St. Petersburg spending money to recoup lost investments
ST. PETERSBURG -- The city is investing in its effort to recoup whatever it can from the $15 million it lost in Lehman Brothers stock.
Last month, the city sued its former investment manager, Wachovia Global Securities, for the loss, claiming that Wachovia didn't properly inform the city of its share in Lehman Brothers, nor appropriately alert the city when the stock started collapsing in 2008.
The lawsuit was signed by an assistant city attorney. It turns out, however, that the lawsuit was written by Smith, Moore and Leatherwood, a Charlotte, N.C., law firm. The city filed a motion Tuesday identifying the firm's attorneys as the lead litigants in the case.
As City Attorney John Wolfe pointed out, the firm's hometown is an important detail.
"It's the hometown of Wachovia," Wolfe said of the bank that merged with Wells Fargo at the end of 2008. Wells Fargo has yet to file a response to the city's lawsuit.
So far, the city has agreed to pay the firm up to $60,000. It has already paid about $33,000 from when the firm was hired last year. The firm is charging $250 an hour instead of its normal rate of $350, Wolfe said. If the city gets a settlement, it will pay the firm the extra $100 an hour for all time worked if the recovery equals or exceeds twice the compensation.
The city has already paid local attorney John Kiefner $10,000 to review the case. Smith, Moore and Leatherwood took over the case last year.
Wolfe said the firm has handled numerous cases against Wachovia. Its experience was why the city hired Smith, Moore.
"(They) probably know more about Wachovia than Wells Fargo does," Wolfe said.
Michael Van Sickler, Times staff writer