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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.
PJT Partners Wins Dismissal of Rogue Employee Securities Class Action
- Client News
- September 8, 2017
Paul, Weiss secured the dismissal of a putative securities class action against asset manager PJT Partners Inc., its CEO Paul J. Taubman and its CFO Helen T. Meates.
The investor stock-drop action stems from a 10 percent drop in PJT’s stock price following the March 2016 arrest of Andrew W.W. Caspersen, a former partner of one of PJT’s subsidiaries. Casperson, who is not a defendant in this case, later admitted to creating fake investment opportunities for investors and temporarily diverting two fees owed to PJT in order to fund his gambling addiction. The investor plaintiff alleged that PJT was liable for the stock drop as a result of Caspersen’s actions.
Judge Valerie Caproni of the Southern District of New York dismissed the plaintiff’s complaint in its entirety, finding no allegation that PJT knew about Casperson’s crimes until after the fact. “The Securities Exchange Act of 1934 prohibits making knowing and recklessly false statements to the market,” the judge wrote. “But the Exchange Act does not expect management to be guarantors of the honesty of every employee and not every undisclosed fact is actionable. This case illustrates the difference.”
While granting the plaintiff permission to file a motion for leave to amend, the judge noted that she was skeptical that the plaintiff could “cure the fundamental flaws” in the complaint, because the original complaint didn’t allege a false statement by the defendants. Judge Caproni also held that Caspersen’s scienter could not be imputed to PJT, because he was not “management level,” and that PJT chair and CEO Taubman and CFO Meates were not reckless in signing their Sarbanes-Oxley certifications.
The Paul, Weiss team included litigation partner Aidan Synnott, who argued the motion to dismiss, and counsel Amy Barton.