Milbank obtains dismissal of CDO-related claims.
Milbank represented the Putnam Advisory Company, LLC in a case in New York Supreme Court in which investors in a collateralized debt obligation managed by Putnam brought an action against Putnam and the CDO’s arranger. The plaintiffs alleged that our client failed to disclose that a non party hedge fund purportedly controlled Putnam’s selection of collateral for the CDO, and used that control to select poor-quality assets to further its own purported plan to profit on short positions on those assets. The plaintiffs asserted claims against Putnam for common law fraud, conspiracy to defraud, aiding and abetting fraud, and unjust enrichment. They sought $70.5 million in damages.
We challenged all elements of the plaintiffs’ theory of fraud and the court granted our motion to dismiss on June 13, 2011. The plaintiffs promptly appealed, but on September 16, 2011, they withdrew their appeal and entered into a stipulation of voluntary discontinuance with prejudice.
Through motion practice in Investment Company Act case, Milbank obtains dismissal of one claim and withdrawal of a second
Milbank represents AXA Equitable Life Insurance Company and AXA Equitable Funds Management Group, LLC in a derivative action brought under Section 36(b) of the Investment Company Act of 1940 (“ICA”). The plaintiff purports to bring the action on behalf of eight mutual funds that are offered as investment options for variable annuity products sold by AXA Equitable. The plaintiff alleges that the defendants received excessive investment management fees for managing the funds in breach of their fiduciary duties under Section 36(b) of the ICA. The plaintiff seeks rescission of the funds’ management agreements and recovery of the allegedly tens of millions of dollars of excessive fees.
The plaintiff also asserted a Section 26(f) claim on behalf of all persons who invested in any of the funds through a variable annuity contract with AXA, alleging that AXA violated Section 26(f) of the ICA by charging unreasonable fees under the variable annuity contracts, as a result of charging allegedly excessive management fees to the funds. The plaintiff also asserted an unjust enrichment claim on behalf of all persons who paid investment management fees to the defendants on account of their investments in the funds.
The defendants originally filed a motion to dismiss the action in its entirety on October 17, 2011. The plaintiff thereafter filed an amended complaint. On December 19, 2011, the defendants filed a motion to dismiss the amended complaint. While that motion was pending, the plaintiff voluntarily dismissed the Section 26(f) claim. On September 25, 2012, the court granted the defendants’ motion to dismiss with respect to the unjust enrichment claim but denied it with respect to the Section 36(b) claim. Discovery has now commenced.
Milbank delivers favorable settlement for Fidelity in putative class action case
Milbank represented Fidelity Management & Research Co. and related entities and persons in a putative class action brought under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. Plaintiff contended that defendants misrepresented the risks of investing in the Fidelity Ultra-Short Bond Fund, which experienced negative investment performance during 2007 and 2008 due to losses on investments in various types of mortgages. The court denied defendants’ motion to dismiss, but we were nonetheless able to negotiate a settlement of the action on terms extremely favourable to defendants.
Milbank convinces securities plaintiffs to voluntarily dismiss their claims, after extensive discovery and oral argument
Milbank represented Fidelity Management & Research Co. and FMR Co., Inc. in an action challenging the fees paid by five of Fidelity’s largest and best-known mutual funds–including the flagship Magellan Fund–which collectively represent more than $115 billion in assets. Plaintiffs alleged that the fees charged by Fidelity for managing and servicing the funds were excessive in violation of Section 36(b) of the Investment Company Act of 1940 and sought potential damages of more than $10 billion. After extensive fact and expert discovery, the parties cross-moved for summary judgment. Following oral argument, the plaintiffs voluntarily dismissed the case.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
