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Mealey's Securities

  • March 8, 2019

    Demand Futility Sufficiently Pleaded In Derivative Suit, Investor Argues

    NEW YORK — An investor in a shareholder derivative lawsuit has sufficiently pleaded demand futility and shown that a majority of a Chinese automotive manufacturing company’s directors face a substantial likelihood of liability for their role in an electric vehicle (EV) subsidy scheme, the investor argues in a March 5 opposition brief in New York federal court, opposing a motion to dismiss filed by the defendants in the action (Richard Baker v. Xiaoming Hu, et al., No. 17-4399, S.D. N.Y.).

  • March 6, 2019

    $93M Civil Penalty In Insider Trading Suit Against Former Galleon Partner Upheld

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on March 5 ruled that a federal district court did not err in interpreting federal securities law when it ordered a former Galleon Management Co. general partner to pay a nearly $93 million civil penalty for his role in an insider trading scheme (Securities and Exchange Commission v. Raj Rajaratnam, No. 11-5124, 2nd Cir., 2019 U.S. App. LEXIS 6640).

  • March 6, 2019

    Panel: Cigna’s Medicare Compliance Statements Not Material In Stock-Drop Suit

    NEW YORK — A federal district court properly determined that the lead plaintiff in a securities class action lawsuit against health insurance provider Cigna Corp. and certain of its senior executives failed to sufficiently allege any material misrepresentations in arguing that the defendants’ statements regarding Cigna’s compliance with Medicare requirements violated federal securities laws, a Second Circuit U.S. Court of Appeals panel ruled March 5 (Minohor Singh v. Cigna Corp., et al., No. 17-3484, 2nd Cir., 2019 U.S. App. LEXIS 6637).

  • March 5, 2019

    Judge Rejects Defendants’ Reconsideration Bid In Securities Class Action

    CHICAGO — A federal judge in Illinois on Feb. 13 ruled that an automotive part recycler and two of its senior executives failed to show that the judge erred in relating allegations made in a shareholder’s amended complaint back to the filing of her original complaint in a securities class action lawsuit (Amanda Beezley, et al. v. Fenix Parts Inc., et al., No. 17-7896, N.D. Ill., 2019 U.S. Dist. LEXIS 25459).

  • March 5, 2019

    Panel’s Ruling In Securities Class Action Erroneous, Defendants Argue

    WASHINGTON, D.C. — The Ninth Circuit U.S. Court of Appeals erred in determining that an inferred private right of action is supported  by Section 14(e) of the Securities Exchange Act of 1934 based on mere negligence, a company argues in a Feb. 19 petitioner’s brief filed in the U.S. Supreme Court (Emulex Corp., et al. v. Gary Varjabedian, et al., No. 18-459, U.S. Sup., 2019 U.S. S. Ct. Briefs LEXIS 613).

  • March 5, 2019

    Panel Overturns Dismissal Ruling In Securities Lawsuit Over Merger Deal

    ST. LOUIS — A federal district court erred in dismissing an amended shareholder complaint against a biotech company and others because the shareholder has sufficiently shown that the company’s omission of income/loss information in the proxy statement issued as part of its proposed merger plans may have been material to shareholders’ decision to vote in favor of the merger deal, an Eighth Circuit U.S. Court of Appeals panel ruled March 1 (Jesse Campbell v. Transgenomic Inc., et al., No. 18-2198, 8th Cir., 2019 U.S. App. LEXIS 6301).

  • March 4, 2019

    Investors Seek Approval Of $240M Settlement In Wells Fargo Derivative Suit

    SAN FRANCISCO — The co-lead plaintiffs in a shareholder derivative lawsuit against 20 Wells Fargo & Co. officers and directors asked a federal judge in California in a Feb. 28 motion to grant preliminary approval of a proposed $240 million settlement, claiming that the proposed settlement is fair, reasonable and accurate (In re Wells Fargo & Co. Shareholder Derivative Litigation, No. 16-5541, N.D. Calif.).

  • February 28, 2019

    Judge: Investor Failed To Plead Securities Law Claims In Stock Drop Suit

    NEW YORK — A federal judge in New York on Feb. 26 ruled that the 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 show that the defendants issued material misrepresentations or acted with the requisite scienter in allegedly failing to disclose the impact of a major algorithm change to its hotel search platform in violation of federal securities laws (Anthony Holbrook v. Trivago N.V., et al., No. 17-8348, S.D. N.Y., 2019 U.S. Dist. LEXIS 30700).

  • February 28, 2019

    Defendants: Shareholder Suit Properly Dismissed For Failure To State Claim

    SAN FRANCISCO — A federal district court did not err in dismissing a securities class action lawsuit against a developer and manufacturer of electronic design automation (EDA) products and certain of its senior executives because the lead plaintiff in the action failed to state a claim for relief in making its federal securities law claims, the defendants argue in a Feb. 25 appellee brief filed in the Ninth Circuit U.S. Court of Appeals (Western Pennsylvania Electrical Employees Pension Fund v. Mentor Graphics Corp., et al., No. 18-35693, 9th Cir.).

  • February 28, 2019

    Lawyer’s Money-Laundering Conviction For Role In Securities Fraud Scheme Upheld

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on Feb. 27 ruled that vacating the conviction of an attorney convicted of money laundering as part of his role in a securities fraud scheme is unwarranted, rejecting each of the defendant’s arguments on appeal (United States v. Jonathan P. Flom, No. 17-2440-cr, 2nd Cir., 2019 U.S. App. LEXIS 5831).

  • February 27, 2019

    District Court Erred In Dismissing Mattel Stock-Drop Suit, Investor Argues

    SAN FRANCISCO — A federal district court erred in dismissing a shareholder class action lawsuit against toy maker Mattel Inc. and certain of its current and former executive officers for failure to plead falsity with the requisite particularity and scienter because the lead plaintiff sufficiently claimed that the defendants issued material misrepresentations concealing their involvement in a channel-stuffing scheme, the lead plaintiff argues in a Feb. 25 appellant brief filed in the Ninth Circuit U.S. Court of Appeals (Waterford Township Police and Fire Retirement System, et al. v. Mattel Inc., et al., No. 18-56361, 9th Cir.).

  • February 26, 2019

    Panel Declines To Rehear Appeal Of Summary Judgment Ruling In SEC Action

    SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel issued a pair of orders on Feb. 22, denying a defendant’s petition for rehearing, as well as his motion for a stay of the petition pending resolution of an appeal of a related criminal action, in an appeal of a summary judgment ruling in favor of the Securities and Exchange Commission in an enforcement action (Securities and Exchange Commission v. Mitchell Jay Stein, No. 15-55506, 9th Cir., 2019 U.S. App. LEXIS 5101 and 2019 U.S. App. LEXIS 5102).

  • February 25, 2019

    Bank, Insurer Dismiss Breach Of Contract Case Against Underwriters

    NEW YORK — A bank and an insurer on Feb. 21 voluntarily dismissed without prejudice their New York federal court lawsuit accusing underwriters of breaching a reinsurance contract regarding coverage for alleged breaches of securities lending agreements (Wells Fargo Bank N.A., et al. v. Lloyd’s Syndicate AGM 2488, et al., No. 18-12122, S.D. N.Y.).

  • February 20, 2019

    2nd Circuit Asked To Overturn Class Certification Ruling In Stock-Drop Case

    NEW YORK — A federal district court erred in certifying a class of investors in securities class action lawsuit against Goldman Sachs Group Inc. and certain of its executive officers by making an “unprecedented and incorrect” decision to expand the price maintenance theory in holding that the defendants failed to rebut the Basic Inc. v. Levinson presumption of reliance, the defendants argue in a Feb. 15 appellant brief filed in the Second Circuit U.S. Court of Appeals (Arkansas Teachers Retirement System, et al. v. Goldman Sachs Group Inc., et al., No. 18-3667, 2nd Cir.).

  • February 20, 2019

    Panel Affirms Dismissal Of Securities Law Claims Against Firm, Others

    CHICAGO — A federal district court did not err in dismissing a securities fraud lawsuit brought by 39 former employees of a diversified alternative asset and risk management firm, the holding company that owned their employer and certain members of the employer’s senior management team because the plaintiffs failed to sufficiently state a claim for relief, a Seventh Circuit U.S. Court of Appeals panel ruled Feb. 13 (Kurt V. Cornielsen, et al. v. Infinium Capital Management LLC, et al., No. 17-2583, 7th Cir., 2019 U.S. App. LEXIS 4358).

  • February 14, 2019

    Judge Abused Discretion In Dismissing Securities Class Action, Investor Argues

    NEW YORK — A federal judge abused his discretion in dismissing federal securities law claims against a provider of high technology products and services to the building and aerospace industries based on pre-motion letters and an earlier motion to dismiss to which the lead plaintiff had responded by filing an amended complaint, the lead plaintiff argues in a Feb. 7 appellant brief filed in the Second Circuit U.S. Court of Appeals (Kapitalforeningen Lægernes Invest v. United Technologies Corp., et al, No. 18-3208, 2nd Cir.).

  • February 14, 2019

    Defendants: Court Properly Dismissed Pro Se Investor’s Securities Fraud Suit

    NEW YORK — A federal district court did not err in dismissing an investor’s securities fraud lawsuit against a gas and oil company, certain of its former executive officers and directors, its financiers and others because the investor failed to sufficiently plead that the defendants made material misrepresentations regarding the company’s business and financial condition in violation of federal securities law, the defendants argue in a Feb. 8 appellee/cross-appellant brief filed in the Second Circuit U.S. Court of Appeals (Morgan P. Cartwright v. Dominick D’Alleva, et al., No. 18-2817, 2nd Cir.).

  • February 14, 2019

    Court’s Reliance Ruling In Securities Class Action Was Proper, Investors Argue

    PHILADELPHIA — A federal district court did not abuse its discretion in ruling that a pharmaceutical company and certain of its senior executives failed to rebut the presumption of reliance in attempting to show that their alleged misrepresentations pertaining to the likelihood of U.S. Food and Drug Administration approval of the company’s adult growth hormone deficiency (AGHD) drug had no price impact on the drug maker’s stock, lead plaintiffs argue in a Jan. 16 appellee brief filed in the Third Circuit U.S. Court of Appeals (Aeterna Zentaris Inc., et al. v. Gregory Vizirgianakis, et al., No. 18-2474, 3rd Cir.).

  • February 14, 2019

    Investor Hits Tesla With Derivative Suit Over Musk’s Tweets

    WILMINGTON, Del. — Tesla Inc.’s board of directors breached their fiduciary duty and violated federal securities laws by failing to properly oversee the actions and communications of CEO Elon Musk, an investor argues in a shareholder derivative complaint filed Feb. 11 in Delaware federal court (Melvyn Klein v. Elon Musk, et al., No. 19-0298, D. Del.).

  • February 14, 2019

    Motion To Compel Denied In Securities Class Action

    HARRISBURG, Pa. — The lead plaintiff in a securities class action against a financial institution, its parent holding company and others has failed to show that it exhausted its administrative remedies before bringing a motion to compel the production of protected documents, a federal judge in Pennsylvania ruled Feb. 12 (Southeastern Pennsylvania Transportation Authority v. Orrstown Financial Services Inc., et al., No. 12-0993, M.D. Pa., 2019 U.S. Dist. LEXIS 22436).

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