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Delaware Law Updates - Demand Refused Rule 23.1 Explained by the Delaware Court of Chancery

In a recent decision out of the Delaware Court of Chancery – Friedman v. Maffei et al., C.A. No. 111105-VCMR – the court’s second-newest member, Vice Chancellor Montgomery-Reeves, dismissed a proposed derivative complaint on...more

SEC Files Offering Fraud Action Centered on Warrants From Private Firm

The SEC filed another offering fraud action, a current staple of the agency. This scheme centered on two former executives of a privately held software manufacturer and a marketer who sold investors interests in various...more

SEC Prevails In Jury Trial Against Former CEO of Drug Firm

The SEC prevailed at trial against the former CEO of a biopharmaceutical company on claims that he made false and misleading statements regarding the regulatory approval status of the firm’s only drug. Following a two week...more

SEC Settles Insider Trading Action With Corporate Executive

Insider trading has long been a staple of SEC enforcement. The agency has brought a number of actions against corporate executives who have abused their position by using inside information entrusted to them for personal gain...more

5 Wishes for Securities Litigation Defense

I am committed to helping shape a system for securities litigation defense that helps directors and officers get through securities litigation safely and efficiently, without losing their serenity or dignity, or facing any...more

Why Delaware Corporations Should Worry About California Law When Making Dividends

When paying a dividend to shareholders, California corporations are subject to Chapter 5 of the California Corporations Code. Corporations incorporated in Delaware and other states may also be subject to Chapter 5 if they...more

SEC Sanctions Audit Firm, Partner Tied to Custody Rule

Custody Rule cases are rapidly becoming a staple of SEC enforcement. Rule 206(4)-2 requires registered investment advisers with custody of client funds or securities to implement certain controls to protect those assets....more

This Week In Securities Litigation

The SEC requested comment on the development of a consolidated audit trail this week, a concept long discussed. The audit trail would enable regulators to track trading activity in the U.S. markets. Enforcement initiated...more

Split 8th Circuit Rejects Class Certification in 10b-5 Case

In IBEW Local 98 Pension Fund v. Best Buy Co. Inc., Plaintiffs alleged that misleading statements by Best Buy officers made during a phone call with stock analysts artificially supported Best Buy’s stock prices until a report...more

Underwriters May Have Expertise But That Does Not Make Them “Experts”

In the LBP Holdings v. Allied Nevada Gold Corp. decision released on April 27, 2016, the Ontario Superior Court of Justice refused to allow the underwriters of a secondary public offering (SPO) to be added as defendants to a...more

Plaintiffs Find California Courts Congenial To Section 11 Actions

Muttering About Mottoes - The official motto of the State of California is “Eureka”. Cal. Gov’t Code § 420.5. The word is a transliteration of the Greek word e????a which is first person, singular, indicative active...more

SEC Complaint: How To Create A Manipulation Vehicle

Microcap fraud has long been a focus of SEC enforcement. Many of the cases start with a public shell followed by a reverse merger in which the promoters end up with large portions of the stock. The transaction culminated with...more

Class Certification: Halliburton II and Basic

The predicate for many securities class actions is the fraud-on-the-market theory, adopted by the Supreme Court in Basic, Inc. v. Levinson, 485 U.S. 224 (1988). There the Court held that a securities law plaintiff could...more

Court Affirms Holding That A Trust Owns Stock That Was Issued To The Trustee In His Individual Capacity

In Dutcher v. Dutcher-Phipps Crane & Rigging, Inc., a trust owned twenty percent of a family limited partnership that in turn owned a family business. No. 08-15-00202-CV, 2016 Tex. App. LEXIS 3809 (Tex. App.—El Paso 2016, no...more

District Court Holds Private Equity Funds Jointly Liable for Portfolio Company's ERISA Withdrawal Liability

The U.S. District Court for the District of Massachusetts ruled on March 28, 2016 that two private equity funds were jointly and severally liable for the multiemployer pension plan withdrawal liability of their jointly-owned...more

SEC Settles With Apple Stock Day Trader

Apple stock is well known and popular among investors. It is also attractive to fraudsters who focus on the high tech giant’s shares for schemes. One scheme, for example, brought down New York brokerage Rochdale Securities...more

This Week In Securities Litigation

The Commission prevailed at trial in a market manipulation case. The trial followed a series of settlements and a grant of summary judgment in the Commission’s favor as to one defendant. The remaining defendant, a former NFL...more

Hong Kong Market Misconduct: SFC Extends Enforcement Power to Insider Dealing in Overseas Listed Securities – Part 2

Section 300 of the Securities and Futures Ordinance (the “SFO”) prohibits the use of fraudulent or deceptive schemes or engagement in any practice which is fraudulent or deceptive “in a transaction involving securities,...more

The SEC’s Increasing Use of Data Analysis

The Commission has increasingly focused on data analysis as an aid to its enforcement program. Two recent cases brought against investment advisers for cherry picking illustrate different facets of the approach....more

Second Circuit Stresses Control, Not Attribution, In Applying Janus’s “Ultimate Authority” Test, And Also Allows Expert Testimony...

In Janus Capital, the Supreme Court established the “ultimate authority” test to determine who may be liable under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) as a “maker” of a materially misleading...more

Eighth Circuit Denies Class Certification in Securities Fraud Suit, Finding the “Fraud-on-the-Market” Presumption of Reliance Did...

On April 12, 2016, the U.S. Court of Appeals for the Eighth Circuit issued a significant decision denying class certification in a federal securities fraud action, holding that the defendants had rebutted the...more

SEC Prevails At Trial Over Former Professional Athlete

Sometimes is does not pay to be the last man standing – particularly in a Commission enforcement action. Such was the fate of former NFL player and Olympic athlete Willie Gault. SEC v. Heart Tronics, Inc., Case No....more

Investing in Law Suits – Just Another Offering Fraud Says SEC

The lure of big profits from the settlement of large personal injury law suits was the hook used by a lawyer and his partner to attract investors to Prometheus Law. The thought of all those dollars — virtually riskless...more

CFTC Announces $10 Million Whistleblower Award, Its Largest Award Yet

The Commodity Futures Trading Commission (“CFTC”) recently announced the largest ever award under its Whistleblower Program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The whistleblower...more

Securities Class Action Filings 2015: More Cases, Small Issuers

A new report on securities class actions records an increase in the number of filings in 2015. Most of those actions were brought against smaller issuers, according to the report. PWC, Small Companies, Big Targets – 2015...more

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