SAN FRANCISCO — A second amended securities class action complaint against automaker Tesla Inc. and certain of its senior executives fails to cure the pleading deficiencies that led to the dismissal of the shareholders’ first amended complaint because the alleged misrepresentations the shareholders claim the defendants made were not false or were forward-looking and contained the necessary meaningful cautionary language, a federal judge in California ruled March 25 (Gregory Wochos v. Tesla Inc., et al., No. 17-5828, N.D. Calif., 2019 U.S. Dist. LEXIS 49640).
WASHINGTON, D.C. — In a 6-2 decision, the U.S. Supreme Court on March 27 ruled that an investment banker can be held liable under parts of Securities and Exchange Commission Rule 10b-5(a) and (c), as well as related provisions of the federal securities laws, for false or misleading statements made in an email he sent to investors on behalf of his boss, even though the deceptive statements were made by the boss and not the banker himself (Francis V. Lorenzo v. Securities and Exchange Commission, No. 17-1077, U.S. Sup., 2019 U.S. LEXIS 2295).
WASHINGTON, D.C. — The Ninth Circuit U.S. Court of Appeals properly held that Section 14(e) of the Securities Exchange Act of 1934 requires only a showing of negligence and not scienter, and a holding otherwise would undermine the objective of Congress when it enacted the Williams Act of 1968, respondents argue in a March 21 brief filed in the U.S. Supreme Court (Emulex Corp., et al. v. Gary Varjabedian, et al., No. 18-459, U.S. Sup.).
COVINGTON, Ky. — A proposed $20 million securities class action settlement between investors and a company that provides pharmaceutical care to the elderly and certain of its senior executives has sufficiently met all statutory requirements for preliminary approval, a federal judge in Kentucky ruled March 21 in granting preliminary approval of the proposed settlement (Indiana State District Council of Laborers and Hod Carriers Pension and Welfare Fund v. Omnicare Inc., et al., No. 06-0026, E.D. Ky.).
WILMINGTON, Del. — A Tesla Inc. shareholder filed a complaint in the Delaware Chancery Court on March 20, seeking to compel the automaker to comply with his previous request for an inspection of books and records related to the company’s September 2018 settlement with the U.S. Securities and Exchange Commission and its duties to monitor the public communications of Chief Executive Officer Elon Musk, notably his tweets (Chase Gharrity v. Tesla Inc., No. 2019-0217, Del. Chanc.).
NEW YORK — A Second Circuit U.S. Court of Appeals panel on March 18 ruled that a federal district court did not err in applying Second Circuit guidance in determining that an investor failed to show that an investment adviser breached its fiduciary duty under Section 36(b) of the Investment Company Act of 1940 (ICA) by charging excessive advisory fees (Joan Pirundini v. J.P. Morgan Investment Management Inc., No. 18-733, 2nd Cir.).
WASHINGTON, D.C. — The U.S. Supreme Court on March 18 declined review of a split District of Columbia Circuit U.S. Court of Appeals ruling that investors in a Brazilian oil company had made a prima facie case for jurisdiction based on their claims that the company violated the Foreign Sovereign Immunities Act (FSIA) by targeting investors in the United States to invest in a company it formed and concealed its alleged securities fraud violations from the investors (Petróleo Brasileiro S.A. v. EIG Energy Fund XIV LP, et al., No. 18-716, U.S. Sup.).
HOUSTON — A group of investors on March 14 filed a class action securities lawsuit in a Texas federal court against a hydraulic fracturing company contending that it is liable under the Securities Exchange Act for material misstatements in proxy materials related to a corporate acquisition (Camelot Event Driven Fund v. Alta Mesa Resources Inc. f/k/a Silver Run Acquisition Corporation II, et al., No. 19-957, S.D. Texas).
WASHINGTON, D.C. — Although the Ninth Circuit U.S. Court of Appeals correctly held that Section 14(e) of the Securities Exchange Act of 1934 prohibits negligent misrepresentations and omissions of material fact, it erred in partially reversing a district court’s dismissal of a shareholder class action lawsuit and finding that shareholders needed to plead only negligence and not scienter, the U.S. government argues in an amicus curiae brief filed Feb. 26 in the U.S. Supreme Court (Emulex Corp., et al. v. Gary Varjabedian, et al., No. 18-459, U.S. Sup., 2019 U.S. S. Ct. Briefs LEXIS 613).
WASHINGTON, D.C. — The U.S. Supreme Court should review a divided Second Circuit U.S. Court of Appeals ruling that a district court erred in holding that a plaintiff’s lack of standing in a shareholder derivative lawsuit after the sale of a nominal defendant to a third party deprived the district court of jurisdiction because the ruling conflicts with Supreme Court precedent and creates a split among the circuits as to the scope of Federal Rule of Civil Procedure 17(a)(3), defendants argue in a Feb. 28 petition for writ of certiorari (Cadian Capital Management LP, et al. v. Terry Klein, et al., No. 18-1129, U.S. Sup., 2019 U.S. S. Ct. Briefs LEXIS 764).
LOS ANGELES — An investor on March 13 filed a securities class action lawsuit in California federal court against an online provider of mailing and shipping solutions and certain of its executive officers, alleging that the defendants misrepresented the company’s financial results and relationship with the U.S. Postal Service (USPS) in violation of federal securities laws (Matt Karinski v. Stamps.com Inc., et al., No. 19-1828, C.D. Calif.).
BOSTON — An investor filed a securities class action lawsuit against a pharmaceutical company and two of its senior officers on March 12, alleging that the defendants misrepresented the clinical trial success of its systemic sclerosis and cystic fibrosis treatment drug candidate in violation of federal securities laws (Carmen Kempf v. Corbus Pharmaceutical Holdings Inc., et al., No. 19-10457, D. Mass.).
WASHINGTON, D.C. — The U.S. Supreme Court should grant review of a Ninth Circuit U.S. Court of Appeals’ ruling holding that defendants in a Public Company Accounting Oversight Board (PCAOB) action forfeited their constitutional arguments against the appointment of the hearing officer by not specifically naming the appointments clause of the U.S. Constitution in their arguments because the ruling has created a split among the circuits as to the proper application of the Supreme Court’s Lucia v. SEC ruling, the defendants argue in a Feb. 22 petition for writ of certiorari (Kabani & Co. Inc., et al. v. U.S. Securities and Exchange Commission, No. 18-1117, U.S. Sup., 2019 U.S. S. Ct. Briefs LEXIS 723).
RICHMOND, Va. — A Fourth Circuit U.S. Court of Appeals panel on March 11 ruled that a federal district court did not err in dismissing federal securities law claims stemming from allegedly false and misleading statements made in the proxy statement for a merger deal between real estate investment trusts (REITs) because shareholders failed to sufficiently show that the alleged misstatements were materially false or misleading (Paradise Wire & Cable Defined Benefit Pension Plan, et al. v. Edward M. Weil Jr., et al., No. 18-1483, 4th Cir., 2019 U.S. App. LEXIS 7103).
WASHINGTON, D.C. — Lumber Liquidators Holdings Inc. will pay $33 million in total penalties as part of a deferred prosecution agreement with federal prosecutors over the company’s role in a securities fraud scheme in which it misrepresented to investors that its Chinese-manufactured laminate flooring complied with California Air Resources Board (CARB) regulations, according to documents filed in Virginia federal court on March 12 (United States v. Lumber Liquidators Holdings Inc., No. 19-cr-52, E.D. Va.).
CAMDEN, N.J. — An investor filed a securities class action in New Jersey federal court on March 7 against a Bermuda-based holding company that provides reinsurance services through its subsidiaries regarding violations of the Securities Exchange Act of 1934 (John Dougan v. Maiden Holdings Ltd., et al., No. 19-08105, D. N.J.).
SAN FRANCISCO — GoPro Inc. and certain of its senior executives will pay $6.75 million to settle claims that they violated federal securities laws by misrepresenting to investors that the company had adequate inventory of its new cameras and quadcopter drones to be able to meet the market demand for the products in violation of federal securities laws, according to court documents filed by the lead plaintiff in the action on Feb. 14 in California federal court (Troy Larkin v. GoPro Inc., et al., No. 16-6654, N.D. Calif.).
MINNEAPOLIS — A federal judge in Minnesota on March 8 ruled that shareholders failed to meet their burden of proving reliance in arguing that Best Buy Co. and certain of its senior executives misrepresented the company’s fiscal year 2011 earnings projections in violation of federal securities laws (IBEW Local 98 Pension Fund, et al. v. Best Buy Co., et al., No. 11-429, D. Minn., 2019 U.S. Dist. LEXIS 37315).
NEW YORK — An investor in a shareholder derivative lawsuit has sufficiently pleaded demand futility and shown that a majority of a Chinese automotive manufacturing company’s directors face a substantial likelihood of liability for their role in an electric vehicle (EV) subsidy scheme, the investor argues in a March 5 opposition brief in New York federal court, opposing a motion to dismiss filed by the defendants in the action (Richard Baker v. Xiaoming Hu, et al., No. 17-4399, S.D. N.Y.).
NEW YORK — A Second Circuit U.S. Court of Appeals panel on March 5 ruled that a federal district court did not err in interpreting federal securities law when it ordered a former Galleon Management Co. general partner to pay a nearly $93 million civil penalty for his role in an insider trading scheme (Securities and Exchange Commission v. Raj Rajaratnam, No. 11-5124, 2nd Cir., 2019 U.S. App. LEXIS 6640).