Mealey's Securities
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July 19, 2024
Judge Tosses Most Of SEC Complaint Over Cyberattack For Failure To Show Falsity
NEW YORK — A federal judge in New York on July 18 largely dismissed a first-of-its-kind suit brought by the Securities and Exchange Commission against a software company and its head of information security accusing them of issuing false statements about the company’s software that was the target of alleged state-sponsored cyberattacks from Russia, finding that many of the SEC’s claims “impermissibly rely on hindsight and speculation.”
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July 19, 2024
Federal Judge Won’t Dismiss SEC Claims Against Salesman In Drilling Case
DALLAS — A federal judge in Texas denied a motion from the former chief operating officer (COO) of a fracking business, finding that the Securities and Exchange Commission had adequately established its claims that the man took part in a scheme to defraud investors through unregistered sales of shares for the claims to survive dismissal.
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July 19, 2024
Discovery Deadline Unchanged In SEC Suit Against Owner Of Insurers In Receivership
WINSTON-SALEM, N.C. — A North Carolina federal magistrate judge granted in part a joint motion to extend the case schedule in the U.S. Securities and Exchange Commission’s suit alleging that an advisory services company, its former executive and its former owner, who also owned insurers now in receivership, defrauded clients of more than $75 million, allowing an extra 30 days for “additional fact discovery” but keeping the deadline for close of discovery.
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July 18, 2024
1st Circuit Upholds Finding Advisory Firm, President Violated Securities Laws
BOSTON — A First Circuit U.S. Court of Appeals panel upheld a Massachusetts federal judge’s decision to enter summary judgment against a man and his financial advisory company, along with a host of other orders from the judge, finding that the Securities and Exchange Commission adequately showed that the man and the firm recklessly and repeatedly issued misrepresentations about an investment strategy employed by the firm.
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July 18, 2024
Former Hedge Fund Exec Is Sentenced To Probation In Securities Fraud Case
BROOKLYN, N.Y. — The last of three former hedge fund executives that a New York federal jury found guilty of securities fraud and conspiracy to commit securities fraud for an alleged scheme involving a reinsurer has been sentenced to two years of probation “with a special condition of 6 months home detention,” a $5,000 fine and a $200 special assessment.
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July 17, 2024
Judge: Investors Didn’t Show Pharmaceutical Company’s Projections Are False
NEWARK, N.J. — A federal judge in New Jersey dismissed without prejudice a putative class complaint brought by investors who said a biopharmaceutical company and certain of its executives misled investors about the amount of capital available to the company to test its stem cell treatment for a type of blood cancer, finding that the investors failed to allege a material misrepresentation about the funding.
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July 16, 2024
Investors Seek Approval Of $434M Settlement With Under Armour In Securities Case
BALTIMORE — Plaintiff investors in a class action alleging that Under Armour Inc. and its former CEO violated federal securities laws by making false claims about demand for the company’s products on July 15 sought preliminary approval from a federal court in Maryland of a $430 million settlement with the company.
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July 12, 2024
Federal Judge: Investors’ Requested Amendment Of Securities Suit Would Be Futile
GREENBELT, Md. — A federal judge in Maryland rejected investors’ motion to amend their putative class complaint alleging that a quantum computing company and executives made false statements about its products, leading to a stock value drop once the alleged truth was revealed, finding that the proposed amended complaint did not address the issues that caused the judge to dismiss the complaint with prejudice in September.
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July 12, 2024
SEC Settles Claims Against Fund Manager It Said Took Customer Investments
TRENTON, N.J. — A federal judge in New Jersey entered judgment against an investment fund and its founder that the Securities and Exchange Commission accused of running a scheme that defrauded investors of at least $3 million, after the man and the fund both agreed to the entry of a judgment against them.
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July 11, 2024
SEC Voluntarily Dismisses Firm From Enforcement Action After Owner’s Settlement
NEW YORK — The Securities and Exchange Commission voluntarily dismissed a defunct investment adviser firm from a complaint wherein the SEC alleged that the firm’s owner signed off on statements issued by the firm substantially overstating the fund’s assets; the fund’s owner settled with the SEC in May.
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July 10, 2024
3rd Circuit Affirms Injunction Against Executive Accused Of Insider Trades
PHILADELPHIA —A Third Circuit U.S. Court of Appeals panel on July 9 upheld a New Jersey federal judge’s decision to freeze the assets of the chief scientific officer of a biopharmaceutical company and several investment funds he operates, agreeing with the judge that the Securities and Exchange Commission had adequately shown that the man had likely sold shares in response to material nonpublic information but disagreeing with the standard the judge used to reach that decision.
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July 10, 2024
Judge: No Preliminary Injunction In Case Alleging Securities Fraud, Elder Abuse
OAKLAND, Calif. — A woman who claims that she and her late husband were fraudulently persuaded by a man and his financial institutions to invest in two real estate entities, allegedly violating federal securities laws in the process, failed to show that she would suffer irreparable harm without preliminary injunctive relief, a California federal judge held, denying her motion.
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July 10, 2024
Judge: CFTC Shows Man Ran Crypto Fund Ponzi Scheme, Justifying Summary Judgment
CHICAGO — The Commodity Futures Trading Commission (CFTC) showed that a financial company and its founder engaged in fraud by issuing misleading statements about “crypto hedge funds” run by the company, a federal judge in Illinois held, granting summary judgment to the CFTC.
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July 09, 2024
Securities Suit Against Cybersecurity Company Tossed For No Scienter Evidence
OAKLAND, Calif. — A federal judge in California dismissed a putative class complaint against a cybersecurity company brought by an investor claiming that the company caused a drop in its stock value when it adjusted certain financial projections, finding that the investor failed to show that the company knew that the original projections were incorrect when released.
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July 09, 2024
Investor Appeals Vice Chancellor’s Dismissal Of Suit For Lack Of Presuit Demand
WILMINGTON, Del. — An investor who brought a derivative complaint alleging that a telecommunications company failed to prevent its parent company’s scheme to centralize customer data to train artificial intelligence appealed to the Delaware Supreme Court a state vice chancellor’s decision dismissing the complaint after finding that the shareholder failed to show that making a demand on the board would have been futile.
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July 08, 2024
Federal Judge: DraftKings Customer Plausibly Shows Company’s NFTs Are Securities
BOSTON — A federal judge in Massachusetts held that a customer of an online sports gambling company adequately showed that nonfungible tokens (NFTs) sold by the company are a security under a long-standing test, denying a motion from the company and certain of its executives to dismiss the customer’s putative class complaint alleging that the company sold unregistered securities in violation of federal law.
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July 08, 2024
Federal Judge: No Class Certification In COVID Shot Stock Loss Dispute
SAN FRANCISCO — A California federal judge denied a motion for class certification in a securities dispute brought by investors who claim that a biotechnology company, a hedge fund that backed it and others issued false statements about a COVID-19 vaccine in a massive stock pump-and-dump scheme, saying that both the investors and the hedge fund failed to grapple with the unique issues the case presents.
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July 02, 2024
Judge Gives First OK To $75M Settlement For Investor Suit Against Tech Firm
SAN DIEGO — A California federal judge granted preliminary approval to a proposed $75 million settlement of a suit brought by investors in Qualcomm Inc. against the company and certain of its executives alleging the company issued false claims to investors about certain company practices.
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July 02, 2024
Federal Judge: Some Crypto Tokens, But Not All, In SEC Suit Count As Securities
WASHINGTON, D.C. — An enforcement action brought by the Securities and Exchange Commission against a cryptocurrency firm, its CEO and related entities largely survived a motion to dismiss, but a federal judge in the District of Columbia ruled that the commission failed to show how a “stable coin” offered by the company functioned as a security.
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July 02, 2024
Citing Prudential, Appellees Urge 3rd Circuit To Affirm Securities Row Dismissal
PHILADELPHIA — Arguing primarily that City of Warren Police and Fire Ret. Sys. v. Prudential Fin. is dispositive, a reinsurer and three former executives urge the Third Circuit U.S. Court of Appeals to uphold discovery and summary judgment rulings in a suit over allegations that they violated federal securities laws by omitting historical loss ratios from loss reserves disclosures.
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June 28, 2024
2nd Circuit: Funds Violated Investment Company Act With Acquisition Resolution
NEW YORK — A panel of the Second Circuit U.S. Court of Appeals affirmed a New York federal judge’s decision to grant summary judgment to a hedge fund that owned shares in multiple closed-end funds (CEFs), agreeing with the judge’s finding that the funds violated a section of the Investment Company Act of 1940 (ICA) when they jointly resolved to opt into a provision of the Maryland Control Share Acquisition Act (MCSAA) that would limit the voting rights of the hedge fund.
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June 28, 2024
Jurisdictional Challenges Meet Mixed Fate In Suit Over Alleged Fraud Scheme
NEW YORK — Largely focusing on personal jurisdiction, a New York federal judge granted one refiled dismissal motion and partly granted another in an insurer’s suit over “an alleged massive and complex fraud that resulted in losses exceeding $135 million.”
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June 28, 2024
High Court Overrules Chevron Deference, Changes Standard For Regulatory Review
WASHINGTON, D.C. — The U.S. Supreme Court on June 28 voted 6-3 to overrule the doctrine of Chevron deference as incompatible with the Administrative Procedure Act (APA) in two cases arising out of federal fishing regulations, changing governing precedent for federal courts reviewing agencies’ regulatory actions.
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June 27, 2024
5th Circuit Finds SEC Did Not Justify Rescinding Proxy Voting Rules
NEW ORLEANS — The Securities and Exchange Commission acted arbitrarily and capriciously in 2022 when it rescinded a 2020 rule regulating proxy voting advice, a Fifth Circuit U.S. Court of Appeals panel held June 26, reversing a Texas federal judge’s grant of summary judgment in the SEC’s favor in a complaint brought by two business associations that argued the commission did not provide enough of an explanation for the course change.
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June 27, 2024
Amici States Tell 8th Circuit SEC Lacked Authority To Enact Climate Rules
ST. LOUIS — The states of Florida and Kansas filed one of nearly a dozen amicus curiae briefs in support of petitioners who say the Eighth Circuit U.S. Court of Appeals should not allow newly announced Securities and Exchange Commission disclosure rules related to climate issues, with Florida and Kansas arguing that the SEC is seeking disclosure information it is not authorized to seek.