On May 24, 2016, the Supreme Court of Delaware issued an opinion in the case Citigroup Inc., et al. v. AHW Investment Partnership, MFS, Inc., which considered the issue of whether the claims of a plaintiff against a corporate defendant, alleging damages based on the plaintiff’s continuing to hold the corporation’s stock in reliance upon the defendant’s misstatements, are properly brought as direct or derivative claims. Peiffer Wolf Carr & Kane attorneys Alan L. Rosca and Colin R. Ray prepared an amicus curiae brief on behalf of the Public Investors Arbitration Bar Association (“PIABA”), arguing that such claims are properly considered as direct claims, rather than derivative claims.
The position advocated by the Peiffer Wolf Carr & Kane attorneys would allow investors to seek compensation from a corporation in such a scenario without having to face additional roadblocks.
Amicus briefs, often known as “friend of the court” briefs, are filed with the permission of courts to aid the court in evaluating cases.
The Delaware Supreme Court agreed with the pro-investor position advocated by the Peiffer Wolf Carr & Kane attorneys Alan Rosca and Colin Ray, and held that such claims belong to the security holder, rather than the issuer. The case appeared before the court as a Certification of Question of Law from the United States Court of Appeals for the Second Circuit.
“We are pleased with the Court’s ruling, which will benefit all investors who have relied upon an issuer’s misstatements to their detriment,” said Alan Rosca, whose practice is focused on representing investors who suffer losses as a result of misconduct or fraud.
The Court’s full opinion is located on its website at http://www.courts.delaware.gov/supreme. The case number is 641, 2015, and the Second Circuit case numbers are 13-448-cv(L) and 13-4504-cv(XAP). The opinion can be accessed directly at http://courts.delaware.gov/Opinions/Download.aspx?id=241290.