The firm recently achieved a decisive appellate win in the United States Court of Appeals for the Second Circuit, which unanimously affirmed the district court’s summary judgment ruling dismissing all Rule 10b-5 securities fraud claims against our clients Mickey Gooch and Colin Heffron, the former Chairman and CEO of GFI Group, Inc. GFI is an interdealer broker, which disclosed its plans to merge with the Chicago Mercantile Exchange in a 2014 press release. The CME wanted to buy GFI’s software business, and spin the brokerage business off to a private consortium led by Gooch and Heffron, all at a major premium over traded prices. The merger ultimately failed when a GFI competitor made a higher bid for the whole company, which led one plaintiff to bring a class action alleging that Gooch’s description of the planned merger in the press release as a “singular and unique opportunity to return value” was actionable securities fraud.
Together with co-counsel, the firm succeeded in convincing the district court to grant our clients’ motion for summary judgment, which the district court based on the grounds that the plaintiffs could not possibly prove either scienter or loss causation at trial. The firm led the defense efforts on appeal, which the Second Circuit resolved by affirming on yet another ground the firm had briefed: that the challenged sentence was not material because no reasonable investor would have placed reliance on such a vague and open-ended statement in making an investment decision, especially not given all the caveats also contained in the press release. The decision brought a decisive end to a long-running case against our clients, and will also help future defendants who are sued in securities fraud class actions on the basis of what the Second Circuit called mere “vague and indefinite expressions of corporate enthusiasm.”