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Mealey's Securities

July 12, 2019
Alleged Ponzi Schemer Seeks High Court Review Of 10th Circuit Ruling

WASHINGTON, D.C. — The U.S. Supreme Court should grant review of a 10th Circuit U.S. Court of Appeals ruling upholding a lower court’s grant of a preliminary injunction against the operator of an alleged Ponzi scheme because the appellate panel’s ruling contradicts the Supreme Court’s holding in Morrison v. National Australia Bank Ltd., a petitioner argues in a June 21 petition for writ of certiorari (Charles D. Scoville v. Securities and Exchange Commission, No. 18-1566, U.S. Sup.).
July 12, 2019
Retirement Fund: Fracking Company, Executives Violated Federal Securities Laws

PITTSBURGH — Cambridge Retirement System (CRS) on June 25 filed a federal securities class action in Pennsylvania federal court against a hydraulic fracturing company and some of its executives, contending that they violated the Securities Exchange Act (SEA) and Securities Exchange Commission regulations (Cambridge Retirement System v. EQT Corporation, et al., No. 19-754, W.D. Pa.).
July 12, 2019
Judge Won’t Reconsider Judgment In Securities Class Action Lawsuit

NEW YORK — A lead plaintiff’s motion for reconsideration was not timely filed because it was not filed within one year of a federal district court’s entry of final judgment that it seeks to have reconsidered, a federal judge in New York ruled July 3 (Christopher Wyche v. Advanced Drainage Systems Inc., et al., No. 15-5955, S.D. N.Y., 2017 U.S. Dist. LEXIS 111617).
July 12, 2019
Dismissal Of Rule 10b-5 Claim In Securities Suit Was Warranted, Panel Rules

NEW YORK — A federal district court properly dismissed a guardian’s federal securities law claim brought on behalf of her disabled sister against several defendants in a private action because the plaintiff failed to plausibly show that the unsuitability of an annuity certain defendants were alleged to have fraudulently established on behalf of the sister caused the plaintiff’s loss, a Second Circuit U.S. Court of Appeals panel ruled in a July 11 summary order (Fredia Robertson v. MetLife Securities Inc., et al., No. 18-1236, 2nd Cir., 2019 U.S. App. LEXIS 20543).
July 11, 2019
2nd Circuit Asked To Decide Whether Investors Pleaded Falsity, Loss Causation

NEW YORK — Parties in a securities class action lawsuit against a drug company and its co-founders recently asked the Second Circuit U.S. Court of Appeals to determine whether a federal district court erred in dismissing a second amended complaint for failure to plead falsity and loss causation (Michael Nguyen, et al. v. NewLink Genetics Corp., et al., No. 19-642, 2nd Cir.).
July 11, 2019
Investor: Court Failed To Consider Allegations In Dismissing Securities Claims

NEW YORK — A federal district court erred in holding that a lead plaintiff in a securities class action lawsuit against online hotel booking company Trivago N.V., certain of its senior executives, its American representative and underwriters of Trivago’s initial public offering (IPO) failed to sufficiently plead any actionable misstatement or omission in making his federal securities law claims because it ignored certain allegations made by the lead plaintiff demonstrating materiality, the lead plaintiff argues in a June 27 appellant brief filed in the Second Circuit U.S. Court of Appeals (Anthony Holbrook, et al. v. Trivago N.V., et al., No. 19-0766, 2nd Cir.).
July 11, 2019
Panel Substantially Overturns Dismissal Of Claims In LifeLock Stock-Drop Suit

SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on July 10 ruled that a federal district court erred in dismissing a securities class action lawsuit against identity theft protection provider LifeLock Inc. and certain of its senior executives because lead plaintiffs in the action sufficiently pleaded scienter as to all but one defendant and falsity in making their federal securities law claims (Oklahoma Police Pension and Retirement System, et al. v. LifeLock Inc., et al., No. 17-16895, 9th Cir.).
July 10, 2019
Tech Company, CEO Hit With Securities Class Action Lawsuit

LOS ANGELES — An investor sued a tech company and its CEO in California federal court on July 9, alleging that the defendants misrepresented the terms of an agreement they reached with another company in violation of federal securities laws for the development of certain integration software (Scott C. Hartman v. Verb Technology Co. Inc., et al., No. 19-5896, C.D. Calif.).
July 10, 2019
District Court’s Curative Measures Enough In Ponzi Scheme Suit, Panel Rules

ATLANTA — An 11th Circuit U.S. Court of Appeals panel on June 24 ruled that a federal district court did not abuse its discretion in allowing the testimony of government prosecutors’ expert witness in a criminal suit against three parties alleged to have operated a massive Ponzi scheme because the court took the necessary curative measures to correct any potential issues for the jury (United States of America v. Joseph Signore, No. 16-11344, United States of America v. Laura Grande-Signore, et al., No. 16-11425, 11th Cir., 2019 U.S. App. LEXIS 18753).
July 09, 2019
Panel: SLUSA Does Not Preclude Beneficiary’s Fiduciary Duty Claims

PASADENA, Calif. — A Ninth Circuit U.S. Court of Appeals panel on July 5 ruled that a federal district court erred in holding that the Securities Litigation Uniform Standards Act (SLUSA) precluded a beneficiary’s state law claims involving breaches of fiduciary duty by a trustee, reversing and remanding the lower court’s determination (Lindie L. Banks, et al. v. Northern Trust Corp., et al., No. 17-56025, 9th Cir., 2019 U.S. App. LEXIS 20054).
July 09, 2019
Jury Instruction In Insider Trading Trial Not Prejudicial, Panel Rules

NEW YORK — A Second Circuit U.S. Court of Appeals panel on July 8 ruled that a federal district court did not commit plain error in issuing jury instructions in a criminal proceeding against an alleged inside trader because any error issued by the district court did not prejudice the defendant (United States v. John Afriyie, Nos. 17-2444 and 17-4045, 2nd Cir., 2019 U.S. Dist. LEXIS 20149).
July 08, 2019
Failure To Plead With Particularity Leads To Dismissal Of Securities Claims

NEWARK, N.J. — A lead plaintiff in a securities class action lawsuit against a developer of therapeutic products and three of its senior executives has failed to sufficiently show that it may rely on confidential witness statements in making its federal securities law claims because the confidential witnesses’ allegations fail to identify “the who, what, when, where, and how of some of the sources of his information,” a federal judge in New Jersey ruled July 2 (Randy Smith v. Antares Pharma Inc., et al., No. 17-8945, D. N.J., 2019 U.S. Dist. LEXIS 110688).
July 03, 2019
Split 4th Circuit Grants Review Of Merger Deal Class Action Rulings, Reverses

RICHMOND, Va. — A split Fourth Circuit U.S. Court of Appeals panel on June 28 granted a pair of appeals in investor lawsuits stemming from a merger agreement between utility companies, ruling that “relevant factors weigh heavily in favor of a prompt appellate review” of remand orders that were issued in both actions (Dominion Energy Inc., et al. v. Metzler Asset Management GmbH, et al., No. 18-2066, 4th Cir., 2019 U.S. App. LEXIS 19478).
July 01, 2019
Panel: Court Incorrectly Granted Summary Judgment In SEC Enforcement Action

NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel on June 27 held that a federal district court erred in granting the Securities and Exchange Commission’s summary judgment motion in an enforcement action because it failed to consider “several issues of material fact” that were raised by the defendants in the action (Securities and Exchange Commission v. Arcturus Corp., et al., No. 17-10503, 5th Cir., 2019 U.S. App. LEXIS 19230).
July 01, 2019
Panel Affirms Court’s Dismissal Of Stock-Drop Suit For Failure To Plead Scienter

BOSTON — A federal district court did not err in dismissing lead plaintiffs’ claims in a securities class action against a biopharmaceutical company and three of its current or former executive officers because the plaintiffs failed to sufficiently plead scienter in making their federal securities law claims, a First Circuit U.S. Court of Appeals panel ruled June 27 (Metzler Asset Management GmbH, et al. v. Kingsley, et al., Nos. 18-1369 and 18-1472, 1st Cir., 2019 U.S. App. LEXIS 19237).
June 28, 2019
FedEx Hit With Stock- Drop Suit Over Cyberattack Misrepresentations

NEW YORK — FedEx Corp. and certain of its senior executives concealed the extent of financial damage resulting from a cyberattack on its newly acquired European logistics company in violation of federal securities law, a pension fund argues in a June 26 securities class action complaint filed in New York federal court (Rhode Island Laborers’ Pension Fund v. FedEx Corp., et al., No. 19-5990, S.D. N.Y.).
June 27, 2019
Dismissal Of Investor Suit Stemming From Ponzi Scheme Vacated, Remanded

SAN FRANCISCO — Investors have plausibly alleged that a financial institution assisted a convicted Ponzi schemer’s fraud by continuing to operate his company’s deposit accounts and disperse funds, even though it had discovered his fraud and stopped loaning his company money years earlier, a divided Ninth Circuit U.S. Court of Appeals panel ruled June 24 (Ronald C. Evans, et al. v. ZB NA, No. 18-15094, 9th Cir., 2019 U.S. App. LEXIS 18781).
June 24, 2019
Supreme Court Declines Review Of Loss Causation Pleading Standard Ruling

WASHINGTON, D.C. — The U.S. Supreme Court on June 24 denied a petition for writ of certiorari filed by an energy company and several of its current and former senior executives seeking determination of the appropriate pleading standard for alleging loss causation in a securities class action lawsuit (First Solar Inc., et al. v. Mineworkers’ Pension Scheme, et al., No. 18-164, U.S. Sup.).
June 24, 2019
High Court Won’t Review 9th Circuit’s Morrison Application In Securities Suit

WASHINGTON, D.C. — The U.S. Supreme Court on June 24 declined to review an appeal of a Ninth Circuit U.S. Court of Appeals holding in which it applied the Supreme Court’s ruling in Morrison v. National Australia Bank, Ltd. to find that Toshiba Corp.’s American Depositary Shares (ADSs) were securities under the Securities Exchange Act of 1934 (Toshiba Corp. v. Automotive Industries Pension Trust Fund, et al., No. 18-486, U.S. Sup.).
June 21, 2019
Dismissal Of Stock-Drop Suit Against Cemetery Company, Others Affirmed

PHILADELPHIA — A federal district court did not err in dismissing a shareholder class action lawsuit against a cemetery services provider and others for failure to plead any materially false and/or misleading statements in an attempt to conceal its poor financial condition in violation of federal securities laws because, for each alleged category of alleged misrepresentations, the information was “readily and consistently disclosed” by the defendants, a Third Circuit U.S. Court of Appeals panel ruled June 20 (Peter Fan, et al. v. StoneMor Partners LP, et al., No. 17-3843, 3rd Cir., 2019 U.S. App. LEXIS 18520).