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Richard A. Russo, Jr.

Partner

D   484.270.1445
F   610.667.7056

Richard A. Russo, Jr., a partner of the Firm, concentrates his practice in the area of securities litigation, and principally represents the interests of plaintiffs in class actions and complex commercial litigation.

Rick specializes in prosecuting complex securities fraud actions arising under the Securities Exchange Act of 1934 and the Securities Act of 1933, and has significant experience in all stages of pre-trial litigation, including drafting pleadings, litigating motions to dismiss and motions for summary judgment, conducting extensive document and deposition discovery, and appeals.

Rick has represented both institutional and individual investors in a number of notable securities class actions. These matters include In re Bank of America Securities Litigation, where shareholders’ $2.43 billion recovery represents one of the largest recoveries ever achieved in a securities class action and the largest recovery arising out of the 2008 subprime crisis; In re Citigroup Inc. Bond Litigation, where the class’s $730 million recovery was the second largest recovery ever for claims brought under Section 11 of the Securities Act of 1933; and In re Lehman Brothers, where shareholders recovered $616 million from Lehman’s officers, directors, underwriters and auditors following the company’s bankruptcy filing.

Rick is currently representing shareholders in high-profile securities fraud actions against General Electric, Precision Castparts Corp., Kraft Heinz Corp. and Luckin Coffee Co. Rick has also assisted in prosecuting whistleblower actions and patent infringement matters.

In 2016, Rick was selected as an inaugural member of Benchmark Litigation’s Under 40 Hot List, an award meant to honor the achievements of the nation’s most accomplished attorneys under the age of 40. Rick was again selected as a member of the 40 & Under Hot List in 2018, 2019, and 2020. Rick has also been selected by his peers as a Pennsylvania Super Lawyers Rising Star on five occasions.

Awards/Rankings

  • Benchmark Future Stars, 2020 & 2021
  • Benchmark Litigation Under 40 Hot List, 2020
  • Benchmark Litigation Under 40 Hot List, 2016
  • Pennsylvania Super Lawyers Rising Star, 2012-2016
Experience

Current Cases

  •   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
      PLAINTIFFS 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 long-term receivables factoring (i.e., selling future receivables to GE Capital, GE’s financing arm, or third parties for immediate cash).  Through long-term factoring, GE pulled forward future cash flows, which it then reported as cash from operating activities (“CFOA”).  GE relied on long-term factoring to generate CFOA needed to reach publicly disclosed cash flow targets.  Thus, 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. 

    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 and massive reductions in Industrial CFOA guidance—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.  The Court had previously dismissed these claims but, upon reviewing Plaintiffs’ motion—based on evidence obtained through discovery—permitted the claim to proceed.

    On September 28, 2023, the Court entered an order denying Defendants’ motion for summary judgment, sending Plaintiffs’ claims to trial. In March 2024, the Court denied Defendants’ motion for reconsideration of its summary judgment decision. Trial is set to begin in November 2024.

    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

    Read Opinion and Order Here (9/28/23)

    Read Memorandum Opinion & Order Here (3/21/24) 

  • CASE CAPTION  Charles Larry Crews, Jr., et al. v. Rivian Automotive Inc., et al.
    COURT United States District Court for the Central District of California Western Division
    CASE NUMBER 2:22-cv-0524
    JUDGE Honorable Josephine L. Staton
    PLAINTIFFS Sjunde AP-Fonden, James Stephen Muhl
    DEFENDANTS Rivian Automotive, Inc. (“Rivian” or the “Company”), Robert J. Scaringe, Claire McDonough, Jeffrey R. Baker, Karen Boone, Sanford Schwartz, Rose Marcario, Peter Krawiec, Jay Flatley, Pamela Thomas-Graham, Morgan Stanley & Co. LLC, Goldman Sachs & Co., LLC, J.P. Morgan Securities LLC, Barclays Capital Inc., Deutsche Bank Securities Inc., Allen & Company LLC, BofA Securities, Inc., Mizuho Securities USA LLC, Wells Fargo Securities, LLC, Nomura Securities International, Inc., Piper Sandler & Co., RBC Capital Markets, LLC, Robert W. Baird & Co. Inc., Wedbush Securities Inc., Academy Securities, Inc., Blaylock Van, LLC, Cabrera Capital Markets LLC, C.L. King & Associates, Inc., Loop Capital Markets LLC, Samuel A. Ramirez & Co., Inc., Siebert Williams Shank & Co., LLC, and Tigress Financial Partners LLC.
    CLASS PERIOD November 10, 2021 through March 10, 2022, inclusive

    This securities fraud class action case arises out of Defendants’ representations and omissions made in connection with Rivian’s highly-anticipated initial public offering (“IPO”) on November 10, 2021. Specifically, the Company’s IPO offering documents failed to disclose material facts and risks to investors arising from the true cost of manufacturing the Company’s electric vehicles, the R1T and R1S, and the planned price increase that was necessary to ensure the Company’s long-term profitability. During the Class Period, Plaintiffs allege that certain defendants continued to mislead the market concerning the need for and timing of a price increase for the R1 vehicles. The truth concerning the state of affairs within the Company was gradually revealed to the public, first on March 1, 2022 through a significant price increase—and subsequent retraction on March 3, 2022—for existing and future preorders. And then on March 10, 2022, the full extent Rivian’s long-term financial prospects was disclosed in connection with its Fiscal Year 2022 guidance. As alleged, following these revelations, Rivian’s stock price fell precipitously, causing significant losses and damages to the Company’s investors.

    On July 22, 2022, Plaintiffs filed a Consolidated Class Action Complaint on behalf of a putative class of investors alleging that Rivian, and its CEO Robert J. Scaringe (“Scaringe”), CFO Claire McDonough (“McDonough”), and CAO Jeffrey R. Baker (“Baker”) violated Sections 10(b) and 20(a) of the Securities Exchange Act. Plaintiffs also allege violations of Section 11, Section 12(a)(2), and Section 15 of the Securities Act against Rivian, Scaringe, McDonough, Baker, Rivian Director Karen Boone, Rivian Director Sanford Schwartz, Rivian Director Rose Marcario, Rivian Director Peter Krawiec, Rivian Director Jay Flatley, Rivian Director Pamela Thomas-Graham, and the Rivian IPO Underwriters. In August 2022, Defendants filed motions to dismiss, which the Court granted with leave to amend in February 2023. On March 16, 2023, Defendants filed motions to dismiss the amended complaint. In July 2023, the Court denied Defendants’ motions to dismiss the amended complaint in its entirety. The case is now in fact discovery and the parties are engaged in briefing on Plaintiffs’ motion for class certification.

    Read Consolidated Class Action Complaint Here

    Read Amended Consolidated Class Action Complaint Here