On January 1, 2021, Congress enacted the Corporate Transparency Act as part of the Anti-Money Laundering Act of 2020 to “better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity.” FinCEN issued the final rule on Beneficial Ownership
Second Circuit Holds that Accurately Reported Financial Statements Are Not Actionable and that Materiality Has a Half-Life
The U.S. Court of Appeals for the Second Circuit held earlier this week that a company’s accurately reported financial statements are not misleading simply because they do not disclose that alleged misconduct might have contributed to the company’s financial results. The court also ruled that alleged misstatements made three to four years before the plaintiffs purchased the issuer’s securities were not material as a matter of law where an “outpouring of information” about the alleged misconduct followed those purported misstatements and preceded the plaintiffs’ securities purchases.
The decision in Plumber & Steamfitters Local 773 Pension Fund v. Danske Bank A/S (2d Cir. Aug. 25, 2021) squarely aligns the Second Circuit with other courts that have held that accurately reported financial results are not actionable even if undisclosed alleged misconduct purportedly contributed to the financial performance. The decision also highlights the need to consider whether a particular shareholder can be an optimal class representative where the complaint alleges a long class period.
First Circuit Adopts Prevailing Standard for Applicability of Federal Securities Laws to Foreign Investors, But Rejects Second Circuit’s Narrower Test
The U.S. Court of Appeals for the First Circuit held yesterday that the U.S. securities laws apply to foreign brokers’ solicitations of securities purchases by foreign investors if the purchasers or sellers incurred irrevocable liability within the United States to pay for or deliver the securities. The decision in SEC v. Morrone follows the “irrevocable liability” test that the Second, Third, and Ninth Circuits previously adopted to determine whether the federal securities laws apply to transactions in securities not listed on a U.S. exchange. However, the First Circuit disagreed with other Second Circuit precedent holding that, even if a domestic transaction has occurred under the “irrevocable liability” standard, the transaction still might be too foreign for U.S. law to apply.
DOJ Moves to Dismiss Public Corruption Charges Against Former VA Governor
Last week, the U.S. Attorney’s Office for the Eastern District of Virginia moved to dismiss public corruption charges against former Virginia Governor Robert McDonnell, and his wife, Maureen McDonnell. The decision comes after the U.S. Supreme Court unanimously vacated the former Governor’s corruption conviction earlier this summer. McDonnell v. United States, 579 U. S. ____ (2016). The government’s decision not to further pursue charges against the McDonnells is a signal that prosecutors are paying heed to the Supreme Court’s warnings about over-aggressive interpretations of criminal statutes and that they had scant additional evidence against the McDonnells.
Proskauer Hedge Fund Seminar Recap: Fallout From the Second Circuit’s Insider-Trading Ruling
On Thursday, February 5, 2015, Ralph C . Ferrara, Robert J. Cleary and Jonathan E. Richman were invited to Proskauer’s Hedge Fund Breakfast Seminar to speak about the Second Circuit’s insider-trading ruling in Newman/Chaisson. The litigators provided the group of hedge fund professionals with a helpful overview of