Securities Litigation

Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. Clients large and small seek our counsel to handle their most complex securities matters. Our clients reap the benefits of our vast experience on the front lines of securities litigation and regulatory matters, and our track record of achieving favorable results is second to none.

Why Paul, Weiss?

From the days of insider trading and corporate raiders in the 1980s, to the dotcom bust and the failure of Enron and WorldCom in the 1990s, to the recent collapse of the subprime and auction-rate securities markets, Paul, Weiss securities litigators have been at the center of numerous securities-related controversies. In each instance, we have helped our clients respond to the fallout, mitigate crises, handle the challenges of public and private litigations and investigations and adjust to fundamental changes in securities law. The resolution of many of these matters has had broad implications for the financial markets and in corporate boardrooms.

Our clients benefit from our wealth of experience at all stages of the litigation process, including motions to dismiss, class certification, summary judgment, settlements, trials and appeals, and in investigations and other administrative matters. At the outset of each new matter, we engage in comprehensive strategic planning with our clients to manage their risk and exposure.

Our securities litigation and regulatory practice group includes lawyers with diverse backgrounds. Our group includes former in-house counsel, members of the U.S. Attorney’s Office, the SEC Enforcement Division and the New York Attorney General’s Office, and lawyers who have devoted their careers to handling securities litigations in state and federal court and before regulatory bodies. The collective wisdom of our lawyers is formidable.

Our experience includes handling lawsuits arising under federal and state securities laws, as well as litigating securities-related issues arising under other statutory schemes, including ERISA and the Bankruptcy Code. We represent clients in forums throughout the country. We take major cases to trial and achieve spectacular results. We know the ropes in dealing with federal and state regulators. We perform internal investigations. And we regularly handle the challenges of proceedings involving multiple forums, such as simultaneous litigation in several courts, criminal investigations, and federal and state regulatory investigations.

We have collected and organized our institutional knowledge of the securities laws into various databases, so that we can quickly and easily review the firm’s prior experience to tailor our strategy to the unique facts of each new matter. And because we leverage our past work so efficiently, we are a highly cost-effective choice of counsel.

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Our Practice

There is no “typical” Paul, Weiss securities matter. Our matters run the gamut from massive litigations and regulatory proceedings raising a multitude of legal and factual questions to smaller matters involving discrete issues.

We handle a full range of securities matters, including:

Shareholder class actions
Suits by large institutional investors
Shareholder derivative suits
Complex parallel proceedings
Merger, acquisition and proxy contest-related actions

Cases arising out of the sale of limited partnership interests
Arbitrations
Internal investigations
Government investigations
Government enforcement actions

Our Trial Experience

Numbered among our partners are litigators who are widely recognized as some of the finest trial lawyers in the country. We frequently take cases through trial to winning verdicts— including two recent verdicts for Citigroup that collectively were worth over $37 billion. Clients and adversaries know that we are prepared to take cases to trial and that we know how to win, which gives us a tremendous advantage both in the courtroom and at the settlement table.

Representative trial victories include our representations of:

Citigroup in a victory in a multibillion dollar lawsuit by the London-based private equity firm Terra Firma. Terra Firma and its Chairman Guy Hands claimed they were defrauded in the purchase of the music company EMI in 2007. The Paul, Weiss team prepared the case for trial in just 10 months and tried it to a New York City jury. After a twelve-day trial, the jury deliberated for less than five hours before returning a verdict vindicating Citigroup in all respects.
Citigroup in a $2.2 billion claim by Parmalat (reduced from more than $30 billion after our successful summary judgment motion) for allegedly aiding and abetting Parmalat directors’ breaches of fiduciary duty in stealing billions from the company. After a five month trial, the jury found that Citigroup was not liable and returned a verdict worth more than $430 million (including interest) on Citigroup’s counterclaims. This was one of the highest-value jury verdicts in the United States in 2008.
General Atlantic’s partners and its managing member in claims of breach of contract, fraudulent inducement, breach of fiduciary duty and tortious interference with contracts, in which plaintiffs sought $90 million. The jury rejected plaintiffs’ claims and found that plaintiffs had also failed to prove any damages.
An institutional pharmacy provider in an arbitration involving claims of breach of contract and lost profits in the attempt by a chain of nursing homes to terminate its services agreement with our client. Our client was victorious on all counts, allowing it to preserve an annual revenue stream of $110 million and to recover over $82 million in damages.
Hollinger International (now Sun-Times Media Group) in a challenge to Lord Conrad Black’s breach of fiduciary duties and breach of contract in entering into a transaction to sell the company without providing any benefit to the company’s public shareholders. The court granted our client the relief it sought, enjoining Lord Black from selling control of the company and upholding the adoption of a “poison pill” designed by our team.
A major international mining company in an arbitration involving a breach of a tax sharing agreement. The three-member arbitration panel awarded our client a judgment in the full amount sought— $36.5 million— plus interest in excess of $10 million.

Our Regulatory and Internal Investigation Practice

The expertise of our securities litigators is complemented by the talent and experience of our partners who specialize in regulatory matters and internal investigations. We frequently appear at the SEC; before Congress, self-regulatory organizations and independent commissions; and in State Attorney General offices from New York to California, representing clients in civil investigations and administrative proceedings. If it becomes necessary, we have the expertise to represent our clients in criminal investigations and trials as well. And we have extensive experience conducting internal investigations, having recently handled investigations into numerous issues— from alleged accounting irregularities and deficiencies in internal controls, to tax reporting and related-party transactions, to suspicious trading activities and misappropriation of assets, to drug-testing programs— for many clients, including:

Durius Capital
The Audit and Finance Committee of Adecco
The Audit Committee of Xerox
The Audit Committee of the Board of Directors of Hampshire Group

The Board of Directors of World Wrestling Entertainment
The Special Review Committee of the Board of Fannie Mae
The Board of Directors of Actrade
The Audit Committee of Gem-Star TV Guide

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Our Clients

Prominent financial institutions, corporations and professional services firms entrust Paul, Weiss with bet-the-company securities matters. But we are also the go-to law firm for individuals and for small and mid-sized corporations from a panoply of industries, who value our ability to represent them cost-effectively. Our clients include both U.S.-based and foreign companies and individuals. Our representation of foreign clients requires not only knowledge of the legal issues unique to foreign entities and individuals, but also a sure hand in leading our clients through the unfamiliar landscape of the U.S. legal system.

Our representations include work for:

Corporations
Advanced Lighting Technologies BioMatrix Canadian Pacific Ships Carnival Check Point Conexant Systems Continental Grain CP Ships Dainippon Sumitomo Pharmaceuticals Ericsson Fitch Gambro Hotels.com Interpublic Israel Aerospace Industries Medco Health Solutions	Merck Metromedia NEC Corporation Oilsands Quest Pace American Group Paramount Pictures PSINet Repsol Rhodia Sealed Air Sumitomo Sun-Times Media TECO Energy Time Warner Cable Warner Chilcott XM Satellite Radio
Financial Institutions
AIG Bank of America BB&T BNY Mellon Centerline CIBC Citigroup Credit Suisse Deutsche Bank DLJ	Dresdner Kleinwort Wasserstein Fitch Goldman Sachs HSBC JPMorgan Chase Morgan Stanley OneWest Swiss Re UBS Wachovia
Private Equity, Hedge Funds and Investment Advisers
Apollo Global Management Capital Ventures International Eton Park Capital Management FrontPoint Partners General Atlantic Harbinger J.P. Morgan Investment Management Kensico Capital Management	Perseus-Soros Biopharmaceutical Fund SAC Capital Stark Investments Thomas H. Lee Partners Van Kampen Investments Yorkville Advisors
Professional Services Firms and Insurance Companies
Equitable Life First Health Prudential Insurance	Deloitte & Touche Sphere Drake Insurance Triad Guaranty Insurance

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Industries

Members of our securities litigation practice group are frequently called upon to handle securities cases in a wide variety of industries, including:

Consumer products
Retail and apparel
Energy, power and utilities
Pharmaceuticals and healthcare
Industrials and manufacturing
Media and entertainment
Natural resources
Insurance
Banking

Private equity and hedge funds
Publishing
Real estate
Hospitality and gaming
Technology and telecommunications
Transportation
Mutual funds
Investment advisers
Professional services

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Recognitions

Our practice has been consistently recognized for its securities litigation work. Recent honors include:

Chambers USA
- Band 1 firm – “(National) Securities Litigation” and “(NY) Litigation: Securities” (2011)
- Leading firm – “(National) Securities Regulation” (2011)
- A “Star Individual,” a “Band 1,” and two other recognized practitioners – “(National) Securities Litigation” (2011)
- A “Star Individual,” a “Band 1,” and another recognized practitioner – “(NY) Litigation: Securities” (2011)
- Two recognized practitioners – “(National) Securities Regulation: Enforcement” (2011)
Law360
- A “Securities Defense Firm of the Year” (2011)
Best Lawyers in America
- Recognized our Securities Litigation Group as America’s leading lawyers in handling bet-the-company litigation (2010)
Legal 500
- Tier 1 firm – “Securities: Shareholder Litigation” (2011)
- Two “Leading Lawyers” and one other recognized practitioner – “Securities: Shareholder litigation” (2011)
Benchmark Litigation
- Tier 1 firm – “Securities” (2010)
- Three “Star” practitioners “Securities” (2010)
PLC Which Lawyer
- “Leading” firm – New York Dispute Resolution (2010)
Super Lawyers
- Eighteen practitioners in securities litigation recognized (2010)

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Professional Affiliations

Our lawyers, who are known for their thought leadership, often write and speak on cutting-edge securities law issues. They are actively involved in organizations such as The American Bar Association, The American Conference of Investment Counsel on Securities and Corporate Law Issues, Institutional Investor and The Securities Industry and Financial Markets Association. They have also lectured at Columbia Law School, Fordham University School of Law and Harvard Law School.

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Representative Engagements

Paul, Weiss has been involved a multitude of high-profile securities matter in recent years. Some of our recent representations include:

American International Group (AIG) in its settlement of a securities fraud class action and derivative lawsuits that had been pending since 2004. The lawsuits involved allegations of anticompetitive market division, accounting violations and stock price manipulation when AIG’s former CEO, Maurice R. Greenberg, led the company. The hard-fought litigation lasted more than five years, and lead plaintiffs were seeking in excess of $20 billion in damages. Under the creative structure of the settlement, AIG will pay an aggregate of $725 million if the settlement is consummated, $175 million of which is to be paid into escrow within ten days of preliminary court approval, and the remainder of which is conditioned on AIG having consummated one or more common stock offerings raising net proceeds of at least $550 million prior to final court approval.

Apollo Management and Hexion Specialty Chemicals after the Delaware Court of Chancery found that Hexion had knowingly and intentionally breached its merger agreement with Huntsman. We secured for our clients the favorable settlement of the multibillion dollar claims asserted by Huntsman in multiple jurisdictions.

Bank of America in the litigation and settlement of claims by the SEC in connection with BofA’s acquisition of Merrill Lynch in 2008. The U.S. District Court for the Southern District of New York approved the favorable settlement of claims involving BofA’s alleged misrepresentations and omissions in the proxy statement issued in connection with the merger.

Centerline Holding Company in a series of 10b-5 class actions arising out of its decision to sell certain assets and cut its dividend. The actions were dismissed for failure to plead scienter or any duty to disclose, and the U.S. Court of Appeals for the Second Circuit affirmed.

Citigroup in the dismissal of:

two auction rate securities antitrust actions filed by a putative class of auction rate securities investors and issuers who claimed that defendants violated Section 1 of the Sherman Act by allegedly conspiring to withdraw from the auction rate securities market on the same day; and
multidistrict securities class action litigation relating to its sales of auction rate securities.

Citigroup’s directors and officers in securing the dismissal of a derivative claim seeking to hold defendants liable for Citigroup’s subprime losses. The decision, which was covered extensively in The New York Times and other media, was the first to address director liability for subprime losses under Delaware law, and was described as a “monumental victory” for corporate directors.

CP Ships in an SEC investigation and private lawsuits triggered by two restatements the company made in May and August 2004, and a series of stock sales that company insiders made in the months between the two restatements. We successfully guided CP Ships through the litigation, obtaining dismissal of U.S. class actions filed against the company. While that decision was on appeal, we secured a favorable settlement with the class for $1.3 million. The settlements were challenged by shareholders pursuing similar class action claims in Canada. The District Court dismissed the challenges and approved the settlements and the U.S. Court of Appeals for the Eleventh Circuit affirmed.

Deloitte & Touche in:

litigation relating to audits of the financial statements of Fannie Mae. We secured dismissal of those claims; and
securing dismissal on summary judgment of a defamation case based on the defense that the allegedly defamatory statements were disclosures required under the securities laws.

Ericsson in a securities class action arising out of the company’s 2007 financial disclosures, winning dismissal of the action in the U.S. District Court for the Southern District of New York, in a decision that was subsequently affirmed by the U.S. Court of Appeals for the Second Circuit.

Fitch, one of the three national credit rating agencies, in the negotiation of an industry-wide settlement with New York Attorney General Andrew Cuomo relating to the ratings of non-prime residential mortgage-backed securities.

JPMorgan Chase in:

numerous civil cases brought by shareholders of Bear Stearns following the near collapse of the investment bank in March 2008, as well as in regulatory matters arising out of the same events;
matters relating to the Financial Crisis Inquiry Commission, charged by the U.S. Congress to investigate the recent financial crisis; and
proceedings brought by various state and federal regulators, as well as in a securities class action, ERISA class action and derivative lawsuits arising out of allegations of mutual fund market timing, all of which have now been successfully resolved for Bank One (now JPMorgan Chase).

Kohlberg Capital Corporation (KCAP) in the dismissal of a shareholder derivative claims that KCAP's directors harmed the company by improperly valuing its illiquid investments, which led KCAP to restate its financial statements for year-end 2008 and for the first two quarters of 2009. The court dismissed the complaint, rejecting each of plaintiff's attempts to explain his failure to make a demand on KCAP's board before filing suit.

Merck in:

SEC and DOJ investigations and shareholder lawsuits arising from the sale and marketing of Vioxx and Vytorin. After a four-year investigation, the SEC closed its investigation into the company's public disclosures concerning Vioxx, indicating that it has no intent to bring any action against Merck; and
a victory in a shareholder derivative action. Shareholders claimed that Merck and its former subsidiary Medco improperly recognized as revenues co-payments that Medco plan beneficiaries paid to retail pharmacies instead of Medco. The New Jersey Superior Court, Chancery Division granted our motion for dismissal of the action and summary judgment.

Morgan Stanley in:

the dismissal of two class actions alleging claims under the Securities Act of 1933, and seeking to require funds to disclose information regarding alleged misconduct by investment banking and broker-dealer affiliates of the fund’s investment adviser;
a FINRA disciplinary proceeding and a putative class action concerning the firm’s failure to produce emails in certain arbitrations and investigations owing to a mistaken belief that the emails had been destroyed in the September 11, 2001 terrorist attacks. In the FINRA proceeding, we were able to settle the matter on favorable terms. In the putative class action concerning the same underlying issue, we won dismissal of the complaint and a denial of plaintiffs’ request for leave to amend; and
NASD investigations into mutual fund sales practices and mutual bond sales.

SAC Capital in the dismissal, with prejudice, of federal securities claims and state law trade libel and conspiracy claims by Canadian pharmaceutical company Biovail Corporation. Biovail alleged that our client conspired with research analysts to drive down the stock price of Biovail by disseminating false information about its products, business and accounting practices as part of a short-selling scheme. In the State Court action, the New Jersey Superior Court held that Biovail failed to make out a prima facie case for either claim and also found that the Court lacked personal jurisdiction over all but one of the defendants. The Federal Court dismissed the case on Rule 11 grounds.

Swiss Re in the dismissal of a securities class action triggered by Swiss Re's writedown of CHF 1.2 billion in two credit default swaps the company had sold. The case was among the first to apply the U.S. Supreme Court’s Morrison decision to an “F-squared” (securities of foreign issuers purchased on a foreign exchange) case.

Wall Street Underwriting Syndicates:

before the U.S. District Court for the Eastern District of Michigan in various putative class action litigations arising out of the issuance of $25 billion of General Motors and GMAC bonds. We persuaded plaintiffs to dismiss the underwriters from the case without prejudice; and
in a class action pending in the U.S. District Court for the Southern District of New York relating to offerings of securities of Ambac and AIG.

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