Archive for May, 2007

A (third) note on the Shell Settlement

Tuesday, May 29th, 2007

The main post on the settlement is still pending (see previous post), but with thanks to The Race to the Bottom, in the interim a third note.

Earlier this month, Lead Plaintiffs PSERS and SERS (represented by Lead Class Counsel Bernstein Liebhard & Lifshitz LLP) have filed two motions in opposition of the settlement in the original US case pending in New Jersey District Court, opposing the severance and dismissal of the opt-out plaintiffs’ claims and in support of enjoinder of Shell and the Opt-Out Plaintiffs from seeking approval of the settlement in the Amsterdam Court of Appeals.

Shell (Robertson Freilich Bruno & Cohen LLC) and the Opt-Out Plaintiffs (Grant & Eisenhofer PA) each have filed motions in response. The University of Denver Sturm College of Law’s Corporate Governance section (with which The Race to the Bottom is affiliated) offers all four motions.

What’s more: though this is of course the shortest of short notices and hot on the heels of the IBA/ABA’s European class action conference of last week in Rome, Global Pensions hosts a conference in London tomorrow on the same topic under the title Class Action Forum 2007. (programme) The speakers are predominantly from plaintiffs’ firms Berger & Montague PC, Bernstein Litowitz Berger & Grossmann LLP and Murray Frank & Sailer LLP.

One presentation of note is on the Shell settlement as case study presented by Gerard W.R. Fehrenbach, a senior adviser with pension fund PGGM, one of the Opt-Out Plaintiffs.

Wrapping it up, 29 May 2007

Tuesday, May 29th, 2007

It has taken six years and several settlements of US civil lawsuits for the criminal trial to commence in Belgium since the bankruptcy of Lernout & Hauspie Speech Products NV. (Wall Street Journal, subscription required; Belgian paper De Standaard’s expansive L&H file, in Flemish) Dexia and KPMG, both of whom have settled the civil litigation, are defendants in this trial, as well as a dozen company officials and a number of outsiders.

It’s important to note that, under Belgian law, civil suits can only commence after the conclusion of criminal suits. This one is expected to take years, so the non-US individual shareholders so far excluded from relief will have to wait far longer than their US counterparts for an outcome.

A collection of other noteworthy articles of the past few weeks in no particular order:

And one more that anyone, especially of the plaintiffs or defense bar alike, is invited to comment on here or there: The Times‘ Don’t sue fellow shareholders, by columnist Graham Searjeant. What he says:

Apart from pitching hedge and pension funds against small investors, it [’uninsurable class actions from shareholders’] undermines the legitimacy of companies trying to maximise shareholder value.

What’s more: Schiffrin Barroway Topaz & Kessler LLP acted as Counsel in the Shell and Tyco actions (for the Opt-Out Plaintiffs and as Co-Lead Class Counsel, respectively), both of which are being referred to in the The Times article. Darren J. Check, a partner with the firm, has submitted the following comment in response to the article:

[S]uch generalized statements that lawsuits and settlements are unfair are merely attacks on the plaintiffs bar with little substance to back the claims. While it is true that many of the current shareholders of companies like Tyco and Royal Dutch Shell may not have been shareholders during the time of the alleged fraud, there is a responsibility for companies to clean up the messes they have made and to do their best to compensate those investors that did suffer losses.

In addition, these op-ed pieces often ignore the corporate governance changes achieved in many class action settlements and the deterence factor implicit in these settlements. Lastly, on fees, I would simply emphasize again that plaintiff’s attorneys bear a great deal of risk in these actions and the fees that they collect are much more like the 10% you saw in Shell and not the often publicized 33%-40%. The bottom line is that there is a role for litigation when it comes to investors, under the right circumstances.

PwC’s 2006 Securities Litigation Study

Thursday, May 17th, 2007

Every year, PricewaterhouseCoopers LLP releases a report on US securities class action litigation activity, reserving some space in the report to focus on non-US issuers. (download it from the press release)

It names the 13 filers, from eight different countries and mostly from outside of Europe, which were subject of such actions last year (down from 19 the year before) and notes that this represents just 1 percent of the total 1,200 foreign issuers, in line with domestic issuers (93, 1.2 percent).

Skip to pages 56 - 75 (from 60 of 82) for the two chapters on foreign issuers and two editorials, by Reed Smith Richards Butler LLP on the controversial US-UK Extradition Treaty and PwC on deregistration. For a general review, see the D&O Diary.

What’s more: the Savett paper on the growing role of non-US investors in US securities class actions (see previous post) is now available, here. (Subscribe to WV&Z here; days left: 68)

What when where: class actions, Rome

Wednesday, May 16th, 2007

The International Bar Association and the American Bar Association present a conference on European class actions in Rome’s Grand Hotel Plaza on the 24th and 25th of May, next week. (programme including registration form)

The conference, entitled Class actions at a crossroads: Europe’s choice between its own and the American model, focuses on the current status and legislative developments of class and collective actions here and on comparison with the US model.

Key note speaker is Meglena Kuneva, European Commissioner for Consumers (invited) and other speakers, drawn from a mid-Atlantic pool of academics and practitioners, include:

  • Elizabeth J. Cabraser (Lieff Cabraser Heimann & Bernstein LLP)
  • Professor John C. Coffee (Columbia University School of Law)
  • Patricia Hynes (Allen & Overy LLP)
  • Judge John G. Koeltl (SDNY)
  • Xavier Nyssen (Dechert LLP, Paris)
  • Nicola Walter Palmieri (General Counsel, Parmalat SpA)
  • Sherrie R. Savett (Berger & Montague PC)

WV&Z will be there to cover the event.

Wrapping it up, 11 May 2007

Friday, May 11th, 2007

Legal Week and The Times last week reported on the latest development in the running story of plaintiff’s firm Cohen Milstein Hausfeld & Toll PLLC’s establishment of a London office, naming the two competition lawyers who will ’spearhead [the firm’s] European push’.

Legal Week this week reports of the reaction by the defense bar: Skadden Arps Slate Meagher & Flom (UK) LLP is the first to launch a class action defence practice in the UK. In the latter two articles a number of legal practitioners is quoted on these moves.

Also worth a read are an article in the Financial Times (Risk Management section, subscription required) on derivative actions and the extraterritorial reach of US law in relation to D&O insurance in Europe and an opinion piece in the Wall Street Journal (subscription required) which discusses ABN Amro’s current quagmire in the context of the ‘Dutch discount’ and the ‘polder model’.

What’s more: prompted by Best in Class, with thanks, to update this post, the Blog of Legal Times has a follow up to the Skadden story. Asked for comment, Andrew L. Sandler, the Skadden partner mentioned in the original Legal Week article and quoted by BLT, confirms with WV&Z that “there is no new practice group and I am not going to London.”

WOL lotta trouble ABN Amro’s in

Sunday, May 6th, 2007

ABN Amro Holding NV (Euronext, NYSE: ABN) got served a double defeat in Amsterdam courts Thursday, in cases regarding its role in the initial public offering of World On Line International NV (World Online, also commonly referred to as WOL) and regarding the sale of its US subsidiary ABN AMRO Bank North America Holding Company (LaSalle Bank) to Bank of America (NYSE: BAC). In both cases, the Vereniging van Effectenbezitters (Dutch Investors’ Association, VEB) had filed the petition with the court. (opinions: WOL, LaSalle, both in Dutch)

Unsurprisingly, the next day’s headlines focused on the latter action in light of ABN Amro being on the target end of ‘the world’s largest banking deal’. (For more on the ABN Amro takeover battle, see for example the FT.com ABN Amro In depth section.) The VEB had sued ABN Amro to halt the sale of LaSalle, arguing that the transaction effectively served as a poison pill. The court agreed that the bank, considering the sale was linked to the takeover approach from Barclays Plc (LSE: BARC; NYSE: BCS), should have sought shareholder approval for the sale. Now ABN Amro may still seek that shareholder approval or appeal against the ruling by June 14.

That noted, the M&A developments themselves do take place largely if not exclusively outside the scope of WV&Z, at least for now.

The action against ABN Amro and its co-defendants Goldman Sachs (NYSE: GS) and World Online on the other hand is well within the scope here. ABN Amro and Goldman Sachs, as well as World Online itself, have been found guilty of misleading investors in the events, including by way of the prospectus, leading up to the initial public offering of World Online shares and during a certain period of share trading thereafter. (WOL was subsequently taken over by Tiscali SpA (Borsa Italiana: TIS).)

The Shell settlement - approval of which is pending before an Amsterdam court - was relatively big, an upcoming WOL settlement, based on the claim to follow this verdict, could be even bigger: VEB says that 150,000 investors (of which nearly 11,000 are VEB members) have lost €3 billion and it has indicated that the claim could run into the ‘hundreds of millions of euro’. (A partial defeat suffered by VEB in this case is that it has to revise how to administer the claim from the procedure presented to the court.)

A settlement however is no certainty, as the parties may appeal the decision. Watch this space. (Days left: 79)

What’s more: the day after the Enterprise Chamber’s ruling that the sale of LaSalle required shareholder approval, Bank of America filed a breach of contract action against ABN Amro (SDNY, Case number 1:07-cv-03578-PKC); see the complaint.

In re L&H: Dexia adds to settlement amount

Sunday, May 6th, 2007

L&H’s former main commercial bank Dexia Bank Belgium and its parent Dexia SA (Euronext: DEXB, DX; formerly known as Artesia Banking Corp.), have settled the securities class action brought against them, in a case relating to In re Lernout & Hauspie Speech Products Securities Litigation. (Dexia press release) Their $60 million takes the total settlement amount to $180.52 million plus interest.

Plaintiffs’ Lead Counsel: Berman DeValerio Pease Tabacco Burt & Pucillo, Shalov Stone Bonner & Rocco LLP

The L&H Securities Litigation website has been updated and now includes the Dexia notice and claim form. (Also see the memorandum and order denying Dexia’s motion to dismiss the third amended complaint.) The Court will hold a hearing on 22 June 2007 to decide whether to approve the settlement and the deadline for submission of the claim form is 21 August 2007 - for other dates, please see the notice.

Note however that only NASDAQ purchasers are included in the class to which this settlement applies. The litigation on behalf of Easdaq purchasers continues (see previous post).