© Spencer Platt/GettyTraders on the New York Stock Exchange
If Sony is smart, it will delay release of the film until it can replicate some real-life courtroom drama from the epic battle that is likely to ensue from a class-action lawsuit in the matter that was filed last month on April 18 in Federal Court in the Southern District of New York.
The plaintiff in the lawsuit has elicited snickers from the moneyed crowd on Wall Street. It was filed on behalf of the city of Providence, Rhode Island, an area founded in 1636 that became one of the original thirteen colonies, and is not typically known for hobnobbing with the hedge funds of Greenwich, Connecticut or the Wall Street suspender crowd in New York.
A more careful look at the lawsuit, however, is sending shivers across Wall Street. The law firm that made the filing is Robbins Geller Rudman & Dowd LLP - a firm staffed with former prosecutors from the U.S. Justice Department and a legal powerhouse whose bread and butter is securities fraud.
Robbins Geller played a pivotal role in the securities class action against Enron, securing a $7.3 billion recovery; $5.7 billion in the Visa/MasterCard antitrust class action; $2.46 billlion in a Household International class action judgment; $925 million in the UnitedHealth Group stock option backdating case; and $657 million in a securities action involving WorldCom - to name just a few.
The firm's biggest threat to Wall Street is that it actually knows how to define securities fraud to a court, what to ask for in discovery, and it prepares its cases on the basis that they may go to trial - producing deep archives of smoking gun documents.
The complaint by Robbins Geller in the current high frequency matter names every major stock exchange in the U.S. (including the New York Stock Exchange, Nasdaq, Bats, Direct Edge, etc.) as well as major Wall Street firms (Goldman Sachs, Citigroup, JPMorgan, Bank of America, etc.) along with high frequency trading firms and hedge funds. The lawsuit actually references page numbers in the Michael Lewis book, "Flash Boys." One section reads:
"Notwithstanding their legal obligations and duties to provide for orderly and honest trading and to match the bids and orders placed on behalf of investors at the best available price, the Exchange Defendants and those Defendants that controlled alternate trading venues demanded and received substantial kickback payments in exchange for providing the HFT [high frequency trading] Defendants access to material trading data via preferred access to exchange floors and/or through proprietary trading products. Likewise, in exchange for kickback payments, the Brokerage Firm Defendants provided access to their customers' bids and offers, and directed their customers' trades to stock exchanges and alternate trading venues that the Brokerage Firm Defendants knew had been rigged and were subject to informational asymmetries as a result of Defendants' scheme and wrongful course of business, all of which operated to the detriment of Plaintiff and the Class.Filing a Federal lawsuit based on allegations in a book might appear at first blush a bit frivolous. But the Robbins Geller law firm is dead serious about what it does and Michael Lewis is not just any book author.
"Defendants' predatory practices included the Brokerage Firm Defendants selling 'special access' to material data, including orders made by Plaintiff and the Plaintiff Class so that the HFT Defendants could then trade against them using the informational asymmetries and other market manipulation detailed herein. Flash Boys at 168-72 and 242-43." (See High Frequency Trading Lawsuit Filed by City of Providence, Rhode Island (Full Text) )
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