A recent Law 360 story by Rose Krebs, “3 Firms to Seek Up to $4.4M for $20M Fidelity National Suit Settlement” reports that three firms are set to seek $4.4 million for a proposed $20 million settlement of an investor suit in Delaware Chancery Court that accused Fidelity National Financial Inc. directors and others of forcing through a $1.8 billion acquisition of annuity and life insurance provider F&G. In a stipulated settlement filed to Chancellor Kathaleen St. J. McCormick, plaintiff City of Miami General Employees' and Sanitation Employees' Retirement Trust is set to drop its suit in exchange for the defendants paying or having their insurers pay $20 million to Fidelity. The settlement still needs to be approved by the court at a future hearing.
Bernstein Litowitz Berger & Grossmann LLP, Andrews & Springer LLC and Klausner Kaufman Jensen & Levinson are set to seek a fee award of up to $4.4 million in connection with the deal, according to the stipulation. The fee award would be paid out of the $20 million settlement.
The lawsuit alleged Foley used the F&G deal as an opportunity to earn fees for his affiliated companies, including MVB Management LLC and Trasimene Capital Management LLC. Foley and business partner Chinh Chu, the latter of whom is not named as a defendant, allegedly already took in millions of dollars per year from F&G through a sub-advisory investment management agreement with a Blackstone unit, the suit asserted.
The pension fund claimed that through the acquisition of F&G, Blackstone and MVB renegotiated the agreement giving MVB more advisory fees but for the same amount of work. Also, the suit similarly alleged Fidelity paid Trasimene an "exorbitant" amount of money for a five-year services agreement, which that entity earned by giving two presentations to the special committee and didn't provide a fairness opinion.
The deal was approved largely because of Foley's "patronage machine" — the special committee that reviewed the transaction — which included individuals loyal to Foley, the lawsuit asserted. The suit argued the transaction was not a strategically sound decision and made little sense to Fidelity shareholders as the company and F&G operate in separate spheres of the insurance world, title insurance and annuities.
Although the pension fund continues to assert the suit's claims have legal merit, it believes the proposed settlement is "fair, reasonable, and adequate, and in the best interests of the company and its stockholders," the stipulation said. Defendants deny "all allegations of wrongdoing or liability" and have agreed to settle to "avoid the costs, disruption and distraction of further litigation," the stipulation said.