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Mealey's Securities

June 17, 2019
High Court Review Of SEC Disgorgement Award Sought In Light Of Kokesh

WASHINGTON, D.C. — The U.S. Supreme Court should grant review of a federal appellate court’s ruling in a Securities and Exchange Commission enforcement action holding that the SEC may seek disgorgement in addition to injunctive relief and a civil monetary penalty because the ruling provides the Supreme Court with an opportunity to address the issue, which it failed to do in Kokesh v. SEC, petitioners argue in a May 31 petition for writ of certiorari (Charles C. Liu, et al. v. Securities and Exchange Commission, No. 18-1501, U.S. Sup., 2019 U.S. S. Ct. Briefs LEXIS 1995).
June 14, 2019
Judge Grants Motion To Consolidate Inflated Stock Price Class Actions

MADISON, Wis. — After holding that a public school teachers’ pension and retirement fund and others met the requirements for the consolidation of two class actions in which the plaintiffs allege that a company artificially inflated the purchase price of stock, a Wisconsin federal judge on June 12 granted their motion to consolidate and for the appointment of counsel (Earl S. Wagner, et al. v. Spectrum Brands Legacy, Inc., et al., Nos. 19-cv-178 and 19-cv-347, W.D. Wis., 2019 U.S. Dist. LEXIS 98251).
June 13, 2019
Judge Stays SEC’s Case Over Schemes To Defraud Insurers, Reinsurance Trusts

NEW YORK — A New York federal judge on June 10 stayed a lawsuit by the Securities and Exchange Commission that alleges that two individuals “perpetrated multiple schemes to defraud their advisory clients, which were insurance companies and reinsurance trusts” (Securities and Exchange Commission v. Alexander C. Burns, et al., No. 18-09477, S.D. N.Y.).
June 11, 2019
Liquidators File Breach Of Fiduciary Duty Case Over Reinsurance Transactions

WILMINGTON, Del. — Two limited liability companies and liquidators for one of the companies filed a 101-page complaint in a Delaware state court on June 7, alleging breach of fiduciary duty with regard to transactions involving reinsurance agreements (Principal Growth Strategies LLC, et al. v. AGH Parent LLC, et al., No. 2019-0431, Del. Chan.).
June 11, 2019
Panel Remands Portion Of Securities Fraud Suit To District Court

NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel on June 6 ruled that although a federal district court properly dismissed certain misrepresentation claims made by plaintiffs in a securities fraud lawsuit, other alleged misrepresentations and omissions were properly pleaded, and, therefore, the district court erred in dismissing them (Doctor David Masel, et al. v. Adriana Villarreal, et al., No. 18-40499, 5th Cir., 2019 U.S. App. LEXIS 17288).
June 11, 2019
Cloud Content Management Platform Provider Hit With Shareholder Class Action

SAN FRANCISCO — A shareholder of a provider of a cloud content management platform sued the company and certain of its officers and directors in California federal court on June 6, alleging that the defendants misrepresented the company’s business and financial condition in violation of federal securities laws (Simo Duvnjak v. Box Inc., et al., No. 9-3173, N.D. Calif.).
June 10, 2019
3rd Circuit Panel Upholds Conviction In Ponzi Scheme Criminal Suit

PHILADELPHIA — A federal district court did not abuse its discretion in denying a defendant’s motion for a mistrial in a criminal lawsuit stemming from his alleged operation of a Ponzi scheme based on juror misconduct because the district court’s actions taken after the alleged misconduct was discovered “were well within the Court’s discretion, and nothing further was required,” a Third Circuit U.S. Court of Appeals panel ruled June 7 in a nonprecedential opinion (United States v. Bernard M. Parker, No. 17-3442, 3rd Cir., 2019 U.S. App. LEXIS 17201).
June 10, 2019
11th Circuit Panel Upholds Evidentiary Rulings In Ponzi Scheme-Related Suit

ATLANTA — A federal district court did not abuse its discretion in denying a request by investors to depose a convicted Ponzi scheme operator because the investors delayed seeking to depose the individual until the discovery deadline had expired, an 11th Circuit U.S. Court of Appeals panel ruled June 6 (Catherine Kerruish, et al. v. Essex Holdings Inc., et al., No. 18-14813, 11th Cir., 2019 U.S. App. LEXIS 17060).
June 10, 2019
Investor: Attorney Fee Award In Securities Class Action Settlement Excessive

SAN FRANCISCO — A federal district court abused its discretion in awarding lead counsel in a securities class action against Wells Fargo & Co. 20 percent of a $480 million settlement for attorney fees because the amount sought was significantly higher than the amount it should have received, a shareholder argues in a June 5 appellant brief filed in the Ninth Circuit U.S. Court of Appeals (Gary Hefler, et al. v. Thomas Pekoc v. Wells Fargo & Co., et al., No. 19-15140, 9th Cir.).
June 7, 2019
2nd Circuit Panel Affirms District Court’s Dismissal Of Xerox Stock Drop Suit

NEW YORK — Without providing detail, a Second Circuit U.S. Court of Appeals panel on June 6 affirmed a federal district court’s dismissal of a shareholder class action against Xerox Corp. and certain of its current and former executive officers (Arkansas Public Employees Retirement System v. Xerox Corp., et al., No. 18-1165, 2nd Cir.).
June 6, 2019
Panel Rehearing Granted In Securities Class Action Over M&T Merger Deal

PHILADELPHIA — Without providing further detail, a Third Circuit U.S. Court of Appeals panel on June 4 vacated its December ruling in a securities class action lawsuit stemming from M&T Bank Corp.’s acquisition of another bank and granted the defendants’ petition for panel rehearing (David Jaroslawicz v. M&T Bank Corp., et al., No. 17-3695, 3rd Cir.).
June 6, 2019
Investor, Pension Trust Argue In Favor Of Being Named Lead Plaintiff

CAMDEN, N.J. — In separate reply briefs filed May 13, an institutional investor and a pension trust each argue to a New Jersey federal court that they have the largest financial interest to serve as lead plaintiff in securities class actions against a reinsurer and former officers over allegations of misrepresentation in underwriting and risk management techniques and a reinsurance portfolio’s risk (Michael Wigglesworth v. Maiden Holdings Ltd., et al., No. 19-05296, D. N.J.).
June 5, 2019
Investor Argues It Has Sufficiently Pleaded Falsity, Scienter In Securities Suit

SAN JOSE, Calif. — Dismissal of a securities class action against technology company Oracle Corp. and certain of its current and former senior executives is not necessary because the lead plaintiff has sufficiently pleaded falsity and scienter in making its federal securities law claims, the lead plaintiff argues in a May 31 opposition brief filed in California federal court (In re Oracle Corp. Securities Litigation, No. 18-4844, N.D. Calif.).
June 4, 2019
High Court Declines Review Of Insider Trading Criminal Action Ruling

WASHINGTON, D.C. — The U.S. Supreme Court on June 3 declined to review an appeal in an insider trading criminal action where a hedge fund portfolio manager sought a determination whether the Second Circuit U.S. Court of Appeals erred in ruling that a federal district court’s jury instruction in the action was inconsistent with the Supreme Court’s ruling in United States v. Newman (Mathew Martoma v. United States of America, No. 18-972, U.S. Sup.).
May 31, 2019
9th Circuit Correctly Applied Morrison In Investor Suit, Solicitor General Says

WASHINGTON, D.C. — The Ninth Circuit U.S. Court of Appeals correctly applied the U.S. Supreme Court’s holding in Morrison v. National Australia Bank, Ltd. in finding that shareholders’ federal securities law claims against Toshiba Corp. “involve a permissible domestic application of Section 10(b)” of the Securities Exchange Act of 1934, the U.S. solicitor general as amicus curiae argues in a May 20 brief filed with the Supreme Court (Toshiba Corp. v. Automotive Industries Pension Trust Fund, et al., No. 18-486, U.S. Sup.).
May 31, 2019
Tech Company Hit With Shareholder Suit Over Alleged Misrepresentations

NEW YORK — A technology company and certain of its senior executives issued several misrepresentations in violation of federal securities laws in a registration statement it filed with the Securities and Exchange Commission in connection with its initial public offering (IPO) regarding its business and financial condition, a shareholder argues in a May 28 securities class action complaint filed in New York federal court (Luo Zhi v. Jumia Technologies AG, et al., No. 19-4952, S.D. N.Y.).
May 31, 2019
South Carolina High Court Overturns Reduced Sentence In Securities Fraud Suit

COLUMBIA, S.C. — The South Carolina Supreme Court on May 28 ruled that a state appellate panel erred in determining that convicted securities fraudster’s South Carolina Rule of Criminal Procedure 29(a) motion seeking a reduced sentence was timely filed (The State v. Frederick Scott Pfeiffer, No. 2018-001153, S.C. Sup., 2019 S.C. LEXIS 52).
May 31, 2019
Panel Finds No Abuse Of Discretion In Court’s Injunction Ruling In SEC Suit

NEW YORK — A federal district court did not abuse its discretion in enjoining a clearing firm and introducing broker under the first-filed rule from bringing an action against the Securities and Exchange Commission in federal court in Utah, a Second Circuit U.S. Court of Appeals panel ruled May 28 (United States Securities and Exchange Commission v. Alpine Securities Corp., No. 17-4179, 2nd Cir., 2019 U.S. App. LEXIS 15691).
May 30, 2019
2nd Circuit Affirms Dismissal Of Securities Fraudster’s Claims Against Agencies

NEW YORK — A Second Circuit U.S. Court of Appeals panel on May 28 ruled that a federal judge did not err in dismissing a securities fraudster’s complaint against three federal agencies because the agencies were subject to sovereign immunity (Kevin P. Brennan v. United States Department of Justice, et al., No. 18-2569, 2nd Cir., 2019 U.S. App. LEXIS 15683).
May 29, 2019
Panel Upholds Federal Judge’s Summary Judgment Ruling In Ponzi Scheme Suit

NEW YORK — Without providing further detail, a Second Circuit U.S. Court of Appeals panel on May 28 affirmed a federal judge’s granting of a receiver’s summary judgment motion in a securities fraud lawsuit stemming from the operation of a massive Ponzi scheme (John J. Carney v. Francisco Illarramendi, No. 18-1334, 2nd Cir., 2019 U.S. App. LEXIS 15690).