Securities Litigation

In re Merrill Lynch Research Analyst Litigation

Shapiro Haber & Urmy was the first law firm to file a securities fraud class action against Merrill Lynch and Henry Blodget, its former internet stock analyst, stemming from Merrill Lynch and Blodget’s issuance to the public of false and deceptive, optimistic analyst reports regarding internet companies. Shapiro Haber & Urmy filed that class action in July, 2001, long before the disclosures by the New York State Attorney General of its investigation into Merrill Lynch’s research practices.

Thereafter, Shapiro Haber & Urmy partner Edward Haber is the court appointed co-chairman of the Plaintiffs' Executive Committee in In re Merrill Lynch Analyst Reports Sec. Litig., 02-MDL-1484 (S.D.N.Y.). Shapiro Haber & Urmy is also court-appointed lead counsel in two of the Merrill Lynch securities analyst cases: InfoSpace Analyst Reports Sec. Litig., and Internet Capital Group Analyst Reports Sec. Litig. The class action lawsuit against Merrill Lynch and former internet stock analyst Henry Blodget alleged that defendants issued false and misleading analyst reports regarding internet companies covered by Merrill Lynch. The class action was settled for $125 million.

UnitedHealth Group, Inc. Stock Option Backdating Litigation

Shapiro Haber & Urmy filed a shareholder derivative action on behalf of UnitedHealth Group, Inc., a Minnesota-based health care company, against certain current and former directors and officers of the company.  The complaint was filed on March 29, 2006 in the United States District Court for the District of Minnesota.  The Defendants in this case included William C. McGuire, former Chairman of the Board and CEO of United Health, and Stephen J. Hemsley, UnitedHealth's current President and CEO.

The parties to the case agreed to a settlement, which was approved by the Court on July 1, 2009.  This settlement was valued at over $700 million – by far the largest derivative options settlement in any case in the country.

The operative complaint alleged that McGuire and Hemsley, along with the other defendants, knowingly backdated stock options grants for their personal enrichment at the expense of the company and its stockholders.  The complaint further alleged that many of the grant dates received by the defendants were not, as was required by the company’s stock option plan and reported in its SEC filings, priced on the same date of the grant, but were in fact chosen at a later date to secure low exercise prices and greater profit for the defendants.  The Court appointed Shapiro Haber & Urmy Partner Michelle Blauner to serve on the Plaintiffs’ Coordinating Committee for the litigation.

Maxim Integrated Products, Inc. Stock Option Backdating Litigation

Shapiro Haber & Urmy served as counsel in a derivative action, on behalf of Maxim, filed against certain former and current officers and directors of the company.  The complaint was originally filed on June 12, 2006 by Maxim shareholder Walter E. Ryan, Jr. in Delaware Chancery Court (Maxim is a Delaware corporation).  The complaint was amended on February 16, 2007 with the addition of new defendants and additional allegations of backdating.  The Defendants in this case included former CEO and Chairman of the Board of Directors, John F. Gifford, along with other high-ranking officers including former Chief Financial Officer Carl Jasper.

The parties agreed to a settlement, under which Maxim received $38 million in cash and re-priced and surrendered options, and the settlement also included unique and innovative corporate governance reforms.  The Court approved the settlement on January 2, 2009.

The complaint alleged that Defendants Gifford and Jasper, along with other high-ranking officers, knowingly participated in an option backdating scheme that provided a financial windfall for the option recipients at the expense of company itself.  The complaint further alleged that many of the grant dates were not, as was required by the company’s stock option plan and reported in its SEC filings, priced on the same date of the grant, but were in fact chosen at a later date to secure low exercise prices and greater profits. The company admitted that its incorrect pricing of options caused Maxim to overstate its earnings by about $515 million between fiscal years 1997 and 2005.  

Over the course of the litigation, our firm obtained several leading Delaware decisions in the areas of corporate governance and executive compensation.  These include a landmark discovery decision requiring that Maxim produce to Plaintiffs material related to its internal investigation of the challenged conduct, a second decision clarifying and re-affirming the first decision, and a decision approving the settlement of the case.

Affiliated Computer Services, Inc. (ACS) Stock Option Backdating Litigation

Shapiro Haber & Urmy filed a shareholder derivative action on behalf of Affiliated Computer Services, Inc. (ACS) against certain current and former directors and officers of the company.  The complaint was filed on May 2, 2006 in the Chancery Court of Delaware  (ACS is a Delaware corporation).  The Defendants in this case included ACS Chairman and Founder Darwin Deason and two former Chief Executive Officers of ACS, Jeffrey Rich and Mark King.

The parties agreed to a settlement that was valued at more than $40 million.  This settlement was approved by the 193rd Judicial District Court of Dallas County, Texas on May 21, 2009.  (The parties agreed to settle the Delaware case along with a parallel case in Texas.) 

This action was brought to recover damages caused to ACS as a result of the Defendants’ systematic backdating of ACS stock options issued to the Defendants and others, in violation of ACS’s stock option plans. The Defendants also caused ACS to misrepresent, in its SEC filings, ACS’s stock option granting processes. ACS admitted that its stock options were improperly issued and that those practices caused ACS to overstate its earnings between 1994 and 2006 by approximately $51 million.

Waste Management Litigation

Shapiro Haber & Urmy, led by partner Edward Haber, represented a class of persons who had sold businesses to Waste Management, Inc. for common stock of Waste Management. The case arose from Waste Management's restatement of its financial statements. Shapiro Haber & Urmy obtained summary judgment against Waste Management as to liability for a majority of the class members. Shapiro Haber & Urmy also successfully defended defendant's appeal of the class certification order, Mowbray v. Waste Management Holdings, Inc., 208 F.3d 288 (2000). The case was subsequently settled for a combination of cash and stock with a total value of $25 million.

Bank of New England Corporation Securities Litigation

As liaison counsel and class settlement counsel in this securities fraud class action against certain officers and directors of Bank of New England Corporation, Shapiro Haber & Urmy had the primary role in negotiating a settlement of $6.5 million for the class. The settlement negotiations were particularly complicated in that the FDIC and the Bankruptcy Trustee of Bank of New England Corporation were competing claimants against a limited insurance policy, which was the only available source of recovery.

Biopure Securities Litigation

Shapiro Haber & Urmy served as court-appointed co-lead counsel representing a class of stock owners in consolidated litigation filed against Biopure Corporation and certain officers and directors of the Company in the United States District Court for the District of Massachusetts.  The class included individuals and entities that purchased the common stock of Biopure from April 9, 2003 through December 24, 2003. 

The lawsuit alleged that the Defendants were responsible for misleading and fraudulent shareholder and investor reports and "were aware of their materially false and misleading nature."  Specifically, the complaint alleged that Biopure violated the federal securities laws by it misleading statements and material omissions concerning the status of the biologics license application (BLA) it had filed with the federal Food and Drug Administration (FDA) concerning its blood substitute product, Hemopure. The lawsuit alleged that the Defendants withheld from the investing public that the FDA had expressed safety concerns about, and instituted a clinical hold regarding future trials of, Hemopure.  The complaint alleged that Defendants’ conduct resulted in an artificial inflation of the Company's stock price.

This case was recently settled for a $10 million cash payment by Biopure’s insurers.

Cambridge Biotech Corp. Securities Litigation

Shapiro Haber & Urmy served on the executive committee in this class action and recovered a settlement of approximately $1 million in cash, plus common stock equal to 25 percent of the equity in the company.

Citigroup/ECLN Litigation

Shapiro Haber & Urmy was class counsel representing a class of institutional investors that had purchased notes linked to Enron's credit.  The lawsuit, which asserted claims under the federal securities laws against Citigroup and various related investment banking interests, was consolidated into the multi-district litigation which had been created following Enron's bankruptcy.  Thereafter, Shapiro Haber & Urmy negotiated to merge its lawsuit into the primary Enron shareholder litigation, thereby enabling a class-wide settlement with Citigroup to proceed.

Credit Suisse First Boston: Razorfish

Shapiro Haber & Urmy was lead counsel in a class action suit brought against Credit Suisse First Boston that was settled for $3 million.  The complaint alleged 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 Razorfish that were materially false or misleading in that they did not disclose conflicts of interest of Credit Suisse, and in particular the practice of Credit Suisse to gain lucrative investment banking business in part by providing coverage and issuing favorable research reports on prospective investment banking customers. According to news reports, an investigation conducted by the Secretary of State of the Commonwealth of Massachusetts uncovered "very troubling" internal Credit Suisse materials that "suggest . . . a pattern of breach of fiduciary duty" and which appear to have "treated investors like suckers". According to another news report, the Secretary of State has suggested that criminal charges be filed against Credit Suisse over its fraudulent stock research coverage.

Credit Suisse First Boston: Winstar

Shapiro Haber & Urmy was co-lead counsel in a class action suit brought against Credit Suisse First Boston that was settled for $8 million.  The complaint alleged that CSFB violated section 10(b) of the Securities Exchange Act, and Rule 10b-5 promulgated thereunder, by issuing analyst reports setting a $79 per share target price that lacked a reasonable basis and rating Winstar a "strong buy" without adequately disclosing the significant risks of investing in Winstar, including that Winstar needed to raise more than $3 billion to fund its business plan and that it might not be able to raise the necessary funds. The complaint further alleges that CSFB touted its "independent research" but failed to disclose that it actually used its analyst reports to obtain lucrative fees for its investment banking business. On April 28, 2003, the Securities and Exchange Commission filed a complaint against CSFB in the United States District Court for the Southern District of New York which alleged, among other things, that CSFB issued analyst reports concerning Winstar in 2001 that lacked a reasonable basis for its stock target price, inadequately disclosed the risk of investing in Winstar, and violated NASD and NYSE regulations.

Digitial Equipment Securities Litigation

Shapiro Haber & Urmy partner, Thomas Shapiro, successfully argued the appeal to the First Circuit in Shaw v. Digital Equipment Corp., 83 F.3d 1194 (1 Cir., 1996), a securities class action that arose from a secondary offering of Digital securities. After remand, the case was settled for $5.2 million.

Ecoscience Fiduciary Duty Litigation

Shapiro Haber & Urmy represented shareholders of EcoScience Corp., in a breach of fiduciary duty lawsuit against its former directors, arising out of the merger between EcoScience and Agro Power Development, Inc. The case, brought in the Delaware Chancery Court, charged the merger was accomplished by means of a false proxy statement, and resulted in the payment of an unfair price to EcoScience shareholders. Shapiro Haber & Urmy recovered $2 million for EcoScience’s shareholders.

First Commodity Corporation of Boston Customer Accounts Litigation

Shapiro Haber & Urmy successfully represented a class who were victimized by a "boiler room" commodities trading operation. The corporate defendant, First Commodity Corporation of Boston ("FCCB"), had no appreciable assets; rather, the major assets were in the hands of two owners of FCCB, and proving liability against them was a very difficult task. An extremely complex settlement was reached, involving unusual class action issues, including the limited use of a mandatory class to preclude future punitive damage claims. This measure was required in order to persuade the owners to fund the settlement.

Fulco, et al. v. Continental Cablevision

Shapiro Haber & Urmy served as co-lead counsel in this proceeding. The jury returned a verdict for the plaintiffs and the class in the amount of $4.6 million following a three-week jury trial. The case was thereafter settled for $6.2 million, representing the amount of the verdict, plus an agreed upon amount of prejudgment interest

Holton v. L. F. Rothschild

Shapiro Haber & Urmy represented a class of limited partners in ten oil and gas limited partnerships in suits against the sponsor of the partnerships and its principal officers, a broker-dealer that sold partnership interests, and the partnerships' accountants, law firms and engineering experts. After six years of litigation, Shapiro Haber & Urmy achieved a series of settlements totaling over $15 million for the class.

ING Principal Protection Fund Fee Litigation

Shapiro Haber & Urmy represented shareholders of three ING Principal Protection Funds, who have brought suit alleging that the advisory fees charged are excessive and violate Section 36(b) of the Investment Company Act of 1940. The action was settled for payment by the defendants to the ING Principal Protection Funds of significant funds and a substantial reduction in investment advisory fees to be charged in the future, which will result in millions of dollars of savings to the funds and their shareholders.

Inso Corp. Securities Litigation

Shapiro Haber & Urmy was one of two counsel representing a class in this securities fraud action which alleged improper revenue recognition. The case was settled for $12 million.

Kendall Square Securities Litigation

Working together with several other law firms, Shapiro Haber & Urmy was successful in achieving settlements totaling over $16.8 million for shareholders of Kendall Square Research Corporation, a now-defunct supercomputer manufacturer in Waltham, Massachusetts. The suit alleged that officers and directors of Kendall Square deliberately overstated sales and revenues from the company's supercomputer products, and that these actions inflated the price of the company's common stock. Among the settling defendants was Price Waterhouse LLP, which had served as the company's outside auditors and had certified the company's public financial statements.

Kurzweil Applied Intelligence Securities Litigation

Shapiro Haber & Urmy served as co-lead counsel in this action, which settled for $7.5 million in cash and Kurzweil common stock.

Lotus Development Corp. Securities Litigation

Shapiro Haber & Urmy was co-lead counsel in a class action suit brought against Lotus Development Corporation for alleged securities fraud that was settled for $7.5 million. The complaint alleged that Lotus made false and misleading statements concerning inventory levels maintained by its European distributors, and the anticipated favorable financial performance for the second quarter and the 1994 fiscal year. These statements caused the price of Lotus stock to be artificially inflated. Lotus denied reports that it had excessive inventory levels, even though Lotus was aware of excessive inventory levels among its European distributors.

Microcom, Inc. Securities Litigation

Shapiro Haber & Urmy was one of two lead counsel in this securities fraud class action. The case was settled for $6 million shortly before the scheduled commencement of trial.

Molten Metal Technologies Securities Litigation

Shapiro Haber & Urmy was one of two co-lead counsel in this securities fraud class action which was settled for $11.1 million. The case involved complex technological issues relating to Molten Metal's claims as to the ability of its technology to process and recycle hazardous wastes.

Monarch Capital Corporation Securities Litigation

Monarch Capital was an unregulated holding company which owned all of the stock of the Monarch Life Insurance Company, a regulated life insurance company. The action centers around the defendants' failure to disclose the parent corporation's unlawful transfer of over $100 million from its life insurance subsidiary to Monarch Capital. Settlement has been reached for approximately $5 million with the officers and directors of Monarch Capital and Monarch Life. Claims against the auditors of the life insurance company and its parent remain.

Open Environment Corporation Securities Litigation

Shapiro Haber & Urmy was lead counsel in this securities fraud class action involving improper revenue recognition, which was settled for $6 million.

Pension Reserves Investment Trust Fund of the Commonwealth of Massachusetts v. Bear Stearns & Co., Inc.,

Between 1991 and 1999, Shapiro Haber & Urmy represented the Massachusetts State Pension Fund in a securities fraud action against Bear Stearns & Co., Inc. and others in the U.S. District Court for the Southern District of California. The case arose out of the Pension Fund's investment in a start-up film company by the name of "Weintraub Entertainment Group" and Bear Stearns' placement of approximately $85 million of Weintraub Entertainment Group debentures with a number of its clients, including the Pension Fund. The case was consolidated and tried with a class action arising out of the same private placement. In that case, Shapiro Haber & Urmy obtained a $6.5 million jury award against Bear Stearns after a 4-week trial. The case later settled during the pendency of Bear Stearns' appeal from the entry of the jury verdict.

Pegasystems Inc. Securities Litigation

Shapiro Haber & Urmy was one of three law firms that represented the plaintiff class in this class action involving improper recognition of revenue from a software licensing contract. The case was settled for $5.25 million.

PictureTel Corporation Securities Litigation

A settlement was reached with Picturetel for $12 million. The complaint alleged that defendants overstated net income, revenues, and earnings per share by recognizing revenue in violation of standard accounting principles and PictureTel's stated revenue recognition principles. Specifically, defendants improperly recognized revenue for products that were not shipped to customers during the quarter in which the revenue was recognized, from products shipped to customers who had the unilateral right to return products, and from products shipped to customers subject to contingent liabilities, payment contingencies, or payment uncertainties.

Polymedica Securities Litigation

Shapiro Haber & Urmy commenced a securities class action in the United States District Court for the District of Massachusetts against PolyMedica Corporation and certain officers or directors of the Company.  The complaint alleged 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 materially false or misleading statements concerning PolyMedica's billing and marketing practices. The case has been settled for $5.5 million.

Presstek Securities Litigation

Shapiro Haber & Urmy filed a class action alleging securities fraud in the United States District Court for the District of New Hampshire against Presstek, Inc. and certain of its officers on behalf of  purchasers of the common stock of Presstek during the period from July 27, 2006 through September 29, 2006 .   The Complaint alleged that the defendants violated Section 10(b) of the Securities Exchange  Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing false and misleading public statements regarding Presstek’s expected revenue growth in 2006.  A settlement for the Class was approved by the Court on July 20, 2009.

Securities and Exchange Commission v. Chatterjee

This is a case brought by the Securities and Exchange Commission against the defendants to recover profits obtained by the defendants through unlawful insider trading.  At the request of the Securities and Exchange Commission, the Court appointed Edward F. Haber the Receiver in this action.  As Receiver Mr. Haber took custody of the Disgorgement Fund. Mr. Haber had the responsibility to approve or disapprove claims made against the Disgorgement Fund, applying the criteria established in the Plan of Distribution submitted by the Securities and Exchange Commission and approved by the Court.  As Receiver he was also responsible for administering the distribution of the Disgorgement Fund to the approved claimants.

Slavin, et al. v. Morgan Stanley & Co., Inc., et al.

This was a securities fraud class action arising from the underwriting of subordinated notes for Bank of New England Corporation. Our firm together with one other firm achieved an $8.4 million settlement with the three underwriters.

UNIFI Communications, Inc. Fiduciary Duty Litigation

Shapiro Haber & Urmy represented the Trustee of UNIFI Communications, Inc., in a breach of fiduciary duty lawsuit against its former directors, alleging that they grossly mismanaged UNIFI in the period leading up to its bankruptcy, causing UNIFI's insolvency to deepen. Shapiro Haber & Urmy recovered $3.95 million for UNIFI and its creditors.

United States Trust Company of New York, et al., v. Albert, et al., and Investors Fiduciary Trust Company v. Jenner, et al.

These interpleader actions were brought by the plaintiff trust companies involving over $100 million dollars received by the plaintiffs as Trustees of several unit investment trusts. At issue is which combination of three groups of potential claimants are entitled to those funds. On July 25, 1995, United States Magistrate Judge Sharon E. Grubin recommended that Shapiro Haber & Urmy be appointed lead counsel for one of the three defendant classes, noting that Shapiro Haber & Urmy "has extensive experience in prosecuting class actions, including as lead counsel. Haber, as well as the others in his firm, have impressive academic and professional credentials, including teaching and lecturing on securities litigation and other areas." (Report and Recommendation, July 25, 1995, at 35-36 and 37 and 42).

U.S. West Derivative Litigation

This was a class and derivative action arising from $10 million in fines assessed against U. S. West, one of the "Baby Bells" which was created in the court-approved break of American Telephone and Telegraph (AT&T). Shapiro Haber & Urmy was co-lead counsel for the derivative plaintiffs and the class. In his decision approving the settlement of this action Judge Lewis T. Babcock commended the efforts and results of Shapiro Haber & Urmy and co-counsel, noting that "Counsel who have been involved in this case come with a wealth of experience and skill in prosecuting class actions, derivative actions in the field and have expanded this skill and experience to address the rather novel issues that have been presented here." (CCH Federal Securities Law Reporter [1992-1993 Transfer Binder], at page 95,237)

Whalen Bondholder Lititgation

This was a complex securities fraud action on behalf of bondholders who had purchased $10 million of industrial revenue development bonds which were used to fund construction of a hotel outside of Denver, Colorado. There were over 60 defendants in the case, including underwriters, lawyers, numerous Oklahoma Savings & Loan Associations, and the Federal Savings & Loan Insurance Corporation (FSLIC) as Receiver for some savings and loan associations which had been placed in receivership. In representing the interests of the class, we not only litigated and settled, on very favorable terms, the securities fraud claims against the defendants, we also located a buyer for, and negotiated the sale of, the hotel which was the collateral for the bonds. As a result of our efforts, over 80 percent of the bondholders' losses were recovered.

Xerium Technologies Securities Litigation

Shapiro Haber & Urmy was counsel in a securities class action in the United States District Court for the District of Massachusetts against Xerium Technologies, Inc. and certain of its officers.  The case was filed on behalf of a class consisting of all persons other than defendants who purchased the common stock of Xerium pursuant and/or traceable to the Company's initial public offering (IPO) on or about May 16, 2005 through November 15, 2005 (the "Class Period").  The Complaint alleged that the Prospectus with respect to Xerium's IPO, filed with the SEC on or about May 11, 2005 on a Form S-1/A Registration Statement, and which became effective on or about May 16, 2005, contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation.  The case was settled for $3.6 million.