The California Public Employees Retirement System sued former Lehman Brothers Holdings Inc. executives and underwriters alleging they hid Lehman’s exposure to subprime loans when they sold the pension fund about $700 million in bonds.
Calpers claimed in a complaint filed in federal court in San Francisco yesterday that the executives and about 34 investment banks made false statements in offering documents for bonds issued from June 2007 to September 2008.
The case is Calpers v. Fuld, 11-562, U.S. District Court, Northern District of California (San Francisco).
Glaxo Said to Pay $250 Million to Resolve Avandia Suits
GlaxoSmithKline Plc agreed to pay more than $250 million to resolve about 5,500 claims related to its Avandia diabetes drug and avoid the first trial over claims it kills users, two people familiar with the accords said.
Glaxo, the U.K.’s biggest drugmaker, agreed to settle the lawsuits claiming the drug causes heart attacks for an average of at least $46,000 each, said the people, who declined to be identified because they weren’t authorized to speak publicly.
The accords included a previously reported settlement of an undisclosed amount for the family of James Burford, an Avandia user who died in 2006. The Burford family’s case, filed in federal court in Philadelphia, was set for trial last week.
“An average of $46,000 per case is a modest price to pay, in the grand scheme of things,” Gbola Amusa, an analyst at UBS AG in London, said in a telephone interview. “If Avandia definitively had caused heart attacks, Glaxo would have been forced to pay” as much as $1 million a case, he said.
The cases settled were filed by plaintiffs’ lawyers Joseph Zonies and Thomas Cartmell. Glaxo was facing about 2,000 suits alleging the drugmaker hid Avandia’s heart-attack and stroke risks prior to the settlements, lawyers for former users and the company said in court hearings. The company already agreed to pay about $460 million to resolve allegations it didn’t properly warn doctors and consumers about the medicine’s risks.
Mary Anne Rhyne, a U.S.-based spokeswoman for Glaxo, didn’t immediately return a call for comment on the settlements.
Zonies, of Denver, and Cartmell, of Kansas City, Missouri, didn’t immediately return calls seeking comment.
The company said Sept. 23 it would stop promoting Avandia worldwide after regulators said the treatment would be withdrawn from the market in Europe and sales would be limited in the U.S. because of studies linking the drug to increased risks of heart attacks.
The consolidated case is In re Avandia Marketing, Sales Practices and Products Liability Litigation, 07-01871, U.S. District Court, Eastern District of Pennsylvania (Philadelphia). The Burford case is Deborah Burford v. SmithklineBeecham Corp., 07-CV-05360, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).
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Chevron to Pay Atlas Holders 10 Cents More a Share
Chevron Corp., the second-largest U.S. oil company, will pay holders of Atlas Energy Inc. an additional 10 cents a share to settle litigation when its $3.59 billion purchase of the natural-gas producer is completed.
The settlement follows Atlas shareholder lawsuits that alleged company directors breached fiduciary duties by agreeing to an inadequate merger price and using an unfair process, according to a filing with the U.S. Securities and Exchange Commission yesterday. The defendants denied any violations of their duties.
Reliance Industries Ltd., which has a joint venture with Atlas, has said it should’ve been given a chance to top Chevron’s Nov. 9 offer. The company, based in Mumbai, sent a Jan. 10 letter to the board calling itself the “most natural and obvious” partner to buy Atlas.
The additional 10 cents a share “doesn’t really move the needle too much,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York who has a “market perform” on Chevron and owns shares of the company. “There will be no white knight. It’s a done deal.”
Chevron’s cash-and-stock bid valued the company at $43.34 a share, a 37 percent premium to the closing price a day before it was announced. The additional 10 cents would add about $7.8 million to the overall deal value.
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NYSE Euronext Sued in Amsterdam by TOM Over Liffe Membership
NYSE Euronext should be forced to grant membership in the exchange’s Liffe futures and options market to The Order Machine, the alternative securities-trading system, known as TOM, said in a Dutch lawsuit.
NYSE Euronext has refused membership to TOM, which is owned by BinckBank NV, Optiver and government-controlled ABN Amro Group NV, even though a unit of the company applied for access to Liffe two years ago, BinckBank Chief Executive Officer Koen Beentjes said.
“Euronext keeps asking us questions,” Beentjes said in a telephone interview yesterday. “We’ve answered these every time, and think we comply with all requirements, but we still don’t have the membership two years along the way. So we went to court.”
NYSE Euronext owns London-based Liffe, Europe’s second-largest derivatives market. TOM, a Netherlands-based trading firm, offers a way to compare prices of securities on different exchanges. The firm said it became a member last year of Eurex, Europe’s largest derivatives exchange.
TOM and NYSE Euronext met yesterday in summary proceedings before the Amsterdam District Court, Yndra Poel, a spokeswoman for the court, said.
“We are not against competition when it’s on a fair and transparent basis,” said James Dunseath, a spokesman for NYSE Euronext. “We have procedures in place for membership and there are currently several significant questions outstanding about the execution and provision of information relating to the interests of the end-investor, and NYSE Euronext as an exchange, that have yet to be answered.”
Massey Energy Stockholders Sue to Block Sale to Alpha
Massey Energy Co. stockholders sued in federal court in Virginia to block the company’s sale to Alpha Natural Resources Inc. for $7.1 billion, alleging that the proposed acquisition undervalues the Massey shares.
In two separate lawsuits filed last week in U.S. District Court in Richmond, where Massey is based, stockholders said the buyout offer is the result of a “flawed and unfair process” and represents an “unfair price” of 1.025 shares of Alpha common stock and $10 in cash for each outstanding share of Massey’s common stock.
“Instead of attempting to negotiate a transaction reflecting the highest price reasonably available for the company’s stockholders, defendants spent substantial effort tailoring the proposed acquisition to meet their own specific needs and those of Alpha,” said the stockholders, who are seeking class-action, or group, status.
The bid values Massey at $69.33 a share, 21 percent more than its price at the close of trading Jan. 28, the last trading day before the deal was announced. The average premium for coal-industry deals announced in 2010 was 26 percent, according to data compiled by Bloomberg.
Rick Nida, a spokesman for Alpha, declined to comment. Roger Hendriksen, vice president of investor relations for Massey, didn’t immediately return a telephone message seeking comment.
The lawyer representing the stockholders in both suits, Elizabeth Tripodi at Finkelstein Thompson in Washington, also didn’t immediately return a phone message seeking comment.
The cases are Mostaed v. Crawford, 11-cv-00079, and Perkins v. Crawford, 11-cv-00082, U.S. District Court, Eastern District of Virginia (Richmond).
Stanford Receiver, Investors Sue PGA for $13 Million
PGA Tour Inc., the organizing body for professional golfers’ U.S. tournaments, was sued by indicted financier R. Allen Stanford’s court-appointed receiver and a group of his investors, seeking to recoup almost $13 million.
Ralph Janvey, the receiver, and the court-sanctioned investors’ committee said in a complaint filed yesterday in federal court in Dallas that the PGA Tour received tainted money generated by an alleged $7 billion fraud scheme led by Stanford.
Stanford has repeatedly denied civil and criminal allegations that he sold certificates of deposit through Antigua-based Stanford International Bank Ltd. by misleading speculators about the nature of the CDs and their regulatory oversight.
“PGA did not provide reasonably equivalent value for the transfers of CD proceeds to it and cannot establish that it is a good faith transferee,” Janvey and the committee said in yesterday’s filing.
James Cramer, a spokesman for the Ponte Vedra Beach, Florida-based PGA Tour, declined to comment.
The case is Ralph Janvey v. PGA Tour Inc., 11-cv-00226, U.S. District Court, Northern District of Texas (Dallas).
The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston).
Telenor Petitions Court for Injunction on VimpelCom Shares
Telenor ASA, the biggest Nordic phone company, asked a London court to help it maintain its position in VimpelCom Ltd. if the Russian company’s planned merger with Wind Telecom SpA goes forward.
Telenor asked the Commercial Court in London for an injunction requiring VimpelCom to issue it shares alongside those issued to Wind, the Norwegian company said in a statement. The shares would be placed in escrow and only issued to Telenor if it wins an arbitration action it’s pursuing.
VimpelCom shareholders, including Telenor, which owns 39.58 percent of Russia’s second-largest mobile carrier, are entitled under the shareholder agreement to buy more stock to maintain their percentage stake if shares are issued to others. Telenor started the arbitration process on Jan. 28 after learning that VimpelCom planned to classify the Wind merger as a related party transaction, circumventing this requirement for a so-called pre-emptive share issue.
“Telenor believes this proposal is a fair and equitable solution that will preserve the status quo while the arbitration is ongoing and ensure that no party will be unfairly disadvantaged if the Wind Telecom acquisition is completed as presently proposed,” Telenor spokesman Dag Melgaard said in the statement.
Elena Prokhorova, a spokeswoman for VimpelCom, said she couldn’t immediately respond to a request for comment.
Mutualite Francaise Sues Servier Over Mediator Drug
Mutualite Francaise, a group of private health insurers, sued Les Laboratoires Servier, claiming that the company hid the risks associated with the Mediator diabetes drug.
The group, which represents 600 French insurers, filed a complaint against Servier for alleged fraud in the “marketing of Mediator, whose true pharmacological nature was revealed by the Inspector General of social affairs’ report,” the Mutualite Francaise said in an e-mailed statement yesterday.
The report published last month by the Inspection Generale des Affaires Sociales, or IGAS, found Servier pressured officials to keep Mediator on the market even after repeated alerts on its risks. The treatment, sold in France from 1976 until 2009, may have caused between 500 and 2,000 deaths, according to French regulators.
The action taken by the Mutualite Francaise is “based on the IGAS report” and Servier’s comments weren’t taken into account for that report, Servier spokeswoman Lucy Vincent said in a telephone interview yesterday. It’s “based on assumptions and not on a fair and just hearing of the situation which will come in the Court of Justice.”
Servier, a closely held drugmaker based in Neuilly-sur-Seine, outside of Paris, said in a Jan. 15 statement the company was “surprised by the responsibilities the IGAS report appears to put on Mediator, which don’t seem to correspond to reality.”
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WikiLeaks’ Assange Faces Secret Swedish Rape Trial
WikiLeaks founder Julian Assange may be unfairly tried in secret in Sweden if extradited from Britain to face questioning over sexual-assault allegations, his lawyer told a U.K. judge.
Assange’s right to “open justice” will be breached if he is subjected to a closed trial in Sweden -- typical for rape cases in the country -- his lawyer, Geoffrey Robertson, told a judge in London yesterday. He said there had been a “media campaign” against Assange in Sweden.
“It is likely that he will be tried secretly in Sweden, behind closed doors,” Robertson said. “You cannot have a fair trial when the press and public are excluded from the court, and the Swedish custom is to exclude them.”
The alleged sexual misconduct, which two Swedish women claim took place in August, was revealed as WikiLeaks drew condemnation for posting thousands of classified U.S. military and diplomatic communications. Assange’s lawyers are fighting the extradition and claim the case may be politically motivated.
WikiLeaks, which has two servers housed in a mountain cavity in Stockholm, is an organization that publishes secret government and corporate documents online. Prosecutors say the rape case has nothing to do with the website’s activities.
Robertson also said the rape claim wouldn’t have qualified as rape in other European countries. In court papers, Robertson said Assange can only be extradited if the alleged acts are also illegal in the U.K.
U.K. prosecutors, who are arguing on behalf of Sweden, told the judge yesterday that Swedish prosecutor Marianne Ny, who issued the arrest warrant for Assange, was within her authority, rejecting one of Robertson’s defenses. The warrant prompted Assange to turn himself in to London police in December.
District Judge Howard Riddle at Woolwich Crown Court may give his decision as soon as today.
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Primary Global’s James Fleishman Pleads Not Guilty
James Fleishman, a former Primary Global Research LLC sales manager, denied federal charges that he helped investors obtain inside information from consultants working for the expert-networking firm.
“He pled not guilty,” Ellen Davis, a spokeswoman for the U.S. Attorney in Manhattan, said in a telephone interview after the court hearing yesterday. Ethan Balogh, an attorney for Fleishman, didn’t respond to an e-mail and a phone message seeking comment.
Fleishman, who was indicted last week for conspiracy to commit securities fraud and conspiracy to commit wire fraud, is among eight people who worked for Mountain View, California-based Primary Global to have been charged by prosecutors with insider trading. Two have pleaded guilty and are cooperating with prosecutors.
Primary Global connects investors with employees of public companies who purportedly provide them with insight into specific markets. Prosecutors have alleged that the company insiders were paid to provide material nonpublic information to the investors.
Fleishman, who faces related civil claims by the U.S. Securities and Exchange Commission, has been free on bail since his December arrest. The SEC said tips from Primary Global insiders helped investors reap $5.9 million in illegal profits.
The case is U.S. v. Fleishman, 11-cr-32, U.S. District Court, Southern District of New York (Manhattan).
McKinsey’s Kumar Seeks to Block Rajaratnam’s Document Request
Anil Kumar, a former partner at McKinsey & Co., asked a judge to block a subpoena by Galleon Group LLC co-founder Raj Rajaratnam, who goes on trial this month on insider trading charges.
Kumar, who pleaded guilty and will be a government witness, told a judge that Rajaratnam should not be allowed to subpoena his tax returns and brokerage account records. The Galleon co-founder plans to use the documents to attack his credibility, Kumar says.
Rajaratnam, who denies wrongdoing, goes on trial on Feb. 28 in Manhattan federal court for insider trading. His spokesman, Jim McCarthy, declined to comment on Kumar’s request. Last week, another possible government witness, Richard Choo-Beng Lee, also sought to block a Rajaratnam subpoena.
U.S. District Judge Richard Holwell will resolve the dispute.
Kumar said in his court filing that McKinsey can provide many of the thousands of documents that Rajaratnam is seeking.
The case is U.S. v. Rajaratnam, 09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).
Russian Businessman Suing Kerimov May Seek Asylum in U.S.
A Russian businessman who is seeking $2 billion in damages from billionaire Suleiman Kerimov may apply for political asylum in the U.S., his attorney said.
Ashot Egiazaryan, a lawmaker who left Moscow for the U.S. in mid-2009, faces prosecution in Russia for embezzlement after being stripped of parliamentary immunity at the end of last year. Egiazaryan denies the accusations and is “considering” a bid for political asylum, his London-based lawyer, Drew Holiner, said yesterday in a phone interview.
A Cypriot court in September barred Cyprus-registered entities controlled by Kerimov from any transactions using shares in mining company OAO Polyus Gold and fertilizer maker OAO Uralkali until the dispute with Egiazaryan is resolved. Egiazaryan claims Kerimov forced him in 2009 to relinquish a 25.5 percent stake in the landmark Moskva Hotel near Moscow’s Red Square in collusion with then-Moscow Mayor Yury Luzhkov.
Egiazaryan filed a request for $2 billion in damages at the London Court of International Arbitration on Sept. 13, according to court documents in the Cyprus case.
“He was forced out of the hotel project through threats of prosecution and violence,” Holiner said.
Kerimov’s office declined to comment on Egiazaryan’s allegations. No one answered the phone at Luzkhov’s office at the International University in Moscow, where he became dean of the faculty of city management after being fired as mayor in September.
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On the Docket
Deutsche Bank Faces First German Top Court Swap Case
A fight over an interest-rate swap sold by Deutsche Bank AG has reached Germany’s top court which is set to issue its first judgment on the matter, one that may influence similar cases throughout Europe.
The Federal Court of Justice in Karlsruhe, Germany’s top civil tribunal, will hear a claim today by Ille Papier Service GmbH seeking 541,074 euros ($734,000) in damages from the bank. The Altenstadt, Germany-based company says the bank didn’t properly inform it about risks of an interest-rate swap.
“The crucial issue is that Deutsche Bank was the adviser to its customer and, at the time, the seller of the swap,” said Lars Kloehn, a law professor at Germany’s Marburg University, adding the court may take the opportunity to address the broader issue. In one role, the bank “must guard the customer’s interests and in the other role its own interests. It will be very exciting to see what the top court will make out of this.”
Deutsche Bank, Germany’s biggest lender, won a majority of decisions on the swaps issue in German state appeals courts while a minority held the lender violated its duties to customers when selling the swaps and ruled, at least in part, against the bank. The Federal Court of Justice can use the case it hears now to give some guidance to the lower courts.
Today’s case is BGH, XI ZR 33/10.
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