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January 05, 2006
Just an expense of doing business at KPMG
As KPMG's settlement of the class action lawsuit against the firm over its promotion of tax shelters lurches toward final approval, this NY Times article reports that the number of class members opting-out of the proposed settlement is unusually high (almost 30% of all class members) and speculates that KPMG may elect to exercise its right under the settlement agreement to opt-out of the settlement itself if too many class members opt-out.
Although it was nice of the Times to deliver that message by KPMG to class members, there is little chance that the firm will terminate the settlement. Even if 30% of the class members opt out, that means that KPMG has still liquidated its liability to over 190 former tax shelter clients at an aggregate amount of the $180 million or so that KPMG will contribute to the $225 million settlement. That's under a million per individual claim, which is the equivalent of a payout on a "slip and fall " case for KPMG these days. No way KPMG rolls the dice that it can do better than that by defending the class action and even more opt-out individual claims at trial.
Posted by Tom at January 5, 2006 05:32 AM
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