Mealey's Securities

  • June 24, 2020

    Post-Tender Offer Statements Not Actionable Under Section 14(e), Panel Rules

    CHICAGO — An investor may not sue a company under Section 14(e) of the Securities Exchange Act of 1934, challenging statements it made after a tender offer for the repurchase of its stock has been made, because the statute does not give a private right of action to collect damages in that instance, a Seven Circuit U.S. Court of Appeals panel ruled June 22 (Walleye Trading LLC v. AbbVie Inc., et al., No. 19-3063, 7th Cir., 2020 U.S. App. LEXIS 19361).

  • June 23, 2020

    COVID-19 Test Kit Maker Named In Investor Suit Over Kit Accuracy Statements

    SALT LAKE CITY — An investor sued a COVID-19 test kit maker and several of its executive officers and directors in Utah federal court on June 15, alleging that the defendants issued a series of misrepresentations regarding the accuracy of the company’s test kits in violation of federal securities laws (Gelt Trading Ltd. v. Co-Diagnostics Inc., et al., No. 20-368, D. Utah).

  • June 22, 2020

    Certain Investor Claims In Securities Class Action Over Merger Deal Remanded

    PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel on June 18 ruled that a federal district court partially erred in determining that shareholders in a securities class action stemming from a merger deal between two banks failed to plead any actionable misstatements or omissions in making their federal securities law claims (David Jaroslawicz v. M&T Bank Corp., et al., No. 17-3695, 3rd Cir.).

  • June 22, 2020

    U.S. Supreme Court Places Limits On SEC Disgorgement Awards

    WASHINGTON, D.C. — The Securities and Exchange Commission may seek disgorgement as an equitable form of relief under federal statute in situations where seeking such an award will not exceed the net profits obtained by a wrongdoer and is awarded for victims, the U.S. Supreme Court ruled June 22 in an 8-1 decision (Charles C. Liu, et al. v. Securities and Exchange Commission, No. 18-1501, U.S. Sup., 2020 U.S. LEXIS 3374).

  • June 17, 2020

    Government Seeks Reinstatement Of Securities Fraud Convictions Against Former Execs

    NEW YORK — The U.S. government in a June 16 reply brief asks the Second Circuit U.S. Court of Appeals to reinstate jury verdicts against two former hedge executives and to proceed to sentencing over allegations of securities fraud in a scheme to transfer the hedge fund’s assets to a reinsurance company and related entities to defraud bondholders in an oil and gas company (United States v. Uri Landesman, et al., No. 19-3207 c/w 19-3209, 2nd Cir.).

  • June 17, 2020

    2nd Circuit Will Not Rehear Appeal In Goldman Sachs Stock-Drop Suit

    NEW YORK — Without providing further detail, the Second Circuit U.S. Court of Appeals on June 15 declined a request by Goldman Sachs Group Inc. and certain of its senior executives for en banc review of a split panel decision upholding a federal district court’s application of the inflation-maintenance theory for demonstrating price impact in granting class certification in a securities class action lawsuit (Arkansas Teacher Retirement System, et al. v. Goldman Sachs Group Inc., et al., No. 18-3667, 2nd Cir.).

  • June 17, 2020

    Lucia Reaches Settlement With SEC In Long-Running Securities Fraud Action

    WASHINGTON, D.C. — The Securities and Exchange Commission issued an order on June 16 agreeing to accept an offer to settle claims in a long-running enforcement action brought against former investment adviser Raymond J. Lucia and his brokerage firm that had reached all the way to the U.S. Supreme Court (In the Matter of Raymond J. Lucia Companies Inc., et al., No. 3-15006, SEC).

  • June 17, 2020

    Inovio Hit With Shareholder Derivative Suit Over Coronavirus Vaccine Claims

    PHILADELPHIA — Two biopharmaceutical company investors filed a shareholder derivative lawsuit against the company’s board of directors on June 15 in Pennsylvania federal court, alleging that the defendants breached their fiduciary duty and violated provisions of federal securities law by misrepresenting that the company had developed a vaccine for the novel coronavirus (Krishna Kishor Devarakonda, et al. v. J. Joseph Kim, et al., No. 20-2829, E.D. Pa.).

  • June 16, 2020

    Panel Affirms Dismissal Of Coverage Dispute Over SEC Investigation Against Insured

    BOSTON — The First Circuit U.S. Court of Appeals on March 20 affirmed a lower federal court’s dismissal of a trustee for a bankrupt investment advisory company’s 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., 2020 U.S. App. LEXIS 8850).

  • June 12, 2020

    SEC Sues Microcap Company Over Coronavirus Test Kit Misrepresentations

    NEW YORK — A microcap company misrepresented to investors that it had shifted its business from production of cannabinoid-based products to products used to battle the novel coronavirus, including a home test kit, and that it had “begun shipping” its line of home test kits to consumers in violation of federal securities law, the Securities and Exchange Commission argues in a May 14 complaint filed in New York federal court (Securities and Exchange Commission v. Applied Biosciences Corp., No. 20-3729, S.D. N.Y.).

  • June 12, 2020

    D.C. Circuit Panel Vacates, Remands Long-Running SEC Fees Ruling Action

    WASHINGTON, D.C. — Vacating a Securities and Exchange Commission’s ruling that fees charged by two securities exchanges are not justified, a District of Columbia Circuit U.S. Court of Appeals panel on June 5 ruled that Section 19(d) of the Securities Exchange Act of 1934 “is not available as a means to challenge generally-applicable fee rules,” sending an action brought by two securities industry groups back to the SEC for further review (The Nasdaq Stock Market LLC v. Securities and Exchange Commission, et al., Nos. 18-1292 and 18-1293, D.C. Cir., 2020 U.S. App. LEXIS 17707).

  • June 12, 2020

    Carnival Hit With Another Investor Suit Over Novel Coronavirus Safety Measures

    MIAMI — A Carnival Corp. investor sued the cruise line operator and three of its executive officers in Florida federal court on June 3, alleging that the defendants misled investors about the company’s health and safety standards in their handling of the outbreak of the novel coronavirus on several of Carnival’s cruise ships in violation of federal securities laws (John P. Elmensdorp v. Carnival Corp., et al., No. 20-22319, S.D. Fla.).

  • June 12, 2020

    Investors: Purchases Of CBD Product Maker’s Stock Were Domestic Transactions

    BROOKLYN, N.Y. — Dismissal of claims in a securities class action lawsuit against a manufacturer of cannabidiol (CBD) products and others is not warranted because although the over-the-counter (OTC) exchange in which the company’s stock was traded does not constitute a domestic exchange under the U.S. Supreme Court’s ruling in Morrison v. National Australia Bank Ltd., investors’ purchase of the company’s stock were domestic transactions, shareholders argue in a June 4 opposition brief filed in New York federal court (In re Curaleaf Holdings Inc. Securities Litigation, No. 19-4486, E.D. N.Y.).

  • June 11, 2020

    Dismissal Of Stock-Drop Suit Against Medical Device Maker Affirmed On Appeal

    SAN FRANCISCO — A lead plaintiff in a securities class action against a medical device maker and two of its executive officers failed to sufficiently plead a plausible inference of scienter in alleging that the defendants issued misrepresentations in violation of federal securities laws that concealed migration issues with the device maker’s aortic aneurysm device, a Ninth Circuit U.S. Court of Appeals panel ruled June 10 (Vicky Nguyen v. Endologix Inc., et al., No. 18-56322, 9th Cir.).

  • June 10, 2020

    Preliminary Approval Of $84M Settlement In MetLife Stock-Drop Suit Sought

    NEW YORK — The lead plaintiff in a securities class action against global insurance provider MetLife Inc., several of its current and former officers and directors, and underwriters of its Aug. 3, 2010, public offering asked a federal judge in New York overseeing the litigation to grant preliminary approval of a proposed $84 million settlement on June 9, arguing that the settlement has met all statutory requirements for approval (Westland Police & Fire Retirement System v. MetLife Inc., et al., No. 12-0256, S.D. N.Y.).

  • June 08, 2020

    Claims In Securities Suit Against Cannabis Company Dismissed

    NEW YORK — Investors in a Canadian cannabis products company failed to show that statements the company and certain of its executive officers and directors made in the offering documents for an initial public offering (IPO) were materially false and misleading because the alleged misrepresentations amounted to inactionable puffery and corporate optimism, a New York justice ruled May 15 (In re Sundial Growers Inc. Securities Litigation, No. 655178/2019, N.Y. Sup., New York Co.).

  • June 08, 2020

    Federal Judge Denies Terminally Ill Madoff’s Compassionate Release Request

    NEW YORK — Ruling that nothing that has occurred in the 11 years since Bernard L. Madoff was sentenced to 150 years in prison for orchestrating a multibillion-dollar Ponzi scheme that would persuade him to lower Madoff’s prison sentence, a federal judge in New York on June 4 denied Madoff’s request for compassionate release from federal prison (United States of America v. Bernard L. Madoff, No. 09-cr-213, S.D. N.Y., 2020 U.S. Dist. LEXIS 98293).

  • June 08, 2020

    Wells Fargo Hit With Investor Suit Over Alleged PPP Loan Misallocations

    SAN FRANCISCO — Wells Fargo & Co., its CEO and its chief financial officer (CFO) violated federal securities laws by misrepresenting to investors that the financial institution was in compliance with provisions of the Coronavirus Aid, Relief and Economic Security Act’s (CARES Act) paycheck protection program (PPP), when, in fact, it had engaged in a massive misallocation scheme, a shareholder argues in a June 4 complaint filed in California federal court (Guofeng Ma v. Wells Fargo & Co., et al., No. 20-3697, N.D. Calif.).

  • June 08, 2020

    High Court Declines Review Of Civil Penalty Award In SEC Enforcement Action

    WASHINGTON, D.C. — The U.S. Supreme Court on June 8 declined to review a Seventh Circuit U.S. Court of Appeals panel’s ruling in affirming a trial court’s award of a civil penalty in a Securities and Exchange Commission enforcement action that amounted to two times avoided losses (Gary S. Williky v. Securities and Exchange Commission, No. 19-997, U.S. Sup.).

  • June 05, 2020

    Split 8th Circuit Panel Partially Overturns Dismissal Of Ponzi Scheme Suit

    ST. LOUIS — In a divided opinion, an Eighth Circuit U.S. Court of Appeals panel on June 3 partially overturned a federal district court’s dismissal of hedge funds’ claims against entities associated with a multibillion-dollar Ponzi scheme for lack of jurisdiction, agreeing with the hedge funds’ assertion that the lower court’s ruling was premature as it pertained to three of the plaintiffs, which were based in the Cayman Islands (Ritchie Capital Management LLC, et al. v. JP Morgan Chase & Co., et al., No. 18-1130, 8th Cir., 2020 U.S. App. LEXIS 17471).

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