- From LexisNexis® Mealey’s™ Daily Legal News.
The Second Circuit U.S. Court of Appeals on June 14 agreed to hear an appeal filed by the remaining defendants in a securities class action lawsuit that alleges that defendants concealed that investor funds were being placed in accounts that were part of Bernard L. Madoff’s massive Ponzi scheme (PricewaterhouseCoopers LLP, et al. v. Pasha S. Anwar, et al., Nos. 13-896 and 13-936, 2nd Cir.).
Circuit Judges Rosemary S. Pooler and Susan L. Carney granted the motion for leave to appeal, which was filed by PricewaterhouseCoopers (PwC) International Ltd.
and member firms PwC LLP and PwC Accountants Netherlands N.V. (collectively, PwC defendants); Citco Group Ltd., five of its subsidiaries (collectively, Citco) and directors Brian Francoeur and Ian Pilgrim; and GlobeOp Financial Services LLC (collectively, nondismissed defendants) following a Feb. 25 ruling by U.S. Judge Victor Marrero of the Southern District of New York certifying a class of institutional investors.
Circuit Judge Raymond J Lohier Jr. recused himself from the action.
The investors filed an amended complaint in the District Court, alleging that Fairfield Greenwich Ltd. (FG), five of its subsidiaries, 10 officers and directors of FG or one of the subsidiaries (collectively, the FG defendants); 13 FG partners (the fee defendants); the PwC defendants; Citco; Francoeur; Pilgrim; and GlobeOp Financial violated Sections 10(b) and 20(a) of the Securities Exchange Act and Securities and Exchange Commission Rule 10b-5 by concealing FG’s exposure to the Madoff Ponzi scheme.
Additional Claims Made
Additional claims for fraud, negligent misrepresentation, negligence, breach of fiduciary duty, third-party beneficiary breach of contract, constructive trust, mutual mistake, gross negligence, aiding and abetting breach of fiduciary duty, aiding and abetting fraud and unjust enrichment were made.
On July 29, 2010, Judge Marrero ruled that the investors’ state law claims are not preempted by New York’s Martin Act (Anwar I), and in an Aug. 18, 2010, ruling (Anwar II), Judge Marrero held that the investors have properly stated a claim against the FG defendants and the fee defendants and have properly pleaded their securities law claims under the group pleading doctrine.
On Nov. 6, 2012, the investors sought preliminary approval of an $ 80.25 million settlement with the FG officers and directors and one of FG’s subsidiaries.
Judge Marrero certified the class on Feb. 25 but excluded a number of investors that invested their money in FG funds in nearly two countries.
Judge Marrero then granted final approval of the settlement in a March 25 order.
The investors are represented by David Boies of Boies, Schiller & Flexner in Armonk, N.Y.; David A. Barrett and Howard L. Vickery of Boies Schiller in New York; Stuart H. Singer, Carlos M. Sires and Sashi Bach Baruchow of Boies Schiller in Fort Lauderdale, Fla.; Robert C. Finkel, Carl L. Stine and James A. Harrod of Wolf Popper in New York; Christopher Lovell and Victor E. Stewart of Lovell Stewart Halebian in New York; Robert S. Schachter and Hilary Sobel of Zwerling Schachter & Zwerling in New York; Steven J. Toll and S. Douglas Bunch of Cohen Milstein Sellers & Toll in Washington, D.C.; Daniel W. Krasner and Gregory M. Nespole of Wolf Haldenstein Adler Freeman & Herz in New York; and David A Gehn of Gusrae, Kaplan, Bruno & Nusbaum in New York.
PwC Accountants N.V. is represented by William R. Maquire, Sarah L. Cave, Savvas A. Foukas and Gabrielle S. Marshall of Hughes Hubbard & Reed in New York. Francoeur is represented by Kenneth A. Zitter of New York. GlobeOp is represented by Jonathan D. Cogan and Michael S. Kim of Kobre & Kim in New York and Grant B. Rabenn of Kobre & Kim in Washington, D.C.
The Citco defendants are represented by Lewis N. Brown and Amanda M. McGovern of Gilbride, Heller & Brown in Miami and Eliot Lauer and Michael Moscato of Curtis, Mallet-Prevost, Colt & Mosle in New York. Lion Fairfield Capital Management Ltd. is represented by Lawrence P. Eagel, Paul D. Wexler and Jeffrey A. Carpenter of Bragar Wexler Eagel & Squire in New York. PwC International is represented by Howard M. Shapiro, Fraser L. Hunter Jr., Anne K. Small and Brad E. Konstandt Wilmer Cutler Pickering Hale and Dorr in New York.
PwC LLP is represented by Andrew M. Genser of Kirkland & Ellis in New York and Emily Nicklin and Timothy A. Duffy of Kirkland & Ellis in Chicago. The fee defendants are represented by Edward M. Spiro of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer in New York and Mark G. Cunha, Michael J. Chepiga and Peter E. Kazanoff of Simpson Thacher & Bartlett in New York.
The FG defendants are represented by Cunha, Chepiga and Kazanoff of Simpson Thacher in New York; Marc E. Kasowitz and Daniel J. Fetterman of Kasowitz Benson Torres & Friedman in New York; Andrew Levander and David Hoffner of Dechert in New York; Glenn Kurtz and Andrew Hammond of White & Case in New York; and Mark Goodman and Helen Cantwell of Debevoise & Plimpton in New York.