The Second Circuit held today that putative securities class actions involving transactions in non-U.S.-listed securities require careful scrutiny to determine whether the class members’ claims can be litigated on a classwide basis. The court’s ruling in In re Petrobras Securities (No. 16-1914) will likely increase the difficulty of certifying securities class actions arising from transactions in non-U.S.-listed foreign securities.
On June 26, the U.S. Supreme Court ruled that the pendency of a securities class action does not allow individual class members to opt out of the class and file separate actions under the Securities Act of 1933 more than three years after the relevant securities offering took place. The Court’s decision in California Public Employees’ Retirement System v. ANZ Securities, Inc. – which likely applies as well to securities-fraud suits under the Securities Exchange Act of 1934 – establishes that statutes of repose such as the three-year statute in the Securities Act (and the five-year statute in the Exchange Act) are designed to limit defendants’ liability and cannot be tolled based on equitable considerations.
The Amsterdam Court of Appeal denied approval of the €1.204 billion collective settlement of former Fortis (now Ageas) shareholders’ claims unless the parties agree to restructure the allocation of the settlement amount among class members and the compensation for the organizations that filed the proceeding. The court’s June 16, 2017 decision does not undermine the use of the Dutch Act on Collective Settlement of Mass Claims (the “WCAM”) to resolve transnational disputes, but it constrains the ways in which parties can allocate the settlement amount and pay attorneys’ fees.
Terrorist attacks, most recently in London and Manchester, England, have raised the pressure on law enforcement and lawmakers in countries like the U.K. and the U.S., to proactively intercept and interrupt terrorist communications. On May 24, members of the Senate Judiciary Committee’s Subcommittee on Crime and Terrorism addressed practical issues regarding warrants for overseas data in a hearing titled “Law Enforcement Access to Data Stored Across Borders.” Continue Reading
The SEC has continued to pursue a number of insider trading cases this year, both large-scale and small. Some of those matters involved trades that yielded relatively small amounts of profits: $40,000-$60,000. Why does the enforcement division spend resources on these smaller cases? First, they serve as a reminder that violations can be identified, even if trades are relatively small. And the cases are relatively easy to prove when a connection to an insider source can be readily identified. More importantly, these cases demonstrate that the SEC is uncovering new leads through data analysis.
It is worth noting that the FY 2018 budget recently published by the White House proposes eliminating the SEC’s annual $50 million “Reserve Fund,” created under Dodd-Frank and used to advance the SEC’s technological resources. Although the budget is unlikely to be passed in its current form, cutting this fund may affect the SEC’s funding to mine and analyze large data sets. Continue Reading
A federal court in Utah recently held that the Securities and Exchange Commission may bring an enforcement action based on allegedly foreign securities transactions involving non-U.S. residents if sufficient conduct occurred in the United States. Continue Reading
A Pennsylvania federal court held yesterday that an agreement not to use confidential inside information for trading purposes need not precede the receipt of that information in order to create liability under the misappropriation theory of insider trading. The ruling in SEC v. Cooperman (E.D. Pa.) appears to be the first decision to address the “novel issue” of “[w]hether liability under the misappropriation theory of insider trading may be premised on a post disclosure agreement” not to trade on or otherwise use inside information.
This decision, if followed by other courts, could give the Government greater leeway in pursuing claims against persons who allegedly agreed not to trade on material, nonpublic information received from corporate insiders. The decision allows such claims to proceed even if the Government cannot specify when the alleged agreement was made, as long as the agreement preceded the actual trading. Continue Reading