SECURITIES
Milbank has one of the leading securities litigation practices in the United States, having handled several hundred securities class and derivative actions. Frequently retained in high-stakes “bet the company” litigations, Milbank attorneys have led the defense in many of the largest and highest-profile securities class actions in the nation. Many of the partners in the Firm’s Securities Litigation Practice Group have been recognized as leading members of the securities bar by Chambers, the American Lawyer, Legal 500, Best Lawyers in America and Lawdragon 500. In addition, the Milbank team has substantial trial experience in a broad spectrum of civil and criminal securities cases.
Milbank’s securities litigation experience includes matters under both state and federal law, including the Securities Act of 1933, the Securities and Exchange Act of 1934, the Investment Advisers Act of 1940, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The firm has handled a wide variety of securities claims, including claims arising out of public offerings, secondary market trading, mergers and acquisitions, conflicts of interest and self-dealing, stock selection and portfolio management, proxy voting and solicitations, excessive management and other fees, anticompetitive conduct, and distribution practices. Our experience covers virtually every type of securities and investment products, including common and preferred stock, mutual funds, convertible bonds, treasury bonds, municipal bonds, limited partnership and real estate interests, hedge funds, brokerage accounts, mezzanine financing, and variable annuity products.
In addition, Milbank has the preeminent practice defending mutual fund investment advisers and affiliated companies in litigation arising under the Investment Company Act of 1940. For a detailed description of Milbank’s Mutual Fund Litigation Practice, click here.
The Firm represents a broad array of clients, including issuers, underwriters, broker-dealers, accounting firms, banks, investment advisers, and individual officers and directors. Milbank attorneys regularly handle significant matters on behalf of many of the largest financial firms in the country, including AllianceBernstein, Bear Stearns, Capital Research, Citigroup, Deutsche Bank, Fidelity, ING, JPMorgan Chase, Merrill Lynch, Morgan Stanley, the New York Stock Exchange, Nomura and Prudential Financial.
Our securities litigators are backed by one of the nation’s leading broker-dealer regulatory teams, as well as an exceptionally strong white collar crime and SEC enforcement team driven by five partners who are former Assistant U.S. Attorneys from the Southern District of New York. As a result, we are uniquely positioned to handle securities-related civil, criminal, SEC and self-regulatory investigations.
Over the years, Milbank attorneys have tried some of the largest and most important cases in the securities industry. Examples include:
AllianceBernstein -- Representation of Alliance Capital in a claim seeking more than $3 billion in damages for making alleged improper investments for the Florida state pension fund. After a seven-week trial, the jury dismissed all of the claims against Alliance Capital and found the plaintiff liable for $1.2 million in unpaid advisory fees. The result was named a “Top 10 Defense Verdict of 2005” by the National Law Journal. Florida State Board of Administration v. Alliance Capital Management, LLP., Case No. 02-CA-1104 (Fla. 2d Cir. Ct. 2005).
Merrill Lynch Asset Management -- Representation of Merrill Lynch Asset Management in the first excessive management fee case to be tried on the merits under Section 36(b) of the 1940 Act. This case established the industry standard for measuring the fairness of management fees and has been cited approvingly in hundreds of subsequent decisions over more than 25 years. Gartenberg v. Merrill Lynch Asset Management, Inc., 528 F. Supp. 1038 (S.D.N.Y. 1981), aff’d, 694 F.2d 923 (2d Cir. 1982) (affirming dismissal of complaint after trial on the merits).
Merrill Lynch Asset Management -- Representation of Merrill Lynch Asset Management in the first case challenging the propriety of Rule 12b-1 distribution fees to be tried on the merits. Lead plaintiffs’ trial counsel was Melvin Weiss, senior partner at Milberg Weiss. Krinsk v. Fund Asset Management, Inc., 715 F. Supp. 472 (S.D.N.Y. 1988), aff’d, 875 F.2d 404 (2d Cir. 1989) (affirming dismissal of complaint after trial on the merits).
Milbank attorneys have also been involved in many cases that have had a significant impact on the development of our nation’s securities laws. These include:
Prudential Financial -- After decades of decisions holding to the contrary, this was the first Court of Appeals opinion in the nation to find no implied right of action under the Investment Company Act of 1940 (“1940 Act)). The ruling represented a sea change in the law – each of the more than 50 district courts to consider the issue since have found no implied rights of action, citing Olmsted. Olmsted v. Pruco Life Insurance Co., 283 F.3d 429 (2d Cir. 2002) (affirming district court’s dismissal of Complaint).
Bear Stearns -- Representation of Bear Stearns in class action alleging misrepresentations and omissions in prospectus for $100 million initial public offering of Chaus securities. The court dismissed the complaint with prejudice, applying for one of the first times a higher pleading standard under Rule 9(b) to 1933 Act claims sounding in fraud. The opinion was the subject of an article on the front page of The Wall Street Journal. In re Chaus Securities Litigation, 801 F.Supp. 1257 (S.D.N.Y. 1992).
Merrill Lynch -- Court found for one of the first times on a motion to dismiss that newspaper articles were sufficient to put plaintiffs on inquiry notice of their 1933 and 1934 Act claims, finding those claims barred by the statute of limitations. In re Merrill Lynch & Co. Research Reports Securities Litigation, 272 F. Supp. 2d 243 (S.D.N.Y. 2003) (dismissing complaint with prejudice).
Merrill Lynch -- In a question of first impression about whether a potential conflict of interest could form the basis of a claim, this was first time a court had ever granted summary judgment in a claim under Section 36(b) of the 1940 Act. Green v. Fund Asset Management LP, 147 F. Supp. 2d 318 (D.N.J. 2001), aff’d, 286 F.3d 682 (3d Cir. 2002) (affirming district court order granting defendants’ motion for summary judgment).
However, perhaps the most significant results we have achieved for our clients have been in cases where we have convinced the plaintiffs lawyers to walk away from the case short of trial without payment of any attorneys fees or settlement recovery. Some recent representative examples include:
American Century -- Representation of American Century in an action challenging over $1 billion in management fees. Just one week before trial was to begin and after more than 2 ½ years of intense litigation, plaintiffs agreed to dismiss the action with no settlement recovery or payment of attorneys fees, and filed a stipulation with the court conceding their case was without merit. The case was covered by the American Lawyer, Forbes magazine, as well as numerous industry publications. Baker v. American Century Investments, Case No. 04-4039-CV-ODS (W.D. Mo. 2006).
Capital Group -- Representation of Capital Group, the largest investment adviser in the country, in securities fraud class actions under the 1933, 1934 and 1940 Acts seeking over $100 million in damages for alleged market timing activities. We convinced plaintiffs to voluntarily dismiss all of their claims with no payment to either plaintiffs or their counsel. In re Mutual Funds Investment Litigation, (MDL D. Md. 2005).
We are currently handling a number of major securities class actions and derivative suits for some of the largest financial institutions in the nation. Representative examples include:
Citigroup -- Representation of Citigroup, Inc. in a putative securities class action brought against Citigroup, as the lead underwriter of the $630 million initial public offering of FLAG Telecom Holdings, Ltd. common stock, and various other parties. The action alleges claims under the 1933 Act and the 1934 Act for misleading statements and omissions allegedly made in connection with the offering. Milbank attorneys have won two motions to dismiss and discovery is ongoing. In re FLAG Telecom Holdings, Ltd. Securities Litigation.
Legg Mason -- Representation of Legg Mason and certain of its officers in a putative class action brought in connection with the secondary offering of Legg Mason common stock. Plaintiffs’ allege that Legg Mason failed to disclose certain developments about its business, making the registration statement and prospectus issued pursuant to the secondary offering false and misleading in violation of the 1933 Act and the 1934 Act. Milbank attorneys have moved to dismiss the action on a variety of grounds. Garber v. Legg Mason, Inc..
Merrill Lynch -- Representation of the Co-President and COO of Merrill Lynch in a series of class actions and derivative suits involving Merrill Lynch's losses in connection with the underwriting of collateralized debt obligations and other asset backed securities.
Fidelity -- Representation of Fidelity in an action challenging the mutual fund management fees it receives for managing five of the largest mutual funds in the country. This action, brought under Section 36(b) of the Investment Company Act of 1940, seeks over $5 billion in damages. Discovery is currently ongoing. Bennett v. Fidelity Management & Research Co., 04-CV-11651-MLW (D. Mass. 2007).
Capital Group -- Representation of Capital Research and Management Company in a securities class action brought under Rule 10b-5 of the 1934 Act alleging that the prospectuses for various funds they manage are false and misleading. We have recently filed a motion to dismiss the action. In re American Funds Securities Litigation, CV 04-5593 (GAF) (C.D. Cal. 2007).
To find out more about Milbank’s securities litigation practice, please call one of our partners who practice in this area.