November 2015 Newsletter


Scott+Scott Seeks Preliminary Approval of $2 Billion in Settlements in FX Litigation

Scott+Scott Named Co-Lead Counsel in Antitrust Class Action Against Disposable Contact Manufacturers

Scott+Scott Defeats Motion to Dismiss Securities Class Action Againt MetLife, Inc.

Judge Sustains Securities Class Action Complaint Against King Digital Entertainment PLC

Scott+Scott Obtains Favorable Decision in Securities Case Against FireEye, Inc.

Conferences and Educational Seminars


Scott+Scott Seeks Preliminary Approval of $2 Billion in Settlements in FX Litigation

On October 22, 2015, Scott+Scott filed proposed settlements worth over $2 billion on behalf of settlement classes of FX traders in antitrust litigation pending in the Southern District of New York.  The settlements resolve the action against nine defendants – Bank of America, Barclays, BNP Paribas, Citigroup, Goldman Sachs, HSBC, JPMorgan, RBS, and UBS.  The litigation will continue against seven non-settling defendants.  The case is In re Foreign Exchange Benchmark Rates Antitrust Litigation, No. 13-cv-7789 (S.D.N.Y.).

There are two proposed settlement classes.  The first class includes all persons who between January 1, 2003 and the present traded FX instruments directly with a defendant bank.  The second class includes all persons who, between January 1, 2003 and the present, traded FX instrument on exchanges.

If approved, the aggregate settlement amount would be the fourth largest settlement recovery in an antitrust class action in the 125-year history of the Sherman Act.  The settlement agreements also contain cooperation provisions, which require the settling defendants to produce documents, transaction data, and witnesses.  This cooperation will aid plaintiffs in the prosecution of the action against the non-settling defendants.

In the Second Amended Complaint filed in July 2015, plaintiffs alleged that from as early as 2003 and continuing through at least 2013, the world’s largest investment banks used multiple chat rooms – with names such as “The Cartel, “The Bandits’ Club,” and “The Mafia” – to communicate with one another about manipulating foreign exchange benchmark rates and spreads on currency pairs throughout the class period.  As the Complaint describes, “there are thousands of communications involving multiple Defendants reflecting discussions about FX spreads.”  It goes on to explain that “[t]hese communications show traders at more than 30 banks, including Defendants, participated in interbank chats where traders coordinated and exchange information about spreads or customer orders.”  The Complaint brings claims under the Sherman Act and Commodity Exchange Act.

Many of the defendants in the litigation, including Bank of America, Barclays, Citigroup, HSBC, JPMorgan, RBS, and UBS, agreed to pay fines to numerous regulatory agencies to settle allegations related to their misconduct in the foreign exchange market.  The alleged misconduct ranged from failing to maintain adequate controls over their respective FX businesses, to a criminal conspiracy to fix prices in the FX market. 

The first wave of fines was levied on November 11, 2014, when the U.S. Commodity Futures Trading Commission, the U.S. Office of the Comptroller of the Currency, the U.K. Financial Conduct Authority (“FCA”), and the Swiss Financial Market Supervisory Authority announced settlements with various financial institutions or their affiliates, including Bank of America, Citigroup, HSBC, JPMorgan, RBS, and UBS.  The second wave of fines was announced on May 20, 2015 by the U.S. Department of Justice (“DOJ”), the Federal Reserve (“FED”), and the New York Department of Financial Services, including settlements with Barclays, Citigroup, JPMorgan, RBS, and UBS.

The fines imposed break a number of records.  Criminal fines of more than $2.5 billion are the largest set of antitrust fines obtained by the DOJ.  The $925 million fine imposed on Citigroup by the DOJ was the largest single fine ever imposed for violating the Sherman Act.  The $1.7 billion in fines imposed by the FCA on November 11, 2014 were the largest ever imposed by the regulator, and the first time the FCA had pursued a settlement with a group of banks.  The $441 million fine imposed on Barclays by the FCA on May 20, 2015 was also a record for the regulator.  Similarly, the FED fines are among the largest ever assessed.

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Scott+Scott Named Co-Lead Counsel in Antitrust Class Action Against Disposable Contact Manufacturers

Scott+Scott, Attorneys at Law, LLP was named co-lead counsel of a class action lawsuit on behalf of purchasers of disposable contact lenses.  Scott+Scott was named along with Hausfeld, LLP and Robins Kaplan, LLP.  The class alleges that certain manufacturers of contact lenses, including Defendants Alcon Laboratories, Inc. (“Alcon”) (a division of Novartis International AG (“Novartis”); Johnson & Johnson Vision Care, Inc. (“J&J”) (which operates in the United States under the “Vistakon” trade name); Bausch + Lomb (“B&L”) owned by Valeant Pharmaceuticals, Inc. (“Valeant”); and Cooper Vision, Inc. (“Manufacturer Defendants”) conspired with each other and with Defendant ABB Optical Group (“ABB”), to impose minimum resale prices on certain contact lens lines by subjecting them to a so-called unilateral pricing policy and thereby eliminating price competition on those products.  The multi-district class action case is being litigated in the Middle District of Florida.

The class alleges that the Manufacturer Defendants conspired with each other and with Defendant ABB Optical, a wholesaler, as well as independent eye care professionals represented by ABB and their trade association, the American Optometric Association, to impose a unilateral pricing policy and thereby eliminate price competition on those products by “big box” stores (e.g., those owned by Wal-Mart Stores, Inc. (“Wal-Mart”) and Meijer, Inc. (“Meijer”)), buying clubs (e.g., those run by Costco), and internet-based retailers (e.g., 1-800-Contacts and by substantially preventing them from discounting those products.  As eye care professionals themselves have acknowledged, this new pricing scheme represents a “fundamental shift” in how contact lenses are sold to consumers.

The class includes all persons and entities who purchased disposable contact lenses manufactured by Alcon, J&J, B&L, or Cooper Vision from June 1, 2013 to the present, where the prices for such contact lenses were set pursuant to a unilateral pricing policy.  The lines of disposable lenses alleged to be impacted by the anticompetitive conduct are: Alcon – Dailies Total1, Dailies AquaComfort Plus Multifocal, Dailies AquaComfort Plus Toric, and Air Optix Colors; B+L – Ultra; J&J - 1-Day Acuvue Maoist, 1-Day Acuvue Moist for Astigmatism, 1-Day Acuvue TruEye, Acuvue Oasys with Hydraclear, Acuvue Oasys for Astigmatism, and Acuvue Oasys for Presbyopia; and CV – Clariti. 

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Scott+Scott Defeats Motion to Dismiss Securities Class Action Againt MetLife, Inc.

Scott+Scott recently defeated a motion to dismiss securities class action claims under the Securities Act of 1933 (the “1933 Act”) in City of Birmingham Retirement & Relief System v. MetLife, Inc., No. 01-CV-2012-902101.00 (Ala. Cir. Ct.).   The case arises out of MetLife’s initial public offering in March 2011 of approximately $3.3 billion worth of MetLife “Common Equity Units” (“CEUs”).  Plaintiff, the City of Birmingham Retirement & Relief System (“Birmingham”), alleges that the registration statement and related Offering Documents for MetLife’s CEU Offering failed to disclose, inter alia, (1) MetLife’s selective and improper use of the Social Security Administration’s Death Master File (“DMF”); (2) certain pending government investigations into MetLife’s use of the DMF; and (3) the extent to which MetLife had failed to establish adequate loss reserves for “incurred but not yet reported” (“IBNR”) claims of beneficiaries of deceased life insurance policy holders.  The Securities Act of 1933 imposes strict liability on companies who issue securities pursuant to offering materials that contain material misstatements or fail to disclose certain material information. 


Unbeknownst to investors, as of the date of the March 2011 Offering, various state government regulators were investigating MetLife’s highly self-serving and selective use (and non-use) of the DMF to verify deaths.  For example, as government investigators discovered, MetLife regularly used evidence of deaths, as reported in the DMF, to immediately cut off MetLife’s  payments to beneficiaries of deceased MetLife annuity and disability insurance policyholders (thereby saving the Company huge sums).  However, MetLife did not regularly use evidence of death from the DMF to identify deceased holders of MetLife life insurance policies – which effectively allowed MetLife to retain hundreds of millions of dollars that it should have either paid to policy beneficiaries or paid to state authorities under escheatment laws.  Under pressure from government regulators, MetLife secretly agreed prior to the CEU Offering that it would begin to use the DMF database (but not until after the Offering) to systematically identify deceased life insurance policy holders – which in turn would force MetLife to increase the amount of its “IBNR” loss reserves and reduce MetLife’s reported income and profits.  After the Offering, MetLife belatedly announced significant increases to its IBNR loss reserves, as well as the existence of multiple state investigations.  In response, the price of MetLife’s CEUs fell sharply compared to its March 2011 Offering price.  MetLife eventually entered into settlements with over 40 state regulators in 2012, at an estimated total cost of over $500 million, to resolve claims that MetLife had failed to make timely payments of death  benefits to its insured’s beneficiaries and/or to relevant state authorities via escheatment.


Scott+Scott filed the action in Alabama state court on Birmingham’s behalf in July 2012 against MetLife, the MetLife officers and directors who signed the offering materials, and the various Wall Street firms that underwrote the March 2011 CEO offering.  However, Defendants removed the action to federal court, and it took 2 ½ years for the federal court to finally decide, over Defendants’ objections, to send the case back to state court. 


On remand, Plaintiff Birmingham filed an amended complaint this spring, and Defendants thereafter moved to dismiss the case for lack of jurisdiction, forum non conveniens, and for failure to adequately plead any substantive violations of the 1933 Act.  Following extensive briefing and oral argument, on October 14, 2015, the Alabama state court denied Defendants’ motions to dismiss in their entirety.  The case will now proceed into discovery.


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Judge Sustains Securities Class Action Complaint Against King Digital Entertainment PLC


On October 7, 2015, Scott+Scott, Attorneys at Law, LLP (“Scott+Scott”) won an important ruling for plaintiffs that brought suit against King Digital Entertainment PLC (“King Digital” or the “Company”), certain of its officers and directors, as well as its underwriters, for violations of the Securities Act of 1933 for misstatements and omissions in the offering documents used to conduct the Company’s initial public offering (“IPO”).  The honorable Curtis E.A. Karnow of the Superior Court of California, County of San Francisco, overruled the defendants’ dismissal motions and ruled that the misstatement and omission allegations against King Digital and the other defendants were properly pled.  The case, first filed by Scott+Scott on behalf of investors in March 2015, alleges that shareholders were damaged when previously concealed information about King Digital and its business prospectus was revealed to the market.  

King Digital is a video game company that specializes in casual-social games that are generally played on users’ smart phones, tablets, or on platforms like Facebook.  King Digital’s most popular game is known as “Candy Crush Saga” a blockbuster game which, as of February 2014, had nearly 100 million average daily users.  King Digital’s games operate on what is known as a “freemium” business model where, although users can play the game at no cost, they can access game enhancements like extra lives for a small fee.  King Digital’s revenue depends entirely on the fraction of users who choose to make these purchases.  The Complaint alleges that King Digital made a series of false and misleading statements and omitted material information regarding: (i) the decline of the Company’s monthly unique payers; (ii) the decline in Candy Crush bookings; and (iii) a glitch that caused customers’ lives to be deleted when playing Candy Crush on the Company’s Facebook platform. 

In late March 2014, King Digital and the investment banks who served as the IPO underwriters filed the Registration Statement and Prospectus for the IPO with the Securities and Exchange Commission.  The IPO was conducted on March 27, 2014 and raised $499.5 million, selling 22.2 million shares at $22.50 per share.  Shortly thereafter, however, in May 2014, King Digital released its financial results for the first quarter.  King Digital announced that Candy Crush booking had declined significantly from 78% to 67% of gross bookings and that its monthly unique payers declined from 12.2 million to 11.9 million.  After the release of additional adverse information about the Company and its prospects, the price of King Digital stock dropped nearly 40% from its IPO price by the time plaintiffs’ case was filed.

In support of dismissal, Defendants generally argued that: (i) plaintiffs did not allege enough facts to support their claims; (ii) the allegedly concealed information was actually disclosed; and (iii) King Digital had no obligation to disclose certain facts challenged by Plaintiffs.  Judge Karnow rejected these arguments and stated that that Plaintiffs alleged sufficient facts to support their causes of action.  The case is In re King Digital Entertainment PLC Shareholder Litigation, Lead Case No. CGC-15-544770, Superior Court of California, County of San Francisco. 

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Scott+Scott Obtains Favorable Decision in Securities Case Against FireEye, Inc.

Scott+Scott obtained a recent favorable decision in In re FireEye, Inc. Securities Litigation, Case No. 1-14-cv-266866 (Cal. Super.).  The Honorable Peter H. Kirwan of the Superior Court of California overruled two demurrers brought by FireEye, Inc. (“FireEye”), its executives and directors, and several underwriters of the company’s second public offering of securities (“Defendants”).  FireEye is a California-based company providing products and services for detecting, preventing, and resolving cyber security threats.

The decision represents a favorable first step in the consolidated securities class action against Defendants.  In this action, the plaintiffs allege several violations of the Securities Act of 1933 (the “1933 Act”) for a number of materially misleading statements and omissions made by the company in public filings leading up to its second public offering regarding its financial well-being, expectations of profitability, and capability of its threat detection software.  The plaintiffs contend that these and other misrepresentations not only raised the price of shares considerably – from $20 in September 2013 to a high of $95.63 in March 2014 – but after the eventual sale of personal holdings, also helped net nearly $700 million for insiders and other large shareholders. 

In their demurrers, Defendants denied any wrongdoing and argued to the Superior Court that plaintiffs failed to allege sufficient facts to support their claims.  Scott+Scott successfully convinced the Court otherwise. 

The Court agreed that plaintiffs set forth a claim for material misrepresentation in a registration statement under Section 11 of the Securities Act, pointing to statements made by the company in public filings about its software’s “high detection efficacy with negligible false-positive rates,” which were plainly contradicted by known problems with the software, specifically its “inability to reliably differentiate between dangerous cyber attacks and innocent software,” as well as its frequent false-positive alerts.  The Court did not stop there however, as it turned to additional misrepresentations in support of its conclusion.

The Court found that the plaintiffs also sufficiently pleaded a claim under Section 12 of the 1933 Act, on the basis of allegations that top executives and directors of the company had prepared and signed certain public filings and conducted the company’s road show for the second offering.  The Court concluded that the plaintiffs sufficiently pled that the defendants engaged in direct solicitation activities in violation of the 1933 Act.

Drawing on its earlier findings, the Court also concluded that the plaintiffs had made out a claim under Section 15 of the 1933 Act. 

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November Events


Conferences and Educational Seminars


           +November 4-7, 2015


Congress of Cities and Exposition produced by the National League of Cities  (NLC)

Nashville Music City Center

Nashville, Tennessee


The four day Annual National League of Cities conference is dedicated to providing city leaders with resources for building better communities.  The NLC works in partnership with 49 municipal leagues and serves as an advocate for more than 19,000 communities. Cities and towns join NLC and the elected officials and staff from those cities and towns participate in NLC’s programs, activities and governance.  State municipal leagues guide the organization’s priorities and serve as an important link to cities in their state.  NLC, unlike most municipal leagues, offers membership opportunities for members of the private sector.  The annual conference allows through its Corporate Partners Program the private sector to exchange ideas between corporate leaders and leaders of America’s cities in order to strengthen local government and promote corporate civic engagement.  Participation in the NLC Corporate Partners Program is by invitation of the NLC Leadership.


            +November 5, 2015


            3rd Annual Texas Institutional Investor Forum produced by US Markets

            JW Marriott

            Austin, Texas


            Plan sponsors, pension administrators, corporate treasurers and public trustees from Texas will come together to share local expertise. The forum is specially designed to cover topics of interest in the following areas: pension fund management, smart beta, fiduciary responsibilities, legal and legislative issues and real assets and non-traditional asset classes. US Markets has produced more than 100 regional conferences since 2009 with an educational platform created in collaboration with academics and experts in the pension, endowment and foundation arena.


+November 7-11, 2015


61 Annual International Foundation Education Benefits Compensation Conference (IFEBP) 

Hawaii Convention Center

Honolulu, Hawaii


The four day Annual Employee Benefits Conference provides more than 120 sessions of education, roundtable discussions and networking events.  Taft-Hartley and Public Sector fund trustees, administrators, business managers and association leaders as well as service providers to the funds will be in attendance to learn the latest cost-saving ideas, legislative and legal developments in the pension fund and financial areas.  Fiduciary roles are growing in complexity as more legislation such as the pension reform act which directly affects plan fiduciaries.  IFEBP presents the most objective information as it is a non-lobbying and nonpartisan organization where participants may earn continuing education credit and certification.  This year’s conference Keynote speakers include decorated navy seal and author of the book, Lone Survivor, Marcus Lutrell. 


+November 16-18, 2015


17th Annual Endowment and Foundation Forum produced by Opal Financial Group

Boston Marriott Long Wharf

Boston, Massachusetts


This year’s conference will feature independent perspectives by actual endowment and foundation investors including portfolio planning and investment strategies.  The changing landscape for endowments and  foundations include aligning fiscal strategies with goals of the organization. Sessions will include Methods of choosing money managers and problems of ethics and liability in fiduciary planning.  Risk management, sustainable investing and non-profit governance will be covered in core sessions.  Guest Speakers will target industry sectors and show how a particular organization’s fiscal strategy is based on its goals within its sector.

            +November 17-20, 2015

State Association of County Retirement Systems Annual Fall Conference (SACRS)

Marriott Marquis San Diego Marina

San Diego, CA


SACRS is an association of twenty California county retirement systems formed in 1937 under the California County Employees Retirement Law.  The California Government Code sets forth the policies and regulations governing the actions of the county retirement systems.  Those  who serve on a Board of Retirement (or Board of Investment) and those who lead and staff  county pension systems  will  be required to know more about managing retirement plans as more regulations are legislated, etc.  In these turbulent economic times the members, beneficiaries and stakeholders of  member systems  want to be assured,  more than ever, that their interests are appropriately served by the fiduciaries they elected or appointed to the governing Boards and that the management of the retirement systems is as professional as ever.  The SACRS conference provides the trustees a venue for education, problem solving and networking.



+November 18-19, 2015


9th Annual Pennsylvania Association of Public Employee Retirement Systems (PA-PERS)

The Sheraton Station Square

Pittsburgh, Pennsylvania


The annual PAPERS fall workshop, a conference held alternately in the Pittsburgh and Philadelphia areas, provides another opportunity beyond the PAPERS Forum education and networking to those individuals who work in or provides services to Pennsylvania’s public pension funds.  This year’s focus will be on potential implications and sponsor considerations over the next few years due to the 2014 reporting and regulatory changes. The closing panel will discuss Trustee duty to their plan participants and the political body that appointed or requires them to service in their capacity as Trustee to their Pension Plan.


+November 21-24, 2015


County Commissioners Association of Pennsylvania (CCAP) Annual Conference

The Hotel Hershey

Dauphin County, Pennsylvania


The County Commissioners Association of Pennsylvania is a statewide, nonprofit, bipartisan association representing the commissioners, chief clerks, administrators, their equivalents in home rule counties, and solicitors of Pennsylvania's 67 counties.  The County Commissioners Association of Pennsylvania (CCAP) and its member counties are committed to excellence in county government.  CCAP advocates for and provides leadership on those issues that will enhance and strengthen the ability of county commissioners to better serve their citizens and govern more effectively and efficiently.  The Association strives to educate and inform the public, administrative, legislative and regulatory bodies, decision makers, and the media about county government.  The fall conference is exhibit free, however, networking activities take place throughout the conference.  There are more than a dozen committee meetings from agriculture committee meetings to shareholder action committee meetings which meet the first day of the conference.  Most participants belong to at least one committee.  The second day there is a time block set aside for those who participate in the democrat or republican caucus sessions.


Government Finance Officers’ Association Conferences


+November 10, 2015

Connecticut GFOA

Aqua Turf Club

Plantsville, CT



+November 16-18, 2015

Alaska GFOA Fall Conference

Marriott Anchorage Downtown

Anchorage, Alaska


+November 17-20, 2014

Colorado GFOA/CMCA/Region VIII Annual Conference

            Loveland, Colorado 


+November 19, 2015

GFOA-Washington Metropolitan Area Annual Conference

Washington Marriott at Metro Center

District of Columbia Metro Area GFOA


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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: + UK Tel: 0808.234.1396