Less than one week after they were introduced, Alabama State University has decided to remove itself from two class action lawsuits pending in a federal court here that allege 37 banks, brokers, insurance companies, and investment advisory firms engaged in bid-rigging and price-fixing in the municipal derivatives market.
Freddie Gallot, vice president of finance at ASU in Montgomery, said president Joe A. Lee made the decision to remove the university from the suit.
"When we looked at all the issues, we decided that it was not in the best interest of the university to participate in the suit," Gallot said. He declined to elaborate on the rationale for withdrawal.
He did say, however, that Alabama State is in the process of putting together a new bond issue. While the details have not been decided yet, he said the university will probably issue about $38 million of bonds during the next 60 days.
Gallot denied that the proposed bond issue played any role in the decision to drop out of the suits.
"It had nothing to do with that," he said.
The seven original plaintiffs are represented by 12 different law firms, and Armand Derfner, an attorney atDerfner, Altman & Wilborn, which is representing the university, did not return calls for comment yesterday.
The university's decision comes just after Chicago said that it would remove itself as a plaintiff from one of the two suits. The city did not explain the decision, but said it would stay in the suit filed against Bank of America, and withdrew from the other one, which was filed against 36 other firms and companies.
The suit against Bank of America alleges the illegal activity took place over a shorter time period and reflects the fact that the bank is cooperating with the Justice Department's antitrust investigation of the municipal market and has held settlement talks with the issuers in the lawsuits.
Michael Hausfeld, a partner at Cohen, Milstein, Hausfeld & Toll PCCL in Washington, who is leading the litigation, said yesterday that he he had not heard of the university's withdrawal, but was aware of Chicago's. He declined to speculate on reasons for the departures, but said that since the suits were introduced March 12, he has received "significant" interest from other municipalities.
"We've received many inquiries from other institutions, cities, and counties, and you probably will see a lot more entities being added as claimants," he said.
