Securities Litigation and Fiduciary Duty TLFFRA Pension Conference Tuesday, October 3 | The Woodlands, Texas Securities Litigation and Fiduciary Duty Speaker: Jennifer Pafiti, Esq., Pomerantz LLP
Fiduciary Duty The Law The Application
Duty of good faith Duty of care Duty of loyalty
Duty of Good Faith Best interest of the institution Managing corporate assets Disclosing conflicts of interests
Duty of Care Business decisions handled with care Exercise diligence and prudence: Ordinary Business Person test
Duty of Loyalty Fund’s interest above trustee No self-dealing No usurping
What if it goes wrong? Business Judgment Rule
Courts will uphold the business decision if: Acted in good faith Had a reasonable basis for the decision There was a business purpose for the decision
Careful Trusteeship Education Present assets Future assets
Have I captured sufficient information to exercise solid judgment and make an informed decision?
Informed Decisions
LITIGATION AS AN ASSET? How many new securities class actions filed in the U.S. each year? 30 300 3000
LITIGATION AS AN ASSET? How many new securities class actions filed in the U.S. each year? 30 300 3000 Note: health and technology sector saw nearly 30% of these filings with the finance sector filings a little over 16%. And in H1 of 2017 we already have 226 new securities class actions alleging fraud - that's a 49% increase from H1 2016. 9.5% of companies listed on a major US exchange will become subject to a filing - that is 1 in 11 companies.
How many settlements each year? 5 70 100
100 How many settlements each year? 5 70 Note: 113 settled in 2016. Only half the cases filed between 1997 and 2016 have settled, 42% were dismissed. Less than 1% go to trial. Remaining % are ongoing.
How much in unclaimed settlements? $1.8 million $18 million $18 billion
$18 billion How much in unclaimed settlements? $1.8 million Note: I've spent a great deal of time educating institutional investors on the importance of filing claims in settled cases. Many pension funds
Portfolio Monitoring Services
PORTFOLIO MONITORING SERVICES Real time evaluation of losses Personalized monthly reporting Proactive vs. reactive
Claims Filing Services
% of claims filed? 30% 50% 75%
% of claims filed? 30% 50% 75% Note: I've spent a great deal of time educating institutional investors on the importance of filing claims in settled cases. Many pension funds do not play close enough attention to these claims and assume their custodians or money managers will file and collect the funds but many do not.
Specialist Legal Advice Move for lead plaintiff Remain passive Opt-out Move for lead plaintiff - Note: the presence of an institutional lead plaintiff increases the size of securities fraud class action settlements Remain passive – Note: a lot of my practice work is telling clients why they shouldn't become involved in a case
Summary Careful Trusteeship Know your assets Informed Decisions
Jennifer Pafiti Email: jpafiti@pomlaw.com Call: 310-600-9775