Securities Trader – Federal Criminal and SEC Civil Insider Trading Charges
Representing a securities trader in a Department of Justice criminal action and a related SEC civil action where our client is charged with participating in an insider trading scheme in which the securities of public companies were sold short in advance of secondary offerings, allegedly based upon material, non-public information.
Reserve Primary Fund Investor – Recovery of $150 Million Investment
Represented an investor in seeking the recovery of a $150 million investment in the Reserve Primary Fund, a $62 billion mutual fund that was the first to “break the buck,” or fall below the $1 NAV requirement for mutual funds, due to its large holding in Lehman Brothers, which filed for Chapter 11 bankruptcy protection during the height of the 2008 financial crisis. Our client ultimately recovered approximately 98% of its investment.
Hedge Fund Manager – No Action Letter in SEC Insider Trading Investigation
Successfully represented a hedge fund manager and his fund in an SEC insider trading investigation involving a US-based, multinational technology company and the alleged intentional manipulation of securities prices through the creation and spreading of false information. The investigation concluded with the issuance of a no-action letter from the SEC.
Financial Advisor – FINRA Customer Claim Investigation
Represented a veteran financial advisor in a FINRA investigation into customer claims that the client recommended unsuitable investments and maintained an overly concentrated account resulting in millions of dollars in damages. FINRA closed the investigation with no action taken against our client.
$650,000+ FINRA Arbitration Award
Secured an FINRA arbitration award of more than $650,000 on behalf of a retail brokerage against the firm’s former clearing house, which was alleged to have unlawfully refused to release the client’s funds. Herrick successfully argued that the termination provision in the standard clearing agreement functioned as a penalty rather than as liquidated damages, and therefore could not be enforced. The FINRA panel also required the clearing house to deliver over 10,000 shares of a NASDAQ traded biotechnology company to our client while dismissing the respondent’s counterclaim.
NYC Attorney – Successful Defense in $80 Million Securities Fraud Civil Action
Defense of a New York attorney in a civil securities fraud action seeking $80 million in damages and alleging our client and co-defendants participated in a broad-based conspiracy intended to deprive the plaintiff of its shares in a Chinese financial media company at artificially depressed prices in order to realize an unjust windfall for themselves. In response to our motion to dismiss, which included a request for sanctions against the plaintiff for naming our client, the plaintiff agreed to dismiss all claims against our client without any settlement payment.
NYC Attorney – Joint US Attorney and SEC Investigations into Alleged Misappropriation of Funds and Market Manipulation
Represented a prominent former New York City attorney in a joint federal criminal investigation, conducted by the U.S. Attorney's Office, District of Columbia and the SEC, into alleged misappropriation of funds of a large foreign public company and market manipulation of the securities of several small U.S. public companies. Herrick was able to resolve the federal criminal charges against our client through a guilty plea to a single count of obstruction of justice, resulting in a far lower sentencing guidelines range than would have resulted had the client pled to multiple securities fraud charges, as the Department of Justice was initially contemplating. The client was sentenced to two years of probation, later reduced to one year. Notwithstanding the criminal charges involving the sale of securities, the SEC did not bring charges.
Investment Advisor – Litigation Related to Failed Merger and $700 Million in Asset Losses
Represented a registered investment advisor, its managers and the RIA's proprietary funds in a series of four consolidated securities class actions lawsuits, two concurrent state court actions, and a Bermuda and SDNY bankruptcy, involving more than $700 million in claims arising out of a failed merger between the funds and a public shell company.
Favorable Resolution Negotiated in FINRA Customer Arbitration Alleging Sales Practice Violations
Herrick successfully defended a leading investment banking and brokerage firm in a FINRA arbitration initiated by the beneficiary of an estate seeking to hold our client liable for the alleged misconduct of the estate's trustees, including alleged defalcation, in connection with significant losses incurred by a brokerage account opened on behalf of the estate. Herrick was able to negotiate an extremely favorable settlement involving no admissions of wrongdoing or further disciplinary actions by FINRA.
DataTreasury Corp. – $100 Million Dispute with Former COO
Successful defense of DataTreasury Corp. in a 41-day bench trial arising from claims by the company's former Chief Operating Officer that he was entitled to exercise certain stock options granted to him during his tenure. We helped obtain a decision dismissing all of the former executive's claims, based on his disloyal conduct in trying to usurp business opportunities coupled with his failure to properly exercise the options, defeated the plaintiff's multiple post-trial motions, and successfully defended those decisions before the New York State Appellate Division, Second Department which unanimously affirmed.
Multiple Claims Dismissed in Shareholder Derivative Litigation
Secured a ruling in Kings County Supreme Court on behalf of a garment manufacturer and certain affiliated individuals and entities that dismissed several causes of action in a purported shareholder derivative suit. Among the claims asserted was the allegation that a competing entity had been used by certain defendants to usurp business opportunities, and that ownership of a company facility had been fraudulently transferred to a charitable trust and foundation. The court granted our motion to dismiss the claim for a constructive trust over either the alleged competing entity or the foundation; an unjust enrichment claim against the charitable trust and foundation defendants; and a claim of rescission of the alleged fraudulent transfer of the facility, which the court found was time-barred.
Public Company – SEC Investigation in Connection with IPO
Represented a publically traded computer software company in an SEC investigation into the company’s assets and the funds used to purchase shares in the company’s initial public offering.
Favorable Resolution in FINRA Arbitration Initiated by Former Managing Director
Herrick successfully defended a midmarket investment bank and brokerage in a FINRA arbitration initiated by a former Managing Director who alleged that our client had wrongly denied him commissions on deals in which he claimed to have been involved. The parties ultimately entered into binding mediation where virtually all claims against our client were dismissed and the matter was resolved with a minimal settlement that was a small fraction of the amount initially claimed.
Regional CPA Firm – SEC and PCAOB Investigations into Improper Partner Rotations
Representation of regional certified public accountant in connection with SEC and PCAOB investigations into alleged improper partner rotation and related alleged accounting practice improprieties. Herrick was able to reach a settlement with regulators in which the client admitted no wrongdoing.
Publicly Traded REIT – Credit Default Swap Default
Defense of a publicly traded hospitality REIT against allegations by its counterparty, a large multi-national investment bank, that two of our client's funds defaulted on their obligations under a $1.2 billion credit default swap.
Sports and Entertainment Company – SEC Administrative Proceeding
Represented the former chairman of the board of directors of a start-up sports and entertainment company, and a company consultant, in an SEC administrative proceeding alleging violations of the anti-fraud, control person, broker registration and securities registration provisions of the federal securities laws.
Broker Dealer – Regulatory Investigation
Defended broker dealer in a FINRA regulatory investigation alleging that a former analyst made misrepresentations about high-growth securities in multiple firm research reports.
Favorable Settlement Resolving FINRA Investigation into Self-Raise Through Debt Instruments
Herrick successfully defended a public company, its broker-dealer affiliate and the principal of each, negotiating a favorable settlement that resolved a nearly three-year long FINRA investigation into allegedly false and misleading debt instruments used to raise money for the broker-dealer that did not adequately disclose certain material information, including the use of the raised funds.
Broker-Dealer and Its Principal – FINRA Disciplinary Hearing
Represented an embattled broker-dealer and its founder in a 12-day disciplinary hearing initiated by FINRA alleging multiple counts of fraud, failure to supervise and general violations of FINRA rules.
Successful Resolution to FINRA Selling Away Investigation
Successfully represented a registered representative of a broker dealer against allegations of selling away (FINRA Rule 3040) in an investigation initiated by FINRA. The registered representative concluded the matter with a letter of caution.
Broker-Dealer – Sales Practice Investigation by FINRA
Successfully negotiated a favorable settlement on behalf of a broker-dealer in a sales practice investigation initiated by FINRA concerning allegations that the firm made false and/or misleading representations to customers in connection with the sale of certain mortgage backed securities.
Private Equity Firm – Settlement with SEC – Alleged Violations of Broker-Dealer Registration Requirements
Herrick represented a prominent real estate private equity firm in a precedent-setting and favorable settlement with the Securities and Exchange Commission related to the use of a finder in raising capital and the application of broker-dealer registration requirements.
FINRA Employment Arbitration
Representation of a broker-dealer in a complex employment arbitration brought by six former employees seeking over $10 Million in collective damages. This FINRA arbitration proceeded for 60 sessions, including 32 hearing days, and resulted in a virtually complete defense verdict for the firm, including for attorneys' fees. The award was confirmed in its entirety by the Southern District of New York.
FINRA Investigation – Failure to Supervise
Representation of a major broker dealer investigated by FINRA for failure to supervise brokers in connection with the sale of speculative securities.
Investors – Resolution of Fraud and Breach of Contract Claims
Negotiated a favorable settlement involving the payment of significant monetary damages on behalf of a New York limited partnership to resolve allegations of fraud and dissipation of family trust assets against a major offshore bank and international investment advisors.
Philadelphia Stock Exchange and FINRA Investigation
Representation of a regional brokerage firm in a FINRA and Philadelphia Stock Exchange investigation into payment of transaction based compensation to unregistered persons in numerous violations of the just and equitable principles of trade.
Financial Advisory Group – FINRA Arbitration
Negotiated a favorable, but confidential, settlement on behalf of a premier wealth management group at a global financial services firm in FINRA arbitrations relating to disputes with their former employer.
Broker Dealer – SEC Investigation
Representation of a broker dealer in connection with an SEC insider trading investigation.
Senior Investment Banker – SEC/FINRA Investigations
Representation of a senior investment banker in parallel SEC and FINRA investigations relating to allegations of fraud and misrepresentation in connection with the sale of private equity securities.
SEC Matter – Representation of Company and CEO Concerning Stock Transaction
Representation of a public company and its chief executive officer in a U.S. Securities and Exchange Commission investigation regarding the company's private offerings of its stock and its disclosures. The work entailed producing documents in response to SEC subpoenas and representing executives required to give testimony before the SEC.
SEC Matter – CEO of Broker Dealer Investigated for Fraud
Representation of the Chief Executive Officer of a significant broker dealer in a U.S. Securities and Exchange Commission investigation regarding alleged misrepresentations in the offering of private placement interests, and responding to an SEC Wells Notice. The matter was ultimately favorably resolved.
Former MF Global Officers – Regulatory Investigations and Civil Actions
Represented former MF Global officers in investigations conducted by the Department of Justice, the CFTC and the SEC as well as civil and class action lawsuits filed in the wake of the bankruptcy and collapse of the company. Among our many successes, Herrick secured the dismissal of the CEO who preceded Jon Corzine from the securities class action, and the dismissal of five officers and employees from the commodity class action.
Investment Advisor – Successful Conclusion to SEC Investigation and Wells Notice Alleging Fraud Against Senior Executive – Stanford Ponzi Scheme
We represented a senior executive investment advisor formerly associated with the now infamous Stanford Financial Group in a Securities and Exchange Commission investigation. In 2011, the SEC issued a Wells Notice concerning our client's alleged fraudulent disclosures and affirmative misrepresentations in the sales of Stanford International Bank CDs, allegedly a massive Ponzi scheme. After making two submissions in response to the Wells Notice and an oral presentation to the staff at the SEC's Fort Worth office, we successfully persuaded the SEC to issue a no-action letter stating that it will not bring any charges against the client.
Global Financial Services Firm – FINRA Action
Defense of a premier global financial firm in a FINRA action involving claims brought by an investor for losses to retirement account resulting from alleged flawed asset allocation.
Futures Commission Merchant – Fraud Claims
Represented a Futures Commission Merchant ("FCM") in defending claims filed in federal court alleging that a former employee of the FCM assisted the employees of a bank to overvalue the bank's over-the-counter natural gas options book. Damages in excess of $500 million were sought.
Futures Commission Merchant – Class Action
An FCM in a class action lawsuit defending against claims alleging that the firm engaged in, or assisted, a scheme to manipulate the prices of palladium and platinum futures contracts traded on NYMEX.
Brokerage Firm – Defamation Litigation
Representation of a leading independent broker-dealer against claims of defamation and tortious interference asserted by a competitor firm.
Investment Advisor – Successful Conclusion to Internal Investigation
Conducted an internal investigation for a nationally recognized investment adviser to a series of hedge funds following a whistleblower's complaint concerning SEC compliance and operational issues. Upon submission of a report of our investigation, which determined that the whistleblower's allegations had no merit, the SEC never brought charges.
Madoff Litigation – SIPC Trustee Actions
Representation of Madoff victims named as defendants in actions filed by the SIPC Trustee to recover monies withdrawn from their Madoff securities accounts. Those actions, which are commonly referred to as "clawback" claims, are before the Bankruptcy Court for the Southern District of New York.
International Insurance Carrier – Indebtedness Recovery
Representation of international insurance carrier in its attempts to recover a two million dollar indebtedness from a former account executive.
Senior Broker – FINRA Investigation
Representation of a registered senior broker in a FINRA investigation into possible selling-away activities.
FINRA Investigation – Gift and Gratuity
Representation of a senior trader in a FINRA investigation into the possible violation of FINRA gift and gratuity rules.
International Insurer – FINRA Arbitration
Representation of a major international insurer in a FINRA arbitration brought by a group of customers alleging improper selling- away by an account executive.
Financial Service Firm – Insider Trading Investigation
Herrick successfully represented a financial services firm and key executives in a joint SEC and US Attorney's insider trading investigation related to the purchase of shares in multiple pharmaceutical companies prior to announcements of multibillion mergers. The investigation concluded with no action taken against our clients.
NYSE Company – Internal Investigation
Representation of the Audit Committee of a New York Stock Exchange listed company to conduct an internal investigation of whistleblower claims brought by a former officer alleging that certain officers and directors had committed accounting fraud and violated the Sarbanes-Oxley Act.
Madoff Feeder Funds – Unprecedented Recovery from Largest Investment Fraud in History
Representation of two Madoff feeder funds that had collectively lost over $160 million of principal and several hundred million dollars of phantom profit in the wake of the largest investment fraud in history. Herrick represented the funds in dozens of lawsuits including numerous class actions, an action by the Madoff Trustee, and an action by the Department of Labor. Herrick partner Arthur Jakoby ultimately orchestrated two settlements that will result in each of the funds' over 500 investors eventually recovering 100 percent of their principal investment and what is estimated to be a more than 40 percent - possibly as high as 60 percent - profit on their Madoff investment - arguably the most favorable outcome in the world for any investor who invested with Madoff through an investment feeder fund. The firm's achievements on behalf of the funds were widely covered by the media, including a Forbes report entitled "Meet The Madoff Victims That Profited From Their Investment," which lauded Arthur's litigation strategy and the result.
General Counsel – Options Backdating Class Action
Representation of the former General Counsel of a major technology company in a class action against the company concerning stock options backdating.
Witness – SEC Action Charging Kickbacks and Overvaluing of Assets
Herrick represented a key witness in an SEC lawsuit charging kickbacks, failures to disclose and overvaluing of assets involving the owners of a registered investment adviser which claimed to have had over $130 million in assets under management. The investigation resulted in no charges against our client.
Rogue Employee – CFTC and CME Investigations
Conducted an internal investigation into massive trading losses incurred by a rogue employee of a futures commission merchant, and represented the FCM in connection with investigations into the conduct by the CFTC and CME.
Retail Brokerage – NASD Investigation
Representation of a retail broker of a national retail brokerage firm in a NASD investigation alleging numerous sales practice violations in connection with customer accounts. No charges were instituted after the filing of a Wells submission.