As summarized by the lead counsel's website, the class action is brought on behalf of all purchasers, redeemers and holders (the “Class”) of the mutual fund shares or other ownership interests of one or more of the Smith Barney Family of Funds (the “Funds”) from August 26, 2000 through August 26, 2005 (the “Class Period”). Plaintiffs allege violations of Sections 36(a) and 36(b) of the Investment Company Act of 1940, as well as pendent state law claims of civil conspiracy and unjust enrichment, against Defendants Smith Barney Fund Management, LLC (the “Adviser”) and Citigroup Global Markets (“Global Markets”).
The complaint alleges that an investment adviser that placed its interest in making a profit ahead of the interests of the mutual funds it serves. Investment advisers have a fiduciary duty to act in the best interests of the mutual funds they advise and their shareholders. Here, the Adviser, which serves as investment adviser to the Funds, recommended that the Funds contract with Citigroup Trust Bank, fsb (“CTB”), an affiliate of the Adviser, which would perform limited transfer agent services and sub-contract with the Funds’ existing transfer agent, First Data Corporation. The existing transfer agent would perform almost all of the same services it had performed previously, but at deeply discounted rates, permitting the affiliate of the Adviser to keep most of the discount for itself and make a high profit for performing limited work. Indeed, over the past five years, CTB has received more than $100 million in net fees for operating a small customer service call center and performing limited additional oversight and quality control functions at a total cost of approximately $11 million. This self-interested transaction permitted the Adviser and its affiliates to profit from the transfer agent function at the expense of the Funds and their shareholders.
On January 3, 2006, the Court entered the Order consolidating several similar class actions under "In re Smith Barney Transfer Agent Litigation”, civil action 05cv7583(WHP). On April 18, 2006, the Court entered the Memorandum and Order appointing lead plaintiff and lead counsel. On June 1, 2006, the plaintiff filed a Amended Counterclaim. On June 2, 2006, a Consolidated and Amended Class Action Complaint was filed, and the defendants responded by filing a motion to dismiss the Consolidated and Amended Class Action Complaint.
On September 26, 2007, the court granted Defendants' motion to dismiss (Docket No. 69). Counts I and II were dismissed with prejudice. Plaintiffs may replead Count III by October 19, 2007.
On October 26, 2007, District Judge of the Southern District of New York ordered that the Clerk of Court was directed to mark the case, as well as consolidated actions 05 Civ. 7818, 05 Civ. 8356 , 05 Civ. 8357 and 05 Civ. 8399, closed. Plaintiffs have failed to file an amended complaint by October 19, 2007 pursuant to the Court's September 26, 2007 Memorandum and Order.
On November 5, 2007, the court of the Southern District of New York, granted the defendants’ motion to dismiss; Counts I and II were dismissed with prejudice; as plaintiffs have failed to file an amended complaint by October 19, 2007, the Court directed that this case was closed, as well as consolidated actions 05 Civ. 7818, 05 Civ. 8356, 05 Civ. 8357 and 05 Civ. 8399.
On November 16, 2007, Plaintiff appealed to the United States Court of Appeals for the Second Circuit from a Final Judgment, dated November 5, 2007 the following orders: (i) the Memorandum and Order of the United States District Court, dated and entered September 26, 2007, granting Defendants' motion to dismiss Plaintiff's claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and granting Plaintiff leave until October 19, 2007 to replead; and (ii) the Order of the United States District Court, dated October 26, 2007 and entered October 29, 2007, directing that, because Plaintiff did not replead its ICA claims derivatively by October 19, 2007, this consolidated action would now be closed.
On March 12, 2010, the court of appeals for the second circuit ordered that the judgment of the District Court was vacated and remanded in part and affirmed in part in accordance with the opinion of the court.
On March 15, 2010, the court for the Southern District of New York, ordered that the Appeal of the order of the district court was affirmed.
On January 25, 2011, the court of the Southern District of New York, granted in part and denied in part the Defendants' motion to dismiss. Defendants' motion to dismiss the claims by mere holders and the claims related to Smith Barney Funds in which no named plaintiff invested was granted. Defendant Thomas Jones's motion to dismiss the § 10(b) and § 20(a) claims was granted. Defendants' motion to dismiss on all other grounds was denied. Plaintiffs' motion to lift the PLSRA stay was denied as moot. The Clerk of the Court was directed to terminate the motion pending at Docket No. 101.
On May 5, 2011, the plaintiff filed a Second Consolidated Amended Class Action Complaint, and then a Third Consolidated Amended Class Action Complaint on June 30, 2011. On July 15, 2011, the plaintiff filed a motion to certify the class.
According to a news article dated September 22, 2011, Citigroup Inc. (C)’s Smith Barney unit can’t be sued by the union pension fund that’s the lead plaintiff in a six-year-old shareholder fraud class action because it never owned any of the shares that are the basis of the lawsuit, a judge said. U.S. District Judge William H. Pauley III in Manhattan, citing “epic failures” by the lawyers on both sides of the case, today dismissed Operating Local 649 Annuity Trust Fund from the suit. The pension fund’s attorneys told the judge that their client bought more than 75,000 shares of a similarly named security and not those involved in the case. [...]. The mistake will require several motions to be rebriefed, the filing of another amended complaint and the exchange of additional evidence in the case, according to Pauley.
On February 28, 2012, the plaintiff filed a Fourth Consolidated Amended Class Action Complaint.
On August 15, 2012, the Court issued a Memorandum & Order granting in part and denying in part defendants' motions to dismiss.
On March 21, 2013, the Court issued an Order granting the Plaintiffs' motion for class certification.
According to a Notice filed September 24, 2013, Plaintiffs have reached a Settlement with a certain individual defendant. This Settlement was preliminarily approved by the Court on October 7th.