Quinn Emanuel has world renowned experience representing sophisticated hedge funds and fund managers in high stakes litigation. Our practice covers a broad spectrum of litigation matters that advance or defend the traditional and non-traditional investment strategies employed by our hedge fund clients. We are able to deploy our robust securities, general commercial, and corporate governance litigation practices in support of our clients’ needs. Many of our hedge fund clients also call upon our bankruptcy and restructuring expertise in connection with their investments in distressed companies, particularly where litigation plays an important role in protecting or increasing the value of their debt or equity investment.
Much of the work we do for hedge fund managers requires a deep understanding of complex investment structures and strategies. In litigation matters arising from long/short, special situation, macro, arbitrage, and other investment strategies, our extensive understanding of all aspects of corporate restructuring and modern corporate finance, combined with our broad experience litigating structured financial products and other investment vehicles, provides our clients with a distinct advantage. The degree to which our complex financial fluency can be combined with our courtroom skill is unrivaled by our peers.
Given the breadth of our experience, there is no knowledge gap when we take on the large transactional firms in this area. 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 also 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 asset managers against the “Big Four” accounting firms.
Because of our financial acumen and our credibility in the courtroom, we have been appointed lead counsel in virtually every major recent financial manipulation case – including those asserting manipulation in CDS markets, ISDAfix, gold pricing, Interest Rate Swaps, and sub-sovereign and agency bonds. Our track record provides opportunities for our clients to serve as lead plaintiffs if that is their preference. We also have a successful “opt out” practice for clients who prefer not to serve in a class leadership role. We know how to maximize recoveries for our clients.
At the same time, we are very successful at delivering outcomes that maximize value through calculated legal strategies and negotiated resolutions. In fact, while we are known for our trial experience, not all of our representations involve litigation. We also have a proven track record of successfully resolving sensitive partnership, valuation, and redemption disputes between fund managers and individual partners without the need for court filings and litigation.
We have a deep bench of white collar partners who are well-versed with the types of criminal and regulatory defense matters that hedge fund clients occasionally face. Over 25 of our partners were former federal prosecutors, with extensive experience representing funds and fund managers in government investigations and prosecutions around the globe. We have no traditional regulatory practice and as such are not beholden to any regulators. Regulators know we will take cases to trial if it is in our client’s interests, and we believe that gives our clients a distinct advantage in negotiations.
We are also uniquely situated to assist our hedge fund clients with litigation matters that arise overseas or have international aspects. We have major offices in key foreign jurisdictions that are versed in complex financial transactions and regularly handle litigation in those jurisdictions on behalf of hedge funds and other firm clients. For instance, we have offices in the United Kingdom, Hong Kong, Germany, and Australia (among other jurisdictions), each with lawyers experienced in complex business litigation. By not needing to outsource international problems or issues to other firms, we are also able to provide a level of continuity and client responsiveness for cross-border litigation that is unparalleled.
Finally, no business firm in the United States tries as many cases as we do. As far as we know, no firm in the United States has achieved our success. In the last two years alone, we have secured judgments and settlements in excess of $20 billion, including more than $3 billion for funds and fund managers. That said, a substantial amount of our work is defense-oriented, and we have successfully defended numerous asset managers against claims seeking many billions of dollars.
- We cemented our prior victories on behalf of Indonesian bank PT Bank Mutiara, Tbk (now known as PT Bank JTrust Indonesia) against a crooked Mauritian hedge fund, leaving the fund with no assets and no recourse in the United States. Nearly six years ago, the hedge fund improperly seized and retained several million dollars of our client’s assets and refused to return the money despite numerous court orders to do so. The court held the fund and its owner in contempt, imposed fines that eventually reached more than $400 million, and ultimately granted our request that it transfer the ownership of the hedge fund itself to our client. Following that order, and the Court of Appeals’ affirmance, the hedge fund’s former management commenced a new action in Delaware to oust the newly appointed board of directors and to retake control of the entities. We swiftly obtained an injunction stopping that case, which the Court of Appeals affirmed last week. The decision leaves the hedge fund with no viable means to continue its pursuit of our client in courts in the United States or anywhere else around the world.
- The firm won a major victory for two investment funds, Zohar II 2005-1, Ltd. and Zohar III, Ltd. (the “Zohar Funds”), in a dispute with their former collateral manager, Lynn Tilton. The immediate dispute concerned ownership and control over three Delaware corporations—FSAR Holdings, Inc., UI Acquisition Holding Co., and Glenoit Universal Ltd.—but has ramifications for dozens of other portfolio companies that are subject to the same dispute. The Zohar Funds claimed legal and beneficial ownership of the three subject companies, and elected new directors to their boards by written consent. Tilton refused to recognize the election, claiming that the Zohar Funds were merely record holders of equity in the companies, while she was the true beneficial owner entitled to all rights and privileges of ownership, including the right to elect their directors. Following a six day trial before the Delaware Court of Chancery, the Court issued a 95-page Memorandum Opinion finding for the Zohar Funds on all counts. The Court confirmed the Zohar Funds’ appointees as the rightful directors of the subject companies and rejected Tilton’s claim of beneficial ownership of the Defendant Companies as “not credible” and based upon “hindsight observations” the Court characterized as “revisionist.”
- 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 MHR Fund Management 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 its founder is a member of Lions Gate’s board. 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, the New York Supreme Court denied Icahn’s request for a preliminary injunction. Following these rulings, Icahn did not close his then-outstanding tender offer, and his slate of directors was defeated.
- 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.
- 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 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 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 a major hedge fund 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 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 ex parte 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.
- Represented Halcyon in connection with Asarco distressed debt investment.
- 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 won a $90 million FINRA arbitration award after a two-week arbitration hearing representing hedge fund Rosen Capital against Merrill Lynch. The Wall Street Journal described the award as one of the largest FINRA investor arbitration amounts ever obtained. Rosen alleged in the case that during the market turmoil in late 2008, Merrill Lynch made improper margin calls and otherwise mishandled the hedge fund's prime brokerage account.
- 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 fund's auditors and directors.
- We serve as co-lead counsel for a class of major investors, including hedge funds, alleging that the major banks colluded to keep the marketplace for credit default swaps from evolving beyond the “over the counter” system they dominated. The case ultimately settled for $1.87 billion dollars. Large asset managers—heavy users of credit default swaps – were among the largest class members, recovered tens of millions of dollars. The mediator, Judge Weinstein (Ret.), said in support of the settlement : “[I]n 30-plus years of mediating high-stakes disputes, this was one of the finest examples of efficient and effective lawyering by plaintiffs’ counsel that I have ever witnessed.”
- We also serve as co-lead counsel for a class of fund investors alleging that major banks colluded to manipulate the marketplace for interest rate swaps. Asset managers are among the largest users of such swaps, as they represent a key risk-management tool. This is a pioneering lawsuit because it is not an outgrowth of a prior government investigation, an indictment, or a guilty plea; the conduct at issue was instead uncovered and developed by our firm acting as “private attorneys general.” In selecting Quinn Emanuel as co-lead counsel over other plaintiffs’ firms, Judge Paul Engelmayer of the Southern District of New York recognized that “the efforts undertaken by Quinn Emanuel [in crafting the complaint] exceeded the investigative work of the other applicants by an order of magnitude.”
- We are Court-appointed co-lead counsel for a class of investors, including numerous hedge funds, related to alleged manipulation of the benchmark price for gold known as the “London Gold Fix.” This massive class action pending in the Southern District of New York is brought against a group of banks for their involvement in manipulating the gold market. Defendant Deutsche Bank has already settled; the remaining defendants include The Bank of Nova Scotia, Barclays Bank plc, HSBC Bank plc, Société Générale SA, and UBS.
- We have been appointed co-lead counsel in a class action alleging that five of the world’s largest financial institutions conspired to manipulate the multi-trillion dollar market for supranational, sub-sovereign and agency (“SSA”) bonds. The complaint alleges the banks conspired in private chat rooms to rig prices and bid-ask spreads. Our allegations are supported by economic analysis demonstrating multiple historical patterns in SSA spreads and prices that are indicative of a price-fixing conspiracy from 2010 to 2014. The case is pending before Judge Ramos in the Southern District of New York.