Mealey's Securities
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June 07, 2023
3rd Circuit: Employee Failed To Causally Connect Whistleblowing And Firing
PHILADELPHIA — A financial adviser who alleged that he was fired in retaliation for blowing the whistle on a co-worker who he accused of misusing funds from a customer’s trust account failed to causally connect the two, a Third Circuit U.S. Court of Appeals panel ruled.
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June 07, 2023
Video Game Company To 2nd Circuit: Stockholder Failed To Plead Loss Causation
NEW YORK — A former stockholder and former owner of American Depository Shares (ADS) who accused a video game company in a putative class complaint of committing securities fraud when taking the company private failed to sufficiently plead loss causation, the company argues in an appellee brief filed in the Second Circuit U.S. Court of Appeals.
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June 07, 2023
Health Care Investors Class In Fraud Case Won’t Be Reviewed By 6th Circuit
CINCINNATI — A Sixth Circuit U.S. Court of Appeals panel denied a petition for permission to appeal filed by a health care company after a class of investors who allege that they were defrauded was certified, finding that the company failed to show that it was likely to succeed or that “failure to grant review would sound the ‘death knell’ for the litigation below.”
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June 06, 2023
Parties Brief Dismissal In AI Lending Platform Securities Class Action
CINCINNATI — Optimistic statements about how an artificial intelligence lending platform would perform cannot form the basis of a securities class action, and the class never shows that the alleged misrepresentations were false, let alone false when they were made, defendants argue in a pair of reply briefs in support of motions to dismiss filed in an Ohio federal court.
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June 05, 2023
Stay Derivative Action, AI Lending Securities Defendants Say
WILMINGTON, Del. — Staying a derivative action pending the outcome of a securities class action involving allegations that a company overstated the ability of its artificial intelligence lending system would conserve both party and court resources, defendants tell the Delaware Chancery Court.
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June 05, 2023
Chinese Vaping Company Concealed Risk Before $1.4B IPO, 2nd Circuit Told
NEW YORK — Three Chinese vaping company investors in a June 2 reply brief tell the Second Circuit U.S. Court of Appeals that the dismissal of their putative securities class action against the company should be reversed, asserting that they adequately alleged that the company made misleading statements about the Chinese government’s planned regulatory scheme for e-cigarettes that led them to overestimate its financial prospects before a $1.4 billion initial public offering (IPO).
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June 05, 2023
U.S. Supreme Court Will Not Hear Appeal Of Sentence In Securities Fraud Case
WASHINGTON, D.C. — The U.S. Supreme Court on June 5 denied review of a Sixth Circuit U.S. Court of Appeals ruling that held that a federal district court did not err in sentencing a man to 16 years imprisonment after he pleaded guilty to securities fraud charges stemming from his operation of a more than $2.7 million securities fraud scheme because the man knowingly and voluntarily pleaded guilty.
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June 05, 2023
High Court Lets Disgorgement Award In SEC Enforcement Case Stand
WASHINGTON, D.C. — The U.S. Supreme Court denied review on June 5 of a Seventh Circuit U.S. Court of Appeals opinion affirming a district court’s disgorgement award against a man for his alleged role in a financial scheme that defrauded investors in a civil enforcement action brought by the Securities and Exchange Commission.
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June 05, 2023
Judge Certifies Class In Securities Fraud Case Tied To Roundup Litigation
SAN FRANCISCO — A federal judge has certified a class in a securities fraud lawsuit against Bayer AG, the parent company of Monsanto Co., related to statements it made about Monsanto’s science-based trial defenses in Roundup litigation, saying Bayer’s arguments in opposition to class certification were “not persuasive.”
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June 02, 2023
Software Developer To 9th Circuit: Shareholders Failed To Show False Statements
SAN FRANCISCO — A software developer that saw a drop of stock prices one day after a merger with a former rival and reduced earnings projections and others filed an appellee brief in the Ninth Circuit U.S. Court of Appeals arguing that a securities fraud complaint by shareholders was properly dismissed with prejudice as the parties suing “failed to plead that any of the challenged statements were false.”
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June 01, 2023
U.S. Supreme Court Interprets Securities Act, Remands Direct Listing Case
WASHINGTON, D.C. — Section 11 of the Securities Act of 1933 “requires a plaintiff to plead and prove that he purchased shares traceable to the allegedly defective registration statement,” a unanimous U.S. Supreme Court ruled June 1 in a putative class case over a technology company’s direct listing of shares and allegedly misleading registration statement, vacating a Ninth Circuit U.S. Court of Appeals’ judgment and remanding for the court to consider that issue in the first instance.
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May 31, 2023
Asbestos Securities Class Certification Briefing Refiled After Stay Lifted
TRENTON, N.J. — Plaintiffs in a case claiming that Johnson & Johnson violated securities law by withholding knowledge about the presence of asbestos in its talc tell a federal judge that they were refiling briefing involving class certification in the wake of a May 8 order lifting a stay and reopening the case.
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May 30, 2023
U.S. Supreme Court Won’t Hear Case Involving SEC’s Denial Of Whistleblower Award
WASHINGTON, D.C. — The U.S. Supreme Court on May 30 denied review of a Second Circuit U.S. Court of Appeals panel’s ruling upholding the Securities and Exchange Commission’s denial of a whistleblower award for information the whistleblower provided in an international bribery scheme enforcement action.
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May 26, 2023
Hedge Fund Parties Argue Against High Court Review Of Fraud Claims Adjudication
WASHINGTON, D.C. — A hedge fund manager and the fund’s investment adviser filed two briefs in two days in the U.S. Supreme Court, one opposing a petition for a writ of certiorari by the Securities and Exchange Commission challenging a Fifth Circuit U.S. Court of Appeals’ decision on the adjudication of securities fraud claims and one supporting the hedge fund parties’ own conditional cross-petition.
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May 25, 2023
En Banc Review Of D&O Coverage Dispute Is Warranted, Insured Tells 4th Circuit
RICHMOND, Va. — An insured filed a petition in the Fourth Circuit U.S. Court of Appeals 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, challenging the panel’s holding that the lower court “adopted an unduly narrow reading” of the exclusion.
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May 25, 2023
Immunomedics CFO Pleads Guilty To Insider Trading About Breast Cancer Drug
NEWARK, N.J. — The former chief financial officer (CFO) of Immunomedics Inc. has pleaded guilty to one charge of insider trading, admitting that he gave insider information about a new drug development and then made about $213,000 in profit off of a $65,000 purchase of company stock.
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May 24, 2023
2nd Circuit Hears Arguments In Appeal Over ‘Control Share’ Provision Adoption
NEW YORK — The Second Circuit U.S. Court of Appeals heard arguments on May 24 in an appeal by a collection of closed-end Massachusetts business trusts and their trustees after a trial court granted summary judgment to investors and rescinded their adoption of a “control share” provision, finding that it violated the Investment Company Act of 1940 (ICA).
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May 23, 2023
Michigan Appeals Court: Reves Test Determines If Promissory Note Is Security
DETROIT — The “family resemblance test” announced in Reves v. Ernst & Young is the appropriate assessment to use in Michigan to determine whether a promissory note is a security under the Michigan Uniform Securities Act, a Michigan appellate court panel ruled, reversing a trial court’s determination that the Reves test conflicted with Michigan law.
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May 22, 2023
ESOP Asks 7th Circuit To Revive Claims In Suit Over Valuations, Securities Laws
CHICAGO — An employee stock ownership plan (ESOP) is asking the Seventh Circuit U.S. Court of Appeals to reverse dismissal of claims it asserted against company executives, independent trustees and financial advisers under federal securities laws, the Employee Retirement Income Security Act and state law.
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May 22, 2023
Notice Of Proposed $22M Settlement Approved In Block.one EOS Securities Case
NEW YORK — A federal judge in New York issued an order providing for notice of a proposed $22 million settlement in a class action accusing a company that promised it would develop a software program enabling the creation of novel EOS blockchain technologies of making “a host of materially false and misleading statements to induce investors to purchase EOS Securities” and failing to register its initial coin offering (ICO). The order was issued nine months after the judge denied approval of a $27.5 million settlement because the requirement of adequate representation had not been satisfied.
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May 22, 2023
Supreme Court Declines To Hear 2nd Appeal Of Disgorgement Award Ruling
WASHINGTON, D.C. — The U.S. Supreme Court on May 22 let stand a Ninth Circuit U.S. Court of Appeals ruling that affirmed a federal district court’s calculation of a disgorgement award and imposed joint and several liability in a Securities and Exchange Commission enforcement action, and the high court also declined to address the jurisdictional character of the appellate mandate rule.
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May 19, 2023
2nd Circuit: Shareholders’ COVID-19 Vaccine Misstatements Suit Properly Dismissed
NEW YORK — AstraZeneca PLC shareholders who accused the company and executives of making material misstatements regarding testing of a COVID-19 vaccine failed to “adequately [plead] falsity or facts fiving rise to a strong inference of scienter,” a Second Circuit U.S. Court of Appeals panel ruled, affirming dismissal of the complaint.
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May 18, 2023
Evidence Supported Jury’s Finding In Securities Suit, U.S. Government Says
WASHINGTON, D.C. — The U.S. Supreme Court should deny a former trader’s petition for writ of certiorari because the evidence supports a jury’s finding that the trader conspired to make material misrepresentations when he engaged in a scheme to lie to his clients about bids to inflate his firm’s profits, the U.S. government says in a response brief.
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May 18, 2023
Panel Denies Musk’s Claim That SEC Acted In Bad Faith, Nixes Bid To Quash Subpoena
NEW YORK — A panel of the Second Circuit U.S. Court of Appeals has affirmed a lower court ruling and held that there is no evidence to support Elon Musk’s contention that the U.S. Securities and Exchange Commission used a consent decree “to conduct bad-faith, harassing investigations of his protected speech,” with regard to something he tweeted about possibly taking his company Tesla private. As a result, the panel denied Musk’s bid to quash a subpoena and terminate a consent order that had been instituted in response to his tweeting behavior.
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May 16, 2023
‘Unwaivable Conflict Of Interest’ Prevents Law Firm From Recovering Under Policy
NEW YORK — The Second Circuit U.S. Court of Appeals on May 15 affirmed a lower court’s ruling that a law firm has no claim to the remaining proceeds of a directors, officers and entity securities liabilities insurance policy for legal services that it conducted for a pharmaceutical company during an investigation brought by the Securities and Exchange Commission, finding that “an unwaivable conflict of interest prevented” the law firm from recovering under the policy.