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Mealey's Securities

March 03, 2025
Federal Judge Dismisses Investor Claims Over 2023 Norfolk Southern Derailment

NEW YORK — A federal judge in New York dismissed all claims brought against Norfolk Southern Corp. and certain of its executives by investors following a 2023 train derailment in East Palestine, Ohio, that led to a controlled detonation of toxic chemicals, finding that the railroad company and its employees’ statements about its safety measures and messaging were not misleading and that they did not have an obligation to disclose risks and uncertainties that required disclosure in the offering documents under Securities and Exchange Commission Regulation S-K.
March 03, 2025
High Court Asked To Address FINRA Constitutionality, Stay Of Judgment Request

WASHINGTON, D.C. — A broker filed a petition for a writ of certiorari in the U.S. Supreme Court asking it to address the constitutionality of the Financial Regulatory Authority (FINRA) as well as what constitutes an irreparable injury for purposes of a preliminary injunction, days after filing an emergency application for a stay of judgment pending the disposition of its petition asking the high court to prevent an expedited FINRA proceeding to expel the broker for violating a cease-and-desist order from going forward while the petition for certiorari is pending.
February 28, 2025
SEC, Crypto Company Agree To Drop Enforcement Case, Interlocutory Appeal

NEW YORK — The Securities and Exchange Commission on Feb. 27 filed a joint stipulation to dismiss with Coinbase Inc. and Coinbase Global Inc. (collectively Coinbase), with the commission agreeing to dismiss its case alleging that the company engaged in the unregistered sale of securities and Coinbase agreeing to withdraw its request for interlocutory appeal of a federal judge in New York’s split ruling on its motion for judgment on the pleadings before the Second Circuit U.S. Court of Appeals.
February 28, 2025
2nd Circuit Affirms Quashing Of New York Discovery Subpoenas For German Suit

NEW YORK — The plaintiff in a German lawsuit over purported securities violations did not establish her right to subpoena her opponent in that suit for discovery in New York federal court under U.S. Code Title 28 Section 1782, a Second Circuit U.S. Court of Appeals panel ruled, finding that the necessary factors of Intel Corp. v. Advanced Micro Devices Inc. had not been satisfied.
February 26, 2025
Split 1st Circuit Affirms Judgment Against Company CEO For Registration Violation

BOSTON — A split panel of the First Circuit U.S. Court of Appeals affirmed a district court’s grant of partial summary judgment in favor of the Securities and Exchange Commission and the amount ordered in disgorgement against the CEO of a holding company for violating the registration provision of federal securities laws but found that the lower court erred in holding that it lacked the power to issue a civil penalty.
February 26, 2025
Crypto Company Says It Reached Agreement For SEC To Drop Enforcement Case

NEW YORK — In a Form 8-K filing, Coinbase Global Inc. said it has reached an agreement in principle with the Securities and Exchange Commission to jointly dismiss litigation the SEC brought against it alleging that the company engaged in the unregistered sale of securities; on the same day the Second Circuit U.S. Court of Appeals granted the SEC’s motion for an extension to respond to Coinbase’s petition for permission to file an interlocutory appeal of a lower court’s divided ruling on its motion for judgment on the pleadings.
February 24, 2025
Investment Fund Waives Right To Respond To Petition In Note Repayment Dispute

WASHINGTON, D.C. — An investment fund waived its right to respond to a petition for a writ of certiorari filed in the U.S. Supreme Court by the fund’s founder and corporate affiliates after the Fifth Circuit U.S. Court of Appeals affirmed summary judgment on the investment fund’s behalf, determining that the lower court properly found that demand notes, borrowed by the founder on behalf of the corporate affiliates owned by the investment fund’s founder, were valid and due to the now-bankrupt investment fund.
February 21, 2025
5th Circuit Grants SEC’s Voluntary Dismissal Of Appeals In ‘Dealer Rule’ Cases

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals issued orders granting the Securities and Exchange Commission’s motions for voluntary dismissal of appeals in two cases where a federal judge in Texas found the SEC “engaged in unlawful agency action taken in excess of its authority” and vacated the SEC’s “Dealer Rule.”
February 20, 2025
Fund Manager Argues 1st Circuit Should Reverse Denial Of Fees In SEC Enforcement

BOSTON — A hedge fund manager and his company argue in an appellant reply brief that the First Circuit U.S. Court of Appeals should reverse a Massachusetts federal judge’s finding 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 sanctions the SEC demanded were excessive.
February 19, 2025
Final Approval Of Settlement Granted In Stock-Drop Suit Against Holding Company

ALBANY, N.Y. — A federal judge in New York granted final approval to an $850,000 settlement ending a class action filed by stockholders against a bank holding company for allegedly failing to disclose that the company maintained defective disclosure controls that increased the risk that it couldn’t timely file required financial reports with the Securities and Exchange Commission and become delisted from the NASDAQ, ultimately causing the stock price to drop after the alleged misrepresentations were disclosed.
February 19, 2025
Federal Judge Finds Investors’ Fraud Claims Fail To Meet Pleading Standards

MILWAUKEE — A federal judge in Wisconsin granted an energy-related products company’s motion to dismiss securities fraud claims brought by two pension funds, finding that the investors’ allegations of fraudulent nondisclosure surrounding the company’s COVID-19 pandemic-related gains and subsequent drop did not identify any false statements of material fact.
February 13, 2025
9th Circuit Holds Plaintiff Didn’t Prove Traceability In Direct Listing Case

SAN FRANCISCO — On remand from the U.S. Supreme Court, a Ninth Circuit U.S. Court of Appeals panel found that the lead plaintiff in a putative class action failed to prove that he purchased shares traceable to a technology company’s direct listing of shares as required when he brought claims under Section 11 of the Securities Act of 1933 alleging that the company issued false and misleading statements in the registration statement regarding issues with its service platform.
February 13, 2025
Federal Judge Dismisses Securities Claims Against CVS, Finds They Lack Specificity

PROVIDENCE, R.I. — A federal judge in Rhode Island dismissed shareholder claims against CVS Health Corp., certain executives and members of its board of directors and members of Aetna Insurance Corp.’s board of directors, finding that the shareholders’ securities law claims regarding alleged misrepresentations of CVS’s long-term care business at the time CVS and Aetna merged were insufficiently pleaded.
February 12, 2025
Federal Judge Grants Final Approval To Settlement In Six Flags Stock-Drop Suit

FORT WORTH, Texas — A federal judge in Texas granted final approval of a $40 million settlement in a case brought against Six Flags Entertainment Corp. and two of its former senior executives by stockholders who alleged that Six Flags violated federal securities law by issuing alleged misrepresentations regarding the company’s theme park expansion in China.
February 11, 2025
Proposed Deal Reported In SEC Fraud Action Against Former Brazilian Exec

NEW YORK — Parties in a U.S. Securities and Exchange Commission enforcement action against the former senior executive of a Brazilian reinsurance company announced an unspecified agreement in principle to settle the case, telling a New York federal court that a determination on whether the SEC commissioners “will accept the settlement offer can take several months.”
February 11, 2025
2nd Circuit: Former CEO’s Misdeeds Defeated Privilege Via Crime-Fraud Exception

NEW YORK — Any attorney-client privilege claimed in certain communications between a company’s former chief executive officer and his counsel was negated by the crime-fraud exception in light of securities filing failures and allegations of sexual misconduct, a Second Circuit U.S. Court of Appeals panel found.
February 06, 2025
Delaware High Court Reverses Ruling In D&O Coverage Dispute Over Securities Action

WILMINGTON, Del. — The Delaware Supreme Court reversed a Delaware judge’s ruling that an underlying federal securities lawsuit brought in 2016 against a pharmaceutical company insured is not “meaningfully” related to a May 7, 2015, subpoena issued by the Securities and Exchange Commission, finding that directors and officers liability coverage should have been placed in the pharmaceutical company’s first tower of insurance.
February 06, 2025
Split 2nd Circuit: Stockholder Properly Pleaded Loss Causation Against Game Company

NEW YORK — A split panel of the Second Circuit U.S. Court of Appeals determined that a former stockholder and former owner of American Depository Shares (ADS) sufficiently pleaded loss causation in its class action complaint against a video game company that allegedly committed securities fraud when taking the company private, vacating the lower court’s dismissal of those claims against the company.
February 06, 2025
Rhode Island Supreme Court Affirms Dismissal Of Securities Case Against CVS

PROVIDENCE, R.I. — A panel of the Rhode Island Supreme Court affirmed a lower court’s dismissal of stockholders’ complaint against CVS Health Corp. for violating federal securities laws by providing false or misleading statements in its stock offering documents, finding that while the lower court erred by finding that the case was collaterally estopped, the stockholders waived their right to address the lower court’s dismissal based on the merits of the case.
February 04, 2025
Federal Judge Awards Some Costs To Mylan In EpiPen Misrepresentation Suit

NEW YORK — A federal judge in New York issued a memorandum and order awarding some costs to drugmaker Mylan N.V. and certain of its current and former executives after previously granting summary judgment to Mylan and against stockholders who filed a class action suit against it alleging that the drugmaker made misrepresentations regarding its classification of the EpiPen and concealed its involvement in an anticompetitive rebate scheme that allowed Mylan to inflate the price of EpiPen.
February 04, 2025
9th Circuit Affirms Final Judgment Against Securities Fraud Participants

SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals issued a memorandum affirming the final judgments against three parties who were subject to a civil enforcement action brought by the Securities and Exchange Commission for their roles in a securities fraud scheme.
February 03, 2025
Delaware High Court Upholds Judgment, Discovery Ruling In Oracle Derivative Suit

DOVER, Del. — A Delaware trial court did not err in denying Oracle Corp. shareholders’ efforts to obtain certain documents from an investigation by a special litigation committee (SLC) in a derivative suit centering on Oracle’s acquisition of another tech company, the Delaware Supreme Court held, finding that the documents were largely protected by privilege.
February 03, 2025
Suit Over Investments Gone Bad Dismissed As Sanction For AI-Created Fake Cites

FORT LAUDERDALE, Fla. — A pro se plaintiff’s inclusion of fake cites in a brief opposing dismissal of his suit against former investment partners leads to the “firm conviction” that he used artificial intelligence (AI) to craft that brief regardless of his other explanations for the mistake, a federal judge in Florida said in dismissing the action as a sanction.
January 31, 2025
Judge Grants Final Approval Of $22M Settlement In Block.one EOS Securities Case

NEW YORK — A federal judge in New York granted final approval of a $22 million settlement in a class action accusing a company that promised that it would develop a software program enabling the creation of novel EOS cryptocurrency blockchain technologies of making “a host of materially false and misleading statements to induce investors to purchase EOS Securities” and failing to register its initial coin offering (ICO).
January 31, 2025
Shipping Company Did Not Violate Securities Laws In Seeking Investment, Jury Finds

DAYTON, Ohio — A jury in a federal court in Ohio found that a shipping company didn’t violate federal securities laws or commit fraud in seeking investment from a trucking-logistics company in a consolidated case where the trucking-logistics company alleged that the shipping company used misinformation to induce its investment and the shipping company alleged that the trucking-logistics company breached their contract.