Winner, Securities Litigation Department of the Year: Paul Weiss
When the financial crisis meltdown morphed into securities litigation, Paul Weiss was at the ready—winning key victories for big banks in court and at the bargaining table, especially for Citi.
Paul, Weiss, Rifkind, Wharton & Garrison's securities litigation practice is big, powerful and swaggering. It's also seemingly ubiquitous, popping up in some of the most high profile, high-stakes securities litigations in recent history.
Indeed, its representation of mega financial institutions caught in the maelstrom of the economic meltdown is quite exceptional. What also sets it apart is its willingness to go to trial at the 11th hour—which it deploys as leverage in negotiating settlements. We picked Paul Weiss as securities litigation department of the year because no other firm matched the number and magnitude of headline-making securities litigation during our competition time frame (August 1, 2011, to July 31, 2013).
Depending on your viewpoint, Paul Weiss is either a shining knight for Wall Street institutions—fending off meritless lawsuits and overreaching prosecutions—or a fixer for financial behemoths that contributed to the financial fiasco, helping them avoid big payouts and penalties. Any way you look at it, there's no denying that the firm has been a very effective advocate for its clients.
For Citigroup Inc. alone (the firm's largest financial client), Paul Weiss has chalked up a series of impressive wins in the last two years. (Some of the key partners who work on Citigroup matters include Jack Baughman, Bruce Birenboim, Susanna Buergel, Jay Cohen, Claudia Hammerman, Brad Karp and Theodore Wells Jr. The firm does not have a separate securities litigation practice area.) Among its wins for Citigroup:
• In 2011 U.S. District Judge Jed Rakoff of the Southern District of New York famously rejected a $285 million settlement between the U.S. Securities and Exchange Commission and Citigroup, represented by Paul Weiss. Rakoff was troubled that Citigroup neither admitted nor denied the allegations and thought the settlement amount was too low. But the firm ultimately triumphed, convincing the U.S. Court of Appeals for the Second Circuit to reject Rakoff's ruling and reasoning.
• The bank prevailed in arbitration after Abu Dhabi Investment Authority claimed that it was fraudulently induced to invest $7.5 billion in Citigroup. (The Southern District of New York confirmed the ruling.)
• The Southern District also granted Citigroup's motion for summary judgment in a $200 million lawsuit in which seven Norwegian municipalities alleged misrepresentations by Citigroup about risks associated with notes they bought. (The case is currently on appeal.)
Besides those wins, Paul Weiss also negotiated some jaw-dropping settlements for Citigroup, including a $590 million class action settlement with shareholders who claimed a $176.3 billion loss, and a $730 million class action settlement with bondholders who claimed losses exceeding $20 billion. The firm also brokered a confidential settlement with the Federal Housing Finance Agency that settled more than $4 billion in claims against Citigroup.
While those settlements required the bank to pay out massive sums, Citigroup seems pleased with the result. Though the bank wouldn't comment on specific matters, Citigroup deputy general counsel Edward Turan praises the firm's performance: "Over the last several years the firm has represented Citi on many of its most high-profile and high-exposure matters. The firm has done a superior job in obtaining numerous excellent results at trial, from motion practice or pretrial settlements."
One of Paul Weiss's specialties is parachuting into a case at the crisis stage. It played a critical, last-minute role in settling a series of messy lawsuits that resulted from Bank of America Corporation's 2009 acquisition of Merrill Lynch & Co. Inc. Shareholders had brought a $25 billion suit, claiming that Bank of America made misleading statements and material omissions during the merger approval process.