The market economy allows investors to reap the rewards of wise investment decisions - just as it penalizes investors who make bad decisions. Federal and state law protect investors from fraudulent schemes carried out by corporations, their officers and directors.

In the most common form of securities fraud, a company will try to unlawfully inflate the market price of the security by making false and misleading statements to securities analysts, brokers, and the investment community at large. For example, a company may seek to induce investors to purchase its securities by making overly optimistic statements in a prospectus or press release in which the company falsely portrays the success of a new product line. The company may also seek to do the same by announcing quarterly earnings or year-end earnings results that are artificially inflated.

Sometimes a company will conspire with its accountants and use improper accounting practices to misrepresent the company’s profitability. Eventually, the truth comes out, the stock price goes down, and the investors are hurt.

In bringing securities litigation, our goal is to act in the best interest of our clients and to maintain a close working relationship with them. We recognize the importance of carefully evaluating a securities case before recommending that a client expend the time and resources to file a complaint or seek lead plaintiff status. We investigate a potential case as thoroughly as possible, including obtaining the assistance of outside investment bankers, forensic accountants and investigators as necessary. We evaluate the risks of litigation as well as the likely range of outcomes. A client is entitled to an explanation of a case’s potential weaknesses as well as its strengths - and we provide that explanation. We understand that sometimes it is in the client’s best interests not to litigate, even where there is a meritorious claim.

Our firm has taken a prominent role in litigating class actions against many corporations for securities fraud, and has recovered hundreds of millions of dollars for defrauded investors. However, for some clients, particularly institutional investors, the success of a case is not always measured solely by the amount of money recovered. In shareholder derivative suits, for example, the goal is to enforce the rights of the corporation which has been harmed by the misconduct of its officers or directors. In these cases, we are prepared to aggressively seek appropriate changes in corporate governance, such as strengthening the independence of the board of directors, altering the responsibilities of the board’s key committees, and funding an independent oversight committee and independent compliance counsel.

Some examples of our securities cases include-

• In Felzen v. Andreas (Archer Daniels Midland Co. Derivative Litigation) (C.D. Ill.), plaintiffs alleged that the directors had breached their fiduciary obligations by causing the company to violate the federal antitrust laws. The settlement required the company to strengthen the independence of the board of directors, to revise the structure and responsibilities of key board committees, to create corporate governance and regulatory oversight committees, and to pay $8 million, part of which the company used to retain independent outside counsel to assist the oversight committees. SRK was co-lead counsel to plaintiffs.

• In In re Leslie Fay Securities Litigation (S.D.N.Y.), SRK was co-lead counsel in this complicated accounting fraud case that settled for $35 million.

• In In re U.S. Healthcare Securities Litigation (E.D. Pa), SRK was co-lead counsel in another accounting fraud case that settled for $23 million.