Hogan Lovells Represents International Value Advisers in Dismissal of Insider Trading Case

New York, 11 February 2019 - Hogan Lovells represented Defendants International Value Advisers, LLC, Charles de Vaulx, and Charles de Lardemelle in the successful dismissal of an insider trading action in the Southern District Court of New York. In dismissing the case, the Court found that the plaintiff, Aaron Rubenstein had failed to plead a plausible claim under Section 16(b) of the Securities and Exchange Act of 1934 and reasoned that the managed account that made the trade at issue was not an “insider” under the statute.

The Court rejected Rubenstein’s unprecedented theory that, when a registered investment advisor that beneficially owns more than 10% of a public company’s stock becomes subject to Section 16 by virtue of developing an intent to influence control of the company, every client of the advisor over whose account it has investment discretion implicitly forms an “agreement” with the advisor to seek to influence control of the issuer, and as a result of that “agreement,” forms a “group” with the advisor, subjecting all of the advisor’s clients to Section 16 as 10% owners.

“This finding is significant because had the Court accepted Rubenstein’s theory, it would have expanded Section 16(b) liability far beyond its intended scope,” said Hogan Lovells senior associate Robin Muir.

The Hogan Lovells team was led by Litigation partner Dennis Tracey and Alan Dye, and by senior associate Robin Muir.


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