According to news reports (Bloomberg, Reuters), a verdict was returned earlier today in the Vivendi trial.

Vivendi SA was found liable on all 57 counts, but former Chief Executive Jean-Marie Messier and former Chief Financial Officer Guillaume Hannezo were found not liable.

While some ink has been spilled recently over the Vivendi trial that is wrapping up in New York, little mention was made of another recent (and rare) securities class action trial, until now.

The case, pending against Capital Research and Management Company and American Funds Distributors, Inc., alleged that the advisory and 12b-1 (or distribution) fees which defendants received from the mutual funds they advised, and their investors, were excessive.

In an exhaustive opinion, after a bench trial this past summer, Judge Gary Feess found that "Plaintiffs have failed to sustain their burden of proving that CRMC charged fees that were 'so disproportionately large that [they bore] no reasonable relationship to the services rendered and could not have been the product of arm's-length bargaining'" - the so-called Gartenberg standard.

The American Lawyer has a story, here.

Milbank, Tweed, Hadley & McCloy represents the defendants while Milberg and Weiss & Lurie are lead counsel for the plaintiffs.

Our presentation detailing all 22 securities class action cases that have gone to trial since 1996, is available here.

Those cases fall into three categories:

1.Securities Class Action Trials Based on Post-Reform Act Conduct Resulting in a Verdict at Trial (eight)

2. Securities Class Action Trials Based on Post-PSLRA Conduct Resulting in a Settlement or Summary or Default Judgment During Trial (seven)

3. Securities Class Action Trials Based on Pre-PSLRA Conduct Resulting in a Verdict at Trial (seven)

Note that we have not yet added the Vivendi case to the presentation, but will do so when it fits into one of our three categories.

As always, readers are encouraged to send in any updates, additions, or corrections.

One of the areas that we track here at SLW headquarters is the small, but growing number of federal securities class actions that have gone to trial since the PSLRA was enacted.

Yesterday, that group got a new member, as jury selection started in the Vivendi shareholder litigation pending in the Southern District of New York.

The case, pending against Vivendi and Jean-Marie Messier, the former chairman and CEO, and Guillaume Hannezo, the former CFO, represents a collision of two areas that have received a lot of ink over the last few years - a rare securities class action trial and a so-called "F-cubed" case.

Cravath, Swaine & Moore, Weil, Gotshal & Manges, and King & Spalding represent the defendants while Abbey Spanier Rodd & Abrams are lead counsel for the plaintiffs.

Media coverage has been surprisingly light so far, with stories in the Litigation Daily and the New York Times domestically and The London Telegraph and The Times of London.

And of course, we would be remiss if we didn't point out that the Vivendi case spawned another new breed of securities litigation - the "opt-in" individual action, as discussed in our prior post, here.

Our presentation detailing the prior 21 securities class action cases that have gone to trial since 1996, is available here.

Those cases fall into three categories:

1.Securities Class Action Trials Based on Post-Reform Act Conduct Resulting in a Verdict at Trial (seven)

2. Securities Class Action Trials Based on Post-PSLRA Conduct Resulting in a Settlement or Summary or Default Judgment During Trial (seven)

3. Securities Class Action Trials Based on Pre-PSLRA Conduct Resulting in a Verdict at Trial (seven)

Note that we have not yet added the Vivendi case to the presentation, but will do so when it fits into one of our three categories.

Stay tuned for trial updates as they come in.

As always, readers are encouraged to send in any updates, additions, or corrections.

A few observations from a brief review of the verdict form.

1. Of the 39 allegedly false and misleading statements, the jury found for the plaintiffs on 16 of those statements.

2. Of those 16 statements, the jury found that all four defendants acted recklessly with respect to 15 of those statements.

3. On one of the statements, two defendants (Household and former Chairman and CEO William Aldinger) were found to have acted knowingly, one defendant (Gary Gilmer, the former Vice-Chair of Consumer Lending) was found to have acted recklessly, and one defendant (David Schoenholz, the former CFO, COO, and vice-chairman of the Board) was found not liable with respect to that statement.

4. The percentage of responsibility that the jury attributed to each defendant is as follows:

Household - 55%
Aldinger - 20%
Schoenholz - 15%
Gilmer - 10%

5. The verdict form attributes an inflation factor to each day of the class period. From 7/3/99 - 3/22/01, the jury found that there was no inflation of Household's share price attributable to the alleged misstatements and omissions.

6. But from 3/23/01 - 10/11/02, the jury found that the alleged misstatements and omissions inflated Household's share price between $23.94 and -$4.66. It seems that with the negative inflation number the jury is indicating that on a few days during the class period, the defendants actually caused the share price to go down. It is unclear whether the plaintiffs will amend their complaint to add a subclass of common stock sellers that were harmed by this deflation!

7. Last, but not least, the jury found that defendant Gilmer had no control person liability under Section 20(a).

A copy of the jury verdict is available here.

While securities class action trials are rare, they do happen.

We now have a plaintiffs' verdict in the liability phase of the latest such case, Lawrence E. Jaffee Pension Plan v. Household International, Inc., a securities class action that has been kicking around the courts since August 2002.

The finding of liability means that the trial will go on to the next phase, the damages phase.

We have updated our complete list of federal securities class action trials, which can be accessed here.

Lead counsel for the plaintiffs is Coughlin Stoia Geller Rudman & Robbins LLP and Cahill Gordon & Reindel LLP is lead counsel for the defendants.

Pat Coughlin, the Coughlin Stoia firm's Chief Trial Counsel, said the following in a written statement:

"We are extremely proud of our trial team and pleased that defrauded shareholders have won this historic victory. The jury's verdict is a victory for the millions of Americans suffering as a result of deceptive predatory lending practices and a victory for all investors fighting for greater corporate transparency, honesty and integrity. The verdict is also a testament to our firm's willingness and ability to see a case through on behalf of our clients, despite facing adversaries with tremendous power and resources."

No word yet from the defense attorneys on the case.

Stay tuned for further updates.

We have to admit that we were crying into our Cheerios a little this week, as the two securities class action cases we thought were going to trial ended up not going that route (keep reading for an update on those two cases) during the first quarter of 2008.

But then we saw that a trial has started in Germany over a share offering in in June 2000 by Deutsche Telekom, the former state owned telecommunications concern.

While the US securities class action settled in 2005 for $120 million, this case is the first test of Gesetz über Musterverfahren in kapitalmarktrechtlichen Streitigkeiten or KapMug which loosely translates to "statute governing representative legal actions on the grounds of capital markets disputes." KapMug was introduced in Germany to deal with mass claims in cases concerning the capital markets.

The Deutsche Telekom matter has generated enough interest and has enough participants that the court hearing the matter was "forced the court to rent a civic hall that provides room for 600 people." Indeed, according to an article from Spiegel Online, approximately 900 lawyers are representing the shareholders.

Though press reports are a bit inconsistent, a few things are clear:

1. The class numbers between 16-17,000.
2. The plaintiffs are seeking approximately $126 million in damages.
3. The German plaintiffs had to wait substantially longer than the US plaintiffs for their day in court.

Spiegel Online, Bloomberg, and the AP all have stories on the Deutsche Telekom case.

For the record, Omnicom Group and Oracle Corp were the two cases scheduled to go to trial that we alluded to earlier.

According to Omnicom's 10-Q for the period ended September 30, 2007, "a trial on any remaining portion of plaintiff's claim is currently scheduled for the first quarter of 2008."

But, in January, Judge Pauley granted the defendants motion for summary judgment. So that was strike one for our securities class action trial predictor (the 7940 Series).

We did not despair, as we had already found a pre-trial order in the Oracle litigation that set the jury trial for March 24, 2008.

But then we saw this motion, seeking an order vacating the March 24, 2008 trial date and reassignment of the case to another district court judge, as Judge Jenkins had been nominated to a seat on the California Court of Appeal, First District.

And finally we saw this notice, vacating all pretrial deadlines and the trial date. Interestingly enough though, Judge Jenkins intends to "resolve the submitted Motions For Summary Judgment before reassigning the case."

Of course, none of this requires us to update our presentation (here) of the 20 federal securities class action cases that have gone to trial since 1996.

We track a whole bunch of things here at SLW. Federal securities class action trials, options backdating cases, and opt-out cases in Tyco, Vivendi, and Merck to name a few. There are a bunch of updates to report, so let's dive in.

Securities Class Action Trials - "The List"

Some unrelated research revealed that we had missed a case that had gone to trial back in 2002. The case, Claghorn v. Edasco Ltd. was originally brought against Scorpion Technologies, certain Scorpion officers, and Grant Thornton, LLP, the company's auditor. The litigation settled against those defendants, and the settlement with Grant Thornton included an assignment of claims

Plaintiffs filed a separate complaint that alleged that Edsaco had participated in a scheme to deceive Grant Thornton. After a two week trial, the jury returned a verdict against Edsaco, for $5.78 million in compensatory damages and $165 million in punitive damages. The litigation then settled for $10 million. The conduct at issue in Claghorn was all Pre-PSLRA, so it falls into our third bucket.

Our updated presentation (here) now details the 20 securities class action cases that have gone to trial since 1996.

The cases fall into three categories:

1.Securities Class Action Trials Based on Post-Reform Act Conduct Resulting in a Verdict at Trial (six)

2. Securities Class Action Trials Based on Post-PSLRA Conduct Resulting in a Settlement or Summary or Default Judgment During Trial (seven)

3. Securities Class Action Trials Based on Pre-PSLRA Conduct Resulting in a Verdict at Trial (seven)

Tyco Opt-outs

Second on our list of updates - the Michigan public pension funds, represented by Kaplan Fox, have filed a Tyco opt-out case. The Michigan funds join just one other public pension fund that has filed an opt-out case in Tyco. Details on all of the Tyco opt-outs can be found here.

Vivendi Opt-outs

Another international institutional investor, Wiener Städtische AG Vienna Insurance Group, has filed a Vivendi opt-out case. Wiener Städtische is represented by Motley Rice. Our complete list of Vivendi opt-outs can be found here.

With the Apollo Group verdict now in, we have updated (again) our presentation detailing the 19 securities class action cases that have gone to trial since 1996.

The cases fall into three categories:

1.Securities Class Action Trials Based on Post-Reform Act Conduct Resulting in a Verdict at Trial (six)

2. Securities Class Action Trials Based on Post-PSLRA Conduct Resulting in a Settlement or Summary or Default Judgment During Trial (seven)

3. Securities Class Action Trials Based on Pre-PSLRA Conduct Resulting in a Verdict at Trial (six)

As always, readers are encouraged to send in any updates, additions, or corrections.

Press reports indicate that a federal jury has found Apollo Group Inc. (NASDAQ: APOL) and certain former officers liable for securities fraud and has ordered them to pay $280 million to shareholders in the securities class action suit pending in the District of Arizona.

Apollo Group is the for-profit company that owns the University of Phoenix. The company has a website dedicated to the securities litigation, here.

The company has issued the following statement:

Apollo Group, Inc. (NASDAQ:APOL) is disappointed in the decision returned today by a Phoenix jury in a consolidated securities class action brought by the Policemen's Annuity and Benefit Fund of Chicago. The case, tried in federal district court in Arizona, was premised on Apollo's supposed failure to disclose unsubstantiated allegations from a preliminary government report.

"We disagree with the jury's verdict, both the finding and the amount of damages," said Wayne W. Smith of Gibson Dunn & Crutcher LLP, counsel to Apollo. "The law does not require the disclosure of preliminary or unproven charges in a government investigation. In not disclosing the report at issue, Apollo acted in good faith and in the best interests of its students, alumni, employees and shareholders, who could have been unfairly harmed by a premature disclosure."

...

Apollo is evaluating options for appeal.

No comment yet from the plaintiffs or their counsel, but stay tuned.

First, best wishes for a happy and healthy year to all of my readers.

Now, on to the good stuff, with two updates on the Apollo Group trial that has been going on in the District of Arizona.

Back on December 12, the plaintiffs rested their case and defendants moved for a directed verdict on the issue of loss causation. Judge Teilborg denied the motion, noting:

I'm finding that it is a question for the jury to decide whether or not and when there was a corrective disclosure seems to me this jury can conclude that the facts did, to use I think a word the plaintiffs have used, did dribble into the marketplace, and that the [UBS] analyst Kelly Flynn and the reports of that date [September 20, 2004] did indeed connect dots in such a way that they became the corrective disclosure.

And earlier this week, the parties had a meet and confer and agreed to present closing arguments on January 9, 2008, or on the next full day of trial.

The oddsmakers in Vegas are suggesting that we will have a verdict by January 10th.

Special thanks to Jeffrey A. Barrack, a Barrack, Rodos & Bacine partner and member of the trial team for finding the time to send us this stuff.