Securities Fraud Lawyer

FrontPoint Securities Fraud and Insider Trading Litigation

Shapiro Haber & Urmy LLP has filed a class action alleging securities fraud and insider trading against FrontPoint Partners, LLC, Yves Benhamou, Joseph F. “Chip” Skowron and certain John Doe investment advisors and hedge funds.  The complaint was filed in the United States District Court for the District of Connecticut on behalf of all persons and entities who purchased shares of Human Genome Sciences, Inc. (“HGSI”) from December 7, 2007 through January 22, 2008 (the “class period”).  The case is entitled Brodzinsky v. FrontPoint Partners, LLC, C.A. No. 3:11-cv-00010.  An amended complaint was filed on March 2, 2011.

The amended complaint alleges that Skowron’s information came from Yves Benhamou, M.D. (“Benhamou”), one of five members of a Steering Committee overseeing the Albuferon trial.  On January 23, 2008, HGSI publicly disclosed the negative information regarding the Albuferon trial, causing the price of HGSI stock to fall $4.40 per share to $5.62 per share, a 44% decline.  The amended complaint alleges that, by this conduct, FrontPoint, the Hedge Funds, Skowron, Benhamou and the six investment advisors for the six Hedge Funds – violated various provisions of the Securities Exchange Act of 1934 (“Exchange Act”) against fraud and insider trading.  Accordingly, the Hedge Funds avoided just over $30 million in losses as a result of their unlawful sales of HGSI stock while in possession of material adverse information regarding HGSI, causing economic loss to purchasers of HGSI shares during the class period.

If you purchased shares of HGSI during the period December 7, 2007 to February 5, 2008 please contact attorney Edward Haber at ehaber@shulaw.com or (617) 439-3939.

Sherter, et al. v. Ross Fialkow Capital Partners, LLP, et al.

Shapiro Haber & Urmy LLP is prosecuting a class action alleging that Defendants Ross Fialkow Capital Partners, LLP, and its partners, Jay Lawrence Fialkow and Jeffrey P. Ross, illegally offered securities in connection with a multi-million dollar Ponzi scheme perpetrated by Richard Elkinson of Framingham, Massachusetts.  Elkinson was arrested last year and criminally charged by the United States Department of Justice for defrauding 130 investors out of an estimated $29 million dollars.  In the civil litigation against Ross and Fialkow,  Plaintiffs allege that Defendants referred numerous investors, including Plaintiffs, to Elkinson in exchange for commissions, violating multiple sections of the Massachusetts Uniform Securities Act.  The complaint seeks to recover hundreds of thousands of dollars lost by Plaintiffs, and millions of dollars lost by members of the proposed class, as a result of Defendants’ alleged misconduct.  For a complete list of the counts alleged, read the Amended Class Action Complaint filed August 6, 2010 in the Business Litigation Session of the Massachusetts Superior Court.  The Court denied Defendants’ motion to dismiss on March 18, 2011.

Actrade Financial Technologies Securities Fraud Litigation

Shapiro Haber & Urmy LLP is co-lead counsel in a class action in the United States District Court for the District of New York alleging fraud against former officers of Actrade on behalf of a class of purchasers during the period March 11, 1999 through August 22, 2002.  Actrade itself filed for bankruptcy and is therefore not a defendant.  A settlement was achieved for $9.9 million but it was never consummated due to complications that developed in Actrade’s bankruptcy.  A Third Amended Complaint was recently filed, which alleges a complex scheme to inflate revenue and earnings through a web of offshore entities.

China Natural Gas Litigation

Shapiro Haber & Urmy LLP has filed a class action alleging securities fraud against China Natural Gas and certain of its officers and directors on behalf of all purchasers of the common stock of China Natural Gas during the period from March 10, 2010 through August 19, 2010.  

The complaint was filed in the United States District Court for the District of Delaware.  The case is entitled Vandevelde v. China Natural Gas, Inc., C.A. No. 1:10-cv-00728-SLR.  The complaint alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading public statements in its Annual Report for the year ended December 31, 2009 and its Quarterly Report for the quarter ended March 31, 2010, specifically that the defendants failed to disclose and properly account for a $17.7 million loan it had entered on February 26, 2010 (“the Bank Loan”).  The complaint further alleges that the defendants failed to disclose that the Bank Loan violated an Indenture for senior notes and warrants of the company, placing China Natural Gas in default under the Indenture.  As a result of the Bank Loan and the resulting default under the Indenture, China Natural Gas was required to reclassify approximately $45 million in long term liabilities to short term liabilities.  The complaint alleges that Plaintiff and other class members were damaged because they purchased stock at artificially inflated prices during the relevant period as a result of the defendants’ fraudulent conduct.

HealthSouth Derivative Litigation

Edward Haber, a partner of Shapiro Haber & Urmy LLP, is one of the Court appointed lead counsel in the consolidated derivative action brought on behalf of the HealthSouth Corporation against its former CEO, Richard Scrushy, its other former officers and directors, its auditors, investment bankers, and others. This action coordinates derivative actions brought on behalf of HealthSouth in the Delaware Chancery Court, the Federal District Court in Alabama, and the state court in Birmingham, Alabama.

The legal team, on which Shapiro Haber & Urmy  LLP serves as one of the lead counsel, has obtained the following recoveries for HealthSouth: (i) summary judgment in the Delaware Chancery Court, for over $17 million, against Scrushy, In re HealthSouth Corp. Shareholders Litig., 845 A.2d 1096 (Del. Ch. 2003), aff'd, 847 A.2d 1121 (Del. 2004); (ii) summary judgment in the Circuit Court of Jefferson County, Alabama against Scrushy for over $47 million, see Tucker v. Scrushy, 2006 WL 37028 (Ala. Cir. Ct. Jan. 3, 2006), aff'd, 2006 WL 2458818 (Ala. Aug. 25, 2006); (iii) a settlement of the derivative claims against some of the officers and directors of HealthSouth (not including Scrushy) for $100 million, to be paid by those defendants' insurers; and (iv) a $133 million settlement of the derivative claims against HealthSouth’s former investment advisor, UBS.  The legal team has obtained a $2.8 billion dollar judgment against Mr. Scrushy after a bench trial in the Circuit Court of Jefferson Court, Alabama.  The legal team is also pursuing claims against HealthSouth’s auditors, Ernst & Young, which are being arbitrated.

Delaware Shareholder Derivative Litigation

Shapiro Haber & Urmy LLP is representing minority shareholders in a derivative action pending in Delaware Chancery Court against former officers of a company.  The complaint alleges that through a series of transactions, the officers appropriated to themselves substantial assets of the company.

Fiserv Litigation

Shapiro Haber & Urmy LLP commenced a class action suit on behalf of a class of all persons who, as of December 11, 2008, had self-directed IRAs at Fiserv, for which Fiserv or its subsidiaries or affiliates, including First Trust Corporation, Retirement Accounts, Inc., Fiserv Trust Company, Trust Industrial Bank, Lincoln Trust Company, or NTC & Co., LLC served as the IRA trustee or custodian, and which were invested with Bernard Madoff or Bernard Madoff Investment Securities, LLC (“BMIS”).

The class action maintains that Fiserv and its subsidiaries and affiliates had custody of the funds in the IRA accounts invested with Madoff, but allowed Madoff, through his Ponzi scheme, to convert, commingle, and abscond with Plaintiffs’ and class members’ retirement savings.  Plaintiffs allege that Fiserv and its subsidiaries and affiliates failed to take physical custody of the assets in the Madoff IRAs, or to take any rudimentary steps to verify that the assets entrusted to Madoff even existed.  Fiserv and its subsidiaries and affiliates violated their duties despite warnings by Fiserv’s own sub-advisor, Rogercasey, Inc., “about the integrity of the Madoff structure,” and many other “red flags” about Madoff’s investment strategies and operations, including discrepancies on account statements Fiserv received from BMIS.  Prior to the time Madoff’s scheme was revealed, Fiserv had entanglements with Madoff promoters Avellino & Bienes who were shut down by the SEC and Fiserv knew that it had facilitated similar massive Ponzi schemes perpetrated by other fraudsters, yet Fiserv did nothing to change its operational procedures to prevent another catastrophe.  

Plaintiffs maintain that Fiserv and the Trustee Defendants violated their fiduciary, contractual, and professional duties to Plaintiffs and the members of the class, who lost their retirement savings.

Fidelity Management Research Company Excessive Fee Litigation

Shapiro Haber & Urmy LLP represents shareholders in five of Fidelity’s largest mutual funds – Fidelity Magellan Fund, Fidelity Contrafund, Fidelity Growth & Income Portfolio I Fund, Fidelity Blue Chip Growth Fund and Fidelity Low-Priced Stock Fund (the “Funds”) – in a lawsuit against Fidelity, claiming that Fidelity has charged the Funds excessive portfolio advisory fees in violation of under Section 36(b) of the Investment Company Act of 1940.

Fidelity is one of the largest investments advisors in the world and the Funds are five of the largest mutual funds in the country.  Fidelity charges fees to each of the Funds to the investment advisory services it provides.  Although, in percentage terms, those fees may look modest, in dollar terms, or in comparison to fees charged to comparable institutional portfolios, they are staggering.  In the money management business, there are extraordinary “economies of scale” that can be realized as the size of assets under management grows.  Because of this, investment advisors such as Fidelity would be expected to offer their services to clients for lower fees as the size of the portfolios managed grows.  Although required by law to share these benefits with its mutual fund clients, including the Funds, the shareholders allege that Fidelity has failed to do so.  The advisory services that Fidelity provides to the Funds are identical to the advisory services that Fidelity provides to other institutional clients. Unlike the advisory contracts with the Funds, however, the contracts negotiated with other Fidelity institutional clients are the product of arms' length negotiations and result in far lower fees even though those clients' portfolios are far smaller than those of the Funds.

Fidelity’s motion to summary judgment has been taken under advisement by the court

Credit Suisse – AOL Litigation

Shapiro Haber & Urmy LLP is counsel in a class action suit against Credit Suisse First Boston Corporation (“Credit Suisse”) on behalf of all persons who purchased common stock of AOL Time Warner Inc. ("AOL") during the period from January 12, 2001 through September 3, 2002, arising out of allegedly misleading analyst reports.  The complaint alleges that the defendants violated section 10(b) of the Securities Exchange Act of 1934 ("the Exchange Act"), and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act, by issuing a series of favorable research reports on AOL that were materially false or misleading in that they did not reflect Credit Suisse’s true opinion of AOL and they did not disclose conflicts of interest of Credit Suisse.

Fidelity Ultra Short Term Bond Fund Litigation

Shapiro Haber & Urmy LLP is serving as local counsel for the Plaintiff and the class in this matter, which asserts claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 on behalf of all persons and entities who purchased shares of the Fidelity Ultra-Short Bond Fund (the “Ultra-Short Fund” or “Fund”) between June 6, 2005 and June 5, 2008 (the “Class Period”).  The complaint alleges that Defendants offered shares of the Fund to the public through registration statements and prospectuses (collectively, the “Registration Statement”) that were materially false and misleading, by misrepresenting the characteristics and risks of the Fund; the true extent of its exposure to risky mortgage-related securities; its valuation procedures and capabilities; and the value of the securities held by the Fund as reflected in the NAV.  It is alleged that when the risks associated with these misrepresentations and omissions materialized, the Fund’s NAV plummeted, injuring Plaintiff and other Fund investors.

Auction Rate Securities Litigation

Shapiro Haber & Urmy LLP represents a Massachusetts bank in litigation against Merrill Lynch involving the sale of auction rate securities.  In an action originally filed in the United States District Court for the District of Massachusetts, but then transferred with other proceedings pursuant to the Judicial Panel of Multidistrict Litigation to the Southern District of New York, the bank claims that Merrill Lynch violated the Securities Act of 1933 by selling the bank unregistered auction rate securities even though the bank was not a “Qualified Institutional Buyer” under Securities and Exchange Commission Rule 144A, the rule under which Merrill Lynch purported to sell the securities.  The bank also claims that Merrill Lynch violated Massachusetts General Laws chapter 93A, both by illegally selling unregistered securities to the bank and by making misrepresentations in connection with the sale of such securities, given that Merrill Lynch was making a market in the securities in question and was aware of, but failed to disclose, the impending dissolution of the auction rate securities markets for those and other securities.