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Balancing Act – Sixth Circuit Attempts Middle-of-the-Road Approach with New Corporate Scienter Standard

Balancing Act – Sixth Circuit Attempts Middle-of-the-Road Approach with New Corporate Scienter Standard In KBC Asset Mgmt. N.V. v. Omnicare, Inc. (In re Omnicare, Inc. Sec. Litig.), No. 13-5597, 2014 U.S. App. LEXIS...more

Delaware Chancery Rejects Books and Records Demand as Time-Barred

The Delaware Court of Chancery recently found that a shareholder’s demand for books and records was time-barred, as the alleged basis for a derivative action occurred nearly seven years ago and thus was well beyond any...more

Bridging the Week - October 2014 #3

High-Frequency Trading Firm Pays US $1 Million for Serving Too Much “Gravy” on the Close From June to December 2009 - Athena Capital Research, LLC, a New York City-based high-frequency trading firm, settled charges...more

Sixth Circuit Narrows Collective-Knowledge For PSLRA Scienter

The US Sixth Circuit last week narrowed its standard for adequately pleading scienter in PSLRA cases using a collective-knowledge theory to impute knowledge to a corporate defendant from among various employees. In Omnicare,...more

SEC Brings Another Offering Fraud Case

The Commission filed another in what appears to be an unending series of offering fraud actions. Unlike many of its prior cases, this action centers on a Respondent who kept shifting his scheme to continually raise more money...more

In re Cornerstone Therapeutics Inc. S'holder Litig., Consol. C.A. No. 8922-VCG (Del. Ch. Sept. 10, 2014) (Glasscock, V.C.)

In this opinion on a motion to dismiss, the Court of Chancery held that, in a controller transaction governed by entire fairness review, a plaintiff need not specifically plead non-exculpated breaches of duty as to...more

This Week In Securities Litigation

The Commission prevailed in three litigated decisions. The agency secured a favorable jury verdict in an action centered on an offering fraud. In two other cases — one based on misrepresentations regarding the only company...more

Corporate State of Mind in Securities Cases: The Sixth Circuit Blazes a New Trail

Analysis of the corporate mens rea is, by definition, contrived and one with which federal courts have struggled. Unlike instances where an individual is charged with securities fraud, determining the “thinking” or...more

Ross Holding and Mgmt. Co. v. Advance Realty Group, LLC, C.A. No. 4113-VCN (Del. Ch. Sept. 4, 2014) (Nobel, V.C.)

In this post-trial memorandum opinion, the Court of Chancery evaluated a reorganization under the entire fairness standard, and held that, although plaintiffs received a fair price, the unfair process infected the entire...more

Court Dismisses Suit Alleging Fraud by Merrill Lynch in the Sale of RMBS

On October 8, Justice Charles E. Ramos of the New York Supreme Court for the County of New York, Commercial Division entered an order dismissing an amended complaint brought by Phoenix Light SF Limited, Silver Elms CDO PLC,...more

Wells Fargo Compliance Officer Charged With Altering Document

The acquisition of Burger King by 3G Capital Partners is the matter that just keeps on giving – at least for SEC enforcement. Initially, the Commission brought an action against Wells Fargo broker Waldyr Da Silva Prado Neto,...more

SEC Charges Private Equity Fund Adviser with Misallocating Expenses between Portfolio Companies

The U.S. Securities and Exchange Commission (SEC or Commission) issued a cease and desist order on September 22, 2014 (Order) against private equity fund adviser Lincolnshire Management, Inc. (Lincolnshire). The Order alleged...more

SEC Comment Letters–A New Twist on Insider Trading?

A few days ago the New York Times reported a recent study by three professors at the Haas School of Business at the University of California at Berkley that notes increased insider sales just prior to the EDGAR filing of...more

This Week In Securities Litigation

The Fifth Circuit decided a significant case on loss causation. The Court concluded that the truth could emerge from a series of disclosures which, in and of themselves were not sufficient to uncover the fraud, but which when...more

SEC Brings Another ATM Based Ponzi Scheme Case

Ponzi and investment scheme cases are a staple of SEC enforcement in the post Madoff world. Emerging, however, may be a new trend based on a subset of these frauds – investments in ATM machines. At the close of last month the...more

The Supreme Court approves a new tool to defeat class certification in federal securities fraud cases brought in the Fifth Circuit...

The Supreme Court decision in Halliburton v. Erica P. John Fund, Inc., 134 S.Ct. 2398 (2014) concerns a federal securities fraud class action. The case was appealed from the Fifth Circuit. In Haliburton, the Supreme Court...more

SEC Settles Insider Trading Case, Finding Roommate Relationship Created Duty of Trust and Confidence

The Securities and Exchange Commission recently accepted an offer of settlement submitted by Filip Szymik, in anticipation of a cease-and-desist proceeding resulting from the purported insider trading in Herbalife, Ltd....more

Loss Causation In A Securities Fraud Case From a Stream of Small Disclosures

A critical element in a Section 10(b) and Rule 10b-5 securities fraud claim for damages is loss causation. Mandated as a key component of such a claim by the PSLRA, the element provides the essential link between the alleged...more

Lincolnshire Pays $2.3 Million to Settle SEC Charges of Misallocation of Portfolio Company Expenses

On September 22, 2014, New York-based private equity firm Lincolnshire Management, Inc. (Lincolnshire) agreed to pay $2.3 million to settle Securities and Exchange Commission (SEC) allegations that Lincolnshire misallocated...more

SEC Insider Trading Cases as Administrative Proceedings – A New Trend?

Traditionally, the SEC has brought insider trading cases as civil injunctive actions. The recent emphasis on administrative proceedings, however, appears to be changing that. Earlier this week the agency brought an insider...more

Supreme Court Urged to Consider Excessive Fee Case

The Supreme Court will soon announce whether it will address the scope of ERISA’s six-year statute of repose when applied to a claim that investments selected more than six years before suit commenced were imprudent due to...more

A Compilation of Enforcement and Non-Enforcement Actions

Non-Enforcement - Cost of Proposed User Fees by Registered Investment Advisers Further Discussed - SEC Valuation Guidance for All Funds - Update on Insider Trading in Mutual Fund...more

Bridging the Week - September 2014 #3

Court Permits Customer and IB Claims to Proceed Against U.S. Bank Over Peregrine Collapse - A US federal court in Illinois authorized two lawsuits arising from the collapse of Peregrine Financial Group to proceed...more

S.D.N.Y. Judge Permits Novel Theory And Allows SEC To Use Unpaid Taxes As Measure Of Disgorgement In Securities Fraud Case

In a case against Dallas billionaires Sam Wyly and the estate of his late brother, Charles, Judge Shira Scheindlin of the U.S. District Court for the Southern District of New York agreed with the U.S. Securities and Exchange...more

Supreme Court Considers Whether A Bribe Or Secret Commission Received By An Agent Is The Property Of The Principal

In HR European Ventures LLP & ors v Cedar Capital Partners LLC [2014] UKSC 45, 16 July 2014, the Supreme Court held that bribes and secret commissions, received by an agent, should be treated as the property of the principal...more

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