Securities Litigation & Enforcement

At the center of almost any securities litigation is a company’s financial reporting —  the process by which it captures and reports its financial performance and related disclosures.  The key differentiating feature of the Securities Litigation & Enforcement Practice of Willkie Farr & Gallagher is its dominance in the area of financial reporting and the proceedings surrounding it.  As described by Chambers USA – America’s Leading Lawyers for Business, the practice group is "the best in the city for financial reporting issues."

The group has represented key participants in 21 separate securities litigations decided by the United States Supreme Court.  It won the landmark jury verdict for the defense in the first securities class action tried to a jury pursuant to the Private Securities Litigation Reform Act of 1995.  It has prevailed at trial against the SEC.  It has undertaken some of the highest-profile audit committee investigations into fraudulent financial reporting.  And most recently it is defending numerous SEC, Department of Justice, and congressional proceedings arising out of the financial crisis, including securities litigations involving AIG, Merrill Lynch, Bear Stearns, IndyMac, Ambac, GE, and others.

The practice group’s clients include a former Chairman of the SEC, a former Chief Accountant of the SEC, and other national leaders on financial reporting issues.  They include most of the major accounting firms as well as special coalitions of members of the accounting profession, the AICPA, and the Center for Audit Quality.  They include the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association in securities litigations of national importance.  They include major investment banks, hedge funds, and other asset managers.  They include innumerable public companies, audit committees, officers, and directors.

With the globalization of capital markets, the practice group has also increasingly been called upon for issues arising outside the United States. Through its strategically located international offices, the group has found itself addressing financial reporting issues in China, Japan, India, South Korea, Indonesia, Singapore, the United Kingdom, Ireland, Germany, Italy, and the Middle East.

Beyond the active defense of securities litigation and governmental proceedings, the depth of the group’s experience has long been viewed as a resource by Congress and regulatory authorities.  Starting with the key role of former Willkie attorney Felix Frankfurter in the initial crafting of the securities laws in 1933, the practice group has more recently been asked to testify on financial reporting issues before the Senate Banking Committee, the U.S. Treasury Department, the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees, and the Public Oversight Board.  In addition, through participation in the Financial Accounting Standards Advisory Council to FASB, the practice group has been called upon to assist in the formulation of Generally Accepted Accounting Principles and, through its role as counsel to the AICPA, in the crafting of Generally Accepted Auditing Standards.

Staffed by more than 100 attorneys, the practice group membership includes senior veterans of the SEC, former enforcement officials of the United States Attorney’s Office and the Department of Justice, and other experienced veterans of governmental practice.  Members of the practice group have authored or contributed to more than a half-dozen texts on the securities laws, financial reporting, and the defense of securities litigation and governmental proceedings.  For years, practice group membership has been ranked "Band 1" for securities litigation in New York by Chambers USA.

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Organizationally, the practice group’s activities revolve around eight practice areas.

Accountants Liability
The firm represents seven of the eight largest accounting firms as well as the accounting profession’s main professional association, the American Institute of Certified Public Accountants, and its newly formed association regarding audits of the financial statements of public companies, the Center for Audit Quality. The group defends the accounting profession in federal securities litigation and class actions, as an amicus participant before the highest-level federal and state courts, in federal bankruptcy proceedings, in SEC and other governmental investigations and proceedings, and in congressional and regulatory testimony.

Audit Committee Investigations & Corporate Governance
The practice group literally wrote the book —  Accounting Irregularities & Financial Fraud: A Corporate Governance Guide —  on the proper conduct of investigations into accounting improprieties on behalf of audit committees and other special committees of boards of directors. The practice group has been called upon to assist in many of the highest-profile audit committee investigations, including those involving Enron, Xerox, Dell, HealthSouth, the City of San Diego, Fannie Mae, and Cendant. The group has earned accolades for its accomplishments in efficiently uncovering financial fraud —  for example, its groundbreaking investigation into accounting fraud at Cendant Corp. was described in a Fortune magazine cover story as "remarkable." The group’s clients in this area include a former Chairman of the U.S. Senate’s principal investigative committee. The group’s membership is regularly called upon to publish articles, speak at conferences, and otherwise assist with improvements to audit committees and corporate governance generally.

Financial Reporting
The mainstay of the practice group’s activity is the defense of public companies, accounting firms, investment banks, officers, directors, audit committees, and boards of directors in securities litigation and enforcement proceedings arising out of financial reporting. The depth of the group’s experience in financial reporting gives it a significant advantage against almost any adversary —  civil or govern— as the practice group’s experience brings to the fore a level of legislative and regulatory knowledge often not shared by the other participants.

Regulated & Unregulated Funds
With an asset management practice headed by the SEC’s former Director of the Division of Investment Management, the firm brings particular depth and experience to litigation and proceedings involving asset management, including hedge funds. The firm is positioned to provide in-depth experience particularly in matters involving the Investment Company Act of 1940 and the Investment Advisers Act.

Insider Trading
Much of the practice group’s recent activities and efforts have been devoted to handling governmental investigations into insider trading. The group’s client base includes a large number of hedge funds and other focal points of governmental attention, and the group has defended numerous investigations involving so-called "expert networks" and alleged improper use of corporate secrets and confidences. Practice group members active in this area include several former prosecutors from the United States Attorney’s Office for the Southern District of New York. One practice group member’s recent investigative efforts involving insider trading have been profiled in James Stewart’s 2011 book, Tangled Webs.

Mergers & Acquisitions
The practice group regularly appears in both Delaware and New York courts in litigations involving mergers and acquisitions. Recent M&A litigations include those involving Kenneth Cole, J. Crew, MacAndrews & Forbes, and Allied World.

Regulatory Enforcement
With membership that includes senior former enforcement veterans of the SEC, the group’s enforcement practice brings an unparalleled depth of experience to a wide spectrum of enforcement proceedings. These include enforcement proceedings brought by the SEC, FINRA, the PCAOB, and other regulatory bodies both within and outside the United States. The experience of the group’s enforcement veterans includes regulatory investigations involving public companies, hedge funds, audit committees, boards of directors, broker-dealers, commercial banks, and accounting firms. The group has particular experience in structured finance, derivatives, credit default swaps, other mortgage-related instruments involved in the financial crisis, broker-dealer compliance, and investigations into trading practices.

Trading and Markets
Led by a 16-year veteran of the SEC who served as Senior Associate Director of the Division of Market Regulation (now the Division of Trading & Markets), this area of the group’s practice focuses on trading rules, derivatives, alternative trading systems, hedge funds, and broker-dealer regulations and compliance. Clients include major securities firms, equity and options market-making desks, securities and derivatives markets, electronic and internet-based trading systems, and hedge funds. The group has been particularly active in investigations by the SEC, FINRA, and securities exchanges.

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