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Mealey's Securities

December 04, 2023
SEC Tells 5th Circuit It Was Unable To Fix Stock Buyback Rule By Deadline

NEW ORLEANS — After the Fifth Circuit U.S. Court of Appeals denied a request for more time, the Securities and Exchange Commission told the court in a letter that it was unable to cure errors in a new stock buyback rule by the Nov. 30 deadline set by the court after it found that the SEC had not adequately established that stock buybacks pose a risk to investors.
December 01, 2023
Shareholders: Lending Platform Misconstrues Judge’s Order In Motion To Reconsider

CINCINNATI — A lending platform and certain related defendants, accused by shareholders of making inaccurate claims about the platform’s use of artificial intelligence to approve loans, indicated in a notice in an Ohio federal court no opposition to several investment funds’ motion to intervene in the suit, a day after the shareholders filed a memorandum in opposition to the lending platform’s motion to reconsider an order partially dismissing the suit.
December 01, 2023
More Shareholders Join Suit Saying Target Pride Collection Led To Stock Drop

FORT MYERS, Fla. — A shareholder who previously filed a complaint alleging that Target Corp. made false statements about its LGBTQ+ Pride collection leading to a loss in stock value has filed an amended complaint, now joined by four additional plaintiffs including an investment adviser firm.
December 01, 2023
Securities Broker Tells D.C. Circuit FINRA Enforces Federal Laws Unconstitutionally

WASHINGTON, D.C. — The Financial Industry Regulatory Authority (FINRA) is incorrect to suggest that it does not enforce federal law, a securities broker tells the District of Columbia Circuit U.S. Court of Appeals in its appeal over a FINRA enforcement action, saying FINRA operates with the power of a government agency but no constraints.
November 30, 2023
Constitutionality Of ALJs In SEC Enforcements Debated Before U.S. Supreme Court

WASHINGTON, D.C. — Past Supreme Court precedent shows that Congress does not violate the Seventh Amendment by authorizing federal agencies to impose penalties for violations of federal statutes, the principal deputy solicitor general of the U.S. Justice Department told the high court on behalf of the Securities and Exchange Commission Nov. 29 during oral arguments in an appeal concerning the SEC’s use of an administrative law judge (ALJ) to adjudicate a hedge fund manager and his fund’s violation of securities statutes; the hedge fund manager countered that SEC enforcement actions belong before a federal judge.
November 29, 2023
5th Circuit Won’t Allow SEC More Time To Cure Errors In Stock Buyback Rule

NEW ORLEANS — The Securities and Exchange Commission will not have extra time to cure errors in a new stock buyback rule, a panel of judges in the Fifth Circuit U.S. Court of Appeals ruled after previously determining that the SEC had not adequately established that stock buybacks pose a risk to investors.
November 28, 2023
Federal Court To Decide Unregistered Dealer’s Remedies To SEC In Summary Judgment

ST. PAUL, Minn. — A federal judge in Minnesota denied a motion from a financial company and its principal member seeking a jury trial or advisory jury to determine remedies after the judge granted the Securities and Exchange Commission’s motion for summary judgment, saying the company does not explain why an advisory jury should be used.
November 27, 2023
Amici Tell High Court SEC Disclosure Rule Can’t Form Basis Of Private Claims

WASHINGTON, D.C. — Three business groups jointly filed an amicus curiae brief before the U.S. Supreme Court in support of an infrastructure company, echoing the company’s argument that a failure to comply with a Securities and Exchange Commission rule requiring disclosure of management analysis of a company’s financial situation is unsuitable to form the basis of a private claim under federal securities laws.
November 22, 2023
Federal Magistrate Allows Expert Testimony In SEC’s Case Against Crypto Investor

AUSTIN, Texas — A federal magistrate judge in Texas denied a crypto asset investor’s motion to exclude testimony from a Securities and Exchange Commission expert witness who will testify about the investor’s alleged use of a crypto blockchain to sell a token as an unregistered security, finding in part that the investor did not show what alternate data about the blockchain should have been used by the expert.
November 22, 2023
Hedge Fund Manager Says 1st Amendment Protects Untrue Speech In Reply to SEC

WASHINGTON, D.C. — The Securities and Exchange Commission does little to show how its punishments of a hedge fund manager found liable for making false statements about a biotechnology company survive scrutiny under the First Amendment to the U.S. Constitution, the hedge fund and its manager tell the U.S. Supreme Court in a reply brief in support of their petition for a writ of certiorari.
November 21, 2023
Judge Preliminarily Approves Settlement In Investors’ Case Against Mining Company

LAS VEGAS — A federal judge in Nevada has preliminarily approved a settlement of a securities complaint filed by investors who claim that a mining company doing business in both the United States and Canada made misleading statements to investors about a mine it purchased in Guatemala and its impact on indigenous people there.
November 21, 2023
Garrett Motion Defends Disclosure Of Financial Struggles After Spinoff

NEW YORK — The financial difficulties a newly independent company faced after being left holding millions of dollars in asbestos liabilities was clearly communicated, and nothing required explicit revelation of the company’s exploration of bankruptcy as a possible remedy, Honeywell International Inc. spinoff Garrett Motion Inc. argues in an appellee brief to the Second Circuit U.S. Court of Appeals.
November 20, 2023
Federal Judge Denies Bid For Joint Lead Plaintiffs In Hawaiian Fire Securities Case

SAN FRANCISCO — A federal judge in California denied a stipulation to appoint three joint lead plaintiffs in a putative class complaint alleging that an energy company in Hawaii and certain of its executives made false claims about the company’s level of preparedness for events such as August’s wildfires, saying that the three plaintiffs failed to show how allowing all of them to serve as lead plaintiffs would benefit the class.
November 20, 2023
SEC Announces New Rule Requiring Conflict Management For Clearing Houses

WASHINGTON, D.C. — The Securities and Exchange Commission announced the adoption of new rule with several requirements that it says will improve the governance of clearing agencies, saying the rule reduces the likelihood of conflicts of interest influencing boards of directors.
November 17, 2023
Judge In Securities Fraud Case Orders Probation For Former Hedge Fund Exec

BROOKLYN, N.Y. — One of three former hedge fund executives that a New York federal jury found guilty of securities fraud and conspiracy to commit securities fraud has been sentenced to nearly a year of probation for an alleged scheme involving a reinsurer.
November 17, 2023
SEC: Former CEOs Lied To Investors, Faked Documents Before Mass Furlough

FRESNO, Calif. — The former co-CEOs of a now-bankrupt software company and its parent falsified documents and made misleading statements to investors about the financial prospects while raising nearly $70 million, the Securities and Exchange Commission says in a complaint filed in the U.S. District Court for the Eastern District of California.
November 16, 2023
Charter Communications Settles For $25 Million With SEC For Buyback Violations

WASHINGTON, D.C. — Charter Communications Inc., a telecommunications company, has agreed to pay a $25 million penalty for violating internal accounting requirements related to stock buybacks, the Securities and Exchange Commission announced in a press release and cease-and-desist order.
November 16, 2023
Federal Judge Denies SEC Bid For Default Judgment For Salesman In Drilling Case

DALLAS — A federal judge in Texas denied a Securities and Exchange Commission motion for default judgment against a man they say was part of a scheme to defraud investors of millions of dollars through unregistered sales of a fracking business, with the judge adopting a magistrate judge’s finding that the SEC had failed to adequately establish that it met the requirements for a default judgment.
November 16, 2023
Federal Judge: Investment Fund Doesn’t Show Loss In Medical Securities Suit

SAN JUAN, Puerto Rico — A federal judge in Puerto Rico dismissed with prejudice federal securities claims against a pharmaceutical company and its founder filed by an investment fund that accused the company of lying to investors about having equipment to produce ibuprofen in the territory, with the judge finding that the investment fund failed to establish that loss causation incurred as a result of the alleged misstatements.
November 16, 2023
Shareholder Quotes Accounting Error Report In Suit Alleging Securities Violations

NEW YORK — Quoting a press release in which a Bermuda-based insurance holding company said it “‘identified an error in the accounting for reinstatement premium’” of a specialty casualty reinsurance treaty, an individual who bought shares in the preceding months filed a putative class action under the Securities Exchange Act of 1934.
November 15, 2023
Infrastructure Petitioners Tell High Court SEC Rule Not Enforceable By Investors

WASHINGTON, D.C. — An infrastructure company and other petitioners argue in their U.S. Supreme Court merits brief that a Securities and Exchange Commission rule requiring disclosure of management analysis of a company’s financial situation is unsuitable to form the basis of a private claim under federal securities laws, in the company’s dispute with an investment firm over alleged misstatements about oil regulations.
November 15, 2023
SEC: Hedge Fund Manager Wrong To Say ALJs Have Multiple Layers Of Protection

WASHINGTON, D.C. — A hedge fund manager and his fund fail to justify key aspects of a finding from the Fifth Circuit U.S. Court of Appeals, including that Congress violated the Constitution by granting the Securities and Exchange Commission the ability to adjudicate violations of securities law, the SEC says in a reply brief before the U.S. Supreme Court.
November 13, 2023
Judge: Target, Investor Must Show Discovery Stay Applies To Non-Class Actions

FORT MYERS, Fla. — A federal judge in Florida ordered both a shareholder and Target Corp. to file additional briefing related to a jointly filed request for a stay of discovery under a section of the Private Securities Litigation Reform Act (PSLRA), noting that the section explicitly specifies that it is for class disputes, while the shareholder’s complaint alleging that false statements about Target’s LGBTQ+ Pride collection caused a loss in stock value is not a class complaint.
November 10, 2023
SEC Blasts ‘Absurd’ Arguments From Crypto Platform, Says Case Should Proceed

WASHINGTON, D.C. — A cryptocurrency platform is attempting to tear down decades of precedent on securities laws to avoid repercussions for operating as an unlicensed security and misconstrues a longstanding securities precedent in support of its claims, the Securities and Exchange Commission says in a memorandum in opposition to the platform’s motion to dismiss the commission’s complaint against it filed in a federal court in the District of Columbia.
November 10, 2023
Lending Platform Says Judge Misapplied Scienter Factor, Should Fully Dismiss Suit

CINCINNATI — A day after a lending platform filed a motion asking a federal judge in Ohio to reconsider a ruling that claims made by shareholders about the platform’s use of artificial intelligence to approve loans are actionable, several investment funds filed a motion to intervene in the suit, seeking to ensure that their claims are preserved.