A week ago I briefly noted that now-imprisoned securities class action king Mel Weiss appeared on the list of Bernard Madoff victims (163-pp. PDF courtesy WSJ, via Christopher Fountain) and observed how ironic it seemed that someone who made great claims to expertise in sniffing out stock fraud should have been taken in by it.
According to correspondence from New York securities lawyer (and longtime Weiss critic) Howard Sirota, however, there might be to the story than that:
I wouldn’t be so quick to jump to the conclusion that Mel Weiss [fouled] up investing with Madoff.
Weiss’ wife and son Stephen A. Weiss invested with Madoff, as did [Milberg Weiss partners] David Bershad and Pat Hynes.
In addition, convicted serial Milberg plaintiff Howard Vogel invested with Madoff.
Buchbinder Tunick, Milberg’s accountants and ironically Milberg’s principal forensic accounting experts, appear on the list, although the entries may be clients of the Buchbinder firm.
Class action firms Wolf Popper and Wolf Haldenstein also appear.
Sirota believes that other persons and entities on the Madoff victims list have also served as lead plaintiffs in securities litigation or as plaintiffs in other litigation handled by class-action firms. All of which could be mere coincidence, or could suggest that either Madoff himself or others in his circle might have played some role in funneling lead plaintiffs to the class-action bar. (Particularly in the “race to the courthouse” era that preceded the Private Securities Litigation Reform Act, having a stable of cooperative repeat plaintiffs was vital to the success of many plaintiff’s firms.)
One way to check this thesis, Sirota suggests, would be to check the names on the Madoff victims list against those on the list of plaintiffs maintained by the Stanford Law School securities class action clearinghouse to see whether there are any other noteworthy matches and if so whether they follow any particular pattern. He also asks whether some of the law firms that have been organizing task forces to recruit and represent plaintiffs in the Madoff scandals — they include the Milberg firm and Wolf Haldenstein — have adequately disclosed to potential clients in their literature that their firms’ own names figure on the Madoff victims list. More: Gary Weiss, Larry Ribstein.
Further: Yet more views. And in comments, a visitor says Wolf Haldenstein is on the list because clients of the firm invested with Madoff, not because the firm itself did.