Securities Litigation and Enforcement

Our Securities Litigation and Enforcement Practice has long been trusted counsel to companies, boards, and individuals in high-stakes securities fraud litigation, regulatory enforcement matters, and related disclosure, conduct, and corporate governance investigations.
 

How We Can Help

Securities Fraud Class Actions: We defend securities fraud class actions on behalf of public companies, as well as directors and officers, and other defendants, for claims under the Securities Act of 1933, the Securities Exchange Act of 1934, and state law. We have defended foreign issuers and smaller domestic companies, both of which are increasingly targeted by the plaintiffs’ bar. We also represent private companies and their officers and directors who find themselves the subject of securities fraud lawsuits. Our team includes former SEC trial attorneys and a co-chair of the Class Actions Subcommittee of the ABA’s Securities Litigation Committee.

SEC Enforcement: We routinely represent clients caught in the throes of SEC enforcement proceedings. Our team includes several former high-level SEC enforcement trial attorneys, assistant U.S. attorneys, and state prosecutors. We represent clients from the initial stage of an SEC informal inquiry, through formal investigations, Wells submission, at trial (in SEC administrative proceedings or federal court), and on appeal. We represent issuers, underwriters, individuals, and other industry participants, as well as witnesses and SEC receivers. We also represent clients involved in cutting-edge issues, including Regulation Best Interest; environmental, social, and governance (ESG); information security and resiliency; and crypto assets and emerging technologies. Learn more about our capabilities in SEC enforcement.

FINRA Enforcement: We represent clients in FINRA adversarial matters across the country, focusing on industry disputes, customer disputes, and regulatory investigations and enforcement. Our team has substantial experience with Regulation Best Interest. Our clients include broker-dealers, registered representatives, associated persons, and management personnel. Our team includes a former FINRA enforcement litigator and senior directors. Learn more about our capabilities in FINRA enforcement.

Shareholder Derivative Demands and Litigation: How a board responds to a demand letter from a shareholder makes a large impact on how any ensuing litigation unfolds against the company. We advise companies and their boards in navigating shareholder demands, starting with, as appropriate, setting up a special committee, and continuing through investigation, responding to the complaining shareholder, and managing litigation. We also represent individual officers and directors in derivative litigation. Recent engagements have included responding to shareholder inquiries and formal demands related to diversity, equity, and inclusion (DEI) and ESG matters.

Representing Special Litigation Committees: We act as independent counsel to special litigation committees that have been tasked with the investigation and evaluation of shareholder demands. Our team, which includes more than a dozen former federal prosecutors, is truly independent and works quickly and efficiently to investigate the allegations and advise the committee on whether proceeding with the suggested claims is in the company’s best interests.

Corporate Internal Investigations: We work with legal departments, public company boards, and board committees on all manner of corporate internal investigations. These engagements often start with a shareholder communication, a concerned board member, an ombudsman referral, an employee complaint, or a regulatory or industry communication. Our former SEC, FINRA, and DOJ attorneys work quickly to define, execute, and report out on the investigation. Recent engagements have included investigations into complaints of executive sexual impropriety, expense account abuse, preferential hiring or employee treatment, allegations of accounting and earnings malfeasance, and matters related to DEI or other ESG initiatives and disclosures.

Merger Objection and Post-Merger Litigation: Most public company mergers and acquisitions are accompanied by a merger objection lawsuit, in which a shareholder sues the target, the target’s directors and officers, the acquiring company, and any advisers on the deal, seeking to enjoin the business combination and demanding more disclosures and greater value. We can help defendants distinguish the nuisance suit from the suit that demands significant attention, and then counsel companies, directors, and other defendants through the minefield of merger litigation.

Corporate Governance Litigation: We represent companies, directors, officers, and other individuals in all manner of challenges to corporate governance and allegations of breaches of fiduciary duty. We have particular experience with allegations of accounting malfeasance, self-dealing, failure of oversight, and excessive compensation. We also litigate or otherwise intervene at our clients’ request in change of control disputes and proxy fights.

Insolvency-Related Directors & Officers (D&O) Litigation: Directors and officers are common targets for breach of fiduciary duty or similar claims in bankruptcies, reorganizations, and other insolvency proceedings in which the trustee and other stakeholders are looking to hold senior management accountable. Our firm has represented D&Os in this litigation in numerous large and complex insolvency proceedings. Learn more about our capabilities in insolvency-related D&O litigation and how we help clients navigate through complex legal claims and defenses while minimizing their exposure and protecting their reputations and relationships.
 

The Carlton Fields Distinction

Up-Front Client Commitment: Our practice is dedicated to our clients’ success, and we commit to the following at the outset of every engagement:

• We understand our client’s industry and will commit to understanding the company, its business goals, and its overarching objectives for our engagement as counsel.
• We will conduct an early case assessment and discuss with our client alternative approaches to managing the risks, challenges, and budget for the engagement.
• We will create a client team to serve the client’s needs at the inception of the engagement that will be committed to knowing the company and the matter intimately.
• Even in the largest and most complex cases, we provide a single point of contact so that there is a mechanism for immediate contact and response.
• We have the insight and experience to counsel clients when to contest certain claims vigorously and when it is in the client’s best interest to pursue a negotiated settlement.
• We will discuss and honor the client’s preferred means of communicating with us before, during, and after the engagement.
• We will keep our clients apprised every step of the way, seeking client involvement to the extent preferred.

Intelligent Matter Management: We endeavor whenever possible to obtain early resolution of these types of cases and investigations, which can be disruptive, costly, and unsettling to a company’s management, board, investors, and business partners. By deploying early case assessment, we can triage a new lawsuit and provide an array of options to fit our client’s risk tolerance and budget. Our in-house document collection and analysis tools, including the use of technology-assisted review (such as predictive coding), help to increase efficiencies, find the important documents sooner, and reduce costs. Our practice is at the cutting edge of emerging issues concerning the preservation, production, and discovery of electronic information.

Alternative Fee Arrangements: We welcome alternative fee arrangements (AFAs) in complex securities and corporate governance litigation. Our AFAs can include phased billing, capped fees and collars, blended rates, success and contingency fees, and other arrangements suitable for the matter. We have found these arrangements particularly effective for managing portfolios of similar cases. Additionally, our billing rates, including those of our New York and Washington, D.C., attorneys, are significantly lower than those of the traditional Northeast and West Coast securities litigation defense firms.

Insurance Company Relationships: We are approved securities litigation counsel for directors and officers liability insurance policies issued by several major national insurers. We have an established track record of working cooperatively with these insurers in the defense of securities claims. We also represent insurance companies as monitoring counsel and coordinating counsel in all manner of securities, derivative, and corporate governance litigation, from inception through mediation and settlement or court resolution.

The Right Experience: Our practice group includes more than a dozen former federal prosecutors and several former SEC and FINRA staff. Our attorneys have substantial trial experience both in enforcement actions and in class actions, and can try the most complex matters when appropriate for the matter. Our litigators handle matters at the federal and state trial and appellate levels, in SEC administrative fora, and in FINRA and NYSE arbitrations.

The Right Resources: The Securities Litigation and Enforcement Practice draws on the firm’s extensive resources in corporate, securities, tax, government investigations and white collar defense, appellate and trial support, and other transactional and litigation disciplines. Through our offices in New York, Los Angeles, Connecticut, Atlanta, New Jersey, Washington, D.C., and throughout Florida, and our long-standing relationships with numerous local and regional firms throughout the country, we stand ready to litigate, and have litigated, matters throughout the United States.

We have substantial experience representing public and private companies and their directors and officers in securities and corporate governance litigation. Recent or current matters include:

• Represented the special committee of a public company in an investigation into conflicts of interest, regulatory compliance, and other matters.
• Defeated class certification in a $1.5 billion post-merger securities litigation.
• Represented large regional bank in defense of threatened action by shareholder to challenge proposed merger. Secured resolution without action filed.
• Represented a health care medical device company (as nominal defendant) and defendant officers and directors in defense of shareholder derivative action alleging that current and former members of the company’s management and board of directors failed to exercise oversight of the company and engaged in self-dealing. After conducting an investigation, we negotiated and obtained a settlement for the company and its officers and directors.
• Obtained dismissal of shareholder derivative suit against public health care technology company for failure to make demand.
• Defended public insurance company that received a shareholder demand letter related to executive compensation, settling without litigation.
• Defended a public company against a $20 million earnout claim following the client's acquisition of a smaller public company based on a prior acquisition by the target company.
• Represented the special litigation committee of the board of directors of a Fortune 500 company in an investigation of allegations in a shareholder derivative action concerning the company's earnings projections. Based on our presentation to plaintiff's counsel at the conclusion of the investigation, the plaintiff voluntarily dismissed the action.
• Represented former Kmart officer in a class action securities fraud lawsuit alleging that senior executives misled investors by artificially and falsely inflating prices for Kmart publicly traded securities. Our firm argued that the plaintiffs failed to plead loss causation, and the court ultimately based its decision to dismiss the complaint as to all defendants on such grounds. Also represented former Kmart officer in action alleging breach of contract, unjust enrichment, and fraudulent transfer claims commenced by the Kmart Creditor Trust.
• Represented former executive of Sunbeam Corp. in a securities fraud litigation brought on behalf of class action plaintiffs, and a derivative action brought on behalf of Sunbeam.
• Monitored merger objection litigation for national insurance company, and participated in successful mediation of all claims well below policy limits.
• Represented six former officers of publicly traded company in various matters related to Chapter 7 bankruptcy, including breach of fiduciary duty claims, federal securities fraud claims, wage claims, and common law claims.
• Represented a variable annuity issuer in action alleging violations of Exchange Act Section 10(b)/Rule 10b-5, as well as state statutory and common law claims. Voluntarily dismissed after (i) removed case to federal court; (ii) filed motion to dismiss all counts; and (iii) federal court granted concurrently filed motion to transfer venue.
• Represented a private placement issuer in action claiming losses attributable to Bernie Madoff “feeder fund” investments. Motion to dismiss with prejudice granted on all counts.
• Represented regional bank in responding to a threatened shareholder lawsuit to enjoin merger with Nasdaq-traded bank based on alleged breaches of fiduciary duty, inadequate consideration, and inaccurate disclosures. Merger was completed without lawsuit being filed.
• Represented a government retirement plan service provider in putative class action brought by municipality asserting state law claims relating to service provider’s receipt of allegedly improper “revenue sharing” fees from mutual fund investment advisers and/or distributors. Federal district court dismissed all claims under SLUSA, finding that SLUSA’s “state entity” exception did not apply.
• Represented a wholesale broker-dealer and principal underwriter in FINRA arbitration alleging fraud and due diligence failures in connection with post-financial crisis losses incurred in underlying hedge fund investments selected by high net worth investor within a private placement variable annuity. All claims dismissed by arbitration panel following conclusion of plaintiff’s case-in-chief. Panel’s dismissal subsequently confirmed in federal district court.
• Represented a witness in SIGTARP and Department of Justice’s first high-profile investigation and criminal prosecution of securities fraud in relation to the public-private investment program involving residential mortgage-backed securities.
• Served as outside general counsel to a publicly traded company, and its senior executive officers, board of directors and committees, on corporate governance, disclosure obligations under the federal securities laws, threatened and actual litigation, securities filings, and general corporate matters. Worked closely with a special committee of the board during the company’s acquisition, as well as during the majority shareholder’s sale of the company.
• Defended a derivative lawsuit and parallel shareholder class action claims regarding transactions among related insurance companies. Derivative claims settled favorably after denial of class certification.
• Represented the buyer and its affiliates in connection with consolidated putative class actions arising from a merger and acquisition transaction. All of the actions were resolved shortly after filing and received final approval from the court. Upon completion of the settlement, we also prosecuted a shareholder appraisal action to a successful resolution.
• Represented a publicly traded bank holding company in a U.S. attorney’s office investigation, SEC investigation, and parallel shareholder class action. Client was not charged in investigations, and the class action was settled.
• Represented a publicly traded bank holding company in a federal securities class action and parallel SEC investigation involving, among other things, accounting for loan losses. SEC matter terminated with no enforcement action, and class action settled.
• Represented private equity firm and its affiliates in connection with consolidated putative class actions arising from a merger and acquisition transaction. All of the actions were resolved shortly after filing and received final approval from the court.
• Represented global manufacturing and technology company in connection with a putative class action arising from a merger and acquisition transaction, resolving the action shortly after filing.
• Represented the special committee of the board of directors of a publicly traded company in a shareholder class action challenging fairness of a going-private transaction and disclosure in the proxy. Settled without payment by our clients.
• Represented a special litigation committee in an internal investigation arising out of a demand letter from a former high-ranking executive of a subsidiary company who was terminated and became a “whistleblower” alleging accounting improprieties, improper billing to the U.S. government from this subsidiary (false claims), and other alleged fraudulent conduct at a publicly traded information technology company. After conducting an internal investigation and making a presentation to counsel for the whistleblower and to the government, the government declined to intervene.
• Represented bank in state law class action alleging excessive fees in connection with mutual fund investments. Class claims dismissed with prejudice pursuant to SLUSA, and case terminated.
• Represented former corporate officer in litigation, including securities fraud claims, related to Chapter 7 bankruptcy proceeding.
• Represented the special litigation committee of the board of a Fortune 1000 company in investigating and responding to shareholder derivative demands and derivative litigation alleging conflicts of interest and breach of the duty of care.
• Represented publicly traded insurance company and its directors in responding to derivative demand letters alleging excessive compensation.
• Advised a publicly traded company and its board of directors on going private or “going dark,” and advised company on class action shareholder suit alleging breach of fiduciary duty upon announcement of the proposed transaction, which suit was discontinued.
• Represented a publicly traded company in merger objection litigation in which purported shareholders challenged merger terms and alleged inadequate disclosures. Defeated motion to enjoin the transaction.
• Defended former CEO of Fortune 100 company in securities litigation, derivative lawsuits, and a regulatory enforcement action, which ended, respectively, with summary judgment, dismissal, and a favorable settlement.

​In addition, we are handling a number of cases in which shareholders and other plaintiffs have alleged claims of fraud, corporate mismanagement, waste, self-dealing, breach of fiduciary duties, conflicts of interest, and other issues.