Steven B. Singer

The fraud the jury heard about began in the first quarter of 2001, when WorldCom’s senior management started moving a share of its line costs, the largest expense the company had, out of its operating accounts and into capital expenditure accounts, where they would not reduce reported earnings. On August 22, 2001, after Andersen said it would test the company’s capital expenditure process, $544 million of capitalized line costs was moved into ten new fixed-asset accounts. The practice ran until the company’s internal audit department found it in May 2002. On June 25, 2002 WorldCom announced that its 2001 and first-quarter 2002 financial statements did not comply with generally accepted accounting principles; it filed for bankruptcy on July 21, 2002, and when it emerged it restated its 2000 and 2001 results with about $76 billion in adjustments. In between, the company had sold $5 billion of bonds in May 2000 and $11.9 billion in May 2001, then the largest public debt offering in American history, with Salomon Smith Barney as a lead underwriter of both, and the investors alleged that a Citigroup unit had lent about $500 million to an entity Bernard Ebbers controlled months before Salomon was chosen to lead $17 billion of WorldCom bond sales, while its analyst Jack Grubman told the market to buy.

Judge Denise Cote appointed the state fund lead plaintiff in August 2002, partly lifted the discovery stay that November and ordered about a million pages produced, denied most of the motions to dismiss the Securities Act and Exchange Act claims on May 19, 2003 and certified a class of stock and bond purchasers from April 29, 1999 on October 24, 2003, while the individual investors who sued on their own ran their cases beside the class’s, a coordination Singer helped manage. Citigroup settled on May 11, 2004 for $2.575 billion. The other underwriters followed, more than $6 billion from the banks before trial, and twelve former directors agreed to pay $24.75 million of their own money. That left Andersen, and to find against it the jury would have to conclude that its audits had been highly unreasonable and that the fraud was known to it or obvious. The trial opened in March 2005; Cynthia Cooper, the internal auditor who had found the entries, came in by deposition, with the judge ruling on April 1 that the plaintiffs were entitled to tell the complete story of what prompted her audit. In the fifth week, with closing arguments set for the following week, Andersen agreed to pay $65 million. “Congratulations are in order,” Cote told the lawyers before she approved the agreement and excused the jury. Andersen owed a further $38 million under a contingent clause of that agreement and paid it in October 2012, bringing the investors’ recovery to about $6.15 billion. Cote wrote of the Citigroup settlement that it was “of historic proportions” and that “the magnitude of this settlement is attributable in significant part to Lead Counsel’s advocacy and energy.”

A Trial Date of October 22, 2012

Bank of America agreed to buy Merrill Lynch on September 15, 2008 and put the deal to its shareholders on December 5. The investors who later sued, led by the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System, the Teacher Retirement System of Texas, the Dutch pension fund Stichting Pensioenfonds Zorg en Welzijn and Sweden’s Fjärde AP-Fonden, alleged that the proxy statement concealed more than $15 billion of losses Merrill had run up in October and November, and a $2 billion goodwill charge, and a side agreement that let Merrill pay up to $5.8 billion in bonuses before the merger closed; that after the vote the bank’s management considered invoking the material adverse change clause and was told by the Treasury that it would be removed if it did; and that the bank had taken $20 billion in new capital and government protection on $118 billion of assets to close on January 1, 2009. The bank disclosed Merrill’s fourth-quarter loss of more than $21 billion and the assistance in mid-January 2009, and on January 21 it was reported that $3.6 billion in bonuses had gone out before the closing. The stock went from $12.99 to a low of $5.10, about $50 billion of market value.

Singer led the case for the five funds. Judge P. Kevin Castel sustained the proxy, offering and control-person claims on August 27, 2010, holding that shareholders had a direct claim under Section 14(a) measured by the fall in the share price and requiring only negligence; on July 29, 2011 he sustained the claims over Merrill’s fourth-quarter condition, finding scienter adequately alleged; he certified the class on February 6, 2012; and the plaintiffs moved for partial summary judgment on June 3, 2012, with trial set for October 22. The parties told the judge at a status conference on September 28, 2012 that they had settled: $2.425 billion in cash, and until January 1, 2015 majority voting in director elections, a board committee policy on acquisitions, an independent compensation committee with independent consultants, an annual say-on-pay vote and annual disclosure of any director out of compliance with the stock ownership guidelines. Castel held the fairness hearing on April 5, 2013 and entered judgment on April 8, and the Second Circuit later affirmed the approval over objections to the notice, the allocation and the administration of the fund. The money went out to claimants in four distributions between June 2015 and September 2021.

Two Million Accounts

Singer left Bernstein Litowitz after more than twenty years as a senior partner and a member of its management committee and in January 2017 opened Saxena White’s New York office as its Director of Litigation. The Wells Fargo derivative case was already on file. Bank employees under sales quotas and threats of termination had opened more than two million deposit and credit card accounts since at least 2011 that customers had never asked for, and the City of Birmingham Retirement and Relief System had sued the directors and officers on the bank’s behalf in San Francisco on October 12, 2016. Judge Jon S. Tigar appointed Birmingham and the Fire and Police Pension Association of Colorado co-lead plaintiffs on January 12, 2017, with Saxena White and Lieff Cabraser as co-lead counsel. The consolidated complaint of February 24, 2017 set out what had reached the board: letters saying the “Gr-Eight” cross-selling initiative had produced a high-pressure sales culture, complaints through the bank’s EthicsLine, a whistleblower’s suit over fake accounts, wrongful-termination suits, regulators’ inquiries, a Los Angeles Times account of the scheme, and the widespread firing of employees. On May 4, 2017 Tigar found that the complaint raised “a reasonable doubt as to whether a majority of the Director Defendants face a substantial likelihood of liability,” so that no demand on the board was required, and on October 4, 2017 he let the securities-fraud and proxy claims against the directors and officers go forward, writing that the defendants “knew of, but failed to disclose, a fraudulent business practice that put the company at material risk.”

Singer led the firm’s team through the two motions, the stays and dismissals of competing state-court actions, 3.5 million pages of the bank’s documents and the preparation of depositions. On February 28, 2019 the co-lead plaintiffs announced the settlement: $240 million paid by the defendants’ insurers to Wells Fargo, and the bank’s acknowledgment that the facts the case had developed were a significant factor in its improvements to internal controls and internal reporting, its expanded board oversight of risk and the compensation it had clawed back from executives. Tigar gave final approval on April 7, 2020. “This represents an excellent result for the shareholders,” he said.

Three Bond Offerings and Jho Low

Goldman Sachs was sole bookrunner for three bond offerings that raised $6.5 billion for 1Malaysia Development Berhad in 2012 and 2013, and after each closed hundreds of millions of dollars went to shell companies controlled by Jho Low, an associate of the Malaysian prime minister, whom Goldman’s own private wealth division had turned away as a client; the money paid for personal expenses, a film and a Malaysian election. The Fulton County Employees’ Retirement System sued Goldman’s directors and officers on the company’s behalf in Manhattan on February 19, 2019, with Singer, Maya Saxena, Joseph White and Lester Hooker as its counsel, claiming breaches of fiduciary duty and false proxy statements and alleging that the deals’ size, speed, unexplained use of proceeds, private placement structure and fees had been red flags, that bankers never verified where the money went, that compliance never read the deal team’s emails and so missed Low, and that the concerns senior executives raised were never escalated. On October 22, 2020 Goldman entered a deferred prosecution agreement with the Justice Department acknowledging that its bankers had arranged the deals despite the red flags and agreed with its affiliates to more than $5 billion in fines, penalties and disgorgement; its banker Tim Leissner had pleaded guilty, and Roger Ng was convicted in April 2022.

The fund filed a second amended complaint in November 2020 on the strength of the agreement, and the defendants’ motion to dismiss it was pending when the parties went to two days of mediation before Daniel Weinstein and Jed Melnick in February 2022 and accepted the mediators’ proposal on February 3. The fund then reviewed more than 667,000 pages of Goldman’s documents to confirm the terms. Under the settlement signed May 13, 2022, Goldman’s insurers paid the company $79.5 million, every dollar of it after fees to be spent on compliance, and bound itself for three years to reforms: the company extended the compliance program required by its prosecution agreement for a year beyond that agreement’s October 2023 expiration; its chief compliance officer reports to the board or its audit committee at least quarterly and has the budget for an internal investigative staff and outside investigators; employees have an anonymous hotline to that officer; and an outside party watches the press and the industry for compliance concerns and reports them. Judge Vernon S. Broderick granted preliminary approval on September 16, 2022, calling the payment one of the largest in a derivative case in the Second Circuit’s history and the reforms ones that “would likely be unachievable through litigation,” and noting what the fund would have had to prove at trial: a Caremark claim, in the words of the Delaware authority he quoted, is “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.” He entered judgment approving the settlement on January 20, 2023.

Six Directors

FirstEnergy, the Ohio utility, told investors in late 2016 that it was seeking “legislative solutions” for two aging nuclear plants it could no longer sustain. What it did, the Employees Retirement System of the City of St. Louis alleged in the derivative suit it filed in Columbus on September 9, 2020, was funnel more than $60 million to Ohio House Speaker Larry Householder and others for the legislation it wanted, in what an FBI agent’s criminal complaint called a sophisticated criminal conspiracy to enact legislation on the company’s behalf. Chief Judge Algenon L. Marbley appointed St. Louis and the Electrical Workers Pension Fund, Local 103, I.B.E.W. co-lead plaintiffs on November 16, 2020, with Saxena White, where Singer is Director of Litigation, and Bernstein Litowitz as co-lead counsel; the consolidated complaint of January 25, 2021 traced the red flags to 2015, when shareholders had pressed the company on political spending and its dark-money connections, and set out how, between 2017 and 2019, the company had moved tens of millions of dollars while reporting a fraction of it, and how the legislation Householder passed had subsidized its plants by more than $1 billion. On July 22, 2021 FirstEnergy entered a deferred prosecution agreement with the Justice Department, paid a $230 million fine and admitted that it had paid millions of dollars to Householder for pursuing the nuclear legislation. Singer’s team and Bernstein Litowitz had already defeated the motion to dismiss, which Marbley denied on May 11, 2021: the defendants had “caused the Company to issue Proxy Statements that concealed an illegal bribery scheme,” had “allowed the criminal scheme to continue unchecked,” and the shareholders “would not have voted to re-elect Board members” had they known. Co-lead counsel then intervened in and defeated a motion to dismiss a parallel derivative case in the Northern District of Ohio, beat the special litigation committee’s motion to stay discovery on October 20, 2021, and on December 16, 2021 had the committee’s appeals and mandamus petitions dismissed by the Sixth Circuit. After mediation before Layn Phillips on February 9, 2022, Singer’s team and its co-counsel negotiated a settlement of every related derivative case under which the defendants’ insurers paid FirstEnergy $180 million, six of its directors agreed to leave the board, and the board took on the oversight of political spending and lobbying with specific disclosures in each proxy statement. Marbley gave preliminary approval on May 9, 2022, heard the settlement on August 4 and entered final judgment on August 23, 2022.

Forty-Eight Offerings

Between May 2006 and August 2008 Citigroup sold bonds and preferred stock in about forty-eight public offerings while, the Minneapolis Firefighters’ Relief Association, the Louisiana Municipal Police Employees’ Retirement System and the Louisiana Sheriffs’ Pension and Relief Fund alleged, it concealed billions of dollars of exposure to collateralized debt obligations backed by residential mortgages until November 2007, understated the reserves against its riskiest mortgage loans, called the mortgage assets in its structured investment vehicles high in credit quality and described itself as well capitalized through 2008. Singer was lead counsel for the bond purchasers. Judge Sidney H. Stein sustained the claims in all material respects on July 12, 2010, holding that the plaintiffs had standing for every offering in the complaint, and after four years and more than seventy depositions Citigroup agreed on March 18, 2013 to pay $730 million in cash; Stein approved the settlement on August 20, 2013 and the fund has been fully paid out.

Since joining Saxena White, Singer has worked on the firm’s Wilmington Trust case, in which Delaware’s federal court had held in 2014 that investors “were not receiving all of the available information” about the bank’s loan loss reserves, credit risk and underwriting, certified a class of purchasers between January 18, 2008 and November 1, 2010 and in the February 23, 2010 offering, and on November 19, 2018 approved two settlements totaling $210 million; on DaVita, in which the Peace Officers’ Annuity and Benefit Fund of Georgia and the Jacksonville Police and Fire Pension Fund alleged that the dialysis company had steered patients eligible for Medicare and Medicaid into commercial plans paying up to ten times as much, through more than $100 million a year in donations to the American Kidney Fund that paid the patients’ premiums, and in which Judge William J. Martinez denied the motion to dismiss in its entirety on March 28, 2019 and approved a $135 million settlement on April 13, 2021; and on Patterson Companies, the dental distributor that the Federal Trade Commission sued on February 12, 2018 for conspiring with Henry Schein and Benco to boycott the buying groups that served small dental practices, in which four pension funds alleged that the scheme had inflated the company’s revenue and earnings, a magistrate judge found pleaded “a long-running scheme at Patterson, concocted in the upper echelons of corporate management,” the class was certified on September 28, 2020 and a $63 million settlement was approved on June 9, 2022. Earlier, at Bernstein Litowitz, he was lead counsel in cases that settled for $675 million against Lucent Technologies, $203 million against Mills Corp., $200 million against WellCare Health Plans, $180 million against Bank of New York Mellon, $150 million against Satyam Computer Services, $150 million against JPMorgan Chase and $138 million against Biovail.

Queens, Duke and Twenty Years at Bernstein Litowitz

Singer is from Queens. He took his bachelor’s degree at Duke in 1988, cum laude, and his law degree at Northwestern in 1991, and as a young associate was once sent to Miami on a Friday afternoon to argue a discovery motion. He spent more than twenty years at Bernstein Litowitz Berger & Grossmann, where he became a senior partner and sat on the management committee, before Saxena White announced in January 2017 that he had joined as Director of Litigation and would open its New York office; he oversees the firm’s securities litigation practice with more than thirty years of trial and litigation experience behind him. He is admitted in New York, in the Northern District of Illinois and the Eastern and Southern Districts of New York, and in the Second and Sixth Circuits, and belongs to the New York State and American Bar Associations.