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Mealey's Securities

  • February 7, 2019

    Panel Upholds Judgments Against Defendants In Securities Fraud Suit

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on Feb. 6 ruled that a federal district court did not err in denying motions to vacate judgments filed by defendants in a Securities and Exchange Commission enforcement action because the defendants waived their statute of limitations argument when they failed to answer the complaint against them (United States Securities and Exchange Commission v. Irwin Boock, et al., No. 18-700, 2nd Cir., 2019 U.S. App. LEXIS 3634).

  • February 6, 2019

    Investors: No High Court Review Of FSIA Ruling In Investor Suit Needed

    WASHINGTON, D.C. — No U.S. Supreme Court review of a federal circuit court’s finding that investor claims against a Brazilian company were not protected by the Foreign Sovereign Immunities Act (FSIA) is necessary because under an exemption of the FSIA, the company’s activities had caused a direct effect in the United States, investors argue in a Feb. 4 opposition brief filed in the U.S. Supreme Court (Petróleo Brasileiro S.A. v. EIG Energy Fund XIV LP, et al., No. 18-716, U.S. Sup.).

  • February 5, 2019

    Lack Of Individual, Collective Scienter Leads To Dismissal Of Securities Claims

    NEWARK, N.J. — A federal judge in New Jersey on Jan. 31 ruled that lead plaintiffs in a securities class action lawsuit against a goods and services provider within the printing industry and two of its senior executives failed to sufficiently plead that the defendants acted with the requisite scienter in concealing deficiencies with the company’s internal controls in its Securities and Exchange Commission reporting documents in violation of federal securities laws (In re Electronics for Imaging Inc. Securities Litigation, No. 17-5992, D. N.J., 2019 U.S. Dist. LEXIS 15795).

  • February 5, 2019

    Jury Finds For Investors On 1 Of 4 Claims In Securities Lawsuit

    SANTA ANA, Calif. — A federal jury in California on Feb. 4 handed down a rare verdict in favor of investors on one of four alleged misrepresentations in a securities class action lawsuit claiming that a drug company and its CEO misrepresented the effectiveness of the drug company’s breast cancer treatment drug in violation of federal securities laws (Hsingching Hsu v. Puma Biotechnology Inc., et al., No. 15-0865, C.D. Calif., 2017 U.S. Dist. LEXIS 206236).

  • February 1, 2019

    9th Circuit Panel Affirms Orders In SEC Enforcement Action

    SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on Jan. 30 ruled that a federal district court did not err in granting summary judgment in favor of the Securities and Exchange Commission in an enforcement action against an inventor and his related companies or in issuing its final judgment requiring the defendants to, among other things, disgorge all ill-gotten gains and pay a civil penalty and prejudgment interest (U.S. Securities and Exchange Commission v. Inteligentry Ltd., et al., No. 17-16644, 9th Cir., 2019 U.S. App. LEXIS 3072).

  • January 31, 2019

    Federal Securities Law Claims Trimmed In Navient Investor Suit

    WILMINGTON, Del. — A federal judge in Delaware on Jan. 29 ruled that shareholders have sufficiently pleaded a majority, but not all, facts in support of their claims that one of the United States’ largest servicers of student loans, certain of its officers and directors and underwriters of two of its public offerings of stock misrepresented the company’s business operations and financial results in violation of federal securities laws (Lord Abbett Affiliated Fund Inc., et al. v. Navient Corp., et al., No. 16-112, D. Del., 2019 U.S. Dist. LEXIS 13843).

  • January 29, 2019

    Parties Dispute Whether Insurer Had Liability To Fund Backdating Settlement

    PASADENA, Calif. — An education group and an insurer recently submitted arguments in the Ninth Circuit U.S. Court of Appeals, disputing whether a district court’s order holding that the insurer was not obligated to fund a settlement reached in underlying backdating litigation should be overturned (Apollo Education Group Inc. v. National Union Fire Insurance Co. of Pittsburgh Pa., No. 17-17293, 9th Cir.).

  • January 29, 2019

    Ponzi Scheme Operator, Others To Pay More Than $1B To Settle SEC Claims

    MIAMI — A federal judge in Florida on Jan. 28 issued final judgments against the alleged operator of Ponzi scheme and a group of 11 related companies he managed and 130 limited liability companies, ordering the defendants to pay in excess of $1 billion in disgorgement and civil penalties in connection with their participation in the alleged scheme (Securities and Exchange Commission v. Robert H. Shapiro, et al., No. 17-24624, S.D. Fla.).

  • January 28, 2019

    10th Circuit Panel Affirms District Court Orders In SEC Enforcement Action

    DENVER — A 10th Circuit U.S. Court of Appeals panel on Jan. 24 upheld a federal district court’s rulings granting the Securities and Exchange Commission a preliminary injunction against the operator of an alleged worldwide Ponzi scheme that prohibited him from conducting business on behalf of his company and declining to set aside the receivership that was put in place after the court froze the defendants’ assets and placed them into receivership (Securities and Exchange Commission v. Charles D. Scoville, et al., No. 17-4059, 10th Cir., 2019 U.S. App. LEXIS 2316).

  • January 25, 2019

    Panel Affirms District Court’s Finding That Investor Class Precluded By SLUSA

    CHICAGO — A federal district court did not err ruling that an investor class action lawsuit is a “covered class action” precluded by the Securities Litigation Uniform Standards Act of 1998 (SLUSA) and properly rejected an investor’s argument that SLUSA prelusion does not apply because she proposed a class that contains fewer than 50 members, a Seventh Circuit U.S. Court of Appeals panel ruled Jan. 24 in affirming (Susan Nielen-Thomas v. Concorde Investment Services LLC, et al., No. 18-2875, 7th Cir., 2019 U.S. App. LEXIS 2292).

  • January 25, 2019

    Dismissal Of Derivative Suit Over Union Fund Investments Affirmed

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on Jan. 17 ruled that a federal district court did not err in dismissing a derivative lawsuit brought by members of the Corrections Officers Benevolent Association Inc. (COBA) against the association’s executive directors, law firm and others because the members failed to show that they have standing to bring their claims (Herman Jiminian, et al. v. Norman Seabrook, et al., No. 18-107, 2nd Cir., 2019 U.S. App. LEXIS 1524).

  • January 24, 2019

    Investor Sues Tech Company Over IPO Document Misrepresentations

    SAN FRANCISCO — A technology company’s shareholder sued the company and certain of its executive officers and directors in a California federal court on Jan. 22, alleging that the defendants misrepresented the company’s business and financial condition in the offering documents for its initial public offering (IPO) in violation of federal securities laws (Spencer Wong v. Arlo Technologies Inc., et al., No. 19-0372, N.D. Calif.).

  • 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.).