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Thursday, November 18, 2010

Former Enquirer Publisher Bill Keating Looking To End Gannett Stock Lawsuit? $1.3 Million Settlement Deal On Table

Keating Case Settlement Talks
CINCINNATI (TDB) -- A two-week old court filing in Cincinnati discloses that Bill Keating's lawyers said they would accept $1.3 million to settle the retired Gannett Co. Inc. newspaper exec's lawsuit against his investment advisers.  Keating contends a $20 million investment portfolio was mismanaged.  He and his wife, Nancy, lost $6 million on holdings in Gannett (43,558 shares) and Fifth Third Bank (225,000 shares).  Settlement discussions with a private mediator have taken place.  They failed.  But with the case heading for December 8 trial there is a good chance the talks will be revived under court supervision.  The court filing says:  "The parties engaged a mediator and conducted a partial day of mediation to no avail.  More recently Defendants increased their offer to $500,000 and Plaintiffs reduced their demand to $1,300,000."  That indicates there was movement.

The defense contends Keating was sophisticated about business and investing and should have known that investors can lose money, as well as make money, in stocks.  The trend line is not always up:   "Plaintiffs took on the risk inherent in the market when they invested the portfolios in securities."  Keating is a former GOP congressman from Cincinnati who ran Gannett's newspaper operations in Detroit and Cincinnati.  He was chairman of the Associated Press from 1987-1992.  He was vice president and general counsel of Gannett.  Keating claims he ordered his investment advisers at Sena Weller Rohs and Williams LLC in Cincinnati to aggressively liquidate his stakes in the Gannett media chain and the bank.  He said he wanted a diversified investment portfolio.  He says his orders were not followed.  Keating had served on Fifth Third's board of directors.  The investment advisers said Keating never gave orders to liquidate and reinvest.  In the pre-trial statement filed with Hamilton County Common Pleas Judge Jerome J. Metz Jr., -- the same document that disclosed the settlement offer -- Keating's investment advisers describe the lawsuit as a case of sour grapes that grew out of Wall Street's sharp declines.  The defense lawyers pointed out that all securities markets got clobbered by the same percentages that Keating got clobbered:

"The evidence will show that Plaintiffs received and reviewed monthly statements, quarterly statements and dozens of letters regarding their portfolio.  Since they did not object then, they cannot do so now.  Plaintiffs can prove no damages.  During the period of their relationship all securities markets declined between 40% and 50%, the same amount that the portfolios declined.  Even though Plaintiffs have not alleged a conversion, they argue that a conversion measure of damages, or the New York Rule should be used.  If the proper measure of damages is used Plaintiffs have none, since they are in essentially the same position they would have been in had they received what they now claim they wanted."

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