In a 90-page opinion today, Judge Gardephe largely denied Novartis’ motion to dismiss a government suit alleging that it paid doctors kickbacks by hosting sham speaker events that allegedly “served as little more than upscale social outings designed to induce doctors to write prescriptions for Novartis drugs.”  He rejected Novartis’ argument that the complaint lacked sufficient detail under Rule 9(b):
Continue Reading Judge Gardephe Allows DOJ to Proceed With Suit Accusing Novartis of Using “Sham” Speaker Events to Pay Doctors Kickbacks

In an opinion today, Judge Gardephe dismissed a securities class action accusing Avon of defrauding its investors about its compliance with the FCPA.  Avon’s management received a whistleblower letter about bribes to Chinese officials, and Judge Gardephe found that it was not fraudulent for Avon to investigate the allegations before disclosing them:
Continue Reading Judge Gardephe Dismisses Class Action Accusing Avon of Hiding FCPA Exposure

In a brief filed Friday, a committee of the U.S. House of Representatives and a staffer, Brian Sutter, argued why they need not comply with an SEC subpoena relating to an investigation under the STOCK Act, which essentially extends the insider trading laws to Congress (see our prior post on the case here). Among other arguments, the committee and Mr. Sutter invoked sovereign immunity:
Continue Reading Congressional Committee Claims Sovereign Immunity From SEC Subpoena

In an opinion today, Judge Gardephe rejected Gibson Dunn’s attempt, in a civil defamation suit, to prevent disclosure of interview notes from witnesses whose statements were shared with the SEC. Judge Gardephe had earlier ruled that any privilege was waived, but Gibson Dunn argued that, apart from any waiver, the firm had its own internal interest in protecting the notes:
Continue Reading Judge Gardephe Orders Gibson Dunn to Produce Notes of Interviews of Witnesses Whose Statements It Revealed to SEC

On Tuesday, Judge Gardephe rejected an attempt by Reserve Management Company (RMCI), the investment adviser to the Reserve Primary Fund – the money market fund that “broke the buck” four years ago after Lehman’s bankruptcy – to send its malpractice action against Wilkie Farr & Gallagher LLP back to state court. The Court concluded that the exercise of federal jurisdiction over the action was appropriate because of the “strong federal interest in the federal securities law issues raised in RMCI’s malpractice complaint.” As we reported previously, in defending the SEC’s securities fraud action against them, RMCI and two of its principals have claimed that they relied on Wilkie’s advice in communicating with the public on September 15 and 16, 2008 and considering a credit support agreement that would preserve the Primary Fund’s $1.00 NAV. RMCI’s malpractice action against Wilkie asserts that Wilkie provided incompetent advice to RMCI that led to it being sued by the SEC and private parties. It also alleges that Wilkie’s simultaneous representation of RMCI and the Reserve Primary Fund presented a conflict of interest that the firm never disclosed to RMCI and that has caused significant prejudice to RMCI. RMCI claims that Wilkie failed to advise RMCI properly about including an indemnification and advancement of attorney fees provision in the management agreement between RMCI and the Reserve Primary Fund.
Continue Reading Judge Gardephe Won’t Send Reserve Fund Malpractice Suit Back to State Court

Trial in the SEC’s securities fraud action against several entities and individuals who managed the Reserve Primary Fund – the money market fund that “broke the buck” four years ago after Lehman Brothers announced its bankruptcy – is slated to begin on October 1, 2012. Earlier this week, in anticipation of the looming trial date, Judge Paul Gardephe issued a series of evidentiary rulings. They were a mixed bag for the parties. On the one hand, Judge Gardephe rejected the SEC’s attempt to prevent the Reserve Fund defendants from pursuing an advice of counsel defense. On the other, he ruled that two of defendants’ expert witnesses could not testify at trial. These rulings could have a substantial effect on the trial or on any settlement negotiations between the parties.
Continue Reading Judge Gardephe Allows Reserve Fund Defendants to Proceed with Advice of Counsel Defense