Institutional Investor Litigation

Gibbs & Bruns is nationally recognized for its success in prosecuting securities claims for institutional investors.  Our cases run the gamut of the capital markets.  We have won substantial recoveries for clients who invested in everything from municipal revenue bonds to build private prisons in Texas to asset-backed securities issued by affiliates of National Century Financial Enterprises (NCFE), which collapsed in one of the largest securitization failures in history.  You name the security, and we have likely litigated it.

Our clients have turned to us to help them recover losses on net interest margin securities, mortgage backs, derivatives, other asset backs, investment grade and speculative equities, index arbitrage funds, options, gold stocks, institutional money market funds, and partnership interests.  We bring powerful advocacy, established experience, and an irrefutable track record to every case for every client.  Others have observed that our firm is “unbelievably deep and powerful, hard-hitting and accurate” in this practice area.  The results below illustrate why:

National Century Financial Enterprises
We were lead trial counsel for the holders of $1.6 billion of ostensibly AAA-rated notes issued by affiliates of now-defunct NCFE, once the nation’s largest securitizer of health-care accounts receivable.  Our clients also asked us to represent a litigation trust created for the benefit of creditors as a result of NCFE’s collapse and subsequent bankruptcy.  We recovered over $1 billion in settlements for our clients – including a landmark settlement with NCFE’s Indenture Trustees and settlements with two public accounting firms that rank among the largest on record.

Our representation of our NCFE clients has also resulted in important pretrial decisions that have gained national attention.  Judge James Graham of the U.S. District Court for the Southern District of Ohio accepted our argument that disclaimers in offering memoranda are ineffective to negate liability for securities fraud.  He also ruled in our favor on another motion and issued a decision that markedly limits the effect of the in pari delicto defense against claims by a bankruptcy litigation trust.

Our NCFE clients included 32 of the nation’s largest institutional investors, including PIMCO, Alliance Capital Management, Dreyfus, the State of Arizona, Grantham Mayo & Van Otterloo, and some of the world’s largest financial institutions, including the European Bank for Reconstruction and Development, Olfivalmo Gestion, and Dexia-BIL.

We were lead trial counsel in obtaining an $84 million verdict on behalf of nine mutual funds managed by Merrill Lynch Asset Management; Franklin Advisors, Inc.; and other investment advisors in a suit alleging violations of federal and state securities laws arising out of the issuance and sale of $73 million in mortgage revenue bonds used to develop six private prisons in Texas. The case subsequently settled very favorably for our clients.

Fleming Companies
We represented the litigation trust (the Post-Confirmation Trust or PCT) established for the benefit of creditors as a result of the bankruptcy of the Fleming Companies, Inc.  Fleming, headquartered in Dallas, was one of the nation’s largest grocery wholesalers and plunged into bankruptcy after it was revealed that certain senior members of Fleming’s management manipulated Fleming’s income through a variety of illegitimate transactions.  The firm directed the filing and prosecution of claims against certain of Fleming’s former officers; Fleming’s former public auditor, Deloitte & Touche LLP; and several of Fleming’s vendors and/or their officers.  The PCT has publicly disclosed that it settled this litigation in 2006 and 2007.  Although the amounts of those individual settlements are confidential, our team recovered over $27 million for the PCT and its beneficiaries.

NSM Steel Thailand
We were counsel for 11 mutual funds and a hedge fund in a state securities and RICO dispute arising from an investment in a Thailand steel mill.  We established a precedent that non-New Jersey plaintiffs may sue for violation of the New Jersey RICO statute.  Our clients recovered 90 cents on the dollar of their losses, with the final settlement coming just one week before we were scheduled to pick a jury in state district court in New Brunswick, New Jersey.

We were retained to represent the holders of Landry’s Restaurants debt after Landry’s obtained an ex parte temporary restraining order prohibiting them from exercising their legal rights to accelerate $400 million of Landry’s senior notes.  In a matter of weeks, our aggressive action – including our stinging cross-examination of Landry’s chairman at the temporary injunction hearing – led to a complete collapse of Landry’s strategy.  What began as an offensive move by Landry’s ended with a mid-hearing settlement win that required Landry’s to pay our clients $60 million in increased interest through the notes’ maturity.

We served as lead trial counsel for 11 mutual funds and 3 hedge funds in a $50 million state securities claim arising from the collapse of Bre-X Minerals, an Indonesian mining company. Bre-X was one of the most notorious gold frauds in history. Our clients include funds managed by Franklin Templeton Advisers, Franklin Mutual Advisers, and Appaloosa Management. The case settled on terms favorable for our clients, and the settlement terms are confidential.

Carnegie Mellon University
We were retained to lead Carnegie Mellon’s effort to recover over $50 million in investment losses suffered as a result of its investment in funds managed by Westridge Capital, an entity the Securities & Exchange Commission has described as “an egregious investment fraud…[that] used client money…as [a] personal piggy bank.”  After almost two years of briefing in the Westridge receivership, and following an all-day hearing in March 2011 before Judge Daniels in the Southern District of New York, Judge Daniels from the bench rejected alternative distribution plans for Westridge’s assets, overruled numerous other investors’ objections to the Receiver’s proposed plan, and approved the plan of distribution supported by firm client Carnegie Mellon.

Mid-American Waste
We were lead trial counsel for five mutual funds managed by Merrill Lynch Asset Management in a suit alleging violations of federal and state securities laws arising out of the issuance of senior subordinated notes by Mid-American Waste Systems, Inc.  The case settled favorably for our clients on the eve of trial, with our clients recovering over fifty cents on the dollar of their losses.