Landmark Events and Cases: Timeline
FOUNDING OF THE FIRM
BLB&G is founded by Paul Bernstein, Ronald Litowitz, Max Berger and Edward Grossmann.
Washington Public Power Supply System
After seven years of litigation and three months of trial, BLB&G obtains a $750 million recovery on behalf of investors in the largest municipal bond default ever. At the time, it is the largest securities recovery in history and is described by the Court as "a case of overwhelmingly unique proportions... a rare and exceptional case involving extraordinary services on behalf of Class plaintiffs..."
Congress passes the Private Securities Litigation Reform Act ("PSLRA"), calling upon institutional investors to serve as lead plaintiff in supervising securities fraud class actions. In adopting the PSLRA, Congress emphasized that "private actions perform a critical role in preserving the integrity of our securities markets." "Even more important to ensuring the success of our markets is investor confidence. That confidence is maintained because investors know they have effective remedies against persons who defraud them."
Roberts v. Texaco
BLB&G recovers $170 million on behalf of Texaco’s African-American employees, and engineers the creation of an independent "Equality and Tolerance Task Force" with broad powers over the company’s anti-discrimination, affirmative action and diversity efforts. The task force serves as a model for public companies going forward.
BLB&G prosecutes landmark deal litigation against the Board of Directors of Warner-Lambert for agreeing to a merger with American Home Products without giving due consideration to a competing, substantially higher offer for the company by Pfizer, Inc. Case settles and Warner-Lambert is acquired by Pfizer for $10 billion more than the original merger price proposed with AHP.
At a total of $3.2 billion for investors, the Cendant settlement becomes the largest recovery in history — from a public company and its auditor. In addition, Cendant agrees to the then most extensive corporate governance changes ever obtained from a public company in a class action.
In the first of several historic litigation results, the financing arms of major auto manufacturers are compelled to cease discriminatory "kick-back" arrangements with dealers, leading to historic changes to auto financing practices nationwide.
Following revelations of massive accounting fraud at some of the nation's largest companies, such as WorldCom, Enron, HealthSouth and Adelphia, Congress adopts the Sarbanes-Oxley Act of 2002 ("SOX"), also called the "Public Company Accounting Reform and Investor Protection Act of 2002." SOX provides investors with important new protections, including new or enhanced standards for all U.S. public company boards, management, and public accounting firms. SOX established broader disclosure and certification standards for public companies and provided new SEC rules and enforcement tools. The law also established a new quasi-public agency, the Public Company Accounting Oversight Board ("PCAOB"), which is responsible for overseeing, regulating, inspecting and disciplining accounting firms that audit public companies.
After six years of demanding litigation, BLB&G obtains the most comprehensive corporate governance reforms ever achieved as result of shareholder legal action. The new governance plan is described by the court as "an exceptional benefit" to the shareholders -- and a model for corporate America.
BLB&G obtains over $6 billion in settlements from Citigroup, 17 investment banks, WorldCom's auditor Arthur Andersen and WorldCom's outside directors -- an unprecedented result. After three years of litigation and four weeks of trial, it is the largest securities recovery in history at the time. In addition, rulings in the case reinforce significant law ensuring Wall Street properly performs due diligence obligations to investors.
After 4 weeks of trial and 3 days of deliberation, a San Francisco jury finds liability against Clarent's CEO for a knowing omission or misstatement in Clarent's public filings. Rare securities verdict -- only the second in favor of investors since the PSLRA -- sends strong message that institutional investors and their counsel are committed to holding wrongdoers accountable.
BLB&G and shareholder client bring precedent-setting action to contest the terms of proposed merger between Caremark Rx and CVS Corporation as Caremark board ignores higher competing offer. Pressure created by the lawsuit forces CVS to increase the consideration offered to Caremark shareholders by nearly $3.5 billion more than CVS' initial offer.
On behalf of a group of institutional investors, BLB&G obtains a groundbreaking $920 million settlement which requires restitution payments from UnitedHealth Group, Inc , its founder, Dr. William McGuire, and other of the Company’s former officers and directors, marking the largest derivative and stock options backdating recovery of all time. The New York Times comments: "investors everywhere should applaud the deal... it sets a standard of behavior for other companies and boards when performance pay is later shown to have been based on ephemeral earnings."
Buoyed by substantiated allegations of egregious fraud at Tyco International, including admitted accounting fraud and successful criminal convictions of Tyco's CEO and other former officers accused of stealing millions from the company, BLB&G pursues a direct action against Tyco on behalf prominent mutual funds, hedge funds and individual investors and recovers over $105 million for its clients - an amount representing over nine times the class action recovery.
BLB&G obtains an historic package of corporate governance reforms for Pfizer shareholders in a derivative litigation relating to the company's illegal marketing practices. The settlement establishes a Regulatory and Compliance Committee of the Pfizer Board that will be supported by a dedicated $75 million fund - a provision viewed by experts as a potential industry standard for similar highly regulated public companies. It also provides for an Ombudsman Program for employees to address concerns about legal or regulatory issues, and requires extensive analysis of Pfizer's compensation structure to ensure there are no incentives for employees to engage in unlawful behavior.
After shares of pharmaceutical giant Merck & Co., Inc. lose tens of billions in market value in response to revelations surrounding the Company’s concealment of health risk associated with its blockbuster painkiller VIOXX, investors sue but the court dismisses the case on statute of limitations grounds. The case is appealed all the way to the United States Supreme Court. BLB&G’s efforts as Co-Lead Counsel for Merck shareholders are instrumental in securing a rare, unanimous Supreme Court decision clarifying the standard governing statute of limitations in securities fraud suits. The Supreme’s decision is a significant victory — not only for Merck investors but for all investors as it makes it more difficult for corporate wrongdoers to evade liability by concealing their fraud.
The infamous collapse of Wachovia Bank was a seminal moment in the subprime disaster. Investors were decimated by the mortgage-related assets Wachovia sold prior to its stunning 2008 fire sale to Wells Fargo. BLB&G’s representation results in an historic $627 million recovery on behalf of bondholders - the largest recovery in a subprime-related litigation. The successful Wachovia prosecution and recovery is particularly noteworthy as the case involved no financial restatement, no actual claims of fraud, and no parallel governmental actions.
The bank that wasn’t "too big to fail." The bankruptcy of Lehman Brothers Holdings Inc. deals a devastating blow to the global economy and remains the poster child of the financial crisis. BLB&G recovers $516 million for investors from former Lehman directors and officers, and underwriters of Lehman securities offerings. The matter is still ongoing against Lehman’s auditors.
A U.S. trial court excludes from a securities class action litigation non-U.S. investors who purchased stock of Swiss reinsurer Converium Holding AG (now part of SCOR Holding AG) outside the United States. Despite that ruling, BLB&G secures for non-U.S. investors an additional $58 million recovery which the Amsterdam Court of Appeals approves and rules legally binding in January 2012 - the first time it has ever done so involving a non-Dutch company. The decision is crucial to investors in the wake of 2010’s Morrison ruling by the U.S. Supreme Court as it establishes that there is a legally binding mechanism available in Europe to help resolve securities claims against non-U.S. companies, and a Court that is willing to take an expansive jurisdictional view in reviewing such settlements.
Over twenty-five years of growth and change, the firm has remained committed to litigating with the highest level of excellence and integrity, and to protecting victims of corporate wrongdoing and workplace discrimination where the government's regulatory bodies do not. Working with our clients, we have achieved record recoveries and obtained meaningful corporate governance reforms. From increasing market transparency to establishing greater director independence to holding wrongdoers accountable, our cases have changed corporate business practices for the better.