Reuters-

The U.S. Supreme Court handed down an unusual order Tuesday, directing the lawyers in a case called Public Employees’ Retirement System of Mississippi v. IndyMac to file letter briefs explaining whether a newly proposed settlement of the underlying mortgage-backed-securities class action affects the question presented to the Supreme Court. That sure caught my attention.

The IndyMac case, scheduled to be argued on Oct. 6, is the most consequential case of the term for securities lawyers. It’s not potentially catastrophic, like last term’s Halliburton v. Erica P. John Fund, but it does impact big institutional investors that sometimes prefer to opt out of securities class actions and bring their own suits. Will the IndyMac settlement strip those investors of their chance to challenge an opinion by the 2nd U.S. Circuit Court of Appeals that sets an inviolable three-year limit on their individual claims?

I don’t think so. It’s true that on Monday, Berman DeValerio, lead counsel in the underlying IndyMac class action in federal court in Manhattan, notified U.S. District Judge Lewis Kaplan that plaintiffs have reached a $340 million settlement agreement with the underwriter defendants in the case. But because of the complicated procedural history of the class action, the settlement doesn’t resolve all claims by the Mississippi pension fund that appealed the 2nd Circuit’s ruling to the Supreme Court. In fact, according to the settlement brief, “none of the securities at issue on the appeal to the U.S. Supreme Court were underwritten by the settling defendants.”

[REUTERS]

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