Scienter

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Second Circuit: Intent to Harm Is Not Required for Criminal Conviction Under Investment Advisers Act

On May 4, 2016, the U.S. Court of Appeals for the Second Circuit affirmed the fraud conviction of a registered investment adviser and held that proof of intent to harm is not an element of a criminal conviction under section...more

Bill Aims To Negate Scienter

You can thank the Romans for science and the English for knowledge - The etymon of “scienter” is sciens which is the present participle form of the Latin verb meaning to know (scire). The English word “know” is derived...more

Inside the Courts: An Update From Skadden Securities Litigators - February 2016 / Volume 8 / Issue 1

We are pleased to present Inside the Courts (Volume 8, Issue 1), Skadden’s securities litigation newsletter. This quarter’s issue includes summaries and associated court opinions of selected cases principally decided between...more

SEC’s Charges Provide Support for Class Plaintiffs’ Allegations in the Ocwen Securities Litigation

A December 22, 2015 decision of the U.S. District Court of the Southern District of Florida in In re Ocwen Financial Corporation Securities Litigation illustrates the impact that an investigation and order of the Securities...more

5 Securities Litigation Issues to Watch in 2016

The coming year promises to be a pivotal one in the world of securities and corporate governance litigation. In particular, there are five developing issues we are watching that have the greatest potential to significantly...more

Reform Act Report Card: The Private Securities Litigation Reform Act, 20 Years Later

In 2015, the Private Securities Litigation Reform Act* turned twenty years old. Over my career as a securities litigator, I’ve seen both sides of the securities-litigation divide that the Reform Act created. In the...more

First Circuit Overturns SEC Commissioners’ Sanctions Order

As we have discussed before, the SEC’s increased use of in-house administrative proceedings in enforcement actions involving allegations of fraud has been a subject of considerable debate. Commentators have questioned the...more

First Circuit Overturns SEC Ruling in Flannery v. SEC

The First Circuit’s decision underscores the limits of court deference to Commission decisions, gives teeth to the “substantial evidence” standard of review, and provides a valuable roadmap for evaluating and defending...more

First Circuit Reverses SEC In State Street Bank Case

The long ordeal of two former employees of State Street Bank and Trust Company appears to have come to an end. Initially charged by the SEC with making false statements in the mist of the market crisis, the Administrative Law...more

Ninth Circuit Severely Limits “Rogue Employee” Exception for Corporations in Securities Fraud Cases

In an issue of first impression, the Ninth Circuit Court of Appeals recently held that a rogue corporate officer’s fraudulent intent can be imputed to a corporation even where the defrauding officer acted against the...more

Inside the Courts: An Update From Skadden Securities Litigators - November 2015 / Volume 7 / Issue 4

We are pleased to present Inside the Courts (Volume 7, Issue 4), Skadden’s securities litigation newsletter. This quarter’s issue includes summaries and associated court opinions of selected cases principally decided between...more

Punitive Damages – How Much Increased Risk Is Enough?

Back in 2009 – when the blog was still a Bexis/Herrmann operation – we wrote a catch-all punitive damages post entitled (oddly enough) “On Punitive Damages.” That post identified and briefly discussed a variety of punitive...more

OMNICARE and its Implications

In the spring of this year, the Supreme Court issued its long-awaited decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S.Ct. 1318 (2015), resolving a circuit split regarding the...more

Defrauded Defendant Defenseless Against Investors: Ninth Circuit Imputes Scienter of Embezzling CEO to Corporation for 10b-5...

Malfeasance by a corporate insider against his company has the potential to leave a gaping wound. Facing a securities lawsuit due to that malfeasance is like salt in that wound. Corporations targeted with such lawsuits have...more

The FCA Impact Of DOJ’s Increased Focus on Small Business

In 2014, the Small Business Administration reported that almost a quarter of approximately $367 billion of eligible funding for small business contracting, or roughly $91.7 billion, was awarded to small businesses as prime...more

Ninth Circuit Rejects Adverse-Interest Exception in Fraud-on-the Market Securities Class Actions

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

Securities Class Action Defense Counsel Selection: An Interview Process is Essential

When a public company purchases a significant good or service, it typically seeks competitive proposals. From coffee machines to architects, companies invite multiple vendors to bid, evaluate their proposals, and choose one...more

Entertainment and Media Litigation Update - October 2015

The "Dancing Baby" Case—Ninth Circuit Rules That "Fair Use" Must First Be Considered Before Sending Takedown Notices Under the DMCA - Why it matters: On September 14, 2015, the Ninth Circuit ruled in Lenz v. Universal...more

Inside the Courts: An Update From Skadden Securities Litigators - September 2015 / Volume 7 / Issue 3

This issue of Inside the Courts, Skadden’s securities litigation newsletter, includes summaries and associated court opinions of selected cases principally decided between May 2015 and August 2015. The cases address...more

Business Litigation Report - September 2015

Alleging Fraud in a Financial Crisis: The Second Circuit Articulates a Less Stringent Pleading Standard for Loss Causation: Loss causation has emerged as a central obstacle to post-financial-crisis fraud cases. The loss...more

Walking the Regulatory Compliance Path Defeats Punitive Damages

The Pope came to Philadelphia this past weekend. That’s not the first time this has happened (JPII stopped by in 1979), but the level of paranoia this time around led to four days of street shutdowns, parking prohibitions,...more

Securities Claims Based on Item 303 of Regulation S-K: It Just Doesn’t Matter

In January 2015, the Second Circuit held in Stratte-McClure v. Morgan Stanley, 776 F.3d 94 (2nd Cir. 2015), that Item 303 of Regulation S-K imposes a duty to disclose for purposes of Section 10(b), meaning that the omission...more

Five Advantages to Section 18 – A New Weapon for Institutions

Section 18 of the Securities Exchange Act, while seldom used in the past, has been increasingly used by institutional investors in suits against banks and other entities. The advantages of Section 18 are as follows...more

Alleging Fraud in a Financial Crisis: The Second Circuit Articulates a Less Stringent Pleading Standard for Loss Causation

Loss causation has emerged as a central obstacle to post-financial-crisis fraud cases. The loss causation element of a fraud claim requires plaintiffs to show, in addition to detrimental reliance, that the facts or...more

Southern District of New York Opinion Provides Guidance on Satisfying Scienter Requirement Under False Claims Act

Not every mistake or negligent act gives rise to liability under the False Claims Act. That principle has long been central to the FCA. But the dividing line– between making a mistake, on the one hand, and “knowingly” or...more

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