In a swift move, the U.S. Senate endorsed to the Committee on Banking the Securities Act of 2008 the bill that seeks to enhance the powers of the Securities and Exchange Commission ("SEC"). The referral came less than twenty four hours after the House of Representatives passed, and then sent… More...
The Senate has referred to its Committee on Finance a “bill to require greater disclosure of senior corporate officer compensation, to empower shareholders and investors to protect themselves from fraud, to limit conflicts of interest in determining senior corporate officer compensation, to ensure integrity in Federal contracting, to close corporate… More...
A senate bill that directs the Attorney General to establish a program of grants to states for the protection of senior citizens from securities fraud remained under scrutiny at the Committee on Judiciary. The bill, known as the “Senior Investment Protection Act of 2008,” is entitled “A bill to protect… More...
The House referred to its Committee on Financial Services a bill known as the “Securities Act of 2008” that enhances the effectiveness of the Securities and Exchange Commission’s ("SEC") enforcement, corporation finance, trading and markets, investment management, and examination programs. Rep. Paul E. Kanjorski (PA-11), Chairman of the House Subcommittee… More...
U.S. Senator John Cornyn (TX) introduced a bill that seeks to protect private investors by promoting transparency and accountability of attorneys in private securities litigation. The proposed legislation introduced on May 19, 2008 and entitled Securities Litigation Attorney Accountability and Transparency Act seeks to curb the allegedly rampant practice of… More...
Following are Securities Law Commentaries elaborating on the significance of the most important of the Securities Law Summaries.
Commentary: In the case Magnolia Capital Advisors Inc. v. Bear Stearns, the 11th Circuit Court reversed a decision of the Northern District of Florida to order the parties to arbitration pursuant to their purported agreement. The 11th Circuit found that Magnolia had met the requirements set forth by court precedent and 9 USC § 4 to challenge the enforcement of the arbitration agreement, thus compelling the district court to hold a trial on the issue of the agreement’s enforceability before compelling arbitration. Because the district court failed to hold such a trial, the 11th Circuit reversed the district court’s decision and remanded the case for that trial. The requirements to challenge the enforcement of an arbitration agreement and compel a trial under 9 USC § 4 are not new. However, there have not been that many reported cases where a plaintiff has actually succeeded in meeting those requirements. The Magnolia case is instructive, therefore, in demonstrating the type of evidence a plaintiff can submit to make a “colorable denial” of the arbitration agreement. More...
Related summary: Circuit Court Remands Bear Stearns Fraud Case for Trial
Commentary: The Tellabs tale really has two parts – part one is a Supreme Court decision, which ultimately remanded the case back to the 7th Circuit to apply its ruling, and part two is the subsequent 7th Circuit decision. The Supreme Court decision in Tellabs Inc. v. Makor Issues & Rights Inc., 127 S.Ct. 2499, 2511 (2007), set forth a new standard for proving scienter in cases alleging violation of Section 10(b) of the Securities Exchange Act of 1934, but many analysts questioned the wisdom of a standard they said would require the court to engage in a “mini-trial” even before discovery. Those concerns were given legs in the 7th Circuit’s opinion on remand – the court essentially came right out and found fraud against the corporate defendant before the case had really even begun. More...
Related summary: Supreme Court Vacates 7th Circuit Judgment in Tellabs v. Makor, Orders Remand
Commentary: In Roth v. Jennings, 489 F.3d 499 (2nd Cir. 2007), the Second Circuit Court revisited the issue of pleading a “group” 1 for purposes of Section 13(d) of the Securities Exchange Act of 1934. The court reversed a district court’s dismissal of a plaintiff’s Section 16(b) claim seeking disgorgement of short-swing profits. The appellate court said that the district court had improperly given too much weight to the defendants’ disclaimers of their “group” status in SEC filings and had misconstrued the final sentence of Section 16(b), which states that the section does not apply if the short-swing trader is not a “beneficial owner” at both ends of the purchase-sale transaction. More...
Related summary: Second Circuit Affirms in Part and Vacates in Part District Court's Ruling in Roth v. Jennings
Commentary: While the cases of Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71 (2006), Lander v. Hartford Life & Annuity Life Ins. Co., 251 F.3d 101 (2d Cir.2001), SEC v. Variable Annuity Life Ins. Co. of Am., 359 U.S. 65 (1959) (“VALIC”), and Fisher v. Kanas, 2007 WL 1352713 (E.D.N.Y.), 487 F.Supp.2d 270 may have heightened the bar for filing class action lawsuits before state courts involving a “purchase and sale” of a “covered security” both as defined under the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), the instant case of Ring v. Axa was a deviation from this line of cases, as the Court of Appeals established a fine distinction of what is a “covered security” and what is not within the meaning of the SLUSA. More...
Related summary: Second Circuit Remands Ring v. AXA, Reverses District Court's Ruling
Commentary: This case is a continuation of a line of jurisprudence that seeks to impose a strict limitation on the right of stockholders to initiate class action law suits in state courts. More...
Related summary: NY District Court Dismisses Class Action Suit in Fisher v. Kanas
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Investment Advisers Act of 1940 (pdf, 131kb)
Investment Company Act of 1940 (pdf, 400kb)
Sarbanes-Oxley Act of 2002 (pdf, 195kb)
Securities Act of 1933 (pdf, 241kb)
Securities Exchange Act of 1934 (pdf, 927kb)
Trust Indenture Act of 1939 (pdf, 154kb)
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