Gibson Dunn is a leader in defending companies and individuals facing investigations by the U.S. Department of Justice, the SEC, state Attorneys General, and other federal and state regulatory agencies. We represent directors, officers, issuers, underwriters and auditors in enforcement matters. Our lawyers also routinely represent clients before FINRA (formerly NASD), the New York Stock Exchange, and other regulatory and self-regulatory organizations.
While many of our finest representations are cases that were never brought and thus that we cannot detail, a few may be shared as examples.
Recent representations include:
- In a high-profile, hard-fought struggle for exoneration (over 12 years), we secured a unanimous jury verdict in the Southern District of New York in favor of Nelson Obus and co-defendants in a long-running insider trading case. The Securities and Exchange Commission sued Mr. Obus, the general partner of Wynnefield Capital, Inc., his analyst Peter Black, and Black's friend Brad Strickland in 2006, alleging that Black and Obus traded on inside information in connection with Wynnefield's 2001 purchase of shares in SunSource, Inc. — two weeks before Allied Capital Corporation announced that it would acquire SunSource. The SEC charged Strickland with misappropriating information about the acquisition and tipping Black, who tipped Obus, who then traded. The agency sought an injunction against the three defendants, disgorgement of over $1.3 million in alleged ill-gotten gains, civil monetary penalties, and an order prohibiting each of them from acting as an officer or director of any issuer of securities. The jury verdict, coming after a two-week trial and one day of deliberations, ended years of litigation: The SEC first subpoenaed Mr. Obus, his codefendants and his hedge funds in 2002. The defendants moved for summary judgment on a novel theory in 2009, which the Southern District of New York granted in September 2010. The SEC appealed and the Second Circuit reversed, two years later, in the most significant reinterpretation of the misappropriation theory in 20 years. That opened the way for the trial and acquittal.
- Secured partial acquittal and a declaration of mistrial in the District Court for the District of Columbia for a former executive of China North East Petroleum (CNEP) in the first-ever criminal securities fraud trial stemming from investigation of Chinese reverse mergers by the U.S. Department of Justice and Securities and Exchange Commission. The client was indicted in connection with an alleged fraud stemming from two securities offerings raising more than $30 million in capital; CNEP had traded on the New York Stock Exchange. The seven criminal counts included one of conspiracy to commit securities fraud, four of securities fraud and two of false statements. Following a six-week criminal jury trial Gibson Dunn secured an acquittal on two of the four securities fraud counts and the jury deadlocked on the remaining five counts, prompting the court to declare a mistrial as to them.
- Representing the former head of corporate cash on the fixed income desk at Thomas Weisel Partners LLP in an auction rate securities case, we secured dismissal of all fraud charges against him. The Financial Industry Regulatory Authority (FINRA) had alleged that he engaged in fraud when he authorized the purchase of $15.7 million of auction rate securities for three corporate clients approximately two weeks before the unexpected and unprecedented freeze of the entire ARS market in February 2008. After hearing testimony and reviewing hundreds of documents, The National Adjudicatory Council panel (the appellate review body of FINRA) agreed with a November 2011 decision by a three-member hearing panel and fully credited Gibson Dunn's arguments that defendant believed the securities were safe and liquid investments, that the transactions were entirely consistent with years of practice at Thomas Weisel, and that there was no evidence of improper motive or intent.