PHILADELPHIA – A federal court judge approved both a lead plaintiff and his selection of lead counsel in a class action lawsuit alleging stock options for a large pharmaceutical company were manipulated illegally.
On Tuesday, Judge Gerald S. McHugh of the U.S. District Court for the Eastern District of Pennsylvania granted a motion from plaintiff Stephen Rabin seeking to name himself as lead plaintiff and to appoint Lawrence Deutsch and Robin Switzenbaum of Berger & Montague (along with the firm of Bragar Eagel and Squire) as lead counsel for this market manipulation case.
Rabin initially filed the litigation against “John Doe Market Makers” on Feb. 5, alleging the defendant market makers illegally pre-arranged options trades for Pfizer stock on the Philadelphia Stock Exchange, during a class period of Feb. 6, 2010 to the present.
The original version of the lawsuit didn’t name specific market makers as defendants due to an inability to ascertain their identities from public sources, but McHugh granted a motion on for expedited discovery on April 2.
This motion allowed Rabin’s counsel to identify 20 defendants from NASDAQ records – an action usually not permitted until motions to dismiss are resolved, per the Private Securities Litigation Act of 1994, but nonetheless granted.
An amended complaint filed on May 19 named the following businesses and individuals as defendants: NASDAQ OMX PHLX, NASDAQ OMX Group., Bedrock Trading, Bluefin Trading, Consolidated Trading ELM Trading, First Derivative Traders, HAP Trading, Keystone Trading Partners, Largo Trading, Summit Securities Group, Sumo Capital, Susquehanna International Group, SIG Holding, Michael Patrick Doherty, Alan Barry Goldberg, Robert Christopher Sack, Brian Patrick Sullivan, TSR Associates and V Trader-CG.
The suit alleges they “inflated the size of the options open interest pool for Pfizer stock by flooding the market with over a million additional option contracts one day before the ex-dividend date of (Pfizer) common stock.”
The result, the lawsuit claims, is that the bulk of dividend payments would go to market makers rather than to the plaintiffs. The lawsuit alleges the actions of market makers have damaged other investors by “hundreds of millions of dollars.”
The plaintiff seeks an unspecified amount of compensatory damages, punitive damages, injunctive relief, attorney’s fees, court costs and other equitable relief in this matter.
The plaintiffs are represented by Deutsch, Switzenbaum and Phyllis Parker of Berger & Montague and Deborah R. Gross of The Law Offices of Bernard M. Gross, all in Philadelphia; and Jeffrey Squire and Lawrence Eagel of Bragar Eagel & Squire, in New York, N.Y.
The defendants are represented by Stephen J. Kastenberg, Lisa B. Swaminathan and Paul Lantieri III of Ballard Spahr in Philadelphia; David C. Bohan and Hannah O. Koesterer of Kattin Muchin Rosenman in Chicago; Richard L. Scheff, K. Carrie Sarhangi and Sidney S. Liebesman of Montgomery McCracken Walker & Rhoads in Philadelphia; Amy J. Greer and Laura Hughes McNally of Morgan Lewis Bockius in New York City and Philadelphia, respectively; Kyle David Rettberg and Phillip L. Stern of Neal Gerber & Eisenberg in Chicago; and Lisa B. Wershaw and Michael D. Lipuma of the Law Offices of Michael Lipuma in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:15-cv-00551
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com