For publicly traded companies and their executives, the possibility of enforcement actions and private securities lawsuits remains ever-present. The Dodd-Frank Act, like the Sarbanes-Oxley Act a decade earlier, has intensified scrutiny of business activity, imposed new regulations, and increased the prospect of investigations, enforcement actions and litigation. With the array of federal and state laws concerning the issuance and trading of securities, and governing the actions of executives responsible for managing public companies, clients need their litigation counsel knowledgeable about the securities laws and experienced in the kind of investigations, enforcement actions, and regulatory and private litigation brought under them.
LPHS is a nationally respected securities litigation law firm. Our securities litigation practice extends beyond defending clients in private shareholder lawsuits or U.S. Securities and Exchange Commission (SEC) enforcement actions. We represent clients in responding to inquiries from and investigations conducted by the SEC, the U.S. Department of Justice, state regulators and offices of attorneys general. We conduct internal investigations, providing discrete, comprehensive and speedy representation that enables companies to determine the risks posed by potential wrongdoing. LPHS has also prosecuted securities litigation matters on behalf of its clients.
Our clients have included CEOs, CFOs and other executives; directors; special committees of boards of directors; heads of business units of publicly traded corporations; accountants, lawyers and other advisers to management; mutual fund portfolio managers, brokers, hedge fund operators, and other investment industry and financial services professionals; and shareholders defrauded in the purchase of securities. Our representations have involved such issues as allegations of financial fraud, financial misstatements and nondisclosures, insider trading, questionable foreign payments, failure to perform professional obligations and violations of fiduciary duties.
Our attorneys regularly defend private securities claims, including class actions, derivative suits and Employee Retirement Income Security Act actions. Our experience makes us adept at quickly identifying the specific issues at the heart of claims against our clients, then developing and pursuing a litigation strategy that focuses intensely on those matters. We target our discovery efforts at locating documents and eliciting testimony that bolsters our clients’ defense. We work well with companies’ outside counsel and attorneys representing other defendants, and we know how to work within joint defense agreements to best serve our clients’ interests.
- Obtained dismissal of a bellwether case asserting federal securities claim in Texas state court – the first appellate opinion in that area since the U.S. Supreme Court authorized such claims to proceed. Turner v. Macomb County Employees’ Retirement System, No. 05-19-01177-CV (Tex. App.—Dallas Jan. 21, 2020, no pet.) (mem. op.).
- An LPHS partner defended Laura Pendergest-Holt, the former chief investment officer of Stanford Financial Group, in the SEC’s action and in the private civil actions filed in the Southern District of Texas and the Western District of Texas. The cases alleged violations of the securities laws, the receipt of ill-gotten gains, and other breaches of duty by Pendergest-Holt and the other defendants. Securities and Exchange Commission v. Stanford International Bank Ltd., et al., Civil Action No. 3-09-CV 0298-N, United States District Court, Northern District of Texas.*
- An LPHS partner defended outside directors of Fleming Companies in the securities and derivative litigation relating to the failure of a company that was the largest grocery wholesaler in the United States at the time of its failure. In re: Fleming Companies Inc. Securities and Derivative Litigation, Civil No. 5:03—md-01530-TJW, United States District Court, Eastern District of Texas.*
- An LPHS partner defended Ken Lay in the Enron securities litigation, which also involved numerous issues relating to his duties as a director and officer of Enron and claims against Lay by the post-confirmation trust. Newby v. Kenneth L. Lay, et al., Civil No. 4:02-md-01146, United States District Court, Southern District of Texas.*
- LPHS defended 12 officers and directors and a private equity group against breach of fiduciary duty and fraudulent transfer claims arising out of the Mach Speed Holdings bankruptcy. After filing a motion to dismiss, LPHS settled the matter favorably for the private equity group and the officers and directors. Michelle Chow, as Chapter 7 Trustee of the Consolidated Bankruptcy Estates of Mach Speed Holdings LLC, Mach Speed Technologies LLC, JLab LLC and Bear River International LLC v. Rick Baldwin, et al.; Cause No. Case No. 4:17-cv-00865-ALM; United States District Court, Eastern District of Texas, Sherman Division.
- LPHS defended Cheshier & Fuller LLP (C&F) in connection with claims brought by the trustee for Sunpoint Securities Inc. The trustee alleged that C&F negligently performed audits of Sunpoint Securities’ financial statements because those audits failed to detect the CEO’s theft of $25 million. LPHS tried the case to the Bankruptcy Court and demonstrated that other parties were responsible for 95% of the loss. Securities Investor Protection Corporation, et al. v. Cheshier & Fuller LLP, Adv. Case No. 00-6068, United States Bankruptcy Court, Eastern District of Texas.
- LPHS represented the litigation trustee in the Color Star Growers bankruptcy (E.D. Texas) in claims against the debtor’s auditing firm for failing to recognize a material inventory discrepancy that would have greatly impacted the debtor’s borrowing base. We argued that the failure to recognize the discrepancy led to the debtor entering into loan covenants that it couldn’t comply with, which led to bankruptcy. Jeffrey H. Mims, Trustee for the Litigation Trust in the Color Star Bankruptcy v. Erhardt Keefe Steiner & Hottman PC, Case No. DC-13-14628.
- LPHS represented the litigation trustee in claims against the debtor’s former investment bank in the Color Star Growers bankruptcy. We contended that the investment bank was aware of the inventory discrepancy and breached its fiduciary duties to the debtor by advising the debtor to proceed with refinancing its debt on terms that the investment bank knew the debtor could not comply with. Jeffrey H. Mims, Trustee for the Litigation Trust in the Color Star Bankruptcy v. NexBank Securities Inc., Case No. DC-13-14628.
- LPHS represented Texas Rangers Baseball Partners in a lawsuit against Tom Hicks and Ballpark Real Estate LP, and asserted claims against them for fraudulent transfers, breach of fiduciary duty, conspiracy, and aiding and abetting claims.
- LPHS represented the surviving officer of Opus West Inc. (Opus) against its direct and indirect parents and various former officers and directors. Opus sought to recover more than $100 million, consisting of dividend payments made during the three years prior to filing for bankruptcy and benefits received by former officers and directors in related-party transactions. After obtaining a favorable summary judgment ruling, LPHS achieved a settlement wherein the defendants paid LPHS’s client $45 million (public information) and withdrew claims valued at almost $50 million.
- LPHS represented the liquidating trustee for FirstPlus Financial Group. FirstPlus, a publicly traded company, was taken over by alleged members of the Philadelphia mob with the help of accounting and legal professionals. The alleged mobsters looted the company, including using company funds to purchase a Bentley, an airplane and a yacht (among other things). LPHS brought claims for breach of fiduciary duty and malpractice against the alleged mobsters and the professionals, and obtained confidential settlements from three of the professionals.
- *Cases with an asterisk represent cases in which Chris Akin played a key role during his time as a partner with Carrington, Coleman, Sloman & Blumenthal LLP.