Federal Securities Laws

Subscribe to Federal Securities Laws via RSS

Thanks to HBO’s documentary, “The Inventor: Out for Blood in Silicon Valley,” and a barrage of media coverage about Elizabeth Holmes and her defunct company, Theranos, it is unmistakable that big misrepresentations can lie in public statements regarding miniscule quantities of blood.

This lesson proved true again last month, when the CEO of Decision Diagnostics, a pharmaceutical testing company, widely publicized that the company could accurately test for COVID-19, providing near-instant results with only a finger-prick of blood. In one press release, the CEO, Keith Berman, went so far as to say the COVID-19 testing would be “commercial ready” by summer of 2020.  The market took note, and the company’s stock soared (by a whopping 1,200%) following Berman’s statements.

On December 11, 2020, the United States Supreme Court granted certiorari in a shareholder securities litigation against Goldman Sachs.[1] On appeal, Goldman argues that federal securities law permits issuer defendants in purported class actions to rebut the presumption of reliance where the alleged misstatements are of such a generic…

The U.S. District Court for the Northern District of California held on January 4, 2017 that the federal securities laws apply to U.S. transactions in sponsored, but unlisted, American Depositary Receipts (“ADRs”) for a foreign issuer’s shares. The decision in In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation adds to the handful of decisions addressing whether U.S. transactions in sponsored, but unlisted, ADRs are covered by the federal securities laws. Most of those decisions have held that U.S. law applies to those transactions. The Volkswagen ruling also joins the majority of decisions in holding that the over-the-counter (“OTC”) markets are not considered to be “exchanges” for purposes of determining the scope of the federal securities laws.