Quinn emanuel trial lawyers

Investment Fund and Fund Advisor Litigation

Introduction Print

We have a world-class practice representing hedge funds, private equity funds, venture funds, mutual funds, investment advisors, and fund managers in high-stakes litigation.  This includes litigation arising from activist investment strategies; distressed investment scenarios, including insolvency and restructuring; allegations of improper fund management; inadequate disclosures; alleged securities laws violations; market manipulation; and other complex financial disputes. 

Much of the work we do for our fund clients requires a deep understanding of complex structured financial products, credit agreements, derivatives, risk allocation, and the capital markets.  The vast majority of lawyers who understand these products comes from large transactional firms.  There is no knowledge gap when we take on these firms.  In fact, there is no firm in the world that can top our unique combination of litigation skill and substantive knowledge of the financial industry. 

We are one of the very few top-tier global firms that is free to litigate against the large prime brokers and money center banks, such as Citibank, JPMorgan Chase, UBS, Merrill Lynch, Royal Bank of Scotland, Deutsche Bank, Credit Suisse, Barclays, HSBC, Bank of America, and Goldman Sachs.  We also regularly represent funds and fund managers against the “Big Four” accounting firms. 

Not all of our representations involve litigation. We have a track record of successfully resolving partnership, valuation, and redemption disputes between fund managers and individual partners. 

We have a deep bench of white collar partners, over 20 of whom were former federal prosecutors.  We  have extensive experience representing funds and fund managers before the SEC and FSA, as well as in other government investigations and prosecutions around the globe.  We have no transactional practice or traditional regulatory practice.   We are not beholden to the regulators.  Thus, we are free to be the “hammer” in negotiations.  The regulators know we will take cases to trial if it is in our client’s interests.  We believe that gives our clients a distinct advantage in negotiations.

Finally, no business firm in the United States tries as many cases as we do. (The Lawyer, 2017)  And, as far as we know, no firm in the United States has achieved the success we have.  In the last 12 months alone we have secured judgments and settlements for our clients of $20 billion.  We have recovered $3 billion for funds, fund investors, and fund managers.  That said, the majority of our work involves defending companies, and we have successfully defended numerous funds and fund managers from claims exceeding many billions of dollars.

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Recent Representations Print

  • We represented UMB Bank, N.A. as trustee on behalf of noteholders, in a case against Airplanes Limited and Airplanes U.S. Trust that involved a dispute over the improper reserving by Airplanes of $190 million that otherwise would have gone to noteholders.  We obtained a favorable judgment on the pleadings with the Court finding that the $190 million reserve was improper and in violation of the indenture.
  • We represented a hedge fund in connection with an SEC investigation into the fund’s valuation and subsequent sale of certain illiquid energy assets.  We obtained a complete “walk away” from the SEC despite the SEC having invested several years and substantial resources in investigating the fund’s conduct.    
  • After a week-long trial, we won a complete defense verdict—plaintiff was awarded nothing and lost on every count—in a bet-the-company case.  We represented Athilon Capital Corp. and its board of directors in a lawsuit brought by Quadrant Structured Products LLC (owned by Magnetar) in Delaware Chancery Court.  Quadrant sought not only hundreds of millions of dollars and findings of breach of fiduciary duty against the members of the Athilon board as individuals—but also an order requiring Athilon to liquidate its assets and shut its business down entirely.  Instead, Vice Chancellor Laster denied all the relief Quadrant requested, leaving Athilon free to continue the long-term business strategy Quadrant challenged at trial.   Quadrant attempted to reverse our trial win by appealing to the Delaware Supreme Court, but we won the appeal by securing an en banc decision that affirmed all of the trial court’s rulings. 
  • We represented a global investment bank in a multi-jurisdictional dispute pursuing our client’s right to recover a decade old investment under a convertible note.  A restructure by the issuer effectively rendered our client’s investment ‘worthless’.  After 8 months of applying commercial and legal pressure and obtaining multiple judgments and freezing orders, we achieved a complete recovery of our client’s investment with interest over the past 10 years.
  • We achieved a complete victory for our clients, GSO Credit Partners and Canyon Partners, in the Financial List of the English High Court.  The dispute arose out of an agreement by our clients to acquire (by way of back-to-back trades) a position held by HCC International Insurance Company Plc under a surety bonds facility.  Barclays Bank was the intermediary for the purpose of the back-to-back trades.  The trades were entered into under standard Loan Market Association (LMA) documentation and the dispute concerned the settlement amount payable in relation to the trades.  The judge, Mr. Justice Knowles, agreed with our arguments and found that our construction of the LMA terms was correct.  Significantly for us in the London legal market, this was the first judgment of the recently created Financial List.
  • We represented ICICI Bank Limited in proceedings concerning the construction of three letters of credit together worth $150 million.  ICICI Bank Limited was the issuing bank under the credits and by our construction of them the letters of credit expired before the liability against which they were being drawn became due and payable.  Both at trial and on appeal the court agreed with our construction and our client avoided this $150 million liability – this was critical given the low practical likelihood of recouping funds from the borrower.
  • We currently represent two Prudential-managed mutual funds in LIBOR cases asserting fraud and other claims against the major banks. These cases are at the pleading stage, and we are about to argue against the banks’ motion to dismiss.
  • We represented a major investment management firm when it was threatened with claims by investors in a fund that sought to take advantage of the spreads between municipal bonds and treasury bonds and that lost nearly 80% of its value during the financial crisis.   After extensive discussions and a mediation with plaintiffs’ counsel, we were able to resolve all claims on favorable terms without any litigation claim being filed by any investor.
  • We obtained a complete dismissal with prejudice for The Vanguard Group of a shareholder class and derivative action that asserted RICO and other claims against Vanguard and some of its officers, trustees, and advisors. After plaintiffs appealed, the Second Circuit Court of Appeals affirmed the dismissal.
  • We were retained by several Vanguard Funds shortly before trial to represent them in a securities action against Citigroup and its affiliates arising from the Enron fraud. Vanguard had filed claims against Citigroup for its role in creating and selling Enron credit-linked notes issued by Yosemite Securities Trust I. After Vanguard hired us to replace its counsel, we were able to obtain a successful settlement from Citibank.
  • We defeated two class actions filed against Schwab’s Total Bond Fund in the Northern District of California. The actions were brought by a fund shareholder and an investment advisor who had purchased the fund for multiple clients, and included securities claims. We convinced the court that plaintiffs had failed to allege actionable representations, among other things, leading to involuntary or voluntary dismissal of all claims.
  • We defeated a derivative action filed against Schwab’s YieldPlus Fund alleging breach of fiduciary duty against the Fund officers and trustees and the Fund’s Manager arising out of the change in investment objectives, which the Fund manager used to increase purchases of mortgage-backed securities. Although the Fund ultimately lost $900 million in value, we successfully defended the claims on the ground that a special committee had reasonably determined the derivative action was not in the best interest of shareholders. (The shareholders had already received $235 million in a class action defended by another law firm.)
  • We represented two dozen hedge funds, including international funds grouped under four management entities — Elliott, Davidson-Kempner, Appaloosa, and Angelo Gordon — as plaintiff-holders of Yosemite and Enron Credit-Linked Notes (ECLN) in the Yosemite v. Citibank action in the Enron MDL, where we successfully obtained a settlement in excess of $2.1 billion.
  • We represented MHR Fund Management, its founder Dr. Mark Rachesky, and its affiliated funds relating to Carl Icahn’s 2010 hostile bid for Lions Gate Entertainment Corp. MHR is a longstanding significant investor in Lions Gate, and Dr. Rachesky is a member of Lions Gate’s board. Icahn brought actions in British Columbia, where he alleged shareholder “oppression,” and New York, where he alleged tortious interference with a standstill agreement between Icahn and the company. In both actions, Icahn sought to rescind transactions that closed immediately following the expiration of the standstill, in which the company exchanged certain convertible notes held by Kornitzer Capital Management, which in turn sold the new notes to MHR for approximately $105 million. MHR immediately converted the new notes for approximately 16 million shares. Following a four day trial, the Supreme Court of British Columbia rejected Icahn’s bid to rescind the transactions or sterilize MHR’s votes. Two months later, just days before Lions Gate’s annual general meeting at which Icahn was running a proxy contest, the New York Supreme Court denied Icahn’s request for a preliminary injunction to bar Rachesky’s fund, MHR, from voting 16 million shares of Lions Gate stock at the annual meeting. Following that ruling, Icahn did not close his then-outstanding tender offer, his slate of directors was defeated in the proxy fight and Dr. Rachesky and the management directors were re-elected to the board.
  • We represented Saudi interests in obtaining dismissal of proceedings in the English High Court in which Citigroup sought declarations of non-liability against our clients under the 2002 ISDA Master Agreement and Equity Derivates Definitions. The proceedings were, in substance, an attempt to pre-empt U.S. arbitration proceedings worth around $350 million brought in New York under the rules of the U.S. Financial Industry Regulatory Authority.
  • We represented a consortium of hedge funds and other investors who were initial and secondary market lenders to bankrupt beverage manufacturer Le Nature’s, Inc., in litigation against Wachovia Capital Markets, BDO Seidman, and certain Le Nature’s executives. Separately, we represented a group of approximately 75 pension funds, investment funds, and other investors that purchased bonds issued by Le Nature’s at par value. The defendants in that case included Wachovia, Ernst & Young, and BDO Seidman. We obtained substantial settlements for our clients.
  • We represented Bayerische Hypo-Und Vereinsbank AG (“HVB”) in a lawsuit against an investment vehicle that was wrongfully refusing to redeem shares held by HVB, bringing claims for breach of contract and seeking approximately $422 million in damages. Together with the filing of the complaint, we obtained an immediate exparte attachment of all assets owned by the defendants located in the State of New York and we obtained an order sealing the file. The following day, more than $380 million worth of the defendants’ assets in New York were attached. Having gained considerable leverage, we were able to reach a favorable settlement – receiving $403 million – shortly thereafter.
  • We represented emerging market and distressed hedge fund, VR Capital Management, the largest creditor of failed Refco, Inc. At trial in Refco's bankruptcy proceeding, we won a ruling worth hundreds of millions of dollars establishing that Refco was a broker under Chapter 7, subchapter three, and thus entitling VR Capital to priority recovery as a securities customer. We ultimately recovered nearly $800 million.
  • We represented Elliott Management Company in a successful effort to enforce a security interest in tens of millions of dollars of art formerly owned by convicted fraudster Marc Dreier, which enabled Elliott to recover a significant portion of the losses it sustained on account of Dreier’s fraud.
  • We represented limited partners of a hedge fund in a shareholder derivative arbitration against a hedge fund manager and his stockbroker sister based on claims of systemic fraud through post-execution allocations of securities trades over more than a decade. After an arbitration that spanned seven months, the arbitration panel, in a unanimous opinion, awarded our clients $75 million in compensatory and punitive damages, which included $35 million for disgorgement of compensation for the period of the fraud. In what may be the highest arbitration award ever obtained against an individual defendant, we successfully obtained ratification by the New York Supreme Court.
  • We represented Ramius Capital in a FINRA arbitration against Bear Stearns, asserting fraudulent misrepresentation and mispricing in its sale of initial portfolio collateral to a cash-flow collateralized debt obligation. The FINRA panel unanimously found in favor of Ramius, holding on clear and convincing evidence that Bear Stearns had fraudulently misrepresented the pricing and value of the ABS collateral.
  • We represented a large merger arbitrage fund in a FINRA arbitration against one of the leading global broker-dealers over the liquidation of a swap transaction. After four weeks of hearings spread over three months, we recovered over $10 million for our client in a confidential settlement. The dispute concerned the market quote method of valuing an equity swap under the 1992 ISDA Master Agreement where the broker-dealer sought and received quotes from three reference market makers. We effectively challenged the validity of the settlement value by attacking the quotes as shams which were the product of coaching friendly market makers and manipulating the market price through heavy volume sales.
  • We represented XE Capital Management in a case against its joint venture partner for failing to pay commissions into their joint venture, XE-R, LLC. The defendant counterclaimed, seeking control of a third venture and various insurance policies, worth over $250 million. A three member arbitration panel unanimously found in favor of XE Capital, awarding them $10 million in misappropriated commissions and denying all of the defendant's counterclaims.
  • We represent the Joint Liquidators of Kingate Euro Fund and Kingate Global Fund, two BVI-based funds that invested more than a billion dollars with Madoff. The Madoff SIPA trustee sued both funds for return of distributions as preferences and fraudulent transfers, and we have been representing the funds in negotiating with the Madoff trustee. We also represented Kingate Global in dismissing a derivative action brought by a small shareholder in the fund against various third parties, including the funds auditors and directors.

REPRESENTATIVE CLIENTS:

  • Abrams Capital
  • ADM Capital
  • Aegon Investments
  • AIGFP
  • Aladdin Capital
  • Alchemy Partners
  • Anchorage Capital Group, LLC
  • Angelo, Gordon & Co., L.P.
  • Apollo
  • Appaloosa Management L.P.
  • Aristeia Capital
  • Aurelius Capital Management
  • Avidity Partners
  • Babson Capital Management
  • Black Diamond Management
  • Blackrock Capital
  • Bond Street Capital, LLC
  • Brigade Capital
  • Callidus Capital
  • Canyon Partners LLC
  • Capital Fund Management International, Inc.
  • Carlson Capital
  • Carlyle Group
  • Caspian Capital Advisors
  • Castle Creek
  • Centerbridge Partners, LP
  • Cerulean Capital
  • Citadel Group
  • Context Capital
  • Credit Capital Investments, LLC
  • Cyrus Capital Partners
  • D. E. Shaw & Co.
  • Davidson Kempner
  • DDJ Capital Management
  • Dune Capital Management
  • Durham Asset Management, LLC
  • Eaton Vance
  • Elliott Associates, L.P.
  • Esopus Creek Advisors
  • Fortelus Capital
  • Greywolf Capital
  • Gulf Stream Asset Management
  • Halcyon Asset Management LLC
  • Harbinger Capital PartnersHartford Investment Management
  • Highland Capital Management, L.P.
  • Hillmark Capital
  • Industry Funds Management
  • Lampe Conway & Co., LLC
  • Longacre Fund Management, LLC
  • Luxor Capital Partners, L.P.
  • Marathon Asset Management
  • Matlin Patterson
  • Monarch Alternative Capital
  • Morgan Stanley Senior Funding
  • Natixis
  • Normandy Hill Capital, L.P.
  • Oak Hill Advisors, LP
  • Oaktree Capital
  • Och-Ziff Capital Management
  • Orange Capital
  • Ore Hill Partners, LLC
  • Owl Creek Asset Management, LP
  • Paulson & Co.
  • Pentwater Capital
  • Perry Capital
  • Peter Schoenfeld Asset Management
  • PIMCO
  • Plainfield Asset Management
  • Prentice Capital Management, L.P.
  • QVT Financial L.P.
  • Redwood Capital Management
  • Restoration Capital Management, LLC
  • Riva Ridge Capital
  • Riversource Investments
  • Saybrook Capital LLC
  • Schultze Asset Management
  • Scoggin Capital Management
  • Seneca Capital
  • Sequoia Capital
  • Serengeti Asset Management, L.P.
  • Silver Point Capital, L.P.
  • Solus, L.P.
  • Stark Investments
  • Stone Tower Capital
  • Stonehill Capital Management, LLC
  • Strategic Value Partners, LLC
  • Taconic Capital Advisors, L.P.
  • TCW
  • Tennenbaum Capital
  • The Baupost Group
  • Third Point Capital
  • Venor Capital Management, L.P.
  • Viking Global
  • VR Capital
  • Western Asset Management Company
  • Whippoorwhill Associates
  • Wolf Point Capital Management
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