Archive for November, 2007

Woes in US forewarn of ‘f-cubed Americana’

Wednesday, November 28th, 2007

(Subscribe) How long will it take for a US pension fund to be appointed lead plaintiff against a US company in a euro-class action? That was the question that came to mind reading an article in the Wall Street Journal today, entitled Adding to Woes of U.S. Stocks, Pension Funds Are Pulling Back. The article details US pension funds offloading billions of dollars in US equities in favour of investing outside the US.

From the article: “Among the funds that are part of this trend: the New York State Teachers’ Retirement System, the New York State Common Retirement Fund, the Teacher Retirement System of Texas and the Florida Retirement System Pension Plan. Collectively, these plans control more than $500 billion in assets.”

California Public Employees’ Retirement System (Calpers, US$250 billion in assets) may “reduce its U.S. stock position to 24%, from 40% of its portfolio, which would represent the fund’s lowest allocation to U.S. stocks in more than 20 years. […] The New York State Teachers’ Retirement System, with $100 billion in assets, also disclosed plans to cut its target rate for U.S. stocks to 46% from 51%.”

Follow all that money (and experience of the US legal system) and add two elements to the mix, namely the emergence of class action legislation across the EU and the increase in the number of US listings on EU exchanges. Cases are being added to the ‘f-cubed’ list, ‘foreigners’ (i.e. non-US entities) suing fellow foreigners in US fora, the reverse, a first ‘f-cubed Americana’ action might well be a logical next step. You read it here first.

Wrapping it up, 26 November 2007

Monday, November 26th, 2007

Two articles of interest of today, in FTfm, the weekly Financial Times fund management insert, and this week’s The Lawyer.

The Lawyer reports that Coughlin Stoia Geller Rudman & Robbins LLP, which currently counts 30 UK pension funds among its clients, aims to treble this number over the next 12 months. (Note, no word on a UK office or striking up alliances, just the intent on acquiring more clients.) It mentions the case against GlaxoSmithKline, in which Coughlin client Avon was appointed lead plaintiff (see last previous post on the case).

It was of course already apparent here that Coughlin was active as counsel to UK pension funds. More recently, Coughlin client Lothian fronted the complaint against Vodafone (previous post) and late last year London Pension Fund Authority joined a US client of the firm in the derivative action against BP (first previous post of several on that case, which since has been dismissed; the opinion will be discussed in a future post).

The FTfm article discusses the use of the US class action by European investors. It quotes, among others, RiskMetrics Group’s Adam Savett (of Securities Litigation Watch), René Maatman of Dutch pension fund ABP and Association of British Insurers‘ Michael McKersie. A quote:

“US judges seem prone to assume superiority on the uncertain presumption that EU courts will recognise US class action judgments or settlements,” says [Allen & Overy LLP’s Tim] House, who doubts that they will.

Write-offs anew ring up In re Vodafone 2

Thursday, November 22nd, 2007

In March 2005, England-based Vodafone Group Plc (LSE, NYSE: VOD) settled the US securities class action pending against it by creating a US$24.5 million (then £14.1 million) settlement fund. (settlement notice) The respective class of plaintiffs was defined as purchasers of Vodafone’s American Depository Shares, limiting the class to US investors only.

Non-US investors may however still receive a share of a Vodafone settlement, albeit not out of that fund. This month a new action has been filed against the company, again in New York and again on the basis of ‘impairment of goodwill’, on behalf of ‘all persons who purchased the publicly traded securities’ regardless of location. (complaint)

It’s potentially another f-cubed in the making: The plaintiff is the Lothian Pension Fund, administered by Scotland’s City of Edinburgh Council. Its counsel is familiar with Vodafone and the previous action: Samuel H. Rudman’s old firm, Milberg Weiss Bershad & Schulman LLP (as it was at the time of the settlement), was a settling Plaintiff’s Co-Lead Counsel and he signed this complaint for his current firm, Coughlin Stoia Geller Rudman & Robbins LLP.

The class period is 10 June 2004 - 24 February 2006. The deadline to move the Court for lead plaintiff status is no later than 60 days from the date the case was filed, 9 November 2007. (Subscribe)

What’s more: “US plaintiff firms will continue to enforce the law by way of civil actions in US courts against UK corporations on behalf of US and foreign investors, including those situated in the UK.” (article)

Roundtable publishes Blueprint for policy reform

Friday, November 9th, 2007

As announced in this previous post, the Financial Services Roundtable has now published its own capital markets competitiveness report, entitled The Blueprint For U.S. Financial Competitiveness. (full report, executive summary)

It follows three such reports published in the past year to date, by the so-called Paulson Committee (November 2006), Bloomberg/Schumer (January 2007) and Daley/Culvahouse (March 2007). (Search WV&Z for more on each.) The Roundtable’s Blue Ribbon Commission on Enhancing Competitiveness is co-chaired by Richard M. Kovacevich and James Dimon.

The Roundtable’s Blueprint goes one further however and “build[s] upon the recommendations” of its predecessors, producing ten policy reforms encompassing 68 recommendations. The policy reforms include principles-based regulation and litigation reform: “Chief among the internal threats facing financial market competitiveness in this country is the U.S. legal framework, including the litigious nature of our system in general and securities litigation and class actions in particular.” (p.41) An excerpt:

[L]egal certainty is less of a goal in the U.K. where the potential for litigation or formal supervisory actions is not as great as it is in the U.S. This reflects not only some broader societal differences between the U.S. and the U.K., but, more importantly, the U.K.’s more prudential approach to financial supervision. Prudential supervision reduces the need for litigation and enforcement actions because it encourages firms and regulators to address areas of concern before they develop into significant problems. (p.32) (Subscribe to WV&Z)

What’s more: The article Investor Litigation in the U.S. - The System is Working (February 2007) by Jay W. Eisenhofer and Gregg S. Levin (then) of Grant & Eisenhofer PA provides a counterview to the findings of and recommendations by the first two competitiveness reports and also see SEC Commissioner Kathleen L. Casey’s address to the Institute for Legal Reform’s Annual Legal Reform Summit last month, which in large part is about competitiveness and refers to the three aforementioned reports. (Subscribe)