William Alderman

Senior Counsel

San Francisco

walderman@orrick.com

Read full biography at www.orrick.com
Bill Alderman, a Senior Counsel in the San Francisco office, concentrates his practice on business litigation and dispute resolution. He has broad experience in matters involving federal and state securities, corporate governance, technology, trade secrets, business torts and international disputes.

Bill is additionally recognized for the results he has obtained in insurance coverage, employee benefits, and federal and state antitrust disputes. He commits a substantial part of his time to pro bono representation and to representation of the firm.

Representing clients in class and derivative actions, Bill's approach is to minimize his clients’ overall cost through careful strategic planning, dispositive motions and aggressive negotiation. Only three of the many securities class actions he has defended have resulted in any settlement payment by his client or its carrier. Of his nearly 100 motions to dismiss securities class, mass or derivative actions since 1996, more than 90 percent were granted in their entirety (most with prejudice), while others were granted in part or led to a successful motion for summary judgment.

Posts by: William Alderman

Does Being an ‘Expert’ Make You an Expert?

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Matrix

Earlier this month, Judge Victor Marrero of the Southern District of New York issued his opinion certifying a class of buyers of the common stock of a company created by a Chinese reverse merger.  McIntire v. China MediaExpress Holdings, Inc., 2014 U.S. Dist. LEXIS 113446 (S.D.N.Y. Aug. 15, 2014).  In doing so, he rejected defendants’ Daubert motion challenging the qualifications and methodology of plaintiffs’ expert witness on market efficiency, Cynthia Jones, and concluded that the market was efficient enough to support the Basic presumption of reliance and to permit class certification.  READ MORE →

Insider Trading Gets Political: Trading on Political Intelligence

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Some things are better left unsaid. Especially, it seems, when they involve political intelligence shared by a congressional aide with a lobbyist linked to a political intelligence firm serving Wall Street traders.

The sharing of political-insider scoop has recently caused Congress to be subpoenaed for an insider trading investigation that will likely test recent legislation enacted to curb trading on non-public political information. The SEC subpoenaed Rep. David Camp (R., Mich.) for records, and the Justice Department subpoenaed Camp’s aide Brian Sutter, staff director of the House Ways and Means Committee’s healthcare subpanel, to testify before a federal grand jury. READ MORE →

Halliburton Watch: Let’s Start with the Basics

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On March 5, 2014, the Supreme Court heard oral argument in the case Halliburton Co. v. Erica P. John Fund, Inc., Case No. 13-317, and we are certain our blog readers are eagerly awaiting the Court’s ruling.  The case has potentially far-ranging implications for the survival of the Court’s landmark ruling in Basic, Inc. v. Levinson, 485 U.S. 224 (1988), which relied on the efficient market hypothesis to create the fraud-on-the-market presumption of reliance on misrepresentations.  This post provides background on the history of the Halliburton litigation and is the first in a series of posts that will analyze the arguments by the parties and amici, the Court’s ruling, and the potential implications for future litigation.

Plaintiff-Respondent Erica P. John Fund, Inc. is a not-for-profit group that supports the outreach work of the Archdiocese of Milwaukee.  The Fund purchased stock in Halliburton Company and lost money when Halliburton’s stock price dropped following negative news regarding Halliburton’s (1) potential liability in asbestos litigation, (2) revenue accounting on fixed-price construction contracts, and (3) merger with Dresser Industries.  The Fund sued Halliburton and its CEO David Lesar alleging that they had previously made fraudulent misrepresentations concerning those topics in violation of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. READ MORE →

Out of Control: SEC Says Lack of Internal Controls Led to HP Paying More Than $108 Million to Settle FCPA Actions

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On April 9, 2014, the Securities and Exchange Commission announced that Hewlett-Packard had agreed to pay more than $108 million to settle Foreign Corrupt Practices Act actions brought by the SEC and the Department of Justice.  These actions were based on HP’s subsidiaries’ alleged payments of more than $3.6 million to Russian, Polish, and Mexican government officials to obtain or maintain lucrative public contracts.  The settlement is important because it highlights the SEC’s and DOJ’s continued focus on companies’ internal controls, particularly in the FCPA arena.  It also shows that the SEC may be able to use lesser, non-fraud offenses in which the underlying conduct involves a fairly de minimis amount of money to police behavior and subject companies to significant financial consequences. READ MORE →

Investors Get a Voice at the Regulator: SEC Names Its First Head of the Office of the Investor Advocate

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Though investors might have assumed that the entire Securities and Exchange Commission was their advocate to begin with, on February 12th the agency announced that it had hired Rick Fleming to be its very first Investor Advocate in the recently created Office of the Investor Advocate (“OIA”).

In hiring Fleming, the SEC is implementing Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amended the Securities Exchange Act of 1934 by creating, among other things, an Investor Advisory Committee, the OIA, and an ombudsman to be appointed by the Investor Advocate.  Fleming comes to the SEC from his most recent job as Deputy General Counsel at the North American Securities Administrators Association where he advocated for state securities regulators in matters before Congress and the SEC.  Fleming previously spent several years in Kansas state government, including some fifteen years in the state’s Office of the Securities Commissioner. READ MORE →

Can Your Director Bank on the Business Judgment Rule?

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Ever had one of those days where you think you’re acting with good faith, diligence, and care, and yet you still get sued by the FDIC?  The directors and officers of the now defunct Buckhead Community Bank in Georgia find themselves in the government’s crosshairs and, unlike their D-and-O counterparts at public companies, a federal court in Georgia thinks it’s not so clear that they’ll be able to claim the protections of the business judgment rule to avoid the FDIC’s claim that they caused the bank to lose millions of dollars.

The background in this case reads like so many others in similar suits around the country.  According to the FDIC, the bank implemented an “aggressive growth strategy” beginning in 2005 that resulted in a 240 percent increase in the bank’s loan portfolio through 2007, primarily from gains in the bank’s “high-risk real estate and construction loans.”  The bank’s adversely classified assets grew from twelve percent to more than 200 percent of its tier-1 capital, and by December 2009 the bank had landed in FDIC receivership.  The FDIC later sued the bank’s directors and officers in federal court alleging that they were negligent for repeated violations of the bank’s loan policy, underwriting requirements, banking regulations, and “prudent and sound banking practices.” READ MORE →

A Bird in the Hand is Worth … Nothing if you Can’t Really Sell it

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Building

A pair of investment firms recently filed suit against Twitter in the Southern District of New York, alleging that Twitter had fraudulently refused to allow them to sell its private stock in advance of its much-anticipated IPO.  If that sentence looks somewhat bizarre, it is because the allegations themselves are bizarre, at best.

In short, the plaintiff investment firms allege that a managing partner of GSV Asset Management, who was a Twitter shareholder, engaged them to market a fund that would purchase and hold nearly $300 million in private Twitter shares from the Company’s early-stage shareholders.  Plaintiffs then embarked on an “international roadshow” to line up investors in the fund.  Plaintiffs allege that, on the roadshow, “there was substantial interest in purchasing [the private] Twitter shares at $19 per share.” READ MORE →

When Are Directors Liable for Failing to Exercise Proper Oversight?

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Recently we discussed whether directors of public companies face potential liability for not preventing cyber attacks.  As we discussed, the answer is generally no, because absent allegations to show a director had a “conscious disregard” for her responsibilities, directors do not breach their fiduciary duties by failing to properly manage and oversee the company.

That well-established rule was again affirmed last week by the Delaware Court of Chancery in In re China Automotive Systems Inc. Derivative Litigation,  a case that concerned an accounting restatement by a Chinese automotive parts company.  Plaintiffs there alleged that the company’s directors breached their fiduciary duties by failing to manage and oversee the company’s accounting practices and the company’s auditors, who improperly accounted for certain convertible notes from 2009 to 2012.  When the error was uncovered, the company restated its financials for two years and its stock price dropped by 15%. READ MORE →

SEC Wins Some, Loses Some in Aggressive Insider Trading Case, SEC Doesn’t Know Who Tipped in All Know Insider Trading Case

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In a decision rendered from the United States District Court for the Northern District of Illinois, Eastern Division, Judge Ronald Guzmán granted summary judgment on the SEC’s insider trading claims as to three defendants but allowed claims as to one defendant to proceed to trial.  The SEC’s claims against all of the defendants focused on suspiciously-timed sales and other circumstantial evidence, but failed to identify specific tippers who provided defendants with inside information. The case highlights the SEC’s aggressive strategy in pursuing insider trading claims without direct evidence of tipping. The court’s decision also underscores the  importance of pursuing motions during discovery in order to preserve arguments, or obtain sanctions establishing evidentiary points, in order to later use discovery misconduct to bolster otherwise thin bases for liability.

Defendant Yonghui Zhang worked full time for a company called Global Education & Technology Group, Ltd. (“GEDU”).  GEDU was founded by Zhang’s younger brother and sister-in-law, and provides educational programs and services in China including consultation concerning higher education opportunities in the United States. Zhang purchased 7,900 GEDU American Depository Shares on the NASDAQ for almost $40,000 on the last trading day before GEDU announced its acquisition by Pearson plc. Zhang had never purchased GEDU stock for himself, spent more than three times his annual salary to purchase the securities, and made a profit of close to $50,000. Zhang moved for summary judgment, relying on his testimony that he had no knowledge of the Pearson acquisition and pointing to the SEC’s failure to identify a specific “tipper” who told him about the acquisition.

The Court denied his motion. Zhang’s office was on the same floor as his brother and sister-in-law’s offices, and Zhang had numerous communications with them and with GEDU senior management aware of the Pearson acquisition. Zhang argued that the SEC did not point to any particular records of communications or opportunities to communicate, but the SEC had sought those types of details and Zhang failed to provide them in discovery. READ MORE →

Do Trades Made Pursuant to 10b5-1 Plans Still Offer A Defense to Insider Trading?

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Chairs Around a Table

Rule 10b5-1, enacted in August 2000, codified the SEC’s position that trading while in possession of material non-public information is sufficient to establish liability for insider trading. The rule also provided an affirmative defense for individuals who could prove that the purchase or sale of stock was made pursuant to a pre-existing written plan executed before the individual became aware of the material non-public information. These so-called 10b5-1 plans have long been considered to be an efficient way to trade company stock without raising suspicion of insider trading or another improper motive.

However, recent news stories have reignited concerns that corporate insiders may be abusing 10b5-1 trading plans to trade on material non-public information. An April Wall Street Journal article reported that not only has the use of 10b5-1 plans by non-executive directors nearly doubled between 2006 and 2011, but a significant percentage of the plans were being used to unload all or a large percentage of the directors’ holdings in a short period of time. An earlier November 2012 Wall Street Journal article analyzing thousands of trades made by corporate executives found evidence that company insiders did statistically much better than expected in realizing trading profits. Together, these articles suggest that the lack of transparency and regulation of 10b5-1 trading plans has allowed them to be misused as vehicles to effectuate opportunistic trades.

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