Tuesday, September 26, 2023

Archegos Litigation Heats Up

Rogue Trader's Collapse Still Ripples Through the Financial Industry

Author: David Schwartz J.D. CPA


Archegos Capital Management, a family office run by Bill Hwang, collapsed in March 2021, leaving its counterparties with over $10 billion in losses. The SEC, CFTC, and DOJ have all filed charges against Archegos and its executives, alleging that they engaged in market manipulation and fraud. The litigation is still ongoing, but the case has already significantly affected the financial industry.

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Wednesday, July 5, 2017

Clock Runs Out on CALPERS' Lehman Claims

Supreme Court Upholds Strict Time Limit in Federal Securities Class Actions

Author: David Schwartz J.D. CPA

On June 26, 2017, the Supreme Court handed down a 5-4 decision which ended California Public Employees' Retirement System’s (“CALPERS”) efforts to spin off its own Lehman-related claims from a larger class action because the claims were filed late.  The Court held that the three-year time limit in Section 13 of the Securities Act of 1933 is a statute of repose. Consequently, the Court held that the filing of a class action suit under Section 13 does not stop the clock on the statute of limitations for plaintiffs who subsequently opt-out of the class to pursue individual lawsuits.

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Thursday, January 26, 2017

ADRs Find Themselves in an Unwelcome Spotlight

Author: David Schwartz J.D. CPA

American Depositary Receipts are back in the news.  The Wall Street Journal reported on November 8, 2016 that the Securities and Exchange Commission has issued subpoenas to four large banks with expansive ADR businesses seeking information about trading of ADRs. Citing unnamed sources “close to the investigation,” the Wall Street Journal article said that the focus of the SEC probe seems to be the “pre-release” of ADRs, where a bank may issue depositary receipts without actually having custody of the underlying shares. 

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Tags: litigation, Forex, ADRs

Wednesday, October 19, 2016

Rare Win in Court for Wall Street Bank

$1bn Lawsuit Tests the Limits of Suitability

Author: David Schwartz J.D. CPA

On October 14, 2016, London’s High Court of Justice handed down a ruling in favor of the UK subsidiary of Goldman Sachs, ending a three-year challenge by the US$60 billion Libyan Investment Authority (LIA).  The decision comes after a judge rejected claims by the sovereign wealth fund that the bank's nine synthetic derivatives, crafted in 2007 and 2008, were intended to be so complex as to exploit its staff's limited financial know-how. The bank's willingness to defend itself not only reverses a long string of out-of-court settlements by Wall Street banks, but may also stiffen the resolve of other banks' legal staffs. LIA's claims rest upon a theory of suitability that will no doubt be tested further in the post-reform litigation era. 

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Tuesday, January 12, 2016

Flash Crash Suit Against Congress and the SEC Goes Up in Smoke

Author: David Schwartz J.D. CPA

Angry investor Clyde Calvin Grady II has had his day in court. In a November 2015 ruling, the U.S. Court of Claims dismissed Grady’s suit against Congress and the Securities and Exchange Commission alleging that, by failing to prevent the 2010 “Flash Crash,” the SEC had breached an implied contract with investors. 

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