I can’t help but get excited and announce when one of my former colleagues has a big victory. Kimberly Justice, was in the Philadelphia Field Office when I was Chief, but left when the Division announced it was closing four field offices, including ours. Kim went to Kessler Topaz Meltzer & Check, LLP where she handles plaintiff’s antitrust and securities class actions.
Last week, Kim tried a securities class action and the jury found the defendant, Derek Palaschuk, the former CFO of Longtop Financial Technologies Limited, a Chinese company listed on the NY Stock Exchange liable to plaintiffs and the class. The jury found that defendant Palaschuk was reckless in making untrue statements and omitting facts in the release of the Chinese technology company’s financial results. Ms. Justice’s victory was a rare trial verdict among securities class actions, which are almost always dismissed or settled.
Longtop had a $1.08 billion market value when the New York Stock Exchange halted trading in the company in May 2011. That is when outside auditors disclosed that the company the company’s financial reports were fraudulent. Evidence introduced at trial also showed that Longtop’s CEO confessed that the company had been a fraud since 2004. The stock ultimately was delisted and is now essentially worthless.
Ms. Justice represented a New York pension fund and others in this class action. The jury adopted the per share damages analysis presented at trial by plaintiffs’ expert. Total damages are expected to run higher than $500 million. The jury was asked to apportion liability amongst the CEO, the company and defendant Palaschuk and found 50%, 49% and 1% respectively. A Reuters article on the case can be found here.