Securities Law Alert
In This Edition:• Second Circuit: (1) Courts May Rely on Confidential Witness Allegations Pled with “Sufficient Particularity;”(2) 10b5-1 Plan Stock Trades May Support an Inference of Scienter If Plan Participation Commenced After the
Alleged Fraud Began• Eighth Circuit: Key Inquiry for Determining Whether a Statement Was Forward-Looking for Purposes of
the PSLRA’s Safe-Harbor Provision Is Whether the Statement’s Veracity Was Discernible at the Time theStatement Was Made
• Ninth Circuit: “Personal Benefit” Requirement for Tippee Liability Is Met Where an Insider Discloses
Confidential Information to a Trading Relative or Friend, Even If There Was No Potential or Actual Financial
Benefit• Southern District of New York: (1) Dudenhoeffer Forecloses ERISA Breach of Fiduciary Duty Claims Basedon Public Information Absent “Special Circumstances;” (2) ERISA Appointing Fiduciaries Have No Duty toDisclose Inside Information to Appointees• Southern District of New York: Second Circuit’s Decision in Newman Did Not Change the “Personal Benefit”
Requirement for Tipper Liability for Insider Trading• Delaware Chancery Court: (1) Continuous Holder Requirement for Appraisal Actions Is Not Met If There Is
an Administrative Transfer at the DTC Level; (2) Court Suggests a Different Approach to Determining Who Is
a Stockholder for Appraisal Purposes• Delaware Chancery Court: (1) Discounted Cash Flow Method of Share Appraisal in a Section 262 Action Is
Inappropriate If Management Projections Are Unreliable; (2) Merger Price Can Be Evidence of Share Value
If the Sales Process Was Fair
July 2015

SimpsonThacher’s “marketleading securities litigation
practice” is “known forhandling highly-publicizeddisputes in defense of major
financial institutions andinternational corporations.”– Chambers USA
2015

Second Circuit: (1) Courts
May Rely on Confidential
Witness Allegations Pled with
“Sufficient Particularity;”(2) 10b5-1 Plan Stock Trades
May Support an Inference of
Scienter If Plan Participation
Commenced After the Alleged
Fraud Began
On July 24, 2015, the Second Circuit revived
a securities fraud action alleging that
Green Mountain Coffee Roasters, Inc. andSimpson Thacher & Bartlett LLP

certain of its executives had made material
misstatements concerning “Green Mountain’s
inventory, business performance, and growthprospects.” Emps.’ Ret. Sys. of Gov’t. of V.I.
v. Blanford, 2015 WL 4491319 (2d Cir. 2015)(Chin, J.). The court determined that plaintiffs
had adequately alleged misstatements basedon confidential witness allegations, which
the court found to be pled with “sufficientparticularity to support the possibility thatthe witnesses possessed the information
alleged.” The court further found that stock
trades made pursuant to 10b5-1 trading plans
supported an inference of scienter because
Green Mountain’s executives allegedly beganparticipating in those plans during the class1

period, after the allegedly fraudulent scheme
had begun.

Background
Between February 2, 2011 and November
9, 2011, defendants allegedly represented
that Green Mountain “was straining to meet
consumer demand for its Keurig and K-Cup
products and that the company was ramping
up production without accumulating excess
inventory.” Plaintiffs contended that to thecontrary, “Green Mountain was accumulatinga significant overstock of expiring and unsold
product.” Plaintiffs presented “observations
from numerous confidential witnesses(‘CWs’)—Green Mountain employees fromdifferent tiers of the company—detailing thecompany’s increasing inventory buildup.”
According to the CWs, defendants went togreat lengths to conceal Green Mountain’s
growing inventory from investors, using
measures such as “phony shipment[s]” and“non-mainstream accounting practices
to track [the company’s] inventory.”
Plaintiffs further alleged that the company’s“senior executives capitalized on their own
pronouncements of Green Mountain’s
financial strength by selling their shares ofcompany stock at peak stock prices” pursuant
to their 10b5-1 trading plans.
On October 17, 2011, an investor, David
Einhorn, released a report stating that
“Green Mountain was engaged in a ‘varietyof shenanigans that appear[ed] designed
to mislead auditors and to inflate financial
results.’” A few weeks later, on November 9,
2011, Green Mountain announced that it had
missed its “sales and revenue expectations
for the first time in eight quarters.” Green
Mountain also “admitted that … its total
inventory and obsolete inventory levels had
skyrocketed 61% and 47%, respectively, fromthe prior quarter.”
Plaintiffs subsequently brought the instantsecurities fraud action. On December 20,
2013, the District of Vermont dismissed thecomplaint on the grounds that plaintiffs had
failed to allege either material misstatements
or scienter. Plaintiffs appealed.

Second Circuit Finds Plaintiffs
Adequately Alleged Misstatements
Concerning the Company’s
Inventory Levels
The Second Circuit explained that in order“[t]o satisfy the pleading standard for amisleading statement or omission under
Rule 9(b), a complaint must … specify thestatements that the plaintiff contends were
fraudulent” and “explain why the statements
were fraudulent.” The court further statedthat “[a] complaint may rely on informationfrom confidential witnesses if ‘they aredescribed in the complaint with sufficientparticularity to support the probability that aperson in the position occupied by the source
would possess the information alleged’”(quoting Novak v. Kasaks, 216 F.3d 300(2d Cir. 2000)).
Here, the Second Circuit found that plaintiffs
had alleged “specific misleading statementsby [d]efendants about the status of Green
Mountain’s inventory during the [c]lass[p]eriod.” The court further determinedthat the complaint “explain[ed] why thesestatements were fraudulent by detailingnumerous CWs’ observations that Green
Mountain’s inventory was decidedly not at‘appropriate levels.’” For example, “[m]any
witnesses described the buildup of inventory‘up to the rafters’ and their need to throw
away ‘pallet after pallet after pallet’ as thecoffee products expired.” In addition tostatements from lower-level employees, thecomplaint also “detail[ed] statements fromCWs in management positions with a broader
knowledge of the company’s inventory andaccounting practices.” According to thecomplaint, “[t]hese managers reported toGreen Mountain executives who discouraged
questions about the inventory practices andignored their repeated complaints.” The
Second Circuit noted that the complaint“specifie[d] each witness’s position, lengthof employment, and job responsibilities.”
The court found that plaintiffs’ allegations
had “sufficient particularity to support theprobability that the witnesses possessed theinformation alleged.”
Because the court found that “the [c]omplaintstate[d] with particularity the statements it
allege[d] [were] misleading and the reasons
why these statements [were] fraudulent,” theSecond Circuit held that “the [c]omplaint2

adequately allege[d] false statements ofmaterial fact.”

an inflated stock price, the plan provides nodefense to scienter allegations.”

Second Circuit Finds Company
Executives’ Stock Sales Supported
an Inference of Scienter Even
Though the Sales Were Made
Pursuant to 10b5-1 Trading
Plans Because Defendants Began
Participating in the Trading Plans
After the Fraudulent Scheme
Allegedly Began

Here, the court pointed out that defendants
had allegedly “made positive publicstatements about Green Mountain’s growththat drove up its stock price immediately
before” scheduled sales of stock in their
10b5-1 trading plans. Although the sales “weremade pursuant to their 10b5-1 trading plans,”
the court found it significant that defendants“knew the dates of their scheduled sales[were] imminent when they made allegedly
misleading statements to investors.”

The Second Circuit stated that “the scienter
requirement is met where the complaint
alleges facts showing either: 1) a ‘motive
and opportunity to commit the fraud’; or 2)‘strong circumstantial evidence of conscious
misbehavior or recklessness’” (quoting ATSI
Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d
87 (2d Cir. 2007)). The court explained that“motive for scienter can ‘be shown by pointing
to the concrete benefits that could be realized
from one or more of the allegedly misleadingstatements or nondisclosures; opportunity
could be shown by alleging the means used
and the likely prospect of achieving concrete
benefits by the means alleged’” (quoting S.
Cherry St., LLC v. Hennessee Grp. LLC, 573
F.3d 98 (2d Cir. 2009)).
Applying this standard, the Second Circuit
found that plaintiffs had pled “strong
circumstantial evidence of Green Mountain’s
intent to deceive or defraud [p]laintiffs bydetailing both (1) [d]efendants’ efforts todeceive auditors and investors and conceal
the true facts about Green Mountain’s excess
inventory, and (2) [d]efendants’ significant
personal gain from these efforts” throughstock sales made soon after the “allegedly
misleading statements to investors.”
Notably, the Second Circuit rejected Green
Mountain’s contention that defendants’ stock
sales did “not support an inference of scienter
because they were made pursuant to … predetermined 10b5-1 trading plans.” The court
underscored the fact that defendants beganparticipating in these plans “long after …
Green Mountain’s fraudulent growth scheme[allegedly] began.” The court held that“[w]hen executives enter into a trading plan
during the [c]lass [p]eriod and the[c]omplaint sufficiently alleges that the
purpose of the plan was to take advantage of

The Second Circuit found that the complaint
sufficiently alleged both “[d]efendants’intent to craft a false growth story” and “theextraordinary opportunities for personal gain
this ‘growth’ created for Green Mountain’s
executives.” The court determined that theallegations as a whole gave rise to a strong
inference of scienter.
The Second Circuit vacated the district court’s
dismissal order and remanded for further
proceedings consistent with its opinion.

Eighth Circuit: Key Inquiry
for Determining Whethera Statement Was ForwardLooking for Purposes of
the PSLRA’s Safe-Harbor
Provision Is Whether theStatement’s Veracity Was
Discernible at the Time theStatement Was MadeOn July 2, 2015, the Eighth Circuit affirmed
dismissal of a securities-fraud action against
K-V Pharmaceutical Company based onalleged misstatements concerning, inpart, the likelihood that the Food & Drug
Administration (FDA) would enforce a
period of exclusive sales rights once K-V
launched Makena, a prescription drug forthe prevention of preterm labor. Julianellov. K-V Pharm. Co., 2015 WL 4032102 (8thCir. 2015) (Shepherd, J.). The court foundthat the challenged statements fell within thesafe-harbor provision for forward-looking
statements under the Private Securities
Litigation Reform Act of 1995 (“PSLRA”)

3because they were “tied to a future event: thelaunch of Makena,” and therefore the veracityof K-V’s statements could not be determineduntil this future event took place.

Background
Under the Orphan Drug Act, “manufacturersof drugs designed to treat diseases ordisorders that affect fewer than 200,000
people may obtain seven years of exclusive
sales rights,” subject to FDA approval. On
February 3, 2011, the FDA granted K-V
exclusive sales rights to Makena.
Two weeks later, during an investor
conference call on February 14, 2011, K-V
expressed its expectation that the FDA
would enforce a period of exclusivity for
Makena. K-V stated that it “believe[d] thatthe regulations and laws are very clear” and“that FDA regulations … generally prohibit
the distribution of compounded products thatare the same or essentially the same as FDAapproved products.” K-V further stated that it“believe[d] that compounded pharmacies areaware of these laws and regulations,” and thatit anticipated that compounding pharmacies
would “adhere to them.” At the beginning of
the call, K-V warned that certain statements
made during the call might be “forwardlooking statements” subject to “various risks
and uncertainties,” including “the possibility
that any period of exclusivity may not
be realized.”
In March 2011, K-V released Makena at ahigh price point. Later that month, the FDA
announced that “it did not intend to takeenforcement action against compounding
pharmacies that compounded the equivalentof Makena.” Plaintiffs subsequently brought
suit, alleging, inter alia, “that K-V [had]made both false statements and omissions
about the risk of the FDA not enforcing
exclusive sales rights” to Makena. The district
court dismissed plaintiffs’ complaint in its
entirety. Plaintiffs appealed, contending inpart that the district court had “erred … inholding [that] K-V’s statements regarding
the FDA’s likelihood of enforcing exclusivity
were protected by the PSLRA’s safeharbor provision.”

Eighth Circuit Finds K-V’s
Statements Concerning Whether
the FDA Would Enforce Exclusivity
Were Forward-Looking Because theStatements Were Tied to a Future
Event: the Launch of Makena
On appeal, the Eighth Circuit explained that,“[u]nder the PSLRA, protected forwardlooking statements include, among others:(1) projections of revenues or other financial
items, (2) statements of plans and objectives
for future operations, and (3) statements of
the assumptions underlying the previous two
categories.” The court underscored that,“[i]n determining whether a statement is truly
forward-looking, the determinative factor
is not the tense of the statement; instead,the key is whether its ‘truth or falsity is
discernible only after it is made.’”Applying these standards, the Eighth Circuit
found that K-V’s statements on the likelihoodthat the FDA would enforce a period of
exclusivity for Makena “were forwardlooking” under the PSLRA. First, the court
found that K-V’s statements fell “within the
category of statements regarding plans andobjectives for further operations because
they detailed K-V’s future launch of Makena
and the anticipated results.” Second, thecourt explained that “the veracity of thestatements could only be determined after
they were made” because they were “tied toa future event: the launch of Makena.” Thecourt reasoned that, “[u]ntil this future event
occurred, it could not be determined whether
the FDA would vary from its usual practiceof enforcing exclusivity.” Notably, the court
observed that “there was no evidence at thetime K-V made the statement that the FDA
would not enforce exclusivity.”
The Eighth Circuit further found that “theuse of the present tense in the challenged
statements [did] not undermine [its]determination that they were forwardlooking.” The court held that “[t]he criticalinquiry in determining whether a statement isforward-looking is whether its veracity can be
determined at the time the statement is made,not the tense of the statement.”
Finally, the court found that “K-V’s forwardlooking statements were accompanied
by meaningful cautionary language” that
“explicitly identified the risks associatedwith the FDA’s presumed enforcement of4

exclusivity.” The court therefore held that
“K-V’s statements [fell] within the PSLRA’s
safe-harbor provision … and [were] notactionable as a basis for a securities fraud
action.”Ninth Circuit: “Personal
Benefit” Requirement for
Tippee Liability Is Met
Where an Insider Discloses
Confidential Information
to a Trading Relative or
Friend, Even If There Was No
Potential or Actual Financial
BenefitOn July 6, 2015, the Ninth Circuit held that“[p]roof that [an] insider disclosed material
nonpublic information with the intent tobenefit a trading relative or friend is sufficientto establish the breach of fiduciary duty
element of insider trading” for tippee liability.
United States v. Salman, 2015 WL 4068903(9th Cir. 2015) (Rakoff, J.).1 The Ninth
Circuit declined to follow the Second Circuit’s
decision in United States v. Newman, 773 F.3d
438 (2d Cir. 2014) 2 “[t]o the extent Newman
can be read to go so far” as to require thatthe insider stood to obtain “‘at least a
potential gain of a pecuniary or similarly
valuable nature’” for disclosing confidential
information to a trading relative or friend(quoting Newman, 773 F.3d 438).

Background
Defendant Bassam Yacoub Salman wasconvicted of insider trading based on his
receipt of information from Michael Kara,
who had received the information from his
brother, Maher Kara, a Citigroup investmentbanker. The government presented evidence
that Salman “knew full well” that (1) Maher
Kara was the source of the information
Salman received from Michael Kara, and(2) the two brothers “enjoyed a close andmutually beneficial relationship.”
1. The Honorable Jed S. Rakoff of the Southern District of New
York was sitting by designation on the Ninth Circuit Court ofAppeals.
2. Please click here to read our prior discussion of the Newman
decision.

Salman subsequently appealed his conviction,
arguing, inter alia, that the Ninth Circuit
should adopt the standard set forth by
the Second Circuit in Newman. Salman
contended that, “under Newman, theevidence was insufficient to find either that
Maher Kara disclosed the information to
Michael Kara in exchange for a personal
benefit, or, if he did, that Salman knew ofsuch benefit.”

Ninth Circuit Declines to Follow
the Second Circuit’s Decision in
Newman to the Extent Newman
Requires That an Insider Receive
an Actual or Potential Financial
Benefit for Disclosing Confidential
Information to a Trading Relative
or Friend
On appeal, the Ninth Circuit stated that“[t]he ‘personal benefit’ requirement for
tippee liability derives from the Supreme
Court’s opinion in Dirks v. S.E.C., 463 U.S.
646 (1983).” Under Dirks, the Ninth Circuit
explained, “‘the test is whether the insider
personally will benefit, directly or indirectly,
from his disclosure’” and whether “‘the tippee
knows or should know’ … of the [insider’s]
personal benefit” gained by disclosing theinformation (quoting Dirks, 463 U.S. 646).
The Dirks Court stated that this “personal
benefit” could include “a pecuniary gain or a
reputational benefit that will translate into
future earnings.” However, as the Ninth
Circuit explained, the Dirks Court madeclear that “‘[t]he elements of fiduciary duty
and exploitation of nonpublic information
also exist when an insider makes a gift ofconfidential information to a trading relativeor friend’” (quoting Dirks, 463 U.S. 646).
The Ninth Circuit found that “Maher’s
disclosure of confidential information to
Michael, knowing that he intended to tradeon it, was precisely the ‘gift of confidential
information to a trading relative’ that Dirks
envisioned.” In light of “the Kara brothers’
close relationship,” the court determinedthat “Salman could readily have inferred
Maher’s intent to benefit Michael.” The Ninth
Circuit concluded that, “under Dirks, theevidence was sufficient for the jury to find that
Maher disclosed the information in breachof his fiduciary duties and that Salman knew
as much.”5

The Ninth Circuit expressly declined to follow
the Second Circuit’s decision in Newman“[t]o the extent Newman can be read to go sofar” as “to hold that evidence of a friendshipor familial relationship between tipper
and tippee, standing alone, is insufficient
to demonstrate that the tipper received
a benefit.” The court rejected Salman’scontention that the government shouldhave been required to present evidence that
Maher received “‘at least a potential gain ofa pecuniary or similarly valuable nature’”for disclosing the information to Michael(quoting Newman, 773 F.3d 438). The court
reasoned that, if it accepted Salman’s theory,“then a corporate insider or other person inpossession of confidential and proprietary
information would be free to disclose that
information to her relatives, and they would
be free to trade on it, provided only that
she asked for no tangible compensationin return.”
The Ninth Circuit also questioned whether
Newman in fact requires evidence of such atangible personal benefit in cases involving
disclosures to family members of friends. The
court noted that “Newman itself recognizedthat the ‘personal benefit is broadly defined
to include not only pecuniary gain, but also,inter alia, … the benefit one would obtainfrom simply making a gift of confidential
information to a trading relative or friend’”(quoting Newman, 773 F.3d 438).
The Ninth Circuit affirmed Salman’sconviction, finding the evidence “more thansufficient for a rational jury to find boththat the inside information was disclosed inbreach of a fiduciary duty, and that Salmanknew of that breach at the time he tradedon it.”Southern District of New York:(1) Dudenhoeffer Forecloses
ERISA Breach of Fiduciary
Duty Claims Based on PublicInformation Absent “Special
Circumstances;” (2) ERISA
Appointing Fiduciaries Have
No Duty to Disclose Inside
Information to Appointees
On July 10, 2015, following a remand fromthe Supreme Court in light of its decision in
Fifth Third Bancorp v. Dudenhoeffer, 134
S. Ct. 2459 (2014),3 the Southern Districtof New York dismissed for a third time anaction brought by participants in the Lehman
Brothers Savings Plan (the “Plan”) under the
Employee Retirement Income Security Act(“ERISA”). In re Lehman Bros. Sec. & ERISA
Litig., 2015 WL 4139978 (S.D.N.Y. July 10,2015) (Kaplan, J.) (Lehman III).4 The court
found that plaintiffs’ complaint failed to statea claim based on non-public information,
where, inter alia, plaintiffs failed to plead
how a hypothetical investigation would
have uncovered alleged inside information.
Finally, the court held that appointing
fiduciaries have no obligation under ERISA
to keep their appointees apprised of material
nonpublic information.

Background
After Lehman Brothers filed for bankruptcy in
September 2008, Plan participants broughtsuit against Lehman’s former directors(the “Director Defendants”) and former
members of the company’s Employee Benefit
Plans Committee (the “Plan Committee
Defendants”). Plaintiffs contended that
defendants had violated ERISA “by [allegedly]
imprudently continuing to keep Plan assets
invested in Lehman stock despite Lehman’sdeteriorating condition.” Plaintiffs claimed
that, during the class period, defendants
knew or should have known that the Plan’sinvestment in Lehman stock was imprudent.
Defendants moved to dismiss.
3. Please click here to read our prior discussion of theDudenhoeffer decision.
4. Simpson Thacher represents the former members of theLehman Brothers Employee Benefit Plans Committee (the “PlanCommittee Defendants”) in this action.

6

On February 2, 2010, the Southern District of
New York dismissed plaintiffs’ ERISA claimsin their entirety. In re Lehman Bros. Sec. &ERISA Litig., 683 F. Supp. 2d 294 (S.D.N.Y.
2010) (Kaplan, J.) (Lehman I). Plaintiffs
filed an amended complaint, and defendants
again moved to dismiss. On October 5, 2011,
the Southern District of New York once again
dismissed plaintiffs’ ERISA claims. In re
Lehman Bros. Sec. & ERISA Litig., 2011 WL
4632885 (S.D.N.Y. Oct. 5, 2011) (Kaplan,J.) (Lehman II).5 Among other grounds, thecourt found that plaintiffs had failed to allege
facts sufficient to overcome the presumptionof prudence set forth in Moench v. Robertson,
62 F.3d 553 (3d Cir. 1995). On July 15, 2013,
the Second Circuit applied the presumption ofprudence and affirmed dismissal of plaintiffs’
complaint. Rinehart v. Akers, 722 F.3d 137(2d Cir. 2013) (Wesley, J.).6
A year later, on June 25, 2014, the Supreme
Court unanimously held that “the law does
not create a special presumption” of prudence
for fiduciaries of Employee Stock Ownership
Plans (ESOPs). Fifth Third Bancorp v.
Dudenhoeffer, 134 S. Ct. 2459 (2014). The
Supreme Court subsequently vacated theSecond Circuit’s decision in Rinehart andremanded the action for further considerationin light of Dudenhoeffer. The Second Circuit,in turn, granted plaintiffs’ motion to vacate
the district court’s judgment and remanded
the action to the Southern District of New
York for further proceedings. Defendants
thereafter moved for the third time to dismiss
plaintiffs’ complaint. In response, plaintiffs
opposed defendants’ motions and moved
to further amend their complaint to, interalia, “narrow their claims against the Plan
Committee Defendants” and Richard S. Fuld,
Lehman’s former chairman and CEO (and theonly remaining Director Defendant in thisaction). On May 20, 2015, the court granted
plaintiffs’ motion to amend and file their third
consolidated amended complaint “without
prejudice to [d]efendants’ arguments in favorof dismissal.”

5. Please click here to read our prior discussion of the Lehman IIdecision.
6. Please click here to read our prior discussion of the Second
Circuit’s decision.

Lehman III Court Finds
Dudenhoeffer Requires Dismissalof Plaintiffs’ Public InformationBased Breach of Fiduciary Duty
Claims Against the Plan Committee
Defendants
On July 10, 2015, the Southern Districtof New York found that plaintiffs’ thirdamended complaint “fail[ed] plausibly toallege that public information about Lehman
was so clearly negative in mid-to-late 2008
that the Plan Committee Defendants [had]acted imprudently.” While this amended
complaint included “scattered changes,” suchas “new descriptions of allegedly ominous
news articles” and “volatility in Lehman’s
stock price,” the court found that “[t]hese
new bits of information [did] no more than
add marginally to the cacaphony of ‘mixed
signals’ described in” plaintiffs’ earlier
complaint. The court concluded that “[t]hey[did] not nudge the allegations of the [third
consolidated amended complaint] across theplausibility threshold.”
Significantly, the court found that
“Dudenhoeffer appears to have ‘raised thebar for plaintiffs seeking to bring a claim
based on a breach of the duty of prudence’”in connection with publicly available
information (quoting In re UBS ERISA
Litig., 2014 WL 4812387 (S.D.N.Y. Sept. 29,2014)). In Dudenhoeffer, the Court statedthat “allegations that a fiduciary shouldhave recognized from publicly available
information alone that the market was overor undervaluing the stock are implausible
as a general rule, at least in the absence ofspecial circumstances.” The Lehman III court
determined that “Dudenhoeffer seemingly
has foreclosed any such claim against the Plan
Committee Defendants.”
Finding their distinction to be “illusory,” thecourt rejected plaintiffs’ contention “thatDudenhoeffer’s limitation on claims based on
public information applies only to assertions‘that the market was over- or undervaluing
the stock’” (quoting Dudenhoeffer, 134 S.
Ct. 2459) and not to allegations “that a stock
has become excessively risky.” Thus, in theabsence of “factual allegations justifying aconclusion that ‘reliance on the market price[was] imprudent,’” the Lehman III court
found that Dudenhoeffer “foreclose[s] breachof [the duty of] prudence claims based on
public information irrespective of whether
7such claims are characterized as based onalleged overvaluation or alleged riskiness ofa stock.”
The court found equally meritless plaintiffs’
attempt to rely on Tibble v. Edison
International, 135 S. Ct. 1823 (2015), toargue that the Plan Committee Defendantsshould have conducted a “substantive review… of the prudence of continued investment
in Lehman stock” following the collapse of
Bear Stearns. 7 The court recognized that
the Tibble decision reiterated that “ERISA
fiduciaries bear a ‘continuous duty’ to monitor
the prudence of investments.” However,while “changed circumstances can trigger afiduciary’s obligation to review the prudenceof an investment,” the court explained that“plaintiffs must allege that circumstances
actually have changed sufficiently and thatthe failure to make such a review injured
the plan.” The court found that plaintiffs
had failed to do so here. Notably, the court
rejected plaintiffs’ apparent “view … that once
Bear Stearns collapsed, the ERISA fiduciaries
of every major financial institution’s ESOP
bore a fiduciary duty to re-evaluate theprudence of continued investment in asponsor’s securities.” Moreover, the court
pointed out that plaintiffs did not allege thatany such review “would have averted the
injury that ultimately occurred when Lehman
later collapsed.” The court stated that“[n]either Dudenhoeffer nor Tibble permits
ERISA claims to withstand challenge basedon such threadbare allegations.”
Finally, the court determined thatplaintiffs had failed to allege any “special
circumstances” required for alleging a breachof fiduciary duty claim based on publiclyavailable information under Dudenhoeffer.
The court specifically rejected plaintiffs’
contention that SEC orders issued in July
2008 placing short-selling restrictions on
the securities of certain financial-services
companies, including Lehman, amounted
to such “special circumstances.” The court
underscored that “the SEC never announced
that the market for Lehman stock had ceased
to function efficiently.” Rather, the SEC statedthat “rumor-mongering ‘may artificially andunnecessarily’ depress security prices and that
it was acting to ‘eliminate any possibility that
naked short selling’ could contribute to such
7. Please click here to read our prior discussion of the Tibble
decision.

disruption.” The Lehman III court explainedthat “[a]ction taken to prevent a negative
effect is not the same thing as declaringthat such an effect already had become
manifest.” Moreover, the court noted that, if
anything, the SEC orders indicated that theSEC believed that Lehman stock was actuallyworth more, not less, and was “less risky thanits artificially depressed market price had
made it appear.” The court determined that“[t]he only plausible inference supported by
the [complaint] is that the market processed
any risks identified in the SEC’s orders as
it would have processed any other public
information.” The Lehman III court explainedthat “Dudenhoeffer bars claims based onsuch public information precisely because themarket is competent to react to it.”Court Finds Plaintiffs Failed
to Allege a Breach of Fiduciary
Duty Claim Based on the Plan
Committee Defendants’ Failure toInvestigate Whether Lehman Was aSound Investment
The court next turned to plaintiffs’ claimthat “the Plan Committee Defendants were
obligated to undertake an investigation into
Lehman’s soundness as an investment andthat, had they done so, they would haveuncovered” “negative inside information
about Lehman.” The Lehman III court
acknowledged that, after Dudenhoeffer,“some claims of breach of fiduciary duty basedon nonpublic information may be cognizable.”
The court stated that Dudenhoeffer “altered
the landscape by making clear that claims
based on nonpublic information—at least
where defendants are corporate insiders—nolonger may be rejected out of hand solely
because of concerns born of the insider
trading laws.”
However, the Lehman III court found a“significant difference” between the facts at
issue in Dudenhoeffer and the allegations
here. In Dudenhoeffer, plaintiffs allegedthat defendants had “‘behaved imprudently
by failing to act on the basis of nonpublic
information that was available to thembecause they were Fifth Third insiders’”(quoting Dudenhoeffer, 134 S. Ct. 2459).
Here, on the other hand, plaintiffs allegedthat “the Plan Committee Defendants [had]breached their fiduciary duty by failing topursue insider information held by others.”
8

The Lehman III court declined to reach thequestion of “whether [such] a duty
to investigate nonpublic information[held by others] even exists,” because
it found that plaintiffs’ allegations were“otherwise insufficient.” The court notedthat plaintiffs did not adequately allege“how [this] hypothetical investigation
would have uncovered the alleged inside
information” or “that any such investigation
would have resulted in averting the harmthat ultimately befell the Plan when Lehman
suddenly collapsed.”

Court Dismisses Duty to Inform
Claim Against Fuld, Finding That
ERISA Does Not Impose a Duty on
Appointing Fiduciaries to Keep
Appointees Informed of Material
Nonpublic Information
The court then considered plaintiffs’
contention that Richard Fuld, Lehman’sformer chairman and CEO, “had inside
information about the precariousness of
Lehman’s position and failed to disclose it to
the Plan Committee Defendants so that they
could evaluate the prudence of continuing toinvest in Lehman on a fully-informed basis.”
The Lehman III court found this “duty to
inform” claim against Fuld “impermissible
as a matter of law” because “ERISA does not
impose a duty on appointing fiduciaries tokeep their appointees apprised of nonpublic
information.”First, the court explained that “Fuld was an
ERISA fiduciary only to the extent that heappointed others to manage the Lehman

Plan.” The court rejected plaintiffs’ attempt to“transform Fuld’s limited obligations under
ERISA into all-encompassing ones” thatwould have applied “[w]henever Fuld received
information in any business capacity.”
The court further found that appointing
fiduciaries do not have “an ongoing obligation
to share inside information” under ERISA.
Second, the court pointed out that the Second
Circuit has “consistently … rejected efforts
to impose additional disclosure obligations
upon ERISA fiduciaries.” The Lehman III
court found that, if appointing fiduciaries
were obligated to disclose nonpublic
information to their appointees, “the result
would be ceaseless conflict between duties
of officers, directors and other company
employees, which run to the company and its
shareholders, and the duties of ERISA plan
fiduciaries, which run to plan beneficiaries.”
Finally, the court determined that theguidance set forth in the Second Circuit’s
prior decisions in In re Citigroup ERISA
Litigation, 662 F.3d 128 (2d Cir. 2011),
and Rinehart, 722 F.3d 137, “remains
persuasive even after Dudenhoeffer.” Thecourt explained that the Second Circuit in
Citigroup had held that “ERISA fiduciaries
have no obligation to disclose nonpublic
information to plan beneficiaries,” based,inter alia, on its finding that “ERISA [does]
not require fiduciaries to act as investment
advisors.” The court also noted that theSecond Circuit in Rinehart had foundthat it “‘would be unlikely’” to impose on
appointing fiduciaries a duty to disclose inside
information (quoting Rinehart, 722 F.3d 137).

9

The Lehman III court acknowledged that
the Court in “Dudenhoeffer contemplated
that the duty of prudence might be breachedbased on nonpublic information, so long as
plaintiffs allege[d] ‘an alternative action thatthe defendant could have taken that would
have been consistent with the securities laws’”(quoting Dudenhoeffer, 134 S. Ct. 2459).
However, the Lehman IIII court determinedthat the language in Dudenhoeffer was “notdispositive of whether an appointing fiduciaryhas a duty to disclose inside information.”
The court therefore dismissed plaintiffs’ duty
to inform claim against Fuld, and separately
dismissed plaintiffs’ duty to monitor claim
against Fuld because plaintiffs failed to allegea predicate breach of fiduciary duty by thePlan Committee Defendants.

Southern District of New
York: Second Circuit’s
Decision in Newman Did Not
Change the “Personal Benefit”
Requirement for Tipper
Liability for Insider Trading
On July 2, 2015, the Southern District of
New York denied a motion by Rajat Gupta, aformer director of Goldman Sachs, to vacate
his insider-trading conviction for sharing
material nonpublic information concerning
Goldman Sachs with Galleon Group head Raj
Rajaratnam, who traded on the basis of that
information. United States v. Gupta, 2015
WL 4036158 (S.D.N.Y. 2015) (Rakoff, J.).
Following the Second Circuit’s decision inUnited States v. Newman, 773 F.3d 438 (2dCir. 2014), Gupta had moved, pursuant to 28
U.S.C. § 2255, to vacate the judgment against
him on the grounds that the trial court’s
jury instruction regarding the “personal
benefit” requirement for tipper liability waserroneous. The Southern District of New York
found that Newman “did not open the door
to an argument that ‘prior … case law [had]consistently rejected,’” nor did Newman
change the “personal benefit” requirement for
tipper liability.

Court Holds Newman Did Not
Overrule Any Binding Precedent on
Tipper Liability
The court explained that, “where, as here, ‘acriminal defendant has procedurally forfeited
his claim by failing to raise it on direct review,the claim may be raised in a § 2255 motion
only if the defendant can demonstrate either:(1) cause for failing to raise the issue, andprejudice resulting therefrom; or (2) actual
innocence.’” A petitioner “may demonstratecause for a failure to raise an issue during trial
or to preserve it on appeal where doing sowould have been futile in light of ‘prior … caselaw that consistently rejected [the] particular… claim.’”With respect to Gupta’s contention thatthe trial court’s jury instruction regarding
the “personal benefit” requirement waserroneous, the court found that this argument
would not have been “futile for the simple
reason that Newman … did not purport tooverrule any binding precedent.” The court
explained that Newman only “arguably
narrowed the range of evidence that would
support an inference of ‘benefit.’”Court Holds Newman Did Not Alterthe “Personal Benefit” Requirement
for Tipper Liability
Gupta claimed that, if the trial court had
instructed the jury on the Newman “personal
benefit” standard, the government’s evidence
would have been insufficient to convict him.
According to Gupta, “Newman requires thata tipper (here Gupta) receive from his tippee(Rajaratnam) a ‘quid pro quo’ in the form of‘a potential gain of a pecuniary or similarly
valuable nature.’” The court found that
“Gupta’s argument misread[ ] Newman.”
The court explained that “Newman wasconcerned with the liability of a remotetippee,” not tipper liability. The court statedthat Newman “in no way purport[ed] tochange [the] fundamental concept” that “atipper is liable for securities fraud if he takes
sensitive market information provided tohim in a fiduciary capacity and exploits it forsome personal benefit.” The court found that“the plain language of … Newman” makes
it clear that “a tipper’s intention to benefit
the tippee is sufficient to satisfy the benefit
requirement so far as the tipper is concerned.”
For purposes of establishing tipper liability,10the court found that “no quid pro quo isrequired.”
Nevertheless, the court determined that “theproof at trial easily satisfied even Gupta’sview of Newman.” The court explained that
Gupta and Rajaratnam “were close businessassociates with a considerable history of
exchanging financial favors.” Gupta benefited
in some way, either indirectly through areturn favor or directly through his stakein Galleon, with every tip he conveyed to
Rajaratnam. The court therefore denied
Gupta’s motion to vacate the judgment
against him on Newman grounds.

Delaware Chancery Court:(1) Continuous Holder
Requirement for Appraisal
Actions Is Not Met If ThereIs an Administrative Transfer
at the DTC Level; (2) Court
Suggests a Different Approachto Determining Who Is a
Stockholder for Appraisal
Purposes
Section 262 of the Delaware General
Corporation Law permits dissenting
shareholders in certain merger transactions
to petition the court to obtain the “fair value”
of their shares. 8 Del. C. § 262. A prerequisite
for appraisal rights is that a shareholder must
“continuously hold [ ] such shares through theeffective date of the merger” (the “Continuous
Holder Requirement”).
On July 13, 2015, the Delaware Chancery
Court considered whether the Continuous
Holder Requirement “bar[s] a beneficial
owner” of stock held in fungible bulk by thefederal Depository Trust Company (“DTC”)“from pursuing appraisal if there has beenan administrative transfer at the depositorylevel.” In re Appraisal of Dell Inc., 2015 WL
4313206 (Del. Ch. 2015) (Laster, V.C.). The
court held that “[u]nder current [Delaware]law, the answer is yes.” However, the court
stated that if it were “writing on a blankstate,” it would “look[ ] through” the DTC
ownership structure and “recognize[ ] thecustodial banks and brokers as record
holders.” The court explained that if Delaware

law took this approach, then beneficial
owners of stock held by the DTC “would
retain their appraisal rights” regardless ofany administrative transfers at the depositorylevel as long as “ownership by the relevant
DTC participants” remained the same.

The Creation of the DTC System
In the late 1960s and early 1970s, “[i]ncreased
trading volume in the securities markets
overwhelmed the back offices of brokeragefirms and the capabilities of transfer agents,”
which could not “cope with the burdensof documenting stock trades using paper
certificates.” The SEC eventually responded
by “adopt[ing] a national policy of shareimmobilization.”
Pursuant to this policy, the SEC createdthe DTC to hold shares in fungible bulk
on behalf of banks and brokers. Instead of
issuing shares in the names of the participant
entities, the DTC issues all shares in the nameof Cede & Co., the DTC’s nominee. Throughan “electronic book entry system,” the DTC“track[s] the number of shares of stock thateach participant holds.” However, because“legal title [typically] remains with Cede,”“[n]o new certificates are required” whenshares of stock are transferred from one
owner to the next. The addition of the “DTCto the bottom of the ownership chain”“eliminated the need for the overwhelming
majority of legal transfers.”
Today, more than 800 custodial banks andbrokers are members of the DTC. While the
DTC system “solved the paperwork crisis,
it complicated other aspects of the legal
system,” including appraisal for dissenting
shareholders in the merger context. The
DTC eventually “modified its procedures”
to “help issuers oversee the surrender ofshares.” In the event that “a beneficial ownercauses Cede to demand appraisal, [the] DTC
removes the shares covered by the demand
from the fungible bulk” and “cause[s] theissuer’s transfer agent to issue a paper stock
certificate [in Cede’s name] for the numberof shares held by the beneficial owner.” Bytitling the stock certificate in Cede’s name,the DTC ensures that “the same record
holder continues to hold the shares forpurposes of [Section 262’s] Continuous
Holder Requirement.”11

Case Background
In February 2013, Dell agreed to a goingprivate merger transaction. Five institutions
that owned Dell stock through custodial banks
participating in the DTC system (the “Funds”)
exercised appraisal rights for certain of theirshares. The DTC then “followed its procedures
and issued paper stock certificates in Cede’s
name for the Funds’ shares.” However, theFunds’ custodial banks followed a policy of“only hold[ing] stock certificates that areissued in the names of their own nominees.”
The custodial banks therefore “instructed
Dell’s transfer agent to record a transfer of theshares to [each bank’s] nominee and issue acertificate in [each bank’s] nominee’s name.”
While “[t]he Funds remained the beneficial
owners” and “[t]he custodians remained thecustodians,” “there were [now] new nominees
on the stock ledger.”
Dell moved for summary judgment on
the Funds’ appraisal claim, “arguingthat these back-office steps resulted in
new record holders and broke the chainof title for purposes of the Continuous
Holder Requirement.”

Following Delaware Precedent,
Chancery Court Finds theContinuous Holder Requirement
Is Not Met If There Is a Change ofLegal Ownership, Even If Beneficial
Ownership Remains the SameThe Chancery Court began its analysis withthe appraisal statute. Pursuant to Section
262, “‘[a]ny stockholder of a corporation’”
may petition for appraisal in connection
with certain merger transactions provided
the Continuous Holder Requirement is met(quoting 8 Del. C. § 262). The court observedthat the statute defines “stockholder” as“‘a holder of record of stock in a stock
corporation,’” but “does not define what itmeans to be a ‘holder of record.’”
The Chancery Court then turned to Delaware
precedent. The court found that underprior Delaware decisions, “‘only the person
appearing on the corporate records as theowner of stock in the corporation may qualify
for an appraisal’” (quoting In re Engel v.
Magnavox Co., 1976 WL 1705 (Del. Ch. April
22, 1976)). Delaware courts have held that“‘[i]t is the ‘record holder—not the beneficial
owner—[that] is subject to the statutory

requirements for showing entitlement toappraisal and demonstrating perfection ofappraisal rights under Sections 262(a) and(d)’” (quoting In re Appraisal of Ancestry.
com, Inc., 2015 WL 66825 (Del. Ch. Jan. 5,2015)). Delaware courts have further held that“[t]he re-titling of a certified share after thedemand but before the effective date violates
the Continuous Holder Requirement bycausing record ownership to change” (citing
Nelson v. Frank E. Best Inc., 768 A.2d 473(Del. Ch. 2000)).8
In the case before it, the Chancery Court
found that “on Dell’s records,” “legal
ownership of [the] Funds’ shares [had]changed from Cede” to the custodial banks’nominees between the date of the demand
and the effective date of the merger.
Applying Delaware precedent, the court
accordingly determined that “the Funds losttheir appraisal rights” “[w]hen the shareswere re-titled.”

Chancery Court Suggests Delaware
Courts Should Consider DTC
Participants to Be “Stockholders
of Record” for Purposes of Section
262 Appraisal Rights
The Chancery Court suggested that“[a] different approach” to determining who
qualifies as a stockholder of record for Section
262 appraisal purposes is both “possible” and“preferable.” The court stated that if it were
“writing on a blank slate,” it “would hold thatthe ‘records’ of the corporation for purposesof determining who is a ‘stockholder ofrecord’ include the DTC participant list.”
The court explained that this approach would
bring Delaware law in line with federal law,which “looks through Cede [and the DTC] andrecognizes the custodial banks and brokers
as record holders.” Moreover, the court
reasoned that such an approach would “betterreflect[ ] current reality.” The court explained
that, “[v]iewed pragmatically, the federal
policy of share immobilization compelledpublicly traded Delaware corporations to
outsource one part of the stock ledger—the
DTC participant list—to DTC.” The court
found that “Delaware law … should treat the
8. In Nelson, the Chancery Court noted that because Cede hadtransferred record ownership of shares to the appraisal petitioner,
Cede’s appraisal demand was “invalid, because Cede would not‘continuously’ be the holder of record between the … date of
Cede’s demand and the effective date of the [m]erger, as requiredby 8 Del. C. § 262(a).” 768 A.2d 473.
12

outsourced DTC participant list as a recordof the corporation, albeit one maintained by[the] DTC.”
If the Delaware Supreme Court were to adopt
this approach, then “the Funds would [have]retain[ed] their appraisal rights” in this case“because ownership by the relevant DTC
participants never changed.” However, theChancery Court found that it was not “free tointerpret the ‘holder of record’ language inthis manner” given “existing precedent.” Thecourt noted that it had “previously advocatedtreating DTC participants as holders of record
for purposes of analyzing whether the shares
they held could be voted without a DTC
omnibus proxy” (citing Kurz v. Holbrook,
989 A.2d 140 (Del. Ch. 2010), aff’d in part,rev’d on other grounds sub nom. Crown
EMAK Partners LLC v. Kurz, 992 A.2d 377(Del. 2010)). On appeal in Kurz, the Delaware
Supreme Court did not reach the question of“whether DTC participants should be treatedas record holders,” but did express its viewthat “‘a legislative cure is preferable’” toresolve the question of who is a record holder
for appraisal rights purposes (quoting EMAK
P’rs, 992 A.2d 377). The Chancery Court here
“respectfully disagree[d] with [the Delaware
Supreme Court’s] expressed preference for alegislative cure,” finding “the question of what
constitutes the records of the corporation
for purposes of determining who is a ‘holderof record’” to be “a quintessential issue ofstatutory interpretation appropriate for the
judiciary to address.”

Delaware Chancery Court:(1) Discounted Cash Flow
Method of Share Appraisal
in a Section 262 Action Is
Inappropriate If Management
Projections Are Unreliable;(2) Merger Price Can Be
Evidence of Share Value If theSales Process Was Fair
On June 30, 2015, in an appraisal action
brought pursuant to Section 262 of theDelaware General Corporation Law following
Cypress Semiconductor Corporation’s hostile
cash acquisition of Ramtron International
Corporation, the Delaware Chancery Court

issued a post-trial decision rejecting thediscounted cash flow (“DCF”) methodology
for appraising the value of Ramtron’s sharesbecause it found the underlying management
projections “unreliable.” LongPath Capital,
LLC v. Ramtron Int’l Corp., 2015 BL 208944(Del. Ch. 2015) (Parsons, V.C.). The court
instead determined that the merger price was“a reliable indication of Ramtron’s fair value”
because the sales process was “thorough,effective, and free from any spectre of selfinterest or disloyalty.”

Court Finds Ramtron’sManagement Projections“Unreliable” Because They
Were (1) Prepared by a New
Management Team (2) Using a New
Methodology (3) in Anticipation ofa Potential Acquisition
The Chancery Court stated at the outsetthat “[t]ypically, Delaware courts tend tofavor a DCF model over other available
methodologies in an appraisal proceeding.”
However, the court explained that the DCF“metric has much less utility in cases where… the data inputs used in the model are
not reliable.” The court noted that “[t]hefoundational inputs of a DCF [analysis] are
the company’s cash flows,” which are in turnbased on management projections.
The court stated that, as a rule, “management
projections … made in the ordinary course ofbusiness … are generally deemed reliable.”
However, “projections prepared outsideof the ordinary course do not enjoy thesame deference.” The court observed that“management projections can be, andhave been, rejected entirely when theylack sufficient indicia of reliability, such as
when they were prepared: (1) outside of
the ordinary course of business; (2) by amanagement team that never before hadcreated long-term projections; (3) by amanagement team with a motive to alter the
projections, such as to protect their jobs; and(4) when the possibility of litigation, including
an appraisal action, was likely and probably
affected the neutrality of the projections.”
Here, the court found that “the Ramtronmanagement projections suffer[ed] from all ofthese problems.”
The court explained that the management
projections were created by a “newmanagement team” that utilized several
13

new methodologies for creating long-term
projections. The court also pointed out thatthe projections were questionable in light of“management’s lack of success in accurately
projecting future revenue in the past” and thefact that the projections “def[ied] historical
trends.” In addition, the court determinedthat the projections relied on “revenue
figures that were distorted” due to certain“improper [ ]” revenue recognition practices,
and also “incorporate[d] unrealistic
assumptions” regarding Ramtron’s transition
to a second foundry. The court found that “thefinal nail in the coffin for [Ramtron’s][m]anagement [p]rojections [was] that
Ramtron did not rely on them in the ordinary
course of its business.” Instead, Ramtron
created the projections “in anticipation ofpotential litigation, or, at least, a hostile
takeover bid.”
Because the court found that the management
projections were “unreliable,” the court
determined that “it would be inappropriate todetermine [Ramtron’s] fair value based on a
DCF analysis.”

Court Determines the Merger PriceIs the Best Evidence of Ramtron’s
Fair Value, Even Though There
Was No Multi-Bidder Auction for
Ramtron and Cypress’s Acquisitionof Ramtron Was Hostile
In the case before it, the court determinedthat “the [m]erger price offer[ed] the bestindication of fair value.” The court recognizedthat “[a] merger price does not necessarily
represent the fair value of a company” forpurposes of a Section 262 appraisal. However,the court noted that “in the situation of aproper transactional process likely to haveresulted in an accurate valuation of an
acquired corporation,” the Chancery Court
has previously “looked to the merger price asevidence of fair value and, on occasion, giventhat metric one-hundred percent weight.”
The court noted that unlike in prior cases
adopting the merger price as the best
evidence of fair value, “only one company,
Cypress, [had] made a bid” for Ramtron.
However, the court stated that it was “notaware of any case holding that a multi-bidder
auction of a company is a prerequisite tofinding that the merger price is a reliableindicator of fair value.” The court further
observed that the Ramtron case was uniqueinsofar as it involved “a hostile deal.”
Nevertheless, the court found that the“lengthy” and “publicized” Ramtron sales
process was adequately “thorough” and gave
the court “confidence that, if Ramtron could
have commanded a higher value, it would
have.” The court found meritless petitioner’scontention that “the lack of other bidders”
for Ramtron “indicate[d] a flawed process.”
Rather, the court determined that “[a]ny
impediments to a higher bid resulted from
Ramtron’s operative reality, not shortcomingsof the [m]erger process.” The court therefore“conclude[d] that the [m]erger price [was] a
reliable indication of Ramtron’s fair value.”

The Securities Law Alertis edited by Paul C. Gluckow(pgluckow@stblaw.com/+1-212-455-2653), Peter E. Kazanoff(pkazanoff@stblaw.com/+1-212-4553525) and Jonathan K. Youngwood(jyoungwood@stblaw.com/+1-212-455-3539).

14

New York

Los Angeles

Mark G. Cunha+1-212-455-3475
mcunha@stblaw.com

Lynn K. Neuner+1-212-455-2696
lneuner@stblaw.com

Michael D. Kibler+1-310-407-7515
mkibler@stblaw.com

Paul C. Curnin+1-212-455-2519
pcurnin@stblaw.com

Thomas C. Rice
+1-212-455-3040
trice@stblaw.com

Chet A. Kronenberg+1-310-407-7557
ckronenberg@stblaw.com

Michael J. Garvey+1-212-455-7358
mgarvey@stblaw.com

Mark J. Stein+1-212-455-2310
mstein@stblaw.com

Palo AltoPaul C. Gluckow+1-212-455-2653
pgluckow@stblaw.com

Alan C. Turner+1-212-455-2472
aturner@stblaw.com

Nicholas Goldin+1-212-455-3685
ngoldin@stblaw.com

Mary Kay Vyskocil+1-212-455-3093
mvyskocil@stblaw.com

David W. Ichel+1-212-455-2563
dichel@stblaw.com

Craig S. Waldman+1-212-455-2881
cwaldman@stblaw.com

Peter E. Kazanoff+1-212-455-3525
pkazanoff@stblaw.com

George S. Wang
+1-212-455-2228
gwang@stblaw.com

Joshua A. Levine+1-212-455-7694
jlevine@stblaw.com

David J. Woll
+1-212-455-3136
dwoll@stblaw.com

Joseph M. McLaughlin+1-212-455-3242
jmclaughlin@stblaw.com

Jonathan K. Youngwood+1-212-455-3539
jyoungwood@stblaw.com

Alexis S. Coll-Very+1-650-251-5201
acoll-very@stblaw.com
James G. Kreissman+1-650-251-5080
jkreissman@stblaw.com

Washington, D.C.
Peter H. Bresnan+1-202-636-5569
pbresnan@stblaw.com
Jeffrey H. Knox
+1-202-636-5532
jeffrey.knox@stblaw.com
Cheryl J. Scarboro+1-202-636-5529
cscarboro@stblaw.com
Peter C. Thomas+1-202-636-5535
pthomas@stblaw.com

The contents of this publication are for informational purposes only. Neither this publication nor the
lawyers who authored it are rendering legal or other professional advice or opinions on specific facts
or matters, nor does the distribution of this publication to any person constitute the establishment of an
attorney-client relationship. Simpson Thacher & Bartlett LLP assumes no liability in connection withthe use of this publication. Please contact your relationship partner if we can be of assistance regardingthese important developments. The names and office locations of all of our partners, as well as ourrecent memoranda, can be obtained from our website, www.simpsonthacher.com.
15

SimpsonThacherWorldwide

UNITED STATESEUROPE

SOUTH AMERICANew York
425 Lexington Avenue
New York, NY 10017+1-212-455-2000

LondonCityPoint
One Ropemaker Street
London EC2Y 9HUEngland+44-(0)20-7275-6500

São Paulo
Av. Presidente Juscelino
Kubitschek, 1455
São Paulo, SP 04543-011
Brazil+55-11-3546-1000

Houston
600 Travis Street, Suite 5400
Houston, TX 77002+1-713-821-5650
Los Angeles
1999 Avenue of the Stars
Los Angeles, CA 90067+1-310-407-7500
Palo Alto
2475 Hanover Street
Palo Alto, CA 94304+1-650-251-5000
Washington, D.C.
1155 F Street, N.W.
Washington, D.C. 20004+1-202-636-5500

ASIA

Beijing3919 China World Tower
1 Jian Guo Men Wai Avenue
Beijing 100004
China+86-10-5965-2999
Hong Kong
ICBC Tower
3 Garden Road, Central
Hong Kong+852-2514-7600
Seoul
West Tower, Mirae Asset Center 1
26 Eulji-ro 5-gil, Jung-gu
Seoul 100-210
Korea+82-2-6030-3800
Tokyo
Ark Hills Sengokuyama Mori Tower
9-10, Roppongi 1-Chome
Minato-Ku, Tokyo 106-0032
Japan+81-3-5562-6200

16