PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel on Jan. 30 ruled that a federal district court did not err in ruling that a defendant in a securities fraud criminal suit failed to sufficiently establish beyond a preponderance of the evidence “a lack of knowledge” of a federal securities statute when he violated it by participating in an illegal short-selling scheme (United States v. Steven Fishoff, No. 18-3549, 3rd Cir., 2020 U.S. App. LEXIS 2928).
LOS ANGELES — Shareholders in a securities class action lawsuit against Toshiba Corp. have sufficiently alleged a domestic transaction under the irrevocable liability test in arguing that the lead plaintiff in the action purchased Toshiba American Depositary Receipts (ADRs) on the over-the-counter (OTC) market in the United States, a federal judge in California ruled Jan. 28 in denying Toshiba’s motion to dismiss (Mark Stoyas, et al. v. Toshiba Corp., No. 15-4194, C.D. Calif., 2020 U.S. Dist. LEXIS 14295).
PHILADELPHIA — A federal district court did not err in determining that audita querela is not an available remedy to vacate a final forfeiture and substitute assets orders in a securities fraud criminal action, a Third Circuit U.S. Court of Appeals panel ruled Jan. 28 in a nonprecedential opinion (United States v. George Georgiou, Nos. 18-2498 and 18-2762, 3rd Cir., 2020 U.S. App. LEXIS 2799).
AUSTIN, Texas — A federal judge in Texas on Jan. 10 issued a final judgment in which Dell Inc. will pay $21 million to settle claims that the global information technology company and certain of its senior executives violated federal securities laws by misrepresenting Dell’s international business growth and concealed a drop in demand for its PC product line (City of Pontiac General Employees’ Retirement System v. Dell Inc., et al., No. 15-374, W.D. Texas).
SAN FRANCISCO — A federal judge in California on Jan. 27 ruled that an investor has failed to properly plead falsity or scienter in arguing that a drug company and two of its senior executives violated federal securities law by failing to disclose to investors that they had omitted in a new drug application (NDA) key toxicity information for an active ingredient in a childhood-onset epilepsy treatment drug, which ultimately led the U.S. Food and Drug Administration to deny the NDA (Immanuel Lake, et al. v. Zogenix Inc., et al., No. 19-1975, N.D. Calif.).
OAKLAND, Calif. — A federal judge in California granted preliminary approval of a $175 million shareholder derivative action settlement against opioid drug distributor McKesson Corp. brought by investors who alleged that several of the company’s current and former senior officers and directors failed to conduct the necessary oversight of opioid drug sales, even after the company twice had been hit with fines for previous compliance failures, according to a press release issued by co-lead counsel on Jan. 24 (In re McKesson Corp. Derivative Litigation, No. 17-1850, N.D. Calif.).
WASHINGTON, D.C. — The U.S. Congress has enacted a series of securities laws over the past few decades that have clearly stated that the Securities and Exchange Commission may seek disgorgement in bringing civil actions, and the U.S. Supreme Court should affirm a federal district court’s issuance of disgorgement in a securities fraud scheme involving the EB-5 Immigrant Investor Program, a group of 24 congressmen argue in a Jan. 22 brief as amicus curiae in support of the SEC (Charles C. Liu, et al. v. Securities and Exchange Commission, No. 18-1501, U.S. Sup.).
WASHINGTON, D.C. — U.S. Supreme Court review of a Ninth Circuit U.S. Court of Appeals panel’s ruling upholding the dismissal of claims brought by two business owners and several businesses they owned stemming from the Financial Industry Regulatory Authority’s (FINRA) seizure of materials and information during a raid of one of the businesses is warranted because there is a split among the circuits as to whether FINRA is entitled to absolute immunity for its investigatory conduct, the business owners and their related businesses argue in a Nov. 12 petition for writ of certiorari (John Hurry, et al. v. Financial Industry Regulatory Authority Inc., et al., No. 19-643, U.S. Sup.).
PHILADELPHIA — The Allegheny County Employees’ Retirement System (AERS) on Jan. 21 moved in a Pennsylvania federal court for the Public Employees Retirement Association of New Mexico to be appointed as lead plaintiff in a class action against a hydraulic fracturing pipeline company, the executives of which the plaintiffs say committed securities fraud and coerced a Pennsylvania agency to get approval for the Mariner East 2 pipeline (Allegheny County Employees’ Retirement System v. Energy Transfer LP, et al., No. 20-200, E.D. Pa.).
NEW YORK — The U.S. Department of Justice wrote to a New York federal judge on Jan. 17 updating him on the status of pending criminal proceedings that served as the reasons for a stay of the Securities and Exchange Commission’s lawsuit alleging that two individuals “perpetrated multiple schemes to defraud their advisory clients, which were insurance companies and reinsurance trusts” (United States v. Alexander C. Burns, et al., No. 18-9477, S.D. N.Y.).
WASHINGTON, D.C. — In a brief filed Jan. 15, the U.S. Securities and Exchange Commission argues to the U.S. Supreme Court that Section 21(d)(5) of the Exchange Act authorizes the disgorgement of funds in SEC enforcement actions as a form of “equitable relief” (Charles C. Liu, et al. v. Securities and Exchange Commission, No. 18-1501, U.S. Sup.).
WASHINGTON, D.C. — The U.S. Supreme Court in a per curiam opinion issued Jan. 14 vacated the Second Circuit U.S. Court of Appeals’ judgment in an Employee Retirement Income Security Act appeal concerning an employee stock option plan (ESOP) and remanded for the Second Circuit to determine the merits of claims concerning ERISA-based duty when it comes to inside information (Retirement Plans Committee of IBM, et al. v. Larry W. Jander, et al., No. 18-1165, U.S. Sup.).
PITTSBURGH — Several retirement funds on Dec. 6 filed an amended federal securities class action in Pennsylvania federal court against a hydraulic fracturing company and some of its executives, contending that they violated the Securities Exchange Act (SEA) and Securities Exchange Commission regulations by committing securities fraud and engaging in insider trading (In re EQT Corporation Securities Litigation, No. 19-754, W.D. Pa.).
ST. LOUIS — A federal district court erred in dismissing a securities fraud lawsuit stemming from a failed business relationship for lack of personal jurisdiction because two of the Calder v. Jones factors support a finding a personal jurisdiction, while the other three are “more neutral,” an Eighth Circuit U.S. Court of Appeals panel ruled Jan. 7 (Justin Whaley, et al. v. Jimmy Esebag, et al., No. 18-3236, 8th Cir., 2020 U.S. App. LEXIS 255).
WILMINGTON, Del. — Investors have failed to sufficiently plead falsity, scienter and the existence of a fiduciary duty in alleging that Barclays Bank PLC misrepresented its relationship with an independent investment solutions firm in violation of federal securities law and common law, which caused the investors to lose their $2.5 million investment in the firm, a federal judge in Delaware ruled Jan. 9 (Keystone Associates LLC, et al. v. Barclays Bank PLC, No. 19-796, D. Del., 2020 U.S. Dist. LEXIS 3475).
NEW YORK — The U.S. government argues in a Jan. 7 opening brief that the Second Circuit U.S. Court of Appeals should reinstate securities fraud convictions against two former executives of a hedge fund with regard to their alleged role in the hedge fund’s scheme to transfer assets to a reinsurance company and related entities to defraud bondholders in an oil and gas company (United States of America v. Uri Landesman, et al., No. 19-3207 c/w 19-3209, 2nd Cir.).
RICHMOND, Va. — Parties in a securities class action lawsuit alleging that Under Armour Inc. and its CEO concealed the company’s decline in demand for its apparel in violation of federal securities laws recently asked a Fourth Circuit U.S. Court of Appeals panel to determine whether a federal district court erred in dismissing shareholder claims as time-barred and for failure to properly plead falsity and scienter (In re: Under Armour Securities Litigation, No. 19-2032, 4th Cir.).
PHILADELPHIA — Government prosecutors provided sufficient evidence to support a jury’s finding that a defendant was an investment adviser when it convicted him of three counts for his role in an investment fraud scheme, a Third Circuit U.S. Court of Appeals panel ruled Dec. 12 (United States of America v. Louis F. Petrossi, No. 18-3454, 3rd Cir, 2019 U.S. App. LEXIS 36975).
NEW YORK — An emergency motion by the Securities and Exchange Commission to compel unredacted bank records from a firm accused of securities registration violations was denied Jan. 6 by a New York federal judge, who indicated, however, that review of the records will ultimately occur (Securities and Exchange Commission v. Telegram Group Inc., et al., No. 1:19-cv-09439, S.D. N.Y., 2020 U.S. Dist. LEXIS 3111).
SAN FRANCISCO — An investor in e-cigarette maker JUUL Labs Inc. filed a shareholder derivative and minority shareholder class action lawsuit in California state court on Jan. 6, alleging that certain of the company’s current and former executive officers and directors have breached their fiduciary duty and were unjustly enriched at the expense of minority shareholders through their management of the company (Daniel Grove v. Adam Bowen, et al., No. CGC-20-582059, Calif. Super., San Francisco Co.).