The U.S. Supreme Court held that the Seventh Amendment to the U.S. Constitution entitles a defendant to a jury trial when the Securities and Exchange Commission seeks to impose civil penalties for violations of the federal...more
6/28/2024
/ Administrative Law Judge (ALJ) ,
Administrative Proceedings ,
Article III ,
Bars ,
Civil Monetary Penalty ,
Enforcement Actions ,
Jury Trial ,
Public Rights Doctrine ,
SCOTUS ,
SEC v Jarkesy ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act of 1934 ,
Securities Fraud ,
Seventh Amendment
The Second Circuit held yesterday that a government agency’s nonpublic, pre-decisional regulatory information does not constitute “property” for purposes of the federal insider-trading and wire-fraud statutes. The decision...more
The Court of Appeals for the Second Circuit yesterday reversed the dismissal of a securities class action alleging fraud based on the defendants’ failure to disclose an SEC investigation into the company’s disclosed...more
The SEC prevailed on a motion to dismiss a closely watched lawsuit alleging that the defendant had engaged in insider trading based on news about a not-yet-public corporate acquisition when he purchased securities of a...more
1/20/2022
/ 10b5-1 Plans ,
Acquisition Agreements ,
Enforcement Actions ,
Fiduciary Duty ,
Insider Trading ,
Material Nonpublic Information ,
Misappropriation ,
Motion to Dismiss ,
Popular ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation ,
Securities Regulation ,
Securities Transactions ,
Securities Violations
The Securities and Exchange Commission’s Investor Advisory Committee (the “IAC”) is considering recommendations from its Owner Subcommittee urging the Commission to tighten the affirmative defense and disclosure requirements...more
The SEC recently charged a former employee of a biopharmaceutical company with insider trading in advance of an acquisition but with a unique twist: Trading the securities of a company unrelated to the merger. ...more
8/25/2021
/ Acquisition Agreements ,
Enforcement Actions ,
Insider Trading ,
Misappropriation ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation ,
Securities Transactions ,
Securities Violations ,
Stock Options ,
Stock Prices
The Second Circuit yesterday affirmed the insider trading conviction of the principal of a potential acquiror who, in breach of a nondisclosure agreement with a potential target company, had provided a tippee with nonpublic...more
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...more
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...more
1/2/2020
/ Breach of Duty ,
Centers for Medicare & Medicaid Services (CMS) ,
Confidential Information ,
Duty of Trust ,
Enforcement Actions ,
EU Market Abuse Regulation (EU MAR) ,
Illegal Tipping ,
Insider Trading ,
Material Nonpublic Information ,
Personal Benefit ,
Rule 10(b) ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Fraud ,
Wire Fraud
One of the more intriguing rulings of this Supreme Court Term is the Court’s one-sentence order yesterday dismissing as improvidently granted the writ of certiorari issued in Emulex Corp. v. Varjabedian (No. 18-459). The...more
4/25/2019
/ Emulex Corp. v Varjabedian ,
Implied Right of Action ,
Mergers ,
Negligent Misrepresentation ,
Private Right of Action ,
Proxy Solicitations ,
Rule 10(b) ,
Rule 10b-5 ,
Scienter ,
SCOTUS ,
Securities Exchange Act ,
Securities Fraud ,
Tender Offers
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...more
The Supreme Court ruled today that judicially created principles that toll statutes of limitations for class members in timely filed class actions apply only to subsequently filed individual actions, not to follow-on class...more
6/12/2018
/ Appeals ,
China Agritech Inc v Resh ,
Class Action ,
Class Certification ,
Class Members ,
Equitable Tolling ,
FRCP 23 ,
Putative Class Actions ,
Reversal ,
SCOTUS ,
Securities Fraud ,
Statute of Limitations ,
Subsequent Litigation
The Fourth Circuit ruled yesterday that a plaintiff can sufficiently plead loss causation to establish a securities-fraud claim based on an “amalgam” of two theories: corrective disclosure, and materialization of a concealed...more
2/27/2018
/ Disclosure Requirements ,
False Claims Act (FCA) ,
Form 8-K ,
Healthcare Fraud ,
Internal Investigations ,
Loss Causation ,
Material Misrepresentation ,
Qui Tam ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Subpoenas
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...more
Cornerstone Research recently released its 2016 midyear assessment of federal securities class-actions filings. The report finds an increase in filings in the first half of 2016, with particular increases in M&A filings,...more
On July 20, 2016, the U.S. Court of Appeals for the Sixth Circuit 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...more
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...more
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...more
Last week, the Ninth Circuit issued a decision that could affect analyses of corporate scienter in securities class actions. The court reversed the dismissal of In re ChinaCast Education Corporation Securities Litigation and...more
10/28/2015
/ Apparent Authority ,
Board of Directors ,
CEOs ,
Class Action ,
Corporate Counsel ,
Corporate Officers ,
Exceptions ,
Fraud-on-the-Market ,
Professional Misconduct ,
Scienter ,
Securities Fraud ,
Shareholder Litigation
The Securities and Exchange Commission joined the raging debate about whether SEC administrative proceedings conducted by administrative law judges (“ALJs”) are unconstitutional if the ALJs have not been appointed in...more
The travails of Petrobras have generated a lot of attention – and litigation – in the past year. On July 30, 2015, District Judge Jed Rakoff, of the Southern District of New York, issued an opinion explaining his prior order...more
8/4/2015
/ Brazil ,
Bylaws ,
Corporate Officers ,
Corruption ,
Investors ,
Kickbacks ,
Mandatory Arbitration Clauses ,
NYSE ,
Petrobras ,
Putative Class Actions ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Fraud ,
Shareholder Litigation
A federal judge in the Southern District of New York recently sustained the SEC’s insider-trading complaint against two alleged tippees, holding that, under the pleading standard applicable to a motion to dismiss, the SEC...more
6/11/2015
/ Asset Freeze ,
FRCP 9(b) ,
Insider Trading ,
Motion to Dismiss ,
Pleading Standards ,
Pleadings ,
Quid Pro Quo ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Tippees ,
US v Newman
The Court of Appeals for the Seventh Circuit last week reversed a $2.46 billion judgment in a long-running securities-fraud class action against Household International and granted a new trial on limited issues. The opinion...more
5/29/2015
/ Appeals ,
Burden-Shifting ,
Class Action ,
False Statements ,
Janus Capital Group ,
Lenders ,
Loss Causation ,
Misrepresentation ,
Reversal ,
Rule 10b-5 ,
Securities Fraud ,
Stock Drop Litigation
The U.S. Court of Appeals for the Third Circuit added its voice yesterday to the ongoing judicial effort to construe the U.S. Supreme Court's 2010 decision in Morrison v. National Australia Bank, concerning the extent to...more
1/28/2015
/ Appeals ,
Cross-Border Transactions ,
Extraterritoriality Rules ,
Market Manipulation ,
Morrison v National Australia Bank ,
OTCBB ,
SCOTUS ,
Securities ,
Securities Exchange Act ,
Securities Fraud ,
Stock Exchange
Yesterday, U.S. District Judge Andrew L. Carter, Jr. rejected the argument by the U.S. Attorney’s Office for the Southern District of New York to limit the Second Circuit’s decision in United States v. Newman to classical...more
1/26/2015
/ Hedge Funds ,
Illegal Tipping ,
Insider Trading ,
Material Nonpublic Information ,
Mergers ,
Misappropriation ,
Personal Benefit ,
Portfolio Managers ,
Publicly-Traded Companies ,
Securities ,
Securities Fraud ,
US v Newman