Practice Areas & Industries: Sullivan & Cromwell LLP

 





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Sullivan & Cromwell provides superior legal representation to U.S. and non-U.S. corporations, financial institutions and individuals in the most notable securities litigations and arbitrations worldwide.
 
S&C’s lawyers have played a fundamental role in the evolution of U.S. banking and securities law and are well respected by courts, regulators and adversaries.

The Firm represents clients in:

  • securities actions, including shareholder class-action litigation;
  • shareholder derivative actions;
  • mergers-and-acquisitions litigation;
  • investigations and enforcement actions by the Department of Justice, the Securities and Exchange Commission, the Financial Industry Regulatory Authority and other federal, state and non-U.S. regulators; and
  • internal investigations conducted by corporations and their boards of directors.

 In recent years, the Firm has taken the leading role in defending actions arising out of the ongoing financial crisis:

  • S&C is noted for representing financial institutions and other clients in matters arising out of the subprime lending crisis, including many nonpublic investigations of events in the subprime securitization market.
  • S&C helps clients manage investigations and enforcement actions brought by the SEC and other regulators, often concurrently with private litigation. These investigations and lawsuits often involve allegations of false or misleading disclosures to shareholders, insider trading and other types of financial fraud.
  • S&C has also successfully represented corporations in shareholder derivative and class-action litigation arising out of corporate control disputes.

 The Firm’s securities litigation practice is coordinated among four U.S. offices and S&C’s London office. S&C is one of very few U.S. firms with an established U.S. law litigation practice representing U.S. and non-U.S. clients.

SELECTED REPRESENTATIONS

Sullivan & Cromwell’s securities litigators have a proven track record in bet-the-company securities litigation matters. Recent highlights include representations of:

  • BP and its directors, in securities litigation arising out of the 2010 Gulf of Mexico oil spill. To date, S&C has achieved dismissals in many of these actions including derivative, Employee Retirement Income Security Act and other shareholder litigations.
     
  • Barclays, in international, multiagency investigations into benchmark interest rates, including the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor). S&C was engaged by Barclays to conduct an internal investigation regarding conduct relating to benchmark interest rates. In 2012, Barclays entered into settlements with the U.S. Commodity Futures Trading Commission, U.S. Department of Justice Fraud Division and the U.K. Financial Services Authority. S&C also represented Barclays in obtaining conditional leniency from the Antitrust Division of the U.S. Department of Justice with respect to financial instruments referenced to Euribor. S&C represents Barclays in the related civil litigation. The litigation includes class-action suits involving USD Libor, Yen Libor and Euribor alleging violations of federal antitrust laws and violations of the Commodity Exchange Act, as well as violations of the Racketeer Influenced and Corrupt Organizations Act and various state laws. These claims were substantially dismissed in March 2013.
     
  • Barclays, in the Enron securities class action—widely considered to be the most complex and largest securities class-action litigation ever—for more than nine years. The Firm’s defense strategy proved highly successful: The U.S. Court of Appeals for the Fifth Circuit reversed the class certification order. In March 2009, Barclays achieved a successful final result of that litigation, obtaining summary judgment from the district court dismissing the securities fraud claims brought by the class against Barclays and Barclays’ co-defendants, Credit Suisse and Merrill Lynch. Other financial institution defendants had settled these claims, agreeing to pay a total of $6.6 billion to plaintiffs in 2005.
     
  • Boeing, in a securities class action brought by a putative class of Boeing shareholders related to Boeing’s 878 Dreamliner.
     

The Wall Street Journal called the decision, which sheds additional light on the already controversial use of confidential informants in pleading scienter in private securities fraud litigation, “the biggest plaintiff smackdown of the year.”
 

  • Cablevision, in connection with class-action and shareholder derivative litigation in federal and state courts relating to “options backdating” allegations. S&C helped to facilitate a settlement of the “options” cases that resulted in a total value of approximately $34.4 million being paid to the company by its insurer and individual defendants and the dismissal of claims against the company and settling defendants.
     
  • Gildan Activewear, in a putative class action alleging violations of sections 10(b) and 20(a) of the Securities Exchange Act following a downward reversion of the company’s earnings guidance and a drop in the company’s stock price by 30 percent. The court dismissed the action, noting that the plaintiffs failed to plead facts giving rise to a strong inference of scienter, in part because the insider sales on which the plaintiffs’ scienter allegations rested were not unusual in value, volume or timing.
     

This was one of the first cases to establish a 10(b)(5)(1) plan as an affirmative defense against insider trading.
 

  • Goldman Sachs, in investigations and related litigation involving residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs). Both the DOJ and the SEC concluded lengthy investigations without taking action against Goldman Sachs or its employees. Recent litigation victories include a dismissal of fraud claims brought by an investor in a CDO offering by the Appellate Division, First Department of the New York Supreme Court; a dismissal of fraud claims brought by another CDO investor in a decision affirmed by the U.S. Court of Appeals for the Second Circuit; and dismissal of a shareholder derivative action by the Delaware Supreme Court that resulted in the dismissal of eight related derivative matters filed in the U.S. District Court for the Southern District of New York.
     
  • Goldman Sachs, JPMorgan Chase, Barclays, Nomura and First Horizon, in separate actions brought by the Federal Housing Finance Agency on behalf of Fannie Mae and Freddie Mac. The cases are among 18 suits brought by FHFA alleging that the banks fraudulently issued or underwrote hundreds of mortgage-backed securities prior to the subprime collapse.
     

Together, they constitute one of the highest-profile securities litigations arising out of the financial crisis, with hundreds of billions of dollars in securities at stake.
 

  • A group of financial institutions, as plaintiffs in New York State Court in challenging the $5 billion restructuring of MBIA Insurance, including on a successful, precedent-setting appeal to New York’s highest court.
     
  • JPMC, as national coordinating counsel in the company’s residential mortgage-backed securities litigation, which includes litigation arising from securitizations issued by Washington Mutual and Bear Stearns. As such, the Firm has responsibility for developing the strategy and overseeing more than 70 cases pending in multiple state and federal jurisdictions, as well as various regulatory matters. S&C played a key role in leading JPMorgan through its recently announced $13 billion settlement with the U.S. Department of Justice.
     
  • Moody’s, in a coordinated shareholder class action. After defeating class certification, S&C obtained full dismissal on summary judgment of the actions brought against Moody’s that alleged that Moody’s made false and misleading statements concerning its rating methodologies and its management of conflicts of interest in connection with ratings of subprime residential mortgage-backed securities and other structured finance products that suffered downgrades during the financial crisis. The plaintiffs sought recovery for a more than 50-percent decline in Moody’s share price and the loss of more than $7 billion in market capitalization.
     
  • Leading banking associations, in obtaining a favorable ruling from the U.S. Supreme Court barring “scheme” liability under Section 10(b) of the Securities and Exchange Act in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., which made clear that plaintiffs cannot seek to impose liability on secondary actors—such as investment banks, auditors and vendors—in a so-called scheme to defraud.
     
  • Lewis Ranieri, a pioneer in mortgage finance and former vice chairman of Salomon Brothers, in obtaining dismissal of a securities fraud action, affirmed on appeal to the U.S. Court of Appeals for the Fifth Circuit.
     
  • Porsche, in a high-profile federal securities litigation brought by a group of hedge funds seeking more than $2.5 billion in connection with Porsche’s acquisition of a stake in Volkswagen. The hedge funds’ claims were dismissed.
     

Both The New York Times and The Wall Street Journal reported on this victory. The American Lawyer noted in its March 2011 “Big Suits” column that the win “removes a roadblock to the planned merger between Porsche and VW.” The American Lawyer also recognized the Firm as an honoree for “Global Dispute of the Year: U.S. Litigation” in its inaugural Global Legal Awards (2013) for representation of Porsche in these matters.
 

Regions Financial, in a class-action complaint brought against it under sections 11, 12 and 15 of the Securities Act of 1933. The plaintiffs asserted that the registration statement and prospectus for an April 2008 bond offering were false and misleading because they allegedly understated loan loss reserves and overstated goodwill. The U.S. Court of Appeals for the Second Circuit unanimously affirmed the district court’s dismissal, holding that Regions’ statements of goodwill and loan loss reserves were matters of opinion and estimation, not misstatements of material fact, and therefore were not actionable.
 

The St. Joe Company, in a highly publicized putative shareholder class action brought under the federal securities laws concerning the valuation of real estate assets and disclosure issues. In 2013, the U.S. Court of Appeals for the Eleventh Circuit affirmed the dismissal of the case.
 

UBS, in a variety of regulatory inquiries, investigations, tax matters, and private litigation arising from the recent financial crisis and losses related to mortgage-backed securities. Most recently, S&C advised UBS in obtaining the dismissal of all federal securities claims by UBS shareholders that acquired shares outside the U.S. arising out of UBS’s subprime losses. This decision eliminated billions of dollars of potential liability.
 

Vodafone, in a purported class-action securities fraud litigation alleging that Vodafone had misled investors by failing to timely disclose the impairment of the goodwill value of certain assets and the nature and extent of certain expected tax cash payments. The court dismissed the claims for failure to plead fraud with particularity and failure to plead a primary violation of Section 10(b) of the Securities Exchange Act.
 

55 underwriting firms, in a groundbreaking decision that denied class certification in 306 IPO cases. S&C acted as liaison counsel for the firms. The Second Circuit’s opinion in In re IPO Securities Litigation set the stage for a favorable settlement that was approved in 2009.


 
 
Articles Authored by Lawyers at this office:

Second Circuit Rejects “Listing” and “Foreign-Squared” Claims Under Morrison v. National Australia Bank
, May 09, 2014
In Morrison v. National Australia Bank, the U.S. Supreme Court opined that U.S. securities laws apply only “in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.” Seizing on that...

Tweets Allowed in Proxy Contests and Securities Offerings: New SEC Guidance Allows Use of Hyperlinks to Satisfy Legend Requirements in Social Media Communications with Character Limits and Limits Issuers’ Responsibility for Social Media Communications Re-Transmitted by Third Parties
, April 29, 2014
The staff of the Securities and Exchange Commission has published a number of new Compliance and Disclosure Interpretations facilitating the use of social media in proxy contests, business combination transactions, tender offers and securities offerings. The interpretations allow the use of active...

Conflict Minerals Disclosure Due Date Approaching; While SEC Staff Issues New Guidance, Court’s Decision Creates Some Uncertainty: D.C. Circuit Holds That Portion of Conflict Minerals Disclosure Rule Violates the First Amendment; Absent Further Developments, Issuers Should Continue to Prepare to File Disclosures by Monday, June 2
, April 23, 2014
The deadline-May 31, 2014, extended to June 2 because May 31 falls on a Saturday-for conflict minerals disclosures responsive to the SEC’s rule under Section 13(p) of the Securities Exchange Act, is quickly approaching.

New York’s Highest Court Strengthens Forum Non Conveniens Doctrine in Cases Having Peripheral Connection to New York Banking System: Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Brothers Company
, April 15, 2014
In an opinion issued on April 8, 2014, the New York Court of Appeals unanimously dismissed on forum non conveniens grounds a case arising from a foreign exchange transaction between a bank in the United Arab Emirates and a general partnership in Saudi Arabia, where the only nexus between the...

Kahn v. M&F Worldwide Corp.: Delaware Supreme Court Affirms In Re MFW Court of Chancery Ruling that Business Judgment Review Can Apply to Squeeze-Out Mergers Conditioned Up Front on Both Approval by Special Committee and Majority-of-the-Minority Vote
, March 20, 2014
In an opinion issued last Friday, a unanimous Delaware Supreme Court sitting en banc affirmed then Chancellor (now Delaware Supreme Court Chief Justice) Strine’s decision in In re MFW Shareholders Litigation, holding that the business judgment rule standard of review applies to squeeze-out...

Spin-Off and Listing by Introduction of Feishang Anthracite Resources Limited
, March 10, 2014
China Natural Resources, Inc. (“CHNR”), a natural resources company based in the People’s Republic of China (the “PRC”) with shares listed on the NASDAQ Capital Market, recently completed the spin-off (the “Spin-Off”) and listing by introduction (the...

U.S. Supreme Court Hears Arguments on Critical Issue for Securities Fraud Class Actions
, March 10, 2014
On March 5, 2014, the U.S. Supreme Court heard oral argument in Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, which presents whether to overrule or significantly limit plaintiffs’ ability to rely on the legal presumption that each would-be class member in a securities fraud class...


Chinese Affiliates of Big Four Accounting Firms Ordered Barred from Practicing Before the SEC for Six Months; Suspension Stayed Pending Appeal: Administrative Law Judge Finds that the Firms “Willfully Refused” to Comply with SEC Requests for Audit Work Papers for Issuers Under Investigation for Accounting Fraud
, February 03, 2014
On January 22, 2014, a Securities and Exchange Commission (“SEC”) administrative law judge issued a decision that is of substantial importance to China-based issuers of securities that are registered in the United States, to multinational corporations with significant operations in...

Securities Law—Potential Expansion of Liability Theories Under the Martin Act: New York State Attorney General and BlackRock Settle Investigation into BlackRock’s Analyst Survey Program, Signaling Potential Expansion of Martin Act Liability Under “Insider Trading 2.0” Theory
, January 24, 2014
On January 8, 2014, the New York State Attorney General and BlackRock, Inc. entered into a settlement agreement by which BlackRock agreed to end its Wall Street research analyst survey program. The Attorney General alleged that BlackRock’s practice of systematically surveying and aggregating...

Physical Commodities and Merchant Banking Activities Conducted by Financial Holding Companies: Federal Reserve Seeks Public Comment on New Limitations on Physical Commodities and Merchant Banking Activities Conducted by Financial Holding Companies Under the Bank Holding Company Act
, January 20, 2014
Earlier this week, the Board of Governors of the Federal Reserve System (the “Board”) solicited public comment, through an advance notice of proposed rulemaking (the “ANPR”), regarding various issues and questions related to physical commodities activities conducted by...

Volcker Rule: Agencies Issue Interim Final Rule Exempting Certain TruPS-Backed CDOs from the Volcker Rule’s Prohibition on Banking Entities’ Holding Ownership Interests in or Sponsoring Covered Funds
, January 17, 2014
Earlier this evening, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency (the “OCC”), Federal Deposit Insurance Corporation (such three agencies together, the “Banking Agencies”), Securities and Exchange Commission, and Commodity...

Nasdaq Compensation Committee Independence Requirements: SEC Publishes Nasdaq Rule Change Removing Prohibition on Receipt of Compensatory Fees by Compensation Committee Members; Change Aligns Nasdaq Rule with NYSE Rule
, December 13, 2013
Yesterday, the Securities and Exchange Commission published immediately effective changes to the NASDAQ Stock Market Listing Rules that remove the prohibition on a compensation committee member’s receipt of compensatory fees. Instead, consistent with the New York Stock Exchange compensation...

CFTC Proposes Position Limit Aggregation Rules: CFTC Proposes Aggregation Standards Applicable to Position Limits for Derivatives
, November 22, 2013
On November 5, 2013, the Commodity Futures Trading Commission (the “CFTC” or “Commission”) held a public meeting during which it voted unanimously to propose for public comment rules that would expand in certain respects the availability of aggregation exemptions (the...

U.S. Supreme Court to Consider Critical Issue for Securities Fraud Class Actions: Possible Overruling of Basic’s “Fraud-on-the-Market” Presumption Could Spell Major Changes for Current Regime
, November 22, 2013
On November 15, 2013, the U.S. Supreme Court granted certiorari in the case of Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, raising the prospect that the Court will overrule or significantly limit the legal presumption that each member of a securities fraud class action relied on the...


ISS Proposes Limited Updates to 2014 Voting Policy: Proposals Would Provide Greater Flexibility on Board Implementation of Shareholder Proposals and Eliminate One-Year TSR from the Quantitative Pay-for-Performance Analysis
, November 01, 2013
Institutional Shareholder Services, the influential proxy advisory firm, has published for public comment two proposed changes to its proxy voting guidelines for U.S. companies. The proposals are limited and do not include any change related to the effect of longer board tenure on director...

Asset Management and Financial Stability: Office of Financial Research Publishes Report on “Asset Management and Financial Stability”
, October 07, 2013
On September 30, 2013, the U.S. Department of the Treasury’s Office of Financial Research (OFR) delivered a report to the Financial Stability Oversight Council (FSOC) exploring ways that activities in the asset management industry might create, amplify or transmit stress through the...

SEC Publishes CEO Pay Ratio Proposal: Will Not Affect 2014 or, Most Likely, 2015 Proxy Seasons; Issuers May Use Sampling and Reasonable Estimates to Determine Median; Ratio Must Include All Full-Time, Part-Time, Temporary, Seasonal and Non U.S. Employees
, September 24, 2013
On Wednesday, the SEC published the text of its proposed rule, adopted that morning by a three-to-two vote, requiring U.S. public companies to disclose:

Recent Amendments to Delaware Corporation and LLC Statutes: Adoption of Section 251(h) Facilitates Tender and Exchange Offers; Fiduciary Duties Obtain in LLC Absent Elimination; Public Benefit Corporations Authorized
, September 19, 2013
The State of Delaware recently enacted several significant changes to the Delaware General Corporation Law (“DGCL”) and the Delaware LLC Act (“LLC Act”).

SEC Proposes CEO Pay Ratio Rule: At Earliest, New Rule Will Not Be Effective Until 2015 Proxy Season; Issuers May Use Sampling and Estimates to Calculate Ratio
, September 19, 2013
This morning, a divided SEC Commission proposed a requirement that U.S. public companies disclose:

Broker-Dealer Audit and Reporting Updates: PCAOB Report and New SEC Rules Address Audit, Financial Reporting, Internal Control and Risk Management Issues Relating to Broker-Dealers; These Developments May Be Relevant for Audit Committees of Public Companies that Own Broker-Dealers
, September 17, 2013
The Public Company Accounting Oversight Board and the Securities and Exchange Commission have recently issued reports and taken other steps to strengthen the audit, financial reporting and risk management functions relating to broker-dealers. Broker-dealers, as well as audit committees of public...

Extraterritorial Application of Criminal Securities Fraud Liability: Second Circuit Extends Morrison v. National Australia Bank Ltd. to Criminal Cases; Rules that Section 10(b) Does Not Reach Fraud Committed Abroad Involving Non-U.S. Listed Securities
, September 13, 2013
On August 30, 2013, the Second Circuit answered a question left open in the Supreme Court’s landmark decision in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010): do the limits imposed in Morrison on extraterritorial civil liability encompass criminal and SEC enforcement...

Adjusting to Shareholder Activism: Active Shareholders are the New Normal, Placing a Premium on Management Preparedness, Board Awareness and Ongoing Shareholder Engagement for Public Companies
, August 24, 2013
The results of the 2013 proxy season and other recent corporate governance developments have demonstrated that boards and management teams should thoughtfully assess their approach to dealing with hedge funds and other “long” investors that are considered “activist.”...

CFTC Adopts Final Rule Amendments Harmonizing Compliance Obligations for Dually-Registered CPOs and Modifying Regulatory Requirements for CPOs and CTAs
, August 23, 2013
CFTC’s Final Rule Permits CPOs of Registered Investment Companies to Fulfill Certain CFTC Compliance Obligations Through Substituted Compliance with the SEC Regime and Amends Certain Disclosure and Reporting Requirements for all CPOs and CTAs; SEC Simultaneously Issues Guidance on Use of...

Regulatory Capital Requirements: UK Sets Out Proposed Tax Treatment of New Additional Tier 1 and New Tier 2 Regulatory Capital Instruments
, August 13, 2013
HM Revenue and Customs have published draft regulations (the “Draft Regulations”) on the tax treatment of Additional Tier 1 and Tier 2 regulatory capital securities issued by UK financial institutions to reinforce their regulatory capital base.