INSIDE THIS ISSUE
On March 13, 2015, Scott+Scott announced that it reached a settlement with UBS AG, UBS Group AG, and UBS Securities LLC (collectively, “UBS”) on behalf of a proposed class in In re Foreign Exchange Benchmark Rates Antitrust Litigation, Case No. 13-cv-07789 (LGS) (S.D.N.Y). UBS agreed to pay $135 million to settle its portion of the antitrust lawsuit, which accuses the 12 largest currency dealers of rigging prices in the $5.3 trillion-a-day foreign exchange market.
This is the second settlement reached in the action. Previously, a settlement was reached with JPMorgan Chase & Co. and JPM Chase Bank, N.A. for $99.5 million in January, and filed with the Court on January 30, 2015. Like the agreement with JPMorgan, UBS agreed to cooperate in providing information to assist inthe prosecution of the claims against the remaining defendants.
David R. Scott, managing partner of Scott+Scott, commented that “we are very pleased with this settlement. The class will not only obtain a substantial sum for their losses, but it will also receive unique and valuable cooperation from UBS, as it has from JPM. This also builds momentum towards further settlements while improving our litigation posture vis-a-vis the remaining Defendants.”
Scott+Scott serves as co-lead counsel for the proposed class.
On March 12, 2015, Judge Katherine B. Forrest of the United States District Court for the Southern District of New York granted final approval of a class action settlement in Policemen’s Annuity and Benefit Fund of the City of Chicago, et al. v. Bank of Am., N.A. and U.S. Bank Nat’l Ass’n. The Court appointed Scott+Scott, Attorneys at Law, LLP as Class Counsel on behalf of the Settlement Class which consists of:
Plaintiffs and every other person and entity that purchased or otherwise acquired any of the Certificates at any time (including but not limited to any beneficial owners) and that (i) sold or otherwise disposed of the Certificates as of November 7, 2014, or (ii) did not sell or otherwise dispose of the Certificates as of November 7, 2014, but suffered an Out-Of-Pocket Loss on an investment in a Certificate as of such date.
On April 11, 2012, on behalf of the named plaintiff, Scott+Scott filed a class action complaint against Bank of America, NA (“BofA”) and U.S. Bank National Association (“US Bank”) in their capacity as trustee for certain substantially similar mortgage-backed securities (“MBS”). The MBS are collateralized by loans originated or acquired by Washington Mutual Bank (“WaMu”) or its affiliates, and then bundled together and sold to investors as WaMu MBS. BofA succeeded LaSalle Bank, the original trustee for the WaMu MBS, after a merger by the two banks. Subsequently, US Bank succeeded BofA as trustee for the WaMu MBS.
The complaint alleged that BofA and US Bank, as trustee for specific WaMu MBS owed investors certain contractual duties as well as duties imposed by the federal Trust Indenture Act of 1939. These duties obligated BofA and US Bank to take specific actions to protect investors when BofA and US Bank learned that the loans originated by WaMu and bundled into the MBS breached certain representations and warranties in the offering documents.
After nearly two years of litigation, the parties reached a settlement. As part of the settlement, BofA, on behalf of it and US Bank, agreed to pay $69 million in cash into a settlement fund to be distributed to the Settlement Class members who submit acceptable Proof of Claim forms.
On February 27, 2015, after several years of litigation, including winning an appeal before the Seventh Circuit Court of Appeals, Scott+Scott won final settlement approval for a shareholder derivative action involving Baxter International, Inc. (“Baxter” or the “Company”). A corporate governance expert has conservatively estimated that the value of this settlement is worth between $50 and $60 million to the Company.
Originally filed in 2010, the action involved allegations that the Baxter Board of Directors and certain Baxter executives breached the fiduciary duties they owed to the Company through their gross and reckless mismanagement concerning, among other things, Baxter’s Colleague Infusion Pumps (“Pumps”). Since 1999, it was known that Baxter’s Pumps were dangerous and defective, and annually resulted in thousands of serious injuries, including deaths, to patients who were already in compromised health and in need of special care.
Between 1999 and 2006, the FDA repeatedly warned Baxter of these issues, yet the Company took minimal efforts to correct the problems with its Pumps. The lawsuit therefore alleged that these Baxter directors and executives caused Baxter to violate regulations promulgated by the Food and Drug Administration (“FDA”) and a Consent Decree that Baxter entered into with the FDA.
To help determine whether the Baxter directors had advanced knowledge of the problems with the Pumps, Scott+Scott inspected the Company’s books and records under Delaware law. This enabled Scott+Scott to better understand the Board’s wrongdoing, and to establish that a shareholder demand upon the Baxter Board would have been a futile, which can be a difficult procedural hurdle to bringing derivative lawsuits.
The District Court initially dismissed the lawsuit, ruling that the complaint failed to establish demand futility. On appeal, however, the Seventh Circuit reversed this decision and held that the complaint contained particularized facts creating a reasonable doubt that the Baxter Board’s conduct was the product of a valid exercise of business judgment, and thus, that any demand would have been futile.
After Scott+Scott’s appellate victory, the parties resumed litigation before the District Court. In January 2014, Baxter informed the Court that it was appointing a Special Litigation Committee (“SLC”) to review the claims raised in the complaint. The SLC moved to stay the litigation pending its investigation. Soon, the parties entered into settlement discussions and reached an agreement.
Under the terms of the settlement, Baxter will implement corporate governance reforms designed to address its product quality and safety issues. Specifically, Baxter will create an executive level committee called the Corporate Quality Office (“CQO”) to maintain oversight of Baxter’s interactions with the FDA concerning key matters that could result in substantial penalties or adverse regulatory rulings. The CQO will consist of senior officials at Baxter charged with maintaining product quality controls, and will monitor potential problem areas for the Company. To fund these efforts, Baxter agreed to allocate a minimum budget of $4 million to the CQO for each of the next three years. The total value generated by the settlement will be worth at least $50 to $60 million, and this is a conservative estimate made by Sean Griffith, T.J. Maloney Professor of Law at the Fordham University School of Law and the Director of the Corporate Law Center and the law school’s Corporate Compliance Institute.
On February 27, 2015, the Court held a hearing, and granted final approval to the settlement, thereby concluding over four years of litigation.
Scott+Scott recently defeated a motion to dismiss brought by a mobile health software company that is alleged to have violated Federal Securities Laws. The decision, published on March 13, 2015 by the Northern District of California (San Francisco) is Police and Fire Retirement System of the City of Detroit v. Crane et al., Case No. 13-cv-00945-VC, 2015 WL 1138497 (N.D.Cal. March 13, 2015).
The case concerns Epocrates, Inc. (“Epocrates”), a company that produces applications for smart phones and tablets for health professionals that provide, among other things, “DocAlerts” from pharmaceutical companies regarding medications. These “DocAlerts” are promotional messages sponsored by pharmaceutical companies that enable them to communicate with health professionals. However, pharmaceutical companies were increasingly scrutinizing the messages by having them undergo internal regulatory review, therefore the DocAlerts, as of early 2011, were unable to timely be delivered by Epocrates.
The Third Amended Complaint discusses how Epocrates switched its method of accounting for these delays in order to fill a “big hole” between the company’s revenue goal for the first quarter of 2011 (“1Q2011”) and the actual revenue projections. The complaint also sets forth how, once this hole was realized, Defendants called regular meetings to discuss how to “close the gap” and ultimately decided to “repaper” their contracts in order to be able to immediately recognize revenue on DocAlerts that had not yet been delivered while still maintaining pharmaceutical clients by offering them new contracts. The complaint further sets forth how when individuals objected to this scheme, they were demoted or fired. Therefore, when Defendants made statements regarding, inter alia, revenue growth, visibility into revenue, a lack of changes in accounting policies, and sales growth, these statements were false and misleading in that they failed to disclose that the only reason the numbers were achieved was due to the repapering scheme and change in accounting methods.
In the face of these highly technical arguments, Scott+Scott engaged in hard-fought motion to dismiss practice with three separate arguments before the Court and an additional supplemental briefing. Ultimately, the Court agreed with Plaintiff and held, for example:
· “The first question, therefore, is whether it was ‘material’ that the defendants convinced many of their pharmaceutical customers to prematurely cancel Doc Alert contracts, for the acknowledged purpose of closing the gap between Epocrates’ actual and desired revenue projections for Q1 2011. Reasonable investors would obviously have wanted to know that.”
· “…the more compelling inference is that the defendants intended to mislead the public…”
· “The defendants’ arguments for why the complaint fails to allege scienter might carry the day under a different factual scenario, but not under the scenario discussed above.”
· “…the complaint alleges with enough particularity that the defendants intended to deceive investors…”
The Court therefore sustained Plaintiff’s claims. The case will now proceed to discovery and is already scheduled for a case management conference shortly.
April Events in the USA
+April 7-8, 2015
The Pension Bridge Annual Conference
The Four Seasons Hotel
San Francisco, California
The Pension Bridge Inc. is a professional company that offers educational conferences to the Institutional Investment Community by providing a high level of education with an impressive and influential speaker faculty in a setting that is conducive to networking. The networking sessions are unique and designed to help connect industry peers and prospective business contacts. The ratio of plan sponsor to service provider allows the event to be desirable and accommodating in the conference industry. The Pension Bridge is known for its strength, stability, relationships, and operational excellence.
+April 15-17, 2015
The 56th California Municipal Treasurers Association Annual Conference (CMTA)
The California Municipal Treasurers Association Annual Conference is one of the profession’s longest running state conferences, bringing together almost 150 public sector treasurers and finance professionals throughout California who meet in an educational format to discuss treasury and financial management strategies, improve skills and address the tough challenges they face today.
+April 16-17, 2015
England States Government Finance Officers’ Association promotes and encourages
a closer relationship among those engaged in finance in the municipal, state,
and federal service. The conference
provides discussion, analysis, and solutions under the laws existing in the
+April 20-21, 2015
33rd Native American Finance Officers’ Association Annual Conference (NAFOA)
The Hyatt Regency Hotel
The two day conference will feature more than 2 dozen sessions and exciting keynotes focused on investing in Indian country, policy, and legislation affecting tribes, accounting updates and economic development opportunities. Hear from leading industry experts and tribal leaders on strategies for financial success. Sessions support professional growth of attendees and provides them a chance to engage with tribal leaders, professionals and influential federal agencies.
+April 22-24, 2015
Days Inn and Conference Center
State College, Pennsylvania
The Pennsylvania State Association of County Controllers is an organization of 38 county government finance professionals whose purpose is to encourage the discussion and resolution of issues arising in the discharge of the duties and functions of the office of County Controller. The organization advances the professional development of its members through a conscientiously applied program of continuing professional education and training. The Spring conference is the organization’s major educational conference providing an opportunity for attendees to receive continuing education credits in various topics.
Government Finance Officers’ Association Conferences
+April 15-17, 2015
Iowa Municipal Fund Officers’ Association (IMFOA)
Des Moines Hilton Airport Conference Center
Des Moines, Iowa
www.imfoa.org for conference details
+April 23, 2015
+April 23-24, 2015
Wisconsin Government Finance Officers’ Association (WGFOA)
Wisconsin Dells, Wisconsin
+April 24, 2015
Maryland Government Finance Officers’ Association (MDGFOA) Spring Conference
+April 26-28, 2015
Pennsylvania Government Finance Officers’ Association (PGFOA)
Scott + Scott LLP is a nationally recognized law firm headquartered inConnecticut with offices in New York City, Ohio and California. The firm represents individual as well as institutional investors who have suffered from corporate stock fraud. Scott+Scott has participated in recovering billions of dollars and achieved precedent-setting reforms in corporate governance on behalf of its clients. In addition to being involved in complex shareholder securities and corporate governance actions, Scott+Scott also has a significant national practice in antitrust, ERISA, consumer, civil rights and human rights litigation. Through its efforts, Scott+Scott promotes corporate social responsibility.
Scott+Scott’s PT+SM System is the firm’s proprietary investment portfolio tracking service. Carefully combining the firm’s proprietary computer-based portfolio monitoring software with Scott+Scott’s hands-on approach to client relations is a proven method for institutional investors and their trustees to successfully
- Monitor their investment portfolios
- Identify losses arising from corporate fraud
- Consider what level of participation any given situation requires
- Recover funds obtained on their behalf through investor litigation action
To obtain more information about Scott+Scott’s PT+SM services or to schedulea presentation to fund trustees, fund advisors or asset managers, please contact: David R. Scott + Toll Free: 800.404.7770 email: firstname.lastname@example.org + UK Tel: 0808.234.1396