85 Years — A Long Tradition of Innovation

POMERANTZ MONITOR | JANUARY FEBRUARY 2021

By The Editors

In celebration of the founding of the Pomerantz Firm 85 years ago, the Monitor will feature a highlight from its history in each issue in 2021.

Let’s start at the very beginning. In 1926, Abraham Louis Pomerantz, a young graduate of Brooklyn Law School, hung up his shingle in New York City. For years, he shared one small room and a stenographer with three other young lawyers. When one of lawyers had a client visit, the other three would make themselves scarce. But there weren’t many clients in those early days, and the four spent much of their time playing knock rummy.

One day in 1932, Celia Gallin, the widow of Abe’s high school gym teacher, walked in the door. Her husband had left her 20 shares of stock in the National City Bank of New York (today’s Citigroup). Before the market crash of 1929, they had sold for $585 a share; now, in the Great Depression, they traded at $17. Gallin thought there must be someone she could sue to get her money back. Unfortunately, there was not, Abe told her.

A few months later, Ferdinand Pecora took over as Chief Counsel for what had been a bumbling, ineffective Senate probe of the causes of the stock market crash. As Michael Perino, the author of Ferdinand Pecora, the Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the Great Crash Forever Changed American Finance, wrote:

In just a few weeks Pecora turned the investigation around. His first target was City Bank and its Chairman, “Sunshine” Charlie Mitchell. After a whirlwind investigation, Pecora chronicled how Mitchell and the bank’s other executives had manipulated stocks, dodged taxes, ripped off their shareholders, and collected enormous bonuses for peddling shoddy securities to unsuspecting American investors.

Realizing the opportunity that opened up, Abe quickly called Gallin. He still couldn’t get her money back, but he hoped to effect retribution by convincing the court to force the bank’s executives to return their bonuses. Retaining the well-known New York lawyer David Podell to try the case, Abe brought a derivative suit against National City Bank, relying on the disclosures from the Pecora hearings. Abe and Podell won, clawing back $1.8 million in bonuses from the bank’s executives.

A few months later, Pecora held hearings on Chase Manhattan Bank. Abe brought a derivative lawsuit alleging the same wrongdoing Pecora had revealed. The bank settled. Abe thereafter decided to specialize in stockholder suits, and thus began the Firm as we know it.

Again, according to Perino:

In the worst depths of the Great Depression, Pecora paraded a series of elite financiers before the Senate Banking and Currency Committee. The sensational disclosures of financial malfeasance galvanized public opinion for reform and led to passage of the first federal securities laws and the Glass-Steagall Act.

...
Until his death in 1982, Abraham Pomerantz was one of the leaders of the plaintiffs’ bar. He helped pioneer derivative suits brought by small shareholders against publicly traded corporations, and the law firm he founded remains a major player in the field.

In 1946, “on the strength of his familiarity with complicated financial transactions and his reputation as a tenacious trial lawyer,” the United States Government appointed Abe as Deputy Chief Counsel (Economics) at Nuremberg. As such, he was senior trial counsel in all cases against German industrialists for collaborating in Nazi war crimes. He left after eight months, frustrated that the prosecutions were impaired by inadequate human and financial resources. Abby Mann, in his introduction to his screenplay, Judgment at Nuremberg, wrote, “The first time I gave Nuremberg any thought was when I met Abraham Pomerantz at a dinner party in New York in 1957. Pomerantz had been one of the prosecutors in the last trials at Nuremberg when the defendants included diplomats, doctors and Judges.”

In 1965, Variety Magazine, which as a rule covered theater and film, sent reporter Ronald Gold to cover a trial that Abe was litigating. Gold wrote it up as a movie review:

Though he doesn’t get top billing, Abe Pomerantz, playing one of two lawyers for a couple of worried investors, does the standout job. Managing to be both breathless and stentorian, the gray-haired portly veteran delivers a ringing indictment of legalistic trickery, all the while letting the audience know that along with his sincere emotion he’s just as clever as the opposition.

In a 1968 feature in Fortune Magazine titled “Abe Pomerantz is Watching You,” Spencer Klaw opined:

If the past is any guide, at one time or another during the next year the officers or directors of scores of large, publicly held corporations will be handed a depressing legal document. It will inform them that they have been named as defendants in a minority-stockholder suit. The news will be particularly depressing if the plaintiff is represented by Abraham Pomerantz... Pomerantz has been suing corporate insiders for thirty-five years, and in four out of five cases the defendants have had to pay sizable amounts of money out of their own pockets.

Abe was often in the spotlight, as in the lively February 1977 interview segment, “Lancelot at Law,” on Wall Street Week with Louis Rukeyser. On his death in 1982, the New York Times described Abe as “an articulate courtroom orator who reveled in fencing with his political and legal adversaries.”

The late, and esteemed attorney Milton S. Gould eulogized Abe:

The stockholders’ derivative action flourished under the leadership of men like Abe Pomerantz ... and it continues to flourish. I think an enlightened view of its function and usefulness is that the cause of action has proved to be the most effective instrument we have in protecting corporate ownership from misconduct in corporate management. From those cases have evolved useful concepts of fiduciary loyalty and the need for honest full disclosure ... Abe Pomerantz became a hero, and his name became a synonym for the successful prosecution of the plaintiff’s derivative suit.

In 2015, eighty-three years after Celia Gallin first walked into Abe’s office looking for justice, John C. Coffee, Jr., Professor of Law and Director of the Center on Corporate Governance at Columbia University Law School, wrote in Entrepreneurial Litigation: Its Rise, Fall, and Future:

If this book has found one unassailable hero within the plaintiffs’ bar, it was probably Abe Pomerantz.