Securities Fraud Case: Summary Judgment Granted

On January 27, 2015, the Los Angeles Superior Court granted my client’s, Shattuck Hammond Partners, motion for summary judgment.

In 2003, Asset Real Estate & Investment Co. created structured transactions to acquire senior assisted living facilities. AREI planned to finance these acquisitions by raising equity through the sale of tenant-in-common interests to investors and by raising debt from institutional lenders. In 2004, AREI retained Shattuck Hammond to help solicit and obtain debt financing from institutional lenders.

Between 2008 and 2010, TIC investors in five AREI properties filed five separate lawsuits against AREI and others involved in the transactions, including broker-dealers, law firms, lenders, title insurance companies, and Shattuck Hammond. In all five cases, Plaintiffs’ central allegation was that the private placement memoranda on which they relied in making their investment decision failed to disclose material information about AREI and about the transaction. Plaintiffs alleged that AREI was a Ponzi scheme and that the defendants had conspired with AREI to defraud Plaintiffs.

Earlier in 2015, Shattuck Hammond settled with the plaintiffs in four of the five cases, but plaintiffs in the Roseville case persisted. The Roseville Plaintiffs asserted three causes of action against Shattuck Hammond. First, material assistance in a securities violation under Cal. Corps. Code 25504.1, second, conspiracy to commit fraud, and third, fraudulent nondisclosure.

After more than a year of discovery, Plaintiffs were unable to present any evidence that created a triable issue of fact that Shattuck Hammond knew of the alleged omissions from the PPM, that it had any intent to defraud, or that it had agreed with AREI to defraud. The court agreed that the evidence established that the debt and equity sides of the transaction were separate, that Shattuck Hammond did not owe a duty of disclosure to Plaintiffs, that Shattuck Hammond did not materially assist in the alleged securities violation, and that Shattuck Hammond did not conspire with AREI to defraud the TIC investors.

I led the litigation team in this matter.

Plaintiffs Denied Class Certification in Chinese Automotive Lawsuit

A team of attorneys, including Neal Marder of Winston & Strawn, successfully defended China Automotive Systems against a two-part lawsuit challenging its accounting practices. The efforts of Neal Marder and his team led to the judge denying shareholders’ class certification in their lawsuit, signaling a setback for a slew of similar lawsuits against Chinese reverse-merger companies. US District Court Judge Katherine Forrest stated that the plaintiffs, three purchasers of China Automotive securities, did not effectively show that they were entitled to a class-action lawsuit.

The case stemmed from a complaint that China Automotive Systems released false and misleading accounting statements that were later revealed to be the product of accounting fraud. When the company announced that it would restate its finances, its stock price dropped and the plaintiffs who sued wanted their lawsuit to represent all American investors who bought stock in China Automotive Systems during that time period. China Automotive was one of many Chinese companies that entered the US stock market through a reverse merger during this time, and its victory in this lawsuit was widely lauded as one of the first of its kind.

Law Seminars International Hosts 2013 Conference on Class Actions




On May 13th, legal professionals from across the country joined Law Seminars International (LSI) in Seattle for the two-day Comprehensive Conference on Class Actions and Other Aggregate Litigation. Themed “Practice Tips for Keeping Up With a Rapidly Changing Landscape,” the meeting covered class action trends across the United States, highlighted new Supreme Court cases, and discussed the Consumer Financial Protection Bureau. Attorneys, business executives, government officials, and consultants alike benefited from analysis of some of 2012’s most important class action developments. The program, which featured talks by such leading attorneys as Charles B. Casper and Timothy G. Fielden, provided 13.25 Washington Continuing Legal Education credits.

Neal Marder, a partner at Winston & Strawn’s Los Angeles offices, spoke at LSI’s Seventh Annual Comprehensive Conference on Litigating Class Actions in 2011. During this presentation, he lectured on how increased regulation, specifically through the Dodd Frank Act, could lead to increased rates of class action lawsuits. Named one of the Best Lawyers in America for six consecutive years, Neal Marder regular speaks at national conferences and hosts webinars and other educational events related to class action litigation.