Securities Class Actions - Making a Difference

New York, NYCitigroup is in the news again, this time concerning high-risk hedge funds, in which investors could lose everything they invested. Christopher J. Gray, P.C. has represented plaintiffs in securities class actions, shareholder derivative actions and other complex litigation in the state and federal courts.

Prior to starting his own practice, Gray, in conjunction with his former firm, represented the plaintiffs in a class action that obtained reportedly, the largest recovery ever under the Commodities Exchange Act, $145.35 million.

Lawyers and Settlements recently spoke with Mr. Gray in connection with the Citigroup Hedge Funds lawsuits. Very recently, Citigroup issued a settlement offer, good to June 30, 2008, in which investors could either accept between 45-55 percent of their initial investment and waive their rights to take any further legal action, or reject the settlement offer and retain their right to file a lawsuit. In considering this offer, Gray believes that individuals need to honestly assess their risk tolerance.

"When people are considering legal action they need to consider the possibility that if the case doesn't go the way they would like it to, they could end up with nothing," he said. "They need to ask themselves what their risk tolerance is." Gray believes that investors could do better than the deal that Citigroup is offering. "I think that there is a strong case here – certainly a potential to do better than the 45 – 55 percent Citigroup is offering."

Investors also need to be aware, and educate themselves about the funds they are considering purchasing. While that is no guarantee of safety, it could help mitigate the risks. In this recent Citigroup case, the Falcon and ASTA/MAT hedge funds were allegedly promoted by Citigroup's Smith Barney brokerage arm to investors as being low-risk, safe places to put their money. They were told they would have no more than five percent expectation of posted loss. But this is not the first time Citigroup has been implicated in securities issues. They are cited in a string of securities litigations going back to 2003, and possibly longer. And they were charged by the Securities and Exchange Commission, along with J.P. Morgan Chase, in helping Enron Corp hide debts and defraud investors. Does this constitute a pattern of behaviour for this financial institution that investors should have been aware of?

"I don't know if it's a pattern," Gray said. "There are some very good brokers and advisors out there, but like anything, there are some bad ones as well. Sometimes instructions come from higher up in an organization to sell a particular product, and they might even have special compensation for selling particular products at particular times. Some brokers go along with it, and others don't because ultimately it's their book of business and their customers. If they don't keep their customers they don't have a business."

Individuals Can Influence Corporate Behavior

Having practiced law for 10 years, Gray believes that individuals can make a difference in the big picture. "I think that plaintiffs filing cases does have an impact in discouraging dishonest conduct among brokerage firms and corporations," he said. "With class action suits you can help a lot of people at once. I want to represent plaintiffs because I like to help individual investors and consumers. I like to think I'm making a difference for people. One thing about most plaintiff lawyers is that they are compensated based on a percentage of the recovery that they are able to retain for their clients. So in a sense they are united in their financial interest with the client. They're not making recommendations that will reward them with compensation and hurt their client. Only if the client does well does the lawyer do well."

Based in New York City, Gray is also currently working on two class action cases representing the plaintiffs in a wage and hour case and an anti-trust case.

Mr. Gray was admitted to the bar in New York in 1997 and is a member of the bars of the U.S. District Courts for the Eastern and Southern Districts of New York, the U.S. Court of Appeals for the Second Circuit and the U.S. Supreme Court. Mr. Gray is a member of the New York State Trial Lawyers Association, the New York State Academy of Trial Lawyers, the Association of Trial Lawyers of America, and the Association of the Bar of the City of New York. Mr. Gray holds a J.D. degree from Georgetown and a B.A. from the University of Wisconsin.