In a strange story, a court in the S.D.N.Y. has dismissed the lead plaintiff from a securities class action brought against Smith Barney Fund Management and Citigroup Global Markets because, after six years of litigation, it was revealed that the entity had not actually purchased the securities at issue. The lawsuit, originally filed in 2005, alleges various misrepresentations by an investment advisor for certain Smith Barney mutual funds, which later were acquired by Citigroup. According to counsel for the plaintiffs, the relevant brokerage documentation erroneously showed that the Operating Local 639 Annuity Trust Fund had invested in one of the relevant mutual funds (when, in reality, its investment was in a similarly named fund).
The court, in an apparently scathing decision, cited “epic failures” by the attorneys on both sides of the case in not investigating the issue earlier. For its part, “[h]ad Smith Barney simply checked its records, it would have avoided six years of sparring with a phantom opponent.” Bloomberg and the WSJ Law Blog have articles on the decision.