Attorneys And Law Firms Sanctioned For 'Spurious' Allegation In Securities Fraud Complaint Against ANZ Banking

The Private Securities Litigation Reform Act of 1995 requires, upon final adjudication of any securities fraud lawsuit, that the court make specific findings regarding compliance by each party and each attorney with Rule 11 of the Federal Rules of Civil Procedure. The PSLRA further mandates that if any violations of Rule 11 are found, sanctions are mandatory. Sanctions are relatively rare, but not unheard of. In fact, a federal district court in New York, having dismissed an amended securities fraud complaint against the Australia and New Zealand Banking Group, has just found a “spurious” allegation in the original complaint and has imposed sanctions against plaintiff’s counsel “for a substantial violation of Rule 11 with respect to the original complaint filed in this action.” 

The case is In re Australia and New Zealand Banking Group Limited Securities Litig., No. 08 Civ. 11278 (DLC) (S.D.N.Y. May 11, 2010). The attorneys sanctioned are Kenneth J. Vianale, who acknowledged responsibility and whose name appeared in typewritten form on the original complaint, and Jules Brody, the attorney who actually signed the original complaint. In addition, the court ruled that both attorneys’ firms, Vianale & Vianale LLP and Stull Stull & Brody, were jointly responsible for their respective attorneys’ violations, as mandated by Rule 11(c). Attorneys for the defendants were Samuel W. Seymour, Penny Shane, and Daniel R. Margolis of Sullivan & Cromwell LLP.