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Mealey's Securities

January 29, 2024
Federal Judge Remands ‘Ponzi’ Complaint, Says Bank Does Not Justify Removal

BOSTON — Finding that a bank had not substantiated the need to remove a case to federal court, a federal judge in Massachusetts remanded to state court a complaint in which a brokerage firm accuses the bank of facilitating a Ponzi scheme that negatively affected the brokerage firm’s customers.
January 26, 2024
Investment Adviser Firm, Former Partner Settle SEC Allegations Of Misleading Client

WASHINGTON, D.C. — An investment adviser firm and a former partner have agreed to settle the Securities and Exchange Commission’s allegations that they misled an educators’ retirement fund about discrepancies regarding the retirement fund’s returns on investments, according to an SEC news release and two cease-and-desist orders issued by the commission as part of an agency enforcement action on Jan. 25.
January 25, 2024
Federal Judge Tosses Senior Living Shareholder Derivative Suit Due To Errors

NASHVILLE, Tenn. — A federal judge in Tennessee dismissed a shareholder derivative complaint brought against a company that oversees senior living facilities alleging issues with the quality of service and misstatements made to the public about the services, finding that the shareholders’ theory of the case is contradicted by the documents they rely on.
January 23, 2024
Government Seeks Stay Of SEC Case Against Alleged Fraudsters Due To Criminal Case

NEW YORK — The U.S. government moved to intervene in a civil case brought by the Securities and Exchange Commission against five individuals and associated companies for allegedly selling unregistered securities in private companies before their initial public offerings (IPOs), with the government seeking a stay of the civil case until the culmination of a parallel criminal case brought by the Department of Justice.
January 23, 2024
Investor: Medical Company Misled About COVID’s Impact On Drug’s Clinical Testing

RENO, Nev. — A biopharmaceutical company misled investors by failing to disclose that its ability to test a drug planned to treat Alzheimer’s disease was severely impacted by the ongoing COVID-19 pandemic, an investor says in a putative class complaint filed in a federal court in Nevada.
January 22, 2024
Panel: Excess D&O Insurer Owes No Coverage For Costs Of Shareholder Class Action

PHILADELPHIA — The Third Circuit U.S. Court of Appeals on Jan. 19 affirmed a lower federal court’s summary judgment ruling in favor of an excess directors and officers liability insurer, finding that the insurer has no duty to pay a pharmaceutical drug manufacturer insured’s settlement and defense costs arising from an underlying shareholder class action alleging that it artificially inflated its stock when it misrepresented the results of a clinical drug study.
January 22, 2024
Alaska Supreme Court Upholds Shareholders’ Debt Forgiveness For Tribal Entity

JUNEAU, Alaska — The Alaska Supreme Court affirmed a state superior court’s decision to approve the vote of a shareholder class to forgive the remaining debt owed to it by a tribal corporation, finding that the lower court’s decision satisfies requirements for considering class claims.
January 22, 2024
Bridgebuilder, Insurer Stipulate To Dismissal Of Damage Coverage Claims

WASHINGTON, D.C. — A bridgebuilder and its builders risk insurer have agreed to the dismissal with prejudice of the builder’s breach of contract and bad faith suit against the insurer; the builder last year had been granted summary judgment on the breach of contract claim after a federal judge in the District of Columbia found that the policy’s definition of “damage” includes the builder’s claim for reimbursement for repair costs necessitated by defects in the concrete of the bridge and that the insurer failed to demonstrate that any exclusions apply.
January 22, 2024
Investor: Verizon Broke Law With Decision To Leave Toxic Cables Underground

TRENTON, N.J. — A shareholder has filed a complaint in New Jersey federal court contending that Verizon Communications Inc. and its board of directors violated federal securities laws and committed fraud in connection with the company’s decision to leave toxic cable wires buried in the ground nationwide, which allowed the wires to contaminate groundwater.
January 19, 2024
Dismissal Denied In Suit Against Life Insurer Regarding ‘Leapfrogging’ Policy

CINCINNATI — An Ohio federal judge denied dismissal of a breach of contract suit filed against a life insurer by the liquidating trustee for a viatical settlement provider, finding that the complaint was timely filed because Ohio law applies to the dispute over a “leapfrogging” life insurance policy that was sold to the trust.
January 19, 2024
Federal Judge Freezes Assets Of Companies, CEO That SEC Says Ran Huge Scheme

NEW YORK — A federal judge in New York granted the Securities and Exchange Commission’s request for an emergency freeze on the assets of a man and three companies he controlled that the commission says ran a “staggering” scheme involving billions of dollars’ worth of fictitious transactions and misleading statements overstating the companies’ value, in some cases by hundreds of millions of dollars.
January 18, 2024
Federal Judge Delays Trial Between SEC, Crypto Firm In Hopes CEO Can Be Extradited

NEW YORK — A federal judge in New York agreed to one postponement of a jury trial in the Securities and Exchange Commission’s case against cryptocurrency firm Terraform Labs Pte. Ltd. and its chief executive officer, who are accused of a large-scale fraud, after the CEO’s counsel said there is a possibility he will be released from custody in Montenegro to attend the trial.
January 18, 2024
Investor Says Chip Producer Misled Investors By Not Disclosing Inventory Buildup

NEW YORK — A technology manufacturing company misled investors by not notifying them of its customers creating a buildup in excess inventory of a computer chip it manufactured, leading to a drop in stock value when the company announced the buildup would affect profitability in the first quarter of 2024, an investor says in a putative class complaint filed in a New York federal court.
January 17, 2024
High Court Told ‘Chaos’ Will Ensue ‘In A World Without Chevron’ Deference

WASHINGTON, D.C. — The U.S. Supreme Court was told Jan. 17 that “chaos” will ensue “in a world without Chevron” deference by government attorneys, who urged it to apply stare decisis and uphold Chevron, which is being challenged in two cases arising out of federal fishing regulations.
January 17, 2024
Investor Says BioNTech Misled Shareholders With Predictions Of Vaccine Sales

LOS ANGELES — A biotechnology company misled investors by suggesting that its COVID-19 vaccine was still relevant despite not having approval from the Food and Drug Administration to target the most common subvariant at the time, an investor says in a purported class complaint filed in the U.S. District Court for the Central District of California.
January 17, 2024
Whether SEC Disclosure Rule Can Form Private Claims Argued Before High Court

WASHINGTON, D.C. — The plain language of federal securities laws does not allow for a private claim to be brought under allegations that a company omitted material from a disclosure form required by the Securities and Exchange Commission, an infrastructure company and other petitioners told the U.S. Supreme Court on Jan. 16; an investment company was joined by the U.S. government in arguing that such an omission can form the basis of private claims if it is shown to be material.
January 16, 2024
Former Hedge Fund Exec Is Sentenced To Time Served In Securities Fraud Case

BROOKLYN, N.Y. — One of three former hedge fund executives that a New York federal jury found guilty of securities fraud and conspiracy to commit securities fraud for an alleged scheme involving a reinsurer has been sentenced to time served, a $5,000 fine and a $200 special assessment.
January 12, 2024
Hedge Fund Manager Seeks Fees, Costs From SEC After High Court Denies Certiorari

BOSTON — After the U.S. Supreme Court denied his petition for a writ of certiorari seeking the reversal of a federal appeals court’s decision upholding a jury’s liability finding in an Securities and Exchange Commission enforcement action, a hedge fund manager is seeking attorney’s fees and costs in a Massachusetts federal court, saying he and his fund are entitled to fees and costs because “they were the ‘prevailing parties’” under the Equal Access to Justice Act (EAJA).
January 12, 2024
SEC Says CEO Purchased Company’s Shares To Inflate Stock Value In New Suit

NEW YORK — The chief executive officer of a financial technology company manipulated its stock price by buying hundreds of thousands of shares to artificially raise the company’s stock, the Securities and Exchange Commission says in a suit filed in a federal court in New York.
January 12, 2024
Venture Capitalist Tells High Court SEC Missed Deadline To Cross-Appeal

WASHINGTON, D.C. — A federal district court improperly raised the disgorgement obligation a fugitive joint venture capitalist owed related to misappropriated funds after amendments to the Securities Exchange Act of 1934 because the Securities and Exchange Commission never filed a cross-appeal, the venture capitalist tells the U.S. Supreme Court in a petition for a writ of certiorari.
January 12, 2024
2nd Circuit Affirms Dismissal Of Securities Fraud Claims Against Philip Morris

NEW YORK — Addressing two matters of first impression, the Second Circuit U.S. Court of Appeals affirmed a district court’s dismissal of securities fraud claims brought by shareholders against tobacco company Philip Morris International Inc. and several of its executives based on its statements regarding its studies of heat-not-burn tobacco products, rejecting shareholder claims that PM made material misrepresentations about the products.
January 11, 2024
German Software Firm Agrees To SEC Fines For Bribery In Multiple Nations

WASHINGTON, D.C. — A global software company based in Germany has agreed to pay the Securities and Exchange Commission nearly $100 million in monetary sanctions arising out of bribery schemes in South Africa, Malawi and several other nations that the SEC said violated the Foreign Corrupt Practices Act of 1977 (FCPA).
January 11, 2024
Holding Company Fails To Show Falsity Of CEO’s Statements Soliciting Investments

BILLINGS, Mont. — An investment company failed to show in its first amended complaint that some statements made by the co-founder of an industrial hemp and CBD manufacturing company while he was soliciting investments were false, a federal judge in Montana found, partially granting a motion to dismiss the complaint.
January 10, 2024
5th Circuit Finds CFTC Did Not Provide Notice Of Trading Rule’s New Interpretation

NEW ORLEANS — A panel of the Fifth Circuit U.S. Court of Appeals partly reversed a judgment and partly vacated an injunction against a holding company and a broker working in electrical energy futures trading, finding that the Commodity Futures Trading Commission (CFTC) did not provide sufficient notice of its “unprecedented interpretation” of a CFTC rule.
January 10, 2024
Investor’s Claims That Netflix Misrepresented Account Sharing Prevalence Dismissed

OAKLAND, Calif. — A federal judge in California dismissed a putative class complaint brought by a group of investors against streaming giant Netflix Inc. that alleged that the company made material misrepresentations about how it was affected by users sharing passwords, finding that the investors did not establish the falsity of the company’s statements.