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Mealey's Securities

November 03, 2023
Federal Judge OKs Settlement Forming Oversight Groups In Derivative Complaint

MINNEAPOLIS — A federal judge in Minnesota granted final approval of a settlement of a shareholder derivative complaint filed against a technology company by investors, the terms of which include the creation of oversight committees aiming to prevent future errors similar to the alleged misstatements about the company’s financial position after it was spun off from a parent company that were the target of the complaint.
November 03, 2023
5th Circuit Rules SEC Can Enact Nasdaq Rule Requiring Disclosure Of Board Makeup

NEW ORLEANS — The Securities and Exchange Commission has the right to approve a rule implemented by the 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, a panel of the Fifth Circuit U.S. Court of Appeals found, denying a petition from two entities who argued that Nasdaq is a state actor bound by the U.S. Constitution.
November 03, 2023
2nd Circuit Vacates SEC Disgorgement, Orders Determination Of Pecuniary Harm

NEW YORK — A Second Circuit U.S Court of Appeals panel vacated a disgorgement against the founder of a technology company who allegedly caused the company to engage in fraudulent security offerings, finding that a New York federal court abused its discretion when granting additional disgorgements requested by the Securities and Exchange Commission on top of securities he had already surrendered, with the panel saying the record does not establish that defrauded investors were “victims.”
November 03, 2023
Federal Judge Denies Summary Judgment In SEC Pump-And-Dump Enforcement Action

NEW YORK — A federal judge in New York denied a motion for summary judgment filed by the two remaining defendants in an enforcement action brought by the Securities and Exchange Commission against board members and executives of a consumer electronics retail store whom the commission accused of running a pump-and-dump scheme with the company’s own stocks, with the judge finding that there is a dispute of material facts.
November 03, 2023
2 Executives Settle In Securities Case Involving Greek Gas Company

NEW YORK — A federal judge in New York granted final approval of two class settlements, one by a Greek billionaire who founded a marine fuel logistics company and one by the company’s former chief executive officer, both with a retirement fund that accused the company and certain of its executives of defrauding investors over an eight-year period by overstating its income by manipulating financial results with hundreds of millions of dollars in fake transactions.
November 03, 2023
Appeal Over COVID ‘Cure’ Claims To Continue Without Manufacturer After Bankruptcy

PASADENA, Calif. — An investor’s appeal of a federal judge’s dismissal of his putative class complaint against a pharmaceutical company and certain of its executives accusing them of falsely claiming that its COVID-19 treatment was a “cure” will proceed in the Ninth Circuit U.S. Court of Appeals without the pharmaceutical company after a clerk’s order lifted the automatic stay in the case initiated after the company’s bankruptcy.
October 31, 2023
Supreme Court Denies Amicus Request To Argue In SEC Enforcement Case

WASHINGTON, D.C. — The U.S. Supreme Court on Oct. 30 denied a motion to participate in oral arguments from a group of administrative law scholars who sought to argue that the high court should uphold express limits on administrative law judges (ALJs) as set forth in the Administrative Procedure Act (APA) in a hedge fund manager’s appeal of a Securities and Exchange Commission enforcement action against him.
October 30, 2023
Supreme Court Denies Certiorari To Unregistered Brokers Fighting SEC Penalties

WASHINGTON, D.C. — The U.S. Supreme Court on Oct. 30 denied a petition for a writ of certiorari filed by three municipal bond traders who were found to be unregistered brokers, refusing to review whether civil penalties leveled by the Securities and Exchange Commission “vastly exceed[ed] the ostensible statutory caps set by Congress.”
October 26, 2023
SEC Drops Aiding And Abetting Claims Against Crypto Firm Executives

NEW YORK — A federal judge in New York approved a stipulation of voluntary dismissal filed by the Securities and Exchange Commission, dismissing claims of aiding and abetting against two executives of a crypto asset firm the commission accused of selling cryptocurrencies without registering them as a security.
October 26, 2023
Investors’ Suit Alleging Facebook Lied About User Data Partially Revived

SAN FRANCISCO — A split panel in the Ninth Circuit U.S. Court of Appeals revived some of the claims made by investors in a suit against the former Facebook Inc. alleging that the company misled investors about privacy and data protection, finding that the investors had adequately pleaded that news about Cambridge Analytica and a practice known as “whitelisting” had contributed to two stock drops in 2018.
October 24, 2023
Fracking Operator: Shareholder Case Fails, Does Not Plead Particularized Facts

HOUSTON — A hydraulic fracturing operator and three of its senior executives filed an answer in Texas federal court denying class action claims brought by shareholders who contend that the company and its officers violated federal securities laws. The defendants also argue that the complaint fails to satisfy the requirements of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act (PSLRA) by not pleading particularized facts showing that the defendants made material misstatements.
October 24, 2023
Federal Judge Can’t Say Trader Is Investment Adviser, Denies SEC Summary Judgment

CHARLOTTE, N.C. — A federal judge in North Carolina dismissed a request for partial summary judgment filed by the Securities and Exchange Commission in its case against a trader it accuses of making fraudulent conflict-of-interest transactions with a private fund he managed, saying the court cannot determine at the current stage of proceedings whether the trader qualifies as an investment adviser under the Investment Advisers Act of 1940.
October 24, 2023
1st Circuit Revives Investors’ Suit Claiming Falsehoods About Alzheimer’s Drug

BOSTON — A panel of the First Circuit U.S. Court of Appeals partly reversed a federal judge’s dismissal of a complaint brought by a group of investors who claimed that a pharmaceutical manufacturer and certain of its executives concealed data about an Alzheimer’s disease drug’s clinical trials, finding that the investors adequately alleged scienter regarding a single claim allegedly made by one of the executives.
October 20, 2023
West Virginia, Others Say In Amicus Brief SEC ALJs Wield Unsupervised Power

WASHINGTON, D.C. — The Securities and Exchange Commission’s use of administrative law judges (ALJs) with protections from for-cause removal is a “trifecta” of violations of articles in the U.S. Constitution, according to West Virginia and 17 other states who filed an amicus brief before the U.S. Supreme Court in support of a hedge fund manager who appealed an SEC enforcement action against him.
October 17, 2023
9th Circuit Denies Rehearing For Man Who Sold Fake Cannabis Securities

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals rejected a petition for rehearing or rehearing en banc filed by a man who was found to have defrauded investors through the sale of unregistered and fictitious securities in a cannabis company after the panel upheld a lower court’s award of $654,042.83 against the man.
October 16, 2023
Split 9th Circuit Panel Rules Investor Not A Party, Lacks Jurisdiction For Appeal

SAN FRANCISCO — A split panel of the Ninth Circuit U.S. Court of Appeals dismissed an appeal of an investor who filed the initial complaint alleging that a digital health care company and three of its former executives made misleading statements about a new product, finding that the investor lacked jurisdiction as he was no longer a party to the complaint after a retirement fund was named the lead plaintiff.
October 16, 2023
Supreme Court Grants Certiorari In 2nd Challenge To Chevron Deference

WASHINGTON, D.C. — The U.S. Supreme Court on Oct. 13 granted a petition for a writ of certiorari in a second case challenging the doctrine of Chevron deference and ordered that it be briefed on a schedule allowing argument “in tandem” with a pending case pertaining to the same issue, both of which involve challenges to regulations that require fishing vessels to pay federal monitors.
October 13, 2023
FTX Investor Says Competitor’s Tweets Caused ‘Collapse’ In Value

OAKLAND, Calif. — An investor in FTX Trading Ltd. filed a putative class action in California federal court accusing Binance Holdings Ltd., a competing cryptocurrency exchange, its affiliates and its CEO of violating securities laws and California’s unfair competition law (UCL) by selling off FTX tokens and tweeting negative statements about FTX that allegedly contributed to FTX’s “collapse.”
October 12, 2023
SEC Says Trustees Misread Liquidity Rule In Opposition To Complaint

SYRACUSE, N.Y. — The Securities and Exchange Commission filed a surreply in a New York federal court saying that a mutual fund’s trustees incorrectly argue that the SEC previously said it could not adopt a new liquidity rule; the argument first appeared in the trustees’ reply brief in support of their motion to dismiss the SEC’s civil complaint alleging that the fund and its principals violated the Liquidity Rule by having more than 15% of its assets in illiquid investments.
October 12, 2023
Hedge Fund Manager Tells High Court SEC ALJs Violate Constitutional Rights

WASHINGTON, D.C. — A hedge fund manager says the Fifth Circuit U.S. Court of Appeals was correct to vacate a Securities and Exchange Commission enforcement action against him, arguing in an Oct. 11 respondent brief before the U.S. Supreme Court that the SEC’s use of administrative law judges (ALJs) to adjudicate enforcement actions violates multiple provisions of the U.S. Constitution.
October 12, 2023
NVIDIA Calls 9th Circuit Opinion A ‘Gutting’ Of Securities Rules, Seeks Rehearing

SAN FRANCISCO — Computer manufacturer NVIDIA Corp. filed a petition for rehearing en banc before the Ninth Circuit U.S. Court of Appeals, arguing that the appeals court created a “gaping loophole” for plaintiffs to bypass the Private Securities Litigation Reform Act of 1995 (PLSRA) by partially reversing the dismissal of a complaint filed by shareholders who accused the company and certain of its executives of making misleading statements about the impact of cryptocurrency-related sales on the company.
October 12, 2023
Federal Judge Dismisses Investor’s Complaint Over Alleged Online Misstatements

LOS ANGELES — A federal judge in California dismissed with prejudice the second amended complaint filed by a late investor’s daughter who continued to argue that a real estate company misled investors while seeking crowdfunding through social media statements after the investor’s death, finding that the daughter had failed to adequately plead falsity and that amending the complaint would be futile.
October 12, 2023
11th Circuit Won’t Rehear Tupperware Securities Fraud Case, Denies Investor Petition

ATLANTA — The 11th Circuit U.S. Court of Appeals denied a petition for rehearing en banc filed by an investor in Tupperware Brands Corp. who argued that the court’s affirming of the dismissal of the complaint against the company and certain of its former executives for allegedly misrepresenting its financial results conflicts with 11th Circuit and Supreme Court precedent regarding scienter.
October 12, 2023
Investor, Brewer Spar Over Falsity, Scienter In Seltzer Misstatement Case

NEW YORK — The Second Circuit U.S. Court of Appeals granted a motion to take judicial notice of a newly found slide containing sales analysis of a hard seltzer brand in a case brought by an investor who claims that the drink’s manufacturer made misleading statements about the growth of the product to investors.
October 11, 2023
SEC Seeks To Compel Musk’s Testimony In Twitter Investigation

SAN FRANCISCO — The Securities and Exchange Commission filed an application in the U.S. District Court for the Northern District of California for an order to compel Elon Musk to testify as part of an SEC investigation into his 2022 purchase of stock in Twitter Inc., saying Musk refused to comply with an administrative subpoena in September after having agreed to testify in May and called the subpoena harassment.