Mealey's Securities
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October 01, 2024
9th Circuit Won’t Reconsider Dismissal Of Investors’ Claims Against EV Maker
SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals’ Aug. 9 ruling affirming the dismissal of a putative class complaint brought by investors alleging that an electric car company and the special purpose acquisition company (SPAC) that acquired it misled investors has taken effect after the panel denied rehearing and rehearing en banc.
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October 01, 2024
2nd Circuit: Bankruptcy Trustee’s Fraudulent Transfer Suit Blocked By Safe Harbor
NEW YORK — The liquidating trustee in a power generating company’s bankruptcy case cannot pursue a fraudulent transfer action seeking the return of $708 million from equity securities holders to the bankruptcy estate because a safe harbor provision in the U.S. Bankruptcy Code bars such claims, the Second Circuit U.S. Court of Appeals ruled in affirming a federal court’s decision.
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September 30, 2024
Shareholders Tell U.S. High Court Scienter Proven Through Holistic Inquiry
WASHINGTON, D.C. — The Private Securities Litigation Reform Act of 1995 (PSLRA) requires courts to “holistically assess” shareholders’ allegations of scienter and permits reliance on expert analysis to support claims of falsity, shareholders of NVIDIA Corp. common stock write in their respondent brief filed in the U.S. Supreme Court, opposing what they say are NVIDIA’s two “proposed categorical rule[s].”
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September 30, 2024
Judge Approves $3M Securities Settlement For Misleading COVID-19 Treatment Claims
NEWARK, N.J. — A New Jersey federal judge granted final approval of a $3 million settlement including $750,000 in attorney fees to resolve a securities class action against a pharmaceutical company for deceiving shareholders by making misleading statements about the prospects of its product for the successful treatment of COVID-19.
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September 27, 2024
Judge Adopts Recommendation In CFTC’s Fraud Suit Against Commodity Traders
BROOKLYN, N.Y. — A New York federal judge adopted a magistrate judge’s report and recommendation to grant summary judgment to the U.S. Commodity Futures Trading Commission (CFTC) in its suit alleging violations of the Commodity Exchange Act by specified companies engaged in fraudulent commodities trading, finding no objections to the recommendation for granting summary judgment because of a conviction in a criminal case regarding the remaining civil defendant’s conspiracy to commit wire fraud by misrepresenting that pooled investment funds would be used to trade upon the customers’ behalf.
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September 25, 2024
Musk, SEC Debate Sanctions, Other Fallout From Missed Deposition
SAN FRANCISCO — In a joint statement in the wake of Elon Musk’s failure to appear for investigative testimony the Securities and Exchange Commission asked for court intervention that would ensure “gamesmanship and delay tactics” would end and said it intends to ask for sanctions for missing the deposition. But Musk said that the order requiring him to appear specifically envisioned rescheduling the event and that the limited window available for the launch of a SpaceX shuttle required his presence.
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September 25, 2024
Norfolk Southern: Investors Attempt To ‘Concoct’ Securities Case From Train Crash
ATLANTA — Norfolk Southern Corp. and its principals filed a reply brief in Georgia federal court arguing that it should dismiss a securities fraud class action filed against them related to the train derailment in East Palestine, Ohio, on grounds that the plaintiffs “attempt to concoct securities fraud claims” out of the crash and the stock price declines that followed it.
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September 25, 2024
Investors, Facebook Agree On Risk Question, Disagree On What High Court Should Do
WASHINGTON, D.C. — Meta Platforms Inc., formerly Facebook Inc., investors tell the U.S. Supreme Court in a Sept. 24 respondent brief that they agree with Facebook as to the answer to the limited question before the justices regarding disclosure of immaterial past risks but argue that the Ninth Circuit U.S. Court of Appeals’ ruling should be upheld as it was correct when it opined that Facebook issued misleading statements about the risk of potential misuse of user data because the company was aware that it had already occurred.
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September 25, 2024
Court Reverses Securities Penalty Leaving Minor Player Liable For Entire Loss
NEW ORLEANS — A district court erred in ordering a man who played a minor role in a gold mine penny-stock fraud scheme to disgorge the entire $333,110 fraudulently obtained from investors, a panel of the Fifth Circuit U.S. Court of Appeals said in reversing the award.
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September 24, 2024
5th Circuit Won’t Rehear Ruling Reversing Litigation Bar Order Against Liquidators
NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel denied panel rehearing and rehearing en banc of its August opinion finding that a federal district judge lacked personal jurisdiction to bar two liquidators who were appointed by an Antiguan court to collect assets related to a massive Ponzi scheme from bringing future claims related to the scheme against a Swiss bank that reached a settlement with the receiver appointed in the United States to oversee Ponzi assets.
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September 20, 2024
Judge Gives $3M Securities Class Settlement Final OK, Lowers Attorney Fee
LOS ANGELES — A California federal judge granted final approval of a $3 million settlement of a suit over alleged violation of federal securities laws but, without specific explanation, awarded class counsel about $44,000 less than the $1 million attorney fee requested.
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September 20, 2024
Preliminary Approval Of $40M Settlement Sought In Securities Fraud Class Suit
BALTIMORE — Lead plaintiffs in a securities fraud class suit filed against a COVID-19 vaccine contractor that experienced contamination issues at its Bayview, Md., manufacturing facility and several of its executives seek preliminary approval of a $40 million settlement reached between the parties.
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September 18, 2024
Appeal Filed, Attorney Fee Bid Contested In Suit Over Missouri’s ESG Factor Rules
JEFFERSON CITY, Mo. — Missouri state officials have filed a notice of appeal regarding a ruling that imposed a statewide permanent injunction barring enforcement of parts of two new rules a trade association said would have required “a state-authored script” for “incorporating a social or nonfinancial objective into investment advice.”
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September 17, 2024
Split 6th Circuit Affirms Ruling For SEC In Challenge To Proxy Voting Rule Changes
CINCINNATI — A split Sixth Circuit U.S. Court of Appeals panel upheld a ruling that the Securities and Exchange Commission’s partial rescission of a 2020 rule regulating proxy voting advice survives review under the Administrative Procedure Act (APA), with the dissenting member opining that the rescission is “both procedurally and substantively invalid” and “should be vacated in its entirety.”
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September 17, 2024
SEC Files Rule Compliance Notice In Fraud Suit Against Owner Of Defunct Insurers
WINSTON-SALEM, N.C. — The U.S. Securities and Exchange Commission on Sept. 16 filed a notice of compliance with local rules in a North Carolina federal court regarding its brief responding to a motion to compel discovery filed by insurance magnate Greg Lindberg, a former owner of insurers now in receivership, in a suit alleging that he, his advisory services company and its former executive defrauded clients of more than $75 million.
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September 16, 2024
Bump-Up Exclusion Unambiguously Bars Coverage, Insurers Argue To 4th Circuit
RICHMOND, Va. — Asserting that an appellant insured “has it backward,” insurers asked the Fourth Circuit U.S. Court of Appeals to affirm a lower federal court’s holding that a “bump-up” exclusion unambiguously precludes directors and officers liability insurance coverage for the $90 million settlement of two underlying lawsuits arising from a 2015 merger.
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September 12, 2024
New Disclosures Explain J&J Stock Drop, Not Coincidence, Securities Class Says
PHILADELPHIA — Even entertaining Johnson & Johnson’s incorrect claim that any corrective disclosures in a case must be of “pristine newness,” a trial judge properly certified a class after concluding Johnson & Johnson entities never fully explained away a multi-billion-dollar drop in stock price, a securities class told the Third Circuit U.S. Court of Appeals in an answering brief.
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September 11, 2024
SEC Drops Appeal On Proxy Voting; Separate Appeal Continues From Advocacy Group
WASHINGTON, D.C. — The District of Columbia Circuit U.S. Court of Appeals granted the Securities and Exchange Commission’s motion to voluntarily dismiss its appeal of a federal judge’s ruling that the SEC acted in excess of its authority when it issued rule changes redefining proxy voting advice as a type of “solicitation”; an appeal of the order filed by an advocacy group will continue.
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September 10, 2024
7th Circuit Remands Question Of Commodities Trading Registration To District Court
CHICAGO — A panel of judges in the Seventh Circuit U.S. Court of Appeals held that an Illinois federal judge did not err when granting summary judgment in the Commodity Futures Trading Commission’s (CFTC) favor in an enforcement action it brought against an investment company and its chief executive officer on fraud claims, but the panel said it was unclear whether the company was required to register as a commodity trading adviser (CTA)
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September 10, 2024
Pension Fund Tells High Court 6th Circuit Made New Rule For Risk Disclosures
WASHINGTON, D.C. — A pension fund says in its petition for a writ of certiorari in the U.S. Supreme Court that a partially split Sixth Circuit U.S. Court of Appeals panel erred when it affirmed an Ohio federal judge’s decision to dismiss the fund’s putative class complaint alleging securities fraud on the part of a car insurance provider, arguing that the Sixth Circuit was incorrect to hold that statements made by the company about potential risks were not misleading even though the risks had already occurred.
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September 03, 2024
Judge: Investors’ Claims Against TikTok’s Content Moderator Survive Dismissal
MIAMI — A federal judge in Florida denied a motion from a French telecommunications company that provided content moderation for TikTok Inc. to dismiss a putative class complaint brought against them by investors who claim that the company made false statements to investors about its use of child sexual abuse material (CSAM) images to train moderators, holding that the investors adequately substantiated falsity and scienter to survive dismissal.
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September 03, 2024
Reinsurer’s Purchaser Wins Preliminary Injunction In Suit Over Forced Deal
NEW YORK — A New York federal judge on Aug. 30 granted a motion for preliminary injunction in an insurer’s suit over its April 14 purchase of Bermuda-based reinsurer JRG Reinsurance Company Ltd.
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August 30, 2024
7th Circuit: No Enforceable Contract To Support Company’s Securities Claims
CHICAGO — A panel of the Seventh Circuit U.S. Court of Appeals held that an Illinois federal judge was correct to dismiss claims of securities fraud and other claims brought by a company against a software startup, holding that the plaintiff company failed to show that an enforceable agreement regarding an exchange of ownership interest for an investment existed.
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August 29, 2024
Judge Denies Motion To Dismiss SEC’s ‘Pyramid Scheme’ Claims Against AI Company
ORLANDO, Fla. — A federal judge in Florida denied an artificial intelligence startup and its founder’s motion to dismiss claims brought against them by the Securities and Exchange Commission, finding that the SEC adequately alleged that the company and its founder lured investors with false promises of early access to profits from an AI “ecosystem.”
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August 28, 2024
Dispute Over FCA Public Disclosure Bar Distributed For Conference In Supreme Court
WASHINGTON, D.C. — The U.S. Supreme Court on Aug. 28 distributed for conference a petition for certiorari filed by pharmaceutical companies seeking review of the Ninth Circuit U.S. Court of Appeals’ ruling that the public disclosure bar was not triggered in a case where it reversed a district court’s dismissal of a suit accusing the companies of violating the False Claims Act (FCA) by artificially inflating drug prices.