I've been writing about this for a while over at the Securities Litigation Watch blog (see my posts here and here, for example), but the SEC provided institutional investors with yet another reminder today of the importance of filing claims in securities class action settlements.

As stated in this Litigation Release, the SEC today filed a motion with the federal court in Colorado requesting approval of its distribution plan for the over $250 million settlement reached in its financial fraud investigation of Qwest Communications International. Notably, the SEC proposes to distribute the $250 million via a completely separate securities class action settlement involving Qwest Communications International.

The SEC proposes that the claims administrator handling the securities class action settlement (Gilardi & Co.) also handle the distribution of its settlement. The SEC is increasingly using class action claims administrators to distribute SEC settlements wherever possible because it is a "win-win" for both the SEC and investors. Specifically:

--the SEC does not have to serve as, or hire, a separate claims administrator, saving both time and money;
--using this method, investors should only need to fill out one claim form to recover in both the securities class action and SEC settlements; and
--no attorneys fees are deducted from the SEC money ($250 million in this case) added to the settlement pot.

The SEC's proposal today regarding Qwest shows that investors who fail to file claims in securities class action settlements increasingly risk not only leaving this class action money on the table, but also significant sums of money from SEC settlements.