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

Mealey's Securities

June 29, 2023
Employee To High Court: SOX Whistleblower Case Doesn’t Require Retaliatory Intent

WASHINGTON, D.C. — An employee who brings a case against an employer under the Sarbanes-Oxley Act’s (SOX) whistleblower protection provision must prove only that the protected activity contributed to “the unfavorable personnel action alleged in the complaint” and is not required to prove “retaliatory intent,” a strategist who alleges that he was wrongly fired argues in his petitioner brief in the U.S. Supreme Court.
June 28, 2023
Tesla Investors Not Entitled To New Trial Or Judgment As A Matter Of Law

SAN FRANCISCO — An individual investor who filed a securities class action against Tesla Inc. CEO Elon Musk and others over Musk’s tweets regarding taking the technology company private is not entitled to judgment as a matter of law or a new trial because there was substantial evidence to support a finding that Musk’s tweets were not materially false, a California federal judge found in denying the investors motion.
June 28, 2023
$1.75M Civil Penalty In Shell Company Case Reversed, More Consideration Ordered

PASADENA, Calif. — A divided Ninth Circuit U.S. Court of Appeals panel reversed a trial court’s grant of summary judgement on the amount of a civil penalty in a case over the creation and sale of publicly traded shell corporations, finding that the individual who helped create the companies and directed the preparation of Securities and Exchange Commission filings raised genuine issues of material fact concerning his pecuniary gains, scienter and his remorse.
June 23, 2023
9th Circuit Affirms Charles Schwab Robo-Adviser Suit Precluded By SLUSA

SAN FRANCISCO — A putative class complaint by Charles Schwab Investment Advisory Inc. and Charles Schwab Corp. (together, Charles Schwab) customers who allege that the use of robo-advisers in the handling of their assets harmed their investments is barred by the Securities Litigation Uniform Standards Act (SLUSA), a Ninth Circuit U.S. Court of Appeals panel ruled, affirming a trial court’s order.
June 21, 2023
Texas High Court Grants Insurers’ Petition To Review $220M SEC Fraud Coverage Suit

AUSTIN, Texas — The Texas Supreme Court granted insurers’ petition for writ of mandamus seeking reversal of a lower court’s denial of their motion for summary judgment in an insured’s lawsuit seeking directors and officers liability insurance coverage for an underlying $220 million securities class action settlement.
June 21, 2023
Company: Court Should Deny Class Certification Bid In Fracking Securities Case

HOUSTON — A hydraulic fracturing company has filed a brief in Texas federal court arguing that it should not grant class certification in a securities fraud lawsuit because the company has rebutted the presumption of classwide reliance by demonstrating a lack of price impact as to the alleged misrepresentations at issue.
June 21, 2023
High Court Won’t Review Materiality Finding In Security Fraud Conviction

WASHINGTON, D.C. — The U.S. Supreme Court on June 20 denied a former trader’s petition that sought review of his conviction for conspiracy to commit securities and wire fraud wherein the former trader argued that misrepresentations about the price a security was bought and could be sold for were not material.
June 20, 2023
Consent Order Keeps Crypto Assets In U.S. Pending Outcome Of SEC’s Securities Case

WASHINGTON, D.C. — A District of Columbia federal judge entered a consent order that keeps in the United States assets of cryptocurrency customers of Binance Holdings Ltd. and related entities and individuals pending resolution of the Securities and Exchange Commission’s civil litigation alleging that the defendants are violating securities laws.
June 20, 2023
Government, Defendants Debate Ciminelli In Securities Fraud Case

BROOKLYN, N.Y. — In New York federal court filings, former hedge fund executives are arguing that the U.S. Supreme Court’s recent decision in Ciminelli v. United States requires vacation of their convictions for securities fraud and other crimes in an alleged scheme involving a reinsurer, while the government contends that the decision “has no application to this case.”
June 16, 2023
High Court Seeks Response In Dispute Regarding Application Of Bespeaks Caution Doctrine

WASHINGTON, D.C. — The U.S. Supreme Court is seeking an investor’s response by July 24 to a company’s petition seeking review of a Ninth Circuit U.S. Court of Appeals ruling that overturned the dismissal of claims in a proposed class action against the company and others for alleged misrepresentations they made in social media posts soliciting investment in funds the company managed.
June 16, 2023
SEC, Crypto Asset Businesses Seek Agreement In Case Alleging Unlawful Sales

WASHINGTON, D.C. — The Securities and Exchange Commission and businesses it has accused of engaging in multiple unregistered offers and sales of crypto asset securities and other investment schemes filed a joint status report in a federal court in the District of Columbia on June 15 stating that they are “working towards an agreement relating to a proposed Consent Order.”
June 15, 2023
Settlement Preliminarily Approved In Stockholders’ Case Over Alleged Bribery Scheme

CHICAGO — An Illinois federal judge preliminarily approved a $173 million settlement of a class action in which an energy provider is alleged to have bribed state officials to enact legislation that was favorable to itself, thereby damaging its shareholders by causing the company’s stock price to fall.
June 15, 2023
SEC: Coinbase Operates Crypto Trading Platform As Unregistered Securities Broker

NEW YORK — The Securities and Exchange Commission has sued Coinbase Inc. and its holding company in a federal district court in New York, claiming that it operates its crypto asset trading platform as an unregistered national securities exchange, broker and clearing agency in violation of the Securities Exchange Act of 1934 (Exchange Act).
June 15, 2023
Directors Want T-Mobile AI-Based Data Breach Securities Case Dismissed

WILMINGTON, Del. — Current and former company directors asked the Delaware Chancery Court to dismiss a derivative securities action claiming that T-Mobile US Inc.’s largest shareholder implemented a “hurriedly” enacted data mining plan designed to feed the owner’s machine learning and artificial intelligence platform, resulting in customer data breaches.
June 15, 2023
Panel Says Shareholders Plausibly Allege Falsity For 1 Statement In Securities Suit

PHILADELPHIA — The Third Circuit U.S. Court of Appeals vacated a portion of a district court’s ruling in a securities fraud suit after determining that shareholders of Prudential Financial Inc. plausibly alleged falsity in an amended complaint with regard to a statement made by Prudential’s chief financial officer about the financial health of the company’s life insurance business segment only two months before a drop in the company’s stock prices following the company’s corrective disclosure that the life insurance business segment would sustain an operating loss.
June 15, 2023
Shareholders’ Claims Of Oat Milk Company’s Greenwashing, Poor Accounting Dismissed

NEW YORK — A federal judge in New York granted a motion filed by an oat milk company and its officers and directors to dismiss shareholders’ allegations that improper accounting practices and greenwashing caused stock prices to tumble but cleared the way for the shareholders to replead all of their claims except for one under Section 12(a)(2) of the U.S. Securities Exchange Act, which was dismissed with prejudice.
June 13, 2023
Bifurcated Settlement Proposed For 1 Defendant In SEC Suit Over Alleged Fraud

DURHAM, N.C. — The U.S. Securities and Exchange Commission on June 12 asked a North Carolina federal court to approve a bifurcated settlement it 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.
June 13, 2023
Split En Banc 9th Circuit: Gap Inc. Shareholder’s Fraud Case Filed In Wrong Forum

SAN FRANCISCO — A divided en banc Ninth Circuit U.S. Court of Appeals ruled that a shareholder in The Gap Inc. could not bring a lawsuit alleging violation of securities laws in California federal court because a clause in the company’s bylaws mandates that any litigation against it must be filed in Delaware state court.
June 13, 2023
High Court Asked To Decide If Item 303 Failed Disclosure Supports Private Claim

WASHINGTON, D.C. — The U.S. Supreme Court should decide whether the Second Circuit U.S. Court of Appeals erred when it held that a failure to make a disclosure under Item 303 of Securities and Exchange Commission Regulation S-K can support a private claim under Section 10(b) of the Securities Exchange Act, a publicly traded company that owned and operated a portfolio of infrastructure-related businesses, a subsidiary and various officers and directors argue in their petition for a writ of certiorari.
June 09, 2023
3rd Circuit Asks SEC If It Decided Coinbase’s Rulemaking Petition

PHILADELPHIA — The Third Circuit U.S. Court of Appeals has asked the Securities and Exchange Commission if it has decided to deny a petition by cryptocurrency trader Coinbase Inc. for rulemaking on whether its products are regulated, when it will do so and why the court should not retain jurisdiction to rule on Coinbase’s petition for a writ of mandamus.
June 09, 2023
Shareholder Says Recent 9th Circuit Opinion Supports Reversal Of Dismissal

SAN FRANCISCO — A recent opinion issued by the Ninth Circuit U.S. Court of Appeals supports a finding that a district court erred in dismissing shareholder claims against a digital health care company and three of its former CEOs because the Ninth Circuit opinion does not permit the court to disregard the fact that the company’s expert warned the company that the inflated rates were at risk before the misleading statements were made, the shareholder says in a May 25 letter submitted to the Ninth Circuit.
June 09, 2023
SEC Seeks To Repatriate, Freeze Assets Of Crypto Business Pending Suit

WASHINGTON, D.C. — The Securities and Exchange Commission has filed an emergency motion for a temporary restraining order (TRO) to freeze the assets of a what the agency calls an illegal cryptocurrency business pending resolution of the SEC’s complaint.
June 09, 2023
4th Circuit: Shareholder Didn’t Show Proxy Omissions Caused Lower Merger Prices

RICHMOND, Va. — A shareholder who sued over a bank holding company’s failure to include cash flow projections in its proxy statement before a merger vote did not show that the omission impacted his vote or that the price per share shareholders received once the merger was approved would have been higher had it not been for that omission, a Fourth Circuit U.S. Court of Appeals panel ruled, affirming a trial court’s summary judgment ruling for the holding company and its directors.
June 08, 2023
Arguments Scheduled In Welfare Fund’s Appeal Of Terminix Growth Statements Case

NEW YORK — The Second Circuit U.S. Court of Appeals scheduled oral arguments for July 20 in a welfare fund’s appeal seeking to proceed with its putative class claims accusing a pest control company of making misleading statements about its growth while concealing its legal battle over damage claims stemming from Formosan termite activity.
June 07, 2023
4th Circuit Refuses To Review D&O Coverage Dispute Arising From $90M Settlement

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on June 6 denied an insured’s petition seeking en banc review of the panel’s opinion earlier in May that vacated and remanded a lower federal court’s ruling that a “bump-up” exclusion does not unambiguously preclude directors and officers liability insurance coverage for the $90 million settlement of two underlying lawsuits arising from a 2015 merger, standing by its holding that the lower court “adopted an unduly narrow reading” of the exclusion.