Litigations and Investigations
- multiple large criminal investigations by government agencies (including the SEC and the U.S. Attorney's Offices for the Southern and Eastern Districts of New York, and the District of New Jersey)
- resolution of the existing – and substantial – docket of litigation to which Lehman was a party (e.g., in a series of litigations involving one of the largest land developers in the country, we are defending Lehman entities in claims against more than $2 billion worth of financings and assets)
- civil litigation in connection with a variety of transactions (e.g., our litigators are seeking to recover many billions of dollars from Lehman counterparties that include some of the largest financial institutions and companies in the world. We have already brought or are defending adversary proceedings or motiions involving billions of dollars in derivative payments.
- the Bankruptcy Court litigation that arises from such a large filing (e.g., we represent Lehman Brothers in more than thirty adversary proceedings involving assets worth many hundreds of millions of dollars).
- Weil obtained unprecedented judgments for Lehman in connection with complex disputes involving never before tested areas of the law relating to derivatives and structured finance transactions, such as the scope of the safe harbor provisions under the Bankruptcy Code. To cite just two examples, Weil represented Lehman in litigations against Metavante Corp. and BNY Corp. Trustee Services Ltd., which has come to be known as the "Perpetual Litigation." In Metavante, the Bankruptcy Court granted Lehman's motion to compel a derivatives counterparty to perform its swap agreement with Lehman and held that the counterparty had waived its safe harbor rights by failing to promptly exercise those rights after Lehman's bankruptcy. In the Perpetual Litigation, Weil successfully challenged the enforceability of a "flip clause" in a structured finance transaction, which "flipped" Lehman's priority right to collateral worth hundreds of millions of dollars upon the filing of Lehman's bankruptcy. These unprecedented rulings transformed the derivatives and structured finance world and have helped define the legal landscape of the safe harbor provisions that will guide derivatives counterparties in dealing with chapter 11 debtors for years to come.
- Weil has represented Lehman in hundreds of mediations involving billions of dollars in disputes with Lehman's counterparties and related parties to derivatives and structured finance transactions. The issues involved include the validity of contract terminations, counterparties' non-performance, the scope of the safe harbor provisions and rights of setoff. Weil's multi-disciplinary team representing Lehman in these mediations includes attorneys from its bankruptcy, litigation, and structured finance practice both in the United States and abroad. With Weil's expertise and guidance, Lehman has recovered more than $2 billion.
Weil has also represented AIG in connection with inquiries by federal, state and international agencies, including the U.S. Securities and Exchange Commission, the U.S. Department of Justice, multiple state attorney generals' offices, the U.S. Office of the Special Inspector General for the Troubled Asset Relief Program, the U.K. Serious Fraud Office, the U.K. Financial Services Authority, as well as numerous inquiries by various Senate and House committees and congressionally-appointed commissions and panels, including the Financial Crisis Inquiry Commission and the Congressional Oversight Panel, arising out of AIG's subprime related losses, AIG's receipt of emergency funding by the federal government in late 2008, and compensation issues that have been the subject of much national media attention. To date, none of the governmental agencies have brought any criminal proceedings against the company.
Weil has been successfully representing Credit Suisse in a purported class action filed by owners of luxury resort properties who are asserting RICO claims, along with a host of state-law claims, in connection with a series of real estate loans arranged by Credit Suisse. Weil first obtained the dismissal of plaintiffs’ RICO claim, in which plaintiffs sought $8 billion in damages, and subsequently obtained an order denying class certification. The case remains pending in U.S. District Court for the District of Idaho.
Weil successfully defended Merrill Lynch in multiple purported nationwide class actions alleging discrimination against financial advisors in all aspects of their employment.
- In McReynolds v. Merrill Lynch, Pierce Fenner & Smith Inc., we defended Merrill Lynch in a high-profile, nationwide, putative class action that attacked dozens of policies and alleged that African-American financial advisors were discriminated against in every aspect of their employment from the day they were hired until the day they left. Plaintiffs alleged both a pattern-or-practice of intentional discrimination and disparate impact, and sought injunctive relief as well as money damages in the form of back and front pay, compensatory damages and punitive damages on a class wide basis. We were successful in the district court in defeating plaintiffs’ efforts to certify a pattern-or-practice case for intentional discrimination and a disparate impact case. The Seventh Circuit affirmed the denial of class certification on a pattern-or-practice of intentional discrimination, and affirmed that liability to each class member and the class member's damages must be determined on an individual basis in non-class wide proceedings rather on a class wide formulaic basis as sought by plaintiffs. The Seventh Circuit reversed the district court in a narrow respect, ordering a class trial on whether two current policies, out of the dozens initially challenged, have a disparate impact, and only for purposes of assessing injunctive relief for the class. Subsequently, the parties agreed to settle the matter.
- In a companion case to McReynolds, we prevailed on a motion to dismiss an action claiming that the formula used by Merrill Lynch and its parent company, Bank of America, for paying retention bonuses to Merrill financial advisors (FAs) following the merger with Bank of America constituted intentional racial discrimination. The case presents an important legal question in the financial services industry, an issue on which we prevailed at the district court level in another matter against Merrill Lynch and Bank of America: whether an objective system that awards retention bonuses based solely on prior production can be intentionally discriminatory because the employer knew at the time that the bonus program was established that, as a whole, white FAs produced more than African-American FAs.
- In Goodman v. Merrill Lynch & Co., we secured a victory for Merrill Lynch/Bank of America that has significant implications for claims that may be brought by employees with respect to compensation policies. The case involved a transition “stay bonus” program that Merrill Lynch adopted in connection with its merger with Bank of America and was challenged by a female financial adviser at Merrill Lynch who sued the banks in 2009 under Title VII of the Civil Rights Act, the Equal Pay Act, New York State law and the NYC Administrative Code. A federal judge in the Southern District of New York held that a pay system that compensates people on the basis of actual production is protected from disparate impact claims under Title VII, irrespective of whether the pay system has a disparate impact on minorities or women and irrespective of whether the employer knows that it will have a disparate impact.
- Over the past four years, Weil has successfully litigated on Lehman’s behalf numerous novel disputes involving derivatives transactions. We have also represented Lehman in alternative dispute resolution (ADR) proceedings with respect to hundreds of derivatives disputes arising out of the Lehman bankruptcy.
- Well over one hundred of the ADRs were conducted before experienced mediators, with each side filing detailed mediation statements laying out its arguments. ADR “mini-trials” are confidential, providing Weil with unique perspective on a wealth of derivatives issues.
Weil represents this client on a number of sensitive matters, including:
- An SEC investigation regarding its role as underwriter of the failed IPO of BATS, which offers an electronic trading platform.
- An SEC investigation and related class action litigation involving the underwriting of IntraLinks Holdings.
- A CFTC investigation into whether various financial institutions conspired to manipulate ISDAFix, the benchmark rate for the swaps market.