Securities & Shareholder Disputes

Disputes within closely held businesses often involve both personal and commercial stakes, including conflicts among shareholders, directors, officers, partners, and family members over ownership rights, management authority, fiduciary duties, buy-sell obligations, valuation, employment issues, and alleged minority shareholder oppression. FBT Gibbons attorneys represent companies, majority and minority owners, and other stakeholders in close corporation litigation, helping clients protect business value, preserve operational continuity, and pursue practical resolutions through negotiation, mediation, arbitration, trial, and appeal.

We represented the defendant company and majority shareholders in an action brought by a minority shareholder whose employment was terminated by the company. The plaintiff alleged claims of disability discrimination, breaches of fiduciary duty and breach of contract. The defendants counterclaimed, seeking an order requiring the plaintiff to tender his shares to the company pursuant to a buy-sell agreement.  We prevailed on summary judgment, obtaining dismissal of the plaintiff’s claims and an order requiring plaintiff to tender his shares to the company.

We obtained a substantial settlement for its client, a minority shareholder, in a dissenters’ rights case in Missouri, alleging claims of minority shareholder oppression, breach of fiduciary duty, and breach of contract stemming from a squeeze-out of the minority shareholder via a merger by the corporation.

We represented a closely held corporation and its majority shareholders in claims brought by two minority shareholders whose employment with the corporation had been terminated, including the prosecution of counterclaims against the minority shareholders.

We represented a closely held corporation and its majority shareholder in a dispute over management and control issues.

FBT Gibbons attorneys have extensive experience advising clients on applicable regulations involving the use of electronic technology in the financial services industry, including before the SEC, FINRA, and the Commodity Futures Trading Commission (CFTC).  We counsel clients in the financial industry in assessing litigation risks and developing and implementing cybersecurity programs under Reg S-P for broker-dealers, investment advisers, and public and private funds.

FBT Gibbons attorneys also represent clients to respond to security breaches and have created Cyber Incident Response Plans that help clients identify reasonably foreseeable security risks.  We also assist clients in the design and implementation of security safeguards and protocols, as well as with staff training. We have worked with our clients to create identity theft and “red flag” rule programs and have developed data breach response programs, system monitoring practices, consumer notification procedures, and notice guidelines.

Our attorneys also routinely counsel foreign-based and domestic clients in litigation involving cross-border issues and EU Directives governing privacy and data security.

FBT Gibbons attorneys have extensive experience handling and winning securities arbitrations and mediations in FINRA’s dispute resolution forum and other facilities, including JAMS and the American Arbitration Association (AAA). Representative matters have ranged from claims asserted by public customers, including a broad variety of sales practice violations, to intra-industry disputes, including trade discrepancies and such employment issues as claims of raiding and breach of restrictive covenants.

FBT Gibbons attorneys have a complete understanding of the substantive and procedural aspects of these unique proceedings. Some notable cases in this area include:

We obtained the dismissal of a $10 million claim against a large broker-dealer for breach of fiduciary duty and breach of contract. Claimant alleged that our broker-dealer client mishandled an investigation into elder abuse allegations and the conversion of an account into joint tenancy as a result of alleged undue influence. The Chicago- based FINRA arbitration panel dismissed the case on a directed verdict after the Claimant’s counsel rested and before our client was required to put on a defense.

We obtained a dismissal of a claim involving our broker-dealer client’s alleged mishandling of a margin liquidation and close out of a significant short position by an active trader.  The Los Angeles-based FINRA arbitration panel dismissed the case following a 3 day hearing.

We obtained a multimillion-dollar FINRA arbitration award for a national investment bank against its former investment banking client.  The Los Angeles-based FINRA arbitration panel awarded our investment banking client its costs and interest.

We obtained a defense award on behalf of a national broker-dealer in a claim arising from the payment from transfer-on-death and IRA accounts to beneficiaries other than the account holder’s spouse at death.  The Idaho-based FINRA arbitration panel dismissed the multimillion dollar claim against our client brought by the account holder’s widow.

We obtained a defense award in a FINRA arbitration involving the settlement of a prime brokerage trade of nil-paid rights executed on the London Stock Exchange. The case resulted in a defense award for the client and an award in excess of $200,000 in attorney fees on a third-party claim against the client’s RIA.

We obtained a defense award in a FINRA arbitration involving the settlement of a prime brokerage trade of nil-paid rights executed on the London Stock Exchange. The case resulted in a defense award for the client and an award in excess of $200,000 in attorney fees on a third-party claim against the client’s RIA.

We represented a national broker-dealer in a claim arising from a public customer’s substantial investment in Fannie Mae and Freddie Mac preferred stock. In addition to ruling in favor of the broker-dealer, the FINRA arbitration panel also recommended expungement of the claim from the professional records of the two licensed professionals named in the claim.

We obtained an award against a clearing broker for over $3 million, in representation of the receiver of a title company victimized by a boiler room.

We successfully defended a bank in a $3.7 million claim arising from allegations that the bank’s trust/investment management department breached its fiduciary duty by over-concentrating an irrevocable trust’s multi-million investment portfolio in market linked structured notes and other risky investments.

Defended FINRA arbitration claim brought by brokerage customer seeking more than $320,000 in relief after being sold out of a short position in a meme stock. After a hearing before a panel of FINRA arbitrators in California, the panel denied the claimant’s requested relief.

Our firm counsels clients with respect to the formation and operation of all types of private investment funds (“Private Fund”), including hedge funds; private equity funds; leveraged buyout funds; venture capital funds; business development companies (BDCs) and hybrid funds (whether the fund invests in equity or debt instruments, commodities, real estate, or other assets); distressed investment funds; funds-of-funds; secondary funds; special situations funds; and commodity futures funds. Our clients include broker-dealers, commodity trading advisers/commodity pool operators, and fund managers and their sub-advisers. Our Private Fund clients rely on our knowledge, skill, and experience regarding developing rules and case law in this sector’s rapidly evolving regulatory and economic landscapes.

FBT Gibbons attorneys have handled litigations and administrative proceedings for Private Fund clients, including partnership disputes, class actions, contract claims, securities arbitrations, regulatory proceedings, and employment matters. We advise clients in connection with formation and investment structuring issues, with an eye toward minimizing the risk of future litigation.

The firm has significant RICO experience and has litigated numerous individual RICO and RICO class action claims and other claims brought against private companies and financial institutions.  Some notable representations include:

We represented a major NASDAQ market maker in connection with the Department of Justice and SEC investigations of alleged price fixing on the NASDAQ stock market. In addition to resolving the dual government investigations, we also represented our client in the related private class action litigation and extricated our client through an early, favorable settlement before the remaining industry members settled for far greater amounts.

We successfully represented a national prime lending bank in connection with a putative class action alleging a price-fixing conspiracy among several major banking institutions to fix the prime rate.

We successfully prosecuted and collected a multi-million-dollar recovery for a class of plaintiffs in an action involving an alleged Ponzi scheme.

The firm’s longstanding securities class action practice is as accomplished and varied as the sophisticated clients who, time and again, retain FBT Gibbons to handle their most crucial and complex matters. Our experienced securities litigators represent all manner of issuer, underwriter, advisor, auditor, officer, and director in the defense of class action suits alleging violations of the Securities Act of 1933, Securities and Exchange Act of 1934, and the SEC Rules promulgated thereunder. Our attorneys’ proficiency, experience, and tireless commitment to clients’ objectives have earned Gibbons the trust of industry leaders nationwide in connection with their high-stakes class action litigations.

FBT Gibbons has recently represented or currently represents:

A leading telecommunications company in successfully moving to dismiss a securities class action alleging that the company made misrepresentations regarding purported risks associated with lead-sheathed cables.

A major pharmaceutical manufacturer in a securities class action alleging that the company made misrepresentations regarding anticipated clinical trial results for an obesity drug.

A major pharmaceutical manufacturer in a securities class action alleging that the company made misrepresentations regarding the anticipated effect of compounding of the company’s semaglutide drugs on its revenue outlook.

A leading provider of global mobility solutions in a class action alleging violations of federal securities laws and breach of fiduciary duty.

A major pharmaceutical manufacturer in a securities class action alleging the company misrepresented the anticipated impact of price pressures that pharmacy benefit managers were bringing to bear on the U.S. insulin market.

A major pharmaceutical company in successfully moving to dismiss a securities class action alleging the company made misleading disclosures regarding clinical trial results for a cancer treatment.

A biotechnology company in successfully moving to dismiss a securities class action alleging the company made misrepresentations bearing on the company’s value in connection with its acquisition.

Former executives of a biotech company in a securities class action and derivative action alleging misrepresentations concerning a pain medication and a planned corporate acquisition.

A company that owns and operates data centers powered by renewable energy where hashpower used to create Bitcoin is generated in successfully moving to dismiss a securities class action alleging misrepresentations and omissions concerning certain equipment financing arrangements.

A leading digital printing solutions company in a securities class action alleging misrepresentations regarding revenue and service contracts.

A leading game-centric live streaming platform, with a focus on eSports, in a securities class action alleging misrepresentation and omissions concerning the risk of regulatory actions by the Chinese government and potential changes in Chinese content moderation laws.

FBT Gibbons represents companies, financial institutions, broker-dealers, investment advisers, officers, directors, shareholders, underwriters, funds, and other market participants in securities litigation, regulatory investigations, enforcement proceedings, and related corporate disputes. Our experience includes SEC and state agency matters, FINRA arbitrations, securities class actions, shareholder derivative claims, broker-dealer disputes, offering-related claims, and matters involving alleged misstatements, omissions, fraud, trading issues, and corporate governance obligations.

Broker-Dealer Litigation and Arbitration

FBT Gibbons attorneys have extensive experience handling securities arbitrations and mediations in FINRA’s dispute resolution forum and other facilities, including JAMS and the American Arbitration Association (AAA). The FBT Gibbons Securities Team has tried well over 100 arbitrations.  Representative matters have ranged from claims asserted by public customers to intra-industry disputes. With limited rights of appeal, arbitrations must be handled correctly the first time, and FBT Gibbons attorneys have a complete understanding of the substantive and procedural aspects of these unique proceedings.

Feasibility Study/Bond Offering Litigation

Our team served as co-counsel for a large public accounting firm in an action alleging material misstatements and omissions in connection with feasibility studies for municipal bond issues for a chain of nursing homes. We also served as co-counsel in a related action by the bankruptcy trustee of the debtor against the accounting firm, following the settlement of securities class action. We obtained judgment on the pleadings in favor of its client in the related bankruptcy proceeding.

High-Yield Bond Offering/Investment Bank Representation

We served as co-counsel for an investment banking firm in a securities fraud action involving the issuance of $175 million of senior subordinated high-yield bonds, issued on behalf of a publicly-traded integrated solid waste management company. Our client, along with another investment banking firm, acted as lead underwriters of the bond offering. The plaintiffs asserted state and federal securities law claims (Section 11 and 12(2) claims), as well as various common law claims, including fraud, aiding and abetting common-law fraud, negligent misrepresentation, breach of fiduciary duty/acting in concert and negligence. After picking a jury (from a pool of over 200 potential jurors), and just prior to opening statements, the case settled.

Hostile Takeover Litigation

We represented the target company in the hostile tender offer by a large foreign company. The parties litigated issues (i) in connection with Ohio’s Control Share Acquisition Act, (ii) regarding enjoining false and misleading proxy and tender offer materials, and (iii) regarding a tender offeror’s right to and use of shareholders lists. The litigation was resolved when the acquirer increased its offer and won the endorsement of the target’s board of directors.

Investment Company Representation

We defended an individual and his investor-relations firm in a state court lawsuit in Indiana alleging violations of the Indiana Securities Act and common law fraud relating to the plaintiffs’ purchases of unregistered stock in companies represented by the defendant.

Investigations and Proceedings SEC

Our firm has had substantial involvement with SEC proceedings. For example, FBT Gibbons represented Bill Hwang, Founder and CEO of Archegos Fund LP, in connection with an SEC investigation related to the collapse of a multi-billion dollar fund. FBT Gibbons also served as counsel for the receiver of Paragon Securities before the SEC with regard to various regulatory issues and civil and criminal proceedings. Subsequently, the firm became the leading New Jersey firm sought by the SEC and the Securities Investor Protection Corporation (SIPC) to conduct major broker-dealer liquidations. We also represent various corporations and individuals in connection with both civil and criminal investigations and enforcement proceedings commenced by the SEC. In addition, we have served as independent consultant in an SEC enforcement action against one of the largest independent broker-dealers in the U.S. in a matter involving Reg S-P and company obligations to safeguard customer financial information.

State Agency Litigation

We represented a state securities commissioner in an action alleging that a state teachers association and related entities violated state securities laws, by offering and selling certain health insurance plans, which is alleged to constitute a “security” under state law.

FBT Gibbons attorneys have handled numerous shareholder derivative/fiduciary duty actions, in both federal and state court actions across our national footprint and in Delaware’s Chancery Court and Supreme Court. Our attorneys have represented both plaintiffs and defendants in such actions and have undertaken lead counsel and co-counsel roles in defense of some of the most high-profile actions to have arisen out of the 2008 financial crisis.

Representative engagements include:

We represented the acquiring company in the proposed sale of a publicly traded savings bank, where a shareholder (purporting to represent a class of all shareholders) of the to-be-acquired company has sued to block the sale. We were successful in having all claims against its client dismissed on a motion to dismiss, prior to the preliminary injunction hearing (involving the purported class of all shareholders and the target company).

We represented the defendant publicly traded utility company and its nine-member board of directors in this shareholder derivative action brought by a company shareholder seeking to block the merger of the company with another utility company. The plaintiff alleged that the board violated their fiduciary duties by entering into a potential merger without regard to the fairness of the transaction to the company’s shareholders. The complaint alleged that the board breached their duties of loyalty, care, good faith, candor, and independence. We filed a motion to dismiss, which was granted by the court, and the plaintiff did not appeal the decision.

We represented the defendant publicly traded corporation in this shareholder derivative action in state court. The plaintiff shareholder sought through the derivative action to hold current and former members of the company’s board of directors personally liable to the company for allegedly failing to exercise oversight in connection with the company’s business operations. The parties reached a settlement that was approved by the court and the claims were dismissed.