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Mealey's Securities

May 14, 2024
5th Circuit: States Lack Standing For Review Of SEC Vote Disclosure Rule

NEW ORLEANS — A panel of judges in the Fifth Circuit U.S. Court of Appeals dismissed without prejudice a request by four states to review a Securities and Exchange Commission rule that will require investment funds to disclose proxy voting records on issues related to environmental, social and governance (ESG) matters, determining that the states lack standing because they failed to show how investors in their states would suffer an economic injury as a result of the rule.
May 13, 2024
11th Circuit: Liquidators Untimely Appealed Distribution Plan In SEC Enforcement

ATLANTA — The 11th Circuit U.S. Court of Appeals denied a petition for rehearing filed by the joint official liquidators of an investment fund named as a relief defendant in an enforcement action brought by the Securities and Exchange Commission who requested that the appeals court reconsider its determination that the liquidators untimely appealed a Florida federal judge’s approval of a distribution plan.
May 10, 2024
$6M Fracking Securities Deal Gets Final Approval From Ohio Federal Judge

YOUNGSTOWN, Ohio — A federal judge in Ohio on May 9 granted final approval to a $6 million settlement in a securities fraud case pertaining to a hydraulic fracturing company, ruling that the relief that shareholders in the company will receive passes the test for “fairness, reasonableness, and adequacy of the settlement.”
May 09, 2024
Magistrate Denies Motion For Indicative Relief In FCA Suit Alleging Overcharging

SAN FRANCISCO — A California federal magistrate judge denied a relator’s motion for an indicative ruling that pursuant to the Ninth Circuit U.S. Court of Appeals’ decision in United States ex rel. Silbersher v. Valeant Pharms. Int’l, Inc., a similar False Claims Act (FCA) suit brought by the same relator, the magistrate judge should grant the relator “relief” from the judgment on appeal to the Ninth Circuit after dismissing his claims that pharmaceutical companies overcharged the federal government and states under Medicare and Medicaid.
May 07, 2024
9th Circuit: Judge Failed To Consider Investors’ Arguments When Staying Claims

SAN FRANCISCO — A panel of judges in the Ninth Circuit U.S. Court of Appeals reversed a California federal judge’s decision to stay all proceedings in a putative securities class action brought against an energy company over alleged misstatements about its wildfire safety protocols before a series of large fires in California, certain of its executives, directors and bond underwriters after the company’s bankruptcy, finding that the judge failed to consider whether the stay would cause hardships that outweigh any benefits.
May 07, 2024
Parties Reach Agreement In Principle To Settle Fracking Securities Litigation

HOUSTON — A federal judge in Texas has issued an order directing the parties in a shareholder lawsuit against a hydraulic fracturing operator and three of its senior executives to file a settlement agreement and a motion for preliminary approval in light of the parties’ joint motion notifying the district court that they have reached an agreement in principle to settle the case. The parties did not provide details related to the agreement.
May 07, 2024
3rd Circuit: De Novo Review Must Be Used For Shareholders’ Demand Futility Appeals

PHILADELPHIA — The Third District U.S. Court of Appeals determined in an en banc opinion that de novo review, and not abuse-of-discretion review, should be the standard of review when the court reviews a federal judge’s decision to dismiss a shareholder derivative complaint for a plaintiff’s failure to plead demand futility, overturning precedent that has been in place in the Third Circuit since 1992.
May 03, 2024
Delaware Supreme Court Revives Investor Derivative Suit Against Tech Company

WILMINGTON, Del. — The Delaware Supreme Court reversed a decision from the Delaware Court of Chancery dismissing a derivative shareholder putative class complaint brought by investors against a technology company and certain of its executives challenging the acquisition of the company by a private equity firm, finding that the Court of Chancery erred in holding that minority stockholders were adequately informed about the merger.
May 02, 2024
2nd Circuit Largely Finds Bank Can’t Bring Claims Over Mortgage-Backed Securities

NEW YORK — A panel of the Second Circuit U.S. Court of Appeals narrowly agreed with a German banking organization that appealed multiple orders from federal judges in New York in its suit claiming that another banking organization mishandled residential mortgage-backed securities (RMBS), finding that no action clauses in agreements for the securities do not preclude the bank from filing claims.
April 30, 2024
5th Circuit Vacates Class Certification In Oil Company Securities Suit

NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel vacated a class certification order issued by a federal judge in Texas in a securities action brought by investors against a petroleum corporation and certain of its executives, finding that the judge erred by not allowing the petroleum company to file a sur-reply after the investors included evidence for the first time in a reply brief.
April 30, 2024
Shareholders To 3rd Circuit: Revive Securities Case Against Reinsurer, Execs

PHILADELPHIA — Arguing in part that one holding “invented a ‘total eclipse’ standard lacking any basis in” Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, shareholders filed an appellant brief challenging discovery and summary judgment rulings in a suit over allegations that a reinsurer and some of its former executives violated federal securities laws.
April 30, 2024
Investors: Facebook Mischaracterizes 9th Circuit Ruling In High Court Petition

WASHINGTON, D.C. — Investors who brought a securities putative class complaint against the social media giant formerly known as Facebook Inc. tell the U.S. Supreme Court in an April 29 opposition brief that the Ninth Circuit U.S. Court of Appeals did not create a circuit split when it partly revived the complaint, saying Facebook is wrong to say the Ninth Circuit held that companies must disclose events that pose no risk of business harm.
April 29, 2024
High Court Won’t Consider Constitutionality Of Musk Consent Judgment With SEC

WASHINGTON, D.C. — The U.S. Supreme Court on April 29 denied a petition for a writ of certiorari from Elon Musk, who argued that the Securities and Exchange Commission violated his constitutional rights by imposing prior restraint as a condition for a consent judgment he signed with the SEC.
April 26, 2024
7th Circuit Revives Some ERISA Claims In Suit Over Company’s Valuation

CHICAGO — A Seventh Circuit U.S. Court of Appeals panel upheld dismissal of all federal securities and state law claims in a sprawling suit involving an employee stock ownership plan (ESOP) and alleged price inflation but reversed and remanded on some Employee Retirement Income Security Act claims against the selling company’s directors and officers and the ESOP’s independent trustees.
April 26, 2024
Investor Tells High Court 9th Circuit Erred In Finding He Lacked Standing To Appeal

WASHINGTON, D.C. — In a petition for a writ of certiorari, an investor asks the U.S. Supreme Court to consider whether he had standing to bring an appeal in a securities putative class complaint he initially brought against a digital health care company after a retirement fund was named lead plaintiff, arguing that the Ninth Circuit U.S. Court of Appeals incorrectly found that he lacked standing.
April 26, 2024
Settlement Of Securities Claims Against Pharmaceutical Company Preliminarily OK’d

CAMDEN, N.J. — A federal magistrate judge in New Jersey granted preliminary approval to a $97 million settlement in a case brought against a pharmaceutical company and certain of its executives by shareholders accusing the company of artificially inflating stock value to stave off a buyout.
April 26, 2024
Amici Tell 5th Circuit SEC Approval Of Nasdaq Rule Was Unconstitutional

NEW ORLEANS — Neary half of the U.S. states comprise one of five groups to submit an amicus curiae brief in the Fifth Circuit U.S. Court of Appeals in support of two petitioners who question whether the Securities and Exchange Commission had the right to approve a rule implemented by 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.
April 25, 2024
SEC Files 2nd Appeal Of Finding It Can’t Call Voting Advice ‘Solicitation’

WASHINGTON, D.C. — The Securities and Exchange Commission appealed to the District of Columbia Circuit U.S. Court of Appeals a federal judge’s ruling that the SEC acted in excess of its authority when it issued rule changes redefining proxy voting advice as a type of “solicitation,” days after an advocacy group that acted as an intervener filed an appeal of its own.
April 25, 2024
Settlement Of Shareholder Derivative Claims Against EV Maker Gets Final Approval

DENVER — A federal judge in Colorado granted final approval to a settlement in a shareholder derivative complaint filed by an investor who claimed that an electric vehicle manufacturer made misleading claims about its ability to scale up production following a merger, finding the settlement that includes a $1.85 million payout to be used for other legal defenses to be fair and adequate.
April 25, 2024
Lead Plaintiffs Selected For Securities Complaint Over Boeing’s Safety Record

ALEXANDRIA, Va. — A federal judge in Virginia appointed a retirement system and a pension fund to serve as lead plaintiffs in a putative class complaint originally filed by the retirement system on behalf of investors of the Boeing Co. alleging that the company and certain of its executives made misleading statements about the safety of the company’s 737 MAX airplane.
April 23, 2024
Propriety Of $100 Stability AI Stock Sale At Issue In Delaware Briefing

WILMINGTON, Del. — A man who claims that he was duped into selling what are now millions of dollars’ worth of Stability AI Inc. shares for $100 tells a Delaware court that he reasonably relied on statements that the company was worthless. But the defendants say in their motion to dismiss that the man had his own reasons for selling the stock and that he hopes to receive a windfall based on a case of buyer’s remorse.
April 23, 2024
9th Circuit Finds Investors Didn’t Show Falsity Of Claims From Intel

SAN FRANCISCO — In a four-page opinion, a Ninth Circuit U.S. Court of Appeals panel affirmed a California federal judge’s dismissal of a putative class complaint brought by investors against computer chip manufacturer Intel Corp. and certain of its executives, finding that the investors failed to show that the company knowingly issued false statements about the timeline of a new product’s launch.
April 22, 2024
9th Circuit: Investor Failed To Show Company’s Scienter For False Statements

SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals on April 19 affirmed a California federal judge’s dismissal of a putative class complaint brought by an investor of an informational services company, finding that the investor failed to show that the company and certain of its executives knowingly issued misleading statements about company activities and how the alleged false statements caused a loss.
April 19, 2024
9th Circuit Affirms Dismissal Of Investors’ Suit Against Gaming Company

SAN FRANCISCO — A panel of the Ninth Circuit U.S. Court of Appeals affirmed a California federal judge’s decision to dismiss a putative class complaint brought by investors against a gaming company and certain of its officers, agreeing that the investors did not show that the company misled investors through false statements about the technical aspects of its mobile gaming platform.
April 19, 2024
Jury Finds SEC Showed Man Used Info From Employer For Insider Trades

SAN FRANCISCO — A federal jury in California found a man liable after the Securities and Exchange Commission accused him of using confidential information about the acquisition of his employer to buy stock options in a different company.