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Mealey's Securities

November 20, 2023
SEC Announces New Rule Requiring Conflict Management For Clearing Houses

WASHINGTON, D.C. — The Securities and Exchange Commission announced the adoption of new rule with several requirements that it says will improve the governance of clearing agencies, saying the rule reduces the likelihood of conflicts of interest influencing boards of directors.
November 17, 2023
Judge In Securities Fraud Case Orders Probation For Former Hedge Fund Exec

BROOKLYN, N.Y. — One of three former hedge fund executives that a New York federal jury found guilty of securities fraud and conspiracy to commit securities fraud has been sentenced to nearly a year of probation for an alleged scheme involving a reinsurer.
November 17, 2023
SEC: Former CEOs Lied To Investors, Faked Documents Before Mass Furlough

FRESNO, Calif. — The former co-CEOs of a now-bankrupt software company and its parent falsified documents and made misleading statements to investors about the financial prospects while raising nearly $70 million, the Securities and Exchange Commission says in a complaint filed in the U.S. District Court for the Eastern District of California.
November 16, 2023
Charter Communications Settles For $25 Million With SEC For Buyback Violations

WASHINGTON, D.C. — Charter Communications Inc., a telecommunications company, has agreed to pay a $25 million penalty for violating internal accounting requirements related to stock buybacks, the Securities and Exchange Commission announced in a press release and cease-and-desist order.
November 16, 2023
Federal Judge Denies SEC Bid For Default Judgment For Salesman In Drilling Case

DALLAS — A federal judge in Texas denied a Securities and Exchange Commission motion for default judgment against a man they say was part of a scheme to defraud investors of millions of dollars through unregistered sales of a fracking business, with the judge adopting a magistrate judge’s finding that the SEC had failed to adequately establish that it met the requirements for a default judgment.
November 16, 2023
Federal Judge: Investment Fund Doesn’t Show Loss In Medical Securities Suit

SAN JUAN, Puerto Rico — A federal judge in Puerto Rico dismissed with prejudice federal securities claims against a pharmaceutical company and its founder filed by an investment fund that accused the company of lying to investors about having equipment to produce ibuprofen in the territory, with the judge finding that the investment fund failed to establish that loss causation incurred as a result of the alleged misstatements.
November 16, 2023
Shareholder Quotes Accounting Error Report In Suit Alleging Securities Violations

NEW YORK — Quoting a press release in which a Bermuda-based insurance holding company said it “‘identified an error in the accounting for reinstatement premium’” of a specialty casualty reinsurance treaty, an individual who bought shares in the preceding months filed a putative class action under the Securities Exchange Act of 1934.
November 15, 2023
Infrastructure Petitioners Tell High Court SEC Rule Not Enforceable By Investors

WASHINGTON, D.C. — An infrastructure company and other petitioners argue in their U.S. Supreme Court merits brief that a Securities and Exchange Commission rule requiring disclosure of management analysis of a company’s financial situation is unsuitable to form the basis of a private claim under federal securities laws, in the company’s dispute with an investment firm over alleged misstatements about oil regulations.
November 15, 2023
SEC: Hedge Fund Manager Wrong To Say ALJs Have Multiple Layers Of Protection

WASHINGTON, D.C. — A hedge fund manager and his fund fail to justify key aspects of a finding from the Fifth Circuit U.S. Court of Appeals, including that Congress violated the Constitution by granting the Securities and Exchange Commission the ability to adjudicate violations of securities law, the SEC says in a reply brief before the U.S. Supreme Court.
November 13, 2023
Judge: Target, Investor Must Show Discovery Stay Applies To Non-Class Actions

FORT MYERS, Fla. — A federal judge in Florida ordered both a shareholder and Target Corp. to file additional briefing related to a jointly filed request for a stay of discovery under a section of the Private Securities Litigation Reform Act (PSLRA), noting that the section explicitly specifies that it is for class disputes, while the shareholder’s complaint alleging that false statements about Target’s LGBTQ+ Pride collection caused a loss in stock value is not a class complaint.
November 10, 2023
SEC Blasts ‘Absurd’ Arguments From Crypto Platform, Says Case Should Proceed

WASHINGTON, D.C. — A cryptocurrency platform is attempting to tear down decades of precedent on securities laws to avoid repercussions for operating as an unlicensed security and misconstrues a longstanding securities precedent in support of its claims, the Securities and Exchange Commission says in a memorandum in opposition to the platform’s motion to dismiss the commission’s complaint against it filed in a federal court in the District of Columbia.
November 10, 2023
Lending Platform Says Judge Misapplied Scienter Factor, Should Fully Dismiss Suit

CINCINNATI — A day after a lending platform filed a motion asking a federal judge in Ohio to reconsider a ruling that claims made by shareholders about the platform’s use of artificial intelligence to approve loans are actionable, several investment funds filed a motion to intervene in the suit, seeking to ensure that their claims are preserved.
November 10, 2023
5th Circuit Finds SEC Failed To Justify Need For New Stock Buyback Disclosure Rule

NEW ORLEANS — The Securities and Exchange Commission failed to adequately illustrate that stock buybacks pose a problem to investors in a new rule requiring companies to disclose why they are buying their own stocks back, a panel of the Fifth Circuit U.S. Court of Appeals found, giving the SEC 30 days to fix errors in the rule.
November 09, 2023
Federal Judge Again OKs Settlement Forming Oversight Groups In Amended Order

MINNEAPOLIS — A federal judge in Minnesota issued a corrected version of an order granting final approval to 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 09, 2023
Federal Judge Says SEC Established That Company Is Securities Dealer

NEW YORK — A federal judge in New York denied a motion to dismiss the Securities and Exchange Commission’s complaint against a financial company and its managing member for failing to register as a securities dealer, finding that the SEC established that the company’s alleged actions would qualify it as a dealer.
November 09, 2023
7th Circuit Affirms Dismissal, Says Shareholders Not Entitled To Tax-Free Deal

CHICAGO — A Seventh Circuit U.S. Court of Appeals panel affirmed a Wisconsin federal court’s dismissal of a class complaint filed by shareholders of a Wisconsin company after its merger incurred capital gains taxes for the shareholders, finding that the investors’ arguments “boil down to a demand for a better deal than the one they received” but failed to show that the company made misleading statements in a proxy statement with details about the merger.
November 09, 2023
9th Circuit Hears Arguments In Stockholders’ Pump-And-Dump Case

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals heard oral arguments in an appeal by Genius Brands International Inc. stockholders who argue that their case accusing the company and its CEO of using “misleading tactics” to drive up stock prices was improperly dismissed.
November 09, 2023
Federal Judge Moots Motion To Dismiss From AI Startup In SEC ‘Pyramid Scheme’ Suit

ORLANDO, Fla. — A federal judge in Florida dismissed as moot a motion to dismiss filed by a man who the Securities and Exchange Commission alleges lured investors with promises of early access to profits from an artificial intelligence “ecosystem” in what was nothing more than a multilevel marketing scheme after the SEC filed an amended version of its complaint.
November 09, 2023
Class Certification Granted In Exchange Act Suit Related To Teva FCA Violations

PHILADELPHIA — A Pennsylvania federal judge granted class certification in a putative class action alleging that Teva Pharmaceuticals Industries Ltd. and its executives violated the Securities Exchange Act by artificially raising the price of its stock and concealing information about the multiple sclerosis drug Copaxone, the subject of a False Claims Act (FCA) suit alleging that Teva engaged in a kickback scheme that increased the price of the drug, finding that the lead plaintiff satisfied the standards for class certification, including numerosity, typicality, commonality and adequacy.
November 08, 2023
Shareholder Companies Say Tech CEO Must Disgorge Short Swing Profits

NEW YORK — Two companies that invested in a travel technology company have filed an insider trading complaint in the U.S. District Court for the Southern District of New York against the company’s CEO, seeking disgorgement of short swing profits the companies say the CEO made as a result of a large sale of stocks in the company in June.
November 07, 2023
SEC: Hedge Fund, Manager’s 1st Amendment Arguments Fail In Certiorari Bid

WASHINGTON, D.C. — The U.S. Supreme Court should deny a petition for a writ of certiorari filed by a hedge fund and its manager found liable for false statements about a biotechnology company, the Securities and Exchange Commission writes in its respondent brief, arguing the hedge fund and manager’s arguments based on the First Amendment to the U.S. Constitution are meritless and made for the first time in the petition.
November 07, 2023
Investor Says Company Tasked With Relocating New York Migrants Lied About Services

NEW YORK — A mobile health and transportation company charged with overseeing a recently implemented migrant relocation program in New York City made misleading claims about the efficacy of its services that damaged investors after reporting from outlets around the state, an investor in the company claims in a putative class complaint.
November 06, 2023
Amici Say In D.C. Circuit FINRA Is Subordinate To SEC In Enforcement Dispute

WASHINGTON, D.C. — Several amicus curiae briefs filed Nov. 3 in the District of Columbia Circuit U.S. Court of Appeals reiterate arguments made by the Financial Industry Regulatory Authority (FINRA) and the United States that FINRA is not subject to the appointment and removal requirements under the U.S. Constitution because it is a private, non-government entity and oppose arguments by a securities broker who says that FINRA operates with the power of a government authority but no constraints.
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.