In a previous post, we discussed Kirschner v. JPMorgan Chase Bank,[1] an action in which the trustee of bankrupt Millennium Labs brought state law securities fraud claims on behalf of a group of “approximately 400 mutual funds, pension funds, universities, [CLO]s and other institutional investors,” against banks that organized a $1.765 billion syndicated loan. The threshold issue faced by the court was whether an investor’s share of a syndicated loan qualifies as a “security”…

Capital Markets Litigation Blog

Cryptocurrency and Blockchain Litigation Trends and Predictions

By Alexandra Droz

January 3, 2020

As cryptocurrency and blockchain technology have expanded, so too have regulatory scrutiny and ensuing litigation. The lack of a uniformly applicable regulatory framework–particularly regarding whether virtual currencies constitute securities subject to the federal securities laws and registration requirements–has led to confusion and uncertainty. Recently filed “fintech” actions are poised to establish precedent in this novel legal landscape. The Securities and Exchange Commission (SEC) Enforcement Division’s recently created cyber unit investigated and recommended the commission bring…

Capital Markets Litigation Blog

Do US-Style Securities Class Actions Have a UK Future?

By David Erroll

December 23, 2019

Until 2010, securities fraud class actions pursued in American federal courts dominated the means by which investors sought redress for alleged fraud committed around the world. Securities fraud litigation in non-U.S. legal systems was fraught with risks, such as fee-shifting rules and limited precedent. However, once the U.S. Supreme Court decided Morrison v. National Australia Bank in 2010[1], foreclosing many foreign claims from being brought in U.S. courts, foreign investors–with claims against foreign companies resting…

Capital Markets Litigation Blog

Jury Acquits Lead Defendant in $2 Billion Mozambican Loan Fraud Trial

By Sydney Kaplan

December 16, 2019

In the latest development in a prosecution previously covered on this blog, Privinvest Group executive Jean Boustani was acquitted of all charges on Dec. 2 by a jury in the U.S. District Court for the Eastern District of New York, following a six-week trial. The case centered on nearly $2 billion in loans from Credit Suisse and Russian financer VTB to help fund maritime projects in Mozambique. Prosecutors alleged that Boustani paid $100 million in…

Capital Markets Litigation Blog

Capital Markets Litigation Team Defeats Jurisdictional Challenge to Ponzi Scheme Dispute

By Carly Coleman

November 27, 2019

Lowenstein Sandler’s Capital Markets Litigation team recently defeated a fund administrator’s renewed motion to dismiss on jurisdictional grounds, a second key victory in an action for common law fraud, securities fraud, and Racketeer Influenced and Corrupt Organizations Act violations, among other claims. The plaintiffs, investors in a tax lien fund, seek to recoup millions of dollars in losses resulting from the fund’s operation as a Ponzi scheme. The defendants include the fund’s now-dissolved New Jersey-based…

Capital Markets Litigation Blog

Government Preparing to Rest Its Case in $2 Billion Mozambican Loan Fraud Trial

By Alexandra Droz

November 12, 2019

Prosecutors are nearing the end of their case after over three weeks of trial for Privinvest Group executive Jean Boustani, who is accused of conspiring to defraud investors in loans made by Credit Suisse and Russian bank VTB to Mozambican state-backed special-purpose vehicles (SPVs). The government alleges that Boustani structured the deals so that the $2 billion in loans to fund maritime projects for Mozambique were instead funneled directly to the bank accounts of Privinvest,…

Capital Markets Litigation Blog

Capital One Affiliates Seek Dismissal of Usury Putative Class Action

By Meg Slachetka

November 6, 2019

In the latest development in one of two federal cases examining whether New York usury laws can limit the interest rates charged on credit card debts that are securitized, the Capital One affiliate defendants have moved to dismiss the action brought by plaintiff credit card holders. The plaintiffs alleged that their interest rates, ranging from 22.5 to 27.74 percent, exceed New York’s statutory interest rate limit of 16 percent for civil usury, and even, in…

Capital Markets Litigation Blog

Second Circuit Gives Green Light to Foreign Litigants Seeking Discovery in the U.S.

By Sydney Kaplan & Rachel K. Warren

November 1, 2019

As cross-border business continues to grow, litigation too is increasingly crossing borders. In a recent decision addressing several issues of first impression, the U.S. Court of Appeals for the Second Circuit opted to aid international litigants, interpreting Section 1782 of Chapter 28 of the United States Code to allow discovery in aid of foreign proceedings to be taken in the U.S. from entities that are subject to personal jurisdiction in the U.S. In re del …

Capital Markets Litigation Blog

Mutual Funds and Shareholder Litigation: Funds Should Lean In

By David Erroll

October 28, 2019

Should mutual funds take a more active role in securities litigation? Data appears to suggest that they should. According to Sean J. Griffith[1] and Dorothy S. Lund[2], authors of “Toward a Mission Statement for Mutual Funds in Shareholder Litigation”[3], mutual funds can improve returns for investors by taking on a greater role in enforcing shareholder and investor rights in court. Griffith and Lund survey participation in derivative suits, direct and class claims under…

Capital Markets Litigation Blog

Credit Card ABS: Securitization and State Usury Laws

By David Erroll

September 24, 2019

Consumer lending as we know it today – and credit card lending in particular – depend on securitization for significant access to capital. However, the ability of banks to bundle and sell credit card debt-backed securities may be thrown into disarray depending on the outcomes of a pair of pending cases: Cohen v. Capital One Funding, LLC[1] and Cohen v. Chase Card Funding, LLC.[2] The outcomes of these matters will likely turn on the application…

Capital Markets Litigation Blog

Litigation News for the Financial Community

Blog Authors

Kirschner v. JPMorgan Chase Bank: Case Update

Cryptocurrency and Blockchain Litigation Trends and Predictions

Do US-Style Securities Class Actions Have a UK Future?

Jury Acquits Lead Defendant in $2 Billion Mozambican Loan Fraud Trial

Capital Markets Litigation Team Defeats Jurisdictional Challenge to Ponzi Scheme Dispute

Government Preparing to Rest Its Case in $2 Billion Mozambican Loan Fraud Trial

Capital One Affiliates Seek Dismissal of Usury Putative Class Action

Second Circuit Gives Green Light to Foreign Litigants Seeking Discovery in the U.S.

Mutual Funds and Shareholder Litigation: Funds Should Lean In

Credit Card ABS: Securitization and State Usury Laws

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