Keith Thomas, et al. v. Magnachip Semiconductor Corp., et al.

An Akin Gump has scored an important win for Avenue Capital in a securities fraud class action.

The win significantly reduces both the size of the proposed class and the client’s damages exposure.

The case involved alleged overstatement of financial performance by Korean semiconductor company MagnaChip, of which Avenue Capital was, at the time, controlling shareholder. On March 11, 2014, MagnaChip announced that it had discovered significant accounting errors in its 2011-2013 financial statements and that those should no longer be relied upon.

A securities class action lawsuit was filed the next day against both MagnaChip and Avenue Capital, representing a class of shareholders who purchased stock from February 1, 2012, through March 11, 2014.

The Akin Gump team argued against certification of this class. Barring this, it argued that shareholders who purchased stock after March 11, 2014, must be excluded.

Despite the formidable task of having to persuade the court that the presumption of reliance was rebutted as a matter of law by MagnaChip’s announcement—no 9th Circuit court had ever granted a request to shorten a class period at the class certification stage on this basis, and no court in the country had done so since the Supreme Court’s 2013 Amgen decision, Judge Tigar of the Northern District of California certified a class, but, as argued by Mr. Marder and his team, excluded those who purchased stock after March 11, 2014.

By doing so, the client’s potential damages exposure was reduced dramatically, down as much as 85 percent.

Akin Gump has advised with a team including Neal Marder (Picture), Peter Altman, Ali Rabbani, Jack Murphy, Andrew Jick, Sydney Spector, Josh Rubin and law clerk Annie Banks.

Involved fees earner: Neal Ross Marder – Akin Gump; Peter Altman – Akin Gump; Ali Rabbani – Akin Gump; John Cullen Murphy – Akin Gump; Andrew Jick – Akin Gump; Sydney Spector – Akin Gump; Josh Rubin – Akin Gump;

Law Firms: Akin Gump;

Clients: Avenue Capital;

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Author: Ambrogio Visconti