INSIDE THIS ISSUE
Scott+Scott and its co-lead counsel, on behalf of the Plaintiffs in Alaska Electrical Pension Fund v. Bank of America Corp., et al., Case No. 14-cv-7126 (S.D.N.Y.), filed a motion for preliminary approval of a $56.5 million settlement with Goldman Sachs in litigation concerning ISDAfix, a leading benchmark interest rate. The settlement was filed with the Court on December 19, 2016. Goldman Sachs joins banks who have already agreed to pay $324 million to settle the allegations against them: Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, and RBS. The claims are brought on behalf of a proposed nationwide class of investors that purchased financial instruments linked to ISDAfix. Scott+Scott represents the proposed class as interim co-lead counsel. The case is proceeding against seven non-settling defendants: BNP Paribas, HSBC, ICAP, Morgan Stanley, Nomura, UBS, and Wells Fargo.
In addition to paying substantial monetary relief to the class, Goldman Sachs is obligated to provide cooperation and confirmatory discovery.
The named Plaintiffs include institutional investors, pension funds, and several Pennsylvania counties. According to the complaint, from January 1, 2006 to June 30, 2013, fourteen banks colluded to manipulate the ISDAfix in the multi-trillion dollar trade in “swaptions,” or options on interest rate swaps. The plaintiffs allege that the fourteen submitting banks and ICAP, which administered the ISDAfix benchmark, colluded to set the rate at a level that profited the banks. Among other things, the banks allegedly “banged the close” by buying and selling interest rate derivatives in an effort to move the market just before ISDAfix was set. The Plaintiffs also allege that the banks conspired in submitting nearly identical quotes to ICAP.
In March 2016, the Court denied the Defendants’ motion to dismiss. In the order, U.S. District Judge Jesse Furman held that the “Amended Complaint plausibly alleges that a conspiracy among Defendants existed.” As he explained, “[t]he Amended Complaint contains extensive allegations of parallel conduct. According to the Amended Complaint, the Defendant Banks ‘claimed to have the exact same bid/ask spread’ for ‘nearly every day for multiple years’ and coordinated open-market trades before 11 a.m. to ‘bang the close.’”
In April of 2016, the U.S. District Court for the Southern District of New York granted preliminary approval to a $50 million settlement reached in Axiom Investment Advisors, LLC, by and through its Trustee, Gildor Management, LLC v. Barclays Bank PLC, et al., No. 15-cv-9323.
The case was brought against Barclays, one of the largest currency dealers in the FX market. Barclays acts as both a buyer and seller of currencies through its own proprietary electronic trading platform, known as “BARX,” and through multi-party electronic trading networks.
Plaintiff alleges that Barclays’ counterparties did not receive the agreed-on contract price, but rather, their trades were unlawfully rejected using a programmatic delay called “last look.” Plaintiffs allege that Barclays used last look to delay the execution of matched trades, and when Barclays determined during the delay that the trade would be unfavorable to its position or that it could extract a larger profit, it reneged on the agreed price.
Currently, numerous regulatory agencies are investigating Barclays. On or around March 3, 2015, it was reported that the U.S. Department of Justice and the Securities and Exchange Commission asked Barclays for information relating to BARX and its “last look” practices. On November 18, 2015, Barclays entered into a Consent Order with the New York State Department of Financial Services. Barclays agreed to pay a $150 million civil monetary penalty, to terminate a Managing Director and Global Head of Electronic Fixed Income, Currencies, and Commodities Automated Flow Trading, and to the appointment of an independent monitor.
On July 7, 2016, the Court conducted a hearing on the $50 million settlement with Barclays. Subsequently, the Court approved a schedule for settlement notice, which began with dissemination of notice and claim forms to class members on December 1, 2016. The notice states that Barclays’ trade records indicate that the recipient of the notice may be a potential claimant by virtue of submitting a trade or trade instruction for an FX instrument over BARX between June 1, 2008 and April 21, 2016.
As explained in the notice, the deadline for class members to submit timely claim forms is May 19, 2017. The deadline for any class member to object to the settlement is March 30, 2017. Class members wishing to be excluded from the settlement and to pursue their own legal remedies must also declare that intention by March 30, 2017. Individuals seeking more detailed information on the Barclays Last Look settlement are encouraged to visit www.BarxLastLookSettlement.com, which is a dedicated website for information regarding this settlement notice, settlement administration, and settlement disbursement.
Scott+Scott Appointed Chair of Plaintiffs' Executive Committee in Action Challenging Cigna's Prescription Copayment Clawbacks
On December 8, 2016, Judge Warren W. Eginton of the District of Connecticut appointed Scott+Scott as the Chair of the Plaintiffs' Executive Committee in a consolidated action challenging a fraudulent and deceptive pricing scheme to artificially inflate prescription copayment amounts to purchase medically necessary, covered prescription drugs.
Scott+Scott's action targets the practices of the health insurance company Cigna Corporation (“Cigna”) and the pharmacy benefit manager OptumRx, Inc. (“OptumRx”). Cigna promises customers that when they purchase medically necessary, covered prescription drugs, they will pay the lesser of a copayment or the cost of the prescription drug. Despite this promise, customers are charged a copayment even when the cost of the copayment exceeds the cost of the prescription drug. After the customer overpays the pharmacy for their medically necessary prescription drugs, OptumRx then claws back the difference between the customer's copayment and the cost of the drug, minus a nominal fee to the pharmacy for dispensing the drug.
For example, when a consumer pays a $10 prescription copayment to the pharmacy for a medically necessary, covered prescription drug, as required under the customer's plan, the cost of the drug may be only $3.00. OptumRx then reduces the pharmacy’s reimbursement for the claim for this prescription by $6 as an adjustment to the original claim. In this scenario, OptumRx has “clawed back” $6 of the $10 copay. Ultimately, the pharmacy is reimbursed $4 (all from the customer's copayment) making only $1 over the cost of the drug, while Cigna fraudulently retains $6 – which it does not pass back to the customer. As a result, Cigna customers end up paying more for certain medically necessary prescription drugs than they would have if they were uninsured and paid for the same drugs out of pocket.
Scott+Scott's action against Cigna and OptumRx was filed on November 17, 2016, on behalf of all Cigna customers who purchased medically necessary, covered prescription drugs and paid a copayment in excess of the drug's cost. Scott+Scott has brought similar actions against United HealthGroup, Inc, in Minnesota and Humana, Inc. in Kentucky. Those actions remain pending. Judge Eginton's order consolidates Scott+Scott's suit against Cigna and Optum Rx with a second action filed in the District of Connecticut. A consolidated complaint will be filed on January 9, 2017.
The case is In re CIGNA Corporation PBM Litigation, Case No. 16-CV-1702 (WWE) (D. Conn.).
SEC’s 2016 Annual Whistleblower Report Demonstrates the Success of the Dodd-Frank Whistleblower Program
On December 19, 2016, the United States Securities and Exchange Commission’s (“SEC”) Office of the Whistleblower released its sixth Annual Report on the Dodd-Frank Whistleblower Program to Congress (the “Report”), which details information on the SEC’s activities and bounty payouts. The Report covers the SEC’s 2016 fiscal year (October 1, 2015 to September 30, 2016) and highlights that since the inception of its Dodd-Frank Whistleblower Program in 2011 (the “Program”), the SEC has paid more than $111 million in awards to a total of 34 whistleblowers, with more than $57 million paid in 2016 alone.
Due, in part, to the aid from the 34 whistleblowers, the SEC ordered $584 million in financial sanctions, including more than $346 million in disgorgement of unlawful gains and interest. The SEC also emphasized that increased public awareness of the Program resulted in “a consistent increase in the number of whistleblower tips received.”
Indeed, the number of whistleblower tips received has increased in each fiscal year since the Program’s inception, with a 40% increase from Fiscal Year 2012 to Fiscal Year 2016. Since August 2011, the SEC has received 18,334 whistleblower tips, with over 4,200 tips received in Fiscal Year 2016 alone. The three most frequent types of complaints reported by whistleblowers were Corporate Disclosures and Financials (22%), Offering Fraud (15%), and Manipulation (11%).
Most notably, the SEC paid more than $57 million to 13 whistleblowers during Fiscal Year 2016. In fact, six of the largest whistleblower awards were awarded during Fiscal Year 2016. Although the over-$30 million award issued by the SEC in September 2014 remains the highest award issued under the Program, the second-highest award of over $22 million was made during Fiscal Year 2016 to a company insider that helped thwart a well-hidden fraud at the company where the whistleblower worked. The remaining awards ranged from $275,000 to more than $17 million.
The Report made it clear that it intends to continue to police for these types of efforts, as well as violations of the Dodd-Frank Act Anti-Whistleblower Retaliation Provisions.
Conferences and Educational Seminars
+January 9-11, 2017
Public Funds Summit produced by Opal Financial Group
The Fairmont Scottsdale Princess
Opal Financial Group’s annual Public Funds Conference addresses issues that are relevant to public pension plans. More than 100 U.S. public and foreign government and municipal funds generally attend the 3 day conference. The conference offers presentations, panels and networking with industry peers where discussions will focus on the state of the U.S. Retirement System, New Styles and Strategies for Investing, Challenges facing Public Pension Plans, and Addressing Pension Deficits and Liabilities. This year’s conference will open with a 2 hour debate on Pension Reform. There will be several Plan Fiduciary sessions designed particularly for Pension and Taft Hartley Representatives, Trustees, Administrators, Commissioners and Staff members. The conference serves as a comprehensive resource for ongoing education for plan fiduciaries and plan participants.
+January 11-13, 2017
Metropolitan Baltimore Council AFL-CIO Unions 25th Annual Leadership Conference
Atlantic City, NJ
This regional conference is planned for the decision makers of the moe than 200 locals affiliated with the Metropolitan Baltimore AFL-CIO. This is an excellent opportunity to network with Baltimore’s labor community. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) is a voluntary federation of 57 national and international labor unions. The AFL-CIO was created in 1955 by the merger of the AFL and the CIO. The AFL-CIO union movement represents 12.2 million members, including 3.2 million members in working America. Members are from various professions i.e. teachers, miners, firefighters, farm workers, bakers, engineers, pilots, public employees, doctors, nurses, painters and plumbers and more.
+January 14-16, 2017
National Institute of Pension Administrators (NIPA)
The Sanctuary on Camelback Mountain
The National Institute of Pension Administrators is a national association representing the retirement and employee benefit plan administration profession. It was founded with the idea of bringing together professional benefit administrators and other interested parties to encourage greater dialogue, cooperation and educational opportunities. This year’s Business Management Conference will feature a unique peer-to-peer knowledge exchange examining the latest industry developments. 2017’s annual forum and expo will be held in the spring.
+January 19-20, 2017
The Los Angeles Benefits Conference (ASPPA )(ACOPA)
Hilton Los Angeles Universal City
Universal City, CA
The American Society of Pension Professionals and Actuaries provides an opportunity for attendees to gain knowledge about current regulatory, legislative, administrative and legal topics. This conference focuses on addressing the educational needs of pension and employee benefits professionals particularly in the western part of the United States. Emphasis will be placed on ethics and best practices. Follow up on ERISA litigation where Supreme Court rulings conflict with plan documents and the types of remedies that may be available in breach of fiduciary duty cases as well as plan fee cases. Self-correcting procedures as well as additional processes of correcting errors discovered by audits or other methods will be addressed. Third party administrators and related service providers should find this conference very informative.
+January 22 - 24, 2017
14thAnnual Made In America (MIA): Taft-Hartlely Benefits Summit presented by Financial Research Associates (FRA LLC)
Wynn Las Vegas
Las Vegas, NV
The 2017 Made in America Summit will be divided into multiple tracks; track “A” providing upfront education on pension investment issues and track “B” health & welfare topics thus offering 2 conferences in one. Several sessions will feature domestic equity issues and explore asset recovery. The “get ready-to-use information on how to advance funding status” will be presented using numerous case studies. Thousands have attended Made in America and more than 60% of the attendees are Trustees/Administrators. As always special recognition will be given to the Advisory board and executive committee members who represent more than 10 union factions including the Teamsters, UFCW, IBEW, NECA, OLFBP, NCCMP, Plumbers’ Welfare Funds, and National Elevator Health & Pension Funds.
+January 26-27, 2017
2017 IBEW-NECA Employee Benefits Conference
Naples Beach Hotel
The purpose of this Conference is to provide interested parties a forum to review the administration of the Reciprocal Agreements, discuss issues of common interest related to benefit trust funds and to meet informally with their counterparts. The District II Council meeting precedes this meeting (January23-25) and will be held at the Ritz-Carlton Resort in Naples, FL. The District I Council meeting follows the NECA Benefits Conference at the Omni Hotel in Orlando, FL from January 30-February1, 2017.
+January 29-31, 2017
National Conference on Public Employees Retirement System (NCPERS) Legislative Conference
Capital Hilton Hotel
The NCPERS Legislative Conference takes place annually in Washington, DC and allows public fund trustees an opportunity to visit Capitol Hill and meet with their legislators. Conference topics will highlight federal regulatory issues affecting public funds including the outlook under the new administration, specifically potential revisions to the securities law and regulations will be discussed. The SAFE (Secure Annuities for Employee) legislation will be addressed as the biggest federal threat to public pensions.
Government Finance Officers’ Association Conferences
+January 27, 2017
Maryland Government Finance Officers’ Association (MDGFOA)