Important developments in U.S. securities law, white collar criminal defense, regulatory enforcement and other emerging issues impacting financial services institutions, publicly traded companies and private investment funds
The U.S. Court of Appeals for the Second Circuit issued a lengthy opinion today in the long-running In re Vivendi, S.A. Securities Litigation, affirming the jury’s verdict on liability and addressing issues about loss causation and expert-witness testimony. But the tail on the proverbial dog also dealt with another set of issues that this blog … Continue Reading
On September 9, 2016, the SEC filed a complaint against RPM International Inc. (“RPM”) and the company’s General Counsel/CCO. The SEC claims the company filed false and misleading SEC filings that failed to disclose any loss contingency relating to a DOJ investigation that the company eventually settled for $60.9 million. The complaint also charged the … Continue Reading
The U.S. Court of Appeals for the Ninth Circuit held today that the Sarbanes-Oxley Act’s disgorgement provision – which requires disgorgement of certain CEO and CFO compensation when an issuer restates its financial statements “as a result of misconduct” – applies even if the CEO and CFO were not personally involved in the misconduct. Although … Continue Reading
Last week, in an opinion authored by Judge Richard Posner, the U.S. Court of Appeals for the Seventh Circuit rejected a proposed class-action settlement arising from Walgreen Co.’s acquisition of the Swiss-based pharmacy company, Alliance Boots GmbH. In re Walgreen Co. Stockholder Litigation, No. 15-3799 (7th Circ. Aug. 10, 2016). Judge Posner’s sharply-worded opinion endorsed … Continue Reading
The U.S. Court of Appeals for the Sixth Circuit yesterday recognized the “materialization of the risk” standard as a means of proving loss causation in securities-fraud cases. The court’s decision in Ohio Public Employees Retirement System v. Federal Home Loan Mortgage Corp. aligns the Sixth Circuit with the majority of other circuits, which have also … Continue Reading
The U.S. Court of Appeals for the Second Circuit has allowed the defendants in the Petrobras securities litigation to pursue an immediate appeal from the District Court’s order certifying classes of investors who had purchased unlisted Petrobras securities in off-exchange transactions. The appeal in In re Petrobras Securities Litigation could help resolve questions about whether … Continue Reading
On June 1, 2016, the U.S. Securities and Exchange Commission announced a $3.12M settlement with Maryland-based registered investment adviser, Blackstreet Capital Management, LLC, and its managing member and principal owner, Murry N. Gunty. The SEC’s finding that Blackstreet acted as an unregistered broker-dealer in portfolio company transactions highlights the regulatory focus on broker registration for … Continue Reading
A three judge panel in the Eleventh Circuit issued a ruling last Thursday in Securities and Exchange Commission v. Barry Graham et al., Case No. 14-13562, holding—contrary to several other circuits—that the remedy of disgorgement was effectively a forfeiture, and therefore subject to the standard five-year statute of limitations. The SEC brought this case in … Continue Reading
The U.S. District Court for the Central District of California held on May 20, 2016 that the federal securities laws do not apply to U.S. transactions in unlisted, unsponsored American Depositary Receipts (ADRs) for a foreign issuer’s shares. The decision in Stoyas v. Toshiba Corporation also held that principles of international comity and forum non … Continue Reading
The U.S. Supreme Court’s decision yesterday in Merrill Lynch v. Manning clarified the scope of federal jurisdiction under the Exchange Act in certain important respects, but also left open critical issues that may arise in future cases. Although the Court rejected federal jurisdiction in resolving the sole issue that was before it, the Court also … Continue Reading
The U.S. Court of Appeals for the Second Circuit yesterday affirmed the fraud conviction of a registered investment adviser and held that proof of intent to harm is not an element of a criminal conviction under section 206 of the Investment Advisers Act of 1940, 15 U.S.C. §80b-6 (“IAA”). The court’s decision in U.S. v. Tagliaferri, … Continue Reading
Cornerstone Research’s latest annual report discloses that the number and average size of securities class-action settlements increased in 2015 as compared to 2014. Total settlement dollars rose to more than $3 billion – similar to the annual average for the prior five years, but a significant increase from 2014. Cornerstone attributes the 2015 increase in … Continue Reading
The Second Circuit held yesterday that Item 303 of SEC Regulation S-K requires issuers to disclose only those trends, events, or uncertainties about which the issuer has actual knowledge, rather than those matters about which the issuer allegedly should have known. The court’s decision in Indiana Public Retirement System v. SAIC, Inc. also reinforced prior … Continue Reading
The Second Circuit has clarified the applicable statutes of repose for securities-fraud and proxy-related claims under §§ 9(f), 14(a), and 18(a) of the Securities Exchange Act. The court’s March 17, 2016 decision in DeKalb County Pension Fund v. Transocean Ltd. holds that the five-year statute of repose enacted in the Sarbanes-Oxley Act of 2002 (“SOX”) applies to … Continue Reading
In re Petrobras Securities Litigation continues to produce interesting developments – this time on SLUSA preemption and Brazilian law. On March 12, 2016, the U.S. District Court for the Southern District of New York held that the Securities Litigation Uniform Standards Act (“SLUSA”) does not preempt claims asserted under foreign law and that Brazilian law … Continue Reading
The United States District Court for the Southern District of New York yesterday certified two classes of investors who had purchased Petrobras securities on U.S. exchanges or in other U.S. transactions. The February 2, 2016 decision in In re Petrobras Securities Litigation held that potential questions about whether foreign courts would recognize a U.S. class-action judgment and … Continue Reading
The narrowing of the federal securities laws’ applicability to non-U.S. transactions continues. On December 21, 2015, the U.S. District Court for the Southern District of New York held in In re Petrobras Securities Litigation that certain purchasers of Petrobras debt securities could not sue under the federal securities laws. In so ruling, the court held … Continue Reading
The FINRA Dispute Resolution Task Force issued its final report last week, making certain recommendations designed to improve the arbitration process. More notably, however, the Task Force reported that it was unable to reach agreement on a number of more controversial issues, reflecting deep divisions among practitioners in this area.… Continue Reading
In 2015, we saw high-profile whistleblower litigation around the country under a variety of statutes (such as SOX and Dodd-Frank) that yielded decisions expanding the scope of protected activity and even limiting defenses to causation. We also saw significant activity from the U.S. Securities and Exchange Commission’s Office of the Whistleblower that caused employers to revisit … Continue Reading
The SEC announced this week its proposal to substantially overhaul the rules regarding alternative trading systems (“ATS”), often referred to as dark pools. The proposed rules would require firms operating ATSs to make additional disclosure about business activities that may present conflicts of interest between firms and ATS subscribers, and considerable information as to how … Continue Reading
On October 20, 2015, SEC Chair Mary Jo White gave the keynote address at the “Evolving Structure of the U.S. Treasury Market” conference organized by the U.S. Department of Treasury and the Federal Reserve Bank of New York. The conference and speech follow this summer’s Joint Staff Report analyzing the significant volatility that the U.S. … Continue Reading
Following the D.C. Circuit’s July 14, 2015 decision in Koch et al. v. Securities and Exchange Commission, No. 14-1134 (D.C. Cir. July 14, 2015), which held that the SEC could not retroactively punish an investment advisor for conduct that occurred prior to the enactment of the statute authorizing the punishment, the SEC announced last week … Continue Reading
The Supreme Court today refused to grant review of the Second Circuit’s restrictive insider-trading decision in United States v. Newman. The Government, through the Solicitor General, had asked the Supreme Court to clarify the nature of the “personal benefit” that a tipper must receive in order to create liability for insider trading. But the Supreme … Continue Reading
Mistakes in computer coding by a high frequency trading firm that went undetected for approximately four years were responsible for approximately 12.6 million orders that violated Reg NMS, according to an Order settling an enforcement proceeding with Latour Trading LLC, announced by the SEC on September 30. These noncompliant orders involved more than $4.6 billion … Continue Reading
