PASADENA, Calif. — A Ninth Circuit U.S. Court of Appeals panel on Sept. 26 ruled that a federal district court properly found that general partnership interests sold by a financial planner and his company were investment contracts and, thus, qualify as securities under federal law and that the financial planner violated federal securities laws by selling unregistered securities and defrauding investors (U.S. Securities & Exchange Commission v. E. Andrew Schooler, et al., No. 16-55167, 9th Cir., 2018 U.S. App. LEXIS 27449).
SAN FRANCISCO — A federal judge in California on Sept. 25 ruled that the lead plaintiff in a securities class action against Netflix Inc. and certain of its senior executives failed to sufficiently show that the defendants’ alleged misstatements concealing the financial effects of the company’s enacted price increase on its subscription figures were false or misleading when made (James Ziolkowski v. Netflix Inc., et al., No. 17-1070, N.D. Calif., 2018 U.S. Dist. LEXIS 164641).
NEW YORK — A Second Circuit U.S. Court of Appeals panel on Sept. 25 affirmed a federal district court’s sentencing of a convicted Ponzi scheme operator to 97 months’ imprisonment, ruling that there was “no clear error in the district court’s assessment” of the sentencing guidelines (United States of America v. James E. Neilsen, No. 16-389, 2nd Cir., 2018 U.S. App. LEXIS 27308).
ATLANTA — An 11th Circuit U.S. Court of Appeals panel on Sept. 21 affirmed a federal district court’s order sentencing a defendant to six months imprisonment followed by 18 months’ supervised release on charges that he violated 12 conditions of his supervised release on a previous sentencing for his role in obstructing Securities and Exchange Commission proceedings, ruling that its review of the appeal is precluded by the invited error doctrine (United States of America v. Robert J. Vitale, No. 18-10683, 11th Cir., 2018 U.S. App. LEXIS 27147).
ATLANTA — An 11th Circuit U.S. Court of Appeals panel on Sept. 24 ruled that a federal district court did not err in enjoining two investment trusts from initiating Financial Industry Regulatory Authority (FINRA) proceedings against a Canadian broker-dealer and eight partners that owned the broker-dealer because the trusts’ claims did not “arise in connection with” the defendants’ business activities and because FINRA rules do not require arbitration (Pictet Overseas Inc., et al. v. Helvetia Trust, et al., No. 17-12279, 11th Cir., 2018 U.S. App. LEXIS 27241).
PHILADELPHIA — A federal district court properly applied U.S. Supreme Court precedent in its analysis and did not err in dismissing a securities class action complaint against American car rental company Hertz Global Holdings Inc. and certain of its former executive officers because lead plaintiffs failed to properly plead scienter in making their federal securities law claims, a Third Circuit U.S. Court of Appeals panel ruled Sept. 20 (In re Hertz Global Holdings Inc., No. 17-2200, 3rd Cir., 2018 U.S. App. LEXIS 26865).
NEW YORK — A federal judge in New York on Sept. 20 ruled that the lead plaintiff in a securities class action lawsuit against a mining company and several of its senior officers failed to state a claim for relief in alleging that the defendants misrepresented the extent of three cyanide solution spills at the company’s mine in Argentina and the remedial measures taken to clean up the spills in violation of federal securities law (In re Barrick Gold Corp. Securities Litigation, No. 17-3507, S.D. N.Y., 2018 U.S. Dist. LEXIS 161081).
WASHINGTON, D.C. — In a one-page per curiam order, a District of Columbia Circuit U.S. Court of Appeals panel on Sept. 19 set aside a Securities and Exchange Commission order against co-managers of an investment fund for violations of federal securities laws and remanded the action to the SEC for a new hearing before either another administrative law judge (ALJ) or before the SEC itself in accordance with the U.S. Supreme Court’s recent ruling in Lucia v. SEC (Mohammed Riad, et al. v. Securities and Exchange Commission, No. 16-1275, D.C. Cir., 2018 U.S. App. LEXIS 26710).
WASHINGTON, D.C. — The rebranded Yahoo Inc. will pay approximately $47 million in a global settlement of all litigation arising from its historic data breach, the company said Sept. 17 in a filing with the Securities and Exchange Commission, which already fined the company $35 million for its handling of the breach.
SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on Sept. 17 ruled that a federal district court judge did not err in dismissing a shareholder class action against a drug company and certain of its former executive officers for failure to plead material misrepresentations or omissions because the information allegedly misrepresented was publicly available prior to the statements being made and was “already part of the total mix of information available to investors” (Wahid Tadros v. Celladon Corp., et al., No. 16-56904, 9th Cir., 2018 U.S. App. LEXIS 26260).
SAN ANTONIO — A Russian citizen on Sept. 17 sued a hydraulic fracturing company in Texas federal court for securities fraud, seeking damages allegedly caused by the company’s “fraudulent scheme” in which he says the company violated federal laws and “successfully tricked” him into investing $2.6 million (Nikolay Rastorguev v. David Sepiachvili, et al., No. 18-966, W.D. Texas).
NEW YORK — A federal district court’s order granting a defendant in a securities and wire fraud criminal action a new trial pursuant to Second Circuit U.S. Court of Appeals precedent should be vacated because the District Court erred in determining that a witness’ implication that he mistakenly believed that the defendant was his investment agent in residential mortgage-backed securities (RMBS) and owed him a fiduciary obligation ran afoul of the precedent, the U.S. government argues in a Sept. 4 appellant brief filed in the Second Circuit (United States v. Ross Shapiro, et al., No. 18-2007, 2nd Cir.).
WASHINGTON, D.C. — Review of a Ninth Circuit U.S. Court of Appeals panel’s determination that a general proximate cause test is the proper test for determining loss causation in a securities class action lawsuit brought by shareholders against a solar energy company and certain of its senior executives is not warranted because there is no split among the circuits as to proper application of the test under the U.S. Supreme Court’s ruling in Dura Pharmaceuticals, Inc. v. Broudo, lead plaintiffs argue in a Sept. 5 respondent’s brief filed in the Supreme Court (First Solar Inc., et al. v. Mineworkers’ Pension Scheme, et al., No. 18-164, U.S. Sup.).
WASINGTON, D.C. — Parties in a shareholder derivative lawsuit recently asked the U.S. Supreme Court to determine whether review is needed of a Delaware Supreme Court’s ruling dismissing the shareholders’ complaint as precluded by a ruling in a related action in Arkansas federal court comports with the due process clause of the U.S. Constitution (California State Teachers’ Retirement System, et al. v. Aida M. Alvarez, et al., No. 17-1695, U.S. Sup.).
NEWARK, N.J. — A wireless networking technology provider and certain of its senior executives violated federal securities laws by misrepresenting the company’s financial reporting and internal controls in its financial reporting documents, a shareholder argues in a securities class action complaint filed Sept. 11 in New Jersey federal court (Stéphane Gouet v. USA Technologies Inc., et al., No. 18-13759, D. N.J.).
NEWARK, N.J. — A shareholder sued a pharmaceutical company and certain of its current and former executive officers in New Jersey federal court on Sept. 12, alleging that the defendants engaged in an illegal pump-and-dump scheme in violation of federal securities laws (Jason Kerznowski v. OPKO Health Inc., et al., No. 18-13834, D. N.J.).
SAN JOSE, Calif. — A medical device maker and certain of its senior executives will pay $42.5 million to settle claims that they misrepresented to investors the safety of the medical device maker’s surgical product and its compliance with U.S. Food and Drug Administration regulations in violation of federal securities laws, class representatives state in a Sept. 11 motion for preliminary approval of settlement filed in California federal court (In re Intuitive Surgical Securities Litigation, No. 13-1920, N.D. Calif.).
DALLAS — The lead plaintiff in a securities class action lawsuit has failed to cure the pleading deficiencies in a third amended complaint that led to a previous dismissal of her second amended complaint, a federal judge in Texas ruled Sept. 11 in dismissing the third amended complaint with prejudice (Margaret Budde, et al. v. Global Power Equipment Group Inc., et al., No. 15-1679, N.D. Texas, 2018 U.S. Dist. LEXIS 154159).
SAN FRANCISCO — A federal judge in California on Sept. 7 ruled that the lead plaintiff in a securities class action lawsuit against a generic drug company and certain of its current and former executive officers failed to properly plead scienter and loss causation in arguing that the defendants concealed their involvement in a generic drug price-fixing scheme in violation of federal securities laws (Greg Fleming v. Impax Laboratories Inc., et al., No. 16-6557, N.D. Calif.).
NEW YORK — Investors failed to show that the statute of limitations on their aiding abetting fraud claims against auditors for investment firms found to have orchestrated a Ponzi scheme should be tolled because the investors were on notice of the fraudulent scheme by April 2010 but failed to conduct a proper investigation into the auditors’ role in the fraud, a Second Circuit U.S. Court of Appeals panel ruled Sept. 6 (Deanna M. Ayers, et al. v. Piaker & Lyons P.C., et al., Nos. 17-3513 and 18-716, 2nd Cir., 2018 U.S. App. LEXIS 25267).