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Investment Advisor & Asset Manager Litigation
Quinn Emanuel has a world-class practice representing investment advisors and asset managers such as PIMCO, Schwab, Vanguard, Prudential, BlackRock, Western Asset Management Co., and others in high-stakes litigation around the globe. This includes litigation arising from opt-out opportunities in class actions; financial manipulation cases; distressed investment scenarios, including insolvency and restructuring; allegations of improper fund management or inadequate disclosures; alleged securities laws violations; and other complex financial disputes.
Much of the work we do for asset managers requires a deep understanding of complex structured financial products, credit agreements, derivatives, risk allocation, and the capital markets. Given the breadth of our experience, there is no knowledge gap when we take on the large transactional firms in this area. In fact, there is no firm in the world that can top our unique combination of litigation skill and substantive knowledge of the financial industry.
We are one of the very few top-tier global firms that is free to litigate against the large prime brokers and money center banks, such as Citibank, JPMorgan Chase, UBS, Merrill Lynch, Royal Bank of Scotland, Deutsche Bank, Credit Suisse, Barclays, HSBC, Bank of America, and Goldman Sachs. We also regularly represent asset managers against the “Big Four” accounting firms.
Because of our financial acumen and credibility in the courtroom, we have been appointed lead counsel in virtually every major recent financial manipulation case—including those asserting manipulation in CDS markets, ISDAfix, gold pricing, Interest Rate Swaps, and sub-sovereign and agency bonds. Our track record provides opportunities for our clients to serve as lead plaintiffs if that is their preference. We also have a successful “opt out” practice for clients who prefer not to serve in a class leadership role. We know how to maximize recoveries for our clients.
Not all of our representations involve litigation. We have a track record of successfully resolving partnership, valuation, and redemption disputes between fund managers and individual partners.
We have a deep bench of white collar partners, over 25 of whom were former federal prosecutors, with extensive experience representing funds and fund managers in government investigations and prosecutions around the globe. We have no traditional regulatory practice and are not beholden to any regulator. Regulators know we will take cases to trial if it is in our client’s interests, and we believe that gives our clients a distinct advantage in negotiations.
Finally, no business firm in the United States tries as many cases as we do. As far as we know, no firm in the United States has achieved our success. In the wake of the mortgage crisis, we secured judgments and settlements in excess of $20 billion for our clients, including more than $3 billion for funds and fund managers. That said, a substantial amount of our work involves defense, and we have successfully defended numerous asset managers against claims seeking many billions of dollars.
Recent Representations
- We represented PIMCO, Western Asset Management Co., and dozens of clients whose assets they managed in pursuing federal securities claims arising from the multi-year kickback and bribery at the Brazilian state-owned oil company Petróleo Brasileiro S.A. (“Petrobras”). After less than a year of litigation, we obtained very favorable confidential settlements for each of the managed funds and separate account clients as part of $353 million paid by the company.
- We represent RAM Capital, LLC, an investment and management company controlled by pharmaceutical executive Raymond Mirra, in an action brought by Hawk Mountain, LLC and Michelle Mitchell, as Trustee of the Intercession Trust, seeking $5.3 million plus interest allegedly due and owing under a promissory note. On January 10, 2020, the New York Supreme Court, New York County Commercial Division, granted our motion to dismiss the action in its entirety.
- In another string of victories for Raymond Mirra, we successfully defended him against ten causes of action, with damages in excess of $225 million, that were brought by his former business partner Gigi Jordan, who is currently serving an eighteen-year prison sentence for killing her eight-year-old autistic son. We moved to dismiss nine of the causes of action—including fraud, fraudulent inducement, breach of fiduciary duty, unjust enrichment, and conversion—and the District Court for the District of Delaware granted it. This preceded yet another victory for Mr. Mirra against, Ms. Jordan. In 2016 we secured the complete dismissal of an allegedly due promissory note claim, filed as a pendent state law claim in a federal RICO action in the District Court for the District of Delaware, which was affirmed on appeal by the Third Circuit in May 2017.
- We represented Pacific Investment Management Co. LLC and Anchorage Capital Group LLC in an action seeking discovery under 28 U.S.C. § 1782 from Banco Santander and certain of its affiliates in aid of proceedings pending in Spain and the Court of Justice of the European Union Court. On appeal from a district court order permitting discovery from a U.S.-based Santander affiliate, including discovery of documents located outside of the United States, we obtained an appellate decision in the United States Court of Appeals for the Second Circuit resolving an unsettled question of law and ruling that there is no categorical bar to discovery under Section 1782 of materials located outside of the United States.
- We cemented our prior victories on behalf of Indonesian bank PT Bank Mutiara, Tbk (now known as PT Bank JTrust Indonesia) when six years ago, after a crooked Mauritian hedge fund improperly seized and retained several million dollars of our client’s assets and refused to return the money, we obtained a court order that held the fund and its owner in contempt and imposed fines in excess of $400 million, and that transferred the ownership of the hedge fund itself to our client. Following the Court of Appeals’ affirmance of that order, the hedge fund’s former management commenced a new action in Delaware to oust the newly appointed board of directors and to retake control of the entities. We swiftly obtained an injunction stopping that case, which was again affirmed by the Court of Appeals.
- A federal judge has given final approval to settlements with the final defendants in our ISDAfix case, bringing the total recoveries in the case to over $500 million, which was brought on behalf of investors such as insurance companies, pension funds, hedge funds, and other sophisticated actors. We built the case from the ground-up—before the government even acted—after noticing the rigging of a financial benchmark used to determine the settlement value of certain financial derivatives. The groundbreaking work in this case included: (1) finding traders to explicitly admit their interest in manipulating the benchmark; (2) matching that admission to actual trade; and (3) demonstrating that the trades damaged class members, even those that had traded only hours later. The Court said that this was the “the most complicated case” he ever faced, and that he could “not really imagine” how much more complicated “it would have been if [he] didn’t have counsel who had done as admirable a job in briefing it and arguing it as” we did.
- The firm won a major victory for two investment funds, Zohar II 2005-1, Ltd. and Zohar III, Ltd. (the “Zohar Funds”), in a dispute with their former collateral manager, Lynn Tilton. The Zohar Funds claimed legal and beneficial ownership of three subject companies, and elected new directors to their boards by written consent., but Tilton refused to recognize the election, claiming that she was the true beneficial owner entitled to all rights and privileges of ownership. The Delaware Court of Chancery disagreed and issued a 95-page Memorandum Opinion finding for the Zohar Funds on all counts. The Court confirmed the Zohar Funds’ appointees as the rightful directors of the subject companies and rejected Tilton’s claims as “not credible” and based upon “hindsight observations” the Court characterized as “revisionist.”
- We represented Solus Alternative Asset Management LP against GSO Capital Partners (“GSO”) and Hovnanian Enterprises Inc. (“Hovnanian), in a suit arising from GSO’s agreement to lend money to Hovnanian in exchange for Hovnanian agreeing to default on a portion of its debt—triggering a credit event requiring Solus to pay millions of dollars in payments and yielding GSO millions of dollars in CDS payments. Solus alleged that this agreement, which was explicitly designed to set the price of the payout required from Solus, violated Sections 10(b) and 14(e) of the Securities Exchange Act, and that GSO had tortiously interfered with Solus’s prospective economic advantage. The case settled, and as part of the settlement, Hovnanian cured the agreed-upon default, thereby avoiding the threatened credit event.
- We obtained complete dismissal with prejudice for The Vanguard Group of a shareholder class and derivative action that asserted RICO and other claims against Vanguard and some of its officers, trustees, and advisors, on the theory that Vanguard had improperly invested in illegal gambling companies. After plaintiffs appealed, the Second Circuit Court of Appeals affirmed the dismissal.
- We also represented several Vanguard funds and obtained a settlement shortly before trial in a securities action against Citigroup and its affiliates arising from the Enron fraud. Vanguard was pursuing claims under the Pennsylvania securities laws against Citigroup for its role in creating and selling Enron credit-linked notes issued by Yosemite Securities Trust I. We were able to settle the case successfully prior to trial, shortly after Vanguard hired us to replace its former counsel.
- We have represented Trust Company of the West ("TCW") for many years in a variety of important matters, including in one highly publicized jury trial in which one of its senior portfolio managers was accused of stealing trade secrets and recruiting employees to follow him to set up a competing new business in violation of the terms of his employment agreement. After an eight week jury trial, we obtained a jury verdict finding in favor of TCW on its claim for theft of trade secrets and related claims.
- We serve as co-lead counsel for a class of major investors, alleging that the major banks colluded to keep the marketplace for credit default swaps from evolving beyond the “over the counter” system they dominated. Large asset managers—heavy users of credit default swaps—were among the largest class members, and recovered tens of millions of dollars from the $1.87 billion settlement. The mediator, Judge Weinstein (Ret.), said in support of the settlement: “[I]n 30-plus years of mediating high-stakes disputes, this was one of the finest examples of efficient and effective lawyering by plaintiffs’ counsel that I have ever witnessed.”
- We also serve as co-lead counsel for a class of asset managers alleging that major banks colluded to manipulate the marketplace for interest rate swaps. Asset managers are among the largest users of such swaps, as they represent a key risk-management tool. This is a pioneering lawsuit because the conduct at issue was uncovered and developed by our firm acting as “private attorneys general.” In selecting Quinn Emanuel as co-lead counsel over other plaintiffs’ firms, Judge Paul Engelmayer of the Southern District of New York recognized that “the efforts undertaken by Quinn Emanuel [in crafting the complaint] exceeded the investigative work of the other applicants by an order of magnitude.”
- We defeated two class actions filed against Schwab’s Total Bond Fund in the Northern District of California. The actions were brought by a fund shareholder and an investment advisor who had purchased the fund for multiple clients, and included securities claims. We convinced the court that the plaintiffs had failed to allege actionable representations, among other things, leading to involuntary or voluntary dismissal of all claims.
- We likewise defeated a derivative action filed against Schwab’s YieldPlus Fund, alleging breach of fiduciary duty against the Fund officers and trustees and the Fund’s Manager when the Fund manager changed its investment objectives to increase purchases of mortgage-backed securities. Although the Fund ultimately lost $900 million in value, we successfully defended the claims on the ground that a special committee had reasonably determined the derivative action was not in the best interest of shareholders. (The shareholders had already received $235 million in a class action defended by another law firm.)
- We represent numerous managed pension funds, sovereign wealth funds, and other sophisticated clients—including California State Teachers’ Retirement System (“CalSTRS”), Norway’s sovereign wealth fund, Norges, Vanguard Funds, BlackRock Funds, State Street Corporation, and others—in a collection of securities suits filed by our firm in Germany against Volkswagen related to the scandal arising out of Volkswagen’s manipulation of the emissions systems in its vehicles.
- We are Court-appointed co-lead counsel for a class of investors including asset managers related to alleged manipulation of the benchmark price for gold known as the “London Gold Fix.” This massive class action pending in the Southern District of New York is brought against a group of banks for their involvement in manipulating the gold market. Defendant Deutsche Bank has already settled; the remaining defendants include The Bank of Nova Scotia, Barclays Bank plc, HSBC Bank plc, Société Générale SA, and UBS.
- We represent a consortium of investment funds, a major international bank, and shipping companies from over a dozen countries in the U.S., Europe, Latin America, and the Middle East in the largest financial fraud case in Latin American history. Specifically, Oceanografia, S.A. de C.V. (“Oceanografia”), the largest oil services firm in Latin American and the largest vendor of Petroleos Mexicanos S.A. (“Pemex”) worked with Citigroup, Inc. (“Citigroup”) to falsify invoices and obtain hundreds of millions of dollars in cash advances from Citigroup. When Pemex learned of the fraud, Oceanografia collapsed, resulting in over $1 billion in losses to the funds, bank, and shipping companies that purchased Oceanografia’s bonds, lent it money, and leased it ships. We conducted a wide ranging two-year investigation in over a dozen countries to develop the facts and evidence to represent the consortium before the SEC as victims of the fraud and as plaintiffs in the civil action.
- We successfully represented Axis Capital Management, one of the largest Mexican asset management firms, and its owners in connection with a billion-dollar dispute with its U.S. and Singaporean partners in a Mexican oil services company, Oro Negro S.A.P.I. de C.V. (“Oro Negro”). This dispute involved companies and potential litigation in at least three different jurisdictions, raising novel claims and theories and complex legal issues involving the intersection of U.S., Singaporean, and Mexican law. The matter settled prior to litigation.
- We represented Kallpa Securities S.A.B. (“Kallpa”), one of the largest Peruvian asset management and financial advisory services firms, and one of Kallpa’s partners in SEC and DOJ insider trading investigations in connection with the largest insider trading case in Peruvian history. Neither the SEC nor the DOJ pursued Kallpa and Kallpa’s partner reached a settlement with the SEC.
- We have been appointed co-lead counsel in a class action alleging that five of the world’s largest financial institutions conspired to manipulate the multi-trillion dollar market for supranational, sub-sovereign, and agency (“SSA”) bonds. The complaint alleges the banks conspired in private chat rooms to rig prices and bid-ask spreads. Our allegations are supported by economic analysis demonstrating multiple historical patterns in SSA spreads and prices that are indicative of a price-fixing conspiracy from 2010 to 2014. The case is pending before Judge Ramos in the Southern District of New York.
- We represented MHR Fund Management and its affiliated funds relating to Carl Icahn’s 2010 hostile bid for Lions Gate Entertainment Corp. MHR is a longstanding significant investor in Lions Gate, and its founder is a member of Lions Gate’s board. Following a four day trial, the Supreme Court of British Columbia rejected Icahn’s bid to rescind the transactions or sterilize MHR’s votes. Two months later, the New York Supreme Court denied Icahn’s request for a preliminary injunction. Following these rulings, Icahn did not close his then-outstanding tender offer, and his slate of directors was defeated.
- We represented PIMCO in connection with threatened claims by investors in the Municipal Opportunities Fund, a fund that sought to take advantage of the spreads between municipal bonds and treasury bonds and that lost nearly 80% of its value during the financial crisis; after extensive discussions with plaintiffs’ counsel, we were able to resolve all claims on favorable terms without any litigation claim filed by any investor against PIMCO.
- One of our partners represented the New York State Common Retirement Fund (NYSCR) and a class of similarly situated investors in the securities lawsuit arising out of the massive fraud at WorldCom. The case went to trial and resulted in a recovery for investors of more than $6.1 billion.
- We represented BlackRock in a California state court proceeding in which Impac was attempting to revise several pooling and servicing agreements to reallocate trust distributions to BlackRock’s disadvantage. We prevailed in a bench trial and avoided any revision of the governing agreements.
- Our partners have successfully represented multiple asset managers in FINRA arbitrations against claims that they improperly managed investment accounts. We have won multiple defense victories, including victories assessing fees and costs against claimants.
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