Finalist, Securities Litigation Department of the Year: Cravath, Swaine & Moore
Cravath's securities litigation group makes up in brains for what it lacks in size.
Cravath, Swaine & Moore's small but tight-knit securities litigation practice was instrumental in wiping out many prominent shareholder claims stemming from the financial crisis over the last two years, often on precedential grounds.
In a case brought by the National Credit Union Administration Board against Credit Suisse Securities (USA) LLC—for whom Cravath handles all residential mortgage-backed securities litigation—the firm obtained a precedential decision on time-barred claims while reducing its client's exposure to less than half the case's original $715 million value. For JPMorgan Chase & Co., the firm reduced a $774 million case over its Bear Stearns acquisition to $5.7 million—though it was vacated after the case was remanded to state court on jurisdictional grounds—and obtained a $26 million settlement of $558 million in damage claims over its purchase of Washington Mutual Inc. The firm used a novel argument in a case for Vivendi S.A.—challenging the "fraud on the market" presumption of reliance in a $3.5 million suit filed by Gamco Global Series Funds Inc.
Cravath has also carved out unique niches representing accounting firms and resolving actions over mergers and acquisitions. For Deloitte & Touche LLP the firm obtained a $19.9 million settlement to resolve billions of dollars of alleged losses tied to the Bear Stearns collapse. On the merger front, Cravath fought off actions challenging Delphi Financial Group Inc.'s $2.7 billion sale to Tokio Marine Holdings Inc. and Barnes & Noble Inc.'s purchase of Barnes & Noble College Booksellers.
Biggest Win: Cravath stands out for its novel arguments. In litigation stemming from American International Group Inc.'s government bailout in 2008, the firm applied a newly minted decision from the U.S. Court of Appeals for the Second Circuit, Fait v. Regions Financial Corporation, to get PricewaterhouseCoopers LLP out of the case, the first time an auditor was dismissed on "subjective falsity" ground. Robert Baron, managing partner of the firm's litigation department, calls it a "blockbuster win."
Biggest Loss: In a trial against Liberty Media Corporation, Cravath lost a $956.6 million verdict for Vivendi Universal S.A. when a jury found that Vivendi had fraudulently inflated its stock price before buying USA Holdings Inc. in 2001. From the start, Cravath and cocounsel Weil, Gotshal & Manges faced a significant barrier: Jurors knew about a separate verdict in 2010 concluding that Vivendi had misled shareholders about its financial condition during that period.
Ongoing Cases: The firm is defending Credit Suisse in a pending $11.2 billion residential mortgage–backed securities case filed by the New York attorney general's office.
What Clients Say: Don Liu, general counsel of Xerox Corporation, praises the firm's aggressive approach in filing a summary judgment motion to toss the last of a series of shareholder suits filed against the company following alleged misrepresentations about a 1998 worldwide restructuring. Prior cases had settled. "It was a bold move," Liu says.
Practice Group Size and Revenue