Securities Fraud Lawyer

In Re Altria Group, Inc. Derivative Litigation

In In Re Altria Group, Inc. Derivative Litigation, Lead Case No. 3:20-cv-00772 (DJN) (E.D. Va.), Shapiro Haber & Urmy represents shareholders of Altria in bringing derivative claims against the company arising from its ill-fated investment in Juul Labs, Inc. (“JLI”). The claims are predicated on allegations that Defendants damaged Altria by causing it to invest billions of dollars in JLI while fully aware of the catastrophic risks to Altria posed by JLI’s products and business practices, including JLI’s history of targeting underage consumers. The investment exposed Altria to a raft of lawsuits brought by consumers, regulators and government entities arising out of harm caused by underage e-cigarette use. Altria suffered enormous financial, reputational, and legal-regulatory damage, which it has acknowledged in write downs of over 90% of the value of its investment in JLI.

In a creative settlement which was approved by the Court, Altria committed $117 million to fund third-party programs to prevent underage use of tobacco and existing or newly developed nicotine delivery system products, including e-vapor products. The deployment of the funds will be supervised by an independent monitor, charged with overseeing Altria’s deployment of the funding commitment, and ensuring that it is directed to effective third-party underage use prevention and cessation programs. Operating together with the various additional corporate and policy commitments, this remedial package is designed to prevent recurrence of similar alleged wrongdoing and loss; lay the foundation necessary to restore Altria’s credibility with regulators and investors; and contribute significantly to the public policy goal of reducing underage use of nicotine delivery systems.

The settlement as in the top 5 securities settlements in 2022, and the no. 2 derivative settlement of the year. 

Fisher v. United States

In Fisher v. United States, No. 13-608C (Ct. Fed. Cl.), and Reid v. United States, No. 14-152C (Ct. Fed. Cl.), Shapiro Haber & Urmy represents shareholders of Fannie Mae and Freddie Mac in bringing derivative claims against the United States arising from the government’s takings of assets from both companies during the financial crisis. Shapiro Haber & Urmy successfully defended against a motion to dismiss filed by the government challenging the shareholders’ claims based on jurisdictional and standing arguments. The resulting decision addressed important, previously unresolved questions concerning shareholders’ standing to bring claims against the United States notwithstanding the government’s role as conservator for the companies. 

Luckin Coffee

In Kimson Chemical, Inc. v. Luckin Coffee, Inc., Shapiro Haber & Urmy is counsel in a putative class action brought by Kimson Chemical, Inc., under the Securities Act of 1933 against Luckin Coffee Inc., certain officers and directors of Luckin, and underwriters relating to allegedly negligently prepared and materially false and misleading Registration Statements and Prospectuses in connection with Luckin Coffee’s IPO in 2019 and Secondary Offering in 2020. 

In re Fitbit, Inc. Stockholder Derivative Litigation

In In re Fitbit, Inc. Stockholder Derivative Litigation, No. 2017-0402-JRS (Del. Ch. Ct.), Shapiro Haber & Urmy represented shareholders in a derivative lawsuit on behalf of Fitbit, Inc. arising from stock transactions in which Fitbit’s officers and directors entered while in possession of material nonpublic information about the company. Shapiro Haber & Urmy defeated a motion to dismiss filed by the defendants, resulting in an important decision in the Delaware Court of Chancery affirming the adequacy of the shareholders’ substantive allegations and allegations of demand futility, which built upon important information obtained through a books and records request. In re Fitbit, Inc. S’holder Deriv. Litig.. Shapiro Haber & Urmy was then able to leverage that favorable decision to obtain a settlement on behalf of Fitbit. 

Shapiro Haber & Urmy LLP Announces It Has Filed a Securities Fraud Class Action Lawsuit Against InVivo Therapeutics Holdings Corp. (NVIV)

The Boston, MA law firm Shapiro Haber & Urmy LLP filed a class action suit on July 31, 2014 against InVivo Therapeutics Holdings Corp. (“InVivo”) and its former Chairman and CEO for violations of federal securities laws. The case has been filed in the United States District Court for the District of Massachusetts and is entitled Battle Construction Co., Inc.v. InVivo Therapeutics Holdings Corp., et al., C.A. No. 14-cv-13180.

The Complaint alleges that the Defendants made false and misleading statements about the FDA’s approval of a clinical trial and the time for completion of the trial and submission of data to the FDA. The Complaint alleges that these misstatements and omissions by Defendants misrepresented and/or omitted material facts to the investing public, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act.

The class action is brought on behalf of all persons and entities who purchased common stock of InVivo from April 5, 2013 through August 26, 2013.

The factual and legal bases for the Plaintiff’s claims are set forth in greater detail in the Complaint, which is available here or can be obtained, without any obligation, from counsel for the Plaintiff, Shapiro Haber & Urmy LLP. 

Shapiro Haber & Urmy LLP and Liggio Benrubi PA Announce the Filing of a Class Action Lawsuit Against Accentia Biopharmaceuticals, Inc. (ABPI) and Officers of Accentia and Biovest International, Inc. (OTCQB:BVTI)

Shapiro Haber & Urmy LLP and Liggio Benrubi PA filed a class action on July 26, 2013 against Accentia Biopharmaceuticals, Inc. (“Accentia”) and certain officers and directors of Accentia and Biovest International, Inc. (“Biovest”), a majority-owned subsidiary of Accentia, for violations of federal securities laws.  The case has been filed in the United States District Court for the Middle District of Florida and is entitled Hill v. Accentia Biopharmaceuticals, et al., C.A. No. 13-cv-01945. 

The Complaint alleges that the FDA informed Biovest that the results of a Phase III clinical trial for BiovaxID, a potential vaccine for the treatment of non-Hodgkin’s lymphoma, did not support an application for approval of BiovaxID.  Despite this information, Defendants made numerous statements in press releases and securities filings that gave the misleading impression that the trial results were statistically significant and that Biovest was on track to obtain FDA approval. The Complaint alleges that these misstatements and omissions by Defendants misrepresented and/or omitted material facts to the investing public, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act.

The class action is brought on behalf of all persons and entities who purchased common stock of either Accentia or Biovest from July 26, 2008 through August 14, 2012.

The factual and legal bases for the Plaintiffs’ claims are set forth in greater detail in the Complaint. 

CommonWealth REIT

Shapiro Haber & Urmy LLP has filed a shareholder derivative action in the United States District Court for the District of Massachusetts on behalf of CommonWealth REIT ("CWH"), a public real estate investment trust, against its co-founder Barry Portnoy and his son Adam Portnoy, and their wholly-owned entity Reit Management & Research, LLC., which manages CWH. The case is entitled Delaware County Employees Retirement Fund v. Portnoy, et al., C.A. No. 1:13-cv-10405.

In its 65-page Complaint, Plaintiff alleges a long history of management abuse, self-dealing, and waste which resulted in various breaches of fiduciary duties owed by Defendants to CWH. 

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.

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.

Commonwealth of Massachusetts Pension Reserves Investment Trust (“PRIT”)

Shapiro Haber & Urmy represented the Commonwealth of Massachusetts Pension Reserves Investment Trust (“PRIT”) in a securities fraud action against Bear Stearns & Co., Inc. in the United States District Court for the Southern District of California. The case arose out of the sale of $81 million in subordinated debentures issued by Weintraub Entertainment Group (“WEG”), a start-up film company. In February 1987, PRIT bought $5 million in bonds from Bear Stearns, the placement agent for the issuer. WEG declared bankruptcy in 1990, and the bondholders lost virtually their entire investment. A class action was filed in San Diego against Bear Stearns and others. PRIT also filed suit in 1991, and in 1993 our action was consolidated with the class action for discovery and trial. The case was tried to a jury in San Diego in the summer of 1998. Shapiro Haber & Urmy partner Thomas V. Urmy was PRIT’s trial counsel. After a four-week trial, the jury found that Bear Stearns had committed securities fraud and entered a $6.57 million verdict in favor of PRIT, representing 100% of the damages sought by PRIT at the trial. The case was subsequently settled while on appeal to the Ninth Circuit. Pension Reserves Inv. Trust v. Bear Stearns & Co. (S.D. Cal.). 

Other

Shapiro Haber & Urmy has recovered substantial settlements for defrauded shareholders by prosecuting securities class action suits on behalf of shareholders of,inter alia: Bank of New England Corp. ($6.5 million); Bank of New England Corp. bondholders ($8.4 million); Biopure Corp. ($10 million); Centennial Tech., Inc. (stock and cash with a value of approximately $20 million); Inso Corp. ($12 million); Kendall Square Research Corp. (cash, stock, and warrants, with a total value of approximately $17 million); Kurzweil Applied Intelligence, Inc. ($9.625 million); Lotus Dev. Corp. ($7.5 million); MicroCom, Inc. ($6 million); Molten Metal Tech., Inc. ($11.85 million); Monarch Capital Corp. ($5 million); Open Environment Corp. ($6 million); Pegasystems, Inc. ($5.25 million); Picturetel Corp. ($12 million); Presstek, Inc. ($20 million); Minoco Oil and Gas Drilling Limited Partnerships ($15 million).  

 

Securities Litigation Trials: 

Attorneys in the firm have conducted the following jury trials in securities cases. Attorneys in the firm have also conducted numerous civil and criminal jury trials in non-securities matters. 

• Mr. Haber and Ms. Blauner represented one partner in a suit against another partner for breach of fiduciary duty. The case was tried to a jury in the federal court in Boston, which returned a verdict in favor of our client in the full amount of the damages sought. The verdict was affirmed on appeal. Wartski v. Bedford, 926 F.2d 11 (1st Cir. 1991).  

Securities Litigation Appeals: 

Attorneys at Shapiro Haber & Urmy had principal responsibility for the brief and presented the oral argument in the following appeals in securities cases. 

• In re PolyMedica Corp. Sec. Litig., 432 F.3d 1 (1st Cir. 2005) 

• Lentell v. Merrill Lynch & Co., Inc., 396 F.3d 161 (2d Cir. 2005) 

• Geffon v. Micrion Corp., 249 F.3d 29 (1st Cir. 2001) 

• Mowbray v. Waste Mgmt., 203 F.3d 288 (1st Cir. 2000) 

• Wells v. Monarch Capital Corp., 129 F.3d 1253 (Table) (1st Cir. 1997) 

• Alpha Group Consultants Ltd. v. Bear Stearns, 119 F.3d 5 (Table) (9th Cir. 1997) 

• Glassman v. Computervision, Inc., 90 F.3d 617 (1st Cir 1996) 

• Shaw v. Digital Equip. Corp., 82 F.3d 1194 (1st Cir. 1996) 

• Wartski v. Bedford, 926 F.2d 11 (1st Cir. 1991) 

• Backman v. Polaroid Corp., 910 F.2d 10 (1st Cir. 1990) 

• Roeder v. Alpha Indus., Inc., 814 F.2d 22 (1st Cir. 1987) 

• Frishman v. Maginn, 75 Mass. App. Ct. 103 (2009) 

• Wolf v. Prudential-Bache Sec., Inc., 41 Mass. App. Ct. 474 (1996) 

• Kessler v. Sinclair, 37 Mass. App. Ct. 573 (1994)