In This Issue:
- AUDITOR LIABILITY
- CLASS ACTIONS
- CONFIDENTIAL WITNESSES
- DEMAND FUTILITY
- DERIVATIVE LITIGATION
- FEDERAL TORT CLAIMS ACT
- FOREIGN CORRUPT PRACTICES ACT
- INSIDER TRADING CLAIMS
- INTERPRETING JANUS
- LOSS CAUSATION
- PRIVATE SECURITIES LITIGATION REFORM ACT
- PROXY SOLICITATIONS
- SEC ENFORCEMENT ACTIONS
- SECURITIES ACT CLAIMS
- SECURITIES FRAUD PLEADING STANDARDS
- Excerpt from AUDITOR LIABILITY: S.D.N.Y. Certifies Class on Claims That Accounting Firm Allegedly Helped Company Hide Losses and Overstate Revenue: In re Winstar Commc’ns Sec. Litig., No. 01 Civ. 3014 (GBD) (S.D.N.Y. Apr. 17, 2013):
Judge George B. Daniels of the U.S. District Court for the Southern District of New York certified a class on claims that an accounting firm violated Section 10(b) of the Securities Exchange Act by allegedly helping a telecommunications company hide losses and overstate revenue. The numerosity and commonality requirements were satisfied because the class consisted of more than 26,000 shareholders and bondholders who allegedly suffered the same injury from the same alleged misrepresentations. The decision follows the U.S. Court of Appeals for the Second Circuit’s recent opinion in NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012), which held that a lead plaintiff had standing to bring claims on behalf of investors in mortgage-backed securities it did not own so long as those claims implicated the same set of concerns as claims arising from securities it did own. In addition, the lead plaintiff — a mutual fund — was typical and adequate, even though it purchased stock only on behalf of its investors, because the fund was a fiduciary for its shareholders and the fund’s shareholders could not have brought suit themselves. Further, the defendants did not show that the lead plaintiff traded on material nonpublic information (allegedly gained during a road show). Finally, investors were entitled to the fraud-on-the-market presumption of reliance because the company’s common stock and bonds traded on an open and active market and the challenged statements were publicly made, and thus, individual issues of reliance did not predominate.
Please see full memorandum below for more information.
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Topics: Audits, Class Action, Confidential Witnesses, Demand Futility, Derivative Suit, FCPA, Insider Trading, Liability, Loss Causation, Misrepresentation, Private Securities Litigation Reform Act of 1995, Proxy Solicitations, Scienter, SEC, Securities Fraud, Tort Claims Act
Published In: Business Organization Updates, Business Torts Updates, Civil Procedure Updates, Constitutional Law Updates, Securities Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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