Litigators Secure Favorable Decision for Sequoia Fund Board
On August 14, a Ropes & Gray litigation team secured a decision in Maryland dismissing claims asserted against directors of the Sequoia Fund and its investment adviser, relating to the Fund’s prior investment in Valeant Pharmaceuticals.
The shareholder-plaintiff asserted these derivative claims ostensibly on behalf of the Fund. Through his counsel, he had previously made a derivative demand on the Fund’s independent directors, insisting that they bring claims in the Fund’s name. As detailed in the court’s opinion, the board appointed a Demand Review Committee of independent directors, who conducted an extensive factual review of the shareholder’s allegations and concluded that the claims had no merit. The shareholder then sued anyway, challenging the independence of the directors on the Committee and the reasonableness of their inquiry. In the decision, the court rejected the plaintiff’s claims across the board, finding that “the allegations of the complaint are insufficient to establish that the members of the Demand Review Committee did not act independently and in good faith.” This is the latest in a string of victories for the Sequoia Fund and its directors and adviser, including prior decisions in New York federal and state courts rejecting similar claims.
Ropes & Gray represents the Sequoia Fund’s independent directors in the Maryland action. Amy D. Roy, a partner based in Ropes & Gray’s Boston office, noted: “We are gratified that the court recognized the undeniable independence of the Sequoia Fund board members, as well as the thorough review they conducted in rejecting the latest meritless claims about the Fund’s investments.”
In addition to Ms. Roy, the Ropes & Gray team included Boston-based partner Robert A. Skinner and New York-based counsel Lee Gayer.