The Heenan Law Firm, which brought and has served as co-lead counsel of the putative class action data breach lawsuit against D.A. Davidson, announces that the federal court has granted preliminary approval to the settlement reached between the parties.  More information about the D.A. Davidson settlement is available at www.DADSettlement.com.  A more detailed description of the settlement, as reported by the Billings Gazette, is described below.

CLAIR JOHNSON Of The Gazette Staff | Posted: Monday, August 3, 2009 7:20 pm

D.A. Davidson & Co. of Great Falls has settled a federal class-action lawsuit over clients’ information that was compromised by a computer hacker.

Chief U.S. District Judge Richard Cebull has given preliminary approval to a proposed settlement agreement that could affect an estimated 226,000 current and former customers. About 40 percent of the customers, or 90,000 people, live in Montana. A hearing for final approval is set for Nov. 12.

The data security breach occurred about Dec. 20, 2007, when a D.A. Davidson database of confidential personal and financial information of current and former clients was hacked by someone using sophisticated techniques. The company learned of the problem on Jan. 16, 2008, and immediately contacted law enforcement and other regulators and hired a forensic security consultant to investigate.

Although D.A. Davidson was prepared notify its clients and former clients of the breach almost immediately, it delayed notice for several days at law enforcement’s request, the settlement said.

The hacker did not gain access to the company’s operating systems or account information. No trading accounts were affected, the company said.

The settlement is the result of more than a year of negotiations between the parties from two initial lawsuits and one filed in May in federal court.

Under the deal, D.A. Davidson will continue to make available at its own expense a credit monitoring program that monitors customers’ credit reports daily and alerts them of indicators of possible identity theft. So far, nearly one-fourth of the class members, or 50,000 people, have enrolled in the monitoring program.

The settlement also makes available up to $750,000 to reimburse class members who can prove losses, with a limit of $10,000 per member. For those enrolled in the credit monitoring program, the agreement makes up to $250,000 available for reimbursement of expenses not covered by the program.

Class members will need to file a claim to prove their losses or expenses, but the procedure is less stringent than would be required if the claims were litigated, the agreement said. The claim procedure also includes a streamlined dispute resolution arrangement.