Opinion
No. 02 Civ. 8855 (LAK).
March 28, 2005
ORDER
The Joint Official Liquidators of Relief Defendant Beacon Hill Master, Ltd. (in liquidation) (the "Master Fund") move for an order approving the retention of Scott Berman of Friedman Kaplan Seiler and Adelman LLP and the payment to him of $500,000.
Although Mr. Berman has represented a number of investor plaintiffs in Fraternity Fund, Ltd. v. Beacon Hill Asset Management, 03 Civ. 2387 (LAK), and thus arguably has at least some potential divergence of interest between his role as counsel to the investors and his proposed role as counsel to the Master Fund, the Court is satisfied that this representation may go forward in light of the extensive disclosure to all concerned and the agreement of the Securities and Exchange Commission.
The proposed payment to Mr. Berman is another matter. According to the application, the Liquidation Committee agreed that the Master Fund should reimburse the investor plaintiffs who previously had retained Mr. Berman in Fraternity Fund for certain legal fees and expenses previously incurred by them. The Court questions whether this proposed reimbursement is appropriate. After all, the investor plaintiffs hired Mr. Berman and agreed to pay his fees. It is hardly clear why those who hold interests, direct or indirect, in the Master Fund should reimburse them. In any case, the basis for the determination that the amount of the reimbursement should be $500,000 is entirely obscure.
Accordingly, insofar as the motion seeks approval of the retention of Mr. Berman, it is granted. Insofar as it seeks approval of the payment, the motion is referred to Magistrate Judge Henry B. Pitman to make a complete investigation into the circumstances of the proposed reimbursement, the merit of that application, and the basis for the amount sought.
SO ORDERED.