Accounting Misdeeds

From The 10b-5 Daily:

Second Largest Accounting Firm Settlement Ever - The Associated Press reported on Friday that KPMG has agreed to a $125 million settlement in a securities class action in the E.D. of Pa. The case is based on KPMG’s role in the events leading to Rite-Aid Corp.’s 1999 restatement of earnings. According to one of the plaintiffs’ attorneys, it is the second-largest settlement by an accounting firm in a securities class action (after the Cendant case, in which Ernst & Young agreed to pay $335 million). U.S. District Judge Dalzell’s ruling on the settlement is expected next week.

Quote of note: An individual investor objected to the request by the plaintiffs’ law firms for 25% percent of the settlement in fees (or roughly $31 million). At the Friday hearing, however, Judge Dalzell seemed disinclined to find the proposed fees excessive, noting that it was a difficult case because “(KPMG) had the very obvious defense that they were victims too . . . It’s not a sure thing.”