Quinn emanuel trial lawyers

Securities Litigation

Introduction Print

One of the firm’s largest practice areas is securities litigation.  Unlike most corporate law firms, we  do not represent only defendants; we represent plaintiffs too.  For decades the firm has represented both plaintiffs and defendants in many of the most high-profile securities cases in the nation.  Recently, we have had great success in the barrage of litigation arising from the mortgage-backed securities debacle.  Over the last four years we have recovered $26.8 billion for our clients in these litigations. 

We have litigated every type of securities case, including:

  • Claims under the Securities and Exchange Acts of 1933 and 1934
  • Fraud and non-disclosure cases under state blue-sky laws
  • Market manipulation cases
  • Takeovers and proxy disputes
  • “All holders/best price” rule litigation
  • Insider trading
  • Option disputes
  • Valuations

In securities cases we have represented:

  • Fortune 500 companies
  • Investment banks
  • Directors and officers
  • Special committees
  • Audit committees
  • Institutional investors
  • Hedge funds
  • Financial advisors
  • Broker-dealers

We have litigated these matters in federal and state courts across the country.  Many representations have involved dozens of related shareholder derivative and class action claims.

We try more complex business cases than any other U.S. firm (The Lawyer 2017).  We certainly believe this gives us an edge when we try cases.  However, just as importantly, it gives our clients an edge during settlement negotiations where just the threat of going to trial is enough.  Many securities cases, particularly in the takeover and valuation areas, involve long, complex hearings on requests for injunctions and other preliminary relief.  Our trial skills are often vital to success in these proceedings.

Not all of our securities work involves litigation.  We are often called on to counsel clients and conduct internal investigations into areas such as options backdating and insider trading.  Weare well positioned to do so.  Over two dozen of our partners are former prosecutors.  They include high ranking DOJ lawyers and alumni of United States Attorney’s Offices.  We are skilled at performing internal investigations and also in interacting with prosecutors and regulators such as the SEC, the CFTC, the FTC, etc. (For more information about our investigations practice.)

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Recent Representations Print

Defense Representations:

  • We defended MassMutual and its investment advisor subsidiary Babson Capital Management, against breach of fiduciary duty claims brought by Paul Davis related to MassMutual’s investment in Scottish Re (a Cayman Island Company). We obtained dismissal of all claims asserted against our clients on the grounds that the Plaintiff lacked standing to assert derivative claims under Cayman law and because the court lacked jurisdiction over certain of our clients. These decisions were upheld by the First Department, although a procedural question concerning Cayman Island law is pending before the New York Court of Appeals.
  • We represent E*TRADE Financial Corporation and E*TRADE Securities LLC, along with the former and current CEOs of E*TRADE Financial, in a putative class action bringing claims under Sections 10(b) and 20(a) of the Securities and Exchange Act. We obtained a motion to dismiss all claims against all defendants. The action challenged E*TRADE’s order routing practices, and alleged that E*TRADE earned tens of millions of dollars in “Payment for Order Flow” by prioritizing its receipt of rebates over the quality of execution provided to its customers, thereby violating E*TRADE’s duty of best execution.
  • We represented South Tryon in a lawsuit in the Southern District of New York seeking to force the Collateral Manager of Triaxx Prime CDO 2006-1, Ltd. (“Triaxx”) to sell over $500 million in defaulted collateral in accordance with the requirements of the Indenture. South Tryon moved for summary judgment at the outset of the case arguing that the Indenture unambiguously required the Collateral Manager to sell. The District Court ruled in South Tryon’s favor on that motion and ordered the Collateral Manager to liquidate the defaulted collateral. The District Court, and then the Second Circuit, denied the Collateral Manager’s attempt to stay the judgment. Finally, the Second Circuit affirmed the District Court’s decision in its entirety.
  • 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.    
  • We represented Pitney Bowes Inc. and two of its officers in the District of Connecticut in a securities fraud class action alleging misstatements and omissions relating to the company’s 2012 revenue and earnings projections. We obtained dismissal of all claims, with prejudice, after taking over the case from previous counsel.
  • We represented several Charles Schwab-related entities and individuals in a shareholder derivative suit and securities class action related to the Schwab YieldPlus Fund. Pursuant to the recommendation of a special litigation committee, we moved for, and obtained, dismissal of the derivative and class action claims on summary judgment. The judgment was affirmed on appeal.
  • We represented a former director of Peregrine Systems, Inc. against claims by multiple classes of federal securities plaintiffs, in three state court lawsuits by groups of investors, and against claims by the Peregrine Litigation Trust, which sought more than $2 billion arising from the company’s $500 million financial restatement. The securities claims alleged improper accounting for reseller channel sales and other revenue recognition issues. (A dozen insiders either pleaded guilty or were indicted in connection with these claims.) We obtained complete dismissal of all federal securities fraud claims and two of the state court actions, leading to a successful settlement of the remaining cases. The largest state court action had been pending for more than three years, and we never let plaintiffs progress beyond the pleading stage.
  • We represent Marvell Technology Group in consolidated class actions and a derivative action that alleged $1 billion in market losses after the company announced an audit committee investigation and settlement of significant patent litigation. We were able to obtain dismissal of all claims in the class actions on our initial motion to dismiss, and were able to convince the derivative plaintiff to agree to dismiss its claim with prejudice in exchange for a cost waiver. We also obtained dismissal with prejudice of a prior class and derivative action alleging the company’s board and management had failed to settle or otherwise avoid a $1.54 billion judgment in the underlying patent litigation.
  • We represented Live Nation in a matter filed by a class of Ticketmaster shareholders in Los Angeles County Superior Court challenging proxy disclosures in connection with the Ticketmaster/Live Nation merger. We persuaded the court that Live Nation’s demurrer should be sustained; with our motion for sanctions pending, plaintiffs chose not to amend and to dismiss Live Nation from the lawsuit, sparing Live Nation the burden and expense of a preliminary injunction battle before the companies’ shareholder meetings.
  • We obtained complete summary judgment for the defense in a case brought against our client by companies owned by Ronald Perelman, which had been seeking over $135 million for alleged fraud in connection with the sale of an educational software company.
  • We represented VeriSign, Inc. in a suit brought by a leading class-action plaintiffs’ firm alleging violations of Rule 10b-5. Plaintiff alleged that VeriSign misrepresented the likelihood that the Department of Commerce would approve the renewal of VeriSign’s key contract with the ICANN, and that VeriSign made false financial projections. We filed an immediate motion to dismiss prior to appointment of lead plaintiff and challenged plaintiff’s use of investigators to interview VeriSign’s former employees. Within months, the firm persuaded plaintiff to abandon the case.
  • We represented AOL Time Warner, as a defendant in the Homestore.com securities litigation, a $1 billion securities matter related to the bankrupt internet company. Our client was alleged to have participated in roundtrip or barter transactions that the debtor had misrepresented in its financial statements. The matter was dismissed as to our client, and dismissal was affirmed by the Ninth Circuit.
  • We were retained, on the eve of trial, as counsel to Terayon Communications Systems and its various officers and directors to assume the defense of shareholder class and derivative actions. We successfully resolved matters after summary judgment argument and expert discovery.
  • We represented two preeminent Silicon Valley venture capital firms and their individual directors in the In re Shopping.com Securities Litigation, from successfully demurring to securities fraud claims and then removing the matter to federal court upon plaintiffs’ amendment. The matter favorably settled on confidential terms.
  • One of our attorneys represented Unisys Corporation against claims that the company and its officers had fraudulently failed to disclose adverse business developments when Unisys missed quarterly revenue growth projections and experienced a significant drop in stock price. As much as $1 billion in damages was at stake. After limited discovery, the case settled for nuisance costs of approximately $5 million, including attorneys’ fees.
  • We represented various outside directors in connection with the In re Crown Vantage Liquidating Trust Litigation regarding claims of securities fraud, purportedly seeking over $1 billion, arising out of the spin-off merger and subsequent bankruptcy of this subsidiary of a leading paper company. We obtained dismissal of all claims, affirmed by the Ninth Circuit.
  • We represented GE Capital in McKesson-HBOC merger securities fraud litigation (alleged fraudulent revenue recognition at pre-merger HBOC). All claims were dismissed.
  • We represented the chairman and founder of E-Universe in securities class actions related to revenue recognition. All claims were dismissed, and the dismissal was affirmed on appeal.
  • We represented Hughes Electronics in securities litigation arising out of the failed Hughes-EchoStar merger. All claims were dismissed, and the dismissal was affirmed on appeal.
  • We represented two preeminent Silicon Valley venture capital firms in securities fraud litigation arising out of the merger of Epinions.com and DealTime.com. The bulk of the claims were dismissed, the case was removed, and it then settled confidentially.
  • We represented the chairman and founder of Ariba, Inc. in securities class action related to alleged accounting misstatements and failure to report expenses properly. All claims were dismissed.
  • We successfully represented directors and officers of Bridgestone/Firestone in securities fraud litigation arising from disclosures concerning move of corporate headquarters to Illinois.
  • We represented the former President and Chief Operating Officer of Brocade Communications Systems, Inc. in federal securities class action and shareholder derivative suits; we obtained dismissal of our client from the federal class action.
  • We represented Infonet Securities in class actions alleging various federal securities violations. The matter was settled on favorable terms following motions to dismiss.
  • We represented G & L Realty in a class action alleging shareholder fraud and breach of fiduciary duty in connection with a management buyout. The matter was settled on favorable terms following successful motions to dismiss.
  • We represented Northrop Grumman in various consolidated class actions alleging breaches of fiduciary duty and various federal and state securities laws violations. The cases were dismissed with no class certification and affirmed on appeal.
  • We represented NewMediaSpark plc in a class action alleging fraud related to a private placement memorandum for a startup company making e-commerce investments. The case was dismissed on repeated demurrers with no class certification.
  • We successfully represented directors and officers of Action Auto Rental in securities fraud litigation brought after the company’s stock price dropped following disclosures concerning, among other things, its substantial exposure to the used car market.
  • We represented St. John Knits and several of its officers and directors in a securities fraud class action arising in the context of a leveraged buyout. We obtained early dismissal for a nominal settlement.
  • We represented IAC Inc. and several of its officers and directors in a securities fraud class action arising from a leveraged buyout. We obtained early dismissal for a nominal settlement.
  • We served as counsel in the Biovail Pharmaceuticals Securities Litigation arising out of alleged misstatements regarding product development and prospects.
  • We served as company counsel to Tier Technologies in an audit committee investigation arising out of an accounting restatement.
  • We defended investment company Waterton Management and its manager in a securities action arising from the merger of two internet companies shortly before the dot com bubble burst. Plaintiff asserted claims for common law fraud and securities fraud. We obtained summary judgment on all claims, affirmed on appeal.
  • We represented the former CEO and Chairman of People’s Choice Home Loan, Inc., a failed subprime lender, in connection with claims being asserted by the liquidating trustee in bankruptcy against officers of that subprime lender.
  • We represented internet advertising firm Betawave in a securities class action brought by private equity firm Sunrise Equity Partners. Claims arose from the PIPE transaction that took Betawave public. Plaintiffs first filed in federal court, but we convinced Plaintiffs to dismiss voluntarily. Sunrise re-filed in state court, where we successfully obtained dismissal with prejudice.
  • We represented Vivendi S.A. and its chairman in an all holders/best price rule tender offer class action arising from a tender offer for U.S. Filter. We obtained dismissal on the pleadings.
  • We represented a major investment bank in the In re AIG Securities Litigation, forcing the plaintiffs to withdraw a multi-billion dollar securities class action prior to the filing of a threatened motion to dismiss.
  • We represented PricewaterhouseCoopers in two federal class actions in the ICN Pharmaceuticals Securities Litigation, obtaining dismissals with prejudice. PwC was alleged to have prepared and certified false financial statements for its audit client ICN, and was the only defendant dismissed with prejudice. Dismissal was affirmed by the Ninth Circuit.
  • We represented Athilon Capital Corp., its board of directors, and Athilon Structured Investment Advisors LLC in an action brought by a noteholder asserting both direct and derivative claims. Plaintiff was attempting, among other things, to force the company to wind up in 2014, more than 20 years early. We obtained dismissal with prejudice of all of the plaintiff’s claims in the Delaware Chancery Court.
  • We represented Kimberlite Corporation and its Chief Executive Officer in a suit by Kimberlite’s former President and Chief Operating Officer arising out of a transaction in which Kimberlite was sold to its employees through an Employee Stock Ownership Program (“ESOP”). The case settled favorably for our clients in mid-trial.
  • We have served as counsel in various stock option matters, including internal investigations, SEC, DOJ, and shareholder derivative actions, for Maxim Integrated Products, Barnes & Noble, and Terayon; for the Special Committee in Apple; and for individual officers of Brocade, Marvell, MRV Communications, and Computer Sciences Corp.
  • We obtained complete dismissal of claims by the New York Attorney General alleging securities fraud under the Martin Act relating to the sale of auction rate securities.
  • We obtained complete dismissal of claims alleging overinvestment in mortgage backed securities and violations of mutual fund’s statutory investment objectives.
  • We represented an officer of JB Oxford/National Clearing Corporation in an action by the SEC, and achieved a low five-figure settlement on the eve of trial of the first federal market timing/late trading action to approach trial.
  • We represented an internet-based entertainment company in a federal criminal investigation into allegations of securities fraud made in a parallel civil lawsuit. We convinced the government not to prosecute. We had previously represented this client in multiple civil securities fraud and fraudulent transfer lawsuits.
  • We successfully defended a margin call case where a hedge fund alleged that our brokerage client had improperly wiped out its accounts. The case settled on very favorable terms.
  • We represented an investment advisor in a federal criminal investigation arising out of an alleged $70 million securities fraud/Ponzi scheme. The statute of limitations expired without any criminal charges being brought against our client. We also represented the client in a variety of civil securities fraud matters and bankruptcy court proceedings.

Plaintiff Representations:

  • In a truly historic partnership between a regulator and a private firm, we represented the Federal Housing Finance Agency, as Conservator for Fannie Mae and Freddie Mac, in connection with its investigation and litigation of nearly $200 billion in residential mortgage-backed securities. We filed fourteen complaints, asserting billions in damages, against most major investment banks, including Bank of America, Goldman Sachs, Merrill Lynch, Royal Bank of Scotland, JPMorgan, Nomura, and others. Each complaint asserted federal and state “strict liability” statutory claims against institutions and individuals arising out of misrepresentations about the securities and the underlying collateral, and certain complaints asserted common law fraud claims. As widely reported, this was one of the most significant court actions taken by any federal regulator since the advent of the mortgage crisis, and the single largest set of actions ever filed by a governmental entity. Between 2012 and 2016, we prevailed on numerous motions in these coordinated cases, including as to statistical sampling, loan file collection, reunderwriting, and the inapplicability of any loss causation defense to FHFA’s state “Blue Sky” claims. We have also won on several key appeals in these actions before the Second Circuit, including as to the timeliness of FHFA’s claims and the validity of numerous discovery rulings by the district courts. Following a nearly four-week trial, we prevailed against both Nomura and RBS in the Southern District of New York, and recovered over $800 million. We have now recovered over $25 billion in settlements and trial judgments in these actions, including most recently in the RBS action, where we settled FHFA’s claims for $5.5 billion, one of the largest recoveries ever in a securities action.
  • 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 Lehman Brothers Holdings Inc. and the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. in objections to claims by JPMorgan Chase Bank, N.A. and certain of its affiliates against LBHI, including an objection challenging the commercial reasonableness of the largest disposition of securities collateral we are aware of ever having taken place, resulting in a settlement through which JPMorgan agreed to pay LBHI $797.5 million.
  • On behalf of client CIFG, now known as Assured Guaranty, Quinn Emanuel convinced a New York state appellate court to modify the lower court’s dismissal of a misrepresentation claim with prejudice to a dismissal without prejudice, thus allowing CIFG to replead the claim in its effort to recover from Bear Stearns for inducing CIFG to issue financial guaranty insurance regarding collateralized debt obligation vehicles that Bear Stearns had loaded with risky assets.
  • We have a large practice representing other investors that purchased RMBS. For example, we represented Allstate Insurance Company in eight lawsuits, Prudential Insurance Company in twelve lawsuits, Capital Ventures International in two lawsuits; and Massachusetts Mutual Life Insurance Company in nine lawsuits. All of those lawsuits now successfully resolved, sought to recover losses on residential mortgage-backed securities arising from material misrepresentations about the quality of the underlying loan collateral. These cases were against the world’s leading banks (including, for example, Bank of America, Merrill Lynch, Credit Suisse, Citigroup, Goldman Sachs, UBS, JP Morgan, and Deutsche Bank), were filed in various state and federal courts, and cover federal and state statutory, and state common-law claims.
  • We represented PIMCO, Western Asset Management Co., and dozens of other plaintiffs that hired us to pursue federal securities claims arising from the multi-year kick-back and bribery at the Brazilian state-owned oil company Petróleo Brasileiro S.A. (“Petrobras”). After less than a year of litigation, we obtained very favorable confidential settlements for each of our clients as part of $353 million paid and re by the company.
  • We represent note purchasers in their action to recover damages arising from misrepresentations in the sale of notes and siphoning of assets from a debtor whose only asset is a majority interest in a lead conglomerate. Both the debtor and lead conglomerate are controlled by Howard Meyers, whose wrongful conduct has rendered the debtor insolvent and unable to pay the €1.6 billion debt maturing in March 2017. The claims we are pursuing include (i) fraud based on earnings numbers that were materially inflated due to illegal cartel activity; (ii) fraudulent transfers based on illegal dividend, tax, and other payments; (iii) breach of fiduciary duties based on siphoning assets; (iv) RICO violations; and (v) alter ego.
  • Darwin Deason, Xerox’s largest individual shareholder, hired us to sue Xerox to enjoin its planned reorganization plan as violating preferred shareholder rights. Three weeks after we were retained, and within days after we sought expedited discovery for our impending injunction motion, our client’s demands were met.
  • We represented the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. in litigation against JPMorgan Chase Bank, N.A. concerning collateral JPMorgan obtained from Lehman pre-petition and the close out of derivatives transactions between the two institutions post-petition, resulting in a settlement that included a cash payment by JPMorgan to the Lehman estate of over $1.4 billion.
  • We obtained an award of nearly $80 million for our client Rosen Capital Partners, which The Wall Street Journal described as one of the largest investor arbitration awards ever issued by a FINRA arbitration panel. In December 2011, the Los Angeles Superior Court confirmed the award and in February of 2013, the California Second District Court of Appeal affirmed the judgment and rejected Merrill Lynch’s arguments seeking to vacate the award. The judgment, which amounted to over $89 million, was collected in full.
  • We represented several major institutional investors in connection with approximately $1 billion in claims against a major investment bank relating to an international fund governed by the laws of the Cayman Islands and other laws in jurisdictions around the world where the causes of action have accrued. The claims involved allegations of self-dealing and mismanagement of the Fund, including allegations of improper actions taken in connection with currency hedge trading that caused the Fund to suffer hundreds of millions of dollars in losses.
  • We obtained, with co-counsel, a settlement of more than $6 billion for the Estate of Washington Mutual, Inc. in litigation against JPMorgan Chase, which involved disputes over billions of dollars in structured trust preferred securities.
  • We represented Palm, Inc. in a $60 million claim against Merrill Lynch arising out of Merrill’s sale to Palm of auction rate securities and auctionable CDOs. The case was one of the largest litigations in the country on behalf of an institutional plaintiff arising out of the failure of the auction rate securities market. After Palm defeated Merrill’s summary judgment motions, the case settled just prior to trial.
  • We secured a settlement on securities and other claims in excess of $150 million for our client, Chapter 11 debtor Superior National Insurance Group. Superior National was a holding company that purchased four workers compensation insurance companies from Foundation Health Corporation (now HealthNet, Inc.). The core allegation was that Foundation defrauded Superior by not disclosing certain financial and claims information that undermined its actuaries’ reserve opinions.
  • We successfully represented MetroPCS Wireless, Inc. in a FINRA arbitration against Merrill Lynch. MetroPCS brought fraud and related claims arising out of Merrill’s sale of over $100 million of auction rate securities comprised of certain tranches of collateralized debt obligations. The firm leveraged its unmatched expertise in structured finance litigation with its extensive knowledge of Merrill Lynch’s conduct to take targeted discovery, develop a powerful case, and ultimately persuade Merrill Lynch to settle the action on favorable terms prior to the hearing.
  • We represented Mercury Insurance, Erie Insurance and Minnesota Power in a Section 11 case against multiple defendants, including a major investment bank. After we defeated various summary judgment motions, we obtained seven-figure settlements from the investment bank and others before trial.
  • We represented a Trust that purchased $100 million in auction rate securities in a FINRA arbitration against a major financial institution that advised the Trust to make the investments in these instruments that became illiquid. 
     

See Our Securities Class Action Representations

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