U.S. Securities and Exchange Commission v. Petters

Background

The Securities and Exchange Commission brought this civil action in 2009 in connection with a related criminal case involving Gregory M. Bell and a Ponzi scheme associated with Thomas J. Petters. Ronald R. Peterson was appointed receiver in 2010 over assets belonging to Bell, Lancelot Investment Management, and certain relief defendants. A receiver is a person appointed by a court to control, manage, and distribute specified assets.

Jenner & Block LLP served as the receiver’s primary counsel. Its work included locating and managing receivership assets, liquidating property and mortgage notes, negotiating a settlement, establishing a claims process, overseeing the distribution of approximately $27 million to victims, addressing tax matters, and communicating with victims. Meagher + Geer, PLLP served as local counsel.

Fee Requests

The receiver sought approval to pay Jenner $620,398.50 in fees for 1,335.40 hours of work and $140,097.47 in expenses. Jenner had agreed to cap its hourly rate at $500 for this case. The court noted that the fee application’s supporting materials showed a total request of $760,495.97 and treated a higher amount stated in the supporting memorandum as a typographical error.

The receiver sought $630.00 in fees and $13.40 in expenses for Meagher + Geer, based on 1.8 hours of work by a senior partner at $350 per hour. These applications were the first requests for payment to the two firms for work performed since the case began.

Court’s Analysis and Ruling

The court explained that payment for a receiver and the receiver’s attorneys is largely within the court’s discretion. It considered the detailed billing records and found that the requested fees and expenses were reasonable and necessary. The court also found that the hourly rates were within the prevailing market range and that the time spent was reasonable given the size and complexity of the case. It noted that Jenner’s capped rates produced an approximately 50% discount from its standard rates, and that the Jenner fees were approximately 2.8% of the funds distributed to date.

The court approved both fee applications in the amounts requested. It granted Receiver Peterson’s motions and authorized payments of $643.40 to Meagher + Geer, PLLP and $760,495.97 to Jenner & Block LLP.