Mealey's Securities
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December 20, 2024
Split 9th Circuit: Arbitrator Ruling Can Preclude Relitigation Of SOX Issues
PASADENA, Calif. — While a ruling by an arbitrator can’t preclude a Sarbanes-Oxley Act of 2002 (SOX) claim, it can “preclude relitigation of issues underlying such a claim,” a divided Ninth Circuit U.S. Court of Appeals panel ruled, affirming dismissal of a whistleblower retaliation claim.
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December 18, 2024
Split 5th Circuit Determines SEC Not Authorized To Approve Disclosure Rule
NEW ORLEANS — Sitting en banc, a split Fifth Circuit U.S. Court of Appeals found that the Securities and Exchange Commission did not have the right to approve a rule implemented by Nasdaq Stock Market LLC that requires companies listed on the exchange to publicly disclose information about the race and gender identity of their board members, agreeing with two petitioners who argued that the SEC did not show that it had the authority to approve the rule.
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December 16, 2024
2nd Circuit: Minority Shareholders Lacked Evidence To Support Claims
NEW YORK— A panel of the Second Circuit U.S. Court of Appeals in an unpublished opinion found that former minority shareholders of a mining company failed to offer admissible evidence adequate to support their securities and racketeering claims against the former majority shareholder of the mining company and the former majority shareholder’s co-managers, affirming a district court’s grant of summary judgment in the former majority shareholder’s favor.
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December 16, 2024
Investors Failed To Show IPO Statements Were Misleading, 3rd Circuit Finds
PHILADELPHIA — A panel of the Third Circuit U.S. Court of Appeals affirmed dismissal of an investor’s securities fraud class action against a medical device manufacturer, agreeing with the trial court that the investor failed to plead falsity and scienter as to business statements the investor found to be misleading.
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December 12, 2024
Target Bid To Dismiss Shareholder Suit Over Pride Month Marketing Denied
FORT MYERS, Fla. — A federal judge in Florida denied Target Corp.’s motion to dismiss and motion to transfer a suit brought by shareholders alleging securities law violations after the company’s 2023 Pride Month marketing and sales campaign led to a boycott that caused Target’s stock price to decline, finding that the shareholders’ allegations satisfy the required pleading standards.
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December 11, 2024
Supreme Court Grants Motion To Dismiss Pension Fund’s Securities Fraud Petition
WASHINGTON, D.C. — Following the filing of a joint motion to dismiss under U.S. Supreme Court Rule 46, the high court dismissed a pension fund’s petition for a writ of certiorari that sought review of a Sixth Circuit U.S. Court of Appeals panel’s ruling that statements made by a car insurance company about potential risks were not misleading even though the risks had already occurred.
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December 11, 2024
U.S. High Court: PSLRA Particularity Standards Appeal Was Improvidently Granted
WASHINGTON, D.C. — The U.S. Supreme Court on Dec. 11 dismissed as improvidently granted a petition regarding the pleading requirements for alleging scienter under the Private Securities Litigation Reform Act of 1995 (PSLRA) based on allegations related to internal company documents and the PSLRA falsity requirement.
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December 11, 2024
2nd Circuit: Court Did Not Err Moving Asset Management Firm Into Receivership
NEW YORK — A panel of the Second Circuit U.S. Court of Appeals affirmed a federal court’s decision to convert a court-ordered monitorship of an asset management firm to a receivership after the former chief executive officer, who maintained much of the company’s membership interest, hired new managers and amended the operating agreement, finding that this violated the monitor order.
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December 05, 2024
Supreme Court Declines Review Of Shareholder Standing Dispute
WASHINGTON, D.C. — The U.S. Supreme Court denied a petition for writ of certiorari, refusing to review the Second Circuit U.S. Court of Appeals’ decision that a violation of Section 16(b) of the Securities Exchange Act of 1934 inflicts an injury and, thus, that a shareholder had standing to file a shareholder derivative complaint seeking disgorgement of short-swing profits from a capital management company.
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December 05, 2024
Delaware Judge Will Not Revise Opinion That Musk’s Tesla Pay Package Is Unfair
DOVER, Del. — A Tesla Inc. stockholder vote approving a $56 billion pay package for Elon Musk is not grounds to revise a Delaware judge’s posttrial opinion that Musk is not entitled to the $56 billion compensation package because the vote occurred after the posttrial opinion was issued and not during the litigation, the judge said.
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December 05, 2024
GAO: Crypto Options Seem To Be A Small Part Of The 401(k) Market
WASHINGTON, D.C. — In a report released publicly Dec. 4 regarding crypto assets in 401(k)s, the U.S. Government Accountability Office (GAO) noted data and projection limitations, saying in part that “certain crypto assets continue to trade in markets that do not have investor protections or comprehensive oversight.”
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December 05, 2024
Court Vacates Judgment After 8th Circuit Bars Trustee From Ponzi Scheme Recovery
MINNEAPOLIS — A federal court vacated its order granting judgment to the bankruptcy trustee for an entity that pleaded guilty to charges related to its involvement in a multibillion-dollar Ponzi scheme and granted judgment to the bank that allegedly aided in the Ponzi scheme after the Eighth Circuit U.S. Court of Appeals reversed the judgment, finding that the bank was entitled to the equitable defense of in pari delicto.
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December 04, 2024
Magistrate Judge Approves $65M Deal In Securities Case Against Fracking Operator
HOUSTON — A federal magistrate judge in Texas issued a final judgment and order of dismissal after approving a $65 million settlement in a securities fraud lawsuit investors brought against a hydraulic fracturing operator.
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December 04, 2024
Federal Judge Awards Delayed Attorney Fees In Shareholder Derivative Lawsuit
SAN FRANCISCO — Two years after giving final approval of a settlement, a federal judge approved a motion for attorney fees in a shareholder lawsuit alleging that several senior executives and the board of directors of Pinterest Inc. breached their fiduciary duty by participating in and/or failing to sufficiently prevent a culture of racial and sexual discrimination within the company.
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December 04, 2024
2nd Circuit: Investment Fund Failed To Allege Oil Company Engaged In Fraud Scheme
NEW YORK— A panel of the Second Circuit U.S. Court of Appeals affirmed a lower court opinion dismissing a case brought by an investment fund that alleged that a Venezuelan oil and gas company defrauded investors by issuing invalid notes and later defaulting on them, finding that the investment fund failed to allege a plausible scheme to defraud.
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December 04, 2024
Scienter Is Focus Of Dismissal Arguments In Securities Suit Involving Reinsurance
NEW YORK — Scienter is the key issue in dismissal arguments in a putative class action, with the named plaintiff telling a New York federal court that “improperly accounting for reinsurance premiums” led to material overstatements and investors were also misled on “internal controls,” and the defendants challenging “the misguided assumption that the Company’s identification of an accounting error and weakness in internal controls necessarily equates to securities fraud.”
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December 04, 2024
D.C. Circuit Grants Preliminary Injunction Of FINRA Expulsion Until SEC Review
WASHINGTON, D.C. — A broker is entitled to a preliminary injunction until the U.S. Securities and Exchange Commission can review the Financial Regulatory Authority’s (FINRA) decision to expel the broker for violating a cease-and-desist order, a divided panel of the District of Columbia Circuit U.S. Court of Appeals held, agreeing with the broker that it would be irreparably harmed by being expelled before the decision could be reviewed.
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December 02, 2024
Shareholder’s Complaint Over Allegedly Misleading Proxy Statement Dismissed
SAN DIEGO — Finding that a shareholder’s allegations that Block Inc. and its current and former directors made misstatements about the internal controls relating to the technology company’s Cash App in the company’s 2024 proxy statement “are implausible and insufficiently detailed,” a federal judge in California granted the defendants’ motion to dismiss.
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November 27, 2024
10th Circuit Asks Court To Recalculate Judgment Against Ponzi Scheme Investor
DENVER — The 10th Circuit U.S. Court of Appeals found that a federal court in Utah erred in calculating the amount of judgment an investor was ordered to pay in a case brought by a receiver to recover funds the investor and her husband received from a Ponzi scheme, saying the lower court lacked sufficient evidence to support its calculation.
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November 26, 2024
Crypto Purchasers Argue Against Petition Over Domestic Transaction Standards
WASHINGTON, D.C. — The U.S. Supreme Court has no grounds to review a Second Circuit U.S. Court of Appeals ruling that securities claims may proceed over crypto asset purchases in light of plausible allegations that the transactions in question matched on servers located in the United States as even the petitioners agree that the correct legal standard was applied, crypto asset purchasers argue in a Nov. 25 opposition brief.
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November 22, 2024
COMMENTARY: 2024 Key Insurance Decisions, Trends & Developments & A Look Ahead To 2025
By Scott M. Seaman, Pedro E. Hernandez and Lisa M. Roccanova
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November 22, 2024
Judge Issues Final Judgment, Approves Allocation Of Under Armour Securities Settlement
BALTIMORE — A federal judge in Maryland issued a final judgment, dismissal with prejudice, order approving plan of allocation, attorney fees and expenses and an award to plaintiffs in a class action brought by investors claiming that Under Armour Inc. and its former CEO violated federal securities laws by making false claims about demands for the company’s products, finding the settlement to be, “in all respects, fair, reasonable, and adequate to the Class.”
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November 22, 2024
Split 5th Circuit Finds Petition On Nonfinal SEC Proxy Proposal Order Moot
NEW ORLEANS — A split panel of the Fifth Circuit U.S. Court of Appeals granted the Securities and Exchange Commission’s motion to dismiss a self-described conservative think tank and other investors’ petition to review a no-action letter that agreed that Kroger Co. had a basis for excluding the think tank’s proposal in its 2023 proxy materials, finding the petition to be moot because Kroger ultimately decided to include the proposal in its 2023 proxy materials.
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November 22, 2024
Federal Judge In Texas In 2 Opinions In 2 Cases Vacates SEC’s ‘Dealer Rule’
FORT WORTH, Texas — A federal judge in Texas on Nov. 21 issued two opinions granting summary judgment to groups in two separate cases challenging the Securities and Exchange Commission’s “Dealer Rule,” finding that the SEC “engaged in unlawful agency action taken in excess of its authority” and vacating the rule.
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November 22, 2024
Remaining $75.2M From Long-Running SEC Enforcement Action Goes To U.S. Treasury
NEW YORK — A federal judge in New York granted the Securities and Exchange Commission’s motion to transfer the remaining $75,232,529.11 from a long-running insider trading enforcement action to the U.S. Treasury, denying a pharmaceutical company’s cross-motion seeking transfer of the funds to itself as a victim entitled to disgorgement under the fair funds statute.