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Securities Litigation and Enforcement
Katten’s Securities Litigation and Enforcement Practice defends corporations and their directors and officers in complex securities, director-and-officer and merger cases, and in related regulatory actions, including SEC enforcement actions and criminal prosecutions by the United States Attorneys Offices. Our attorneys have defended over 250 major securities cases in both federal and state courts across the country, and are nationally recognized for their record of success. Among our experienced securities litigators are former Assistant United States Attorneys, former SEC Enforcement Attorneys, and former Department of Justice Associate Attorneys General.
Areas of Practice
Shareholder Direct and Class Actions
We represent corporations and their directors and officers in direct and class actions brought by shareholders pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934 and other related rules and statutes, arising out of alleged misstatements, omissions or other market manipulation. Katten is one of the few defense firms to have tried a securities class action case—including claims of material misrepresentation and insider trading—to verdict, and won.
Director-and-Officer Litigation
We represent corporations and their directors and officers in derivative and direct actions brought by shareholders pursuant to statutory or common law litigation arising out of alleged mismanagement.
Merger and Corporate Control Litigation
We represent corporations, directors and officers and board committees in actions brought by shareholders challenging mergers, change-of-control transactions and other corporate actions.
Regulatory Enforcement and Criminal Prosecution
We defend corporations and directors and officers that have become targets of regulatory investigations and actions, as well as criminal or quasi-criminal investigations and prosecutions. We also have extensive experience advising corporations and committees of their boards of directors in connection with internal investigations into potential securities-related wrongdoing, including insider trading and accounting irregularities.
Professionals
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Chicago
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Washington, D.C.
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Chicago
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Chicago
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Chicago
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Chicago
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Los Angeles - Century City
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Chicago
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Washington, D.C.
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Washington, D.C.
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New York
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New York
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New York
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Chicago
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Chicago
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Chicago
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Chicago
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Los Angeles - Century City
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Washington, D.C.
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Los Angeles - Century City
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New York
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Chicago
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Chicago
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Chicago
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New York
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New York
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Chicago
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Chicago
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New York
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New York
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Chicago
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New York
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Chicago
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Washington, D.C.
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Chicago
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Washington, D.C.
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New York
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Chicago
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New York
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Chicago
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New York
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Los Angeles - Century City
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Chicago
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New York
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May 8, 2013
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May 2, 2013
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April 24, 2013
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April 5, 2013
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March 22, 2013
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January 23, 2013
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January 15, 2013
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December 5, 2012
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November 1, 2012
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October 31, 2012
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October 29, 2012
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June 21, 2012
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June 7, 2012
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September 2011
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September 2011
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September 2011
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June 10, 2011
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June 9, 2011
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September 14, 2010
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September 2010
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September 1, 2010
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June 24, 2010
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June 2, 2010
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January 19, 2010
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November 12, 2009
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October 7, 2009
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September 2009
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August 8, 2009
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August 2009
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July 20, 2009
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May 13, 2009
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March 3, 2009
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January 12, 2009
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December 12, 2008
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December 12, 2008
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October 23, 2008
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October 2008
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September 2008
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August 20, 2008
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June 13, 2008
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May 12, 2008
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January/February 2008
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October 2007
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June 27, 2007
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December 18, 2006
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October 31, 2006
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September 21, 2006
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August 31, 2006
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August 2006
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August 15, 2006
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October 2004
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September 2004
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2003
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June 11, 2013
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Presented by the Practising Law Institute
Chicago, Illinois
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April 23, 2013
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Presented by the National Investor Relations Institute
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November 12, 2012
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Presented by Litigation Daily, The American Lawyer, Corporate Counsel Magazine and The National Law Journal
Washington, D.C.
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Kairalla v. Advanced Medical Optics, Inc. (C.D. Cal.):
Represented Advanced Medical Optics, Inc. (“AMO”) and its directors and officers in a securities class action arising out of AMO’s decision to withdraw one of its most significant products based on the fact that the FDA and CDC had concluded that there was an association between AMO’s CompleteMoisturePlus multipurpose contact lens solution and Acanthamoeba keratitis, a potentially blinding infection of the cornea. The plaintiffs asserted claims under Sections 10(b) and 20 of the Securities Exchange Act in a first consolidated complaint that included allegations based on confidential witnesses, scientific journals, individual stock sales, and other information. We successfully moved to dismiss the plaintiffs’ first consolidated complaint and then convinced plaintiffs to dismiss the case with prejudice without filing a further amended complaint.
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In re Alstom, SA Sec. Litig. (S.D.N.Y.):
Representing former senior finance officer of corporate subsidiary in securities fraud class action brought pursuant to Exchange Act, arising from alleged misstatements regarding subsidiary’s project costs and fraudulent scheme to inflate one subsidiary’s performance to balance other subsidiaries’ poor performance.
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In re Amdocs, Ltd. Sec. Litig.:
Represented, Amdocs, Ltd., the largest publicly traded company headquartered in Israel, in a litigation that consisted of a securities fraud class action and a formal SEC investigation. The case alleged, among other things, insider trading of over $1 billion dollars. The case was dismissed and the dismissal was affirmed by the 8th Circuit. Subsequently, the SEC formally dropped its investigation of the company.
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In re Arnold v. Comm’l Capital Bancorp, Inc. (Nev. Cir. Ct.):
Represented corporation and its directors and officers in corporate governance action brought pursuant to common law, arising from proposed merger. Negotiated favorable settlement.
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Brody v. TALX Corp. (E.D. Mo.):
Represented corporation and its officers and directors in securities fraud class action brought under Securities and Exchange Acts, arising from alleged misrepresentations regarding corporation’s expansion plans and business lines. Won dismissal of Exchange Act claims without prejudice and negotiated favorable settlement of all claims following motion to dismiss amended complaint.
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Burstyn v. Worldwide Xceed Group, Inc. (In re Worldwide Xceed Group, Inc. Sec. Litig.) (SDNY):
Represented former CEO in securities fraud class action brought pursuant to Exchange Act, arising from alleged misrepresentations regarding corporation’s financial health and prospects. Won dismissal in district court; plaintiff declined to pursue appeal.
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In re Career Education Corp. Sec. Litig. (N.D. Ill., Ill. Chancery):
Representing NYSE Company and certain directors and officers in consolidated securities class actions alleging violations of Exchange Act arising from alleged misrepresentations of key revenue drivers in financial statements. The court dismissed the plaintiff’s first, second and third amended complaints for failure to plead a securities fraud claim with sufficient particularity. The dismissal of the third complaint is now on appeal to the United States Court of Appeals for the Seventh Circuit. Representing the board of directors in parallel derivative actions filed in Illinois state court and Company in SEC investigation and books and records demand in Delaware Chancery Court.
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In re CNET Networks, Inc. Deriv. Litig. (N.D. Cal. and Cal. Super. Ct.):
Representing cofounder/former President, CEO and Chairman in derivative litigation arising out of alleged back-dating of stock options. Motion to dismiss federal claims and stay discovery pending.
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In re Commercial Capital Bancorp Inc. (Las Vegas, Nevada):
Acted as lead counsel for Commercial Capital Bancorp, Inc. ("CCBI") and its directors in a class action brought in Nevada state court, where a plaintiff class of CCBI's common shareholders challenged a merger agreement between CCBI and Washington Mutual. We successfully negotiated a settlement with the plaintiff class, whereby the $1 billion transaction was consummated, and CCBI and its directors were dismissed with no admission of liability or wrongdoing.
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In re Cooper Companies, Inc. Securities and Derivative Litigation (C.D. Cal.):
Represent one of the directors of Cooper Companies, Inc. (“Cooper”) in a securities class action and derivative litigation in which the plaintiffs alleged that Cooper and its directors and officers defrauded its shareholders by making false statements about its merger with Ocular Sciences, Inc., its financial statements, and its pipeline of new products. Along with the other defendants, we successfully moved to dismiss the plaintiffs’ first consolidated complaint alleging claims under Sections 10(b) and 20 of the Securities Exchange Act. The court thereafter denied all of the defendants’ motions to dismiss the plaintiffs’ second consolidated complaint. We, however, persisted in seeking dismissal on behalf of our client asking the court to reconsider the denial of the motion to dismiss as to our client and after further briefing, the court dismissed our client alone while allowing the case to proceed against the other defendants.
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Cordova v. HSBC Bank USA, N.A. (S.D. Fla.):
Representing HSBC Bank USA, N.A. in class action brought by investors against financial institutions pursuant to common law, arising from allegations that Bank breached its fiduciary duties as trustee for retirement trusts sold to bank’s customers by aiding and abetting fraudulent investment scheme. Won dismissal of common-law claims, with prejudice, based on SLUSA preemption. Plaintiff amended complaint to bring claims pursuant to Securities and Exchange Acts, arising from same circumstances and alleging bank was co-offeror of investments trusts. Motion to dismiss amended complaint pending.
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In re Cree, Inc. Securities Litigation (M.D.N.C./4th Cir.):
Represented Cree, Inc. (“Cree”) and its directors and officers in a securities class action arising out of an alleged financial fraud involving channel stuffing and round trip transactions. We successfully obtained dismissal with prejudice of the lawsuit in the district court even though the plaintiffs had filed a 136 page complaint replete with allegations from confidential witnesses including the company’s co-founder. The United States Court of Appeals for the Fourth Circuit affirmed the dismissal on appeal and adopted the most stringent standard applied to analyze allegations based on confidential witnesses of any Court of Appeals. We also successfully opposed a petition for rehearing and rehearing en banc in the Court of Appeals.
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In re Dana Corp. Sec. and Deriv. Litig. (N.D. Ohio):
Representing this public company and certain of its current and former officers in securities fraud class actions, related derivative cases and SEC investigation arising from its restatements of earnings. Recently obtained dismissal of all class claims and derivative claims, with prejudice in one of the first decisions of its kind post-Tellabs. Appeals pending.
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DE&J Ltd. P’ship v. Conaway (In re Kmart, Inc. Sec. Litig.) (E.D. Mich./6th Cir.):
Represented former officers in consolidated securities fraud class action brought pursuant to Exchange Act, arising from corporation’s alleged misrepresentations that it was in the midst of a recovery when it actually posted a $2.4 billion loss. Won dismissal with prejudice in district court; dismissal was affirmed on appeal.
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Donovan v. Seher (In re ABC-NACO Inc.) (Bankr. N.D. Ill./N.D. Ill.):
Represented ABC-NACO Inc. and its directors and officers in direct securities action arising out of stock-for-stock acquisition. Won dismissal with prejudice in bankruptcy and district courts; plaintiff abandoned further appeal to 7th Cir.
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In re ECtel, Ltd. Securities Litigation (D. Md./4th Cir.):
Represent ECtel, Ltd. (“ECtel”) and its directors and officers in a securities class action alleging claims under Section 10(b) and 20 of the Securities Exchange Act. Plaintiffs alleged that ECtel prematurely recognized revenue in a number of ways, including “bill-and-hold” transactions, factoring receivables, and other “sham” transactions basing its claim on information from confidential witnesses and on internal company documents contained on multiple CDs of data that plaintiff had somehow obtained. We succeeded in moving to dismiss the case with prejudice in the district court at which point the plaintiff moved for reconsideration and for leave to amend based on an additional confidential witness and additional internal company documents including accounting workpapers. We successfully opposed the motion for reconsideration and motion for leave to amend and plaintiff appealed to the United States Court of Appeals for the Fourth Circuit. After the briefing was complete in the Fourth Circuit, in the week before oral argument was scheduled, the parties reached an agreement in principle to settle the case for $750,000.
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In re Exide Techs., Inc. Sec., B’holders and Deriv. Litig. (S.D.N.Y. and D.N.J.):
Representing corporation and current and former officers in consolidated securities fraud class action, bondholder class action and derivative action brought pursuant to Exchange Act and common law, arising from corporation’s announcement shortly after $350 million bond offering that it would fail to meet outstanding loan covenants. The court accepted our arguments and dismissed the derivative litigation in its entirety, with prejudice.
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In re First Virtual Communications, Inc. Securities Litigation (N.D. Cal.):
Represented the former CEO and CFO of First Virtual Communications, Inc. (“First Virtual”) in a securities class action arising out of the company’s financial restatement that ultimately led to its bankruptcy. The plaintiffs asserted claims under Section 10(b) and 20 of the Securities Exchange Act based on facts derived from 16 confidential witnesses and the company’s public statements concerning its need to restate its financial results to restate revenue on sales made in the Far East. We moved to dismiss the complaint and while the motion to dismiss was pending reached a settlement with the plaintiffs for $1.6 million.
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Henzel v. Image Entertainment, Inc. (Cal. Super., L.A. County):
Represented Image Entertainment, Inc. (“Image”) and its directors in a shareholder class action challenging the fairness of the sale of Image to an investor group led by David Bergstein. The shareholders claimed that Image’s directors breached their duties of care and loyalty by authorizing the sale of Image at an unfair process following an unfair process in a complicated transaction involving cash and "stub" equity. While the plaintiffs initially threatened to move for a temporary restraining order and/or a preliminary injunction to prevent Image’s shareholders from voting on the transaction, we convinced plaintiffs not to bring such motion. We also successfully convinced plaintiff to dismiss the case voluntarily after detailing the lack of merit to her claims.
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In re Home Prods. Int’l, Inc. S’holders Litig. (Del. Ch. Ct. and Ill Ch. Ct.):
Represented corporation and its independent directors in shareholder action alleging breach of fiduciary duty in approval of going-private merger. Obtained voluntary dismissal and defeated Illinois plaintiff’s petition for attorneys’ fees.
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In re HSBC Bank USA, N.A. Sec. Litig.(US Dist. Ct. S.D. of FL):
Representing HSBC Bank USA, N.A. in putative class action securities fraud litigation brought against the Bank and several other well-known financial institutions, pending in the U.S. District Court for the Southern District of Florida. The claims arise from the Bank's alleged involvement in a fraudulent investment scheme perpetrated by one of the Bank's customers—Pension Fund of America ("PFA"). By Order entered in February 2006, Katten successfully obtained dismissal of the case consisting of plaintiffs' state law claims for breach of fiduciary duty and aiding and abetting PFA's fraud and breaches of fiduciary duties, arguing such claims were pre-empted by the Securities Litigation Uniform Standards Act. The plaintiffs were granted leave to amend their complaint and alleged an entirely different theory of liability, alleging HSBC and the other financial institutions directly violated the federal securities laws as co-offerors of the alleged fraudulent retirement trusts. Katten moved to dismiss this complaint, Plaintiffs sought leave to amend their complaint again, and the Court denied the motion to amend in August 2006. Previously filed motions to dismiss are pending for determination by the Court.
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In re IPO Sec. Litig. (S.D.N.Y.):
Represented former directors and officers in consolidated securities fraud class action against issuers, directors and officers and underwriters arising from high-technology IPOs.
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Jackson Nat'l v. Kendig, Steinberg v. Kendig (In re Ben Franklin Retail Stores, Inc.):
Represented former directors and officers of insolvent corporation in direct and derivative actions raising claims for common-law fraud, breach of fiduciary duty and negligence arising from alleged misrepresentations in corporation’s public filings, loan documents and contracts. Won dismissals of all claims against all clients in all courts; Illinois Court of Appeals affirmed state court dismissal and federal plaintiffs abandoned appeal of federal claims to 7th Cir.
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In re Krispy Kreme Doughnuts, Inc. Sec. Litig. (M.D.N.C.):
Representing corporation and certain directors and officers in securities fraud class action brought pursuant to Exchange Act, arising from alleged misrepresentations regarding growth and profitability that were unrealistic in light of diet trends, market saturation and difficulties in wholesale operations were inhibiting growth, and ultimately leading to multi-year restatement.
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Krys v. Sugrue (S.D.N.Y.):
Representing former general counsel of Refco Inc. in action asserting breach of fiduciary duty and aiding and abetting breach of fiduciary duty.
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Lapiner v. Camtek, Ltd. (N.D. Cal.):
Represent Camtek, Ltd. ("Camtek") and its directors and officers in a securities class action in which the plaintiff alleges that Camtek lacked adequate internal controls and had no reasonable basis for its revenue projections during a class period extending from November 2005 to December 2006. The case arises out of Camtek's miss of its revenue projection for the fourth quarter of 2006.
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In re Laureate Education Corporation (Baltimore County, Maryland):
Represented successfully the Chairman & CEO of Laureate Education, Inc., an interested member of the board of directors and their private equity firm, Sterling Capital Partners in a shareholder class action lawsuit challenging the almost $4 billion "taking private" transaction proposed by management and their financial investors.
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Lepetomane IX, Inc. v. Rosenband (In re RHC/Spacemaster Corp.) (Bankr. N.D. Ill.):
Representing former directors and officers of now-insolvent corporation in direct action by bankruptcy trustee alleging breach of fiduciary duty and other common-law claims arising from compensation and bonus payments and incomplete corporate transactions.
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Leumi Gemel, Ltd. v. Goldstein (In re ECtel, Ltd. Sec. Litig.) (D. Md.):
Representing corporation and certain of its officers in securities fraud class action brought pursuant to Exchange Act, arising out of allegedly improper revenue recognition. Won dismissal with prejudice in district court; plaintiff’s motion for reconsideration pending.
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Lubin v. Chapman (Md. Circ. Ct.):
Represented CEO and Chairman in proceeding brought by state attorney general and securities commissioner alleging fraudulent scheme regarding public offering.
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In re Merge Techs., Inc. Sec. Litig. (E.D. Wis.):
Representing Merge Technologies, Inc. in the defense of several consolidated securities class actions arising from restatement of three years of financial statements and resignation of top executives filed in the United States District Court for the Eastern District of Wisconsin, a derivative case pending in the State Court of Wisconsin, and in regulatory proceedings before the NASDAQ Exchange and the Securities Exchange Commission.
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Ohio Bureau of Workers’ Comp. v. MDL Active Duration Fund, Ltd. (S.D. Ohio):
Represented corporation and its officers and directors in securities fraud class action brought by Ohio Attorney General regarding loss of $215 million hedge fund investment.
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Opper v. Res-Care, Inc. (In re Res-Care, Inc. S’holder Litig.) (Ky. Cir. Ct.):
Represented corporation and certain of its directors in shareholder class actions alleging breach of fiduciary duty and seeking injunction of proposed going-private merger. Plaintiffs voluntarily dismissed their claims, with prejudice, following briefing on motion to dismiss.
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In re Psilos Group Partners:
Represented Psilos Group Partners and related persons and entities, winning three consecutive motions to dismiss complaints alleging securities fraud, common law fraud, and breach of fiduciary duty. The plaintiff appealed and the Ninth Circuit affirmed the district court's dismissal of the case.
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In re ProQuest Co. Sec. and Deriv. Litig. (E.D. Mich.):
Representing former CEO/chairman in consolidated securities fraud class action brought pursuant to Exchange Act, and in related derivative litigation, arising from corporation’s anticipated restatement of six years of financials.
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In re Refco Capital Markets Brokerage Litig. (S.D.N.Y.):
Represented former general counsel in securities fraud class action arising from parent corporation’s restatement of financials. Obtained voluntary dismissal of complaint.
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In re Refco Sec. Litig. (S.D.N.Y.):
Representing former general counsel in securities fraud class action arising from corporation’s restatement of financials. Won summary judgment in two related insurance coverage actions compelling advancement of defense fees and costs. Obtained preliminary injunction against third insurance carrier compelling advancement of defense fees and costs.
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In re Rent-Way Sec. Litig. (W.D. Pa.):
Represented founder, CEO and Chairman in securities fraud class action arising from alleged misrepresentations in financial statements. Negotiated favorable settlement.
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In re Safety Components Int’l Sec. Litig. (D.N.J.):
Represented former Chairman in securities fraud class action arising from corporation’s restatement of financials. Negotiated favorable settlement.
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Savas v. UNext, Inc. (Ill. Circ. Ct.):
Representing corporation in direct shareholder action raising common-law claims based on alleged misrepresentations in investment solicitations. Won dismissal with prejudice in circuit court; appeal pending.
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In re School Specialty, Inc. S’holders Litig. (Wis. Circ. Ct.):
Represented corporation and its directors in shareholder litigation alleging breach of fiduciary duty in connection with proposed $1.4 billion merger. Defeated plaintiff’s motion for TRO, obtained voluntary dismissal of claims and enabled shareholder vote approving merger to go forward.
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SEC v. Chapman (D. Md.):
Represented founder, CEO and Chairman in SEC civil enforcement action brought pursuant to Securities Act, Exchange Act and Investment Advisers Act, arising from alleged fraudulent scheme in IPO and secondary market trading.
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Sikes v. Craig Winn (W.D. Va.):
Represented corporation and former officers and directors in securities fraud class action arising from alleged misrepresentations and overlyoptimistic projections and business models in IPO documents, road show and subsequent public disclosures. Negotiated favorable settlement.
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Steiner v. MedQuist Inc. (D.N.J.):
Representing former COO in securities fraud class action brought pursuant to Exchange Act, arising from allegedly improper billing practices.
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In re Initial Public Offering Securities Litigation, Master File No. 21 MC 92 (SAS):
Acting as lead counsel for the former officers and directors of a bankrupt issuer, Value America, Inc. (now bankrupt), in a massive securities litigation consolidating hundreds of cases in the Southern District of New York. The issuers and individual issuer defendants had entered into a complex settlement agreement with the putative plaintiff's class, which consisted of investors who traded in the various issuers' IPOs. The Second Circuit, however, vacated the certification of the plaintiffs' class, which unwound the settlement agreement then in place. Therefore, there remain significant discovery, motions, and issues relating to class certification, tolling, and other possible grounds for dismissal, prior to revisiting the possibility of entering another issuers settlement.
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In re Vitesse Semiconductor Corp. Securities and Derivative Litigation (C.D. Cal.):
Represent certain of the current and former directors of Vitesse Semiconductor Company in securities class action and derivative litigation alleging that Vitesse improperly accounted for certain transactions including the grant of backdated options. We also represent these same current and former directors in SEC and DOJ investigations concerning these same transactions. We have reached a preliminary settlement with plaintiffs in the securities class action and derivative litigation that awaits preliminary court approval. The SEC and DOJ investigations are ongoing.
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In re Worldwide Xceed Group, Inc.:
Represented the former CEO of Worldwide Xceed Group, Inc. in defense of securities fraud claim in the United States District Court for the Southern District of New York. The court dismissed with prejudice plaintiffs' claims against our client—the only defendant dismissed from the litigation.
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