Ostrager Chong Flaherty & Broitman P.C.
Securities Litigation
Our firm has more than 30 years of experience representing corporations and their shareholders in bringing enforcement actions under Section 16(b) of the Securities and Exchange Act of 1934 to recover short-swing profits. During this period, we have advanced the jurisprudence in this area of law in cases litigated in district and circuit courts throughout the country. On behalf of corporations, we have obtained disgorgement of substantial short-swing profits realized by their insiders.
Section 16(b) requires corporate insiders (officers directors, and shareholders with ownership of more than 10% of any class of a company’s stock) to disgorge short-swing profits realized in trading the company’s stock.
In enacting Section 16(b), Congress recognized that corporate insiders may have access to information about their corporations not available to the rest of the investing public and sought to curb the evils of insider trading by taking the profits out of a class of transactions in which the possibility of abuse was believed to be intolerably great. Congress provided for enforcement of the statute by the corporations or their shareholders when corporations fail to pursue statutory remedies.
Company: Software Company
Case Name: Qlik Technologies, Inc., v. Cadian Capital Management, LP, 906 F.3d 215 (2d Cir. 2018).
Results: OCFB initiated a derivative action against an investment group on behalf of a software company (Qlik). The District Court granted defendants’ motion to dismiss the case for lack of subject matter jurisdiction when representative plaintiff lost standing and denied OCFB’s cross motion to allow Qlik to be substituted as a plaintiff. On appeal, the Second Circuit vacated the District Court’s dismissal of the action and remanded the case for substitution of Qlik and further proceedings. The parties settled the case shortly thereafter.
Company: Aerostructures Manufacturer
Case Name: Roth v. Scopia Capital Mgmt. LP, 2017 U.S. Dist. LEXIS 118963, 2017 WL 3242326 (S.D.N.Y. 2017)
Results: OCFB initiated action against an investment group on behalf of Spirit AeroSytems Holdings, Inc. In a motion to dismiss the defendants challenged the representative plaintiff’s standing to pursue a derivative claim under Section 16(b). After their motion was denied, the parties engaged in discovery proceedings and concluded a settlement.
Company: Specialty Chemistry and Data Company
Case Name: Flotek Industries, Inc. v. Gates Capital Management, LP, 16 Civ. 3584 – S.D.Tex.
Results: OCFB identified a Section 16(b) claim on behalf of Flotek Industries against an investment group. Thereafter, the company filed an action for disgorgement of short-swing profits and obtained a $15.48 million settlement.
Company: Pharmaceutical Company
Case Name: Roth v. RA Capital Management, LLC, 15 Civ. 4928 (WHP) – S.D.N.Y.
Results: OCFB initiated action against an investment group on behalf of a pharmaceutical company (Acadia Pharmaceuticals Inc.) and obtained a $15.75 million settlement.
Company: Pharmaceutical Company
Case Name: Donoghue v. Achillion Pharmaceuticals, Inc., 14 Civ. 8353 (PAC) – S.D.N.Y.
Results: OCFB commenced an action against an investment group (RA Capital Healthcare Fund, LP et al.) on behalf of a pharmaceutical company (Achillion) and obtained a $10.4 million settlement.
Company: Private Vacation Ownership Company
Case Name: Klein v. Central Florida Investments. Inc., 642 F. Supp. 2d 1374 (S.D. Fla. 2009).
Results: OCFB initiated a derivative action against an investment group on behalf of a private vacation ownership company (Bluegreen Corp.). OCFB moved for partial summary judgment for disgorgement of profits realized by defendants. The District Court rejected defendants’ assertion of defense from liability under the unorthodox transaction doctrine and granted partial summary judgment in our client’s favor. A favorable settlement for the company was thereafter concluded.
Company: Pharmaceutical Company
Case Name: Klein ex rel. SICOR Inc. v. Salvi, 02 Civ. 1862 (AKH) – S.D.N.Y.
Results: OCFB initiated action against an investment group (Rakepoll Finance, N.V. et al) on behalf of a pharmaceutical company (SICOR). The defendants filed a motion for summary judgment on the ground that they were except for liability under SEC Rule 16b-3(a) which OCFB opposed. The parties settled before the motion was heard and OCFB obtained a $10.75 million settlement.
Company: Oil and natural gas exploration and production Company
Case Name: Schaffer ex rel. Triton Energy Corp. v. Soros, 1994 U.S. Dist. LEXIS 15508, 1994 WL 592891 (S.D.N.Y. 1994)
Results: OCFB commenced a derivative action on behalf of Triton against a group of investment funds. The District Court denied defendants’ motion for summary judgment and granted plaintiff partial summary judgment on a cross-motion. The parties subsequently settled the case.