McDermott’s securities litigation team has extensive experience, and has successfully represented companies and their officers and directors, accountants, and other professionals and individuals, in the defense of class, derivative and other civil litigation under federal and state securities laws. We handle securities fraud cases, market manipulation cases, corporate take-over contests, proxy fights, insider trading and valuation cases, representing clients in federal and state courts across the United States.
We represent public companies, accounting firms, broker-dealers, investment advisers, underwriters, audit committees and officers, directors and senior management in investigations and enforcement proceedings brought by the SEC, the Financial Industry Regulatory Authority (FINRA), the Public Company Accounting Oversight Board (PCAOB), stock exchanges and other self-regulatory organizations, as well as various state securities enforcement agencies.
Our securities defense group includes former members of the SEC Division of Enforcement, all of whom have substantial experience covering the full spectrum of securities enforcement activity. We understand the SEC’s organization, rules, practices, customs and staff. The SEC has called upon members of our group to act as receivers in SEC civil enforcement proceedings.
Two former partners of PricewaterhouseCoopers, and now head of the Caribbean office of Grant Thornton International Ltd., who are liquidators of an Antiguan bank, Eurofed. Our clients contested the attempted forfeiture of all Eurofed’s assets by the DOJ. After six years of litigation, including three trips to the US Court of Appeals for the Ninth Circuit, a team of McDermott lawyers achieved victory and the return of millions of dollars of Eurofed’s assets to the liquidators in 2011. The latest decision was in favor of the liquidators and the matter is still ongoing. The case emanated from the prosecution of the former Ukraine Prime Minister Pavlo Lazarenko for money laundering, theft and improper use of his position as a Ukraine government official.
Five officers of PG&E Corporation (PG&E) and its subsidiary, Pacific Gas and Electric Company, including the chairman, CEO, president and CFO of PG&E, and the president, CFO, treasurer and controller of the subsidiary, in several derivative actions. These cases arise out of the 2010 San Bruno pipeline accident.
An affiliated investment adviser, broker-dealer and the CEO and controlling shareholder in an SEC investigation and five related private civil actions, one of which was filed by a receiver appointed by a federal judge. Each of these matters arose out of allegations of the misappropriation of client assets by a registered representative of the broker-dealer. We developed a strategy for managing the SEC investigation and the civil litigation, all of which we were able to resolve successfully, allowing the companies to remain in business. The SEC investigation was closed with no action against the CEO and controlling shareholder or the broker-dealer, and with minor charges against the investment adviser. All of the civil litigation has been settled on highly favorable terms, and both the broker-dealer and registered investment adviser remain in business as a result of our efforts.
A director/substantial shareholder in the defense of securities fraud and breach of fiduciary duty claims asserted against Broadcom and its board members in multiple derivative and class actions arising out of the pending proposed acquisition of Broadcom by Avago Technologies Ltd.
Gregory Geswein, former chief financial officer of Diebold, Inc., in connection with a securities fraud suit brought by the SEC in Ohio federal court, a derivative case filed by Diebold shareholders in state court in Ohio and a class action filed in federal court in Ohio. All matters were settled on highly favorable terms for our client.
Hertz and the Hertz Audit Committee in a derivative demand investigation arising out of facts that gave rise to a restatement.
Mars, Incorporated, in the successful defense of a purported shareholder class action alleging an inadequate buyout price for Wrigley stock.
The special committee of the board of directors of MEMC Electronic Materials, Inc., in an independent internal investigation of securities fraud allegations asserted by shareholders in a derivative demand.
Two individuals, successfully, in an SEC insider trading investigation arising out of trading in Amazon.com stock, including testimony taken by the SEC. McDermott succeeded in persuading the SEC not to file charges against the individuals.
Smith & Wesson Holding Corporation (Smith & Wesson) with the dismissal of a shareholder derivative lawsuit before the US District Court for the District of Massachusetts, which granted Smith & Wesson’s motion to dismiss for failure to make a required pre-suit demand on the company. The shareholders’ complaint against the Smith & Wesson officers and directors arose from allegations concerning a former employee’s purported violations of the Foreign Corrupt Practices Act. The dismissal is significant as a deterrent to other shareholders seeking to file derivative suits without making a demand upon the company.
Broadcom’s co-founder, Dr. Henry Samueli, in connection with litigation related to Broadcom’s merger with Avago Technologies. Valued at $37 billion, the merger is one of the largest in the technology sector. Following the announcement of the merger, Broadcom, Avago, Dr. Samueli and various other Broadcom officers and directors were sued for allegedly breaching their fiduciary duties and violating securities laws.
Steel Dynamics, Inc. (SDI), the fifth-largest steelmaker in the United States, and its chairman and CEO with the complete dismissal of a federal securities fraud class action suit. The plaintiffs alleged that the defendants made fraudulent statements and failed to disclose material facts in public US Securities and Exchange Commission filings and in an earnings conference call. This allegedly caused an increase in SDI’s stock price, and SDI subsequently downgraded its earnings estimate from a positive to a loss, after which the stock price dropped.