R. Scott Garley

R. Scott Garley is the Co-Administrative Director in charge of the firm’s New York Office. He is a member of the firm’s Commercial & Criminal Litigation Department, Team Leader of its Securities Litigation practice, and Co-Chair of its Private Equity and Hedge Fund Team. Mr. Garley also is a member of the firm’s Sarbanes-Oxley Act Compliance Committee.

Mr. Garley focuses his practice on litigation, arbitration, investigations and counseling in connection with securities transactions and regulatory matters, directors and officers liability and corporate governance matters, executive compensation and employment matters, business tort claims and complex commercial disputes.

Representative Recent Matters

• Represented a major international pharmaceutical manufacturer in connection with a federal court action and related FINRA arbitration against a U.S. brokerage firm and its foreign parent to recover losses of almost $300 million arising from the sale of auction rate securities that were fraudulently represented and sold to our client as guaranteed student loan securities. As a result of their fraudulent scheme and conduct against our client and other corporate investors, the responsible directors of the defendant brokerage firm were indicted and later convicted of securities, wire and mail fraud in New York federal court.
• Represented a prominent pharmaceutical securities analyst in connection with SEC, FINRA, NYAG, and AIMR investigations and enforcement proceedings relating to his alleged trading of securities of the companies he covered on a research basis. Gibbons also represented the analyst in a defamation action in New York federal court against a public pharmaceutical company and its CEO arising from their public statements concerning the analyst’s alleged trading activities. Our motion practice relating to various ediscovery issues in the case led to two of the most oft-cited and significant ediscovery decisions to date — Treppel v. Biovail Corp., 233 F.R.D. 363 (S.D.N.Y 2006) (“Treppel IV”) and Treppel v. Biovail Corp., 249 F.R.D. 111 (S.D.N.Y. Apr. 2, 2008) (“Treppel VII”). The Treppel opinions have been cited in numerous court decisions, treatises, law reviews, articles and blogs as among the most significant ediscovery decisions since the seminal Zubulake v. UBS Warburg decisions.
• Represented one of the large offshore feeder funds in connection with the Madoff bankruptcy action, Securities Investment Protection Corporation v. Bernard L. Madoff Investment Securities, LLC, pending in the U.S. Bankruptcy Court for the Southern District of New York, arising from the $65 billion Ponzi scheme orchestrated by Bernie Madoff through his investment firm, Bernard L. Madoff Investment Securities (“BLMIS”). Our client lost almost $500 million on its investments with BLMIS as a result of the massive Ponzi scheme. Gibbons represented and advised the client in connection with the prosecution of its claim against the BLMIS Estate, as well as its defense of avoidance claims brought by the SIPC Trustee.
• Represented a major Wall Street brokerage and investment banking firm in New York state and federal court actions, NASD arbitration, and SEC enforcement and receivership proceedings arising from the collapse of a hedge fund that later turned out to be a $65 million Ponzi scheme. Gibbons represented its client in court actions and arbitration proceedings against the hedge fund manager and its primary market maker as part of our efforts to recover the client’s significant financial losses. We also later defended our client in connection with a fraudulent transfer action brought by the SEC receiver to recover funds and securities allegedly received or transferred by the client.
• Represented the general partner and investment adviser of insurance dedicated private funds in actions brought in Tennessee, North Carolina and Texas state courts by several annuity policy owners who beneficially invested in the funds through a variable annuity marketed and sold by a major insurance company and its affiliates. The funds sustained investment losses during the relevant period, thus reducing the account value of plaintiffs’ annuities. Plaintiffs alleged that Gibbons’ clients and eleven other defendants violated various state securities and consumer protection laws by misrepresenting or failing adequately to disclose the nature of the fund investments and associated risks.
• Served as counsel to the Audit Committee of the Board of one of the world’s largest publicly-traded tanker companies in an internal investigation and related SEC investigation concerning certain consultancy arrangements and accounting issues in connection with two major sale and leaseback transactions for the company’s vessels. The issues under review relating to the sale and leaseback transactions led to the resignation of the company’s independent auditors, a restatement of the company’s earnings, and the resultant SEC investigation of and shareholder class actions against the company and its directors and officers. Gibbons conducted a thorough investigation in Greece, Cyprus and the U.S., and presented its findings in reports to the Audit Committee and the SEC.
• Represented an algorithmic trading and execution firm in two related AAA arbitrations against three former principals and employees who misappropriated and used the firm’s proprietary technology, software, trading strategies and other confidential information to form and operate competing companies while still members and employees of the client. Both arbitrations resulted in substantial awards against the respondents for breach of contractual and fiduciary duties, misappropriation of trade secrets, unfair competition and spoliation of evidence.
• Represented a large Canadian investment trust in an interpleader adversary proceeding brought in the Lehman Brothers bankruptcy action pending in federal bankruptcy court in New York. The interpleader action was brought to determine the respective rights and obligations of the trust and various financial institution counterparties with respect to the settlement of certain foreign exchange trades executed on behalf of the trust’s account. The settlement of those trades was suspended by the Lehman bankruptcy filing in September 2008. Gibbons also represented the trust in a related damages action that the trust brought against its investment manager in New York federal court to recover the losses the trust sustained as a result of the investment manager’s alleged mismanagement of the trust’s account and improper withholding of the trust’s assets as purported security for the settlement of the trades.
• Represented an investment advisory firm, its principal and various entities that the principal owned or controlled in connection with litigation and receivership proceedings in the U.S., the Bahamas, and the Isle of Man arising from the collapse of a large Bahamian mutual fund that our client managed. Our clients were defendants in several investor lawsuits and receivership proceedings alleging that they had defrauded the investors and made fraudulent transfers to themselves or to entities that they owned or controlled.
• Served as counsel to the Special Committee of the Board of a large U.S. shipping company in internal investigations of questioned shipping transactions and accounting practices that surfaced during the company’s financial review in preparation for an initial public offering. In addition to presenting our investigation findings in reports to the Special Committee, Gibbons provided recommendations and advice to company management relating to effective internal controls and procedures for its operational and accounting practices.
• Represented one of the founding members of a major hedge fund firm in an action in Delaware Chancery Court against the firm and its other two founding members arising from defendants’ wrongful termination of our client and refusal to pay him his interest in the hedge fund firm. The case has resulted in a recent decision of first impression in Delaware concerning the applicability of the statute of frauds to an oral or unsigned limited liability company operating agreement.
• Represented an international owner and operator of oceangoing cargo vessels and several of its affiliated entities as defendants in a securities fraud action brought in New York federal court by several institutional investors arising from our clients’ alleged default and misconduct in connection with a $750 million bond issuance. Gibbons engaged in emergent proceedings throughout the world as plaintiffs attempted to arrest and attach the clients’ vessels and other assets.
• Represented a major information technology firm and its principals in an action commenced in New York federal court by a competitor firm for unfair competition and tortious interference with prospective economic advantage based on our clients’ alleged diversion of a $10 million web development project with the assistance of a former employee of plaintiff. After a two-week trial, the Court entered judgment dismissing all claims against our clients.