Disclosure Issues
Blatt v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 916 F. Supp. 1343 (D.N.J. 1996)
Representation of Merrill Lynch in a putative class action brought by shareholders of the Merrill Lynch Short-Term World Income Fund and the Merrill Lynch Short-Term Global Income Fund, seeking over $700 million in damages for claims under the 1933 Act, the 1934 Act, the 1940 Act, and common law based on allegations that the funds’ adviser failed to adequately disclose the risks of investing in the funds. After the district court partially granted our motion to dismiss, the case settled in what the Wall Street Journal favorably described as “the Wall Street legal settlement of the year.”
Donovan v. American Skandia Life Assurance Corp., 2004 WL 1088946
(2d Cir. 2004)
Representation of American Skandia in a putative class action on behalf of persons who invested in variable annuity products for purposes of funding a qualified (i.e., tax-deferred) retirement accounts. Plaintiffs alleged that it is never appropriate to use a variable annuity as a funding vehicle for qualified funds and claimed that omission of language to that effect in the variable annuity products’ prospectuses constituted violations of the 1933 Act, the 1934 Act, and the 1940 Act. We successfully argued that there was no material omission and that plaintiffs’ claims were time-barred. The district court dismissed the complaint in its entirety with prejudice, and the Second Circuit affirmed.
In re Dreyfus Aggressive Growth Mutual Fund Litigation, 2000 WL 10211 (S.D.N.Y. 2000)
Representation of Dreyfus in a consolidated class action brought by shareholders in two mutual funds seeking nearly $200 million in damages. Plaintiffs alleged that the funds’ portfolio manager wrongly invested the funds’ assets in securities in which the portfolio manager had a personal interest and that the funds’ prospectuses and other documents misrepresented the types of investments the funds would make in violation of the 1933 Act and the 1940 Act.
Fitzgerald v. Citigroup, Inc., No. 03 Civ. 4305 (DAB) (S.D.N.Y.)
Representation of Citigroup and Salomon Smith Barney Asset Management in a putative class action on behalf of shareholders in over sixty SSB mutual funds. Plaintiffs allege that the funds, their adviser, and their adviser’s affiliates violated the 1933 Act and the 1934 Act by failing to disclose that investing in Class B shares never makes economic sense for persons investing $100,000 or more because, regardless of the holding period, such investors will always pay less in sales charges and distribution fees by investing in Class A shares.
Goggins v. Alliance Capital Management LP, 349 F. Supp. 2d 882 (D.N.J. 2004)
Representation of Alliance Capital Management in an action involving claims under the 1933 Act based on allegations that the prospectus for the Premier Growth Fund contained materially false and misleading descriptions of the fund’s research and investment strategies. We successfully argued that various articles in the press about the fund’s investments put plaintiffs on inquiry notice and that, as a result, their claims were barred by the statute of limitations.
Green v. Fund Asset Management LP, 286 F.2d 682 (3d Cir. 2002)
Representation of Merrill Lynch and related entities in an action alleging that the prospectuses for six closed-end bond funds failed to disclose that the funds’ fee structures created an incentive for the adviser to keep the funds fully leveraged at all times. We successfully argued on summary judgment that the prospectus disclosures were appropriate and that the fee structures did not violate the adviser’s fiduciary duties under the 1940 Act.
In re Merrill Lynch & Co. Research Reports Securities Litigation, 272 F. Supp. 2d 243 (S.D.N.Y. 2003)
Representation of Merrill Lynch in three putative class actions brought by shareholders in three separate Merrill Lynch mutual funds seeking billions of dollars in damages. The complaints asserted claims under the 1933 Act, the 1934 Act, and the 1940 Act based on the failure to disclose alleged conflicts of interest regarding the funds’ investments in companies with which Merrill Lynch had investment banking relationships and which were the subject of allegedly misleading research reports issued by Merrill Lynch analysts. The district court granted our motion to dismiss all three actions.
In re ML-Lee Acquisition Funds I and II Securities Litigation, 848 F. Supp. 527 (D. Del. 1994); 954 F. Supp. 810 (D. Del. 1996)
Representation of Merrill Lynch in putative class actions brought by investors in two mezzanine financing funds against the funds’ adviser seeking almost $500 million in damages. The complaints alleged that the adviser violated the 1933 Act, the 1934 Act, the 1940 Act, and common law by making false and misleading disclosures in the funds’ prospectuses and by engaging in certain prohibited transactions. The court partially granted our motion to dismiss the complaints and granted our motion to strike numerous allegations from plaintiffs’ amended complaints, thereby eliminating over $100 million in potential damages. As a result, plaintiffs agreed to settle both actions for only a very small fraction of the claimed damages.
Nodvin v. Dreyfus Corp., No. 94 Civ. 9048 (DLC) (S.D.N.Y.)
Representation of Dreyfus in a class and derivative action brought by a shareholder in a $1.2 billion municipal bond fund alleging violations of the 1933 Act and the 1940 Act for supposed misrepresentations and omissions in connection with the fund’s investments in a complicated form of derivatives known as inverse floaters.
Riley v. Merrill Lynch Asset Management LP, 292 F.3d 1334 (11th Cir. 2002)
Representation of Merrill Lynch and related entities in a class action asserting claims under Florida law based on allegations that Merrill Lynch misrepresented the risks and investment objectives of the Merrill Lynch Growth Fund. We successfully argued that SLUSA preempted plaintiffs’ claims.
In re Salomon Smith Barney Mutual Fund Fees Litigation, 2006 WL 2085979
(S.D.N.Y. 2006)
Representation of Citigroup Asset Management and related defendants in a class action involving claims under the 1933 Act, the 1934 Act, the 1940 Act, and state law based on an alleged scheme consisting of three components: (1) SSB offered undisclosed incentives to brokers and financial advisers to steer investors into SSB’s funds and other funds with which SSB had undisclosed kickback arrangements; (2) SSB extracted improper fees from investors in its proprietary funds; and (3) SSB caused its proprietary funds to invest in poorly performing companies because of their status as SSB investment banking clients. We successfully argued a motion to dismiss all of plaintiffs’ claims, although the court granted leave for plaintiffs to replead their claim under Section 36(b) of the 1940 Act as a derivative action.
Young v. Nationwide Life Insurance Co., 2 F. Supp. 2d 914 (S.D. Tex. 1998); 183 F.R.D. 502 (S.D. Tex. 1998)
Representation of American Century in a federal class action brought on behalf of more than 50,000 policyholders in certain variable annuity and variable life insurance products, asserting claims under RICO, the 1934 Act, the 1940 Act, and common law based on allegations that an insurance-only mutual fund was misrepresented as a “clone” of a similarly named retail fund.