Noted class-action shareholder lawsuit lawyer William Lerach alleges in a letter in the Dec. 11 issue of Fortune magazine that the biz glossy had a conflict of interest that it didn’t disclose in its Nov. 13 cover story about the breakup of Lerach’s former firm.
Lerach wrote, “Your article failed to mention that I represent some 70 institutional investors from all over the world who are prosecuting a case against Fortune’s parent company, AOL Time Warner, where the clients are demanding billions in cash to hold AOL Time Warner accountable for issuing an admittedly false and misleading registration statement in connection with the merger.
“In fact, the article was made public on virtually the same day a court-ordered settlement conference was scheduled to take place. Moreover, Fortune pursued this story after the case was filed against AOL Time Warner. Despite the fact that the AOL Time Warner suit has generated significant media attention and that the multibillion-dollar demand and the timing of the settlement was known for weeks before the publicationof the article, Fortune did not mention even once that it was an adverse party in this major lawsuit — a fact that would have shed light on the magazine’s agenda.
“It is clear that the article was meant to impact the case by undermining our resolve to recover billions of dollars of losses your company caused our clients.”
The Fortune letters aren’t available online. What I find interesting is that there is an article in the same issue on p. 30 about former Enron CFO Andy fastow that mentioned Lerach, and in that article, there is the following disclosure: “Lerach’s firm has lawsuits pending against Time Warner, Fortune’s parent company.”
Which makes you wonder why the disclosure was included in that one-page article, but not in the cover story from last month. What changed in the past month that merited the disclosure now, but not then?