September 2014 Newsletter


•  Scott+Scott Achieves Preliminary Approval of a Settlement For the Benefit of Military Families

•  European Commission Fines Pharmaceutical Companies $583M Over Pay-For-Delay Deal

•  Lloyds Banking Group to Pay Over $380 Million to Resolve American and British Investigations into the Manipulation of Interest Rates

•  U.S. Court of Appeals, Second Circuit, Affirms Ruling that Dodd-Frank’s Whistleblower Protections Do Not Apply Outside the United States

•  Conferences and Educational Seminars


Scott+Scott Achieves Preliminary Approval of a Settlement For the Benefit of Military Families

            On August 5, 2014, the District Court for the District of Massachusetts granted preliminary approval of a settlement reached in In re Prudential Insurance Company of America SGLI/VGLI Contract Litigation, 3:11-md-02208-MAP.  Scott+Scott was co-lead counsel for Plaintiffs.

The case concerns allegations that Prudential failed to honor its contractual and statutory obligations to make “lump sum” payments to Plaintiffs and other similarly situated beneficiaries of certain military life insurance policies when it settled benefits through the use of a retained asset account (known as the “Alliance Account”).  Plaintiffs contended that use of the Alliance Accounts violated the federal SGLI Act, 38 U.S.C. §1970, and gave rise to claims for breach of contract and various common law torts.  In short, the Plaintiffs alleged that, rather than pay a lump sum life insurance amount to relatives of a deceased service member or veteran, Prudential instead issued “check books” to the bereaved while maintaining the policy amounts in its own general funds.

The settlement allows for payments of $125 per class member (totaling approximately $8.4 million in aggregate) as well as $20.5 million in charitable donations by Prudential to various non-profit organizations that are devoted to veterans over the next five years.

As the settlement has now been preliminarily approved, notice is being disseminated to class members, giving them an opportunity to opt out of the settlement.  The Court has set a briefing schedule for final approval of the settlement and a hearing on that approval will be held December 8, 2014.

Table of Contents


European Commission Fines Pharmaceutical Companies $583M Over Pay-For-Delay Deal

The European Commission (“EC”) fined French pharmaceutical company Servier SAS and five generic pharmaceutical producers $583 million in connection with patent infringement litigation settlements that delayed market entry of generic forms of perindopril, a blockbuster blood pressure medication.  The EC’s announcement of Servier’s fine in July 2014 follows a five year formal investigation.

The EC alleged that most of the patents covering the perindopril molecule expired in 2003.  Generic manufacturers challenged the remaining patents in court or attempted to develop patent free generic products.  Servier and the generic producers entered into agreements settling the patent claims.  The EC alleged the settlement agreements were anticompetitive and delayed the entry of generic forms of perindopril between 2005 and 2007.  According to the EC, the agreements violated Articles 101 and 102 of the Treaty on the Functioning of the European Union.

This is the third recent EC investigation to recover substantial fines concerning anticompetitive patent litigation settlements in the pharmaceutical industry relating to the delay of generic forms of pharmaceutical products.  In 2013, Danish drug maker H. Lundbeck A/S paid $125.6 million to settle the EC’s allegations that the company entered into anticompetitive agreements to keep generic forms of its antidepressant citalopram off the market.  In 2013, the EC also fined Johnson & Johnson and Novartis AG $22.4 million for delaying the introduction of generic painkiller fentanyl the Netherlands.

Table of Contents


Lloyds Banking Group to Pay Over $380 Million to Resolve American and British Investigations into the Manipulation of Interest Rates

            On July 28, 2014, American and British authorities announced that Lloyds Banking Group plc (“Lloyds”) had agreed to pay more than $380 million to resolve investigations into Lloyds’ illegal manipulation of interest rates, including the London Interbank Offered Rate (“LIBOR”). 

LIBOR is the primary benchmark for short-term interest rates around the world that is established by panels of banks, including Lloyds, that report the daily interest rate they are charged to other banks to borrow money in specific currencies for specific periods of time.  Large banks, like Lloyds, illegally communicated with each other to discuss what rates to submit, thereby artificially manipulating the rate.

            Lloyds will pay around $370 million to resolve investigations by the Commodity Futures Trading Commission and the Department of Justice in the United States, and the Financial Conduct Authority in the United Kingdom.  In addition to its manipulation of LIBOR, Lloyds – partly owned by the British government after a bailout – also manipulated other benchmark rates that were used to determine fees paid under an emergency funding program for financial institutions during the financial crisis.  As a result of this added manipulation, Lloyds will pay around £7.76 million (around $13.2 million).

            Assistant Attorney General Leslie R. Caldwell of the United States Department of Justice’s Criminal Division stated that “[f]or more than three years, traders at Lloyds manipulated the bank’s LIBOR submissions for three currencies to benefit the trading positions of themselves and their friends, to the detriment of the parties on the other side of the trades.” Caldwell added “[b]ecause investors and consumers rely on LIBOR’s integrity, rate-rigging fundamentally undermines confidence in financial markets.  Lloyds is the fifth major financial institution that has admitted LIBOR manipulation and paid a criminal penalty, and nine individuals have been criminally charged by the Justice Department.  Our active investigation continues, as we work to restore trust in the markets.”

American authorities said that a rate submitter at Lloyds colluded with his equivalent at Dutch lender Rabobank from mid-2006 to October 2008 to manipulate LIBOR as it was tied to the Japanese yen to benefit both banks’ trading positions.  Rabobank agreed in October 2013 to pay more than $1 billion in criminal and civil penalties to settle investigations led by several worldwide governmental agencies.  In addition to the yen, the British Financial Conduct Authority also stated that Lloyds’ rate submitters tried to manipulate LIBOR as it was tied to the pound and other global currencies to benefit trading positions at the bank.

            As part of its agreement with the United States Department of Justice, Lloyds will enter into a “deferred prosecution agreement,” which allows Lloyds to avoid criminal charges if it remains out of trouble for the next two years.

Lloyds is just the latest of several big multinational banks to admit criminal wrongdoing by its employees in attempting to manipulate LIBOR, as well as other global benchmark interest rates.  Scott+Scott, in addition to other counsel, represents investors in an antitrust lawsuit pending in the Southern District of New York, alleging that Lloyds and several other big banks illegally manipulated LIBOR.

Table of Contents


U.S. Court of Appeals, Second Circuit, Affirms Ruling that Dodd-Frank’s Whistleblower Protections Do Not Apply Outside the United States

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) was passed, in large part, to provide whistleblowers with significant financial incentives to report corporate wrongdoing or illegal activity.  It also provided whistleblowers with substantial protections when coming forward with these allegations.  The theory behind Dodd-Frank was to provide personal incentive and protection for insiders with knowledge of corporate malfeasance so that they could report illegal activity that might not otherwise come to light.  

Recently, the Securities and Exchange Commission (“SEC”) reported that in Fiscal Year 2013, the SEC fielded over 3,000 whistleblower complaints or allegations of wrongdoing.  The vast majority of these allegations pertained to domestic companies and involved domestic whistleblowers.  However, 4.6 percent of the whistleblower allegations reported in 2013 related to allegations involving the Foreign Corrupt Practices Act (“FCPA”), meaning that the underlying issues in those cases involved a foreign entity and/or a foreign whistleblower.  That number is up from 2012, when the SEC reported only 3.8 percent of whistleblower claims as pertaining to foreign conduct.

Because Dodd-Frank is a domestic law, the question arose whether Dodd-Frank’s whistleblower protections applied to foreign entities, whistleblowers, and conduct, or was limited to domestic applicability.  That question remained largely unanswered because no U.S. court had been presented with a situation requiring a definitive ruling on that issue.  However, on August 14, 2014, the U.S. Court of Appeals for the Second Circuit helped to answer that question in affirming a U.S. District Court ruling that held that Dodd-Franks’ protections do not apply outside of the United States.  

The case, Meng-Lin Liu v. Siemens AG (No. 1:13-cv-00317), was originally brought before the U.S. District Court for the Southern District of New York, alleging that Munich-based Siemens AG’s former compliance officer, Meng-Lin Liu (“Liu”), was fired for blowing the whistle on an alleged kickback scheme in which Siemens China submitted inflated bids to sell medical imaging equipment to public hospitals in North Korea and China.  These sales would allegedly proceed through third-party intermediaries in Asia, which bought the equipment from Siemens at significantly lower prices and then resold it to hospitals for the original inflated bid price and paid off the officials who signed off on the bids.  Liu subsequently reported Siemens for FCPA violations and was told by Siemens not to return for work as a result of the whistleblowing.

Liu then sought protection from Dodd-Frank by bringing action against Siemens under Dodd-Franks’ anti-retaliation provision, arguing that while the language of Dodd-Frank was silent on its extraterritorial application, the United States Congress intended to protect whistle blowers wherever they were.  Siemens moved to dismiss the action, arguing that Dodd-Frank’s whistleblower protections were not applicable outside the United States.

Ultimately, the District Court dismissed Liu’s action against Siemens because it concluded that Dodd-Frank’s protections extended only within the United States and Liu’s case had no substantial connection to any U.S. jurisdiction.  As the District Court reasoned, Liu’s case involved a Taiwanese resident (Liu) who brought suit against a German company (Siemens) over alleged corruption in China and North Korea, and that when a “statute (like Dodd-Frank) gives no clear indication of an extraterritorial application, it has none.”  Liu subsequently appealed to the Second Circuit.

In affirming the District Court’s denial of Dodd-Frank protections for Liu, the Second Circuit reasoned that the protections afforded by Dodd-Frank can only be invoked when there is some connection between the whistleblower or the alleged wrongdoing and the United States.  In Liu’s case, the Second Circuit agreed that Liu was not able to avail himself of the Dodd-Frank whistleblower provisions because Liu did not allege that any of the events in that case had any nexus to the United States.  Because Liu could not establish a connection to the United States for himself, the alleged misconduct, or the alleged wrongdoer, there was no reason to apply American law to an entirely foreign series of events.

Legal and political pundits theorize that the Second Circuit’s ruling may have a “chilling effect” on cases brought in the U.S. by employees of foreign companies or subsidiaries, and there is genuine debate about whether this decision will have a significant impact on diminishing the number of tips brought to the SEC and Department of Justice by whistleblowers.  However, many are quick to point out that less than 5 percent of all whistleblower tips fall under this umbrella, that the law is still very new, and that a cautious approach to its implementation and enforcement is a prudent approach.

Nevertheless, whistleblowers will no doubt continue to test retaliation claims in which the underlying allegations rely upon the FCPA.  As more challenges arise, and more U.S. courts opine on the matter, the law will evolve and become more defined.  Until then, the Second Circuit’s recent ruling will make that battle an uphill climb for foreign tipsters.


Table of Contents


September Events


Conferences and Educational Seminars



+September 6-10, 2014


National Association of State Treasurers (NAST)

Grand Hotel and Conference Center

Mackinac Island, Michigan


Each year more than a hundred private sector firms take advantage of the prosperous public-private partnership with NAST through the Corporate Affiliate Program, founded in 1986.  The Corporate Affiliate Program consists of finance and legal professionals who are nationally recognized for their expertise, experience, and quality business practices.  They understand the complex needs of state treasurers – ranging from investment and pension fund management, including corporate governance, to debt and cash management functions and are often the first to provide services to states.



+September 7-9, 2014


Louisiana Association of Public Employees Retirement System (LAPERS)

New Orleans Marriott

New Orleans, Louisiana


Organized in 1985, the Louisiana Association of Public Employees’ Retirement System (LAPERS) is a nonpartisan, nonprofit organization that brings together individuals employed by state, statewide, and local public employees’ pension plans to exchange information, ideas, and experiences with others facing the same challenges.  By uniting Louisiana public retirement systems, LAPERS works for their common interests, monitors state and federal legislative activities, and enhances public pension fund management and administration by providing educational and informational services to its more than 358,000 members with $40.1 billion in assets.



+September 7 - 9, 2014


Annual Texas Local Fire Fighters’ Retirement Act Pension Conference (TLFFRA)

City of Lufkin Pitser Garrison Convention Center

Lufkin, Texas

During the Great Depression, the Texas Legislature created the Office of the Fire Fighters’ Pension Commissioner (FFPC) to protect the pensions of fire fighters throughout Texas. This legislative foresight resulted in a sound statutory framework and a strong partnership between the state of Texas and local communities in providing pension benefits to fire fighters and their families.  Through an annual conference, fund administrators and boards of trustees are provided training by qualified experts in the fields of investment management, administration, and fiduciary responsibility.


+September 8-10, 2014


The 20th Annual Institutional Investment Conference - Investment Trends Summit produced by OPAL

Financial Group

The Four Seasons, The Biltmore

Santa Barbara, California


This year’s conference will serve as an educational forum focused on analyzing trends for the future, as well as exploring ways to implement new strategies in particular investment plans.  In this period of dynamic change, it is more important than ever to stay abreast of future investment opportunities and winning strategies, upcoming regulation, and asset allocation plans from leading allocators, out-performing managers, and industry experts.  Speakers from across the globe will present during the 3 day conference.


+September 9 - 11, 2014


37th Kentucky Labor-Management Conference

Kentucky Dam Village State Resort Park

Gilbertsville, Kentucky


Established in 1977, the conference is governed by a Board of Directors and co-sponsored by the Kentucky Labor Cabinet and the Kentucky Cabinet for Economic Development.  The Kentucky Labor-Management Conference serves as the centerpiece of the state's effort to promote labor-management cooperation as an enhancement to economic development.  The event provides participants a relaxed atmosphere, apart from the work environment, that is conducive to positive, meaningful dialogue between labor and management.  The conference begins with two days of interactive educational opportunities in which the participants are given the chance to talk directly with the presenters on a wide variety of topics of mutual interest to labor and management.



+September 11-14, 2014


65th Annual Fall Conference of the New England States Government Finance Officers’ Association (NESGFOA)

Omni Hotel

Providence, Rhode Island


The New England Government Finance Officers Association (NESGFOA) is a regional professional association for government finance managers from the six New England States who work together to develop a closer relationship and understanding among public officials whose responsibilities and duties involve state and municipal problems; and to facilitate discussion, analysis, and solutions of such problems under the laws existing in the New England States. The fall conference is annually held in September or October on a six-state rotating basis and shall provide continuing education programs for public finance officials and employees.




+September 14-16, 2014


Michigan Association of Public Employees Retirement System (MAPERS)

Grand Traverse Resort and Conference Center

Acme, Michigan


The Michigan Association of Public Employee Retirement Systems is recognized as the principal educational and legislative forum for trustees, plan administrators, and other retirement and financial professionals in the State of Michigan.  MAPERS was established to provide educational training and legislative updates to trustees of Public Employee Retirement Systems within the State of Michigan. MAPERS employs the service of a full-time professional lobbyist (Capitol Services, Inc.) to monitor legislation that may affect the more than 720,000 members and retirees of public pension plans in the State of Michigan.  This outstanding conference is geared toward educating local pension board members and administrators.



+September 17-18, 2014


Pennsylvania Association of Public Employees Retirement System 8th Annual Fall Workshop (PAPERS)

Wyndham Philadelphia Historic District

Philadelphia, Pennsylvania


PAPERS primary purpose in conducting an annual educational forum is to provide the basis for improved financial and operational performance of the public employee retirement systems in the state.  PAPERS acts as a central resource for educational purposes and networking agent.  The annual PAPERS fall workshop is held alternately in the Pittsburgh and Philadelphia areas and provides another opportunity beyond the PAPERS Forum with additional  educational  and networking opportunities to those individuals who work in or provide services to Pennsylvania’s public pension funds.  This year’s focus will be on expecting change and preparing for the changes, potential implications, and sponsor considerations over the next five years. PAPERS will welcome a new executive director, Jim Allen of Dauphin PA, at the fall workshop.  Jim replaces PAPERS’ founder, Jim Perry, who is retiring.



+September 22 -23, 2014


Native American Finance Officers’ Association Fall Finance and Tribal Economies Conference (NAFOA)

Hard Rock Hotel and Conference Center

San Diego, California


This year’s Fall Finance and Tribal Economies Conference will be held in “America’s Finest City,” San Diego.  NAFOA’s mission is to improve the quality of financial and business management of tribal governments and their business entities.  NAFOA advocates for tribes on issues affecting sovereignty and supports the development of Native American financial professionals.  NAFOA invests in Native American communities by building the next generation of Native American financial leaders through educational and networking opportunities in finance.  Board members are elected by the membership and serve staggered two-year terms.  Members of this governing board are volunteers who hold financial management positions within their organizations and are members of a federally recognized tribe.  Expert speakers will illustrate market relationships, policy effects, forecast the near- and long-term global trends, weigh in on tax reform, new accounting standards, and offer ideas on governmental best practices for navigating outside influences and protecting Native American assets.

+September 22-24, 2014


National Coordinating Committee for Multiemployer Plans (NCCMP)

The Diplomat Hotel

West Hollywood, Florida


The NCCMP is an organization of national, regional, and local multiemployer pension and health and welfare plans, International and Local Unions, national and local employer associations, individual local employers, and multiemployer fund professionals.  For more than 30 years, NCCMP been representing the interests of multiemployer plan participants in the halls of Congress, in regulatory arenas, and in the courts.  The NCCMP has saved multiemployer plans hundreds of millions of dollars in regulatory and administrative costs.



+September 23-25, 2014


Georgia Association of Public Pension Trustees (GAPPT)

Callaway Gardens Conference Center

Pine Mountain, Georgia


In the summer of 2009 administrators and trustees of several of the public pension plans in Georgia gathered together to form an association to provide a forum for support and information for education, training, advancement and accreditation for public plan trustees and personnel.  GAPPT is a non-profit association formed solely to promote and support the education and development of the Trustees and Administrators of Georgia’s Public Pension Plans in the areas of: fiduciary responsibility and liability, board governance, investment acumen,  and plan administration.



+September 29 – October 1, 2014


Council of Institutional Investors (CII) 2014 Fall Meeting

Millennium Biltmore Hotel

Los Angeles, California


The Council of Institutional Investors is “the voice of corporate governance” as a nonprofit association of public, union, and corporate pension funds.  Member funds are long-term shareowners with a duty to protect the retirement assets of millions of American workers.  The annual meeting will educate members, policymakers, and the public about good corporate governance, shareowner rights, and related investment issues. 



+September 30 – October 3, 2014


Illinois Public Pension Fund Association Midwest Pension Conference (IPPFA)

Grand Geneva Resort and Conference Center

Lake Geneva, Wisconsin


The Illinois Public Pension Fund Association is available to more than 600 Police and Fire Pension Funds.  The original IPPFA, Illinois Police Pension Fund Association, was organized by a group of police trustees in 1985 for the education and protection of Police pension funds in Illinois. The Firefighters joined the group more than eight years later and the IPPFA became known as the Illinois Public Pension Fund Association. The organization is open to all public pension trustees. The IPPFA educational programs are certified trustee programs and are offered throughout the year at various locations throughout the state.  Other IPPFA sponsored programs include regional seminars, referral programs, on-line training, legislative support, an annual conference as well as financial support to all member families who have lost a police officer or firefighter in the line of duty. This year’s keynote speaker will be Ronald Brownstein, journalist, historian, and political observer.


Government Finance Officers’ Association Conferences


+September 7-9, 2014

Illinois GFOA Annual 2014 Conference

Bloomington-Normal Marriott

Normal, Illinois


+September 8-13, 2014

Wyoming Association of Municipal Clerks and Treasurers Municipal Institute

Ramada Plaza Riverside

Casper, Wyoming


+September 16-19, 2014

Washington Finance Officers Association

Yakima Convention Center                             

Yakima, Washington


+September 17-19, 2014

GFOA of New Jersey Annual Fall Conference

Atlantic City Sheraton Hotel

Atlantic City, New Jersey


+September 17-19, 2014

Idaho City Clerks, Treasurers & Finance Officers Association (ICCTFOA)

Boise hotel and Conference Center

Boise, Idaho


+September 17-19, 2014

Ohio GFOA Conference and Membership Meeting

Kalahari Convention Center

Sandusky, Ohio


+September 18-19, 2014

Wisconsin GFOA Fall Conference

Heidel House Resort

Green Lake, Wisconsin


+September 21-24, 2014

Michigan GFOA (MGFOA) Fall Training Institute

Boyne Mountain Resort

Boyne Mountain, Michigan


+September 23-25, 2014

Oklahoma Municipal League Annual Conference

Cox Convention Center; Renaissance Hotel

Oklahoma City, Oklahoma



+September 24-26, 2014

Minnesota GFOA Annual Conference

Arrowwood Resort

Alexandria, Minnesota


+September 25-27, 2014

North Dakota League of Cities Annual Conference

Grand Hotel Minot

Minot, North Dakota


+September 28-October 1, 2014

Georgia GFOA – Annual 2014 Conference

DeSoto Hilton

Savannah, Georgia




Labor Union Conferences


+September 9 - 11, 2014


International Brotherhood of Electrical Workers Membership Development Conference (IBEW)

The Paris Las Vegas Hotel

Las Vegas, Nevada


More than 1,300 IBEW delegates attended last year’s conference which could effectively expose participating organizations to the leaders of more than 700,000 IBEW members. This is the largest annual networking event with decision makers and industry leaders of the IBEW who value the USA service providers.  This year’s program agenda will be innovative, dynamic, and somewhat controversial as the election approaches.


Table of Contents

Scott + Scott LLP is a nationally recognized law firm headquartered inConnecticut with offices in New York City, Ohio and California. The firmrepresents 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