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Gregory M. Castaldo

Partner

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Gregory M. Castaldo is a master litigation strategist with over 20 years experience in complex securities fraud cases. Institutional investors trust Greg’s judgment in developing and executing successful litigation plans, from initial claim identification and investigation, all the way through resolution. As a result, he handles many of the firm’s most significant cases in both state and federal courts.

Greg has represented several of the world’s largest pension funds in cases against Bank of America related to its acquisition of Merrill Lynch, Lehman Brothers, Tenet Healthcare, and Duke Energy. In 2014, he won a rare plaintiff’s victory in a full jury trial against China’s Longtop Financial Technologies in the Southern District of New York. 

Awards/Rankings

  • Benchmark Litigation Stars, 2020 
  • Lawdragon 500 Leading Plaintiff Financial Lawyer, 2019
Experience

Current Cases

  • CASE CAPTION             In re Apache Corp. Securities Litigation
    COURT United States District Court for the Southern District of Texas
    CASE NUMBER 4:21-CV-00575
    JUDGE Honorable George C. Hanks, Jr.
    PLAINTIFF Court-appointed Lead Plaintiffs Plymouth County Retirement Association and the Trustees of the Teamsters Union No. 142 Pension Fund
    DEFENDANTS Apache Corporation, John F. Christmann IV, Timothy J. Sullivan, & Stephen J. Riney
    CLASS PERIOD September 7, 2016 to March 13, 2020, inclusive

    This securities fraud class action arises from Apache’s materially false and misleading statements regarding its purportedly groundbreaking oil and gas discovery in West Texas, which it dubbed “Alpine High.”  Starting in September 2016, Defendants claimed the play held copious amounts of valuable oil and gas on par with world-class plays like the Marcellus Shale in Pennsylvania and the Eagle Ford in Texas, which Apache could economically exploit, and thus drive company revenues for years to come.   Investors accepted the claims, and Apache’s common stock price skyrocketed.  However, Lead Plaintiffs’ extensive investigation has revealed that Defendants’ claims were baseless.  Internal studies at Apache prior to September 2016 established that Alpine High was characterized by low-value gas, not valuable oil or gas resources.  Confirming this, Apache’s own production data from the wells it drilled at Alpine High showed that the area held hardly any oil and gas that could be economically exploited, let alone the vast amounts Defendants repeatedly touted to investors.  Scrambling to contain the failure, Defendants fired multiple dissenters from inside the company and shielded Alpine High production data from ordinary disclosure and review—but they could sustain the sham only so long.  The truth concerning Alpine High was gradually revealed to the public through a series of disclosures on October 9, 2017, February 22, 2018, April 23, 2019, October 25, 2019, and March 16, 2020, which collectively showed that the play was an unprofitable bust.  Apache’s stock prices fell sharply on each partial corrective disclosure, causing massive losses to defrauded shareholders.

    On December 17, 2021, Plaintiffs filed a Consolidated Class Action Complaint on behalf of a putative class of investors, alleging that Apache, John Christmann IV, Timothy Sullivan, and Stephen Riney violated Section 10(b) of the Exchange Act by making materially false and misleading statements regarding the Alpine High play; and that Christmann IV, Sullivan, and Riney, as controlling persons of Apache, violated Section 20(a) of the Exchange Act.  On February 15, 2022, Defendants moved to dismiss the Complaint.  Plaintiffs filed an opposition to that motion on April 22, 2022.  

    Read Consolidated Class Action Complaint Here

  •   CASE CAPTION                       Pontiac, City of General Employees Retirement System v. First Solar Incorporated, et al.
      COURT  United States District Court for the District of Arizona
      CASE NUMBER 2:22-cv-00036-MTL
      JUDGE Honorable Michael T. Liburdi
      PLAINTIFF

    Palm Harbor Special Fire Control & Rescue District Firefighters’ Pension Plan (“Palm Harbor”) and Greater Pennsylvania Carpenters’ Pension Fund (“Pennsylvania Carpenters”)

      DEFENDANTS First Solar, Inc. (“First Solar” or the “Company”), Mark Widmar, Alexander R. Bradley, and Georges Antoun
      CLASS PERIOD February 22, 2019 through February 20, 2020, inclusive

    This securities fraud class action arises out of First Solar’s alleged misrepresentations and omissions concerning its Series 6 solar power modules and its Project Development division. In late 2017, First Solar announced that it was transitioning to the Series 6 solar module as its flagship product and phasing out the Company’s existing Series 4 module. In connection with this transition, Defendants touted the significantly higher output (measured in watts per module) and lower cost (measured in cost per watt) of the Series 6 compared to the Series 4.  During the Class Period, Defendants repeatedly assured investors that the Series 6 was meeting the necessary milestones to achieve the targeted watts per module and cost per watt figures. Unbeknownst to the market, however, the Series 6 was plagued by manufacturing and performance defects that were negatively impacting both metrics. At the same time that they were concealing these issues with the Series 6, Defendants also failed to disclose that First Solar’s Project Development division had lost significant market share, that its project pipeline was rapidly dwindling, and that the Company was looking to divest this business. The truth concerning the state of affairs within the Company was eventually revealed to the public through disclosures on January 15, 2020 and February 20, 2020. Following these revelations, First Solar’s stock price fell precipitously.

    On June 23, 2022, Palm Harbor and Pennsylvania Carpenters filed an Amended Complaint on behalf of a putative class of investors alleging that First Solar and certain of its current executives violated Sections 10(b) and 20(a) of the Securities Exchange Act by making false and misleading statements and concealing material facts about the manufacturing and performance issues with the Company’s Series 6 modules and its struggling Project Development division. On August 22, 2022, Defendants filed a motion to dismiss. Plaintiffs will oppose that motion on October 21, 2022.

    Read Amended Class Action Complaint Here

  •   CASE CAPTION Sjunde AP-Fonden, et al., v. General Electric Company, et al.
      COURT United States District Court for the Southern District of New York
      CASE NUMBER 1:17-cv-08457-JMF
      JUDGE Honorable Jesse M. Furman
      PLAINTIFF  Sjunde AP-Fonden and The Cleveland Bakers and Teamsters Pension Fund
      DEFENDANTS General Electric Company and Jeffrey S. Bornstein
      CLASS PERIOD March 2, 2015 through January 23, 2018, inclusive

    This securities fraud class action case arises out of alleged misrepresentations made by General Electric (“GE”) and its former Chief Financial Officer, Jeffrey S. Bornstein (together, “Defendants”), regarding the use of factoring to conceal cash flow problems that existed within GE Power between March 2, 2015, and January 24, 2018 (the “Class Period”).

    GE Power is the largest business in GE’s Industrials operating segment. The segment constructs and sells power plants, generators, and turbines, and also services such assets through long term service agreements (“LTSAs”). In the years leading up to the Class Period, as global demand for traditional power waned, so too did GE’s sales of gas turbines and its customer’s utilization of existing GE-serviced equipment.  These declines drove down GE Power’s earnings under its LTSAs associated with that equipment.  This was because GE could only collect cash from customers when certain utilization levels were achieved or upon some occurrence within the LTSA, such as significant service work.

    Plaintiffs allege that in an attempt to make up for these lost earnings, GE modified existing LTSAs to increase its profit margin and then utilized an accounting technique known as a “cumulative catch-up adjustment” to book immediate profits based on that higher margin.  In most instances, GE recorded those cumulative catch-up earnings on its income statement long before it could actually invoice customers and collect cash under those agreements. This contributed to a growing gap between GE’s recorded non-cash revenues (or “Contract Assets”) and its industrial cash flows from operating activities (“Industrial CFOA”).  

    In order to conceal this increasing disparity, Plaintiffs allege that GE increased its reliance on receivables factoring (i.e., selling future receivables, including on LTSAs, to GE Capital or third parties for immediate cash).  Through factoring, GE pulled forward future cash flows and, in light of the steep concessions it often agreed to in order to factor a receivable, traded away future revenues for immediate cash.  In stark contrast to the true state of affairs within GE Power—and in violation of Item 303 of Regulation S-K—GE’s Class Period financial statements did not disclose material facts regarding GE’s factoring practices, the true extent of the cash flow problems that GE was attempting to conceal through receivables factoring, or the risks associated with GE’s reliance on factoring.  Rather, Defendants affirmatively misled investors about the purpose of the Company’s factoring practices, claiming that such practices were aimed at managing credit risk, not liquidity

    Eventually, however, GE could no longer rely on this unsustainable practice to conceal its weak Industrial cash flows.  As the truth was gradually revealed to investors—in the form of, among other things, disclosures of poor Industrial cash flows, massive reductions in Industrial CFOA guidance, and a dividend cut that was attributable in part to weaker-than-expected Industrial cash flows—GE’s stock price plummeted, causing substantial harm to Plaintiffs and the Class. 

    In January 2021, the Court sustained Plaintiffs’ claims based on allegations that GE failed to disclose material facts relating its practice of and reliance on factoring, in violation of Item 303, and affirmatively misled investors about the purpose of GE’s factoring practices.  In April 2022, following the completion of fact discovery, the Court granted Plaintiffs’ motion for class certification, certifying a Class of investors who purchased or otherwise acquired GE common stock between February 29, 2016 and January 23, 2018.  In that same order, the Court granted Plaintiffs’ motion for leave to amend their complaint to pursue claims based on an additional false statement made by Defendant Bornstein.  Expert discovery is complete, and the parties will engage in summary judgment motion practice in September 2022.

    Read Fifth Amended Consolidated Class Action Complaint Here

    Read Opinion and Order Granting and Denying in Part Motion to Dismiss Here

    Read Order Granting Motion for Class Certification and for Leave to Amend Here

    Click Here to Read the Class Notice

  • CASE CAPTION            In re re Kraft Heinz Securities Litigation
    COURT United States District Court for the Northern District of Illinois
    CASE NUMBER 1:19-cv-01339
    JUDGE Honorable Robert M. Dow, Jr.
    PLAINTIFF Union Asset Management Holding AG, Sjunde Ap-Fonden, and Booker Enterprises Pty Ltd.
    DEFENDANTS The Kraft Heinz Company (“Kraft” or the “Company”), 3G Capital Partners, 3G Capital, Inc., 3G Global Food Holdings, L.P., 3G Global Food Holdings GP LP, 3G Capital Partners LP, 3G Capital Partners II LP, 3G Capital Partners Ltd., Bernardo Hees, Paulo Basilio, David Knopf, Alexandre Behring, George Zoghbi, and Rafael Oliveira
    CLASS PERIOD November 5, 2015 through August 7, 2019, inclusive

    This securities fraud class action case arises out Defendants’ misstatements regarding the Company’s financial position, including the carrying value of Kraft Heinz’s assets, the sustainability of the Company’s margins, and the success of recent cost-cutting strategies by Kraft Heinz.

    Kraft Heinz is one of the world’s largest food and beverage manufacturer and produces well-known brands including Kraft, Heinz, Oscar Mayer, Jell-O, Maxwell House, and Velveeta. The Company was formed as the result of the 2015 merger between Kraft Foods Group, Inc. and H.J. Heinz Holding Corporation. That merger was orchestrated by the private equity firm 3G Capital (“3G”) and Berkshire Hathaway with the intention of wringing out excess costs from the legacy companies. 3G is particularly well-known for its strategy of buying mature companies with relatively slower growth and then cutting costs using “zero-based budgeting,” in which the budget for every expenditure begins at $0 with increases being justified during every period.

    Plaintiffs allege that Kraft misrepresented the carrying value of its assets, sustainability of its margins, and the success of the Company’s cost-cutting strategy in the wake of the 2015 merger. During the time that Kraft was making these misrepresentations and artificially inflating its stock price, Kraft’s private equity sponsor, 3G Capital, sold $1.2 billion worth of Kraft stock.

    On February 21, 2019, Kraft announced that it was forced to take a goodwill charge of $15.4 billion to write-down the value of the Kraft and Oscar Mayer brands—one of the largest goodwill impairment charges taken by any company since the financial crisis. In connection with the charge, Kraft also announced that it would cut its dividend by 36% and incur a $12.6 billion loss for the fourth quarter of 2018. That loss was driven not only by Kraft’s write-down, but also by plunging margins and lower pricing throughout Kraft’s core business. In response, analysts immediately criticized the Company for concealing and “push[ing] forward” the “bad news” and characterized the Company’s industry-leading margins as a “façade.”

    Heightening investor concerns, Kraft also revealed that it received a subpoena from the U.S. Securities and Exchange Commission in the same quarter it determined to take this write-down and was conducting an internal investigation relating to the Company’s side-agreements with vendors in its procurement division. Because of this subpoena and internal investigation, Kraft was also forced to take a separate $25 million charge relating to its accounting practices. Plaintiffs allege that because of the Company’s misrepresentations, the price of Kraft’s shares traded at artificially-inflated levels during the Class Period.

    On August 11, 2021, The Honorable Robert M. Dow, Jr. sustained Plaintiffs’ complaint. The case is now in discovery.  In March 2022, Plaintiffs moved for class certification.  

    Read Consolidated Amended Class Action Complaint Here

    Read Opinion and Order Denying Motion to Dismiss Here

    Read Motion for Class Certification Here

Landmark Results

  • Allergan stockholders alleged that in February 2014, Valeant tipped Pershing Square founder Bill Ackman about its plan to launch a hostile bid for Allergan. Armed with this nonpublic information, Pershing then bought 29 million shares of stock from unsuspecting investors, who were unaware of the takeover bid that Valeant was preparing in concert with the hedge fund. When Valeant publicized its bid in April 2014, Allergan stock shot up by $20 per share, earning Pershing $1 billion in profits in a single day.

    Valeant’s bid spawned a bidding war for Allergan. The company was eventually sold to Actavis PLC for approximately $66 billion.

    Stockholders filed suit in 2014 in federal court in the Central District of California, where Judge David O. Carter presided over the case. Judge Carter appointed the Iowa Public Employees Retirement System (“Iowa”) and the State Teachers Retirement System of Ohio (“Ohio”) as lead plaintiffs, and appointed Kessler Topaz Meltzer & Check, LLP and Bernstein Litowitz Berger & Grossmann, LLP as lead counsel.

    The court denied motions to dismiss the litigation in 2015 and 2016, and in 2017 certified a class of Allergan investors who sold common stock during the period when Pershing was buying.

    Earlier in December, the Court held a four-day hearing on dueling motions for summary judgment, with investors arguing that the Court should enter a liability judgment against Defendants, and Defendants arguing that the Court should throw out the case. A ruling was expected on those motions within coming days.

    The settlement reached resolves both the certified stockholder class action, which was set for trial on February 26, 2018, and the action brought on behalf of investors who traded in Allergan derivative instruments. Defendants are paying $250 million to resolve the certified common stock class action, and an additional $40 million to resolve the derivative case.

    Lee Rudy, a partner at Kessler Topaz and co-lead counsel for the common stock class, commented: “This settlement not only forces Valeant and Pershing to pay back hundreds of millions of dollars, it strikes a blow for the little guy who often believes, with good reason, that the stock market is rigged by more sophisticated players. Although we were fully prepared to present our case to a jury at trial, a pre-trial settlement guarantees significant relief to our class of investors who played by the rules.”

  • After over five years of hard-fought litigation, on February 19, 2020, Judge Michael M. Anello of the U.S. District Court for the Southern District of California granted preliminary approval of a class action settlement brought on behalf of SeaWorld Entertainment, Inc. shareholders.  Since December 2014, Kessler Topaz has served as co-lead counsel in the litigation. 

    The case alleges that SeaWorld and its former executives issued materially false and misleading statements during the Class Period about the impact on SeaWorld’s business of Blackfish, a highly publicized documentary film released in 2013, in violation of Section 10(b) of the Exchange Act of 1934.  Defendants repeatedly told the market that the film and its related negative publicity were not affecting SeaWorld’s attendance or business at all.  When the underlying truth of Blackfish’s impact on the business finally came to light in August 2014, SeaWorld’s stock price lost approximately 33% of its value in one day, causing substantial losses to class members.

    In April 2019, after the close of fact and expert discovery, Defendants moved for summary judgment on all claims—their last and best opportunity to avoid a jury trial on the Class’s claims through a dispositive motion.  After highly contested briefing and oral argument, in November 2019 the Court held in a 98-page opinion that Plaintiffs had successfully shown that the claims should go to a jury.

    With summary judgment denied and the parties preparing for a February 2020 trial, the parties reached a $65 million cash settlement for SeaWorld’s investors.  

  • As co-lead counsel representing the State of New Jersey – Division of Investment, negotiated a groundbreaking multipart settlement in litigation arising from Tenet Healthcare’s (Tenet) manipulation of the Medicare Outlier reimbursement system and related misrepresentations and omissions.

    The initial partial settlement included $215 million from Tenet, personal contributions totaling $1.5 million from two individual defendants—an unusual result in class action litigation—and numerous changes to the company’s corporate governance practices. A second partial settlement of $65 million from Tenet’s outside auditor, KPMG, addressed claims that it had provided false and misleading certifications of Tenet’s financial statements.  As a result of the settlement, various institutional rating entities now rank Tenet’s corporate governance policies among the strongest in the United States.