City of Cambridge Retirement System v. Altisource Asset Management Corporation

Hagens Berman was appointed lead counsel in this institutional investor lawsuit brought on behalf of purchasers of Altisource Asset Management Corporation (AAMC).

AAMC preys on financially vulnerable mortgage holders encouraging them to default on loans so that a related AAMC entity can purchase properties at fire sale prices. Once a distressed property was inside the AAMC umbrella, a series of AAMC-related entities would then own the loan, service the loan and service the property itself. Those related entities included Ocwen Financial and Altisource Portfolio Solutions. All entities were founded by William Erbey. AAMC’s largest client is, in fact, another related entity, Altisource Residential.

The complaint alleges that AAMC misrepresented or outright concealed its relationship with these companies and the extent to which the interconnected entities engaged in conflicted transactions with themselves. On Dec. 22, 2014, AAMC announced that as part of the terms of a settlement that Ocwen had reached with the New York Department of Financial Services (the “New York DFS”), Erbey would step down as chairman of AAMC’s board and from his positions at each of the related companies. As part of its investigation, the New York DFS indicated that it had uncovered “serious conflicts of interest between the Related Companies.” This triggered a landslide in AAMC’s share price – it declined more than 23 percent per share in late 2014 before tumbling another 33 percent in January 2015 on news that the California Department of Business Oversight was seeking to revoke Ocwen’s license to operate in the state.

Estimates of class-wide damages are in the hundreds of millions of dollars. The firm recently filed the consolidated complaint and motions to dismiss are pending before the U.S. District Court for the District of the Virgin Islands.

HB Secures Approval of Distribution of up to $1.4 Billion in In re Tremont Securities Law, State Law and Insurance Litigation 

Hagens Berman is co-lead counsel for the state law class action and derivative actions representing all purchasers of partnership interests in Tremont Funds. These funds invested with Bernard Madoff. The lawsuit alleged Tremont turned over virtually all capital invested in its Rye Funds to Madoff, amounting to around $3.1 billion. While relinquishing management to Madoff, Tremont continued to receive management fees from clients. The company provided account statements and other documentation that made it appear as though Tremont had active oversight of clients’ capital, when in reality they were pawns in Madoff’s Ponzi scheme.

In 2011, the judge hearing the case granted final approval to a $100 million class settlement. The class settlement allocation was besieged by objectors and spent years on appeal. In June, the court approved distribution of the class settlement. In parallel, class and derivative counsel worked with scores of interested parties on allocating a derivative settlement with the Madoff bankruptcy trustee. After nearly two years of negotiations and mediation, on Sept. 14, 2015 the court granted final approval of the plan of allocation and distribution of the funds which markets estimate could yield investors as much as $1.446 billion.

Treasuries Antitrust

The firm filed a case against several financial services companies on behalf of two institutional investors, alleging collusive manipulation of the market for treasury bills, notes, bonds and other derivative financial products.

Defendants in the case are Merrill Lynch, Pierce, Fenner & Smith Inc., Morgan Stanley & Co., BNP Paribas Securities Corp., Barclays Captial Inc. and other financial services corporations. The complaint alleges restraint of trade, price manipulation, principal-agent liability, aiding and abetting liability and unjust enrichment. Defendants’ manipulative conduct occurred from Jan. 1, 2007 to Dec. 31, 2012, when the defendants used their position as “primary dealers” in the market for U.S. treasuries to subvert market operations by manipulating U.S. Treasury Department auctions and treasuries prices. The cases have been consolidated and the court will consider appointing a lead plaintiff later this year.  

ChinaMedia

Hagens Berman represents investors in a case against China MediaExpress, which purported to be the owner of a network of advertising terminals on buses throughout China. The case alleges that the company and its auditor (Deloitte Touche Tohmatsu) participated in an accounting fraud that ultimately led to the demise of the company. In early 2014, the court entered a default judgment in the amount of $535 million and certified a proposed class against China Media Express Holdings Inc. The case will proceed separately against Deloitte Touche Tohmatsu.

On May 6, 2015 Hagens Berman obtained a $12 million settlement from Deloitte Touche Tohmatsu, one of the largest settlements against an auditor in a Chinese “reverse merger” case which is now awaiting final approval from the court.