CASE IN POINT

In late 2000, investors began accusing high-tech companies and their underwriters of illegally pumping up the post-IPO stock prices of these companies. Fifty-five investment banks, including Goldman Sachs, Credit Suisse, Morgan Stanley, and JP Morgan, were named, in addition to companies such as Ask Jeeves, E-Loan Inc., and Razorfish. In the end, investors sued over 300 companies and 1,000 current and former officers and directors of these companies, resulting in a coordinated proceeding of over 300 separate securities class actions in the U.S. District Court for the Southern District of New York. The Initial Public Offering Securities Litigation is one of the largest, most complex securities class actions in U.S. history.

Morrison & Foerster represents approximately 30 of the companies, and was elected at the outset to head the multi-company defense team for the more than 300 high-tech companies and their individual defendants. Since 2001, Morrison & Foerster has played the lead role in developing the issuers’ position—namely, that the issuers did not participate in any wrongful conduct—and strategically representing the best interests of the more than 300 issuers through motion practice, discovery, and multiple settlements.

We successfully negotiated the issuers’ position with both plaintiffs’ and underwriters’ counsel in a global settlement that was reached in April 2009. The settlement received final approval from the District Court in October 2009 and is currently on appeal to the Second Circuit. In addition, and perhaps most importantly for our clients, the issuers’ insurance companies will cover the entire cost of the issuers’ share of the settlement as well as the defense costs under D&O policies. In the end, the issuers—including their successor companies—will feel virtually no impact on their bottom lines from the settlement.

New York partners Jack Auspitz and Joel Haims led the representation. Angela Rella, a New York associate who worked on the case since the beginning, commented: “As liaison counsel, we were intimately involved in every aspect of this ground-breaking case, which has given me tremendous development opportunities – from representing the issuers’ interests at depositions as a junior associate to assisting in the negotiation of the settlement as a senior associate. In addition, my involvement throughout the long life of this case has enabled me to become the primary point of contact for many of our clients and co-counsel. It has been very rewarding to be the person they turn to with questions about the case and the terms of the settlement.”