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Mealey's Securities

August 28, 2024
Investor Asks Supreme Court To Consider Opt-Outs In Shareholder Settlements

WASHINGTON, D.C. — An investor in a movie theater chain tells the U.S. Supreme Court that the Delaware Supreme Court was wrong to affirm a settlement between the chain and other investors because the settlement contained no opt-out clause for objecting investors such as herself; the investor says that the case provides the ideal vehicle to solve a circuit split over such opt-out clauses.
August 27, 2024
Congress Members Tell 8th Circuit SEC Climate Rules Necessary For Investors

ST. LOUIS — Two U.S. senators and two U.S. congressmen, all Democrats, on Aug. 26 filed an amicus curiae brief before the Eighth Circuit U.S. Court of Appeals arguing that petitioners including nearly half of the nation’s states are incorrect to say the Securities and Exchange Commission lacked authority to enact disclosure rules related to climate change issues, telling the Eighth Circuit that the rules comport with the SEC’s “past pattern and practice with respect to risk disclosures.”
August 27, 2024
Split 9th Circuit Says Showing Of Intent Unnecessary For Ponzi Determination

SAN FRANCISCO — A split panel of judges in the Ninth Circuit U.S. Court of Appeals affirmed a California federal court’s designation of a defunct company as a Ponzi scheme in a dispute stemming from a fraudulent conveyance suit arising out of the company’s bankruptcy, with the majority holding that jurors need not find intent when determining that an organization is operating as a Ponzi scheme.
August 27, 2024
Investors: Norfolk Southern Broke Securities Laws Related To Ohio Train Derailment

ATLANTA — Investors have filed a brief in Georgia federal court opposing a motion to dismiss their securities fraud class action against Norfolk Southern Corp. and its principals, arguing that they have laid out in “exacting detail” that the defendants misled investors about the purported safety of the railroad’s operations while the company implemented cost-cutting procedures that “systematically dismantled critical safety measures in pursuit of profits, culminating in the derailment” of a Norfolk Southern train in East Palestine, Ohio, which resulted in toxic chemical pollution in that town.
August 27, 2024
Judge Sets Briefing Over ChatGPT-Created ‘Gobbledygook’ Admission In Stock Case

NEW YORK — A federal judge in New York overseeing a “pump and dump” stock case on Aug. 26 set deadlines for a pretrial motion, saying he hopes for prompt resolution of a dispute in which the government portrayed some of the evidence a man hopes to introduce under the hearsay exception as ChatGPT-created “gobbledygook.”
August 23, 2024
9th Circuit Won’t Revive Crypto Law Firm’s Suit Against SEC

SAN FRANCISCO — A panel of judges in the Ninth Circuit U.S. Court of Appeals held Aug. 22 that a cryptocurrency-focused law firm lacked standing to bring a suit against the Securities and Exchange Commission because the firm failed to show that it was in danger of being subject to enforcement action over its use of the cryptocurrency network Ethereum, affirming a California federal judge’s decision to dismiss the firm’s case last year.
August 22, 2024
9th Circuit: Shareholders Of Electric Vehicle Maker Lack Standing For Claims

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a California federal judge’s decision to dismiss 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; unlike the judge who dismissed on the claims on their merits, though, the panel held that the investors lacked standing to bring their claims in the first place.
August 22, 2024
Amici Tell High Court 9th Circuit’s Falsity Ruling Could Damage Financial Industry

WASHINGTON, D.C. — The Digital Chamber filed one of four amicus curiae briefs before the U.S. Supreme Court in support of a computer manufacturer and its CEO, arguing that a Ninth Circuit U.S. Court of Appeals finding that plaintiff retirement funds could rely on expert testimony to support their claims of security fraud under the Private Securities Litigation Reform Act of 1995 (PSLRA) could have potentially disastrous effects, particularly in the cryptocurrency space.
August 20, 2024
2nd Circuit: Recent High Court Finding Narrowly Affects Securities Suit

NEW YORK — The Second Circuit U.S. Court of Appeals on Aug. 19 remanded to a New York federal court a securities dispute brought by investors who said an infrastructure company made misleading claims to investors, holding that a recent ruling from the U.S. Supreme Court stemming from the case only narrowly impacts the Second Circuit’s previous findings.
August 20, 2024
Hedge Fund Manager Appeals Finding Of No Attorney Fees In SEC Enforcement

BOSTON — A hedge fund manager and his funds have appealed to the First Circuit U.S. Court of Appeals a Massachusetts federal judge’s holding that they are not entitled to attorney fees under the Equal Access to Justice Act (EAJA) after partially prevailing on claims brought by the Securities and Exchange Commission because the SEC’s initial position was substantially justified.
August 19, 2024
D.C. Circuit: No Award To Whistleblowing Lawyer Who Tipped Client To SEC

WASHINGTON, D.C. — A panel of judges in the District of Columbia Circuit U.S. Court of Appeals affirmed the Security and Exchange Commission’s decision to deny a whistleblower award to a company’s in-house attorney whose tip led to SEC enforcement action against the company and certain of its executives, with the panel holding in a June opinion that was unsealed Aug. 16 that the attorney’s tip was not made to serve his client’s interests.
August 19, 2024
Delaware High Court Affirms Attorney Fees in $1B Dell Securities Settlement

WILMINGTON, Del. — A unanimous Delaware Supreme Court upheld a vice chancellor’s award of $266.7 million in attorney fees to counsel for the lead plaintiff in a complaint brought by investors alleging that Dell Technologies Inc., certain of its controlling stockholders and directors, and its financial adviser breached their fiduciary duty by engaging in a stock swap that resulted in significant losses to investors, holding that the vice chancellor did not abuse his discretion in setting the award.
August 15, 2024
Judge Rules Missouri’s ESG Factor Rules Preempted, Grants Permanent Injunction

JEFFERSON CITY, Mo. — Ruling against state officials on all claims, a Missouri federal judge on Aug. 14 granted summary judgment for a trade association and entered a statewide permanent injunction barring enforcement of two new Missouri rules the association said require “a state-authored script” for “incorporating a social or nonfinancial objective into investment advice.”
August 15, 2024
Amici Decry Discovery Ruling In FirstEnergy Bribery Securities Case

CINCINNATI — A coalition of 39 law firms was one of four groups to file amicus curiae briefs in the Sixth Circuit U.S. Court of Appeals in support of an energy company’s petition for a writ of mandamus, echoing the company’s argument that an Ohio federal judge inappropriately ruled that internal investigation reports about the company’s bribes to an Ohio state representative were not subject to attorney-client privilege in a securities complaint stemming from the bribery; the law firms say the ruling has the potential to severely damage companies’ ability to perform internal investigations.
August 14, 2024
Patent Attorney Urges High Court To Decline Review Of 9th Circuit FCA Reversal

WASHINGTON, D.C. — A patent attorney who was a district court’s qui tam plaintiff in a suit accusing pharmaceutical companies of violating the False Claims Act (FCA) by artificially inflating drug prices urges the U.S. Supreme Court to decline review of the Ninth Circuit U.S. Court of Appeals’ ruling reversing the district court’s dismissal, arguing that the Ninth Circuit correctly “held that the public disclosures did not collectively disclose the fraud.”
August 14, 2024
NVIDIA Tells High Court Pension Funds’ Securities Suit ‘Flunks’ Scienter Test

WASHINGTON, D.C. — A computer manufacturer and its CEO tell the U.S. Supreme Court in their Aug. 13 opening brief that the Ninth Circuit U.S. Court of Appeals enlarged a split over the legal standard for alleging scienter under the Private Securities Litigation Reform Act of 1995 (PSLRA) by allowing retirement funds to rely on the findings of experts to show falsity.
August 14, 2024
9th Circuit Partly Revives Investor’s Price-Fixing Claim Against Crypto Outfits

SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals partially revived a putative class complaint brought by an investor against several cryptocurrency companies, alleging that they conspired to deflate the value of a crypto asset, holding that an Arizona federal judge erred in holding that the investor failed to establish personal jurisdiction regarding the crypto companies.
August 13, 2024
5th Circuit: Litigation Bar Against Liquidators Of Ponzi Assets Was Inappropriate

NEW ORLEANS — A federal judge in Texas 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 any future claims related to the scheme against a Swiss bank that reached a settlement with the receiver appointed in the United States to also oversee Ponzi assets, a split panel of judges in the Fifth Circuit U.S. Court of Appeals held.
August 12, 2024
Facebook To High Court: Risk Disclosure Statements Weren’t Misleading

WASHINGTON, D.C. — The social media giant formerly known as Facebook Inc. told the U.S. Supreme Court in an Aug. 9 brief that the Ninth Circuit U.S. Court of Appeals erred when it held that the company issued misleading statements about the risk of potential misuse of user data because the company was aware that it had already occurred; Facebook argues that it disclosed all information required under federal securities laws.
August 12, 2024
Briefly: Some Claims May Proceed In Securities Fraud Case About Pipeline

PHILADELPHIA — A federal judge in Pennsylvania has ruled in a long and winding securities fraud class action related to the construction of a hydraulic fracturing pipeline that only claims brought by shareholders that are based on corrective disclosures made by the pipeline company in August 2018 may proceed.
August 09, 2024
Magistrate Judge: Crypto Exchange Not Subject To U.S. Securities Laws

AUSTIN, Texas — A federal magistrate judge in Texas recommended that a putative class complaint brought by investors who say an online crypto asset exchange and its organizers misled them by saying their investment was risk free should be dismissed without prejudice, writing that the complaint should proceed in an Israeli court because the crypto organization is registered as an entity in Israel and lacked sufficient contact with the United States.
August 09, 2024
Judge Tosses Most Claims In Shareholder Derivative Suit Against Formula Maker

CHICAGO — A federal judge in Illinois dismissed without prejudice multiple claims brought by investors in a shareholder derivative complaint against a food company whose shutdown of a plant contributed to a national shortage of baby formula, holding that the investors failed to show that a presuit demand on the company’s board of directors would have been futile.
August 09, 2024
Judge: No Filing Errors In Dismissed Asbestos Investor Claims Against Honeywell

WILMINGTON, Del. — After dismissing with prejudice a shareholders’ derivative complaint against Honeywell International Inc. brought by investors over the company’s 2018 announcement increasing its asbestos liability by more than $1 billion, a federal judge in Delaware issued an order determining that all parties complied with a procedural rule the judge said was required by the Private Securities Litigation Reform Act of 1995 (PSLRA).
August 08, 2024
Federal Judge Orders $125M Civil Penalty Against Crypto Firm In SEC Enforcement

NEW YORK — A crypto asset firm will be required to pay more than $120 million as a civil penalty after a New York federal judge on Aug. 7 granted the Securities and Exchange Commission’s motion for entry of final judgment on the commission’s allegations that cryptocurrencies sold by the firm were effectively unregistered securities.
August 08, 2024
Federal Judge: Musk Rehashes Arguments In Bid For Judgment On Investors’ Claim

SAN FRANCISCO — A federal judge in California denied Elon Musk’s motion for judgment on the pleadings in a putative class complaint brought by investors in the company formerly known as Twitter who say Musk attempted to manipulate the company’s stock price before his takeover, holding that Musk makes nearly identical arguments as he did in a previously denied motion to dismiss.