- Learn More
Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
Paul, Weiss Achieves Two Victories on Behalf of Citigroup
- Client News
- April 2, 2010
On March 29, 2010, Paul, Weiss achieved a victory before the Honorable Sidney H. Stein in the Southern District of New York for its clients Citigroup, Citigroup Global Markets Inc. (CGMI), and former Citi officers and employees.
Plaintiffs invested in the equity tranche -- the riskiest tranche -- of a collateralized debt consolidation (CDO) underwritten by Citi called Octonion in early 2007. As the market deteriorated in mid to late 2007, plaintiffs' investment declined in value and plaintiffs ultimately sold their investment back to Citi at 3% of par value.
Plaintiffs thereafter brought an action against defendants, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as related state law claims, alleging that they were induced into investing in Octonion based on material misrepresentations and misstatements relating to the structure and value of the CDO. In particular, plaintiffs alleged that Citi defendants failed to disclose that the CDO assets in Octonion were "worthless," "spare parts" left over from previous Citi securitizations.
The court dismissed all claims, agreeing with Paul, Weiss that the allegations failed to set forth facts showing that the Octonion CDO assets were worthless at the time of plaintiffs' investment or that defendants had knowledge of such facts at the time of plaintiffs' investment. The court dismissed plaintiffs' federal claims with prejudice and the state law claims without prejudice.
Also on March 29, 2010, Paul, Weiss achieved a victory before the Honorable Larry Alan Burns in the Southern District of California for its clients Citigroup, CGMI and certain Citigroup directors in Brecher v. Citigroup.
Plaintiffs, current and former employees of Smith Barney in California, brought a putative class action against Citigroup, CGMI, and certain current and former Citigroup directors under state law, alleging that certain provisions of their employment agreements with Smith Barney violated California's Unfair Competition Law (UCL). Specifically, plaintiffs alleged that certain forfeiture and acceleration provisions associated with lump sum payments that plaintiffs received upon joining Smith Barney were unlawful noncompete provisions under the UCL. Plaintiffs also asserted various other state law claims.
The court dismissed all claims, agreeing with Paul, Weiss that the forfeiture and acceleration provisions did not violate the noncompete provisions of the UCL and that the plaintiffs had failed to plead facts to support their remaining claims.
The Paul, Weiss team was comprised of litigation partners Susanna Buergel and Richard Rosen, associates Michael Berger, Richard Eisenberg, Karen King, Stuart McPhail, Issa Mikel and Lindsey Weinstock.