Market Timing

Milbank attorneys represented Alliance Capital and Capital Research in the consolidated litigation of over 400 class and derivative actions filed against dozens of mutual fund investment advisers in the wake of New York Attorney General Eliot Spitzer’s investigation into alleged market timing and late trading arrangements between Canary Capital Partners LLC, a New Jersey-based hedge fund, and various investment advisers. The complaints assert claims under the 1940 Act, the 1933 Act, the 1934 Act, the Investment Advisers Act, and common law based on allegedly improper market timing and late trading in funds managed by defendants. In early 2004, after extensive motion practice, including removal, transfer, and consolidation proceedings, the actions were consolidated by the Judicial Panel on Multidistrict Litigation before Judge Motz and two other judges in the United States District Court for the District of Maryland for coordinated pre-trial proceedings. Although litigation against most defendants remains on-going, we successfully convinced the plaintiffs to voluntarily dismiss their claims against Capital Research with no settlement recovery in 2005, and Alliance Capital recently obtained a favorable settlement of the claims against it.