Trace Schmeltz

Securities

• Assisted an outside director client in obtaining the complete dismissal of a securities fraud class action involving a company formed through a so-called 'Chinese reverse merger'. The court granted the client's motion to dismiss and, although the plaintiffs were given leave to amend, they dropped the case altogether.
• Advised and represented boards of directors in pursuing and defending against hostile efforts by activist shareholders and companies to take over corporate ownership and/or control.
• Represented hedge fund and private equity investors to successfully obtain recovery for misstatements or omissions in offering documents.
• Advised hedge funds seeking to bring affirmative claims under the securities laws for false statement and omissions made to the funds themselves.
• Handled class certification, discovery and summary judgment briefing in some of the largest class actions brought to date. These rarely tried securities fraud cases arose from the collapse of the telecommunications industry, auction rate securities, missed earnings projections, restatements, allegations of fraudulent business models, and the failure to meet Wall Street's expectations.
• Performed internal investigations into potential liability under the securities laws, including investigations into potential insider trading, accounting errors, and violations of anti-corruption laws, including of the FCPA.

Commodities

• Represented and obtained a full recovery for commodity customers and commodity pool operators with extensive metals holdings—including brokers, commodity trading advisors, and futures commission merchants—to address the market disruption caused by the collapse of MF Global and PFG Best.
• Litigated commodity trading disputes involving non-compete agreements, the alleged theft of trade secrets, and a variety of issues surrounding incomplete or failed delivery on physical commodity contracts.
• Regularly advises and represents commodity trading advisors, commodity pool operators, futures commission merchants, and swap dealers in compliance matters and enforcement actions brought by the NFA, the CME Group, and the CFTC.
• Represented a commodity trading advisor in an arbitration under ICE Futures US Cocoa Rules regarding a trade involving allegedly non-compliant physical settlement. 
• Served as a director on the advisory board for a hedge fund and related entities specializing in futures.

Investigations and Enforcement Actions

• Managed over 50 government investigations at Enron Corp. following its collapse. Responsibilities included responding to subpoenas, factual development, conducting witness interviews, providing advice to business units as to how to respond to government inquiries, and coordinating the company's efforts to cooperate with the DOJ and FBI.
• Involved in several investigations brought by the SEC pertaining to alleged trading by a corporate insider or tippee on purportedly material, non-public information. Worked with economists and other experts to demonstrate the lack of materiality of such information or to develop facts demonstrating that the information was publicly available.
• Collaborated with the SEC and the US Attorney's Office for the Southern District of New York to investigate and identify individuals who should be targeted for prosecution or enforcement actions. This work was performed on behalf of a court-appointed receiver in a case involving a private equity real estate firm that was operated as a Ponzi-like scheme. Investigative efforts included factual development and analysis, deposing individuals with the SEC, and pursuing affirmative claims for the receiver.
• Regularly retained by individuals who may have been involved with companies deemed to be operating in a fraudulent or improper manner by the SEC or CFTC. Assisted clients in ascertaining defenses to both liability and, where applicable, disgorgement of funds obtained in connection with the allegedly fraudulent enterprises.
• Helped companies ensure compliance with the Foreign Corrupt Practices Act by investigating possible violations and successfully formulating strategies for avoiding potential liability.

Merger and Acquisition Litigation 

• IBP, Inc. v. Tyson Foods, Inc. One of the seminal cases considering the impact of an alleged material adverse change on a company's obligation to close a merger.
• Assisted client, a retailer with a large chain of athletic footwear stores, to successfully terminate its merger agreement with a specialty apparel retailer. The client company saw its stock price increase by 52% following the announcement of the deal's termination.
• Advised and represented boards of directors in pursuing and defending against hostile efforts by activist shareholders and companies to take over corporate ownership and/or control.
• Regularly handles post-closing litigation matters, such as purchase price adjustment claims, disputes over earnouts, and claims for indemnification based on breaches of representations and warranties; also consults on drafting dispute resolution clauses in acquisition agreements.

White Collar and Fiduciary Defense

• Represented the owner of an investment management firm in fraud and breach of fiduciary claims arising from the collapse of hedge funds which had invested in a Ponzi scheme led by Tom Petters. These actions included an investigation and enforcement action brought by the SEC and a criminal complaint filed by the US Attorney's Office.
• Successfully defended the owners and directors of a private company against allegations that they had breached fiduciary duties to minority shareholders.
• Represented bank officers in parallel civil and criminal fraud proceedings.
• Represented corporate officers facing potential liability for alleged waste, insider trading, and securities fraud in actions brought by the government and private plaintiffs.

Bankruptcies and Receiverships

• Managed the investigation into the collapse of Wextrust Capital and its affiliates, including Wextrust Commodity Managers, LLC; handled litigation related to the claims process in the resulting receivership.
• Advised the receiver on the risks, outflows, trading, and real estate for AlphaMetrix, LLC, after a receivership was imposed on that entity.
• Prosecuted and defended fraudulent transfer claims arising out of the bankruptcies of companies such as Global Crossing and Washington Group.
• As counsel to the Special Committee of the Board of Directors of a Bitcoin mining company during its bankruptcy, investigated and pursued claims against insiders for alleged breaches of fiduciary duties, assisted in negotiating a confirmable plan in bankruptcy, and litigated claim objections.
• As counsel to the Special Committee of the Board of Directors of Lugano Diamonds & Jewelry during its bankruptcy, investigated claims against insiders for alleged breaches of fiduciary duties, advised the committee in meeting its duties and obligations to the estate.

• Co-chair, Crypto-Currency/Blockchain Subcommittee, Securities Litigation Committee, American Bar Association (2024-present)
• Co-Chair, SEC Enforcement Subcommittee, Securities Litigation Committee, American Bar Association (2020-present)