NEW YORK, Oct. 8, 2021 /PRNewswire/ --Litigation powerhouse
Reid Collins & Tsai LLP today
announced the terms of a direct pay cash settlement totaling at
least $300 million and resolving
the In re Renren, Inc. Derivative Litigation (NYSE:
RENN). (The aggregate cash payment to Renren's
minority shareholders and ADS holders may exceed $300 million depending on the final determination
of the number of shares and ADSs held by non-Defendants).
Pending in New York state court,
the action alleges a complex scheme by Renren insiders to take the
company's billion-dollar investment portfolio for themselves.
$300 million settlement is among
largest ever derivative recoveries....precedent-setting case law to
protect investors
Reid Collins Founding Partner William T. Reid, IV on the
resolution of the Renren litigation: "This is an
extraordinary result by any measure. It is very rare to settle a
case for more than the damages that we originally
pleaded. Yet indeed, from the vantage point of minority
shareholders, we have recovered more for them in this direct pay
settlement than the damage claim we set forth in the
complaint. Obtaining jurisdiction over these foreign
defendants was no small task, but obtaining derivative standing was
an even greater achievement. What little New York law existed on establishing
derivative standing under Cayman law was adverse, but the facts of
this case and a thorough presentation of Cayman law nonetheless
allowed us to establish that the minority were in fact entitled to
pursue the company's claim under the 'fraud on the minority'
exception to the general rule against derivative standing. I could
not be more proud of what we have accomplished in Renren,
and of our clients, including Heng Ren Silk Investments, LLC in
taking on this significant and important challenge."
The shareholder derivative suit arises from a highly unusual
series of interrelated transactions through which Renren's
allegedly corrupt insiders took Renren's investment portfolio for
themselves in 2018 to the detriment of minority shareholders. The
complaint centers on alleged breaches of fiduciary duty in
connection with the transfer of Renren's most valuable assets,
including a substantial stake in fast-growing lender Social
Finance, Inc. ("SoFi") — for far less than fair market value — to a
private company, Oak Pacific Investments ("OPI"), which is owned
and controlled by Renren's CEO Joseph
Chen and other controlling shareholders. Chen and affiliates
stood on all sides of these transactions as major investors and/or
directors in Renren, OPI, and SoFi itself, facilitated by Duff
& Phelps, LLC, a financial advisor to a special committee of
Renren's board of directors, who it is alleged aided and abetted
these breaches of fiduciary duty.
"This is an important message American investors are sending to
Chinese companies on our stock markets," said Peter Halesworth, founder and manager of Heng
Ren. "U.S. shareholders will fight raw deals of bad actors from
China in our stock markets."
Precedent-Setting Case Will Have Long Term Impacts for Cross
Border Fraud and Financial Misconduct
In May 2020, Reid Collins defeated all motions to dismiss
filed by the original defendants. In March
2021, the Appellate Division, First Judicial Department of
New York State Supreme Court affirmed the trial court's denial of
all the motions to dismiss and rejected defendants' arguments over
personal jurisdiction and contending that plaintiffs lack standing
under Cayman Islands law. In
April, the New York State Supreme
Court took the rare step of attaching all of the assets that OPI
received in the 2018 transaction and required any sales proceeds up
to $560 million be deposited in a
New York escrow account.
Plaintiffs faced significant legal challenges to acquire U.S.
jurisdiction over multiple foreign defendants and establish
derivative standing under Cayman law. After an extensive
investigation and litigation, Plaintiffs presented the complex
details of the transactions and the conduct of the far-flung
participants to the court, building a jurisdictional theory with
which the court agreed completely and was affirmed on appeal.
These wins have created new precedent to combat a growing problem
in the financial sector – the difficulty in addressing fraud and
wrongdoing by foreign companies (and related individual actors)
publicly traded on U.S. exchanges.
The case is In re Renren, Inc. Derivative Litigation,
Index No. 653594/2018 (N.Y. Sup. Ct.). Reid Collins, representing derivative plaintiffs
as Lead Counsel in this action (alongside co-counsel Grant &
Eisenhoffer P.A., Gardy & Notis, LLP, and Ganfer Shore Leeds
& Zauderer LLP), successfully litigated these novel claims
against an array of law firms, including: Skadden, Arps, Slate,
Meagher & Flom LLP; Paul, Weiss, Rifkind, Wharton &
Garrison LLP; McDermott, Will & Emery LLP; Morrison &
Foerster LLP; Orrick, Herrington & Sutcliffe LLP; Goodwin
Procter LLP; Holland & Knight,
LLP; and Winston & Strawn LLP.
About Reid Collins
Reid Collins & Tsai LLP is
one of the nation's leading plaintiffs' trial firms, litigating
complex business disputes and achieving billions of dollars in
settlements and judgments for its clients. Its team is comprised of
accomplished trial lawyers who have extensive experience
prosecuting financial fraud and corporate malfeasance cases,
bankruptcy and insolvency related litigation, professional
liability claims, and cross-border disputes. The firm represents
fund managers, investor groups, trustees, receivers, liquidators,
international banks, companies, governmental entities, and
individuals in federal and state courts across the country.
For more information visit www.reidcollins.com
Austin | Dallas | New
York | Washington D.C. |
Wilmington
Source: Reid Collins &
Tsai LLP
Contact:
Alexander Coxe
212.365.4792
acoxe@reidcollins.com
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