PHILADELPHIA — A biotechnology company and three of its senior executives asked a federal judge in Pennsylvania on Nov. 5 to dismiss shareholder claims that the defendants issued several misrepresentations regarding the manufacturing possibilities of the company’s COVID-19 coronavirus vaccine candidate and its selection for the federal government’s Operation Warp Speed program, arguing that shareholders failed to plead key elements of its federal securities law claims (Patrick McDermid v. Inovio Pharmaceuticals Inc., et al., No. 20-1402, E.D. Pa.).
SAN FRANCISCO — A federal judge in California on Nov. 4 appointed an individual shareholder as lead plaintiff in a securities class action lawsuit against video communications platform application provider Zoom Communications Inc. and two of its senior executives, ruling that the timing of a competing shareholder’s sale of its Zoom stock capped his potential damages recovery under the Private Securities Litigation Reform Act’s (PSLRA) statutory damages cap (In re Zoom Securities Litigation, No. 20-2353, N.D. Calif., 2020 U.S. Dist. LEXIS 207490).
SAN DIEGO — The lead plaintiff in a securities class action lawsuit against a pharmaceutical company and certain of its senior executives has failed to sufficiently plead any actionable misstatements or omissions in alleging that the defendants misrepresented the success of a clinical study for the company’s obesity treatment drug in violation of federal securities law, a federal judge in California ruled Nov. 2 in granting the defendants’ motion to dismiss for failure to state a claim for relief (Karim Khoja v. Orexigen Therapeutics Inc., et al., No. 15-540, S.D. Calif., 2020 U.S. Dist. LEXIS 204299).
PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on Nov. 3 ruled that a federal district court erred in dismissing shareholder claims against a bank and certain of its senior executives based on evidence uncovered by Freedom of Information Act (FOIA) requests with the Securities and Exchange Commission for failure to plead loss causation because that information was not already publicly available and, therefore, constituted a corrective disclosure (David Grigsby, et al. v. BofI Holding Inc., et al., No. 19-55042, 9th Cir., 2020 U.S. App. LEXIS 34662).
MIAMI — Dismissal of federal securities law claims against cruise line operator Norwegian Cruise Line Holdings Inc. and two of its senior executives stemming from the defendants’ alleged concealment of deceptive sales tactics that artificially inflated the company’s stock price in the wake of the novel coronavirus pandemic is unwarranted because a pension fund has sufficiently pleaded factual allegations supporting its claims that the defendants engaged in such tactics and concealed them from investors, the pension fund argues in an Oct. 29 opposition brief filed in Florida federal court (Eric Douglas v. Norwegian Cruise Lines, et al., No. 20-21107, S.D. Fla.).
NEW ORLEANS — Without providing further detail, the Fifth Circuit U.S. Court of Appeals on Oct. 30 granted en banc review of a split panel ruling that held that parties to Securities and Exchange Commission enforcement proceedings may not challenge such actions in federal court until the agency proceedings have concluded (Michelle Cochran v. Securities and Exchange Commission, et al., No. 19-10396, 5th Cir., 2020 U.S. App. LEXIS 25525).
MIAMI — Royal Caribbean Cruises Ltd. and certain of its senior executives violated federal securities laws by failing to disclose to investors that its business and financial condition had been adversely impacted by the novel coronavirus pandemic and misrepresenting the adequacies of Royal Caribbean’s policies and procedures implemented to fight the spread of COVID-19 on its cruise ships, an investor alleges in an Oct. 27 complaint filed in Florida federal court (Thomas Altomare v. Royal Caribbean Cruises Ltd., et al., No. 20-24407, S.D. Fla.).
CAMDEN, N.J. — A reinsurer and former officers cannot dispute allegations that they knowingly failed to disclose that the reinsurer’s stated reserves did not align with historical data, lead securities class plaintiffs argue to a New Jersey federal court in an Oct. 26 brief opposing dismissal of their case (In re Maiden Holdings, Ltd. Securities Litigation, No. 19-05296, D. N.J.).
WASHINGTON, D.C. — Shareholders’ challenges to a third amendment to preferred stock purchase agreements (PSPAs) entered into between the U.S. Treasury Department and the appointed conservator for Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac) are barred by the succession and anti-injunction clauses of the Housing and Economic Recovery Act of 2008 (HERA), federal parties argue in an Oct. 23 reply and response brief filed in consolidated actions pending in the U.S. Supreme Court (Patrick J. Collins, et al. v. Steven T. Mnuchin, et al., No. 19-422, and Steven T. Mnuchin, et al. v. Patrick J. Collins, et al., No. 19-563, U.S. Sup.).
ATLANTA — In what it deemed an issue of first impression, an 11th Circuit U.S. Court of Appeals panel on Oct. 22 ruled that a federal district court correctly applied a two-level enhancement in applying the sentence for an individual convicted of orchestrating a bank and wire fraud scheme in which he bilked more than $2 million from an investment firm’s related entity (United States of America v. Gerti Muho, No. 18-11248, 11th Cir., 2020 U.S. App. LEXIS 33339).
DENVER — A federal judge in Colorado on Sept. 28 ruled that counsel for plaintiffs in a shareholder derivative action seeking to recover advisory and administrative fees paid to an investment adviser and its parent company must pay statutory sanctions for pursuing claims through trial even though the counsel knew that the claims “were lacking in merit” (Joan Obeslo, et al. v. Great-West Capital Management LLC, No. 16-230, D. Colo.).
BROOKLYN, N.Y. — The Goldman Sachs Group Inc. on Oct. 22 admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) for its role in a more than $1 billion bribery scheme involving officials from Malaysia and Abu Dhabi in exchange for business dealings favoring Goldman Sachs, according to documents filed in New York federal court (United States v. Goldman Sachs Group Inc., No. 20-cr-437, and United States v. Goldman Sachs [Malaysia] Sdn. Bhd., No. 20-cr-438, E.D. N.Y.).
LOS ANGELES — A security technology company and certain of its current and former executive officers violated federal securities law when they failed to disclose to investors that the Los Angeles Police Department’s (LAPD) pilot testing program for the company’s remote restraint device showed limited utility, thereby allowing the company’s stock to trade at an artificially high rate, a shareholder alleges in an Oct. 15 complaint filed in California federal court (Paula Early v. Wrap Technologies Inc., et al., No. 20-9444, C.D. Calif.).
ATLANTA — A federal judge in Georgia on Oct. 8 granted preliminary approval of a proposed settlement agreement in a shareholder derivative lawsuit brought on behalf of tissue graft maker MiMedx Group Inc. against several of the biopharmaceutical company’s current and former executive officers and directors that alleged that the defendants breached their fiduciary duty by covering up whistleblower allegations of a massive “channel-stuffing” scheme (In re MiMedx Group Inc. Shareholder Derivative Litigation, No. 18-4486, N.D. Ga.).
MIAMI — Royal Caribbean Cruises Ltd. and certain of its senior executives violated federal securities law by failing to disclose that the cruise line had been experiencing a decrease in bookings for cruises outside of China in the wake of the novel coronavirus outbreak and that the company lacked adequate policies and procedures to combat the spread of COVID-19 on its ships, a shareholder alleges in an Oct. 7 complaint filed in Florida federal court (City of Riviera Beach General Employees Retirement System v. Royal Caribbean Cruises Ltd., et al., No. 20-24111, S.D. Fla.).
PHILADELPHIA — The Third Circuit U.S. Court of Appeals should deny a petition for writ of mandamus filed by the 3M Co. and certain of its current and former executive officers in an investor class action claiming that the defendants concealed the truth about the company’s exposure to liability associated with per- and polyfluoroalkyl substances (PFAS) in violation of federal securities laws because a federal district court committed no clear error in denying the petitioners’ request to transfer the action to Minnesota federal court, shareholders argue in an Oct. 13 response brief (In re 3M Co., et al., No. 20-2864, 3rd Cir.).
CINCINNATI — A licensed securities professional failed to exhaust all administrative remedies under the Securities Exchange Act of 1934 when he filed a state court lawsuit against the Financial Industry Regulatory Authority (FINRA) and others seeking damages for sanctions ordered against him, and, as a result, a federal district court did not err in dismissing his action for lack of jurisdiction, a Sixth Circuit U.S. Court of Appeals panel ruled Oct. 14 in what it deemed an issue of first impression in the Circuit Court (Jeffrey Allen Mohlman v. Financial Industry Regulatory Authority, et al., No. 20-3257, 6th Cir., 2020 U.S. App. LEXIS 32395).
SAN FRANCISCO — A federal district court’s imposition of a $75,000 civil penalty against a supply chain services company’s former employee for his admitted insider trading in violation of federal securities law was reasonable in light of the appellant’s involvement in the scheme, a Ninth Circuit U.S. Court of Appeals panel ruled Oct. 13 (U.S. Securities and Exchange Commission v. Robert M. Morano, No. 18-386, 9th Cir., 2020 U.S. App. LEXIS 32231).
PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel on Oct. 13 ruled that a federal district court correctly deemed a bid by shareholders to reopen a securities class action lawsuit against bankrupt car rental company Hertz Global Holdings Inc. and certain of its senior executives and file an amended complaint based on newly discovered evidence as untimely because the evidence the pension funds sought to add was in existence before the district court’s dismissal ruling (In re Hertz Global Holdings Inc. Securities Litigation, No. 19-3532, 3rd Cir., 2020 U.S. App. LEXIS 32238).
NEW YORK — A federal district court did not abuse its discretion in granting final approval to a $6.5 million settlement in a securities class action lawsuit because the court properly considered each of the nine factors established in City of Detroit v. Grinnell Corp. before determining that the proposed settlement agreement was fair, reasonable and adequate, a Second Circuit U.S. Court of Appeals panel ruled Oct. 2 (Aric McIntire, et al. v. ODS Capital LLC, et al., No. 19-3748, 2nd Cir., 2020 U.S. Dist. LEXIS 31434).