Mealey's Securities
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July 26, 2024
Federal Judge: Fraud Conviction Justifies Summary Judgment In Related SEC Action
SAN FRANCISCO — A California federal judge on July 25 granted the Securities and Exchange Commission’s motion for summary judgment against the final defendant remaining in an enforcement action related to an insider trading scheme orchestrated by a friend of the man, with the judge citing a criminal conviction against the man on charges arising from the same conduct as the primary reason.
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July 26, 2024
9th Circuit: Fund’s Insider Trading Claims Against Broadcaster’s Investors Fail
SAN FRANCISCO — A California federal judge did not err in dismissing allegations of insider trading brought by two hedge funds against large investors in a satellite communications company, a Ninth Circuit U.S. Court of Appeals panel held, agreeing with the lower court judge that the hedge funds failed to show that the investors possessed material nonpublic information about a meeting the company had with the Federal Communications Commission.
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July 25, 2024
Judge: Investors Show Falsity Of Some Equipment Testing Claims From Company
SAN FRANCISCO — A federal judge in California largely granted a technology company’s motion to dismiss a second amended putative class complaint brought by investors alleging that the company and certain of its executives issued false statements about the testing of equipment that would be used to create a new type of battery; however, the judge found that the investors had adequately substantiated their claims regarding three allegedly false statements issued by the company.
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July 25, 2024
New York Federal Judge Agrees To Limit Expert Testimony In Securities Fraud Case
BROOKLYN, N.Y. — A New York federal judge partially granted the government’s motion to exclude expert witnesses retained by two men charged with securities and wire fraud after finding that some testimony is inadmissible under Daubert v. Merrell Dow Pharmaceuticals Inc. and Federal Rule of Evidence 702.
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July 24, 2024
Judge Gives 1st Nod To $434M Settlement In Under Armour Securities Suit
BALTIMORE — A Maryland federal judge granted preliminary approval to a proposed $434 million settlement in a class action brought by investors claiming that Under Armour Inc. and its former CEO violated federal securities laws by making false claims about demands for the company’s products, finding that the proposed settlement is fair and adequate for the purposes of preliminary approval.
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July 24, 2024
Federal Judge: No Fees To Hedge Fund After Mixed Verdict In SEC Enforcement
BOSTON — A federal judge in Massachusetts held in a July 23 order that a hedge fund manager and his fund 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, finding that the SEC’s initial position was substantially justified.
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July 24, 2024
Investors Seek Approval Of $200M Settlement Of Uber IPO Misstatement Allegations
SAN FRANCISCO — Investors who brought claims against ride sharing company Uber Technologies Inc. and certain of its executives told a federal court in California that they had settled their allegations that the company issued a series of misleading statements in the lead-up to its May 2019 initial public offering (IPO); the investors say Uber agreed to settle the claims for $200 million.
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July 23, 2024
Judge Certifies Class In Securities Case Brought Against Electric Vehicle Maker
LOS ANGELES — A federal judge in California granted a motion for class certification filed by investors who say an electric car manufacturer and certain of its executives hid from investors that the company knew that it would be selling its vehicles at a significant loss ahead of its initial public offering (IPO), finding that the investors had satisfied all four requirements for class certification.
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July 23, 2024
Investors Did Not Allege Scienter In Suit Over Sports Drink Claims, Judge Says
NEW YORK — A federal judge in New York dismissed with prejudice a putative class complaint in which investors claimed that a cannabis health care company and certain of its executives misled them about the success of a sports drink subsidiary, finding that the investors failed to plead scienter by relying too much on confidential witnesses they failed to show had access to the information they claimed to have had.
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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.