Photo by Laura Barisonzi.
For a powerhouse plaintiffs’ securities firm like Pomerantz, representing defrauded investors means keeping an ear to the ground. They’re constantly monitoring for announcements from companies and regulators that precipitate a stock drop, using that as their cue to dig deeper and sniff out potential fraud.
J. Alexander (Alex) Hood II spearheads this effort at Pomerantz as head of the firm’s case origination team. His group is attuned to significant stock drops in the market and does the initial groundwork on investigating the merits of a potential claim.
If they see a large stock drop accompanied by some indication of potential malfeasance, Hood’s group takes a closer look to see if the facts might present a fraud case. They then work to identify current and potential clients with losses and to represent them through the filing of a complaint and motion for appointment as lead plaintiff.
“From the inception of a case until a lead plaintiff is appointed,” says Hood, “it’s my team’s responsibility.”
Hood, a partner in the New York office, also manages the firm’s efforts to secure recovery on behalf of institutional investors in shareholder proceedings pending in foreign jurisdictions, primarily in Europe.
The two practices dovetail nicely because, as head of the case origination team, Hood is already closely monitoring the news and looking for opportunities to secure recovery for the firm’s clients in any venue. Overall, the job is a good fit for Hood, a news junkie who enjoys the client-facing work and the turn-over of a diverse case load.
Hood also believes that, “There’s a real social utility to this kind of work, in correcting corporate malfeasance and hoping to deter it.”
Lawdragon: You lead your firm's case origination team. What’s your process there?
Alex Hood: It starts the moment we see a news item indicating that there might have been some kind of corporate malfeasance. We look for red flags, which might be an abrupt CFO resignation, or announcement of a DOJ investigation – any news item that's accompanied by a significant stock drop that catches our attention. If we take a deeper dive into the facts and conclude that there’s a potential meritorious fraud claim, and our firm has a client with losses, we work to get a class action complaint on file promptly.
At that point, there's a statute in place where any member of the class – that is, any company investor with losses – can seek appointment as lead plaintiff within 60 days. In the majority of cases, the court will generally appoint whichever interested investor suffered the largest loss.
LD: Whoever has the most skin in the game.
AH: Exactly. During those 60 days my team works with individual retail investors and institutional clients who may have incurred significant losses in connection with this case, and to the extent that they’re interested in serving as lead plaintiff, we’ll file a motion on their behalf. If the motion ends up being competitive vis-à-vis any other class members who are also seeking appointment as lead plaintiff, we’ll continue to litigate on our client’s behalf through further briefing and often a motion hearing.
LD: Is there a specific case that sticks out for you where you won a lead plaintiff appointment for the firm against the odds, or where the competition was particularly stiff?
It starts the moment we see a news item indicating that there might have been some kind of corporate malfeasance. We look for red flags, which might be an abrupt CFO resignation, or announcement of a DOJ investigation – any news item that's accompanied by a significant stock drop that catches our attention.
AH: There have been a few cases in which we secured lead plaintiff appointment in large part because our team showed up with a level of focus and attention to detail that the competition simply didn’t bring. Again, in these cases, there's a very strong presumption that the court's going to appoint whoever has the largest loss, but that’s not the end of the inquiry. You also need to demonstrate that you’re going to be an adequate and typical class representative. In most cases that’s a given, but there have been a number of cases in which the competing movants’ papers simply didn’t stand up to close scrutiny – for example, where there were errors in their loss calculations, or undisclosed issues that rendered them unfit to serve as fiduciaries for a class, regardless of the magnitude of their investment losses. By closely scrutinizing the competing movants’ papers, we identify those issues, and there have been instances where, on that basis, we’ve persuaded the court to disqualify a movant with a larger loss and appoint our own client with a smaller loss instead. The most memorable cases are the ones where you manage to persuade the judge to change their thinking over the course of a hearing, from initially leaning against you to ultimately ruling in your favor.
LD: Now can you tell us about your work pursuing international securities claims for clients?
AH: While the class action litigation model has historically been a U.S. phenomenon, we’re seeing more and more analogous class or collective action proceedings commenced on behalf of defrauded investors in foreign jurisdictions, primarily in Europe. Ever since 2010, when the Supreme Court held in Morrison v. National Australia Bank that the U.S. federal securities laws only apply to U.S.-purchased securities, it’s been more difficult for non-U.S. investors to pursue recovery of investment losses due to fraud by foreign issuers, since many foreign companies don’t have U.S.-listed securities. Our firm has a number of foreign institutional clients, and these European proceedings can provide them an opportunity to recover investment losses on shares that they may have purchased, say, on the London Stock Exchange, or in Amsterdam, or Frankfurt, rather than in New York – and these are thus losses that they generally wouldn’t be able to recover in a U.S. class action.
In short, we’re always looking for ways to help our clients to recover investment losses caused by fraud, and these foreign proceedings have opened up new avenues for that.
LD: You must not have known back in law school that this would be the type of practice that you would have. Did you even know that this sort of thing existed?
AH: I definitely did not. I graduated law school in 2010, so I was in one of the first classes coming out of law school following the 2008 financial crisis. When I started practicing, almost all of the work was in cleaning up the massive mess that was left in the financial sector in the wake of the credit crisis.
LD: All mortgage-backed securities litigation, all day.
AH: Yep. Candidly, it was not wildly appealing to me. I worked for a defense firm, and my practice group leader back then had a saying, that when you're the defendant, any day you're not paying a judgment you're winning. I certainly understand the logic of that, but as a rallying cry I found it somewhat lacking. I like to win by affirmatively winning as opposed to simply winning by not losing. So I was glad to make the move to the plaintiffs’ side.
LD: How did you then make your way to Pomerantz?
The most memorable cases are the ones where you manage to persuade the judge to change their thinking over the course of a hearing, from initially leaning against you to ultimately ruling in your favor.
AH: I joined the firm in 2015, shortly after Pomerantz secured leadership in the Petrobras Securities class action.
LD: That was a huge one.
AH: It was. The case was a huge win for the firm, and Pomerantz securing that leadership role in 2015 definitely influenced my decision to join the firm.
LD: And you’re finding it’s a good fit for you?
AH: Absolutely. There's a real collegiality here that I quite enjoy. The people here are about as kind and respectful of a group of legal professionals as you’ll find anywhere. It's certainly rigorous, and there’s no room to be easy-going with respect to the quality of your work, either here or anywhere, but I appreciate being at a place where nobody seems to think that you need to sacrifice kindness or respect towards your colleagues to get the job done.
LD: How would you describe your style as a lawyer?
AH: One of the first litigators I worked with told me that you should always strive to come across as the most reasonable person in the room, and that’s something that I've taken very much to heart. In my experience, zealous advocacy for your client is most effective when you keep an even keel and respectful tone.
LD: What do you do for fun when you're outside of the office?
AH: I'm an avid reader and I love to cook. My wife and I also welcomed our daughter Vivian back in September 2021, so we spend every minute of free time we can with her.
LD: Mazel tov!
AH: Thank you. She's absolutely wonderful. Mondays are always tough because I have to say goodbye to her and head back to the office.
LD: Final question: Do you have a favorite book or movie about the law?
AH: If TV shows count, then Better Call Saul, hands-down. It doesn't shy away from some of the minutiae of lawyering that a lot of so-called “legal” dramas largely disregard.