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.

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.

The Delaware Court of Chancery recently held that claims for breach of the fiduciary duty of oversight are not easier to plead against corporate officers than against corporate directors. The decision in Segway Inc. v. Cai emphasizes the high burden for pleading oversight claims against officers as well as directors, and it repeats the admonition that the oversight doctrine “is not a tool to hold fiduciaries liable for everyday business problems.”

On November 29, the U.S. Treasury Department’s Financial Crimes Enforcement Network issued a final rule aimed to ease compliance with certain aspects of the regulations promulgated under the Corporate Transparency Act. The final rule extends the deadline from 30 days to 90 days for entities created or registered during 2024

The SEC defeated a motion for summary judgment brought by a defendant whom the SEC accused of engaging in insider trading based on news about a not-yet-public corporate acquisition when he purchased securities of a company not involved in that deal. The November 20, 2023 decision in SEC v. Panuwat (N.D. Cal.) keeps alive the SEC’s theory of “shadow trading,” which involves trading the securities of a public company that is not the direct subject of the material nonpublic information (“MNPI”) at issue.

The Panuwat decision does not appear to break new ground under the misappropriation theory of insider trading in light of the particular facts alleged. But the “shadow trading” theory warrants attention because it can potentially have wide-ranging ramifications for traders by broadening the scope of the types of nonpublic information that might be deemed material.