Mealey's Securities
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January 06, 2025
9th Circuit Holds Equity Shares Aren’t ‘Goods’ Under Lanham Act
SAN FRANCISCO — A partly split Ninth Circuit U.S. Court of Appeals panel affirmed a California federal judge’s dismissal of an American legal services website company’s trademark infringement suit against a similarly named Japanese legal software company beginning to sell equity shares to American investors, holding that selling equity does not meet the Lanham Act’s criteria of the sales of goods and services.
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January 03, 2025
SEC Granted Final Judgment Against Trader Who Defrauded Clients For Years
AUSTIN, Texas — After a federal magistrate judge agreed with the Securities and Exchange Commission that an options trader had operated a stock options trading scheme, a federal judge in Texas issued an order granting final judgment on the SEC’s behalf, agreeing with the magistrate judge that the options trader had violated antifraud provisions of federal securities laws.
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January 03, 2025
Investors In Snapchat Creator Adequately Pleaded Scienter, 9th Circuit Panel Says
SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals reversed a district court’s decision to dismiss a class action complaint against the company that created Snapchat, finding that the investors had adequately alleged scienter by bringing allegations that the company had misled investors when discussing the impact of advertising changes at Apple Inc. to its revenue.
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January 02, 2025
Funds File Reply Asking U.S. High Court To Rule On ICA Private Right Of Action
WASHINGTON, DC — In a reply brief supporting their petition for a writ of certiorari, multiple closed-end funds (CEFs) ask the U.S. Supreme Court to decide whether a section of the Investment Company Act of 1940 (ICA) includes a private right of action, arguing that the circuits are split on the issue and countering a hedge fund’s argument in opposition that the high court should let the issue percolate further.
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December 30, 2024
Exchange Act’s Antifraud Provisions Applied In Suit Against Former Brazilian Exec
NEW YORK — Ruling that a July 2010 amendment to the Securities Exchange Act of 1934 (Exchange Act) means that the act’s “antifraud provisions apply to extraterritorial conduct that is the subject of an enforcement action” by the U.S. Securities and Exchange Commission, a New York federal judge denied a motion to dismiss an enforcement action against the former senior executive of a Brazilian reinsurance company.
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December 23, 2024
2nd Circuit Affirms Dismissal Of Kodak Shareholder Derivative Action
NEW YORK — The dismissal of a shareholder derivative action alleging that a company’s officers and directors enriched themselves at the company’s expense when they conducted a series of stock transactions was upheld by the Second Circuit U.S. Court of Appeals, with the panel finding that the plaintiff shareholders had waived their challenge to the lower court’s factual findings in the case.
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December 20, 2024
Federal Judge Finds Hedge Fund Failed To Establish Trade Secrets Claims
BIRMINGHAM, Ala. — A federal judge in Alabama found that a startup hedge fund failed to establish that the company it hired to help fix its computer code designed to help process stock market data and beat the stock market had wrongfully appropriated and publicized the computer code, granting summary judgment to the defendant company.
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December 20, 2024
Delaware Supreme Court Affirms Stockholder Damages After CEO Fast-Tracked Merger
WILMINGTON, Del. — Sitting en banc, the Delaware Supreme Court affirmed a portion of a lower court’s determination that a company’s founder and CEO breached his fiduciary duty to the company’s stockholders when he fast-tracked a merger with a private equity firm, finding that the company’s former stockholders sufficiently pleaded that the CEO “tilted” the process in favor of the firm rather than pursue a deal that was in the stockholders’ best interest.
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December 20, 2024
Split 9th Circuit: Arbitrator Ruling Can Preclude Relitigation Of SOX Issues
PASADENA, Calif. — While a ruling by an arbitrator can’t preclude a Sarbanes-Oxley Act of 2002 (SOX) claim, it can “preclude relitigation of issues underlying such a claim,” a divided Ninth Circuit U.S. Court of Appeals panel ruled, affirming dismissal of a whistleblower retaliation claim.
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December 18, 2024
Split 5th Circuit Determines SEC Not Authorized To Approve Disclosure Rule
NEW ORLEANS — Sitting en banc, a split Fifth Circuit U.S. Court of Appeals found that the Securities and Exchange Commission did not have the right to approve a rule implemented by 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, agreeing with two petitioners who argued that the SEC did not show that it had the authority to approve the rule.
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December 16, 2024
2nd Circuit: Minority Shareholders Lacked Evidence To Support Claims
NEW YORK— A panel of the Second Circuit U.S. Court of Appeals in an unpublished opinion found that former minority shareholders of a mining company failed to offer admissible evidence adequate to support their securities and racketeering claims against the former majority shareholder of the mining company and the former majority shareholder’s co-managers, affirming a district court’s grant of summary judgment in the former majority shareholder’s favor.
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December 16, 2024
Investors Failed To Show IPO Statements Were Misleading, 3rd Circuit Finds
PHILADELPHIA — A panel of the Third Circuit U.S. Court of Appeals affirmed dismissal of an investor’s securities fraud class action against a medical device manufacturer, agreeing with the trial court that the investor failed to plead falsity and scienter as to business statements the investor found to be misleading.
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December 12, 2024
Target Bid To Dismiss Shareholder Suit Over Pride Month Marketing Denied
FORT MYERS, Fla. — A federal judge in Florida denied Target Corp.’s motion to dismiss and motion to transfer a suit brought by shareholders alleging securities law violations after the company’s 2023 Pride Month marketing and sales campaign led to a boycott that caused Target’s stock price to decline, finding that the shareholders’ allegations satisfy the required pleading standards.
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December 11, 2024
Supreme Court Grants Motion To Dismiss Pension Fund’s Securities Fraud Petition
WASHINGTON, D.C. — Following the filing of a joint motion to dismiss under U.S. Supreme Court Rule 46, the high court dismissed a pension fund’s petition for a writ of certiorari that sought review of a Sixth Circuit U.S. Court of Appeals panel’s ruling that statements made by a car insurance company about potential risks were not misleading even though the risks had already occurred.
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December 11, 2024
U.S. High Court: PSLRA Particularity Standards Appeal Was Improvidently Granted
WASHINGTON, D.C. — The U.S. Supreme Court on Dec. 11 dismissed as improvidently granted a petition regarding the pleading requirements for alleging scienter under the Private Securities Litigation Reform Act of 1995 (PSLRA) based on allegations related to internal company documents and the PSLRA falsity requirement.
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December 11, 2024
2nd Circuit: Court Did Not Err Moving Asset Management Firm Into Receivership
NEW YORK — A panel of the Second Circuit U.S. Court of Appeals affirmed a federal court’s decision to convert a court-ordered monitorship of an asset management firm to a receivership after the former chief executive officer, who maintained much of the company’s membership interest, hired new managers and amended the operating agreement, finding that this violated the monitor order.
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December 05, 2024
Supreme Court Declines Review Of Shareholder Standing Dispute
WASHINGTON, D.C. — The U.S. Supreme Court denied a petition for writ of certiorari, refusing to review the Second Circuit U.S. Court of Appeals’ decision that a violation of Section 16(b) of the Securities Exchange Act of 1934 inflicts an injury and, thus, that a shareholder had standing to file a shareholder derivative complaint seeking disgorgement of short-swing profits from a capital management company.
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December 05, 2024
Delaware Judge Will Not Revise Opinion That Musk’s Tesla Pay Package Is Unfair
DOVER, Del. — A Tesla Inc. stockholder vote approving a $56 billion pay package for Elon Musk is not grounds to revise a Delaware judge’s posttrial opinion that Musk is not entitled to the $56 billion compensation package because the vote occurred after the posttrial opinion was issued and not during the litigation, the judge said.
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December 05, 2024
GAO: Crypto Options Seem To Be A Small Part Of The 401(k) Market
WASHINGTON, D.C. — In a report released publicly Dec. 4 regarding crypto assets in 401(k)s, the U.S. Government Accountability Office (GAO) noted data and projection limitations, saying in part that “certain crypto assets continue to trade in markets that do not have investor protections or comprehensive oversight.”
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December 05, 2024
Court Vacates Judgment After 8th Circuit Bars Trustee From Ponzi Scheme Recovery
MINNEAPOLIS — A federal court vacated its order granting judgment to the bankruptcy trustee for an entity that pleaded guilty to charges related to its involvement in a multibillion-dollar Ponzi scheme and granted judgment to the bank that allegedly aided in the Ponzi scheme after the Eighth Circuit U.S. Court of Appeals reversed the judgment, finding that the bank was entitled to the equitable defense of in pari delicto.
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December 04, 2024
Magistrate Judge Approves $65M Deal In Securities Case Against Fracking Operator
HOUSTON — A federal magistrate judge in Texas issued a final judgment and order of dismissal after approving a $65 million settlement in a securities fraud lawsuit investors brought against a hydraulic fracturing operator.
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December 04, 2024
Federal Judge Awards Delayed Attorney Fees In Shareholder Derivative Lawsuit
SAN FRANCISCO — Two years after giving final approval of a settlement, a federal judge approved a motion for attorney fees in a shareholder lawsuit alleging that several senior executives and the board of directors of Pinterest Inc. breached their fiduciary duty by participating in and/or failing to sufficiently prevent a culture of racial and sexual discrimination within the company.
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December 04, 2024
2nd Circuit: Investment Fund Failed To Allege Oil Company Engaged In Fraud Scheme
NEW YORK— A panel of the Second Circuit U.S. Court of Appeals affirmed a lower court opinion dismissing a case brought by an investment fund that alleged that a Venezuelan oil and gas company defrauded investors by issuing invalid notes and later defaulting on them, finding that the investment fund failed to allege a plausible scheme to defraud.
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December 04, 2024
Scienter Is Focus Of Dismissal Arguments In Securities Suit Involving Reinsurance
NEW YORK — Scienter is the key issue in dismissal arguments in a putative class action, with the named plaintiff telling a New York federal court that “improperly accounting for reinsurance premiums” led to material overstatements and investors were also misled on “internal controls,” and the defendants challenging “the misguided assumption that the Company’s identification of an accounting error and weakness in internal controls necessarily equates to securities fraud.”
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December 04, 2024
D.C. Circuit Grants Preliminary Injunction Of FINRA Expulsion Until SEC Review
WASHINGTON, D.C. — A broker is entitled to a preliminary injunction until the U.S. Securities and Exchange Commission can review the Financial Regulatory Authority’s (FINRA) decision to expel the broker for violating a cease-and-desist order, a divided panel of the District of Columbia Circuit U.S. Court of Appeals held, agreeing with the broker that it would be irreparably harmed by being expelled before the decision could be reviewed.