with OnSpring 2018 the Record

Read the Latest Breaking News and Stories About Corporate Governance

Robbins Geller Achieves Unanimous Supreme Court Victory+ The Latest in the Nationwide Fight Against the Opioid Epidemic

Find out Why Investor Activism Is on the Rise in Europe Will the SEC Strip Investors of Protections Against Securities Fraud? Read the Latest Ninth Circuit [Wins in the First Solar, Quality Systems and Trump University Cases A Note from Samuel Rudman We continue to advocate for investors lawsuits related to the crisis and the and consumers around the world, Firm is honored to have been selected obtaining several key precedents by dozens of cities and counties to favorably impacting institutional lead the effort to prosecute these cases investors. In Cyan, Inc. v. Beaver and construct a lasting solution to this County Employees Retirement Fund, a scourge. case led by Robbins Geller, the U.S. In January 2018 Robbins Geller was Supreme Court recently issued a named as one of the nation’s Top unanimous opinion holding that state Securities Practice Groups – the only courts continue to have jurisdiction plaintiff’s firm so recognized – by over investor class actions asserting Law360. Chambers USA dubbed the violations of the Securities Act of 1933. Firm “the leader in the battle against In addition, Robbins Geller’s in-house corporate securities fraud.” We are fraud and misrepresentations caused appellate team recently obtained key proud of the Firm’s continued success by corporate insiders. We urge each decisions in the Second and Ninth on behalf of our clients. of you to inform yourselves about

Spring 2018 Spring Circuit Courts of Appeal preserving these efforts, which undermine the favorable class certification and loss That said, our ability to protect security of our public markets. It is causation standards that will help investors from corporate wrongdoers important that you take action to future classes of aggrieved investors is currently threatened by a campaign ensure such measures designed to and consumers. spearheaded by the U.S. Chamber shield wrongdoing from public view do of Commerce to implement We are also at the forefront of efforts to not become part and parcel of share mandatory arbitration provisions in ownership in the United States. address the horrors of the nationwide connection with the public offering of opioid epidemic that public health securities. The widespread adoption Robbins Geller looks forward to officials have called the worst drug of mandatory arbitration provisions continuing to work with you to protect crisis in American history. Name would effectively eliminate investors’ your plan’s assets in the months and partner Paul Geller is on the team of ability to seek judicial redress for years to come. elite lawyers spearheading coordinated

Robbins Geller’s Client Achieves Securities Group of FEATURES Unanimous Victory at U.S. the Year 3 Supreme Court 4 Robbins Geller Wins Appeal Robbins Geller on the Investor in the Second Circuit for High Front Line in the Fight Activism Frequency Trading Investors Against the Opioid News 5 6-7 Epidemic 10 2 A Note from Samuel Rudman 13 Trump University Students Prevail in the Ninth Circuit 8 Corporate Governance Roundup 11 Robbins Geller’s Mike Dowd Receives Trial Lawyer 14 First Solar and Quality Systems Shareholders Score Excellence Award Major Victories in Ninth Circuit 11 The National Law Journal Names Robbins Geller Partners 15 Plaintiffs Move Forward with Case After Goldman Paul Geller, Jason Forge and Rachel Jensen as 2018 Sachs’s Second Circuit Appeal Plaintiffs’ Lawyers Trailblazers 16 Climate Change News 12 Marvell Technology Investors Score Final Approval 17 Reining in Unicorns: Protecting Pensioners and of $72.5 Million Recovery Entrepreneurs From Fraud

OTHER CONTENT 13 Medtronic Investors Score Class Certification and 18 Will the SEC Strip Investors of Protections Overcome Motion for Summary Judgment in Medtronic Against Securities Fraud? Class Action 30 Meet Robbins Geller’s 2018 Leading Lawyers in [ rgrdlaw.com America 2 RobbinsRobbins Geller’sGeller’s ClientClient AchievesAchieves UnanimousUnanimous VictoryVictory atat U.S.U.S. SupremeSupreme CourtCourt

On March 20, 2018, the U.S. Supreme Court issued a unanimous opinion in Cyan, Inc. v. Beaver County Employees Retirement Fund, No. 15-1439, holding that state courts continue to have jurisdiction over class actions asserting violations of the Securities Act of 1933. The Court’s ruling secures investors’ ability to bring 1933 Act claims in either state or federal court when companies fail to make full and fair disclosure of relevant information in offering documents. The Court confirmed that the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) was designed to preclude securities class actions asserting violations of state law – not to preclude securities class actions asserting violations of federal law brought in state courts. In the underlying case, Cyan, a Through the opinion, the Supreme Court telecommunications company, allegedly reaffirmed the ability of state courts to made false statements in its offering adjudicate 1933 Act class action cases, documents about the company’s customer holding that “SLUSA did nothing to strip base and likely future sales. When the truth state courts of their longstanding jurisdiction was subsequently disclosed, Cyan’s stock lost to adjudicate class actions alleging only almost half of its value. Consistent with state 1933 Act violations.” courts’ longstanding jurisdiction, investors brought a class action in San Francisco At the time of its enactment, President Franklin D. Roosevelt explained that the 1933 Act was designed to “bring back public confidence” in securities offerings by “put[ting] the burden of telling the whole truth on the seller” in such offerings. Congress implemented this objective by allowing injured investors to file private actions under the 1933 Act in either state or federal court. The decision has affirmed the Superior Court alleging that Cyan’s false ability of investors to rely on state courts, as statements made in connection with its well as federal courts, as a legitimate forum initial public offering violated Section 11 of for pursuing class action remedies when the 1933 Act. Cyan moved to dismiss the companies provide false and misleading case on the ground that SLUSA eliminated information to investors. state court jurisdiction for such class actions. “The Supreme Court’s unanimous opinion The trial court rejected this contention, makes clear that investors continue to have relying on an earlier California Court of an important remedy in state courts when Appeal decision holding that the SLUSA companies fail to come clean in connection provisions do not preclude the ability of with public offerings,” noted Robbins Geller state courts to hear 1933 Act class action partner Andrew S. Love, who represented cases – SLUSA’s purpose, rather, was to plaintiffs Beaver County Employees thwart securities fraud class actions brought Retirement Fund, Retirement Board under state law that were being pursued as of Allegheny County and Delaware a way to evade certain restrictions imposed County Employees Retirement by the Private Securities Litigation Reform System in the U.S. Supreme Court and in Act of 1995. the California appellate courts. Cyan challenged the trial court’s ruling Robbins Geller attorneys Darren J. by filing a writ in the California Court of Robbins, James I. Jaconette, James Appeal and a petition for review in the E. Barz, Andrew S. Love and Kenneth California Supreme Court, both of which Black are counsel to the plaintiffs/ were rejected. It then sought review before respondents in Cyan Inc. v. Beaver County the U.S. Supreme Court. Employees Retirement Fund.

On the Record | Spring 2018 3 Securities Group of the Year n naming Robbins Geller settlement ever in a post-PSLRA be independent directors and as one of the nation’s securities fraud case. Ultimately, created a clawback scheme top Securities Practice the case encapsulates the Firm’s that required the recovery Groups of the Year for strongest attributes and “our of compensation paid to the 2017, Law360 released commitment to the clients, not company’s top officers if its a detailed profile on the Firm, giving up, not settling early, accounts were restated, among Inoting its drive to obtain an not settling on the cheap, and other changes.” “optimum result” for its clients, obtaining an optimal result,” which “set[s] it apart from other Robbins added. Additionally, the publication securities litigation shops.” noted the Firm’s victory in Robbins Geller partner Luke securing a $64 million recovery As the only plaintiff’s firm named, Brooks, one of the lead attorneys for the class in Plumbers & the profile lauds Robbins Geller on the Household International Pipefitters National Pension Fund for “cement[ing] its reputation case, noted that at every turn, v. Burns (the Dana Corp. case), as a go-to firm for harmed the trial team “demonstrated which included “two trips to the investors” and recognizes to [defendants] that this was Sixth Circuit” and 11 years of certain of the Firm’s recent something they couldn’t escape hard-fought litigation. cases, including those against with a nominal payment.” Household International (now “Robbins Geller attorneys also HSBC), Community Health Law360 also highlighted notched an important win in a Systems and Dana Corp., as Robbins Geller’s excellent work fight with software maker Quality demonstrating why the Firm is in Community Health Systems, Systems Inc.,” Law360 noted, one of the nation’s top securities which provided unprecedented and explained that the Firm is practice groups. corporate governance reforms currently “representing plaintiffs and a $60 million cash payment. in potentially groundbreaking Referencing the record Household Robbins pointed out to the securities actions against International case, which publication that “settlements that Theranos and Uber Technologies yielded a $1.575 billion call for corporate governance Inc., both highly valued private recovery, partner Darren reforms have become a hallmark companies that have seen their Robbins explained that the of [our] practice.” valuations drop in the wake of case involved “spending more corporate scandals.” than $34 million [and] going “Not only did investors get toe-to-toe with a long list of $60 million in the Community “As the defendants find new prominent defense firms.” The Health deal, but a stronger voice ways to commit fraud, we’re recovery is the largest ever in the company’s direction, with going to find new ways to hold following a securities fraud class two directors on its board,” them accountable,” Brooks action trial, the largest securities wrote Law360. “The settlement stated, succinctly summarizing fraud settlement in the Seventh required members of the board’s the Firm’s ethos in protecting Circuit and the seventh-largest compensation committee to victims of securities fraud.

44 rgrdlaw.com Robbins Geller Wins Appeal in the Second Circuit for High Frequency Trading Investors

On December 19, 2017, the U.S. Court sides, the SEC filed its amicus curiae brief on how those products and services could be of Appeals for the Second Circuit ruled November 28, 2016, answering both of the used on their trading platforms.” in plaintiffs’ favor in the so-called “High above questions in plaintiffs’ favor. With Frequency Trading” securities fraud case, regard to the first question, the SEC stated The Second Circuit then vacated the district reversing the district court’s prior dismissal that it believes “the securities laws do not court’s entry of judgment for the defendants of the action and vacating the judgment that divest the district court of subject matter and remanded the case to the district court the lower court had entered in defendants’ jurisdiction over this case.” With regard for further proceedings. favor. to the second question, the SEC told the Robbins Geller appellate partner Joseph court that the defendant exchanges “are not D. Daley, who briefed and argued the The underlying case charges assorted entitled to absolute immunity from suit for appeal, applauded the Second Circuit’s national securities exchange defendants the challenged conduct.” with violating §10(b) of the Securities ruling: “The win for our pension fund Exchange Act of 1934, alleging that they Agreeing with both the plaintiffs and the clients and other ordinary investors is engaged in a scheme and wrongful course SEC, a three-judge Second Circuit panel especially gratifying because our team of business that was designed to, and did, reversed the dismissal on December 19, was able to convince not only the Second manipulate the U.S. securities markets and 2017 in a unanimous published decision Circuit, but also the SEC, that our position the trading of equities on those markets. spanning 35 pages. Writing for the court, was the correct one.” In a nutshell, the complaint alleges that Circuit Judge John M. Walker, Jr. stated: In addition to Daley, Robbins Geller the exchanges engaged in manipulative “We conclude that we have subject matter attorneys Samuel H. Rudman, Patrick conduct by creating high-priced products jurisdiction over this action and that the J. Coughlin, David W. Mitchell, Brian and services specifically designed for their defendants are not immune from suit. We O. O’Mara, Randi D. Bandman, Mary favored high-frequency trading customers. further conclude that the district court K. Blasy, Vincent M. Serra and Lonnie The manipulative conduct diverted billions erred in dismissing plaintiffs’ complaint A. Browne, along with co-counsel, of dollars annually from ordinary investors for failure to state a claim.” The appellate obtained this result for investors. who bought and sold securities on the panel further stated that plaintiffs had defendants’ securities exchanges. City sufficiently alleged that the defendant City of Providence, Rhode Island v. BATS Global of Providence, Rhode Island and exchanges had engaged in manipulative Markets, Inc., No. 15-3057, Opinion (2d Cir. Plumbers and Pipefitters National or deceptive conduct forbidden by the Dec. 19, 2017). Pension Fund are serving as lead plaintiffs, Securities Exchange Act, and that the along with other institutional investors, in lower court had erred in holding that the the action. exchanges’ conduct rose, at best, to mere aiding-and-abetting. Instead, the panel Following appellate briefing and oral held that plaintiffs had sufficiently pleaded argument in the summer of 2016, on that “the exchanges created a fraudulent August 25, 2016, the Second Circuit scheme that benefited [high-frequency requested that the Securities and Exchange trading] firms and the exchanges” Commission (“SEC”) file an amicus curiae themselves, while “fail[ing] brief setting forth the agency’s views on to fully disclose to (i) “whether the district court had subject- the investing matter jurisdiction over the case,” and public (ii) “whether defendants-appellees have absolute immunity from suit arising from the challenged conduct.” At the SEC’s request, Robbins Geller attorneys, together with co-counsel, traveled to Washington, D.C. and presented arguments to the agency, urging it to support plaintiffs’ case. Defendants were invited to argue their side as well. Following the presentations by both

On the Record | Spring 2018 5

Robbins Geller Line in on the Front the Fight Against Public health officials have called the nationwide opioid epidemic the worst drug crisis in American history. According the Opioid Epidemic to the Centers for Disease Control and Prevention, “Overdose deaths involving prescription opioids were five times higher in 2016 than 1999,” and sales of these prescription drugs have County, as well as the first lawsuit in Arizona (on behalf of quadrupled. ‟From 1999 to 2016, more than 200,000 people Phoenix) and the first federal lawsuit in Florida (on behalf of have died in the U.S. from overdoses related to prescription Delray Beach). 1 opioids.” Several pharmaceutical companies, including The team also filed on behalf of the City of Los Angeles. Purdue Pharma, Teva Pharmaceuticals USA Inc., Johnson L.A. City Attorney Mike Feuer said he filed the lawsuit & Johnson and Endo Health Solutions Inc., are at the center because manufacturers and distributors encouraged doctors of the crisis for allegedly using Big Tobacco-style marketing to prescribe the potent painkillers while downplaying the of prescription drugs to increase sales, leading to widespread addictive nature of the drugs, all while failing to report addiction and otherwise avoidable deaths. Leading the fight suspicious sales. “I will not let Los Angeles become the next against the pharmaceutical manufacturers, distributors and West Virginia or Ohio when it comes to the devastating retail pharmacies responsible for creating and perpetuating effects of the opioid crisis,” he said at a May 3, 2018 news this epidemic, Robbins Geller has been hired to represent conference announcing the lawsuit. Most recently, Robbins municipalities and Taft-Hartley Plans throughout the nation, Geller was hired by Marin County and a suit was filed in including several of the country’s largest cities and counties. the U.S. District Court in San Francisco. The Marin County One of the Firm’s founding partners, Paul J. Geller, has case will be transferred to the multi-district litigation. been appointed to the team of elite lawyers spearheading more than 450 coordinated lawsuits in the multi-district In the United States, more than 47,000 people died in litigation captioned In re National Prescription Opiate Litigation. 2014 due to drug overdoses, and that number surpassed Recently, the presiding Judge, the Honorable Dan Aaron 52,000 in 2015 and 63,000 in 2016. Michigan healthcare Polster, selected six of the lawsuits to serve as “bellwether” providers wrote 11 million prescriptions for opioid drugs in cases, placing them on an expedited schedule. Two of the six 2015 and an additional 11 million in 2016 – more annual involve Robbins Geller clients – Broward County, Florida opioid prescriptions than Michigan has residents. “We see and Monroe County, Michigan. the devastation every day in our hospitals, in our jails and at the morgue, and it’s getting worse. There has to be a price to “Our firm is committed to holding opioid manufacturers and be paid when corporations show such disregard for human distributers accountable for their fraudulent marketing of life,” said Executive Warren C. Evans of Wayne County, opioids, which has fueled the worst drug scourge ever,” said which saw opioid-related deaths increase from 478 to 506 partner Mark J. Dearman, who is working on the litigation between 2013 and 2015. In 2016, that number reached 817 seven days a week. – more than 32 overdose deaths for every 100,000 residents. “The defendants’ massive nationwide campaign of false Oakland County Executive L. Brooks Patterson added, “The marketing, and their failure to report suspicious sales as opioid industry put profits over people and now people are required by law, resulted in dramatic increases in prescribing paying the price, some with their lives.” which advanced in lockstep with overdose deaths,” said Rising numbers of opioid-related deaths can easily be partner Aelish M. Baig who, along with Geller and tracked throughout the cities and counties that have thus Dearman, leads the Robbins Geller opioid team. Robbins far retained Robbins Geller to represent them against these Geller and co-counsel filed the first lawsuit in Michigan opioid manufacturers and distributors. According to The regarding the crisis, on behalf of Wayne and Oakland Washington Times, the Montgomery County Council’s Office

1 https://www.cdc.gov/drugoverdose/data/overdose.html

6 rgrdlaw.com of Legislative Oversight conducted a study this summer, “Cities, like ours, face immeasurable human tragedies and finding that the County has had “sharp increases” in drug- escalating, multi-million dollar fiscal impacts due, in part, related deaths in recent years, and according to the Maryland to the negligence and fraud of opioid manufacturers and Department of Mental Health and Hygiene, “there were distributors who reaped billions while knowingly, if not 1,856 opioid-related deaths in 2016, a 70 percent increase intentionally, spawning the current and next generation over 2015,” in Maryland.2 of opioid addicts,” said Robbins Geller client Cary D. Glickstein, Mayor of Florida’s Delray Beach. “We look “The biggest thing we’re looking for is an injunction against forward to our day in court to redress the financial damages these distributors to force them to do what they’re supposed to our taxpayers have been forced to shoulder.” be doing,” said Maryland’s Talbot County Council President Jennifer Williams after selecting Robbins Geller to represent The team of lawyers that was appointed by Judge Polster, Talbot County in the lawsuit.3 Talbot County Attorney including Paul J. Geller, “reads like a ‘Who’s Who’ in Anthony Kupersmith noted that when selecting mass torts,” according to The National Robbins Geller, he and Assistant Attorney Law Journal. According to Law360, the Mary O’Donnell looked for “experience, smaller appointed group of negotiators a track record of successful outcomes in is “split into two camps: seven attorneys these larger litigation cases, a firm that has “The opioid representing local governments that allege the resources to fight this fight against a grievous financial harm from the opioid group that has very deep pockets and that epidemic is a crisis, and 11 attorneys representing opioid has representation from their firm on the public health crisis, manufacturers and distributors. Their settlement committee and the executive and fighting the assignment is daunting: broker a quick and committee of the MDL.” Kupersmith meaningful deal that earmarks money for added, “Several other Maryland counties manufacturers health care and law enforcement, while also have decided to work with Robbins and distributors also helping to curb opioid prescribing and Geller, so we’re very excited about the abuse.”5 opportunity . . . .” who are largely responsible for it When asked about his appointment, Geller “Our investigation has revealed that said: “I’m honored to have been selected manufacturers intentionally misled will be a privilege. among this exceptional group of lawyers. prescribers, patients and the public Every day, 90 The opioid epidemic is a public health regarding the appropriate uses, risks, safety Americans die from crisis, and fighting the manufacturers and and efficacy of prescription opioids,” Baig distributors who are largely responsible told The Washington Times. an opioid overdose. for it will be a privilege. Every day, 90 It’s time to put an Americans die from an opioid overdose. Counties affected the most by opioid- It’s time to put an end to that.” related deaths also deal with significant end to that,” financial consequences as a result of said Geller. “I believe that (Robbins Geller) have what over-prescription and addiction, including we need to be successful,” Maryland’s Talbot increased law enforcement and judicial County Council Vice President Corey Pack expenditures, increased jail and public works succinctly told The Star Democrat.6 “This problem is expenditures, increased substance abuse treatment not going to go away. It’s not all about dollars and cents, but and diversion plan expenditures, increased emergency it’s about holding those companies accountable for the fraud and medical care services expenditures, and lost economic they’ve perpetrated on the American people.” opportunity. For instance, according to a recent study by Urban Institute, “Between 2011 and 2016, spending on Robbins Geller partners Paul J. Geller, Mark J. Medicaid-covered prescriptions used to treat opioid addiction Dearman, Aelish M. Baig, Thomas E. Egler and and overdoses increased from $394 million to $930 million, Matthew S. Melamed, along with associates Dory P. an average annual increase of 19 percent. Spending grew Antullis, Carissa J. Dolan, Ricardo J. Marenco, faster in later years, with a 30 percent increase between 2015 Sabrina E. Tirabassi and Bailie L. Heikkinen, are and 2016.”4 leading the Firm’s litigation efforts on behalf of cities and counties around the country.

2 https://www.washingtontimes.com/news/2017/dec/13/robbins-geller-rudman-dowd-say-big-pharma-misled-c/ 3 http://www.stardem.com/news/local_news/talbot-joins-opioid-lawsuit/article_8f68b1b4-d5c7-5a02-ac85-65b242cab4a4.html 4 https://www.urban.org/research/publication/rapid-growth-medicaid-spending-medications-treat-opioid-use-disorder-and-overdose 5 https://www.law360.com/articles/998904/meet-the-attys-at-the-opioid-mdl-s-negotiating-table 6 http://www.stardem.com/news/local_news/talbot-joins-opioid-lawsuit/article_8f68b1b4-d5c7-5a02-ac85-65b242cab4a4.html On the Record | Spring 2018 7 CORPORATE GOVERNANCE ROUNDUP

After Parkland Shooting, CEOs SEC and Disclosure of Dark Money The SEC rejected Ford’s argument, Respond More Quickly than Political Contributions allowing both proposals to move forward Politicians to be voted on by shareholders.4 The Brennan Center reports that in part Professor Jeffrey Sonnenfeld wrote in as a result of advocacy by shareholders, Fortune about what CEOs are doing more than half of the S&P 500 companies and should do about their affiliation have agreed to be more transparent with the NRA.1 He correctly sees it about their political spending.3 They as only secondarily about “corporate now share information that would citizenship.” Primarily, it is about their otherwise be opaque and untraceable, brand. He compares it to the CEOs including money flowing through dark who quit President Trump’s advisory money trade associations and so-called Mick Mulvaney, Director of the Office of Management committee after he refused to condemn social welfare organizations. and Budget the Nazis and KKK. But the trend toward transparency The SEC’s stance with Ford is Several fast-acting companies have is still being met with resistance. a welcome change from last year’s severed ties with the NRA, but is Goldman Sachs wrote to the SEC in alarming decision which blocked addressing such a problem the role December to block its shareholders a proxy question at ExxonMobil of business? from voting on a lobbying disclosure to disclose campaign spending proposal in part because the because there was another to reveal * * * amount of money at issue “relates how much money was spent on Instead of fearing boycotts for to operations that account for less lobbying. At least in the view of the snubbing the gun lobby, many than five percent of the Company’s SEC back then, the two questions business leaders now fear the assets.” The shareholders withdrew were “substantially duplicative,” opposite backlash, as those with their proposal. as if disclosing lobbying spending continuing NRA ties are showcased was the equivalent of disclosing by public safety advocates. And campaign spending.3 66% of consumers believe it is important for brands to address The Fed Orders Wells Fargo to socio-political issues like gun control. Replace Directors Nonprofits are taking to social In an unusual action, the Federal media to encourage media and Reserve responded to “widespread tech companies to block NRA ads. consumer abuses” at Wells Fargo by #BoycottNRA was the number one imposing new sanctions prohibiting any trending topic on Twitter Friday in Ford Holds Annual Shareholder Meeting: (L-R) Carl growth in the bank’s $2 trillion balance the United States. Reichardt, Vice Chairman of Ford Motor Co.; Allan sheet, perhaps for the rest of the year.5 Gilmour, Vice Chairman and Chief Financial Officer; According to Moody’s Investors Service, Akin to the business leadership Nick Scheele, President and COO; Bill Ford, Chairman such an order is unprecedented in the response to Merck’s Frazier, the and CEO; William Clay Ford, retired Vice Chairman of cracks in the dam spread slowly at Ford's Board of Directors; and Dennis Ross, Vice President Fed’s regulation of financial firms. The first, and then there is a groundswell. and General Counsel. Fed also ordered Wells Fargo to replace Many corporate leaders are earning four of its directors. Outgoing Chair the business the old-fashioned way. Ford Motor Company also Janet Yellen said, “We cannot tolerate complained to the SEC that two pervasive and persistent misconduct at CNN also wrote about the companies shareholder proposals (one on any bank and the consumers harmed that decided to end their NRA affiliations lobbying and one on electoral by Wells Fargo expect that robust and and discount programs.2 spending) were duplicative and that comprehensive reforms will be put in the latter should be excluded from place to make certain that the abuses do Ford’s annual proxy. not occur again.”

1 http://fortune.com/2018/02/27/parkland-florida-school-shooting-business-leaders/ 2 http://money.cnn.com/2018/02/25/news/companies/companies-abandoning-nra-list/index.html 3 https://www.brennancenter.org/blog/fight-corporations-reveal-political-spending 4 https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2018/jamesmcritchie020618-14a8.pdf 5 https://www.federalreserve.gov/newsevents/pressreleases/enforcement20180202a.htm 8 rgrdlaw.com SEC Considering Restrictions on We first document that on the Shareholder Lawsuits shareholder meeting date abnormal volume is equal to 19.4%, and that Bloomberg reports that as an inducement such large abnormal volume exists to increase the number of IPOs (though even around the dates of meeting there is no evidence that an increase is a legitimate goal, especially if so heavily subsidized), the SEC is considering allowing binding arbitration to replace 6 shareholder lawsuits. Steve Wynn, Wynn Resorts former Chairman and CEO Is the Proxy Advisory Firm Bill that Passed the House Constitutional? Is There a Relationship Between Trades and Votes? There are many troubling elements in HR 4015’s “kill the messenger” bill A new study by Sophia Zhengzi Li passed by the House. But no one has and Miriam Schwartz-Ziv looks at the questioned what to us seems the most connection between trading stock and glaring problem: consideration of this voting proxies documents that “on the bill included no assessment of any kind shareholder meeting date abnormal of its potential for unconstitutional volume is equal to 19.4%,” and that infringement of First Amendment such large abnormal volume exists freedom of speech and of the press. The even around the dates of meeting that Harvey Weinstein proxy advisory firms publish reports have only routine proposals on their that include facts, data, analysis, and agendas. This finding demonstrates that opinion along the lines of a newspaper or “shareholder votes are associated with that have only routine proposals magazine. No one is required to buy their significant trading activity” across the on their agendas. This finding reports or follow their recommendations. board. At the same time, they found demonstrates that shareholder The bill’s requirement that these reports that trading activity is particularly votes are associated with significant include rebuttals from the corporations large on dates of particularly important trading activity across the board. they are analyzing would be allowing meetings, e.g., meetings that involve a At the same time, we find that the government to direct the content vote on a merger, or meetings at which trading activity is particularly large of their publications, like requiring The at least one proposal resulted in an on dates of particularly important New York Times to publish op-eds by the outcome contradicting management’s meetings, e.g., meetings that involve individuals in their news stories. recommendation. They did not find a a vote on a merger, or meetings at comparably “clear spike in abnormal which at least one proposal resulted How Expensive Is Executive volume around the record date, the in an outcome contradicting Misconduct? date the proxy statement is filed, the management’s recommendation. We do not find a comparably clear It can be quite expensive for the date Institutional Shareholder Services spike in abnormal volume around executive and the shareholders. Most (ISS) issues its recommendation, or the the record date, the date the proxy recently, the publicity about Steve date the vote outcome is formally filed.” statement is filed, the date ISS Wynn’s sexual harassment of employees These findings support the conclusion issues its recommendation, or the led to a $2 billion drop in value.7 that, in most cases, “information on the vote outcome is released on the day of date the vote outcome is formally the meeting, and it is the release of this filed. These findings support the information that is associated with high conclusion that, in most cases, 8 abnormal volume.” continued on page 22

6 https://www.bloomberg.com/news/articles/2018-01-26/trump-s-sec-mulls-big-gift-to-companies-blocking-investor-suits 7 https://blogs.wsj.com/moneybeat/2018/01/26/misconduct-report-shaves-nearly-2-billion-from-wynn-market-value/ 8 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3095745

On the Record | Spring 2018 9 Investor Activism News

What Does Shareholder The three managers collectively is on holiday. It emerged this month “Engagement” Mean? oversee more than $13 trillion in that Corvex Management, an assets, bigger than the size of China’s American hedge fund, had built up a Sarah Krause writes in The Wall Street economy, the world’s second-largest. $400m position in Danone, a French Journal about large institutional investors’ food giant. AkzoNobel, a Dutch differing views of “engagement,” noting We Are Seeing More Pushback paints-and-chemicals firm which has that they also differ on their analysis from Investors on Excessive Pay been under heavy fire from Elliott of particular engagement/activism Outside the United States2 Advisors, a subsidiary of another opportunities:1 American activist fund, agreed to Britain’s Investment Association has appoint three new directors to its The biggest passive money called out 143 UK-listed companies board. An even bigger skirmish is managers all like to use some that experienced shareholder rebellions under way in Switzerland, where version of the word “engage” when of at least 20% in the last year. The Third Point, an American fund run describing how they hold their list is made up of more than a fifth of by Daniel Loeb, is seeking to shake portfolio companies accountable the constituents of the FTSE All Share up Nestlé, the world’s biggest food behind the scenes. They differ on Index, including WPP, BT, Morrisons company. Ulf Mark Schneider, how that engagement is measured. AstraZeneca, Thomas Cook, HSBC, Nestlé’s new boss, is under pressure Reckitt Benckiser, Ladbrokes, Man to present bold plans to investors in * * * Group, Pearson, William Hill, Foxtons, September. BlackRock’s engagements, Balfour Beatty, Sports Direct and Sky. Such tussles used to be relatively according to the company, can be rare in Europe. But shareholder “basic,” “moderate” or “extensive.” The list was made as a key component activism is on the rise, with restive Basic can be one conversation to the government’s package of corporate investors demanding corporate on a “routine matter”; moderate governance reforms, which is largely overhauls. Armand Grumberg, a “generally involves more than one driven by outrage over bosses’ pay. For mergers lawyer in Paris, last year meeting,” while extensive can be instance, the biggest shareholder revolt counted 70 such campaigns in “numerous meetings over a longer of the year in the United Kingdom continental Europe. He expects this time frame.” over boardroom pay was at Pearson, an education publishing and assessment year to be even livelier. “It is the new For Vanguard and State Street service, where almost two-thirds rejected normal,” he says. each phone call or meeting counts the company’s remuneration report. The surge in activism has several as an “engagement.” State Street causes. As American activist funds typically also sends hundreds of On the Rise of Investor Activism in jostle to find targets at home, letters to its portfolio companies that Europe, The Economist Reports:3 some are seeking less well-trodden it also classifies as “engagements,” hunting grounds abroad. Relatively though they aren’t included in the Leave it to the Americans to cheap European firms are tempting firm’s count of 676 engagements. besiege European companies in August, when the entire continent prey. Many Americans also see continued on page 26

1 https://www.wsj.com/articles/at-blackrock-vanguard-and-state-street-engagement-has-different-meanings-1516449600 2 http://www.independent.co.uk/news/business/comment/bosses-pay-smackdown-a-fifth-of-ftse-companies-named-and-shamed-but- where-is-persimmon-a8118071.html 3 https://www.economist.com/news/business/21727086-third-point-corvex-and-elliott-are-just-beginning-investor-activism-surging

10 rgrdlaw.com Mike Dowd Receives Trial Lawyer Excellence Award

The Jury Verdict Reporter recognized the seventh-largest settlement ever in Robbins Geller’s Michael J. Dowd a post-PSLRA securities fraud case. with an award for the Highest Reported Illinois Verdict or Settlement at the 8th “I am proud to be part of a firm with so Annual JVR Awards for Trial Lawyer many great attorneys,” said Dowd. “It Excellence. Held at The Peninsula is an honor to be recognized by the Chicago hotel, the event recognizes Jury Verdict Reporter for our record- “superior outcomes and record verdicts breaking $1.575 billion recovery in achieved by individuals and teams of Household, which was the product John Kirkton, Editor, Jury Verdict Reporter (left) and Michael Dowd trial lawyers from both the plaintiff and of hard-fought litigation. Robbins defense bars.” Dowd was honored at the Geller excels because we have reception and awards ceremony, which real trial lawyers. We never would attracted more than 300 trial attorneys have won without the sacrifices and recovery), and judges. outstanding efforts of our partners, WorldCom ($657 Spence Burkholz, Dan Drosman, million recovery), AOL Time Warner The award is the result of Dowd’s Maureen Mueller and Luke ($629 million recovery), Qwest ($445 tireless work on the Household International Brooks.” million recovery) and Pfizer, Inc. ($400 (now HSBC Finance Corporation) million recovery). This award comes Dowd has been practicing securities securities class action, which yielded on the heels of several other notable litigation for more than 20 years, a record-breaking $1.575 billion recognitions for Dowd, including being prosecuting dozens of complex recovery after 14 years of litigation. The named a Best Lawyer in America by securities cases and recovering billions $1.575 billion recovery is the largest Best Lawyers®, a Recommended Lawyer of dollars for investors. In addition to ever following a securities fraud class by The Legal 500 and a Leading Lawyer Household International, his other notable action trial, the largest securities fraud in America by Lawdragon. settlement in the Seventh Circuit and cases include UnitedHealth ($925 million

The National Law Journal Names Robbins Geller Partners Paul Geller, Jason Forge and Rachel Jensen as 2018 Plaintiffs’ Lawyers Trailblazers

Paul Geller Jason Forge Rachel Jensen

On May 1, 2018, The National Law Journal recognized Paul J. Geller, Jason A. Forge and Rachel L. Jensen as Plaintiffs’ Lawyers Trailblazers for its second annual issue. The publication honors select attorneys “who continue to make their mark in various aspects of legal work on the Plaintiffs’ side. . . . [E]ach has shown a deep passion and perseverance in pursuit of their mission, having achieved remarkable successes along the way.” After sifting through hundreds of nominations, the publication interviewed each honoree to discover their pioneer spirit, the trails they have blazed, and what they see for the future of litigation. continued on page 29

On the Record | Spring 2018 11 Marvell Technology Investors Score Final Approval of $72.5 Million Recovery

On April 20, 2018, the Honorable various semiconductor products. The million pages of documents produced William Alsup, United States District case involved claims under the Securities by defendants and third parties” and Judge for the Northern District of Exchange Act of 1934. Specifically, “took 10 depositions and defended three California, granted final approval Plumbers and Pipefitters National depositions” during the course of the of a $72.5 million recovery in Luna Pension Fund alleges that Marvell case. v. Marvell Technology Group, Ltd. The reported revenue and earnings during recovery represents up to 50% of the the class period that were misleading Robbins Geller attorneys Scott H. best estimate of classwide damages as a result of undisclosed pull-in and Saham, Jonah H. Goldstein, Jason suffered by investors who purchased concession sales. As a result of this C. Davis and Matthew I. Alpert shares during the February 19, 2015 conduct, the price of Marvell common obtained this result on behalf of Marvell through December 7, 2015 class period. stock was artificially inflated, with its investors. Plumbers and Pipefitters National stock price reaching a class period high Luna v. Marvell Technology Group, Ltd., No. Pension Fund is serving as lead of over $16 per share. 3:15-cv-05447, Order Granting Motion plaintiff. In acknowledging lead plaintiff’s and for Final Approval of Proposed Class Marvell Technology Group, Ltd. is a Robbins Geller’s efforts in attaining this Settlement and Granting in Part Motion publicly traded company holding stakes result for shareholders, the court noted for Attorney’s Fees and Expenses (N.D. in subsidiaries that produced and sold that lead counsel “reviewed over two Cal. Apr. 20, 2018).

12 rgrdlaw.com Medtronic Investors Score Class Certification and Overcome Motion for Summary Judgment in Medtronic Class Action

On January 30, 2018, the U.S. District investors could not have discovered the Then, on March 2, 2018, the court denied Court for the District of Minnesota facts regarding defendants’ intentional in part defendants’ motion for summary certified a class of investors in the Medtronic involvement in the scheme until the U.S. judgment, ruling that there is a genuine securities class action. Senate Finance Committee issued a Staff issue of material fact with respect to Report in October 2012. The case was specific individual defendants. The case alleges that Medtronic and remanded to the district court for further certain of its officers and directors violated proceedings. Robbins Geller attorneys Shawn federal securities laws by engaging in a A. Williams, Danielle S. Myers, scheme to defraud Medtronic investors In certifying the class, the district court Christopher M. Wood, Robert R. by secretly drafting and editing medical found that “the proposed class meets Henssler, Jr., Susannah R. Conn and journal articles, purportedly authored the threshold requirements of Rule 23(a) Hillary B. Stakem, serving as co-lead by physician consultants. These articles . . . [,] that common issues of law and fact counsel, obtained this result for investors. underreported or failed to report known predominate and that a class action is adverse events associated with Medtronic’s likely the superior way to adjudicate the West Virginia Pipe Trades Health & Welfare key bone growth treatment, INFUSE. claims.” The court also found that “lead Fund v. Medtronic, Inc., No. 13-cv-01686- Defendants’ deception artificially plaintiffs Employees’ Retirement JRT-FLN, Order Certifying Class (D. inflated Medtronic’s stock price, causing System of the State of Hawaii, Union Minn. Jan. 30, 2018; and West Virginia Pipe hundreds of millions of dollars in damages Asset Management Holding AG, and Trades Health & Welfare Fund v. Medtronic, when the truth was revealed in June West Virginia Pipe Trades Health Inc., No. 13-cv-01686-JRT-FLN, 2011. In December 2016, the United & Welfare Fund are adequate class Memorandum Opinion and Order (D. States Court of Appeals for the Eighth representatives” and that Robbins Geller, Minn. Mar. 2, 2018). Circuit vacated the district court’s 2015 as co-lead counsel, “is well-qualified to summary judgment dismissal, finding that serve as class counsel in this case.”

Trump University Students Prevail in the Ninth Circuit

On February 6, 2018, the U.S. of what they paid for Trump University “extraordinary” and “all the more Court of Appeals for the Ninth programs.” Turning to the objection, exceptional when viewed in light of Circuit commended Robbins Geller’s the court stated: “This appeal involves the risk” of continued litigation. In “admirable” work on behalf of former a lone objector, Sherri Simpson, who approving the extraordinary settlement, Trump University students and seeks to opt out of the class and bring the court commended Robbins Geller affirmed a settlement that is expected her claims in a separate lawsuit, which for prosecuting the case on a pro bono to enable victims to recover over 90% would derail the settlement.” Judge basis: “Class Counsel’s exceptional of their “tuition.” In a unanimous Nguyen recognized that Simpson had decision to provide nearly seven years decision, the court dismissed the lone received a court-approved notice of her of legal services to Class Members on objection to the $25 million settlement, right to exclude herself from the class a pro bono basis evidences not only a which will reimburse thousands of and chose not to do so by the deadline. lack of collusion, but also that Class consumers, including senior citizens, As to the objector’s claim that she Counsel are in fact representing the who accessed retirement funds and should have a second opportunity best interests of Plaintiffs and the Class maxed out credit cards to enroll in to opt out at the settlement stage, or Members in this Settlement. Instead of Trump University. alternatively, that due process requires seeking compensation for fees and costs a second chance, the court held: that they would otherwise be entitled Writing for the court, Circuit Judge “Neither argument is correct.” to, Class Counsel have acted to allow Jacqueline Nguyen observed that the maximum recovery to Plaintiffs and settlement provided “terms highly Last March, District Court Judge Class Members. Indeed, that Eligible favorable to class members [who] Gonzalo P. Curiel approved Class Members may receive recovery would receive between 80 to 90 percent the settlement and hailed it as of 90% or greater is a testament to continued on page 31

On the Record | Spring 2018 13 First Solar and Quality Systems Shareholders Score Major Victories in Ninth Circuit On January 31, 2018, the U.S. Court A three-judge Ninth Circuit panel court explained that “non-forward- of Appeals for the Ninth Circuit issued affirmed the district court’s partial looking portions of mixed statements an important opinion that clears the denial of defendants’ motion for are not eligible for the safe harbor way for plaintiffs to proceed to trial summary judgment and held that provisions of the [Private Securities in Mineworkers’ Pension Scheme v. First the “general proximate cause test” is Litigation Reform Act of 1995].” Solar Incorporated, a securities fraud class “the proper test” for loss causation. While the court acknowledged that action on appeal from the District of The Ninth Circuit specifically the safe harbor’s purpose is “to protect Arizona. rejected defendants’ argument that companies and their officials from “‘[s]ecurities fraud plaintiffs can suit when optimistic projections of The district court largely denied recover only if the market learns of the growth in revenues and earnings are defendants’ motion for summary defendants’ fraudulent practices.’” not borne out by events,” at the same judgment, but nonetheless certified its time, that safe harbor does not protect ruling for immediate appeal to answer The Ninth Circuit held that the loss defendants “when they knowingly the question: “‘[W]hat is the correct causation “inquiry requires no more make a materially false or misleading test for loss causation in the Ninth than the familiar test for proximate statement about current or past facts” Circuit?’” Agreeing with Robbins cause . . . . To prove loss causation, or combine such a statement with Geller’s clients, Mineworkers’ plaintiffs need only show a ‘causal a forward-looking one. Discussing Pension Scheme and British Coal connection’ between the fraud and the the specific statements in question, Staff Superannuation Scheme, loss . . . by tracing the loss back to ‘the the court stated that “Defendants the Ninth Circuit ruled that the test for very facts about which the defendant made a number of mixed statements loss causation is a general “proximate lied . . . . Disclosure of the fraud is not that included projections of growth cause” test, rejecting the imposition of a sine qua non of loss causation, which in revenue and earnings based on a singular bright-line “revelation of the may be shown even where the alleged the state of [Quality Systems’] sales fraud” standard. fraud is not necessarily revealed prior pipeline.” The court held that “both to the economic loss.’” The opinion is a significant victory for the non-forward-looking and the investors, as it forecloses defendants’ Robbins Geller attorneys Michael J. forward-looking portions of these ability to immunize themselves from Dowd, Daniel S. Drosman, Luke statements were materially false or liability simply by refusing to publicly O. Brooks, Jason A. Forge, Susan misleading.” acknowledge their fraudulent conduct. K. Alexander, Andrew S. Love, Robbins Geller appellate partner Darryl J. Alvarado and Matthew First Solar, Inc. is one of the world’s Joseph D. Daley, who briefed and S. Melamed obtained this result for argued the Quality Systems appeal, largest producers of photovoltaic solar shareholders. panel modules. In the underlying case, applauded the Ninth Circuit ruling: plaintiffs allege that First Solar violated Mineworkers’ Pension Scheme v. First Solar “We felt very strongly that the district §§10(b) and 20(a) of the Securities Incorporated, No. 15-17282, Opinion court had committed reversible error Exchange Act of 1934 and SEC Rule (9th Cir. Jan. 31, 2018). in allowing defendants to insulate their 10b-5. Specifically, plaintiffs claim that numerous misstatements as corporate between April 30, 2008 and February First Solar comes on the heels of another ‘puffery’ and non-actionable forward- 28, 2012, First Solar discovered a significant appellate win by the Firm. looking statements.” In 2017, the Ninth Circuit ruled in manufacturing defect that caused its In addition to Daley, Robbins Geller modules to suffer rapid power loss and favor of investors in In re Quality Systems, Inc. Securities Litigation. In that case, a attorneys Darren J. Robbins, a design defect that caused rapid power Robert R. Henssler, Jr. and loss in hot climates. Plaintiffs allege three-judge panel reversed the district court’s dismissal of the action in a Christopher D. Stewart obtained that First Solar not only concealed this result for investors. these defects from shareholders, but unanimous decision. also misrepresented the cost and The issue was one of first impression In re Quality Systems, Inc. Securities scope of the defects and reported concerning “mixed” future and Litigation, No. 15-55173, Opinion (9th false information on the company’s present-tense misstatements made by Cir. July 28, 2017). financial statements. Quality Systems, Inc. The appellate

14 rgrdlaw.com Plaintiffs Move Forward with Case After Goldman Sachs’s Second Circuit Appeal On January 12, 2018, the U.S. Court Following appellate briefing and oral of Appeals for the Second Circuit ruled argument, Judge Wesley noted that in plaintiffs’ favor in In re Goldman Sachs “the Basic presumption is a substantive Grp., Inc. Sec. Litig. The court remanded doctrine of federal law that . . . altered the case to the district court to apply the default rule and imposed a burden its recently articulated standard from of persuasion on defendants seeking to another securities case regarding what rebut it.” In remanding the case, the defendants have to show to rebut Second Circuit directs the district court plaintiffs’ evidence relating to the Basic to consider the evidence presented by presumption of reliance in the context the parties and determine whether of class certification. defendants have met their burden by a preponderance of the evidence. The securities class action alleges that Goldman failed to disclose Spencer A. Burkholz, co-lead conflicts of interest in connection with counsel and Robbins Geller partner, certain mortgage-backed-securities noted: “The court rejected Goldman’s transactions, including betting against position on the standard for the court the very same securities it was selling to apply at class certification, as well as its clients. The allegations in the Goldman’s claim that the case should complaint relate to several high-profile be dismissed in its entirety. We look transactions, including the infamous forward to returning to the district Abacus transaction that resulted in court and preparing the case for trial.” Goldman paying $550 million in fines to the SEC. Robbins Geller partners Spencer A. Burkholz, Jonah H. Goldstein, The Second Circuit agreed with Robert R. Henssler, Jr., Eric I. plaintiffs that to rebut the presumption Niehaus, Susan K. Alexander of reliance, defendants must prove and Andrew S. Love, serving as co- by a preponderance of the evidence lead counsel, obtained this result for that there was no price impact from shareholders. defendants’ misrepresentations, rejecting defendants’ argument for a Arkansas Teachers Ret. Sys. v. Goldman lesser standard. Notably, the Second Sachs Grp., Inc., No. 16-250, Opinion Circuit also rejected defendants’ (2d Cir. Jan. 12, 2018). argument that the misrepresentations themselves were mere puffery, i.e., general statements upon which no reasonable investor would rely. The court held that this challenge was not appropriate at the class certification stage of the proceedings.

On the Record | Spring 2018 15 Climate Change News Chicago Treasurer Pledges to Use and ExxonMobil. Seven companies Limited board oversight of lobbying activity: the City’s $8B Portfolio to Promote have board members with some Only half the 21 companies mention Sustainability environmental background; the rest any board oversight of lobbying, of the companies do not. although three-quarters discuss Chicago Treasurer Kurt Summers election spending. Oversight for these announced plans to use the city’s $8 $673 million spent on influence: This companies is more robust than in the billion portfolio to help fight climate report unveils, for the first time, a S&P 500 as a whole, yet highlights change and promote social progress. total political activity footprint for the widespread reluctance by any Summers is proposing to overhaul the these 21 energy and utility companies companies to be more transparent city’s investment strategy to ensure over the last three election cycles, on about their efforts to influence public taxpayer dollars are directed to financially lobbying and election spending. policy. sound companies that make it a priority to protect the environment, encourage Myriad ways to spend: Including newly Lots of lobbying, little disclosure: Using gender and racial diversity, uphold labor available state lobbying data, the corporate treasury money, all firms standards and operate ethically. He report delineates the many ways lobby and all but Kinder Morgan wants the portfolio to be carbon-neutral companies spend shareholder dollars spend on elections. However, only by 2020. The proposed changes would to influence elections and public six voluntarily report lobbying be rolled into the municipal code under policy: expenditures. Disclosure laws mean an ordinance1 introduced by Alderman independent data are missing for $524.3 million – Lobbying (three- John Arena2 who last year persuaded 38 more than half the states – even quarters of it at the federal level) other members of City Council to sign a though environmental policy is 3 nonbinding resolution calling on Chicago $51.2 million – State ballot measures heavily defined at the state level, and to divest from oil and gas companies. profoundly affects the landscape for Summers wants to make a company’s $25.8 million – “527” political companies and their investors. record on water usage, labor rights and committees diversity as important as creditworthiness Dark dollars block climate action: The when deciding how to invest its $8 billion $20.9 million – Candidates for state report explores behind-the-scenes operating budget. office spending by the 21 companies to influence climate policy, largely in Key Metrics Assessment of Climate $14.4 million – Political party ways not reported to investors. The Change Governance and Political committees “known unknowns” are many but Influence Spending in the Energy four companies clearly say one thing $11.2 million – Super PACs and Utility Sectors and spend money to do the opposite: Corporate-sponsored political action Duke Energy, DTE Energy, Devon A new report on 21 energy and utility committees, using executives’ money Energy and Southern. Some, such as companies from the non-profit 50/50 and directed by executives, also Chevron and ExxonMobil, make no Climate Project finds: spent $28.1 million on candidates effort to hide their opposition to public policy to combat climate change. The Negligible board oversight of climate risk: 20 for political office. These PACs report compares companies’ public of the 21 companies do not mention transferred an additional $7.3 million statements and their association with climate change considerations in their to other PACs. non-profit groups that legally can corporate governance documents Over $50 million to block clean energy obscure their donors while working as a board obligation; Occidental in 7 states. In addition to spending against climate-friendly policies. Petroleum is the only firm to do so. to prevent climate action at the 14 mention general environmental federal level, companies covered in Green Bonds on the Rise oversight, but six say nothing. this report spent heavily to prevent The governance focus on sustainability is states from enacting clean energy Paucity of climate expertise on boards: Just usually on disclosure, strategy, and board standards, improve energy efficiency, two directors out of 245 who serve on competence, but it is time to pay attention and close fossil fuel tax loopholes. these boards have expertise relevant to to debt instruments as well. Global green States affected include Alaska, dealing with the business implications bond issuance passed $100 billion for California, Florida, Michigan, Ohio, of climate change; at ConocoPhillips the first time, up 68 percent from 2016, Oregon and Washington. continued on page 27

1 https://www.documentcloud.org/documents/4390964-Proposed-Chicago-ESG-Ordinance.html 2 http://www.chicagotribune.com/news/ct-met-chicago-social-climate-investing-20180227-story.html 3 http://midwestenergynews.com/2017/03/09/even-if-symbolic-chicago-fossil-fuel-divestment-could-send-powerful-signal/

16 rgrdlaw.com Reining in Unicorns: Protecting Pensioners and Entrepreneurs From Fraud

nce upon a time, private The bottom line: far too often imploding of a covert “Greyball” program to companies with market Unicorns scorch the retirement savings evade law enforcement where it was valuations of more than $1 of workers who watch while their life operating illegally or facing opposition; Obillion were so rare that they were savings go down in flames. and of renting recalled, unsafe vehicles dubbed Unicorns. to its drivers in Singapore. Damaging Disclosures Unicorns are much less exotic today. In No one expects that Theranos or Uber the United States, there are more than The poster child for Unicorn hype is will be the last Unicorn conflagration. 100 such companies with a collective blood diagnostic company Theranos, A recent paper by two business school value of $360 billion, according to CB Inc. At one point the company’s market professors studied legal filings from Insights. They have collectively raised value reached a whopping $9 billion. 135 Unicorns in the United States and over $73 billion. Once fawned over and feted by the concluded that on average, after each media, the company’s story proved new valuation, they are worth half what Some of these Unicorns occupy too good to be true after a 2015 Wall is advertised. The paper did not accuse the vanguard of technological Street Journal investigation exposed its the companies of intentionally seeking advancement, exemplifying American claims about proprietary blood-testing to manipulate investors, but rather ingenuity at its best by driving technology. characterized the valuation of these innovation and economic growth. Unicorns as a “black box,” owing to the The Securities and Exchange increasing complexity of their financial But as we’ve learned the hard way, Commission has since charged the structures. being a Unicorn does not necessarily company, its CEO Elizabeth Holmes, equate to being a model corporate and former President Ramesh “Sunny” Investor Remedies citizen. Sometimes, Unicorns really Balwani with an “elaborate, years- are the stuff of fairy tales, using make- long fraud in which they exaggerated Shareholder class actions have long believe promises to raise billions of or made false statements about the served as the most effective and efficient dollars from unsuspecting investors. company’s technology, business, and vehicle for investors in publicly traded And, equally unsurprising, when the financial performance.” (Theranos and companies who seek recourse when truth about such companies is revealed, Holmes settled the charges.) A related they are damaged by misstatements, the value of those investments often criminal investigation is reportedly omissions and other forms of corporate evaporates. ongoing. fraud. Just since the Global Financial Crisis of 2007-2009, courts have Holding perpetrators of such frauds Ride-sharing company Uber approved more than $29 billion of accountable is critical. This is not just Technologies Inc., once valued at recoveries obtained for defrauded about protecting sophisticated venture nearly $70 billion—more than Ford investors via shareholder class actions, capital firms that choose to invest in Motor Company, General Motors, according to Cornerstone Research. Unicorns. It’s about protecting the Twenty-First Century Fox and eBay— hard-earned retirement savings of also tried its best to keep the darker side But privately held companies, which do public employees, teachers, firefighters of its business from investors. However, not list shares on public exchanges and and law enforcement officers. it has now been widely reported that do not have to regularly file financial the ethical, progressive and socially information with the SEC, have not How is that, you ask? Because many of responsible corporate citizen that Uber historically been held accountable for the venture capital firms that invest in portrayed itself to be was sheer fantasy. misconduct via investor class action these startups often do so using workers’ lawsuits. With some companies now retirement savings. For example, one This romanticized image has been raising hundreds of millions of dollars active investor in Unicorns, Union replaced by one stained with tales of or even billions of dollars before they Square Ventures, has on its roster executives fostering a toxic culture even complete an IPO, it is no wonder of investors public pension funds in defined by sexual harassment and that investors in these companies have California, Oregon and Wyoming. gender discrimination; of pilfered driver started to rely on shareholder actions to and rider data from its main competitor; continued on page 31

On the Record | Spring 2018 17 Will the SEC Strip Investors of Protections Against Securities Fraud? By Paul Bland

In a dramatic departure from worst of the worst corporate actors decades of precedent, Jay Clayton, accountable, as the leadership of the the new Chair of the Securities and SEC (including chairs from both Exchange Commission (“SEC”), has parties) have repeatedly recognized declared that he is undecided as to for decades. whether investors should continue to be able to bring class actions if The best known challenge to the they’ve been cheated in violation of SEC position came in 2012, when the securities laws. For decades, when The Carlyle Group asked the SEC a corporation deceived its investors for permission to issue an IPO with after selling securities through an an arbitration clause that would initial public offering (or “IPO”), ban investors from bringing a class those investors could band together action. While there is a long history in a class action to seek accountability of arbitration for individual claims for this kind of fraud. Over the years, involving violations of the securities these class actions have recovered laws through FINRA, Carlyle’s many billions of dollars for cheated proposed clause would have gone investors, ranging from large pension much further, barring investors from funds for firefighters to regular pursuing class actions. The SEC American citizens holding IRAs and expressed serious concerns that this 401(k)s. This private enforcement move violated the securities laws, and has been central to holding the Carlyle backed down.

18 rgrdlaw.com But starting last summer, some began For some time, in congressional to challenge the historic rule. Last July, hearings and other forums, Chairman SEC Commissioner Michael Piwowar Clayton refused to give straightforward publicly urged corporations to ban answers about how he intended to deal class actions in a recent speech. Then, with this issue. It appeared that the a few months later, the Treasury SEC might simply allow a corporation Department issued a lengthy report to quietly propose IPO documents that that (among many other initiatives) banned class actions, and let staff at the argued that it was harming the Corporate Finance Division approve American economy for investors to those documents without a full public bring securities class actions when they debate or vote. And it was not at all were deceived, and urged corporations clear what the Chairman would do if to ban class actions. there were a vote. continued on page 20

Source: Cornerstone Research SEC Enforcement Activity: Public Companies and Subsidiaries, Midyear FY 2018 Update

On the Record | Spring 2018 19 WILL THE SEC (continued from page 19)

After an outcry from investor in U.S. corporations is that American advocates – including strong speeches markets are particularly well policed from SEC Commissioner Robert compared to those in many other Jackson and the SEC’s Investor countries. Advocate Rick Fleming, and then most importantly a strongly worded Private enforcement of the laws against letter from Rep. Carolyn Maloney securities fraud is absolutely crucial and all of the Democratic members to the safety of investors in America’s of the House Finance Committee markets. While the SEC does great – on April 24, 2018, Chairman work, it has a relatively modest Clayton responded more fully. As staff, and over time it has been far to the procedural question, Clayton less successful than private lawsuits did finally promise a public, open in recovering monies for cheated discussion before the SEC allows investors. In the mid-2000s, there corporations to ban securities class were a series of extremely egregious actions, and he promised a public vote. and well-publicized securities frauds On the important substantive issue, in the United States, involving Enron, though, he stated, “I have not formed WorldCom, Tyco, Bank of America, a definitive view on whether or not and Global Crossing. In those five mandatory arbitration for shareholder cases, the SEC’s enforcement actions disputes is appropriate in the context recovered penalties and fees of $1.8 of an IPO for a U.S. company.”If billion. By contrast, private litigation the SEC does allow corporations to by investors themselves – the exact eliminate securities fraud class actions, kind of case that the SEC is now it will likely harm U.S. markets with considering eliminating – recovered foreign investors. At the time that the $19.4 billion for investors. Carlisle IPO was before the SEC, a A more recent case, whose settlement number of large foreign institutional is still being administered in a New investors joined together to express York federal court, demonstrates concerns. They explained that one exactly what is at stake here. In In re of the main reasons foreign investors Petrobras Securities Litigation, a Brazilian hold more than $6.2 trillion in stocks

20 rgrdlaw.com oil company made an IPO and sold In addition to protecting individual other securities to investors. There investors, securities class actions are were serious problems with the often the only way bad actors are held IPO. When litigation commenced accountable for fraud that weakens about misleading statements about our entire financial system. These Petrobras’s financial statements class actions are a necessary deterrent and business operations emerged, for the Enrons and Tycos of the world it turned out that there were two who might otherwise be able to run different sets of investors: those who off with the profits from serious fraud. purchased securities pursuant to U.S. transactions, and those who If some company challenges the purchased securities via the Brazilian established policy with an arbitration stock exchange. clause that seeks to ban class actions, there will be a firestorm of Thanks to the protections of U.S. controversy. In addition to an outcry securities law, the first group of from the public, institutional investors investors was able to bring class will need to speak out to protect their actions despite a forced arbitration interests. clause banning them in Petrobras’s ABOUT THE AUTHOR bylaws. These investors are set to Paul Bland recover more than 90% of the $3 billion fraud settlement – meaning F. Paul Bland, Jr., Executive they will receive checks for over $2.7 Director, has been a senior billion. attorney at Public Justice since 1997. As Executive Director, Mr. The second group of investors, at the Bland manages and leads Public mercy of Brazilian law, were forced Justice’s legal and foundation into arbitration on an individual basis staff, guiding the organization’s and barred from joining a class action. litigation docket and other These investors are still attempting to advocacy. recover damages on their claims, and are doing so in uncharted waters.

On the Record | Spring 2018 21 GOVERNANCE ROUNDUP (continued from page 9) information on the vote outcome executives at Fox and Weinstein executive pay and improving is released on the day of the Co. knew about them, also raise corporate performance. While that meeting, and it is the release of this questions of accounting. Earlier this may be so, the strategy remains information that is associated with year, there were reports that federal popular: In France, the median large abnormal volume. prosecutors were investigating how remuneration of CEOs running the settlement payments involving 40 biggest public firms increased Weinstein Scandal Triggers claims against Fox News chieftain 31% last year from 2014. Questions of Corporate Liability Roger Ailes were disclosed. Ailes and Even Complicity departed last year, and died in May. Execs are also well compensated in the UK, where Vlerick found that A long record of a CEO’s sexual “I’d point out that both of these CEOs at the largest corporations harassment and abuse, followed by a companies are in essence controlled take home 100-times more than series of settlements and non-disclosure by dynamic founders, which makes the average employee at their agreements, becomes a problem of independent oversight much less firms, compared with 86-times for corporate governance when there is likely,” Minow said. continental European companies in reportedly an employment contract the study, which excluded Sweden. providing that the CEO cannot be A new survey on board gender diversity fired for sexual harassment as long finds lip service for the benefits of a And women are almost entirely as he personally bears the costs of the diverse board but a reluctance to support locked out of the executive suite: settlements. The Weinstein Company quotas.10 We expect more focus on this only 5% of European CEOs are is privately held, so some of the rules issue as sexual harassment complaints female, according to the research. pertaining to public companies, like continue to lead to immediate departures This imbalance, too, deserves public disclosure of the employment of high-profile figures. scrutiny for many reasons, not least contract, do not apply. In an October because research by Scandinavian 2017 Variety article, ValueEdge Yet Another Study Shows bank Nordea has shown that Advisors Vice Chair Nell Minow that Overpaid Executives women CEOs tend to beat the 11 Underperform broader market, according to As we have been saying for more than Bloomberg. 20 years, overpaying chief executives might be making companies worse. This study provides a look at compensation problems in the United Kingdom, the Netherlands, Sweden, Belgium, Germany, and France from 2010 to 2016:

[O]verpaying executives can also be a sign of weaker corporate governance, [Xavier] Baeten said. Overall, companies whose chief executives are paid relatively less tend to have a higher return on assets, according to a study by compared the situation to that of News Vlerick [Business School]. . . . As Corporation/21st Century Fox:9 market capitalization increases, executive compensation also rises. Nell Minow, a longtime corporate governance expert, said the reports Baeten says there’s little-to-no of the settlements, and what correlation between higher

9 http://variety.com/2017/biz/news/harvey-weinstein-sexual-harassment-corporate-liability-21st-century- fox-1202598683/ 10 http://www.igmchicago.org/surveys/board-quotas-for-women 11 https://qz.com/1167226/vlerick-research-overpaid-ceos-may-worsen-corporate-performance/

22 rgrdlaw.com JP Morgan Fined by FINRA • Accounting allocations obscure true multi-class capital structures economics that carry unequal voting rights. The Financial Industry Regulatory Among investors, a large minority Authority fined J.P. Morgan Securities, • Data does not match a manager’s sphere of responsibility (43 percent) indicated that LLC $1.25 million for failing to conduct unequal voting rights are never proper background checks on 8,600 new The authors note: appropriate for a public company 12 employees from 2009 to 2017. J.P. under any circumstances. An Morgan’s due diligence failures involved Having access to appropriate data is critical to making sound decisions equal proportion of investors (43 95% of the firm’s “non-registered percent) said unequal voting rights associated persons.” on strategy, compensation, and capital allocation. However, Building a Better Board Book evidence suggests some directors do not receive the information The first question we like to ask directors they need on important drivers is about the quantity, quality, and timing of the business. In general, what of the information they receive from the is the quality of information company. The late Tom Wyman, who served on the General Motors board in the 1990s, told us that the board materials were delivered “by forklift,” but the board agenda never included time for questions or comments. More recently, complaints about over- emphasis on compliance rather than structures may be appropriate for risk assessment and strategy have led to newly public companies if they concerns that board briefing materials are subject to automatic sunset miss the forest for the trees. requirements or at firms more broadly if the capital structure is A new analysis by Alex Baum (Value put up for periodic re-approval by Act Capital), David F. Larcker that public company directors receive? Is it sufficient to make the holders of the low-vote shares. (Stanford University – Graduate School Among non-investors, 50 percent of Business), Brian Tayan (Stanford optimal decisions? If not, how widespread is this problem? In responded that companies should University – Graduate School of be allowed to choose whatever Business), and Jacob Welch (Value Act situations where the quality of data is lacking, what discussions should capital structure they see fit, while Capital) assesses the current state of 27 percent responded that a multi- board books and suggests improvements. the board use with management to improve information quality and class structure may be appropriate at a newly public company if subject The six significant shortcomings they presentation? to an automatic sunset provision identify are:13 Board Diversity or more broadly if reapproved on • Data lacks important context a periodic basis by the low-vote A new report from ISS underscores the shareholders. • Data focuses on results (outputs) concerns institutional investors have • Board Gender Diversity. ISS rather than drivers (inputs) about “male, pale, and stale” boards of asked respondents if they would directors, as well as other governance • Data does not inform organic (P&L) consider it problematic if there are issues like dual class voting stock and investment decisions zero female directors on a public virtual annual meetings.14 Key findings • Unexplained outperformance is company board. More than two- include: insufficiently investigated thirds (69 percent) of investor • Unequal Voting Rights. ISS respondents said “yes.” A large solicited respondents’ views on percentage of these respondents

12 http://www.fcpablog.com/blog/2017/11/27/finra-fines-jp-morgan-for-thousands-of-hr-due-diligence-fail.html 13 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3047910 14 https://www.issgovernance.com/iss-announces-results-2018-benchmark-voting-policy-survey/

On the Record | Spring 2018 23 (43 percent) said that the absence only” shareholder meetings if they have open industry ties consistent of women directors could indicate provided the same shareholder with the nonprofit’s public-private problems in the board recruitment rights as a physical meeting. status as a self-regulator of the process, while 26 percent of investor • Pay Ratio Disclosures. ISS financial industry. Another 13 seats respondents said that although a asked respondents how they intend are designated to public members, lack of female directors would be to analyze data on pay ratios. intended to represent investors. problematic, their concerns may Somewhat surprisingly, only 16 The remaining seat is for FINRA’s be mitigated if there is a disclosed percent indicated that they are CEO. policy/approach that describes the not planning to make use of this considerations taken into account Johnston Press Deploys a Poison new information. Nearly three- Pill by the board or the nominating quarters of the investor respondents committee to increase gender indicated that they intend to A discredited U.S.-created management diversity on the board. A majority either compare the ratios across entrenchment provision is being used in (54 percent) of the non-investor companies/industry sectors, or the United Kingdom. respondents answered “yes” when assess year-on-year changes in the asked if the absence of a single ratio at an individual company or Johnston Press has thwarted an woman director on a board is use both of these methodologies. attempted boardroom coup by using a 17 problematic, although more than Of the 12 percent of investors who poison pill: half of these respondents said their selected “other” as their response, Christen Ager-Hanssen, the concerns might be mitigated by some of them indicated they would activist shareholder plotting to oust a company’s disclosed policy or take a wait-and-see approach, while chairman Camilla Rhodes and the approach. others indicated they were uncertain company’s senior management, • Virtual Meetings. Survey or had concerns regarding the has been forced to delay a call for respondents were asked to usefulness of the pay ratio data. an Extraordinary General Meeting provide their views on the use of Among non-investor respondents, after advisers discovered the online mechanisms to facilitate a plurality (44 percent) expressed tripwire in bond documents. shareholder participation at general doubt about the usefulness of such meetings, i.e., “hybrid” or “virtual- pay ratio data. This weekend Mr. Ager-Hanssen only” shareholder meetings. About Ann Marsh of Financial Planning says was in talks with lawyers at the City one out of every five (19 percent) of that a new report documents conflicts of firm Mishcon de Reya on how to the investors said that they would interest on the FINRA board, the self- circumvent the mechanism, known generally consider the practice of regulatory body with jurisdiction over as a “dead hand proxy put,” in holding either “virtual-only” or financial services.15 The report “by a preparation for a new attack. “hybrid” shareholder meetings to group of securities arbitration attorneys Johnston Press inserted the dead be acceptable, without reservation. calls into question FINRA’s ability to hand proxy put into its bondholder At the opposite extreme, 8 percent protect investors given alleged conflicts agreements when it last refinanced of the investors did not support of interests on its board”: either “hybrid” or “virtual-only” its £220m debt pile three years meetings. More than one-third The report was issued . . . by ago. Such terms can secure lower (36 percent) of the investor the Public Investors Arbitration interest rates but can also trigger respondents indicated that they Bar Association, whose members a default if shareholders step in to generally consider the practice represent investors in legal disputes appoint new directors. of holding “hybrid” shareholder with FINRA member firms.16 The In the United States, the law firm meetings to be acceptable, but group raises concerns about five of of Fried, Frank, Harris, Shriver & not “virtual-only” shareholder FINRA’s 13 public governors and Jacobson LLP says the following about meetings. Another 32 percent of one recently departed governor these provisions:18 the investor respondents indicated who now sits on the Federal that the practice of holding Reserve’s Board of Governors. Judicial concern about proxy puts “hybrid” shareholder meetings is in debt is based on their inherent FINRA’s board is comprised acceptable, and that they would potential entrenchment effect, also be comfortable with “virtual- of 24 members. Among them, 10

15 https://www.financial-planning.com/news/finra-board-rife-with-conflicts-of-interest-new-report-finds 16 https://piaba.org/piaba-newsroom/report-finra-governance-review-public-governors-should-protect-public-interest 17 http://www.telegraph.co.uk/business/2017/10/21/poison-pill-stops-presses-boardroom-coup-attempt-johnston-press/ 18 http://www.friedfrank.com/siteFiles/Publications/FINAL%20-%206-5-2015%20-%20Dead_Hand_Proxy_Puts_What_You_Need_to_Know.pdf 24 rgrdlaw.com because a triggering of the put voting power to add two new directors ValueEdge Advisors’ could make a change in control of to the board, which went from eight the board more costly – as the debt members to 10. “That has now plunged (and, through cross-acceleration Uber into another period of uncertainty provisions, possibly all of the and a corporate governance crisis, at a company’s debt) could be required time when the company had been trying 2018 to be refinanced if the put were to move beyond its controversial past Public Funds Forum triggered. Proxy puts with a dead with a new chief executive on board.” September 4-6, 2018 | Montage Laguna Beach | California hand feature are more inherently entrenching than non-dead hand Equifax Hack proxy puts as they disable a board G PORTFO The leak of millions of personal details, IN L from approving a dissident slate to T IO C V including social security numbers, is an E A avoid the put being triggered. T L unprecedented threat to the financial O U R E Update on Uber system, and the investigation into its P causes and impact is just beginning.

Boardroom Resources has a good initial 2 0 M 1 take in “The Equifax Hack: More 8 U P R U O Questions Than Answers About the F BL S Board.”20 On paper, it looks good: IC FUND “[M]ost of the prudent governance, risk, and organizational boxes are checked.” But initial reports raise the most serious concerns. Is it possible that top executives, including the CFO, sold stock prior to the public announcement of the Uber seems to be running through a breach? That the executive in charge top 10 list of governance problems. was not a specialist? And who was The latest comes from a September 30, responsible for the bumbled follow-up 2017 New York Times story highlighting that required customers to waive rights a new ploy from founder and ousted to sue in order to find out whether their CEO Travis Kalanick to regain power information was at risk and sign up for in the boardroom.19 Mr. Kalanick is an Equifax protection service in order to still a director and, more importantly, get the promised one year of coverage? he still wields disproportionate voting power. The Times reports that the board Fighting Corporate-Led “Reform” retained Goldman Sachs to develop a to Reduce Shareholder Proposals CELEBRATING plan to “shift the power on Uber’s board James McRitchie takes apart the YEARS by reducing Mr. Kalanick’s voting clout, Chamber of Commerce’s “fake 2 009-2018 expanding Mr. Khosrowshahi’s powers news” advocacy of reducing the right and imposing a 2019 deadline on the of shareholders to file non-binding Join us for three days of informative sessions resolutions, a right that already excludes and networking activities with experts who company to go public.” Before that plan 21 could be voted on, Kalanick used his “ordinary business.” It is a must-read. will cover topics ranging from methods for improving portfolio assessment, identification of market indicators, manager selection, risk management, fulfillment of fiduciary duties, global investment strategies, and approaches for maximizing portfolio returns.

19 https://www.nytimes.com/2017/09/30/technology/uber-travis-kalanick-dara- khosrowshahi.html?_r=0 20 https://boardroomresources.com/insight/equifax-hack-more-questions-about-board-of- directors/ 21 https://www.corpgov.net/2017/08/chamber-releases-shareholder-proposal-reform/ For more informationOn and the to Record register, | Spring visit 2018 www.PublicFundsForum.com. 25 CLE and CPE accreditation pending. INVESTOR ACTIVISM (continued from page 10)

continental models of corporate IRRC and ISS Have Issued a of fresh-faced, highly-qualified, governance as ripe for disruption. New Report on the Relationship independent candidates on both Americans (and Britons) think that Between Activism and Board nominee slates. Highlighting boards must prioritise shareholders’ Composition4 this narrowing divide, dissidents’ interests; Europeans, backed by “hand-picked” nominees have been courts, insist boards should also [L]ong-standing stereotypes known to reject their sponsors’ take the interests of staff, creditors appear to be outdated as activism wishes and strategic plans (witness and suppliers into account. has entered an era in which most Elliott Management’s first tranche dissident nominees have attenuated of candidates at Arconic, who were It is not just Americans who have ties to their hedge fund patrons. The seated via a settlement, opposing sprung into action. A London-based experience, qualifications, attributes, the hedge fund’s second attempt group, The Children’s Investment and skills of dissident nominees can to gain board seats). Similarly, Fund, recently led a successful appear indistinguishable from those nominees selected by incumbent campaign to urge Safran, a French of the incumbent directors whom directors to face off against dissident maker of aeronautical parts, to lower they seek to supplant. Nominees’ candidates sometimes end up its offer price for Zodiac, a poorly backgrounds and experiences can endorsing the very shifts in strategic run French producer of aeroplane become even more interchangeable direction that they were recruited to seats and toilets. On the other side with those of incumbent directors fend off (witness the DuPont board’s of the deal, a French fund called when the latter transfuse their own “victory” over Nelson Peltz’s Trian CIAM had invested in Zodiac and ranks with new blood during, or in Partners, followed by board- sought the Safran takeover. anticipation of, an activist campaign. recruited director-turned CEO Ed This heightened competition can Breen’s advocacy of a Peltzian-style leave shareholders with a bounty breakup of the company).

4 https://irrcinstitute.org/wp-content/uploads/2017/08/FINAL-Activism-and-Board-Refreshment-Trends-Report-Aug-2017.pdf

26 rgrdlaw.com CLIMATE CHANGE (continued from page 16) research by Bloomberg New Energy Finance administration to rescind a federal finding resolution is exposing within ALEC, shows.4 that greenhouse gases are harmful. The a group funded by organizations like Hill reports:7 Koch Industries Inc. and coal miner The market was mainly driven by new Peabody Energy Corp., which pushes corporate debt issuance. Companies from “As has been previously conservative policies in the state and a range of sectors sold green bonds to communicated to ALEC, we are federal governments. fund corporate sustainability measures, concerned by the language of the including development of renewable resolution, especially relating to Vanguard Seeks Better Disclosure energy and energy efficiency measures. climate science, and do not support on Climate Change See Figure 1. the resolution,” Kenneth Freeman, ExxonMobil’s manager of United On August 14, 2017, Ross Kerber 8 NOTE: Focus on disclosure, strategy, States government relations, wrote in reported on Reuters that: political contributions, and board the Monday letter to ALEC’s energy, Vanguard Group on Monday said competence relating to climate change environment and agriculture task it has urged companies to disclose continues. ValueEdge Advisors Vice force. Chair Nell Minow co-authored an how climate change could affect article in the American Bar Association’s “ExxonMobil will continue to their business and asset valuations, International Environmental Law Committee oppose the resolution and will vote reflecting how the environment has Newsletter with 50/50 Climate Project against it should it come before the become a priority for the investment Executive Director Edward Kamonjoh taskforce or the board.” industry. about “climate-competent directors.”5 Under pressure from investors, The publication also includes an article ExxonMobil’s public dissent is Vanguard and other fund companies by George Dallas on the governance part of a broader rift that the climate challenges of climate change and an article by the issue’s editor, Linda Lowson, called FSB Guidance on Climate-Related Financial Figure 1: Reporting: Regulatory and Market Responses. $ bn NOTE also: Climate change concerns, 160 134.9 traditionally considered progressive or 140 Democratic issues, are increasingly being Extrapolated raised by political conservatives.6 And 120 ABS/ MBS 99.1 Municipal Walden Asset Management has called 100 on portfolio companies to oppose the Project 80 Chamber of Commerce in its effort to roll Corporate back EPA rules. 60 50.0 Financials

ExxonMobil Breaks with ALEC on 40 Governmental Agencies 36.6 Climate Change 20 Sovereigns 7.2 14.8 0.9 ExxonMobil Corp. opposed an American 0 0.5 3.4 4.3 Supranationals Legislative Exchange Council (ALEC) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 proposal that would push the Trump Source: Bloomberg New Energy Finance

4 https://about.bnef.com/blog/green-bond-issuance-will-soon-pass-100-billion-2017/ 5 https://valueedgeadvisors.files.wordpress.com/2018/01/ic940000_newsletterpubs_aba_climate_change_sust_fin_rptg_publication_ dec_2017.pdf 6 https://grist.org/article/climate-change-isnt-just-for-democrats-anymore-meet-the-eco-right-republicans/ 7 http://thehill.com/policy/energy-environment/363389-exxon-opposes-alecs-attempt-to-fight-epa-climate-policy 8 https://www.reuters.com/article/us-vanguard-climate/vanguard-seeks-corporate-disclosure-on-risks-from-climate-change-

On the Record | Spring 2018 27 have pushed to pass several high- Vanguard, the biggest U.S. mutual “Our support for these proposals profile shareholder resolutions on fund firm by assets, had not supported is not a matter of ideology, it’s a climate risk at big energy firms like climate activists on similar measures. matter of economics,” he said. “To Exxon Mobil Corp and Occidental But Glenn Booraem, Vanguard’s the extent there are significant risks Petroleum Corp during the spring investment stewardship officer, said in to a company’s long-term value proxy season. a telephone interview on Monday the proposition, we want to make sure issue as well as shareholder proposals there is long-term disclosure of those * * * have evolved. risks to the market.”

Corporate fraud. Insider trading. Board misconduct. Unfair business practices.

It all stops with us.

28 rgrdlaw.com NATIONAL LAW JOURNAL’S TRAILBLAZERS (continued from page 11)

Though Paul Geller has devoted prepare the next generation of lawyers,” Forge and Jensen were “two of the lead his practice to the representation of Geller has aided in the advancement attorneys who secured a global settlement consumers and investors for much of of several Robbins Geller partners, of $25 million for former Trump his career, he got his start by defending including Jensen, who was recently University students in two class actions companies in high-stakes class action appointed to the leadership team of the against President Donald J. Trump and litigation. “In one of my first cases, I Fiat Chrysler MDL. Geller also sits on the his eponymous ‘university.’ The Ninth represented drug companies in actions Board of Emory University’s Institute Circuit recently affirmed Judge Curiel’s brought by hemophiliacs, mostly of Complex Litigation, which facilitates approval of the settlement, commending children, who were given HIV-positive dialogue between judges and attorneys, Robbins Geller’s ‘admirable’ work.” blood treatments,” he told NLJ. “I including young attorneys. “You need Robbins Geller litigated the case pro bono, realized I’d rather fight for these kids and experience and financial resources to allowing maximum recovery to plaintiffs their families. I learned a lot and worked run these cases, but younger lawyers and class members. under tremendous lawyers at that firm, can’t get experience if they don’t get but I was always more comfortable appointments,” noted Geller. “One of the misperceptions is that the standing up to bullies than representing case was politically driven,” Jensen them.” When discussing Wall Street being clarified. “But when the case started in “rife with fraudsters,” Geller told NLJ 2010, Trump wasn’t a politician. The NLJ highlights much of Geller’s current that he is “confident that shareholders case did not become daily headline litigation, including his recent work in will continue to have the right to hold news until it was lobbed around on a the national opioid epidemic MDL. “I’m Corporate America responsible for Republican primary debate stage six one of the court-appointed members of fraud,” and that he expects “that years later.” the leadership team, and also the court- traditional securities fraud will extend in appointed settlement team,” he said. the future to cryptocurrency.” Though Forge’s involvement was “Our goal is to reach a global resolution. supposed to be temporary, his role Litigation may be the method to abate Both senior partners at Robbins Geller, quickly changed after deposing a former the nation’s greatest national health Jason Forge and Rachel Jensen have student. “I really felt she had been crisis.” Geller was also selected to unique professional backgrounds that manipulated. I called [Jensen] and serve in a leadership position on the have shaped them into the attorneys told her that we should bring a RICO Plaintiffs’ Steering Committee on behalf they are today. For instance, Forge claim. A few months later, we started of consumers in the massive Volkswagen spent most of his career as a federal a whole new case with a single RICO “Clean Diesel” Emissions scandal. San prosecutor. “I liked the challenge of claim that enabled us to bring together a Francisco legal newspaper The Recorder being the aggressor and investigator nationwide class.” labeled the group that was appointed in trying to flesh out wrongdoing. The most When it comes to the future of litigation, that case, which settled for more than righteous targets were those who had the Geller, Forge and Jensen all see a $17 billion, a “class action dream team.” power to get away with it,” Forge told the publication. “When I decided to go great need to expose the truth. “There Additionally, Geller is currently taking into private practice, my goal was to may be efforts to curtail the rights of on Mylan in the EpiPen antitrust continue to aggressively and creatively shareholders, but I’m confident that MDL, alleging that Mylan stifled its prosecute righteous fraud cases.” shareholders will continue to have competition and raised the price of the right to hold Corporate America EpiPens. “I was as outraged as anyone,” Jensen studied international human responsible for fraud,” noted Geller. Geller remarked. “It’s a very meaningful rights law and spent a year in Tanzania “I totally understand why the public is case to me. When my son, who is now and the Netherlands working for the so frustrated with the legal profession,” in college, was two years old, he ate a Prosecutor at the UN tribunals. She Forge said. “I shake my head every cashew, had a reaction and was rushed explained: “The work I did at the day at lawyers’ arguments, which are to the hospital. Since then, he has never tribunals was at the cutting edge of typically designed to prevent or postpone gone a day in his life without an EpiPen establishing that sexual violence can be answers to a very simple question: ‘What nearby.” genocide and raised profound questions about the limits of human power and really happened here?’ But with that When he isn’t in the courtroom, NLJ rights. But I didn’t want to live the expat frustration comes even more motivation noted that Geller “works to promote life, so I found plaintiff-side firms that to expose the truth. It’s not easy, but it diversity and the next generation of took on human rights cases here in the wouldn’t be rewarding if it was.” top tier plaintiffs’ lawyers.” Telling U.S. Now I prosecute fraud cases against the publication that he wants to “help large corporations.”

On the Record | Spring 2018 29 Meet Robbins Geller’s 2018 Leading Lawyers in America

Lawdragon recently announced that eight Robbins Geller partners have been recognized as Leading Lawyers in America for 2018. “These are lawyers who inspire with their public interest leadership, their vision of the rule of law and its relationship to our lives, our economies and our governance. They assess how to structure the most difficult deals, and how to counsel leaders who abuse, prevaricate and some who actually try to lead,” states the publication. Darren J. Robbins, Paul J. Geller, Samuel H. Rudman, Spencer A. Burkholz, Daniel S. Drosman, Shawn A. Williams, Randall J. Baron and Rachel L. Jensen were all honored as Leading Lawyers in America for 2018. Additionally, Michael J. Dowd was elevated to the Lawdragon Hall of Fame, which is a permanent recognition. Between these nine attorneys, tens of billions of dollars have been recovered on behalf of injured investors in such cases as Enron ($7.2 billion – the largest securities class action recovery), Household International ($1.575 billion – the largest securities class action recovery following a trial), UnitedHealth ($925 million – the largest stock option backdating recovery) and WorldCom ($657 million – the largest opt-out (non-class) securities action recovery).

Samuel Rudman Darren Robbins Paul Geller

Spencer Burkholz Daniel Drosman Shawn Williams

Randall Baron Rachel Jensen Combined Leading Lawyer Wins 48 Michael Dowd 30 rgrdlaw.com HOW TO

TRUMP (continued from page 13) CONTACT US We welcome your letters, comments, Class Counsel’s representation and for so many elderly Trump University questions and submissions. dedication to act in their clients’ best students, the Ninth Circuit’s decision Please direct all inquiries to: interest.” provides a welcome light at the end of David C. Walton the tunnel for those who have struggled (619) 231-1058 or [email protected] The Robbins Geller trial team to pay off their debt for a decade.” [ welcomed the confirmation of their hard work. “Justice doesn’t always Robbins Geller attorneys Jason A. Annalisa Barrett Tor Gronborg prevail, but when it does, it really Forge, Rachel L. Jensen, Steven F. Richard A. Bennett Robert R. Henssler, Jr. Paul Bland Rachel L. Jensen propels the next pursuit,” explained Hubacheck, Daniel J. Pfefferbaum Luke Brooks Andrew S. Love Jason A. Forge. and Patrick J. Coughlin obtained Spencer A. Burkholz Danielle S. Myers this result on behalf of plaintiffs. Joseph D. Daley Darren J. Robbins Robbins Geller partner Rachel L.

Mark J. Dearman Samuel H. Rudman Contributors Jensen, who has been litigating the Simpson v. Trump University, LLC, No. 17- 55635 (9th Cir. Feb. 6, 2018). Michael J. Dowd Shawn A. Williams case since its filing in 2010, stated: Paul J. Geller “With precious days slipping away

On the Record is published by Robbins Geller Rudman & Dowd LLP, 655 West Broadway, Suite 1900, San Diego, CA 92101, (619) 231- 1058 or (800) 449-4900. REINING IN UNICORNS (continued from page 17) Robbins Geller Rudman & Dowd LLP hold corporate fraudsters accountable. markets.” Defrauded investors deserve is one of the world’s leading law firms their day in court, regardless of whether representing investors in securities litigation. Investment fraud is not just bad for the company in which they invest is With 200 lawyers in 10 offices, Robbins investors. It is a menace to honestly Geller has obtained many of the largest publicly traded or not. Otherwise, securities class action recoveries in history. innovative entrepreneurs because fraud pensioners and entrepreneurs alike will For five consecutive years, ISS Securities undermines the integrity of our capital be relegated to living unhappily ever Class Action Services has ranked the Firm markets—the life blood of any startup. in its annual SCAS Top 50 Report as one of after. the top law firms in both amount recovered For these reasons, it is important to for shareholders and total number of class hold fraudsters accountable. I agree Reprinted with permission from the April 9, 2018 action settlements. Robbins Geller attorneys with former Securities and Exchange edition of “The Recorder”© 2018 ALM Media have helped shape the securities laws and Properties, LLC. All rights reserved. Further have recovered tens of billions of dollars on Commission Chair Mary Jo White duplication without permission is prohibited, contact behalf of aggrieved victims. Beyond securing who noted in a 2016 speech that 877-257-3382 or [email protected]. financial recoveries for defrauded investors, “being a private company comes with Robbins Geller also specializes in implementing corporate governance reforms, helping to serious obligations to investors and the improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit rgrdlaw.com for Darren J. Robbins is a founding partner of Robbins Geller more information. Rudman & Dowd LLP. Over the last two decades, he has

served as lead counsel in more than 100 securities class actions Atlanta • Boca Raton • Chicago • Manhattan • Melville and has recovered billions of dollars for injured shareholders. Nashville • Philadelphia • San Diego • San Francisco Washington, D.C. Darren Robbins 1800-449-4900 0808-238-9902

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On the Record | Spring 2018 31 The voice of investors and consumers.