Mealey's Securities

  • September 15, 2020

    Investors: Court Applied Wrong Standard In Dismissing Claims In Securities Suit

    RICHMOND, Va. — A federal district court erred in dismissing claims in a securities class action against an information technology (IT) company and two of its senior officers because it "applied unduly harsh standards and ignored controlling" U.S. Supreme Court and Fourth Circuit U.S. Court of Appeals precedent in reaching its conclusion, investors argue in a Sept. 11 appellant brief filed in the Fourth Circuit (KBC Asset Management NV, et al. v. DXC Technology Co., et al., No. 20-1718, 4th Cir.).

  • September 09, 2020

    Shareholder Claims Juul Investment Cost Altria $50 Billion

    SAN FRANCISCO — A shareholder of Altria Group Inc. filed a shareholder derivative action on Aug. 27 in California federal court accusing the tobacco company's executives, e-cigarette maker Juul Labs Inc. and Juul executives of harming Altria shareholders due to an estimated $50 billion in market capitalization losses that allegedly were caused by Altria's $12.8 billion investment in Juul (Maria Cecilia Lorca, derivatively on behalf of Altria Group Inc. v. William F. Gifford, Jr., et al., No. 20-6041, N.D. Calif.).

  • September 04, 2020

    Shareholder Claims In AbbVie Kickback Lawsuit Survive Dismissal Bid

    CHICAGO — A federal judge in Illinois on Sept. 1 ruled that shareholders in a securities class action lawsuit against AbbVie Inc. and two of its senior executives have sufficiently pleaded the necessary elements of their federal securities laws claims in alleging that the defendants misrepresented the biopharmaceutical company's growth and success of its rheumatoid arthritis prescription medication, Humira, and their alleged failure to disclose their involvement in a kickback scheme with physicians (Mayuko Holwill v. AbbVie Inc., et al., No. 18-6790, N.D. Ill., 2020 U.S. Dist. LEXIS 159885).

  • September 02, 2020

    Investment Adviser Takes SEC ALJ Separation Of Powers Suit To U.S. Supreme Court

    WASHINGTON, D.C. — U.S. Supreme Court review of an 11th Circuit U.S. Court of Appeals' ruling upholding a federal district court's dismissal of an investment adviser's lawsuit against the Securities and Exchange Commission and others challenging the constitutionality of the SEC's in-house enforcement proceedings is warranted because the "multilayered protection" given to the SEC's administrative law judges (ALJs) violates the separation of powers provision of the U.S. Constitution, the investment adviser argues in an Aug. 31 petition for writ of certiorari filed in the Supreme Court (Christopher M. Gibson v. Securities and Exchange Commission, et al., U.S. Sup., No. N/A).

  • September 02, 2020

    D.C. Circuit Denies Rehearing In Long-Running SEC Civil Action

    WASHINGTON, D.C. — Without providing further detail, the District of Columbia Circuit U.S. Court of Appeals on Aug. 28 issued a pair of orders denying a fraudster's petitions for rehearing and rehearing en banc in a long-running Securities and Exchange Commission civil action stemming from the fraudster's involvement in a securities fraud scheme in violation of federal securities law (Paul A. Bilzerian v. Securities and Exchange Commission, No. 18-5109, D.C. Cir., 2020 U.S. App. LEXIS 27643 and 2020 U.S. App. LEXIS 27645).

  • August 31, 2020

    Herbalife To Pay More Than $123M To Settle FCPA Claims With SEC, Justice Department

    WASHINGTON, D.C. — Herbalife Nutrition Ltd. will pay more than $123 million to settle claims brought by the U.S. Department of Justice and Securities and Exchange Commission alleging that the direct selling company violated the books and records provision of the Foreign Corrupt Practices Act (FCPA) by failing to report that its Chinese subsidiary had offered "corrupt payments and improper benefits" to government officials in China, the SEC says in an Aug. 28 order instituting cease-and-desist proceedings pursuant to federal securities law (In the Matter of Herbalife Nutrition Ltd., No. 3-19948, SEC).

  • August 27, 2020

    Investor: COVID-19 Vaccine Developer Engaged In Stock Pump-And-Dump Scheme

    SAN FRANCISCO — An oral vaccine developer and others engaged in a massive pump-and-dump scheme in violation of federal securities laws stemming from the defendants' alleged misrepresentations that the company's COVID-19 oral vaccine candidate had been chosen to take part in the U.S. government's Operation Warp Speed (OWS) program, an investor argues in an Aug. 24 securities class action filed in California federal court (Kirk Himmelberg v. Vaxart Inc., et al., No. 20-5949, N.D. Calif.).

  • August 26, 2020

    Split 9th Circuit Panel Upholds Dismissal Denial In In Rem Forfeiture Action

    PASADENA, Calif. — In a 2-1 ruling, a Ninth Circuit U.S. Court of Appeals panel on Aug. 24 held that a federal district court did not err in denying a Saudi Arabian oil and gas exploration company CEO's motion to dismiss an in rem civil forfeiture action brought by government prosecutors stemming from the CEO's laundering of proceeds from an embezzlement scheme involving a Malaysian investment company (United States v. Tarek Obaid, No. 18-56657, 9th Cir., 2020 U.S. App. LEXIS 26803).

  • August 26, 2020

    Fracking Company Investor: Misrepresentations Constitute Securities Law Violations

    NEW YORK — A shareholder on Aug. 24 filed a putative class action against a hydraulic fracturing services company in New York federal court, alleging violations of federal securities laws as a result of misrepresentations the company made in its financial projections (James Costello v. CNX Midstream Partners LP, et al., No. 20-6820, S.D. N.Y.).

  • August 21, 2020

    Panel Upholds Dismissal Of Investor Claims In Drilling Company Acquisition Suit

    NEW ORLEANS — A federal district court correctly dismissed shareholder claims against a technology provider for the drilling, servicing and completion of wells for the upstream energy industry, its board and the company with which it merged because the lead plaintiff failed to sufficiently state a claim upon which relief may be granted, a Fifth Circuit U.S. Court of Appeals panel ruled Aug. 19 in affirming (Norman Heinze v. Tesco Corp, et al., No. 19-20298, 5th Cir., 2020 U.S. App. LEXIS 26430).

  • August 19, 2020

    Fannie, Freddie Agreement Amendment Does Not Violate HERA, Federal Parties Argue

    WASHINGTON, D.C. — An amendment to an agreement negotiated between the Federal Housing Finance Agency (FHFA) and the U.S. Department of Treasury allowing for the Treasury Department to provide capital to the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac) in the wake of the 2008 financial crisis does not violate the terms of the Housing and Economic Recovery Act (HERA), federal parties argue in a merits brief filed Aug. 17 in the U.S. Supreme Court (Patrick J. Collins, et al. v. Steven T. Mnuchin, et al., No. 19-422, U.S. Sup.).

  • August 19, 2020

    BYU Professor To Brief, Argue For FHFA In High Court Separation Of Powers Appeal

    WASHINGTON, D.C. — The U.S. Supreme Court on Aug. 17 issued an order appointing a Brigham Young University (BYU) law professor to brief and argue as amicus curiae on behalf of the Federal Housing Finance Agency (FHFA) in a consolidated appeal of an investor lawsuit that seeks determination as to whether the agency's structure violates the separation of powers and whether federal courts are required to set aside actions set forth by the FHFA under its current single-director structure (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.).

  • August 17, 2020

    Kodak Sued Over CEO's Stock Trading Related To $765M COVID-19 Loan

    TRENTON, N.J. — An Eastman Kodak Co. shareholder sued the company and two of its senior executives in New Jersey federal court, alleging that the defendants engaged in a scheme to artificially inflate the technology company's stock price relating to a $765 million loan awarded to Kodak under the Defense Production Act (DPA) for the manufacture of pharmaceutical materials used in drugs for the treatment of COVID-19 (Tiandong Tang v. Eastman Kodak Co., et al., No. 20-10462, D. N.J.).

  • August 18, 2020

    Fair Fund Established In Facebook SEC Action; Tax Administrator Appointed

    SAN FRANCISCO — A federal judge in California on Aug. 17 granted a post-judgment motion filed by the Securities and Exchange Commission in an enforcement action against Facebook Inc., establishing a fair fund for $100 million in civil penalties the social media giant agreed to pay as part of a consent of final judgment stemming from Facebook's issuance of misrepresentations to investors concealing misuse of its user data by data analytics company Cambridge Analytica (Securities and Exchange Commission v. Facebook Inc., No. 19-4241, N.D. Calif.).

  • August 14, 2020

    Company's False Report About Groundwater Issues Led To Fraud, Investor Says

    HOUSTON — A shareholder filed a securities fraud lawsuit on Aug. 13 against a hydraulic fracturing operator in Texas federal court, contending that the company made materially false and misleading statements regarding, among other things, its compliance with environmental laws in Pennsylvania where the attorney general had filed a criminal case against the company for groundwater contamination (John Gordon Windler v. Cabot Oil & Gas Corporation, et al., No. 20-2827, S.D Texas).

  • August 14, 2020

    Justice Dismisses Parties From Suit Filed By Insolvent Reinsurer Shareholder

    NEW YORK — Two directors of an insolvent reinsurer and a private equity firm on July 31 were dismissed by a New York justice from a shareholder's breach of fiduciary duty suit (Paul Davis v. Larry Port, et al., No. 654027/2013, N.Y. Sup., New York Co., 2020 N.Y. Misc. LEXIS 4061).

  • August 13, 2020

    Split Panel Rules That Party's Constitutional Challenge Of SEC Action Not Proper

    NEW ORLEANS — A divided Fifth Circuit U.S. Court of Appeals panel on Aug. 11 ruled that parties cannot raise constitutional challenges to a Securities and Exchange Commission  enforcement action in federal court before the end of the agency proceeding, citing its own precedent as well as precedent set by other circuit courts to find that "the statutory review scheme is the exclusive path for asserting a constitutional challenge to SEC proceedings" (Michelle Cochran v. Securities and Exchange Commission, et al., No. 19-10396, 5th Cir., 2020 U.S. App. LEXIS 25525).

  • August 13, 2020

    Dismissal Of Investor Claims In Chipotle E. Coli Outbreak Suit Upheld On Appeal

    NEW YORK — The Second Circuit U.S. Court of Appeals on Aug. 12 ruled that a federal district court applied the correct standard in denying a post-judgment motion to amend its securities class action complaint for a fourth time, rejecting the lead plaintiffs' argument that the district court failed to identify an adequate basis for relief under Federal Rule of Civil Procedure 59(e) or 60(b) (Metzler Investment GmbH, et al. v. Chipotle Mexican Grill Inc., et al., No. 18-3807, 2nd Cir.).

  • August 12, 2020

    Uber's Alleged IPO Document Misstatements Deemed Actionable

    NEW YORK — Dismissal of a shareholder class action lawsuit against on-demand ride and food delivery transportation company Uber Technologies Inc. and others is not proper because a lead plaintiff sufficiently pleaded its federal securities law claims in alleging that the defendants failed to disclose material facts pertaining to the company's business model and financial condition and the safety of passengers in offering documents for Uber's initial public offering (IPO), a federal judge in California ruled Aug. 7 (Boston Retirement System, et al. v. Uber Technologies Inc., et al., No. 19-6361, N.D. Calif., 2020 U.S. Dist. LEXIS 141724).

  • August 11, 2020

    Investor Claims In WWE Securities Class Action Suit Survive Dismissal Bid

    NEW YORK — A federal judge in New York on Aug. 6 ruled that the lead plaintiff in a securities class action lawsuit against sports entertainment and media giant World Wrestling Entertainment Inc. (WWE) and certain of its current and former senior executives has sufficiently pleaded that the defendants issued material misrepresentations or omissions pertaining to its media contracts in the Middle East and North Africa (MENA) region in violation of federal securities laws (City of Warren Police & Fire Retirement System v. World Wrestling Entertainment Inc., No. 20-2031, S.D. N.Y., 2020 U.S. Dist. LEXIS 140925).

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