Underwriter Syndicate Wins Dismissal of Securities Fraud Claims

Paul, Weiss achieved a significant victory for a syndicate of underwriters led by Citigroup Capital Markets by securing the dismissal with prejudice of claims under the Securities Act arising out of a 2013 offering of American Depository Shares by Spanish energy company Abengoa, S.A. The third amended complaint alleged that Abengoa had engaged in systemic accounting fraud and that various statements in the registration statement for the 2013 offering concerning its accounting practices were false.

In the order dismissing the case, U.S. District Court Judge Edgardo Ramos of the Southern District of New York held that the plaintiffs’ claims against the underwriters were time-barred by the Securities Act’s statute of limitations. Judge Ramos concluded that a series of disclosures in November 2014 had put the plaintiffs on notice of potential claims against the underwriters under the Securities Act and triggered a “duty to inquire.” Because the plaintiffs did not amend their complaint to add the underwriters as defendants and claims under the Securities Act until August 2016, however, those claims were time-barred. Though Judge Ramos noted that leave to amend ought to be freely granted, he held that the plaintiffs had already been given an opportunity to amend the complaint following the court’s prior opinion dismissing the complaint without prejudice on the same grounds. Therefore, the motion to dismiss was granted with prejudice.

The Paul, Weiss team that briefed the motions to dismiss the amended complaint included litigation partner Richard Rosen.