the court's calculations, this includes all class members who received more than $ 3,286.36 in the first distribution. If further investigation reveals that distribution will actually cost less than $ 5.50 per claimant, class counsel is directed to distribute pro rata shares to each class member whose share is more than double this revised cost figure.
The one lingering issue, of course, is the third question: what to do with the remaining portion of the residue. Because it would be impractical to distribute funds to those class members whose pro rata shares of the residue are less than $ 11.00, the court will invoke its cy pres doctrine and redirect this money to an alternate recipient.
As indicated above, class counsel urges the court to direct this money to the BASF. In support of this motion, class counsel has provided evidence that the BASF pursues commendable ends. See Ramey Decl. Nonetheless, it is unclear how distribution of the residue to this lawyers' group would aid class members or similarly situated parties in the future. Much like the civic association that served no educational purposes in Rockford, the BASF and its efforts to promote the legal profession and educate attorneys may be "laudable," but they are nonetheless attenuated from the interests of the class members. Class counsel's proposal to distribute the residue to the BASF is particularly ironic in a securities class action given that Congress recently revised some of the procedures applicable to these actions because it found that too much of the money from such litigation ended up in the hands of lawyers rather than investors. See Private Securities Litigation Reform Act of 1995, Senate Report No 104-98, 104th Cong, 1st Sess, 5-9 (1995) in 2 U.S.C.C.A.N. 684-88 (1995).
There are a number of organizations, however, that do serve the interests of the current class members or future class members in similar litigation. In reaction to the court's initial skepticism with regard to giving the money to the BASF, class counsel has suggested the Stanford Law School Securities Class Action Clearinghouse (the Clearinghouse) as an alternate recipient. This is an apt suggestion. The Clearinghouse provides pertinent information on pending securities class actions free of charge to the public via the Internet, as more fully set forth in the declaration of Stanford Law Professor Joseph Grundfest. In addition, the Clearinghouse is helping to effectuate the local rules of this court governing securities litigation. See Civ. LR 23-2. The court will therefore order class counsel to disperse the remainder of the residue fund to the Clearinghouse.
While the court agrees with class counsel's contention that the Clearinghouse is an appropriate alternate recipient, the court also notes that similar groups may also be proper recipients of cy pres distributions in future securities class actions. The Council of Institutional Investors, to pick one example, seeks to further the interests of defrauded investors. It might therefore be a suitable recipient in future situations such as the one at bar, and it would certainly be a more suitable recipient than a local bar association.
For the foregoing reasons, the court DENIES in part and GRANTS in part class counsel's motion (Doc # 160, Pt # 1) to disperse the residue of the settlement fund. Specifically, the court directs class counsel to:
1. distribute all pro rata shares in the residue that are greater than $ 11.00 to the class members to whom they belong;
2. subtract the cost of each distribution from the pro rata share being distributed; and
3. disperse all remaining residue funds to the Stanford Law School Securities Class Action Clearinghouse.
IT IS SO ORDERED.
VAUGHN R. WALKER
United States District Judge