According to a press release dated July 6, 2005, a federal appeals court has concluded that the lawyers who pursued a case against Aon Corp. earned 30 percent of the settlement that the Chicago-based insurance giant agreed to pay. The 7th U.S. Circuit Court of Appeals on Tuesday rejected the argument that 30 percent of the $ 7.25 million settlement represented an excessive fee. A notice sent to class members said lead counsel for the plaintiffs, the Pennsylvania-based firm of Schiffrin & Barroway LLP, intended to seek fees of up to 331/3 percent of the settlement fund as well as about $ 100,000 in expenses. The firm ultimately sought -- and was awarded -- 30 percent of the settlement fund and an additional $ 111,054.06 in expenses.
On July 28, 2004, the Court entered the Minute Order granting the motion for final approval of the class action settlement and plan of allocation. The lead plaintiff’s counsel was awarded the sum of $2,100,000 in fees and $111,054.06 in reimbursement of expenses. The case was terminated.
In the Notice of Pendency, the settlement fund consists of $7,250,000 in case, plus interest.
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between May 4, 1999 and August 6, 2002, thereby artificially inflating the price of Aon securities. Throughout the Class Period, as alleged in the complaint, defendants issued numerous statements and filed quarterly and annual reports with the SEC which described the Company's earnings and financial performance. The complaint alleges that these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the Company had materially overstated its net income by $27 million in 1999, by $24 million in 2000 and by $5 million in the first quarter of 2002; (ii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iii) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times. On August 7, 2002, before the market opened for trading, Aon shocked the market when it announced, among other things, that: (a) it had failed to meet analysts' expectations on its earnings for the second quarter by a wide margin; (b) because of the slumping financial markets, it had canceled a spinoff of its insurance underwriting businesses to shareholders; and (c) the SEC had began an investigation of its accounting and was questioning several items in the Company's accounts, including the reporting of investment write-downs, the timing of some costs and a reinsurance recoverable item and the
decision not to consolidate certain special purpose vehicles. Aon also stated
that, if the SEC says it is necessary, it will have to restate its earnings for
the past three years, and reduce its net income by $27 million in 1999, by $24 million in 2000 and by $5 million in the first quarter of 2002. Following this report, shares of Aon fell $6.43 per share to close at $14.77 per share, a one-day decline of 30.3%, on volume of more than 20 million shares traded, or more than twenty times the average daily volume.