Mealey's Securities
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August 16, 2019
High Court Review Of Collateral Estoppel Ruling In SEC Action Sought
WASHINGTON, D.C. — U.S. Supreme Court review of a Ninth Circuit U.S. Court of Appeals ruling in a Securities and Exchange Commission enforcement action is necessary because the appellate court’s reasoning in affirming a lower court’s grant of summary judgment has exacerbated a split among the federal circuits of appeal, as well as among several state courts of appeal, the defendant argues in a July 17 petition for writ of certiorari (Mitchell J. Stein v. U.S. Securities and Exchange Commission, No. 19-97, U.S. Sup., 2019 U.S. S. Ct. Briefs LEXIS 2681).
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August 16, 2019
Section 11 Director Liability Does Not Apply To Board Observers, Panel Rules
PHILADELPHIA — A nonvoting board observer that is affiliated with an issuer’s placement agent is not a “person who, with his consent, is named in the registration statements as being or about to become a director[] [or] person performing similar functions” under Section 11 of the Securities Act of 1933, a Third Circuit U.S. Court of Appeal panel ruled in a divided July 23 opinion (Obasi Investment Ltd., et al. v. Tibet Pharmaceuticals Inc., et al., No. 18-1849, 3rd Cir., 2019 U.S. App. LEXIS 21902).
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August 16, 2019
Panel Affirms Dismissal Of Securities Suit Against Mortgage Loan Servicer
ATLANTA — An 11th Circuit U.S. Court of Appeals panel on Aug. 15 affirmed a federal district court’s dismissal of a securities class action lawsuit against a mortgage loan servicer and certain of its senior executives, ruling that the district court properly determined that a lead plaintiff failed to sufficiently plead any actionable misrepresentations or omissions in making its federal securities law claims (Karen A. Carvelli, et al. v. Ocwen Financial Corp., et al., No. 18-12250, 11th Cir., 2019 U.S. App. LEXIS 24284).
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August 15, 2019
Dismissal Of State Law Claims In Market Manipulation Suit Overturned On Appeal
NEW YORK — A federal district court erred in dismissing state law claims in a market manipulation suit filed by former customers of a bankrupt broker-dealer because it incorrectly held that the former customers failed to plead damages, a Second Circuit U.S. Court of Appeals panel ruled in an Aug. 13 summary order (Mohammed Fezzani, et al. v. Isaac R. Dweck, et al., No. 18-1354, 2nd Cir., 2019 U.S. App. LEXIS 24015).
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August 15, 2019
Utah Investor Suit Over Naked Short-Selling Scheme Remanded To State Court
SALT LAKE CITY — The Utah Supreme Court on Aug. 13 vacated and remanded an investor suit against Morgan Stanley & Co. LLC and other financial institutions to a state trial court with instructions for the court to conduct an examination of each defendant’s contacts with Utah and apply certain jurisdictional tests to determine whether specific personal jurisdiction exists over some of all of the defendants (Raser Technologies Inc. v. Morgan Stanley & Co. LLC, No. 20170325, Utah Sup., 2019 Utah LEXIS 126).
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August 15, 2019
CBD Supplement Maker Hit With Investor Class Action Over Alleged Misstatements
NEW YORK — A shareholder of an integrated medical and wellness cannabis operator filed a securities class action lawsuit against the company and certain of its current and former executive officers in New York federal court on Aug. 12, alleging that the defendants misrepresented the governmentally approved use of the company’s products in violation of federal securities law (Sherry Huggins v. Curaleaf Holdings Inc., et al., No. 19-4640, E.D. N.Y.).
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August 14, 2019
Majority Affirms Ruling In Favor Of Excess Directors, Officers Liability Insurer
SAN FRANCISCO — A majority of a Ninth Circuit U.S. Court of Appeals panel on Aug. 12 affirmed a lower court’s summary judgment ruling in favor of a first-level excess directors and officers liability insurer on a software company insured’s breach of contract and bad faith claims, finding that the insured was not liable for any portion of an underlying settlement and the insured’s alleged breach was not the proximate cause of the insured’s purported damages (Genesis Insurance Co. v. National Union Fire Insurance Company of Pittsburgh, Pa., et al., No. 17-17362, 9th Cir., 2019 U.S. App. LEXIS 23956).
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August 13, 2019
Failure To Cure Pleading Deficiencies Leads To Dismissal Of Stock-Drop Suit
SAN FRANCISCO — A federal judge in California on Aug. 12 ruled that a pension fund failed to cure the pleading deficiencies that previously led to the dismissal of its first amended securities class action complaint against a generic drug company and certain of its current and former executive officers, dismissing the pension fund’s second amended complaint (SAC) without leave to amend (New York Hotel Trades Council & Hotel Association of New York City Inc. Pension Fund v. Impax Laboratories Inc., et al., No. 16-6557, N.D. Calif.).
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August 12, 2019
U.S. Government: High Court Review Of Securities Fraud Case Is Unwarranted
WASHINGTON, D.C. — The U.S. government on Aug. 7 filed a brief in the U.S. Supreme Court contending that it should not grant review of a securities fraud case because the appellate court correctly held that the lower court did not abuse its discretion when it refused to hold a hearing about the FBI’s leaks of grand jury material (William T. Walters v. United States, No. 18-1393, U.S. Sup.).
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August 9, 2019
Shareholder: Fracking Company Misleading Statement Violated Securities Law
WILMINGTON, Del. — A shareholder in a company that builds and maintains hydraulic fracturing wells on July 29 filed a class action in Delaware federal court contending that the company violated federal securities laws when it filed a misleading registration statement in its attempt to sell the company to another entity through a wholly owned subsidiary (Chad Wuollet v. C&J Energy Services Inc., et al., No. 19-1411, D. Del.).
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August 8, 2019
Mylan To Pay SEC $30M For Misclassifying EpiPen
HERTFORDSHIRE, England — Mylan N.V. on July 29 said it has reached a $30 million agreement-in-principle to settle a U.S. Securities and Exchange Commission investigation into the misclassification of the EpiPen epinephrine autoinjector as a generic product to avoid paying rebates to the Medicaid program.
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August 6, 2019
Trustee Appeals Dismissal Of Coverage Suit Over SEC Investigation Against Insured
BOSTON — A trustee for a bankrupt investment advisory company recently asked the First Circuit U.S. Court of Appeals to reverse a lower federal court’s dismissal of his complaint seeking excess insurance coverage for $7.7 million in attorney fees arising from a formal order of investigation brought by the Securities and Exchange Commission (Craig R. Jalbert v. Zurich Services Corporation, et al, No. 18-2244, 1st Cir.).
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August 6, 2019
Brokerages: Review Not Needed For Expert Witness Ruling In Retaliation Case
WASHINGTON, D.C. — The U.S. Supreme Court should deny a request by an ex-employee asserting a retaliatory discharge claim against brokerage companies to grant review of lower courts’ exclusion of her expert witness because “further review on this fact-bound, splitless, and correct conclusion is unnecessary,” the companies tell the high court justices in their July 29 response (Jackie Hosang Lawson v. FMR LLC, et al., No. 19-2, U.S. Sup., 2019 U.S. S. Ct. Briefs LEXIS 2904).
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August 2, 2019
6th Circuit Panel Denies Review Of Class Certification Ruling In Securities Suit
CINCINNATI — A Sixth Circuit U.S. Court of Appeals panel on July 31 denied a petition for leave to appeal filed by defendants in a securities class action lawsuit, ruling that a federal district court did not err in certifying a class of investors (In re: Quorum Health Corp., et al., No. 19-0505, 6th Cir., 2019 U.S. App. LEXIS 22923).
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August 2, 2019
Investor Suit Against Tesla Board Members Stemming From Merger Deal Dismissed
SAN JOSE, Calif. — A federal judge in California on July 31 held that Tesla Inc. shareholders may not recover profits received by members of the company’s board of directors after a merger deal with a solar energy company because each of the defendants’ acquisitions of Tesla shares was with the issuer and because the transactions were approved by Tesla’s board (John A. Olagues, et al. v. Elon Musk, et al., No. 18-7110, N.D. Calif., 2019 U.S. Dist. LEXIS 128074).
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August 1, 2019
Defendant In SEC Investment Fraud Suit Ordered To Pay $148,000 Judgment
NEW YORK — A federal judge in New York on April 16 granted the Securities and Exchange Commission’s motion for final judgment against a defendant in a securities fraud lawsuit stemming from an alleged investment fraud scheme, ordering a defendant to pay more than $148,000 as part of the judgment (United States Securities and Exchange Commission v. William C. Skelley, et al., No. 18-8803, S.D. N.Y., 2019 U.S. Dist. LEXIS 121104).
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August 1, 2019
Securities Claims Dismissed In State Court Lawsuit For Failure To Plead Claim
NEW YORK — An investor in a New York state court securities class action has failed to sufficiently state its claims for relief under the Securities Act of 1933 against a Brazilian online retailer, certain of its officers and directors and underwriters of its initial public offering (IPO) because several of the alleged misrepresentations the defendants made were accurate statements or were protected statements of opinion, a New York justice ruled July 17 (In re Netshoes Securities Litigation, No. 157435/2018, N.Y. Sup., New York Co., 2019 N.Y. Misc. LEXIS 3909).
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August 1, 2019
Panel Remands Ponzi Scheme Operator’s Suit To District Court For Resentencing
NEW ORLEANS — Although a federal district court’s conviction and restitution order against the operator of a Ponzi scheme was correct, under U.S. Supreme Court precedent, a vacating of the sentence and remand to state court is necessary because the district court’s sentencing guidelines calculation was off by a single point, a Fifth Circuit U.S. Court of Appeals panel ruled July 29 (United States v. Roberto Trinidad del Carpio Frescas, No. 17-50245, 5th Cir., 2019 U.S. App. LEXIS 22455).
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August 1, 2019
Shareholders: 3M Made False Statements About Risk From Chemical Litigation
TRENTON, N.J. — A group of shareholders on July 29 filed a class action in New Jersey federal court against the 3M Co. contending that it engaged in a scheme to defraud investors by issuing “false and misleading statements to conceal the truth” about 3M’s exposure to legal liability related to its products known as per- and polyfluoroalkyl substances (PFAS) (Heavy & General Laborers’ Locals 472 & 172 Welfare Fund v. 3M Company, et al., No. 19-15982, D. N.J.).
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July 31, 2019
District Court’s Denial Of Post-Judgment Motion Was Correct, Defendants Argue
NEW YORK — The lead plaintiffs in a securities class action lawsuit against restaurant chain Chipotle Mexican Grill Inc. and certain of its senior executives failed to sufficiently show that a federal district court erred in denying their post-judgment motion for leave to amend their complaint, the defendants argue in a July 3 appellee brief filed in the Second Circuit U.S. Court of Appeals (Metzler Investment GmbH, et al. v. Chipotle Mexican Grill Inc., et al., No. 18-3807, 2nd Cir.).