Mealey's Securities : Mealey's : Legal News & Analysis

Mealey's Securities

August 17, 2023
Former SEC Officials, Nonprofit File As Amici, Supporting Traders To High Court

WASHINGTON, D.C. — A group consisting of scholars and former SEC officials, along with a nonprofit litigation advocacy organization, filed separate amicus curiae briefs encouraging the Supreme Court to grant a petition for a writ of certiorari filed by three municipal bond traders found to be unregistered brokers as a result of a suit filed by the U.S. Securities and Exchange Commission, with the former arguing that a Supreme Court decision could provide more guidance on how the SEC determines penalties and the latter claiming that an appeals court decision abandons previous court precedent for determining obligation to register as a broker.
August 17, 2023
Amici Railroad Association, Others Support Employer In SOX Whistleblower Appeal

WASHINGTON, D.C. — The American Association of Railroads is one of the latest groups to file an amicus curiae brief in the U.S. Supreme Court in support of an employer in an appeal over the showing of intent in a Sarbanes-Oxley Act’s (SOX) whistleblower protection case.
August 16, 2023
9th Circuit Denies Full Court Rehearing In The Gap Shareholder Forum Dispute

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals denied a petition for rehearing en banc by the full court filed by shareholder in The Gap Inc. in a dispute over statements made regarding diversity after the limited en banc court issued a split opinion on the proper forum for the case and ability to bring a derivative action.
August 16, 2023
Hedge Fund Manager Takes 1st Amendment Claims In SEC Case To Supreme Court

WASHINGTON, D.C. — A hedge fund manager who was found by a jury to be liable for false statements he made about a biotechnology company after an investigation by the U.S. Securities and Exchange Commission filed a petition for a writ of certiorari before the U.S. Supreme Court, arguing that the statements he made were protected by the First Amendment to the U.S. Constitution and that the trial court and appeals court made decisions that run counter to the First Amendment.
August 16, 2023
Federal Judge Rules SEC Can Argue Crypto Is Security In Case Against Singapore Firm

NEW YORK — A federal judge in New York denied a cryptocurrency firm’s motion to dismiss a complaint filed against it by the U.S. Securities and Exchange Commission wherein the SEC alleges that the firm schemed to defraud investors, finding that the SEC is within its authority to argue that cryptocurrencies are securities.
August 15, 2023
Artificial Intelligence ‘Ecosystem’ Was Just A Pyramid Scheme, SEC Says

ORLANDO, Fla. — A man lured investors with promises of early access to profits from an artificial intelligence “ecosystem,” but promised applications were never developed and the arrangement was nothing more than a multilevel marketing scheme, the Securities and Exchange Commission alleges in a complaint filed in Florida federal court.
August 15, 2023
5th Circuit: Investors Fail To Show ‘Ostensible Fraudulent Activity’ By Company

NEW ORLEANS — A panel of the Fifth Circuit U.S. Court of Appeals has affirmed a lower court’s dismissal of investors’ claims of securities fraud, ruling that a Form 10-Q for the defendant, which the investors said showed fraud, “contain no ostensible fraudulent activity.”
August 14, 2023
Federal Judge Denies Motion To Dismiss Securities Claim Against Software Firm

BOSTON — A federal judge in Massachusetts denied a motion to dismiss a complaint filed by a group of investors who claim that they were misled by a software company that was ordered in a separate case to pay $2 billion to a competitor for misappropriating trade secrets when it told the investors that the competitor’s claims were without merit.
August 11, 2023
Musk Denied Rehearing By 2nd Circuit In SEC Consent Decree Challenge

NEW YORK — The Second Circuit U.S. Court of Appeals in a two-sentence order denied a petition for rehearing or rehearing en banc filed by Elon Musk after the panel affirmed a trial court’s ruling finding that a consent decree between Musk and the U.S. Securities and Exchange Commission regarding Musk’s communications about his company on social media should not be modified or terminated.
August 10, 2023
Former SEC Counsel Files Amicus Brief To High Court Regarding Removal Abilities

WASHINGTON, D.C. — Andrew Vollmer, former deputy general counsel for the U.S. Securities and Exchange Commission and current research scholar, filed an amicus curiae brief with the U.S. Supreme Court in support of neither party in a securities fraud case involving a hedge fund manager, arguing that the Fifth U.S. Circuit Court of Appeals erred when it suggested that SEC commissioners do not serve at the pleasure of the president.
August 10, 2023
3rd Circuit: No Double Jeopardy In Criminal Case After Securities Disgorgement

PHILADELPHIA — A Tennessee securities broker-dealer who was disgorged of ill-gotten gains in a civil securities case failed to show that a criminal prison sentence and an order to pay restitution for transferring assets from a company pension plan into his accounts violated the double jeopardy clause of the Fifth Amendment to the U.S. Constitution, a Third Circuit U.S. Court of Appeals panel ruled.
August 09, 2023
Employer To U.S. High Court: Retaliatory Intent Required In SOX Whistleblower Suit

WASHINGTON, D.C. — An employee suing his employer under the Sarbanes-Oxley Act’s (SOX) whistleblower protection provision must prove retaliatory intent according to the plain language of that section, the employer tells the U.S. Supreme Court in a respondent brief filed Aug. 8.
August 08, 2023
SEC Adopts New Rules On Cybersecurity Management, Reporting

WASHINGTON, D.C. — The U.S. Securities and Exchange Commission has announced the adoption of new rules that will require registrants to disclose material cybersecurity incidents and to make annual reports on information regarding cybersecurity risk management, along with their strategy and governance.
August 08, 2023
Panel Affirms Penalty Related To Cannabis Investments That Went Up In Smoke

SAN FRANCISCO — A split panel of the Ninth Circuit U.S. Court of Appeals has affirmed a lower court’s award of $654,042.83 against a man who defrauded investors through the sale of sale of unregistered and fictitious securities in a cannabis company, ruling that the award was not an abuse of discretion.
August 07, 2023
Investors Say Company Officers Misrepresented Fracking, Committed Securities Fraud

HOUSTON — Investors have filed a consolidated stockholder derivative lawsuit in Texas state court arguing that the directors of a hydraulic fracturing company “drastically overstated the value of the resources” in a shale play known as the Alpine High when they made public statements to the market that are now being litigated in a separate-but-related securities fraud class action. The plaintiffs in the case at hand seek relief for breach of fiduciary duty.
August 04, 2023
9th Circuit Reverses FCA Dismissal, Says Public Disclosure Bar ‘Not Triggered’

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals on Aug. 3 reversed and remanded an order dismissing a relator’s qui tam suit alleging violations of the federal False Claims Act (FCA) against pharmaceutical companies related to their alleged fraud by artificially inflating drug prices, finding that the suit was not precluded by the public disclosure bar because none of the public disclosures “made a direct claim” that the pharmaceutical companies committed fraud.
August 02, 2023
Bankruptcy Movement Disclosure A Must, Asbestos Securities Plaintiffs Say On Appeal

NEW YORK — Having made representations to investors about the “smooth sailing” resulting from its liquidity and financial flexibility, the law obligated an automotive company spun off by Honeywell Inc. and burdened with its asbestos liabilities to disclose the active steps it was taking toward bankruptcy, investors told the Second Circuit U.S. Court of Appeals in an Aug. 1 opening brief.
July 27, 2023
Class Suit Accuses Company Of Misstating Growth Of COVID-19 Related Businesses

WASHINGTON, D.C. — A company that manufactures and distributes diagnostic test and research tools that were used in the effort to combat the coronavirus hid information regarding the severity of its revenue decline as the COVID-19 pandemic subsided, an investor alleges in a putative class complaint filed in federal court in the District of Columbia.
July 26, 2023
Split 2nd Circuit Reverses Decision Barring RICO Claims In $162M Estate Dispute

NEW YORK — A split Second Circuit U.S. Court of Appeals reversed and remanded a district court’s decision that barred a woman’s Racketeer Influenced and Corrupt Organizations (RICO) Act claims in her suit alleging that her brother looted their father’s estate of more than $162 million in assets, finding that the woman’s claims are not barred by the RICO amendment because the alleged conduct did not involve buying or selling securities.
July 25, 2023
Summary Judgment Partially Granted In SEC’s Suit Against Digital Asset Firm

NEW YORK — A federal magistrate judge in New York directed the Securities and Exchange Commission and a digital asset firm accused of offering or selling billions of units of its digital token as securities without registering them to provide “three mutually convenient dates to schedule a settlement conference if they believe it would be productive”; the order came five days after a federal judge determined that the “Institutional Sales . . . constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act.”
July 20, 2023
Tesla Directors To Return $735M In Options, Cash To End Shareholder’s Suit

WILMINGTON, Del. — A Delaware Chancery Court judge on July 19 scheduled a settlement hearing for Oct. 13 in a shareholder derivative suit against Tesla Inc. directors after the parties reached an agreement under which the directors will provide more than $735 million in returned options and returned cash and/or stock.
July 19, 2023
Judge In Securities Fraud Case: Investors’ Losses Not Tied To Defendants’ Actions

BROOKLYN, N.Y. — A New York federal judge on July 18 ruled that investors’ losses “cannot be attributed to defendants’ behavior” in an alleged scheme involving a reinsurer that led to former hedge fund executives’ convictions for securities fraud and conspiracy to commit securities fraud.
July 17, 2023
Panel Reinstates Putative Class Claims In Securities Row With Poultry Producer

DENVER — A federal judge in Colorado wrongly declared a putative class action on behalf of investors in a company accused of conspiring with others to fix the supply and price of broiler chickens barred by the five-year statute of repose for securities actions, the 10th Circuit U.S. Court of Appeals ruled.
July 14, 2023
High Court Denies Petition For Review Of Disgorgement Order Ruling In Light Of Liu

WASHINGTON, D.C. — The U.S. Supreme Court denied investors’ petition seeking review of a Fifth Circuit U.S. Court of Appeals’ finding that defendants in a Securities and Exchange Commission enforcement action were not impermissibly denied their right to a live evidentiary hearing challenging the SEC’s calculation of disgorgement and civil penalty amounts, where the investors argued that both the district and appellate courts’ rulings are not in compliance with the Supreme Court’s ruling in Liu v. SEC.
July 14, 2023
Bifurcated Settlement Granted For 1 Defendant In SEC Suit Over Alleged Fraud

DURHAM, N.C. — A North Carolina federal judge has approved a bifurcated settlement that the U.S. Securities and Exchange Commission negotiated with one of three defendants in a civil suit over a former investment advisory firm’s alleged “series of fraudulent and improper schemes” that defrauded clients of more than $75 million.