Mealey's Securities
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November 09, 2023
7th Circuit Affirms Dismissal, Says Shareholders Not Entitled To Tax-Free Deal
CHICAGO — A Seventh Circuit U.S. Court of Appeals panel affirmed a Wisconsin federal court’s dismissal of a class complaint filed by shareholders of a Wisconsin company after its merger incurred capital gains taxes for the shareholders, finding that the investors’ arguments “boil down to a demand for a better deal than the one they received” but failed to show that the company made misleading statements in a proxy statement with details about the merger.
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November 09, 2023
9th Circuit Hears Arguments In Stockholders’ Pump-And-Dump Case
PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals heard oral arguments in an appeal by Genius Brands International Inc. stockholders who argue that their case accusing the company and its CEO of using “misleading tactics” to drive up stock prices was improperly dismissed.
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November 09, 2023
Federal Judge Moots Motion To Dismiss From AI Startup In SEC ‘Pyramid Scheme’ Suit
ORLANDO, Fla. — A federal judge in Florida dismissed as moot a motion to dismiss filed by a man who the Securities and Exchange Commission alleges lured investors with promises of early access to profits from an artificial intelligence “ecosystem” in what was nothing more than a multilevel marketing scheme after the SEC filed an amended version of its complaint.
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November 09, 2023
Class Certification Granted In Exchange Act Suit Related To Teva FCA Violations
PHILADELPHIA — A Pennsylvania federal judge granted class certification in a putative class action alleging that Teva Pharmaceuticals Industries Ltd. and its executives violated the Securities Exchange Act by artificially raising the price of its stock and concealing information about the multiple sclerosis drug Copaxone, the subject of a False Claims Act (FCA) suit alleging that Teva engaged in a kickback scheme that increased the price of the drug, finding that the lead plaintiff satisfied the standards for class certification, including numerosity, typicality, commonality and adequacy.
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November 08, 2023
Shareholder Companies Say Tech CEO Must Disgorge Short Swing Profits
NEW YORK — Two companies that invested in a travel technology company have filed an insider trading complaint in the U.S. District Court for the Southern District of New York against the company’s CEO, seeking disgorgement of short swing profits the companies say the CEO made as a result of a large sale of stocks in the company in June.
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November 07, 2023
SEC: Hedge Fund, Manager’s 1st Amendment Arguments Fail In Certiorari Bid
WASHINGTON, D.C. — The U.S. Supreme Court should deny a petition for a writ of certiorari filed by a hedge fund and its manager found liable for false statements about a biotechnology company, the Securities and Exchange Commission writes in its respondent brief, arguing the hedge fund and manager’s arguments based on the First Amendment to the U.S. Constitution are meritless and made for the first time in the petition.
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November 07, 2023
Investor Says Company Tasked With Relocating New York Migrants Lied About Services
NEW YORK — A mobile health and transportation company charged with overseeing a recently implemented migrant relocation program in New York City made misleading claims about the efficacy of its services that damaged investors after reporting from outlets around the state, an investor in the company claims in a putative class complaint.
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November 06, 2023
Amici Say In D.C. Circuit FINRA Is Subordinate To SEC In Enforcement Dispute
WASHINGTON, D.C. — Several amicus curiae briefs filed Nov. 3 in the District of Columbia Circuit U.S. Court of Appeals reiterate arguments made by the Financial Industry Regulatory Authority (FINRA) and the United States that FINRA is not subject to the appointment and removal requirements under the U.S. Constitution because it is a private, non-government entity and oppose arguments by a securities broker who says that FINRA operates with the power of a government authority but no constraints.
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November 03, 2023
Federal Judge OKs Settlement Forming Oversight Groups In Derivative Complaint
MINNEAPOLIS — A federal judge in Minnesota granted final approval of a settlement of a shareholder derivative complaint filed against a technology company by investors, the terms of which include the creation of oversight committees aiming to prevent future errors similar to the alleged misstatements about the company’s financial position after it was spun off from a parent company that were the target of the complaint.
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November 03, 2023
5th Circuit Rules SEC Can Enact Nasdaq Rule Requiring Disclosure Of Board Makeup
NEW ORLEANS — The Securities and Exchange Commission has the right to approve a rule implemented by the Nasdaq Stock Market LLC that requires companies listed on the exchange to publicly disclose information about the race and gender identity of their board members, a panel of the Fifth Circuit U.S. Court of Appeals found, denying a petition from two entities who argued that Nasdaq is a state actor bound by the U.S. Constitution.
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November 03, 2023
2nd Circuit Vacates SEC Disgorgement, Orders Determination Of Pecuniary Harm
NEW YORK — A Second Circuit U.S Court of Appeals panel vacated a disgorgement against the founder of a technology company who allegedly caused the company to engage in fraudulent security offerings, finding that a New York federal court abused its discretion when granting additional disgorgements requested by the Securities and Exchange Commission on top of securities he had already surrendered, with the panel saying the record does not establish that defrauded investors were “victims.”
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November 03, 2023
Federal Judge Denies Summary Judgment In SEC Pump-And-Dump Enforcement Action
NEW YORK — A federal judge in New York denied a motion for summary judgment filed by the two remaining defendants in an enforcement action brought by the Securities and Exchange Commission against board members and executives of a consumer electronics retail store whom the commission accused of running a pump-and-dump scheme with the company’s own stocks, with the judge finding that there is a dispute of material facts.
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November 03, 2023
2 Executives Settle In Securities Case Involving Greek Gas Company
NEW YORK — A federal judge in New York granted final approval of two class settlements, one by a Greek billionaire who founded a marine fuel logistics company and one by the company’s former chief executive officer, both with a retirement fund that accused the company and certain of its executives of defrauding investors over an eight-year period by overstating its income by manipulating financial results with hundreds of millions of dollars in fake transactions.
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November 03, 2023
Appeal Over COVID ‘Cure’ Claims To Continue Without Manufacturer After Bankruptcy
PASADENA, Calif. — An investor’s appeal of a federal judge’s dismissal of his putative class complaint against a pharmaceutical company and certain of its executives accusing them of falsely claiming that its COVID-19 treatment was a “cure” will proceed in the Ninth Circuit U.S. Court of Appeals without the pharmaceutical company after a clerk’s order lifted the automatic stay in the case initiated after the company’s bankruptcy.
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October 31, 2023
Supreme Court Denies Amicus Request To Argue In SEC Enforcement Case
WASHINGTON, D.C. — The U.S. Supreme Court on Oct. 30 denied a motion to participate in oral arguments from a group of administrative law scholars who sought to argue that the high court should uphold express limits on administrative law judges (ALJs) as set forth in the Administrative Procedure Act (APA) in a hedge fund manager’s appeal of a Securities and Exchange Commission enforcement action against him.
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October 30, 2023
Supreme Court Denies Certiorari To Unregistered Brokers Fighting SEC Penalties
WASHINGTON, D.C. — The U.S. Supreme Court on Oct. 30 denied a petition for a writ of certiorari filed by three municipal bond traders who were found to be unregistered brokers, refusing to review whether civil penalties leveled by the Securities and Exchange Commission “vastly exceed[ed] the ostensible statutory caps set by Congress.”
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October 26, 2023
SEC Drops Aiding And Abetting Claims Against Crypto Firm Executives
NEW YORK — A federal judge in New York approved a stipulation of voluntary dismissal filed by the Securities and Exchange Commission, dismissing claims of aiding and abetting against two executives of a crypto asset firm the commission accused of selling cryptocurrencies without registering them as a security.
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October 26, 2023
Investors’ Suit Alleging Facebook Lied About User Data Partially Revived
SAN FRANCISCO — A split panel in the Ninth Circuit U.S. Court of Appeals revived some of the claims made by investors in a suit against the former Facebook Inc. alleging that the company misled investors about privacy and data protection, finding that the investors had adequately pleaded that news about Cambridge Analytica and a practice known as “whitelisting” had contributed to two stock drops in 2018.
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October 24, 2023
Fracking Operator: Shareholder Case Fails, Does Not Plead Particularized Facts
HOUSTON — A hydraulic fracturing operator and three of its senior executives filed an answer in Texas federal court denying class action claims brought by shareholders who contend that the company and its officers violated federal securities laws. The defendants also argue that the complaint fails to satisfy the requirements of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act (PSLRA) by not pleading particularized facts showing that the defendants made material misstatements.
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October 24, 2023
Federal Judge Can’t Say Trader Is Investment Adviser, Denies SEC Summary Judgment
CHARLOTTE, N.C. — A federal judge in North Carolina dismissed a request for partial summary judgment filed by the Securities and Exchange Commission in its case against a trader it accuses of making fraudulent conflict-of-interest transactions with a private fund he managed, saying the court cannot determine at the current stage of proceedings whether the trader qualifies as an investment adviser under the Investment Advisers Act of 1940.
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October 24, 2023
1st Circuit Revives Investors’ Suit Claiming Falsehoods About Alzheimer’s Drug
BOSTON — A panel of the First Circuit U.S. Court of Appeals partly reversed a federal judge’s dismissal of a complaint brought by a group of investors who claimed that a pharmaceutical manufacturer and certain of its executives concealed data about an Alzheimer’s disease drug’s clinical trials, finding that the investors adequately alleged scienter regarding a single claim allegedly made by one of the executives.
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October 20, 2023
West Virginia, Others Say In Amicus Brief SEC ALJs Wield Unsupervised Power
WASHINGTON, D.C. — The Securities and Exchange Commission’s use of administrative law judges (ALJs) with protections from for-cause removal is a “trifecta” of violations of articles in the U.S. Constitution, according to West Virginia and 17 other states who filed an amicus brief before the U.S. Supreme Court in support of a hedge fund manager who appealed an SEC enforcement action against him.
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October 17, 2023
9th Circuit Denies Rehearing For Man Who Sold Fake Cannabis Securities
SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals rejected a petition for rehearing or rehearing en banc filed by a man who was found to have defrauded investors through the sale of unregistered and fictitious securities in a cannabis company after the panel upheld a lower court’s award of $654,042.83 against the man.
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October 16, 2023
Split 9th Circuit Panel Rules Investor Not A Party, Lacks Jurisdiction For Appeal
SAN FRANCISCO — A split panel of the Ninth Circuit U.S. Court of Appeals dismissed an appeal of an investor who filed the initial complaint alleging that a digital health care company and three of its former executives made misleading statements about a new product, finding that the investor lacked jurisdiction as he was no longer a party to the complaint after a retirement fund was named the lead plaintiff.
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October 16, 2023
Supreme Court Grants Certiorari In 2nd Challenge To Chevron Deference
WASHINGTON, D.C. — The U.S. Supreme Court on Oct. 13 granted a petition for a writ of certiorari in a second case challenging the doctrine of Chevron deference and ordered that it be briefed on a schedule allowing argument “in tandem” with a pending case pertaining to the same issue, both of which involve challenges to regulations that require fishing vessels to pay federal monitors.