The U.S. Court of Appeals for the Eleventh Circuit held that a contest providing venture-capital funding only to Black female applicants is substantially likely to violate section 1981 of the Civil Rights Act of 1866, which prohibits race discrimination in the making of contracts.  The 2-1 split decision in American Alliance for Equal Rights v. Fearless Fund Management, LLC (No. 23-13138, June 3, 2024) held that an organization devoted to “ending racial classifications and racial preferences in America” was substantially likely to prevail on its § 1981 claim to enjoin the restricted contest, and it remanded the case for entry of a preliminary injunction.

A federal District Court in Ohio recently ruled that a white litigant did not have standing to assert a discrimination claim against a contest that had provided grants to Black-owned businesses.  The decision in Roberts v. Progressive Preferred Insurance Co. (N.D. Ohio May 21, 2024) held that the plaintiff lacked standing to seek retrospective relief under § 1981 of the Civil Rights Act because he had not alleged he would have received a grant had he been able to apply for one.  He also lacked standing to seek prospective relief because the defendants had dropped the race-based eligibility criteria from the following year’s grant program.

The U.S. Supreme Court recently held that the anti-fraud provision of the Securities Exchange Act does not prohibit “pure omissions,” but only false statements or misleading half-truths.  The unanimous decision in Macquarie Infrastructure Corp. v. Moab Partners, L.P. (April 12, 2024) holds that § 10(b) of the Exchange Act and the SEC’s Rule 10b-5(b) require a statement that is false or misleading.  A pure omission that does not render a statement false or misleading is not actionable, at least in private actions.

A federal jury in California agreed with the SEC that a corporate official engaged in insider trading when he purchased securities of a company based on material nonpublic information (“MNPI”) about a different company. The April 5, 2024 verdict for the SEC in SEC v. Panuwat (N.D. Cal.) could embolden the SEC to pursue more claims of “shadow trading,” which involves trading the securities of a public company that is not the direct subject of the MNPI but whose stock price allegedly would be affected by that news.

The U.S. Court of Appeals for the Eleventh Circuit affirmed an injunction against enforcement of portions of Florida’s “anti-woke” law, which prohibits employers from requiring employees to attend training sessions or other activities that “espouse” or “promote” eight “concepts” relating to race, color, sex, or national origin. The unanimous decision in Honeyfund.com, Inc. v. Governor, State of Florida (11th Cir. Mar. 4, 2024) held that the Florida statute draws “distinctions based on viewpoint – the most pernicious forms of dividing lines under the First Amendment” – and cannot be sustained as an “attempt to control speech by recharacterizing it as conduct.”

Well – this took four months. The U.S. Court of Appeals for the Fifth Circuit ordered en banc rehearing of an unsuccessful challenge to the Securities and Exchange Commission’s approval of the Nasdaq Stock Market’s rules concerning diversity of directors on boards of Nasdaq-listed companies. The rules – which a panel of the Fifth Circuit upheld in October 2023 – require listed companies to disclose director-diversity information and either to have a certain number of diverse directors or to explain why not. We blogged about that decision here.

A federal district court in Missouri recently denied a motion to dismiss the Securities Industry and Financial Markets Association’s (“SIFMA’s”) challenge to Missouri Securities Division rules that require financial firms and professionals to obtain clients’ signatures on state-prescribed documents before providing advice that “incorporates a social or nonfinancial objective.” The decision – Securities Industry and Financial Markets Association v. Ashcroft – upholds a noteworthy response from the securities industry to the anti-ESG backlash that has emerged in the past few years and has politicized investment decisionmaking.