Proposed Settlement of Class Action
As a potential Member of the class action against WSB Financial Group, Inc. (and other defendants), I am strongly opposed to the proposed settlement for the following reasons:
1. According to the “Notice” from the U.S. District Court, Western District of Washington, the **gross** settlement payment is $4.85 million, and approximately 4.17 million shares of WSFG common stock are affected by the settlement.
Thus, the **gross** settlement payment per share is $1.16.
However, according to the same “Notice”, the lawyers for WSFG shareholders will request attorney fees of 25% or $0.29 per share.
The **net** settlement payment is now down to $0.87 per share.
The lawyers for WSFG shareholders will also apply for reimbursement of litigation expenses not to exceed $75,000 or $0.018 per share.
In the end, shareholders may receive a mere $0.852 per share.
2. The proposed settlement applies to WSFG shareholders of record from December 12, 2006 to May 31, 2008. (I will not nitpick the fact WSFG shares did not start trading on December 12, 2006. The U.S. Securities and Exchange Commission declared the registration statement for WSFG shares effective on December 12, 2006, but the shares did not start trading until December 14, 2006.)
During the period December 12, 2006 to May 31, 2008, WSFG’s share price had the following range:
High $21.00 (December 14, 2006)
Low $ 3.23 (May 1, 2008)
Today (December 30, 2008), WSFG’s share price before the market opens is $0.76.
Thus, after you receive the $0.852 per share settlement payment, you will still show a loss from $19.388 ($21.00 - $0.852 - $0.76) to $1.618 ($3.23 - $0.852 - $0.76) per share.
**AT BEST**, the settlement payment only covers 34.5% of your loss! At worst, it covers a pitiful 4.2% of your loss.
3. The lead shareholder (i.e. plaintiff) in the class action lawsuit is the Police and Fire Retirement System of the City of Detroit. If such an honorable organization agrees to the settlement, then it must be good, right?
The issue here is numbers—nothing more. If the Police and Fire Retirement System of the City of Detroit wants to lose 65.5% - 95.8% of the investment for their members—fine. Let this government organization perform an extreme disservice to its individual members (who are the truly honorable ones). However, please do not drag the rest of us shareholders into such a horrible deal.
To participate in the proposed settlement, potential members of the class action must mail a completed claim form postmarked before February 19, 2009. By participating in the settlement, members of the class action waive ALL future claims against the defendants.
To be EXCLUDED from the proposed settlement, potential members of the class action must mail a written request for exclusion postmarked before February 19, 2009. Members who opt for exclusion from this class action lawsuit may still participate in any future lawsuit and (hopefully better) settlement.
Of course, all of the documentation for the current proposed settlement fails to specify its damned-if-you-do / damned-if-you-don’t nature. If you exclude yourself from the proposed settlement, the payment will be divided among a smaller number of shares—that is, the payment per share will be larger for the members who submitted a completed claim form.