July 23, 2012
Litigation Department Wins Another Key Ruling for Underwriters in Multibillion-Dollar GE Securities Litigation
Richard D. Bernstein
, Mei Lin Kwan-Gett
Willkie recently secured a ruling of procedural significance for all 26 underwriters on a class action plaintiff’s motion to amend its complaint before the U.S. District Court for the Southern District of New York in In Re: General Electric Company Securities Litigation. Judge Denise Cote ruled against plaintiff’s motion, which sought to assert a new theory that GE’s "knowledge and intent" of the falsity of opinions that were expressed to investors created civil liability under the Securities Act of 1933. Previously, plaintiff had disclaimed such allegations, which is a common tactic in 1933 Act complaints to avoid stricter pleading rules that apply when fraud is alleged. Judge Cote ruled that it was too late for the plaintiff to disavow its prior disclaimer and that its tactics were indicative of "bad faith." Partner Richard Bernstein told Thomson Reuters’ News & Insights, "Plaintiffs can no longer wait for one Securities Act theory to fail before asserting another one. This case is a warning to plaintiffs that they have a choice to make on knowledge and intent. They will not get a free pass at an amended complaint."
This latest ruling reaffirms Judge Cote’s April 18 opinion and order granting reconsideration and dismissing all claims against all underwriters, which was widely reported in the press. In her April ruling, Judge Cote had dismissed all remaining claims brought under the Securities Act of 1933. The case was handled by Mr. Bernstein and partner Mei Lin Kwan-Gett, and associates Zheyao Li, James Fitzmaurice, Jennifer Greene and Ross Wilson.
Read Willkie’s April 19 announcement: Firm Obtains Victory for 26 Underwriters in Multibillion-Dollar GE Securities Litigation