Securities Law Summaries
No. D050159, 2007 WL 2128908,
Cal.App. 4 Dist., 07/26/2007
Holding: In this petition for a writ of mandate filed against respondent Superior Court of San Diego County, the California Court of Appeal for the Fourth District, Division 1, ruled in favor of petitioner California Department of Corporations (the “DOC”) in finding thatCalifornia Corporations Code Section 25612, stating that no rule, form, or order could be made, amended, or rescinded unless the Commissioner of the Department of Corporations found that the action was necessary or appropriate in the public interest or for the protection of investors, grants petitioner Department of Corporations a “pervasively discretionary” authority to address violations of the statute, even though the statute is couched in mandatory language The court found that the Legislature intended that violations of Section 25612 would not give rise to any private right of action against a government agency for rescinding a cease and refrain order. The court therefore granted the DOC’s petition for a writ of mandate filed against respondent Superior Court of San Diego County, and the claims filed against the DOC for redress of investment losses suffered by private investors were ordered dismissed.
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03-12545, 2007 WL 2141701,
11th Cir.(Fla.), 07/27/2007
Holding: In this appeal, the U.S. Court of Appeals for the Eleventh Circuit ruled that a securities fraud suit involving a stock manipulation scheme called "short squeeze" was time-barred. In ruling against plaintiff Mark Tello, as representative of those similarly situated in this class action, the court applied the old statute of limitations and the new Sarbanes-Oxley Act (SOA), which prescribe one-year and two-year limits, respectively, from the time of discovery of the facts constituting the violation. According to the Federal Circuit, a news article in The Washington Post should have placed plaintiff on notice, as established in his deposition, and not the drastic share price drop, since the latter could be explained in ways other than securities fraud. It was in that news article that the scheme was explained and where the reader was referred to various internet sites for information. Because the complaint was filed more than four years after plaintiff was put on inquiry notice by the news publication, he could not avail himself of the five-year limitation period under the SOA. This statute provides that the "earlier" of the two time periods - the two year and the five-year ones - should prevail. The Federal Circuit ordered that the suit was time barred and the dismissal was warranted.
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05-6979-cv, 2007 WL 2127874,
C.A.2 (N.Y.), 07/26/2007
Holding: In this appeal filed against the decision of the United States District Court for the Southern District of New York, which dismissed for being time-barred securities fraud claims against certain underwriters, the US Court of Appeals, Second Circuit, vacated the order of dismissal, and remanded the proceedings on the ground that the American Pipe doctrine could be invoked by putative class members who filed individual suits prior to the resolution of the class certification question.
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06-CV-6294T, 2007 WL 2027385,
W.D.N.Y., 07/13/2007
Holding: In this securities fraud class action instituted under Section 10(b), as amended by the Private Securities Litigation reform Act (PSLRA), where competing motions were filed seeking to be appointed as lead plaintiff, the United States District Court for the Western District of New York applied the rule that applications for lead plaintiff status of “net gainers” and “net sellers” have been consistently rejected in previous cases in view of the profits they may have gained out of these transactions.
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06 C 3166, 2007 WL 2027673,
N.D.Ill., 07/10/2007
Holding: In this insider suit instituted by the Securities and Exchange Commission (SEC) against an alleged tippee who supposedly received information, coming from a non-defendant member of the board of directors of a listed corporation, that the same corporation was about to be acquired by another company, engaged in the trading of shares of that corporation, and later urged others to trade on such shares, the United States District Court for the Northern District of Illinois, Eastern Division, denied the defendants’ motion for summary judgment on the ground that triable issues of fact exist.
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Securities Law Commentaries
Following are Securities Law Commentaries elaborating on the significance of the most important of the Securities Law Summaries.
Page 1 of 4 of Securities Law Commentaries 1 2 3 > Last »
Guyden v. Aetna
Posted: 12/31/2008
Commentary: In Guyden v. Aetna, 544 F.3d 376 (2nd Cir. 2008) – a case of first impression in the federal circuit courts -- the Second Circuit confirmed that arbitration provisions are enforceable against an employee who claims that her termination violated the whistleblower protections of the Sarbanes-Oxley Act. The opinion confirms the federal court’s strong support of arbitration provisions, and provides some guidance for employers seeking to implement arbitration agreements.
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Related summary: Whistleblower Claims Arbitrable under Sarbanes-Oxley Act, Second Circuit Says
In re: Salomon Analyst Metromedia Litigation
Posted: 12/12/2008
Commentary: In Douglas Millowitz v. Citigroup Global Markets et al (“In Re Salomon Analyst Metromedia Litigation”), 544 F.3d 474 (2nd Cir. 2008), the Second Circuit extended the fraud-on-the-market presumption of reliance, first set forth in Basic v. Levinson, 485 U.S. 224 (1988), to analyst reports. The Court also stated that defendants should be afforded the opportunity to rebut that presumption at the class certification stage in an effort to prevent certification. The opinion may make it harder to pursue class actions in some securities fraud cases.
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Related summary: Second Circuit Remands Metromedia Case, Rules that Liability Presumption Now Applies to Stock Analysts as Well
In re Merck & Co., Inc. Securities, Derivative & “ERISA” Litigation
Posted: 11/17/2008
Commentary: In In re Merck & Co., Inc. Securities, Derivative & “ERISA” Litig., ___ F.3d ___, 2008 WL 4138476 (3rd Cir. 2008), a federal circuit court revived a securities fraud class action suit against Merck that accuses the pharmaceutical company of hiding the truth about Vioxx and its link to cardiac problems. The district court had dismissed the class action as time barred, claiming that the plaintiffs were on inquiry notice more than two years before filing the suit. In a split decision on appeal, the Circuit Court disagreed, finding that reassuring messages from Merck and the market prevented plaintiffs from being on inquiry notice until much later.
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Related summary: Third Circuit Reinstates Vioxx Class Action Suit Against Merck
Enterprise Fund v. PCAOB
Posted: 10/23/2008
Commentary: In its long-awaited opinion in Free Enterprise Fund v. PCAOB, 537 F.3d 667 (D.C. Cir. 2008), the Circuit Court for the D.C. Circuit upheld the Sarbanes-Oxley Act of 2002 – specifically that Act’s establishment of the Public Company Accounting Oversight Board (“PCAOB”) – against constitutional challenges. The plaintiffs argued that Act violates both the Appointments Clause of the Constitution as well as separation-of-powers principles by creating the PCAOB as a virtually independent, autonomous agency over which the President has minimal practical control and authority. The Court disagreed, finding that the Securities and Exchange Commission, over which the President has an appropriate amount of control, has sufficient legal authority over the PCAOB to support a finding that the Act is constitutional. But this case is far from over – appeals are expected, including to the U.S. Supreme Court, meaning that the future of Sarbanes-Oxley is still in question.
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Related summary: DC Circuit Upholds Constitutionality of SEC Audit Panel
Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc.
Posted: 09/19/2008
Commentary: In its highly anticipated opinion in Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190 (2nd Cir. 2008), the Second Circuit affirmed that a securities fraud plaintiff can plead corporate scienter without specifically identifying the culpable corporate officer or director whose individual scienter could be imputed to the corporation. The plaintiff need only plead facts sufficient to establish a “strong inference” that someone in the corporation whose acts could be imputed to the corporation acted with the requisite scienter. However, the court warns that the standard for making such a pleading is very high, requiring heightened specificity.
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Related summary: Second Circuit: Securities Class Suit Failed to Plead Corporate Scienter Against Dynex and Merit
Page 1 of 4 of Securities Law Commentaries 1 2 3 > Last »
