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 Court of Appeals for the Second Circuit held yesterday that a securities-fraud plaintiff cannot establish corporate scienter without pleading facts showing that employees who allegedly knew of underlying corporate misconduct had some connection to the corporation’s purportedly false or misleading public statements. The decision in Jackson v. Abernathy should prevent securities plaintiffs from establishing “collective” … Continue Reading
The Second Circuit held earlier this week that the criminal statute proscribing securities fraud permits convictions for insider trading without proof that the provider of material, nonpublic information received a personal benefit in exchange for that information, even though proof of a personal benefit would be required under the general securities-law statute prohibiting insider trading. … Continue Reading
The Court of Appeals for the Second Circuit yesterday affirmed the dismissal of a securities class action alleging misrepresentations arising from generalized statements about an issuer’s compliance efforts and Code of Ethics. The decision in Singh v. Cigna Corporation held that such generic statements are not material because a reasonable investor could not have relied on … Continue Reading
The Second Circuit confirmed this week that a “meaningfully close personal relationship” is not required for insider-trading liability where a tipper discloses inside information as a gift with the intent to benefit the tippee. The June 25, 2018 decision on panel rehearing in United States v. Martoma (No. 14-3599) retreats from the panel’s original decision and no longer … Continue Reading
The Supreme Court ruled today that, when a foreign government presents a formal submission to a federal court about the content of the government’s own laws, the court should accord “respectful consideration” to the government’s statements, but is not bound to grant them “conclusive effect.” The decision in Animal Science Products, Inc. v. Hebei Welcome … Continue Reading
The Second Circuit ruled today that a “meaningfully close personal relationship” is not required for insider-trading liability where a tipper discloses inside information as a gift or in exchange for some other type of nonpecuniary personal benefit. The requisite personal benefit exists “whenever the information was disclosed ‘with the expectation that [the recipient] would trade … Continue Reading
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 … Continue Reading
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 … Continue Reading
The Supreme Court confirmed today that the “personal benefit” required to establish a claim for insider trading can consist of making a gift of material, nonpublic information to a family member or friend and that an exchange of “something of a pecuniary or similarly valuable nature” is not required. The decision in Salman v. United … Continue Reading
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 Tuesday, the Second Circuit in In Re Vitamin C Antitrust Litigation vacated a $147 million award against two Chinese companies for engaging in anti-competitive behavior. At issue was how a federal court should respond when a foreign government’s regulatory scheme conflicts with U.S. laws. Because the Chinese companies could not simultaneously comply with Chinese law … Continue Reading
A handful of recent SEC defeats in administrative proceedings have caused us to question the conventional narrative that the SEC has a distinct “home field advantage” before its own administrative law judges. According to analysis conducted by the Wall Street Journal, the SEC had a 90% win rate in contested cases it brought before its … 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
On March 4, 2016, the U.S. Court of Appeals for the Second Circuit reinforced the stringency of the new standard for liability in securities cases arising from allegedly misleading statements of opinion. Construing the Supreme Court’s 2015 Omnicare decision, the Second Circuit held in Gen. Partners Glenn Tongue v. Sanofi Pharmaceuticals, Inc. that a statement … Continue Reading
The Second Circuit last week affirmed the conviction of a former corporate executive on charges of insider trading. The court’s unpublished decision on January 14 in United States v. Riley held that the Government had adduced sufficient evidence that the defendant had received a personal benefit – in the form of investment advice – in exchange … Continue Reading
The Second Circuit held last week that a borrower did not waive the attorney-client privilege by providing documents to a consortium of lender banks that shared a common legal interest with the borrower in the tax treatment of a refinancing and corporate restructuring resulting from an acquisition originally financed by the consortium. The November 10, 2015 … 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
After months of will-he-or-won’t-he speculation about whether the U.S. Solicitor General would ask the Supreme Court to review the Second Circuit’s restrictive insider-trading decision in United States v. Newman, the question has now been answered. The Government filed a certiorari petition on July 30, 2015 asking the Supreme Court to clarify the nature of the “personal … Continue Reading
The U.S. Court of Appeals for the Ninth Circuit appears to have rebuffed aspects of the Second Circuit’s recent effort to narrow liability for insider trading. The Ninth Circuit’s decision today in United States v. Salman holds that insiders can engage in insider trading if they disclose material nonpublic information with the intent to benefit … Continue Reading
The Second Circuit today denied the request by the U.S. Attorney’s office for the Southern District of New York for panel or en banc rehearing of the landmark U.S. v. Newman decision, which overturned insider-trading convictions of two remote tippees by (i) holding that a tippee must know that the insider tipper received a personal benefit … Continue Reading
The Second Circuit Court of Appeals recently deferred to the SEC’s determination that a tipster who provided information to the Commission before July 21, 2010, the effective date of the Dodd-Frank Act, is not eligible to receive a whistleblower bounty payment. Stryker v. SEC, Case No. 13-4404-ag (2d Cir. Mar. 11, 2015).… Continue Reading
The U.S. Government filed a petition seeking panel and en banc rehearing of the Second Circuit’s December 2014 decision in United States v. Newman and Chiasson, ___ F.3d ___, 2014 WL 6911278 (2d Cir. Dec. 10, 2014). That highly publicized decision – about which we blogged here – overturned insider-trading convictions of two remote tippees by (i) holding that a tippee must know … Continue Reading
Over the last five years, the U.S. Attorney for the Southern District of New York, Preet Bharara, has aggressively pursued insider-trading cases against a broad spectrum of defendants. As a result, insider trading remains a topic of public interest—especially in the compliance community. On December 23, 2014, Compliance Week published an article on the Second … Continue Reading
