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Who We Are Our People Practices News and Events Experience Offices Join Us Diversity Home > Practices and Industries Securities Litigation and Arbitration Watch your step… Every week it seems there’s a new accounting scandal in the newspapers and on the airwaves as yesterday’s industry leader becomes today’s poster child for corporate bad behavior. With increased scrutiny from the government, the press and the public – and of course continued attention from the shareholder plaintiffs’ bar – it’s never been more important to ensure that your internal controls are effective and that when issues arise, they are handled promptly and skillfully. The climate is especially volatile right now. Even the most seasoned corporate accounting and financial reporting departments are struggling to manage potential headline grabbing, hot-button issues, such as sub-prime losses, stock option backdating, and mortgage fraud. It can happen to anyone. No matter how well you think you have internal controls in place, you may find evidence of “creative accounting” in your organization that triggers an internal investigation. In short order, your company could find itself facing an SEC investigation or civil litigation, not to mention bad press. Getting back on track In the event that an internal investigation or litigation defense becomes necessary, you need a skilled legal team at your side, helping you prepare for and execute on the right response and making sure every step is taken with the correct amount of diligence and consideration. Manatt’s Securities Litigation and Arbitration group is the right team. We can advise your company and your board in determining what steps are necessary, and then swiftly carry out the company’s response, so you run less risk of leading the nightly newscast for the wrong reasons. Our goal is always to achieve favorable, swift resolutions for our clients before litigation commences or the matter proceeds to trial. However, in the event a matter heads to litigation or even trial, you can count on securities litigation trial experience from a team that includes former federal prosecutors, SEC attorneys and high-level government officials. In fact, our lawyers are among a select few who have successfully tried securities-related cases to jury verdict. Manatt’s securities litigation team successfully represents clients in a full range of securities litigation and arbitration matters nationwide. We carry out confidential internal investigations of alleged misconduct in the area of securities law and financial reporting on behalf of corporations, boards of directors and board committees. We defend companies, their officers and directors, and other entities in securities class actions, shareholder derivative suits, and other private securities litigation, in federal and state courts around the country. We represent corporations and individuals in investigations and enforcement proceedings before the SEC and state regulators. We handle arbitration matters before FINRA and other industry regulatory authorities. And we represent corporate clients in litigation involving merger and acquisition transactions, including litigation between merger parties as well as shareholder litigation involving fiduciary duties and disclosure issues. Recent Success Stories When a leading nationwide real estate services company discovered previously undisclosed “side letter” agreements with potentially significant accounting and financial reporting implications, the board of directors retained Manatt to conduct an internal investigation and handle related issues. We completed a thorough and swift internal investigation, reported to the Board, and counseled the company through public disclosure, restatement of prior financial statements, remedial measures, and interaction with the SEC. In a short period of time, the company was able to put the matter behind it and move forward with a minimum of regulatory scrutiny – and no enforcement activity or shareholder litigation. When a regional bank holding company needed the flexibility to implement a reverse stock split, it sought shareholder authorization to do so through a special shareholders meeting. Within days, a shareholder plaintiff filed suit in federal court, alleging that the related proxy statement contained inadequate disclosure – false and misleading statements and omissions – regarding the proposed reverse stock split. The complaint asserted representative and class action claims under the federal securities laws and state law fiduciary duties of disclosure, and sought to enjoin the shareholder vote and recover monetary damages. The plaintiff also applied for a temporary restraining order to stop the shareholder vote and to set an expedited hearing on a preliminary injunction. The board turned to Manatt, and we filed opposition papers two days later. Two days later, the Court denied plaintiff’s application in its entirety, allowing the company to go forward with its shareholder meeting – and the proposal to authorize the reverse stock split was approved, thus providing the company with the necessary flexibility to ensure its survival and recovery. We then filed a motion to dismiss all remaining claims, which the Court promptly granted – dismissing all claims and bringing the bringing the matter to a close with a swift and complete victory. When the recent wave of stock option backdating issues first arose, the claims relating to Monster Worldwide, Inc. emerged as among the largest and highest profile. The Chairman and CEO of Monster engaged Manatt to defend him in federal securities and ERISA cases, in federal and state shareholder derivative cases and company claims, and in related U.S. Attorney and SEC investigations and proceedings involving alleged stock option backdating. In all of these separate matters, Manatt skillfully obtained very favorable settlements and complete closure. In conjunction with our Corporate Investigations & White Collar Defense Practice Group, which includes former federal prosecutors, SEC attorneys and high-level government officials and other highly regarded criminal defense counsel, we skillfully advise and defend companies and individuals facing criminal and regulatory scrutiny and enforcement litigation arising out of securities law issues (including insider trading), thus ensuring a fully coordinated response in all criminal and civil “parallel proceedings.” With Manatt’s vast multidisciplinary experience, our securities litigators are able to utilize the skills and experiences of colleagues in Manatt’s other practice and industry groups, including our financial institutions, corporate securities, capital markets, mergers and acquisitions, antitrust, environmental, government, healthcare, real estate, entertainment, tax and business litigation practices. With this backdrop of internal expertise, we focus on crafting strategic solutions to securities litigation issues and carrying out those solutions with individualized attention and aggressive execution. With our extraordinary depth of trial experience and trial success, which includes obtaining an acquittal in a four-month criminal trial involving allegations of securities fraud, racketeering and conspiracy, we can take, and have taken, securities cases through trial to a defense verdict, if necessary. Members of our securities litigation team have also represented: A director of Comverse Technology, Inc. in federal shareholder derivative actions raising federal securities claims and related state law claims involving alleged stock option backdating. (In re Comverse Technology, Inc. Derivative Litigation) Viacom Inc. and directors and officers in federal securities class action, federal ERISA class action, and Delaware shareholder class action asserting breaches of fiduciary duties of loyalty and disclosure, relating to exchange offer and split-off of Blockbuster Inc. Obtained dismissal of all securities claims (504 F. Supp. 2d 151), dismissal of ERISA claims (2007 U.S. Dist. LEXIS 85831), and dismissal of all Delaware fiduciary duty claims (2008 WL 308450, aff’d 965 A.2d 676). A corporate client in complex criminal case involving allegations of securities fraud, racketeering and conspiracy, and won acquittal following four-month trial. (U.S. v. Phillips) A CEO of Internet-based company in defense of securities fraud claims arising out of corporate merger transaction. Obtained dismissal in district court, affirmed by Ninth Circuit. (Scognamillo v. Credit Suisse First Boston LLC, et al.) A CFO of technology company in securities fraud class action. Obtained dismissal in district court. (In re Network Associates, Inc. Securities Litigation) A Canadian graphics chip maker and directors and officers in state court shareholder derivative action involving alleged breaches of fiduciary duties and insider trading. Obtained dismissal of claims based on Canadian law (under “internal affairs” doctrine) and voluntary dismissal of remaining claim. (Carmona v. Ho, et al.) A Silicon Valley software company and directors and officers in state court shareholder derivative action relating to IPO pricing and underwriter allocation of IPO shares. Settled on extremely favorable terms. (Yabroff v. Jaswa, et al.) An accounting firm and NASD member subsidiary in major employment dispute involving registered representative, in arbitration and state court litigation. Obtained defense award and recovered substantial damages on counterclaim regarding trade secret misappropriation. (Belinsky v. Burr, Pilger & Mayer, LLP) Overview Attorneys & Advisors Contacts Press Coverage

Securities Litigation and Arbitration

Watch your step…
Every week it seems there’s a new accounting scandal in the newspapers and on the airwaves as yesterday’s industry leader becomes today’s poster child for corporate bad behavior. With increased scrutiny from the government, the press and the public – and of course continued attention from the shareholder plaintiffs’ bar – it’s never been more important to ensure that your internal controls are effective and that when issues arise, they are handled promptly and skillfully.

The climate is especially volatile right now. Even the most seasoned corporate accounting and financial reporting departments are struggling to manage potential headline grabbing, hot-button issues, such as sub-prime losses, stock option backdating, and mortgage fraud. It can happen to anyone. No matter how well you think you have internal controls in place, you may find evidence of “creative accounting” in your organization that triggers an internal investigation. In short order, your company could find itself facing an SEC investigation or civil litigation, not to mention bad press.

Getting back on track
In the event that an internal investigation or litigation defense becomes necessary, you need a skilled legal team at your side, helping you prepare for and execute on the right response and making sure every step is taken with the correct amount of diligence and consideration. Manatt’s Securities Litigation and Arbitration group is the right team. We can advise your company and your board in determining what steps are necessary, and then swiftly carry out the company’s response, so you run less risk of leading the nightly newscast for the wrong reasons.

Our goal is always to achieve favorable, swift resolutions for our clients before litigation commences or the matter proceeds to trial. However, in the event a matter heads to litigation or even trial, you can count on securities litigation trial experience from a team that includes former federal prosecutors, SEC attorneys and high-level government officials. In fact, our lawyers are among a select few who have successfully tried securities-related cases to jury verdict.

Manatt’s securities litigation team successfully represents clients in a full range of securities litigation and arbitration matters nationwide. We carry out confidential internal investigations of alleged misconduct in the area of securities law and financial reporting on behalf of corporations, boards of directors and board committees. We defend companies, their officers and directors, and other entities in securities class actions, shareholder derivative suits, and other private securities litigation, in federal and state courts around the country. We represent corporations and individuals in investigations and enforcement proceedings before the SEC and state regulators. We handle arbitration matters before FINRA and other industry regulatory authorities. And we represent corporate clients in litigation involving merger and acquisition transactions, including litigation between merger parties as well as shareholder litigation involving fiduciary duties and disclosure issues.

Recent Success Stories

When a leading nationwide real estate services company discovered previously undisclosed “side letter” agreements with potentially significant accounting and financial reporting implications, the board of directors retained Manatt to conduct an internal investigation and handle related issues. We completed a thorough and swift internal investigation, reported to the Board, and counseled the company through public disclosure, restatement of prior financial statements, remedial measures, and interaction with the SEC. In a short period of time, the company was able to put the matter behind it and move forward with a minimum of regulatory scrutiny – and no enforcement activity or shareholder litigation.
When a regional bank holding company needed the flexibility to implement a reverse stock split, it sought shareholder authorization to do so through a special shareholders meeting. Within days, a shareholder plaintiff filed suit in federal court, alleging that the related proxy statement contained inadequate disclosure – false and misleading statements and omissions – regarding the proposed reverse stock split. The complaint asserted representative and class action claims under the federal securities laws and state law fiduciary duties of disclosure, and sought to enjoin the shareholder vote and recover monetary damages. The plaintiff also applied for a temporary restraining order to stop the shareholder vote and to set an expedited hearing on a preliminary injunction. The board turned to Manatt, and we filed opposition papers two days later. Two days later, the Court denied plaintiff’s application in its entirety, allowing the company to go forward with its shareholder meeting – and the proposal to authorize the reverse stock split was approved, thus providing the company with the necessary flexibility to ensure its survival and recovery. We then filed a motion to dismiss all remaining claims, which the Court promptly granted – dismissing all claims and bringing the bringing the matter to a close with a swift and complete victory.
When the recent wave of stock option backdating issues first arose, the claims relating to Monster Worldwide, Inc. emerged as among the largest and highest profile. The Chairman and CEO of Monster engaged Manatt to defend him in federal securities and ERISA cases, in federal and state shareholder derivative cases and company claims, and in related U.S. Attorney and SEC investigations and proceedings involving alleged stock option backdating. In all of these separate matters, Manatt skillfully obtained very favorable settlements and complete closure.

In conjunction with our Corporate Investigations & White Collar Defense Practice Group, which includes former federal prosecutors, SEC attorneys and high-level government officials and other highly regarded criminal defense counsel, we skillfully advise and defend companies and individuals facing criminal and regulatory scrutiny and enforcement litigation arising out of securities law issues (including insider trading), thus ensuring a fully coordinated response in all criminal and civil “parallel proceedings.”

With Manatt’s vast multidisciplinary experience, our securities litigators are able to utilize the skills and experiences of colleagues in Manatt’s other practice and industry groups, including our financial institutions, corporate securities, capital markets, mergers and acquisitions, antitrust, environmental, government, healthcare, real estate, entertainment, tax and business litigation practices. With this backdrop of internal expertise, we focus on crafting strategic solutions to securities litigation issues and carrying out those solutions with individualized attention and aggressive execution.

With our extraordinary depth of trial experience and trial success, which includes obtaining an acquittal in a four-month criminal trial involving allegations of securities fraud, racketeering and conspiracy, we can take, and have taken, securities cases through trial to a defense verdict, if necessary.

Members of our securities litigation team have also represented:

A director of Comverse Technology, Inc. in federal shareholder derivative actions raising federal securities claims and related state law claims involving alleged stock option backdating. (In re Comverse Technology, Inc. Derivative Litigation)
Viacom Inc. and directors and officers in federal securities class action, federal ERISA class action, and Delaware shareholder class action asserting breaches of fiduciary duties of loyalty and disclosure, relating to exchange offer and split-off of Blockbuster Inc. Obtained dismissal of all securities claims (504 F. Supp. 2d 151), dismissal of ERISA claims (2007 U.S. Dist. LEXIS 85831), and dismissal of all Delaware fiduciary duty claims (2008 WL 308450, aff’d 965 A.2d 676).
A corporate client in complex criminal case involving allegations of securities fraud, racketeering and conspiracy, and won acquittal following four-month trial. (U.S. v. Phillips)
A CEO of Internet-based company in defense of securities fraud claims arising out of corporate merger transaction. Obtained dismissal in district court, affirmed by Ninth Circuit. (Scognamillo v. Credit Suisse First Boston LLC, et al.)
A CFO of technology company in securities fraud class action. Obtained dismissal in district court. (In re Network Associates, Inc. Securities Litigation)
A Canadian graphics chip maker and directors and officers in state court shareholder derivative action involving alleged breaches of fiduciary duties and insider trading. Obtained dismissal of claims based on Canadian law (under “internal affairs” doctrine) and voluntary dismissal of remaining claim. (Carmona v. Ho, et al.)
A Silicon Valley software company and directors and officers in state court shareholder derivative action relating to IPO pricing and underwriter allocation of IPO shares. Settled on extremely favorable terms. (Yabroff v. Jaswa, et al.)
An accounting firm and NASD member subsidiary in major employment dispute involving registered representative, in arbitration and state court litigation. Obtained defense award and recovered substantial damages on counterclaim regarding trade secret misappropriation. (Belinsky v. Burr, Pilger & Mayer, LLP)

Press Coverage