Gerald H. Silk
Securities Fraud · Investor-Side Litigation · Case Evaluation · Shareholder Rights
I really believe in these cases.
Seventeen of Twenty-Two
On December 17, 1997, HFS International merged with CUC International and the combined company took the name Cendant. On April 15, 1998, Cendant announced that it had found accounting irregularities in the former CUC businesses, and the stock lost close to half its value the next morning. The restatement filed on September 29, 1998 put numbers on it: income from continuing operations before taxes overstated by about 24 percent, earnings per share by 130 percent, and, as the complaint set out, operating income inflated by roughly $500 million across seventeen of the twenty-two operating units the old CUC had run. Gerald H. Silk, then in his first years at Bernstein Litowitz Berger & Grossmann after nearly three years defending securities cases at Weil, Gotshal & Manges, led the class action with Max W. Berger for the lead plaintiffs, the California Public Employees' Retirement System, the New York State Common Retirement Fund and the New York City pension funds. The injured investors were not one bloc: they held common stock, including shares issued in the merger, stock options, the 5 percent senior notes due 2003, the 4 percent convertible senior notes due 2003 and the 3 percent convertible subordinated notes due 2002, each with its own rights and its own damages, and the settlement had to fit all of them. Cendant paid about $2.85 billion and Ernst & Young, its auditor, $335 million, about $3.2 billion in all, approved by Judge William H. Walls of the District of New Jersey in 2000; on December 29, 2007, Cendant and the former HFS officers resolved their own claims against Ernst & Young for $298.5 million more, half of it for the class.
A Zero-Premium Deal
On November 1, 2006, CVS proposed to acquire Caremark Rx for a little more than $20 billion in stock at no premium to Caremark's shareholders, with a $675 million fee owed to CVS if the deal fell through, and on December 18 Express Scripts made an offer that it valued at $5 billion more. Three days later Silk filed a class action in the Delaware Court of Chancery for the Louisiana Municipal Police Employees' Retirement System and Caremark's other shareholders, and led it with Salvatore J. Graziano. On February 23, 2007, Chancellor William B. Chandler III ordered the defendants to disclose what they had withheld, enjoined the shareholder vote until they did, and held that the shareholders were entitled to statutory appraisal rights. CVS added $7.50 a share in cash, more than $3.3 billion, and Caremark's shareholders approved the revised terms on March 16, 2007.
David Murdock owned 39.5 percent of Dole Food when he offered on June 10, 2013 to buy the rest for $12 a share and then agreed to $13.50, and the Court of Chancery later found that he and C. Michael Carter had breached their duties in the process. The shareholders that ruling did not reach were the ones who had sold on the open market before the deal closed, from January 2, 2013 through November 1, 2013, while the statements about Dole's business held its price down. Silk and Katherine M. Sinderson led their case in the District of Delaware for Proxima Capital Master Fund, the San Antonio Fire and Police Pension Fund, the Fire and Police Health Care Fund of San Antonio and the Arbitrage Fund, with Entwistle & Cappucci as co-counsel; the defendants and third parties produced more than 770,000 pages, and on July 18, 2017 the court approved a $74 million cash settlement, with eligibility and allocation tied to the dates and prices of the sales. In the General Motors case, brought for the New York State Teachers' Retirement System after the recalls of February 13 and 25, 2014, 779,000 vehicles and then 842,000 more for ignition switches that could shut off airbags, and after the company's count of crashes with airbags that had not deployed rose from twenty-two, five of them fatal, to thirty-one and thirteen deaths, Silk was among the lawyers who led the class; the fund was appointed lead plaintiff on October 24, 2014, the consolidated complaint was filed on January 15, 2015, the parties agreed in September 2015, and Judge Linda V. Parker of the Eastern District of Michigan approved the $300 million settlement on May 19, 2016, an approval the Sixth Circuit affirmed on November 27, 2017.
Thirty-Five Clients
Allianz Global Investors sold its Structured Alpha funds to about 114 institutional investors, pension funds for teachers, clergy, bus drivers and engineers among them, as a market-neutral options strategy with protection on the downside; the investors put in roughly $11 billion and paid more than $550 million in fees. In March 2020 the funds lost more than $5 billion, and the Securities and Exchange Commission later found that the managers had altered the risk reports they sent investors, in one instance turning a 42.15 percent loss into 4.15 percent by deleting a digit. Bernstein Litowitz filed for the Arkansas Teacher Retirement System in July 2020, Judge Katherine Polk Failla denied Allianz's motion to dismiss on September 30, 2021, and between February and April 2022 the firm, with Silk on the team, recovered nearly $2 billion for thirty-five public funds and other large investors in direct, client-by-client actions, Arkansas's $643 million among them; on May 17, 2022 the manager pleaded guilty and agreed to pay more than $1 billion to the Commission within more than $5 billion in total restitution. Silk's structured-finance work before that ran to the Cambridge Place Investment Management claims in the Massachusetts courts against sixteen banks and forty-four issuers of residential mortgage-backed securities, resolved with every bank but one, and to a New York action for Dexia entities alleging that Deutsche Bank had misrepresented the underwriting and quality of more than $1 billion of such securities.
Before a Claim Has a Caption
Most securities matters reach him as a loss on a spreadsheet with no explanation attached, and his job is to decide what it is. He co-leads the firm's case development and client advisory group, which monitors the portfolios of more than 350 institutional investors and evaluates each event against the disclosure record, the governing law, the transaction history, the available forums and the remedies, and which the firm extended in 2026 with added United Kingdom and Ireland coverage for clients whose losses cross borders; he is a member of the firm's Executive Committee and chair of its board. He studied economics at the Wharton School of the University of Pennsylvania, graduating in 1991, spent six months in Jerusalem working for the Ministry of Justice and six months waiting tables in Vail and skiing every day, took his law degree cum laude from Brooklyn Law School in 1995, and clerked for Judge Steven M. Gold in the Eastern District of New York before the years at Weil. In 2014 he gave three reasons for changing sides: he had always identified with the victim, which he traced in part to his father, a plaintiffs' lawyer; he preferred a fee that is paid only if the client recovers; and he preferred crafting and strategizing on offense to delaying on defense.
