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Securities & Corporate Disputes

We represent clients in litigation matters involving state and federal securities laws, shareholder and director fiduciary duty claims, close corporation disputes, broker-dealer claims, RICO claims and disputes concerning corporate transactions (e.g., mergers, asset purchase agreements and buy-sell agreements). Additionally, we counsel clients on corporate governance and compliance issues and also conduct or assist in corporate internal investigations.

Key Contacts

Theresa A. Canaday Profile Image
Theresa A. Canaday

Litigation Department Chair

Louisville, KY

Cory J. Skolnick Profile Image
Cory J. Skolnick

Partner

Louisville, KY

Representative Matters

Securities Litigation

State Agency Litigation

We represented a state securities commissioner in an action alleging that a state teachers association and related entities violated state securities laws, by offering and selling certain health insurance plans, which is alleged to constitute a “security” under state law.

Investment Company Representation

We defended an individual and his investor-relations firm in a state court lawsuit in Indiana alleging violations of the Indiana Securities Act and common law fraud relating to the plaintiffs’ purchases of unregistered stock in companies represented by the defendant.

Public Company Representation

We served as co-counsel in purported class action securities fraud litigation, representing the defendant company and several of its officers, in an action wherein the plaintiffs claimed that the defendants made repeated false and misleading guidance projections and engaged in false financial reporting throughout the class period, and also alleged insider trading by one of the officers. The federal district court granted defendants’ motion to dismiss and the plaintiffs later voluntarily dismissed their appeal.

Public Company Representation

We served as co-counsel for the defendant company in an action against the company, officers and directors alleging material misstatements and omissions regarding earnings estimates, raw material costs and labor relations, among other items. The putative plaintiff class consisted of purchasers of the company’s stock and persons acquiring stock as part of its merger with another publicly-traded company. The action was settled favorably after the court dismissed certain claims and denied plaintiffs’ initial motion for class certification on the ground that the named plaintiff would not be an adequate class representative.

Public Company Representation

We served as co-counsel for the defendant company in an action against the company and its chief executive officer alleging material misstatements and omissions in connection with the restatement of earnings for a recently acquired subsidiary. The court granted the defendants’ motion to dismiss the action in its entirety.

Public Company Representation

We served as co-counsel in a purported class action securities fraud litigation, representing the defendant company and several of its officers. The complaint asserted 10b-5 claims relating to alleged fraudulent financial reporting and accounting issues, and the plaintiffs also asserted aggressive trading by certain insiders as the basis for scienter on behalf of the company. The federal district court granted in part, and denied in part, the defendants’ motion to dismiss, and the case settled after an extensive mediation.

Public Company Representation

We served as co-counsel for the defendant company in an action against the company, its former chief executive officer and chief financial officer alleging material misstatements and omissions regarding earnings estimates and new product lines.

High-Yield Bond Offering/Investment Bank Representation

We served as co-counsel for an investment banking firm in a securities fraud action involving the issuance of $175 million of senior subordinated high-yield bonds, issued on behalf of a publicly-traded integrated solid waste management company. Our client, along with another investment banking firm, acted as lead underwriters of the bond offering. The plaintiffs asserted state and federal securities law claims (Section 11 and 12(2) claims), as well as various common law claims, including fraud, aiding and abetting common-law fraud, negligent misrepresentation, breach of fiduciary duty/acting in concert and negligence. After picking a jury (from a pool of over 200 potential jurors), and just prior to opening statements, the case settled.

Hostile Takeover Litigation

We represented the target company in the hostile tender offer by a large foreign company. The parties litigated issues (i) in connection with Ohio’s Control Share Acquisition Act, (ii) regarding enjoining false and misleading proxy and tender offer materials, and (iii) regarding a tender offeror’s right to and use of shareholders lists. The litigation was resolved when the acquirer increased its offer and won the endorsement of the target’s board of directors.

Feasibility Study/Bond Offering Litigation

Our team served as co-counsel for a large public accounting firm in an action alleging material misstatements and omissions in connection with feasibility studies for municipal bond issues for a chain of nursing homes. We also served as co-counsel in a related action by the bankruptcy trustee of the debtor against the accounting firm, following the settlement of securities class action. We obtained judgment on the pleadings in favor of its client in the related bankruptcy proceeding.

Investment Company Representation

We defended an investment seminar company in a putative class action for securities fraud brought against company and co-sponsor of seminars who were alleged to have committed securities fraud. We defeated class certification and obtained dismissal of all claims against client.

Shareholder Derivative Litigation

Shareholder Derivative Action Seeking to Block Merger

We represented the acquiring company in the proposed sale of a publicly traded savings bank, where a shareholder (purporting to represent a class of all shareholders) of the to-be-acquired company has sued to block the sale. We were successful in having all claims against its client dismissed on a motion to dismiss, prior to the preliminary injunction hearing (involving the purported class of all shareholders and the target company).

Shareholder Derivative Litigation

We represented the defendant publicly traded corporation in this shareholder derivative action in state court. The plaintiff shareholder sought through the derivative action to hold current and former members of the company’s board of directors personally liable to the company for allegedly failing to exercise oversight in connection with the company’s business operations. The parties reached a settlement that was approved by the court and the claims were dismissed.

Shareholder Derivative Action Seeking to Block Merger

We represented the defendant publicly traded utility company and its nine-member board of directors in this shareholder derivative action brought by a company shareholder seeking to block the merger of the company with another utility company. The plaintiff alleged that the board violated their fiduciary duties by entering into a potential merger without regard to the fairness of the transaction to the company’s shareholders. The complaint alleged that the board breached their duties of loyalty, care, good faith, candor, and independence. We filed a motion to dismiss, which was granted by the court, and the plaintiff did not appeal the decision.

Close Corporation Litigation

Defense of Claims Brought by Minority Shareholder

We represented the defendant company and majority shareholders in an action brought by a minority shareholder whose employment was terminated by the company. The plaintiff alleged claims of disability discrimination, breaches of fiduciary duty and breach of contract. The defendants counterclaimed, seeking an order requiring the plaintiff to tender his shares to the company pursuant to a buy-sell agreement.  We prevailed on summary judgment, obtaining dismissal of the plaintiff’s claims and an order requiring plaintiff to tender his shares to the company.

Prosecution of Minority Shareholder Claims

We obtained a substantial settlement for its client, a minority shareholder, in a dissenters’ rights case in Missouri, alleging claims of minority shareholder oppression, breach of fiduciary duty, and breach of contract stemming from a squeeze-out of the minority shareholder via a merger by the corporation.

Defense of Claims Brought by Minority Shareholder

We represented a closely held corporation and its majority shareholders in claims brought by two minority shareholders whose employment with the corporation had been terminated, including the prosecution of counterclaims against the minority shareholders.

Defense of Claims Brought by Minority Shareholder

We represented a closely held corporation and its majority shareholder in a dispute over management and control issues.

 

Other Representative Experience

Broker-Dealer Matters

We have handled over 125 FINRA (formerly NASD) arbitrations and disputes, regulatory proceedings and other matters involving broker-dealers and their representatives. Representations have been for firms, registered representatives, supervisors and public claimants. Notable cases include: (i) an award against a clearing broker for over $3 million, in representation of the receiver of a title company victimized by a boiler room (with federal court confirmation); (ii) mid-6-figure award against a firm that unfairly touted tech stocks; and (iii) defense awards in arbitration claims by public customers.

Transactional Dispute Matters

We represented the defendant companies in an American Arbitration Association arbitration involving the sale of three businesses pursuant to an Asset Purchase Agreement. The plaintiff sought millions of dollars in damages, as well as its attorneys’ fees and costs of arbitration. The arbitration panel rejected virtually all of the plaintiff’s claims and determined that the defendants were the “prevailing party’ in the arbitration, ordering the plaintiff to pay all of the defendants’ attorneys’ fees and arbitration costs.

Commission Dispute

We represented the defendants in this action involving a claim for commission and breach of contract in connection with agreement to sell securities.

RICO Action

We represented the plaintiff in this civil RICO action.  The 6th Circuit Court of Appeals affirmed a multi-million-dollar default judgment for “willful, prejudicial and repeated obstruction of discovery.”

Ponzi Scheme Litigation

We successfully prosecuted and collected a multi-million-dollar recovery for a class of plaintiffs in an action involving an alleged Ponzi scheme.

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