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Overview
In July 1982, V&E; was hired to represent 12 former directors of the Penn Square Bank, a small Oklahoma City energy lender. Three years and 12 lawsuits later, this engagement was successfully completed. During the next seven years, the collapse of the energy and real estate sectors of the economy caused the failure of almost every major bank and savings and loan in Texas. These failures spawned hundreds of suits, which lasted well into the ‘90s, against banks and S&Ls; and their officers and directors by government agencies, shareholders, borrowers, lessors and bankruptcy trustees. Civil and criminal investigations were conducted by the SEC, FBI, FDIC and Comptroller of the Currency. V&E;’s Houston, Dallas and Washington offices successfully defended scores of these suits. In addition to Penn Square, we represented the officers and directors of MCorp, First Republic, First National Bank of Midland, Commonwealth Savings and University Savings.
Litigation arising from the Texas banking debacle continues. In the fall of 1999, a team of our lawyers from Houston and Washington tried one of the "Winstar" cases for six weeks in the Court of Federal Claims. Our client alleged that it was damaged by the government’s breach of an assistance agreement in connection with the purchase of a failed Houston S&L; from the government.
In addition to defending suits against financial institution officers and directors for alleged breaches of their fiduciary duties and violation of banking laws and regulations, V&E; has represented banks in "lender liability" cases. Businesses unable to repay their loans sometimes sue their bankers alleging improper conduct in connection with a loan. Our lawyers have litigated scores of these cases. For example, our Washington office represented a local bank in a series of cases involving defaulted loans. The bank brought collection actions and the defendants responded with a raft of lender liability claims. We successfully defended against these claims, obtaining summary judgment or consent judgments on most of them.
Our litigators have developed substantial knowledge about bank and S&L; operations, in addition to expertise on the fiduciary duties of officers and directors of financial institutions. For example, to defend a bank officer charged with negligent mismanagement (the typical FDIC claim), the trial lawyer has to understand loan loss reserves, purchase accounting, lending limits to a single borrower and more.
Besides banks and S&Ls; and their officers and directors, our financial institution litigators have often represented investment banks and brokerage firms. For example, we represented a regional brokerage firm that sold Collateralized Mortgage Obligations ("CMOs") to its customers. These are the same financial instruments that led to the bankruptcy of Orange County. When this market collapsed in 1994, it led to a series of suits against our client.
In addition, we represented an investment banking firm in a case alleging insider trading by one of the investment firm’s partners in connection with the merger of one of the investment firm’s clients. We also represented an investment bank that was sued by creditors of National Gypsum alleging that our client had engaged in fraud in connection with the bankruptcy.
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