Mealey's Securities

  • January 24, 2019

    Johnson & Johnson Concealed Asbestos-Talc Problems To Inflate Stock, Class Claims

    NEWARK, N.J. — Johnson & Johnson (J&J) inflated its stock price by hiding the fact that its flagship baby powder product contained asbestos, defined contribution plan participants allege in a Jan. 22 Employee Retirement Income Security Act class action (Michael Perrone, et al. v. Johnson & Johnson, et al., No. 19-923, D. N.J.).

  • January 17, 2019

    Transportation, Logistics Services Provider Hit With Stock-Drop Lawsuit

    NEW HAVEN, Conn. — An investor sued an international transportation and logistics services provider and certain of its executive officers in Connecticut federal court on Dec. 14, alleging that the defendants concealed that the company’s aggressive mergers and acquisitions (M&A) policies and flawed accounting practices were not resulting in the financial growth the defendants were reporting to investors (Larry Labul v. XPO Logistics Inc., et al., No. 18-2062, D. Conn.).

  • January 17, 2019

    Dismissal Of Short-Swing Profit Shareholder Derivative Suit Affirmed

    DENVER — A 10th Circuit U.S. Court of Appeals panel on Jan. 16 ruled that a federal district court did not err in granting summary judgment in favor of an energy company and certain of its senior executives in a shareholder derivative action because a shareholder failed to show that the defendants were required to disgorge more than $384,000 in short-swing profits obtained as part of a restricted stock unit (RSU) agreement as required by federal securities law (John Olagues v. Richard E. Muncrief, et al., No. 18-5018, 10th Cir., 2019 U.S. App. LEXIS 1393).

  • January 16, 2019

    Defendants In Securities Suit Argue That Investor Failed To Plead Scienter

    NEW YORK — A federal district court properly dismissed a shareholder class action lawsuit against an online currency brokerage and certain of its chief executives because the lead plaintiff in the action failed to properly plead a material misrepresentation or omission and scienter in making its federal securities law claim, the defendants argue in a Nov. 28 appellee brief filed in the Second Circuit U.S. Court of Appeals (Retirement Board of the Policemen’s Annuity and Benefit Fund of Chicago v. FXCM Inc., et al., No. 18-2604, 2nd Cir.).

  • January 16, 2019

    Insurance Underwriter Hit With Stock Drop Suit Over Loss Revenue Reporting

    NEW YORK — A marketer and underwriter of specialty insurance products shareholder sued the company and certain of its current and former executive officers in New York federal court on Jan. 11, claiming that the defendants misrepresented the company’s failure to properly account for loss reserves at its subsidiaries in violation of federal securities laws (David Bergen v. Markel Corp., et al., No. 19-0319, S.D. N.Y.).

  • January 16, 2019

    Investors Argue They Have Cured Pleading Deficiencies In Securities Class Action

    SAN FRANCISCO — Shareholders in a securities class action have sufficiently pleaded the necessary elements of their federal securities law claims against automobile maker Tesla Inc. and certain of its senior executives, and, as a result, a federal judge should deny the defendants’ motion to dismiss, the shareholders argue in a Jan. 11 opposition brief (Gregory Wochos v. Tesla Inc., et al., No. 17-5828, N.D. Calif.).

  • January 16, 2019

    CEO’s Wire Fraud, Bankruptcy Fraud Convictions Upheld By 8th Circuit Panel

    ST. LOUIS — An Eighth Circuit U.S. Court of Appeals panel on Dec. 28 affirmed a former indoor air quality monitoring systems CEO’s convictions in connection with a wire fraud and bankruptcy fraud scheme, ruling that a federal district court did not abuse its discretion in denying several pre- and post-trial motions (United States v. Bryan S. Reichel, No. 17-2562, 8th Cir., 2018 U.S. App. LEXIS 36647).

  • January 15, 2019

    SEC Files Lawsuit Over International Hacking Of Its EDGAR System

    NEWARK, N.J. — The Securities and Exchange Commission on Jan. 15 sued several American and foreign individuals and entities in a New Jersey federal court, alleging that the defendants engaged in a fraudulent scheme to hack into the SEC’s online Electronic Data Gathering, Analysis and Retrieval (EDGAR) system to obtain nonpublic earning documents for publicly traded companies and trade on the information obtained in violation of federal securities laws (U.S. Securities and Exchange Commission v. Oleksandr Ieremenko, et al., No. 19-0505, D. N.J.).

  • January 15, 2019

    Solicitor General Invited To File Brief In U.S. Supreme Court Appeal

    WASHINGTON, D.C. — The U.S. Supreme Court on Jan. 14 invited the U.S. solicitor general to file briefs in an appeal of a Ninth Circuit U.S. Court of Appeals ruling in a securities class action lawsuit pertaining to the international regulation of securities transactions to express “the views of the United States” (Toshiba Corp. v. Automotive Industries Pension Trust Fund, et al., No. 18-486, U.S. Sup.).

  • January 11, 2019

    Attorney’s Conviction In Insider Trading Scheme Upheld By 2nd Circuit

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on Jan. 10 ruled that government prosecutors provided sufficient evidence showing that an attorney acted with the requisite criminal intent in providing his financial advisor with inside information of a pending merger deal as part of an insider trading scheme (United States of America v. Tibor Klein, et al., No. 17-3355, 2nd Cir., 2019 U.S. App. LEXIS 858).

  • January 11, 2019

    Former Medical Device Maker CEO’s Securities Fraud Conviction Upheld

    NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel on Jan. 7 found no reversible error in a federal district court’s evidentiary rulings and jury instructions in the criminal trial of a medical device company’s former CEO for his alleged role in a fraudulent channel-stuffing scheme, affirming the district court’s conviction on charges of wire fraud, securities fraud and conspiracy to commit wire fraud and securities fraud (United States of America v. Michael Baker, No. 17-51034, 5th Cir.; 2019 U.S. App. LEXIS 623).

  • January 10, 2019

    D.C. Circuit Upholds Order To Remand Enforcement Action To SEC

    WASHINGTON, D.C. — Without providing further detail, the District of Columbia Circuit U.S. Court of Appeals on Jan. 9 denied an investment adviser’s petition for rehearing en banc of its per curiam order remanding a Securities and Exchange Commission order to the commission, despite the petitioner’s argument that the SEC’s holding is not in line with the U.S. Supreme Court’s holding in Lucia v. SEC (Harding Advisory LLC, et al. v. SEC, No. 17-1070, D.C. Cir., 2019 U.S. App. LEXIS 795).

  • January 09, 2019

    Investment Fund’s Bitcoin Investment Lawsuit Survives Dismissal Bid

    NEW YORK — A federal judge in New York on Jan. 7 ruled that an investment fund has sufficiently stated each of its claims for relief in a civil lawsuit against a former Bitcoin adopter who is alleged to have misappropriated approximately 5,000 Bitcoin he agreed to purchase for the fund in an attempt to promote his online platform for buying and selling the virtual currency (Winklevoss Capital Fund LLC v. Charles Shrem, No. 18-8250, S.D. N.Y., 2019 U.S. Dist. LEXIS 2648).

  • January 09, 2019

    Investor Class Action Securities Claims Found To Be Untimely Filed

    CHICAGO — A federal district court did not err in dismissing a securities class action lawsuit against a manufacturer of luxury hybrid electric cars and others as time-barred because shareholders failed to bring their claims within Illinois’ three-year statute of limitations on securities-based claims, a Seventh Circuit U.S. Court of Appeals panel ruled Jan. 7 (Orgone Capital III LLC, et al. v. Keith Daubenspeck, et al., No. 18-1815, 7th Cir., 2019 U.S. App. LEXIS 392).

  • January 08, 2019

    Panel Upholds Insider Trading Conviction Under Newman

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on Jan. 7 ruled that a federal district court did not err in denying former Goldman Sachs Group Inc. director Rajat K. Gupta’s motion to vacate his sentencing for insider trading under the Second Circuit’s ruling in United States v. Newman because the former director failed to make the necessary “requisite showings” of cause of actual prejudice in arguing that the lower court improperly instructed the jury on the claims against him (Rajat Gupta v. United States, Nos. 15-2707 and 15-2712, 2nd Cir., 2019 U.S. App. LEXIS 364).

  • January 04, 2019

    U.S. Supreme Court Accepts Appeal Over Section 14(e) Pleading Standard

    WASHINGTON, D.C. — The U.S. Supreme Court on Jan. 4 granted a petition for writ of certiorari in a case appealing a Ninth Circuit U.S. Court of Appeals ruling in a securities class action lawsuit that Section 14(e) of the Securities Exchange Act of 1934 requires proof of negligence and not scienter (Emulex Corp., et al. v. Gary Varjabedian, et al., No. 18-459, U.S. Sup.).

  • January 04, 2019

    Securities Claims Dismissed For Failure To Plead Actionable Misstatement

    BOSTON — A lead plaintiff in a securities class action lawsuit against a women’s clothing retailer has failed to sufficiently show that the company, certain of its senior officers and directors and underwriters of its initial public offering (IPO) misrepresented the company’s business and financial condition in violation of federal securities laws, a federal judge in Massachusetts ruled Dec. 20 (The Pension Trust [Lead Plaintiff] v. J.Jill Inc., et al., No. 17-11980, D. Mass., 2018 U.S. Dist. LEXIS 214094).

  • January 02, 2019

    Dismissal Of Investor Suit Over Merger Deal Partially Overturned

    PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel on Dec. 26 partially overturned a federal district court’s dismissal of a securities class action lawsuit stemming from M&T Bank Corp.’s acquisition of another bank, ruling that although shareholders have sufficiently pleaded an actionable misstatement or omission, they have failed to do so pursuant to the U.S. Supreme Court’s ruling in Omnicare Inc., et al. v. The Laborers District Council Construction Industry Pension Fund and The Cement Masons Local 526 Combined Funds (David Jaroslawicz v. M&T Bank Corp., et al., No. 17-3695, 3rd Cir., 2018 U.S. App. LEXIS 36457).

  • January 02, 2019

    Derivative Action Dismissal Affirmed For Failure To Plead Demand Futility

    SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on Dec. 26 ruled that an investor failed to plead demand futility in bringing a shareholder derivative lawsuit against current and former senior executives and members of The Walt Disney Co.’s board of directors stemming from the company’s involvement in anti-competitive agreements conspiracy with other animation studios (Eugene F. Towers v. Robert A. Iger, et al., No. 17-15770, 9th Cir., 2018 U.S. App. LEXIS 36461).

  • January 02, 2019

    9th Circuit Panel Upholds Summary Judgment Ruling In Ponzi Scheme Receiver Suit

    SAN FRANCISCO — In an issue of first impression, a Ninth Circuit U.S. Court of Appeals panel on Dec. 24 ruled that a federal district court did not err in ruling that a court-appointed receiver in a Securities and Exchange Commission action against the operators of a Ponzi scheme could void and disgorge referral fees paid to a third party under the California Uniform Voidable Transactions Act (CUVTA) (William J. Hoffman v. Howard Markowitz, No. 17-56290, 9th Cir., 2018 U.S. App. LEXIS 36243).

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