In re Allergan, Inc. Proxy Violation Derivatives Litigation (C.D. Cal.)
On June 28, 2017, E&C filed a securities class action captioned Timber Hill LLC v. Pershing Square Capital Management, L.P., et al., Case No. 2:17-cv-04776 DOC (KESx), on behalf of persons or entities that sold Allergan, Inc. (“Allergan”) call options, purchased Allergan put options and/or sold Allergan equity forward contracts from February 25, 2014 through April 21, 2014, inclusive. The Plaintiff alleged that Defendants violated the federal securities laws by engaging in an illicit insider trading and front-running scheme that artificially deflated the value of Allergan common stock, thereby negatively impacting the options and equity forwards traded by Plaintiff and other members of the class.
The Timber Hill action was filed as a related case to In re Allergan, Inc. Proxy Violation Securities Litigation, Case No. 8:14-cv-2004 DOC (KESx) (the “Common Stock Class Action”). In that case, the Court certified a class consisting of: “All persons who sold Allergan, Inc. common stock contemporaneously with purchases of Allergan, Inc. common stock made or caused by Defendants during the period February 25, 2014 through April 21, 2014, inclusive and were damaged thereby.” In so doing, the Court concluded that investors in Allergan derivatives would have an opportunity to intervene and assert their own claims.
On June 5, 2017, the Court issued an Order denying the Common Stock Plaintiffs’ motion to approve the class notice, recognizing that traders in Allergan derivatives were not included in the class. On June 12, 2017, the Common Stock Plaintiffs filed a motion seeking the Court’s approval of a modified Notice and Summary Notice of Pendency of Class Action.
The parties in the Common Stock Class Action engaged the Hon. Layn R. Phillips, a former United States District Court Judge and highly experienced settlement mediator to assist them in exploring a potential negotiated resolution of the claims asserted against Defendants. Timber Hill also participated in the settlement negotiations and mediation.
On December 28, 2018, following multiple in-person and telephonic sessions with Judge Phillips, Timber Hill and Defendants entered into a binding memorandum of understanding to settle the action for $40 million. A hearing was held on January 16, 2018, after which the settling parties agreed to the settlement.
On August 13, 2018, Timber Hill filed a motion for preliminary approval of the class action settlement. On March 19, 2018, the Court entered an order granting preliminary approval, approving the form and manner of notice, and setting a date for hearing on final approval of the settlement. The Court subsequently issued its final order and judgment approving the settlement on August 13, 2018. Timber Hill filed a motion for distribution of settlement proceeds on December 12, 2019, which the Court granted on January 15, 2020.
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