Law firm Lackey Hershman has obtained a USD21.5m jury verdict in favour of its client, Highland Capital Management, and against RBC Capital Markets, which is part of the Royal Bank of Canada (RBC).
The verdict, which was rendered in the 95th Judicial District, Dallas County, Texas, followed a seven-day trial arising out of RBC's failure to settle a securities trade on 14 March 2001. When pre-judgment interest is included, it is anticipated that the judgment entered against RBC will be approximately USD45m.
RBC was represented by Seward & Kissel from New York and Carrington, Coleman, Sloman & Blumenthal from Dallas, Texas.
The jury returned its verdict on the morning of 13 March 2013 after approximately two-and-a-half hours of deliberation. The case stemmed from RBC's alleged refusal to settle a securities trade. Highland alleged that on 14 March 2001, RBC Capital Markets LLC, f/k/a RBC Dominion Securities Corp, agreed to a trade whereby Highland purchased seven deeply subordinated three-year promissory notes from RBC with an aggregate face value of USD45.4m for 52.5 cents on the dollar (or a 47.5 per cent discount). The notes were issued by McNaughton Apparel Group, a publicly traded company. Highland alleged that RBC informed Highland on 20 March 2001 that RBC would not be able to deliver the securities as promised, and refused to settle the trade. On 16 April 2001, it was publicly announced that Jones Apparel Group was acquiring McNaughton, and on 19 June 2001, the notes were paid off in full in conjunction with the closing of that acquisition.
"The jury verdict is an important one for the securities industry because it reaffirms that oral agreements to purchase and sell securities remain as binding and enforceable under New York law today as they have for more than 200 years," says Paul Lackey, the lead counsel for Highland.
Jamie Welton, a partner at Lackey Hershman that tried the case for Highland, says: "The jury verdict against RBC is the result of years of hard-fought litigation through more than nine different state and federal trial and appellate courts, and demonstrates Highland's unwavering commitment to litigate to judgment no matter what the stakes or how long it takes."
"This was an incredibly important case to the securities industry. This verdict validates the integrity on which our markets rely," says Mark Okada, co-founder and chief investment officer of Highland Capital Management, who testified at the trial. "