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Mealey's Securities

  • July 24, 2018

    Shareholder Class Action Complaint Dismissed For 2nd Time

    SAN FRANCISCO — A federal judge in California on July 19 dismissed a shareholder class action complaint for the second time, ruling that lead plaintiffs’ second amended complaint fails to plead their federal securities law claims with the requisite specificity (In re Sunrun Inc. Securities Litigation, No. 17-2537, N.D. Calif.).

  • July 23, 2018

    Final Approval Of $3.5M Securities Class Action Settlement Granted

    SEATTLE — A federal judge in Washington on July 20 granted final approval of a $3.5 million securities class action settlement between shareholders and a health care company and its CEO over the defendants’ alleged misrepresentations made with regard to the company’s breast cancer screening products, bringing an end to the action, which was originally filed in October 2013 (In re Atossa Genetics Inc. Securities Litigation, No. 13-1836, W.D. Wash., 2018 U.S. Dist. LEXIS 121864).

  • July 23, 2018

    Purported Investor Class Action Settled By Theranos, 2 Corporate Officers

    SAN JOSE, Calif. — Beleaguered blood-testing startup Theranos Inc. and its two former officers on July 20 stipulated to dismissal of an investor class action without disclosing terms (Robert Colman, et al. v. Theranos, Inc., et al., No. 16-6822, N.D. Calif., San Jose Div.).

  • July 18, 2018

    9th Circuit Panel Rules That Toshiba ADRs Are Securities Under Exchange Act

    SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on July 17 ruled that Toshiba Corp. American Depositary Receipts (ADRs) are “securities” under the Securities Exchange Act of 1934, and a pension fund’s purchase of Toshiba’s ADRs on the over-the-counter market could be considered a domestic “purchase or sale of . . . any security not’ registered on a national securities exchange” pursuant to the U.S. Supreme Court’s ruling in Morrison v. National Australia Bank (Automotive Industries Pension Trust Fund, et al. v. Toshiba Cop., No. 16-56058, 9th Cir., 2018 U.S. App. LEXIS 19640).

  • July 18, 2018

    Panel Determines That FHFA Violates Separation Of Power

    NEW ORLEANS — Although the Federal Housing Finance Agency (FHFA) acted within its statutory authority when it adopted a net worth sweep as conservator of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac), the FHFA itself is unconstitutionally structured and violates the separation of powers provision of the U.S. Constitution, a Fifth Circuit U.S. Court of Appeals panel ruled July 16 (Patrick J. Collins, et al. v. Steven T. Mnuchin, et al., No. 17-20364, 5th Cir., 2018 U.S. App. LEXIS 19510).

  • July 17, 2018

    Lead Plaintiff Asks Judge To Approve $2.95M Settlement Against Mortgage Banker

    PHILADELPHIA — The lead plaintiff in a securities class action lawsuit against a mortgage banking firm and several of its executive officers asked a federal judge on July 13 to grant preliminary approval of a $2.95 million settlement in the action, arguing that the proposed settlement meets all statutory requirements for settlement (Courtney Elkin v. Walter Investment Management Group, et al., No. 17-2025, E.D. Pa.).

  • July 13, 2018

    Dismissal Of ICA Claim In Shareholder Derivative Lawsuit Affirmed

    SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on July 13 ruled that no private right of action exists under the Investment Company Act of 1940 (ICA) for challenging “the continued validity of an ICA exemption,” affirming a federal district court's dismissal of a shareholder derivative lawsuit against Yahoo! Inc. and certain of its executive officers and directors over their investment in a Chinese retail website (UFCW Local 1500 Pension Fund v. Marissa Mayer, et al., No. 17-15435, 9th Cir.).

  • July 13, 2018

    Judge Grants Government’s Request To Liquidate Shkreli’s Brokerage Account

    BROOKLYN, N.Y. — The federal judge in New York overseeing criminal proceedings against convicted former pharmaceutical company CEO and hedge fund manager Martin Shkreli on July 10 granted the U.S. government’s motion to liquidate a portion of Shkreli’s E*Trade brokerage account and apply the liquidated funds to the outstanding fine and restitution liability that were part of his conviction on securities fraud and conspiracy charges (United States v. Martin Shkreli, No. 15-637, E.D. N.Y., 2018 U.S. Dist. LEXIS 114792).

  • July 13, 2018

    Dismissal Of Securities Suit Backed By Lack Of Scienter Allegations, Panel Rules

    CHICAGO — A Seventh Circuit U.S. Court of Appeals panel on July 12 ruled that a federal district court did not err in dismissing a securities class action complaint against retailed Kohl’s Corp. and certain of its executive officers with prejudice because a pension fund failed to show that the defendants acted with the required scienter and failed to show that amendment of its complaint would cure the pleading defects that led to dismissal (Pension Trust Fund for Operating Engineers, et al. v. Kohl’s Corp., et al., No. 17-2697, 7th Cir., 2018 U.S. App. LEXIS 19014).

  • July 13, 2018

    Shareholder Hits Real Estate Company With Securities Class Action

    DENVER — A shareholder filed a securities class action lawsuit against a real estate company and certain of its executive officers in Colorado federal court on July 11, alleging that the defendants overstated the company’s revenues for its farm real estate lending business in violation of federal securities laws, causing the company’s stock to trade at an artificially high rate during the class period (Alexander Kachmar v. Farmland Partners Inc., et al., No. 18-1771, D. Colo.).

  • July 13, 2018

    Section 11 Claim Against Underwriters In Securities Class Action Dismissed

    CHICAGO — In granting a motion to dismiss, a federal judge in Illinois on June 26 ruled that lead plaintiffs in a securities class action were on notice that a recycler of original automotive products was not performing within the projections stated in Securities and Exchange Commission documents for an initial public offering (IPO) more than a year before filing their amended complaint; therefore, their claim for violation of Section 11 of the Securities Act of 1933 is time-barred (Amanda Beezley, et al. v. Fenix Parts Inc., et al., No. 17-7896, N.D. Ill., 2018 U.S. Dist. LEXIS 108259).

  • July 13, 2018

    9th Circuit Asked To Overturn Dismissal Of Claims In Securities Class Action

    SAN FRANCISCO — A lead plaintiff in a securities class action failed to plead an actionable misstatement or omission or scienter under federal securities law against a risk-based professional employer organization (PEO) and certain of its officers and directors and failed to plead actual control in making its claims against the PEO’s controlling stockholder, the defendants argue in a June 28 appellee brief filed in the Ninth Circuit U.S. Court of Appeals (Howard Welgus v. TriNet Group Inc., et al., No. 18-15084, 9th Cir.).

  • July 13, 2018

    3rd Circuit Panel Upholds Dismissal Of Claims Against Mutual Fund Managers

    PHILADELPHIA — A federal district court did not err in dismissing a derivative lawsuit brought by parties to variable annuity contracts with AXA Life Insurance Co. because the plaintiffs failed to show that AXA and its subsidiary breached their fiduciary duty by charging excessive management and fund administration fees under the provisions of the Investment Company Act (ICA), a Third Circuit U.S. Court of Appeals panel ruled July 10 (Mary Ann Sivolella, et al. v. AXA Equitable Life Insurance Co., et al., No. 16-4241, 3rd Cir., 2018 U.S. App. LEXIS 18678).

  • July 12, 2018

    Investors Argue No Circuit Split Exists For Loss-Causation Pleading Standard

    WASHINGTON, D.C. — No split among the federal circuit courts exists as to the proper application of the loss-causation pleading standard, and as a result, review of a Sixth Circuit U.S. Court of Appeals ruling that shareholders of a for-profit hospital operator pleaded loss causation in making their federal securities law claims is not warranted, the shareholders argue in a July 9 opposition brief filed in the U.S. Supreme Court (Community Health Systems Inc., et al. v. New York City Employees’ Retirement System, et al., No. 17-1453, U.S. Sup.).

  • July 12, 2018

    9th Circuit Asked To Uphold Dismissal Of Amended Complaint In Securities Suit

    SAN FRANCISCO — A federal district court did not abuse its discretion in dismissing claims in a securities class action lawsuit against a content, connectivity and digital media solutions provider for the travel industry and certain of its former executive officers because shareholders failed to plead any actionable misrepresentation or scienter in making their federal securities law claims, the defendants argue in a June 29 appellee brief filed in the Ninth Circuit U.S. Court of Appeals (M&M Hart Living Trust v. Global Eagle Entertainment Inc., et al., No. 18-55122, 9th Cir.).

  • July 11, 2018

    Panel’s Ruling Vacating Bond Trader’s Securities Fraud Conviction Stands

    NEW YORK — Without providing explanation, a Second Circuit U.S. Court of Appeals panel on July 9 denied the U.S. government’s petition for rehearing in an appeal of a bond trader’s conviction on charges that he engaged in a securities fraud scheme to defraud investors in the residential mortgage-backed securities (RMBS) market (United States v. Jesse C. Litvak, No. 17-1464-cr, 2nd Cir.).

  • July 10, 2018

    Shareholders Ask District Court To Deny Dismissal Motions In Securities Suit

    LOS ANGELES — Class representatives in a securities class action lawsuit against a Canadian precious metals streaming company, its auditor and others argue in a July 6 opposition brief that their second amended complaint should not be dismissed because their claims have been proven through discovery and because the class representatives have properly pleaded scienter and loss causation in making their federal securities law claims (In re Silver Wheaton Corp. Securities Litigation, No. 15-5146, C.D. Calif.).

  • July 6, 2018

    Judge: Investors’ Case Against Fracking Company For Safety Misstatements Is Valid

    HOUSTON — A federal judge in Texas on June 19 ruled that investor plaintiffs who brought a securities class action against a hydraulic fracturing company for alleged misstatements regarding its safety protocols had sufficiently pleaded their case that the company’s statement of safety compliance constituted “an actionable misstatement” that “a reasonable investor would consider important in making an investment decision” (Robert Edgar v. Anadarko Petroleum Corp., et al., No. 17-1372, S.D. Texas).

  • July 5, 2018

    Securities Law, Other Claims Trimmed In Shareholder Derivative Suit

    BALTIMORE — A federal judge in Maryland on July 3 ruled that investors in a shareholder derivative lawsuit failed to plead transaction causation in arguing that certain current and former officers and directors of a real estate investment trust (REIT) and the company that managed it violated federal securities law and breached their fiduciary duty in negotiating the renewal of the REIT’s management agreement (In re AGNC Investment Corp. Stockholder Derivative Litigation, No. 16-3215, D. Md., 2018 U.S. Dist. LEXIS 110711).

  • June 28, 2018

    Madoff Customer Claims Ruled Derivative Of Settled Fraudulent Transfer Claim

    NEW YORK — Customers of Bernard L. Madoff Investment Securities LLC (BLMIS) may not bring a federal securities law claim against the estate and related entities of one of Madoff’s investors because the claim is derivative of the BLMIS bankruptcy trustee’s fraudulent transfer claim against the investor and is, thus, subject to a permanent injunction barring BLMIS customers or creditors from bringing such a claim, a Second Circuit U.S. Court of Appeals panel ruled June 27 (A&G Goldman Partnership, et al. v. Irving H. Picard, et al., No. 17-512, 2nd Cir.).