Stephen Ehrenberg

White-Collar and Regulatory Matters

• RPM International Inc. in a disclosure and accounting fraud action filed by the U.S. Securities and Exchange Commission in the United States District Court for the District of Columbia in which the Staff challenged the timing of RPM’s accrual under ASC 450 for a contingent legal liability, which concluded in a favorable settlement.
• Fulton Financial Corporation in an SEC Enforcement investigation regarding earnings-per-share calculations in the company’s periodic filings with the Commission, which concluded in a favorable settlement.
• A global beverage company in an SEC enforcement investigation regarding disclosures of trends relating to the shipment of product in excess of demand, which concluded in a favorable settlement.
• A global asset manager and investment adviser in an SEC enforcement investigation regarding “ESG” branded mutual funds and separately managed account products.
• A major U.S. bank in an SEC enforcement investigation regarding the accuracy of the bank’s public statements and reports concerning its ESG policies and procedures.

• A global asset manager and investment adviser in an SEC enforcement investigation regarding impermissible cross-trades between client accounts, which concluded with no action taken against the firm.
• A global asset manager and investment adviser in an SEC enforcement investigation regarding purported “errors” in a quantitative investment model, which concluded with no action taken against the firm.
• A global asset manager and investment adviser in an SEC examination focusing on misreporting of fund yields, which concluded with no action taken against the firm.
• A global asset manager and investment adviser in an SEC enforcement investigation focusing on conflicts of interest in the private equity space, which concluded with no action taken against the firm.
• A global financial institution in an SEC investigation regarding potential differences in fees and disclosures associated with separately managed accounts offered by a registered investment adviser, and a product offered by an affiliate under a different regulatory regime.
• Moody’s Investor Services in a first-of-its-kind SEC action involving alleged violations of Rule 17g-8(b), promulgated under Dodd-Frank. The SEC alleged that Moody’s failed to clearly define its rating symbols and consistently apply those rating symbols to a class of complex structured finance instruments known as Combination Securities. Although Moody’s rated $2 billion worth of Combination Securities, it paid only a $1.25 million penalty to resolve these claims, with no disgorgement, no admission of wrongdoing, and no bar from rating any type of security as has been a feature of other significant SEC settlements with credit rating agencies.
• Moody’s Investors Service in a variety of matters arising out of the company’s role in the subprime securitization market, including:
• before several state attorneys general in connection with inquiries into practices for rating subprime instruments, including publicly announced investigations conducted by New York, California, Connecticut and Ohio;
• before the SEC in a much-publicized investigation—that ended with no charges being filed against the Company—of an alleged cover-up of an error in the model used for rating constant proportion debt obligations;
• in proceedings conducted in June 2010 by the Financial Crisis Inquiry Commission, which focused on Moody’s as the Commission’s “test case” for examination of the credit-rating industry; and
• in shareholder class action and derivative litigation concerning Moody’s ratings of mortgage-backed securities.
• A prominent high frequency market maker in foreign and domestic regulatory investigations.
• A former director of a major video game publisher in the successful resolution of internal and governmental investigations of alleged “backdating” of stock options. Obtained the settlement or dismissal of all related civil litigation, with S&C’s client not required to contribute anything to the settlement.
• A former CEO in connection with an investigation by the Securities and Exchange Commission and the U.S. Attorney’s Office for the Southern District of New York relating to the company’s practices involving grants of stock options. The SEC settled fraud charges against the company but did not bring charges against S&C’s client. Also successfully represented the former CEO in related shareholder derivative litigation brought in federal court in Texas. 

Civil Matters

• Lead counsel to The Bank of Nova Scotia, and Court appointed Liaison Counsel on behalf of all defendants, in twenty-six class actions consolidated in the Southern District of New York, alleging claims under the Commodity Exchange Act and the Sherman Antitrust Act for purported manipulation of gold and gold derivatives prices.  After full fact discovery, the court has granted preliminary approval of a settlement which is significantly more favorable than settlements by other defendants prior to fact discovery.
• Lead counsel to The Bank of Nova Scotia in six class actions consolidated in the Southern District of New York, alleging claims under the Commodity Exchange Act and the Sherman Antitrust Act for purported manipulation of silver and silver derivatives prices.
• Lead counsel to a global financial institution in five class actions consolidated in the Southern District of New York, alleging claims under the Commodity Exchange Act and the Sherman Antitrust Act for purported manipulation of platinum and palladium and platinum and palladium derivatives prices, which was dismissed at the District Court level and is currently pending appeal to the United States Court of Appeals for the Second Circuit.
• Louis Dreyfus Commodities LLC, one of the world’s largest cotton merchandisers, in a high profile class action asserting claims against LDC and its affiliates for alleged manipulation and monopolization of the cotton futures market during the turbulent summer of 2011.
• A broker in a week-long FINRA arbitration where the claimant sought over $1 million in disgorgement and compensatory damages for a variety of claims including churning, unsuitability, breach of fiduciary duty and negligence in personal securities accounts and accounts for which the claimant was a trustee. The Panel’s decision denied all claims with prejudice, and allocated all hearing fees to the claimant.