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Preview: LexisNexis® Mealey's™ Emerging Securities Litigation Legal News

LexisNexis® Mealey's™ Emerging Securities Litigation Legal News



Headline Emerging Securities Litigation Legal News from LexisNexis®



 



Barclays To Pay $2B To Settle Government's FIRREA Claims Over RMBS
BROOKLYN, N.Y. - Barclays PLC and several of its subsidiaries will pay $2 billion to settle claims with federal prosecutors that the international investment bank violated provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) in its issuance and underwriting of residential mortgage-backed securities (RMBS), according to a settlement agreement reached by the parties and filed in New York federal court on March 29 (United States of America v. Barclays Capital Inc., et al., No. 16-7057, E.D. N.Y.).



Supreme Court Allows Securities Class Actions To Remain In State Courts
WASHINGTON, D.C. - In a unanimous opinion, the U.S. Supreme Court on March 20 ruled that securities class actions brought pursuant to the Securities Act of 1933 may be brought in state court and are not preempted by the Securities Litigation Uniform Standards Act (SLUSA), (Cyan Inc. v. Beaver County Employees Retirement Fund, et al., No. 15-1439, U.S. Sup.).



Preliminary Approval Of $290M Settlements In Securities Suits Granted
SANTA ANA, Calif. - A federal judge in California on March 19 granted preliminary approval to settlements totaling $290 million in a pair of related securities class actions alleging an insider-trading and front-running scheme regarding pharmaceutical company Valeant Pharmaceuticals International Inc.'s attempt at a hostile takeover of Allergan Inc. (Anthony Basile, et al. v. Valeant Pharmaceuticals International Inc., et al., No. 14-2004, C.D. Calif., and Timber Hill LLC v. Pershing Square Capital Management, No. 17-4776, C.D. Calif.).



Oral Arguments Heard In Securities Suit Challenging American Pipe Reach
WASHINGTON, D.C. - The U.S. Supreme Court on March 26 heard oral arguments in an appeal of a Ninth Circuit U.S. Court of Appeals ruling that the Supreme Court's decision in American Pipe & Construction Co. v. Utah tolls the statute of limitations to permit a previously absent class member to bring a subsequent class action outside the applicable limitations period (China Agritech Inc. v. Michael Resh, et al., No. 17-432, U.S. Sup.).



Preliminary Approval Of $125M Securities Class Action Settlement Granted
SAN FRANCISCO - A federal judge in California on March 16 granted preliminary approval of a $125 million settlement in a securities class action that alleged that LendingClub Inc. and certain of its officers and directors and underwriters of LendingClub's initial public offering (IPO) issued a series of misrepresentations in the IPO's offering documents concealing issues with certain of the company's policies in violation of federal securities law (In re LendingClub Securities Litigation, Nos. 16-2627, 16-2670 and 16-3072, N.D. Calif., 2018 U.S. Dist. LEXIS 44835).



Company Shown To Have Concealed Falsified Study Results In Stock Drop Suit
NEW YORK - An Israeli clinical stage biopharmaceutical company that develops combination drugs for the treatment of osteoarthritis and hypertension issued material misrepresentations and omissions concealing that the company's CEO falsified clinical study results for the development of its lead drug candidate in violation of federal securities law, a federal judge in New York ruled March 20 in granting in part and denying in part the defendants' motion to dismiss (Rotem Cohen, et al. v. Kitov Pharmaceuticals Holdings Ltd., et al., No. 17-0917, S.D. N.Y., 2018 U.S. Dist. LEXIS 45676).



Securities Lawsuit Dismissed For Lack Of Actionable Misstatements
BOSTON - Lead plaintiffs in a securities class action lawsuit against a pharmaceutical company and two of its senior executives failed to plead any actionable misrepresentations or omissions supporting their claims that the defendants concealed negative Phase 2 clinical study results for its colon infection treatment drug in violation of federal securities laws, a federal judge in Massachusetts ruled March 30 in granting the defendants' motion to dismiss (Erste-Sparinvest Kapitalanlagegesellschaft Mbh v. Seres Therapeutics, et al., No. 16-11943, D. Mass., 2018 U.S. Dist. LEXIS 54485).



1st Circuit Panel Upholds Dismissal Of Sarepta Securities Class Action
BOSTON - Shareholders have not shown that pharmaceutical company Sarepta Therapeutics Inc. and three of its senior executives materially misrepresented investors that a 2014 new drug application (NDA) with the U.S. Food and Drug Administration for its Duchenne muscular dystrophy (DMD) treatment drug was likely even though the FDA had expressed concerns over the sufficiency of the company's clinical data in making their federal securities law claims, a First Circuit U.S. Court of Appeals panel ruled April 4 in affirming a federal district court's dismissal of the suit (William Kader, et al. v. Sarepta Therapeutics Inc., et al., No. 17-1139, 1st Cir., 2018 U.S. App. LEXIS 8563).



Some Claims Survive Dismissal In EpiPen Maker Stock-Drop Lawsuit
NEW YORK - A federal judge in New York on March 28 granted in part a motion to dismiss filed by defendants in a securities class action lawsuit against a generic drug maker and certain of its executive officers, ruling that lead plaintiffs have only partially pleaded an actionable misstatement or omission and scienter in making their federal securities law claims (In re Mylan N.V. Securities Litigation, No. 16-7926, S.D. N.Y., 2018 U.S. Dist. LEXIS 52084).



Pleading Deficiencies Lead To Dismissal Of Securities Class Action
HOUSTON - Shareholders in a securities class action lawsuit against an oil and gas company, several of its affiliates and senior officers and underwriters of various stock offerings have failed to cure their pleading deficiencies that led to prior dismissal of the suit and, therefore, have failed to state any claim for relief, a federal judge in Texas ruled April 2 in dismissing the lawsuit with prejudice and denying leave to amend (In re Plains All American Pipeline L.P. Securities Litigation, No. 15-2404, S.D. Texas, 2018 U.S. Dist. LEXIS 56013).



Investors Failed To Plead Misstatements In Securities Suit, Judge Says
NEW YORK - Lead plaintiffs have failed to plead any actionable misstatements or omissions or scienter in making their federal securities law claims that two executive officers of networking solutions and products provider Nortel Networks Corp. misrepresented the company's business and financial condition before its filing for bankruptcy in violation of federal securities law, a federal judge in New York ruled April 11 in granting the defendants' motion to dismiss (David Lucescu v. Mike Zafirovski, et al., No. 09-4691, S.D. N.Y., 2018 U.S. Dist. LEXIS 61580).



Federal Judge Grants Summary Judgment In Ponzi Receivership Suit
BRIDGEPORT, Conn. - A federal judge in Connecticut on March 26 granted a receiver's motion for partial summary judgment in a securities fraud lawsuit stemming from the operation of a massive Ponzi scheme, ruling that a receiver has properly pleaded his claims for violation of state, federal and common law (John J. Carney v. Francisco Illarremendi, No. 12-0165, D. Conn., 2018 U.S. Dist. LEXIS 48855).



Investor Seeks Preliminary Approval Of $9M Securities Class Action Settlement
MARSHALL, Texas - A federal judge should grant preliminary approval of a $9 million settlement agreement in a securities class action lawsuit against a Chinese carrier-neutral internet data center services provider and certain of its current and former senior executives over their involvement in a "round-tripping" revenue inflation scheme because the settlement is fair and reasonable and meets all statutory requirements for approval, the lead plaintiff in the action argues in an April 9 motion for preliminary approval of settlement filed in Texas federal court (Ranjit Singh v. 21Vianet Group Inc., et al., No. 14-0894, E.D. Texas.).



Shkreli To Appeal Securities Fraud, Conspiracy Conviction, Prison Sentence
BROOKLYN, N.Y. - Convicted former pharmaceutical company CEO and hedge fund manager Martin Shkreli will appeal his conviction and seven-year prison sentence for bilking investors of millions of dollars of investments, according to a notice of appeal Shkreli filed March 26 in New York federal court (United States of America v. Martin Shkreli, No. 15-637, E.D. N.Y.).



9th Circuit Panel Hears Oral Arguments In Las Vegas Sands Stock Drop Suit
SAN FRANCISCO - During oral arguments on April 12, a Ninth Circuit U.S. Court of Appeals judge expressed concerns over reversing a federal district court's grant of summary judgment in a securities class action lawsuit against casino/resort owner Las Vegas Sands Corp. (LVS) and two of its executive officers for failure to plead any actionable misstatements or omissions or loss causation (Pompano Beach Police & Firefighters Retirement System, et al. v. Las Vegas Sands Corp., et al., No. 17-15216, 9th Cir.).



Claims In Securities Class Action Against Drug Maker Found To Be Insufficient
NEW YORK - Although lead plaintiffs in a securities class action against a drug company and its co-founders have shown that the defendants acted with the requisite scienter, they have failed to plead any actionable misstatements or omissions or loss causation in making their federal securities law claims, a federal judge in New York ruled March 29 in granting the defendants' motion to dismiss (Michael Nguyen, et al. v. NewLink Genetics Corp., et al., No. 16-3545, S.D. N.Y., 2018 U.S. Dist. LEXIS 53561).



Failure To Plead Loss Causation In Securities Suit Leads To Dismissal
SAN DIEGO - A lead plaintiff in a securities class action lawsuit against an energy company and certain of its former executive officers has failed to plead the necessary elements of loss causation in arguing that the defendants violated federal securities laws by concealing from investors their ex parte communications with the president of the California Public Utilities Commission (CPUC), leading to the overturning of a $3.3 billion settlement the energy company had reached with the CPUC, a federal judge in California ruled March 16 in dismissing a third amended complaint with prejudice (Harold Eng, et al. v. Edison International, et al., No. 15-1478, S.D. Calif., 2018 U.S. Dist. LEXIS 43629).



Securities Suit Dismissal For Failure To Plead Scienter, Loss Causation Affirmed
SAN FRANCISCO - In adopting the "detailed and well-reasoned analysis" of a federal district court, a Ninth Circuit U.S. Court of Appeals panel on March 23 affirmed the lower court's ruling dismissing a federal securities class action for failure to plead scienter and loss causation (Thomas Cunningham v. Identiv Inc., et al., No. 17-15220, 9th Cir., 2018 U.S. App. LEXIS 7384).



Failure To Cure Pleading Deficiencies Leads To Dismissal Of Securities Suit
NEW YORK - Lead plaintiffs in a securities class action lawsuit against Chipotle Mexican Grill Inc. and certain of its senior executives have failed to cure their pleading deficiencies that led to dismissal of their first amended complaint, a federal judge in New York ruled March 22 in granting the defendants' motion to dismiss for failure to plead a material misrepresentation and scienter (Susie Ong v. Chipotle Mexican Grill Inc., et al., No. 16-141, S.D. N.Y., 2018 U.S. Dist. LEXIS 47513).



New Jersey Judge Grants Dismissal Of Long-Running Securities Suit With Prejudice
MORRISTOWN, N.J. - A New Jersey judge on April 2 dismissed a long-running securities class action that previously reached the U.S. Supreme Court for determination of whether securities class action plaintiffs were blocked from bringing lawsuits stating claims for state securities law violations in state court if they referenced violations of the Securities Exchange Act of 1934, granting the defendants' motions to dismiss for lack of personal jurisdiction and for failure to state a claim for relief (Greg Manning, et al. v. Merrill Lynch, Pierce, Fenner & Smith Inc., et al., No. MRS-L-1173-12, N.J. Super., Morris Co., Law Div.).



Judge Upholds Section 20(a) Control-Person Liability Ruling In Securities Suit
ATLANTA - Lead plaintiffs have properly shown that defendants in a securities class action lawsuit exercised the necessary control over a power company to support their control-person liability claim under Section 20(a) of the Securities Exchange Act of 1934, a federal judge in Georgia ruled April 6 in granting the defendants' motion for clarification of its earlier order granting in part their motion to dismiss (Monroe County Employees Retirement System, et al. v. The Southern Co., et al., No. 17-0241, N.D. Ga., 2018 U.S. Dist. LEXIS 54008).



Securities Claims In Blackberry Stock-Drop Suit Survive Dismissal
NEW YORK - Newly provided evidence that BlackBerry Ltd. and certain of its executive officers were in possession of adverse information that showed that returns of Blackberry's Z10 smartphone were outpacing its sales are sufficient to withstand the defendants' motion to dismiss in light of recent U.S. Supreme Court precedent, a federal judge in New York ruled March 19 in denying the motion (Marvin Pearlstein v. BlackBerry Ltd., et al., No. 13-7060, S.D. N.Y.).



SEC Seeks Divided Argument In High Court Dispute Over ALJs
WASHINGTON, D.C. - In a March 30 brief, the Securities and Exchange Commission asked the U.S. Supreme Court to grant divided argument for an appeal of a District of Columbia Circuit U.S. Court of Appeals ruling that SEC administrative law judges (ALJs) are not inferior officers and are not subject to the U.S. Constitution's appointments clause (Raymond J. Lucia, et al. v. Securities and Exchange Commission, No. 17-130, U.S. Sup.).



Investors Argue That Basic Presumption Was Properly Applied In Securities Suit
WASHINGTON, D.C. - No U.S. Supreme Court review of a Second Circuit U.S. Court of Appeals ruling affirming a lower court's grant of class certification in a securities class action is necessary because there is no split among the circuits or confusion among lower courts as to whether direct evidence of market efficiency is always required to trigger the presumption of reliance under Basic Inc. v. Levinson, lead plaintiffs argue in a March 23 opposition brief filed in the Supreme Court (Barclays PLC, et al. v. Joseph Waggoner, et al., No. 17-1209, U.S. Sup.).



Lead Plaintiffs Failed To Address Securities Ruling In Brief, Petitioners Say
WASHINGTON, D.C. - Petitioners in an appeal of a Ninth Circuit U.S. Court of Appeals ruling in a securities class action lawsuit filed reply brief in support of their petition for writ of certiorari on April 10, arguing that lead plaintiffs failed to address the appellate panel's "actual holding" in the action in arguing against review (Quality Systems Inc., et al. v. City of Miami Fire Fighters' and Police Officers' Retirement Trust, et al., No. 17-1056, U.S. Sup.).



Shareholder Seeks High Court Review Of 4th Circuit Scienter Ruling
WASHINGTON, D.C. - A federal circuit court erred in affirming a lower court's dismissal of a securities class action lawsuit for failure to plead scienter because it failed to apply the U.S. Supreme Court's pleading standard set forth in Tellabs Inc. v. Makor Issues & Rights, a shareholder argues in a petition for writ of certiorari filed March 12 in the U.S. Supreme Court (Maguire Financial LP v. PowerSecure International Inc., et al., No. 17-1303, U.S. Sup., 2018 U.S. S. Ct. Briefs LEXIS 1097).



Zillow: Investors Failed To Plead Misstatements To Support Securities Claims
SEATTLE - Investors have failed to show that online real estate marketplace provider Zillow Group Inc. or certain of its senior officers issued any misrepresentations or omissions concealing the company's failure to comply with the Real Estate Settlement Procedures Act (RESPA) or that the defendants acted with the requisite scienter in making their alleged misstatements, defendants argue in an April 6 motion to dismiss filed in Washington federal court (In re Zillow Group Inc. Securities Litigation, No. 17-1387, W.D. Wash.).



Diagnostics Company Hit With Shareholder Suit Over Stock Drop
NEWARK, N.J. - A diagnostics company that develops proprietary genomic tests and services and certain of its current and former executive officers violated federal securities laws by concealing the company's business, operational and compliance policies, a shareholder argues in an April 12 securities class action complaint filed in New Jersey federal court (Ruo Fen Zhang v. Cancer Genetics Inc., et al., No. 18-6353, D. N.J.).



Overstock.com Investor Sues Company, Others Over ICO Misrepresentations
SALT LAKE CITY - A shareholder of online retailer Overstock.com Inc. sued the company and two of its senior executives in Utah federal court on April 6, alleging that the defendants concealed the impact of a Securities and Exchange Commission investigation into its proposed initial coin offering (ICO) of digital currency in violation of federal securities laws (Shaham Mahabadi v. Overstock.com Inc., No. 18-0290, D. Utah).



When Strategies Go Awry: Part 5 In A Series On Cognitive Biases And Their Impact
By Laura A. Frase I Gotta Be Me! Self-Enhancing Cognitive Biases "I hate to go on tryin' your patience like this - but well, I'm either dead right or I'm crazy."



Whistleblower Definition Narrowed In U.S. Supreme Court Ruling
WASHINGTON, D.C. - The whistleblower anti-retaliation provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 does not extend to individuals who report a securities law violation but do not report it to the Securities and Exchange Commission, the U.S. Supreme Court ruled Feb. 21 in narrowing the statute's definition of a whistleblower (Digital Realty Trust Inc. v. Paul Somers, No. 16-1276, U.S. Sup.).



RBS To Pay $500M To Settle Mortgage-Backed Securities Claims With New York
NEW YORK - Royal Bank of Scotland (RBS) will pay $500 million as part of a settlement agreement with New York Attorney General Eric T. Schneiderman over RBS's offering of collateralized debt obligations (CDOs) that were backed by residential mortgage-backed securities (RMBS), Schneiderman announced March 6.



Shkreli Sentenced To 7 Years In Prison For Securities Fraud Scheme
BROOKLYN, N.Y. - Convicted former pharmaceutical company CEO and hedge fund manager Martin Shkreli will spend the next 6-1/2 years in prison after a federal judge in New York on March 9 sentenced him to seven years' imprisonment for his role in bilking investors of millions of dollars of investments (United States of America v. Martin Shkreli, No. 15-637, E.D. N.Y.).



Misappropriations Of Funds In SEC Action Are 'Discrete Violations,' Panel Finds
DENVER - A defendant's misappropriations of funds in a securities enforcement action constitute "discrete violations," and the Securities and Exchange Commission properly brought its action against the defendant within the five-year statute of limitations, a 10th Circuit U.S. Court of Appeals panel ruled March 5 on remand from the U.S. Supreme Court (Securities and Exchange Commission v. Charles R. Kokesh, No. 15-2087, 10th Cir.).



Theranos CEO Will Pay $500,000, Give Up Control To Settle SEC Fraud Lawsuit
SAN JOSE, Calif. - Theranos Inc. CEO Elizabeth Holmes has agreed to pay a $500,000 penalty, to return her remaining 18.9 million shares to the company, to relinquish voting control of the company she started and to be barred from serving as an officer or director of any public company for 10 years, the U.S. Securities and Exchange Commission announced March 14 after filing a civil fraud claim against Holmes and Theranos (Securities and Exchange Commission v. Elizabeth Holmes, et al., No. 18-1602, N.D. Calif., San Jose Div.).



Conviction In Wire, Mail Fraud Criminal Case Upheld By 7th Circuit Panel
CHICAGO - Federal prosecutors provided ample evidence to support their criminal counts for wire fraud and mail fraud against the former CEO of a technology company on claims that he intentionally misled investors to bilk them of more than $9 million in investments, a Seventh Circuit U.S. Court of Appeals panel ruled March 8 in affirming the conviction (United States of America v. Gregory Webb, No. 17-1501, 7th Cir., 2018 U.S. App. LEXIS 5816).



Claims Trimmed In Wells Fargo Securities Class Action Lawsuit
SAN FRANCISCO - In a Feb. 27 ruling, a federal judge in California ruled that a lead plaintiff has properly pleaded a material misrepresentation, scienter and loss causation against a majority of defendants in a securities class action lawsuit against Wells Fargo & Co. and several of its current and former officers and directors but has failed to plead the necessary elements of its federal securities law claim against others (Gary Hefler, et al. v. Wells Fargo & Co., et al., No. 16-5479, N.D. Calif., 2018 U.S. Dist. LEXIS 31874).



Dismissal Ruling Affirmed In Securities Suit Against Drug Company, Others
SAN FRANCISCO - Shareholders in a securities class action lawsuit failed to plead any material misrepresentation or scienter in arguing that a drug company and certain of its senior officers and directors issued false and misleading statements about the likelihood of success for a hepatitis B (HBV) treatment drug the drug company was developing, a Ninth Circuit U.S. Court of Appeals panel ruled Feb. 15 in affirming a lower court's dismissal ruling (In re Arrowhead Research Corp. Securities Litigation, No. 16-56499, 9th Cir., 2018 U.S. App. LEXIS 3556).



Additional Allegations Determined To Properly Show Company Acted With Scienter
ALEXANDRIA, Va. - Although shareholders' claims added to their second amended complaint do not support their allegations that a company's executive officer acted with the required scienter in helping to conceal the company's accounting fraud, the additional allegations are sufficient to show the company's scienter, a federal judge in Virginia ruled March 2 in granting in part and denying in part the defendants' motion to dismiss (Steven Knurr v. Orbital ATK Inc., et al., No. 16-1031, E.D. Va., 2018 U.S. Dist. LEXIS 34812).



4th Circuit Stays Mandate In Securities Class Action Pending Rehearing
RICHMOND, Va. - In a March 9 docket entry, the Fourth Circuit U.S. Court of Appeals stayed a mandate remanding a securities class action lawsuit to a federal district court for further proceedings pending a ruling on a petition for rehearing or rehearing en banc filed by a medical device maker and certain of its executive officers (Phillip J. Singer v. Kenneth Reali, et al., Nos. 15-2579 and 16-1019, 4th Cir., 2018 U.S. App. LEXIS 4231).



Investor's Scienter Claims Insufficient Individually, Holistically, Panel Rules
SAN FRANCISCO - A shareholder's scienter claims are insufficient both on their own, as well as under a holistic review, and a federal district court did not err in ruling that the shareholder failed to properly plead the claims when it dismissed his third amended complaint, a Ninth Circuit U.S. Court of Appeals panel ruled March 8 in affirming the lower court's ruling (James Webb v. SolarCity Corp., et al., No. 16-16440, 9th Cir., 2018 U.S. App. LEXIS 5842).



Judge: Allstate Concealed Underwriting Standards Reduction In Stock-Drop Suit
CHICAGO - A federal judge in Illinois on Feb. 27 ruled that a pair of California pension funds have sufficiently met the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA) by showing that insurer The Allstate Corp. and two of its senior officers issued material misrepresentations concealing that they reduced the company's underwriting standards to attract more automobile insurance customers, resulting in an alleged spike in auto insurance claims frequency (Carpenters Pension Trust Fund for Northern California, et al. v. The Allstate Corp., et al., No. 16-10510, N.D. Ill., 2018 U.S. Dist. LEXIS 31195).



Investor Found To Have Failed To Plead Misstatement, Scienter In Securities Suit
NASHVILLE, Tenn. - A shareholder of discount retail chain Dollar General Corp. has not shown that statements made by the company and certain of its executive officers were false when made or made with the requisite scienter and, thus, are not actionable under federal securities law, a federal judge in Tennessee ruled March 8 in granting the defendants' motion to dismiss (Iron Workers Local Union No. 405 Annuity Fund, et al. v. Dollar General Corp., et al., Nos. 17-0063, 17-0275 and 17-0276, M.D. Tenn.).



Panel: Investors Did Not Show That UBS Entities' Knowledge May Be Aggregated
NEW ORLEANS - Investors in a securities class action lawsuit stemming from the collapse of Enron Corp. failed to show that the knowledge and actions of three related but distinct corporate entities may be aggregated to assess liability, a Fifth Circuit U.S. Court of Appeals panel ruled Feb. 26 in affirming a federal district court's dismissal of the investor's first amended complaint (Samuel Giancarlo, et al. v. UBS Financial Services Inc., et al., No. 16-20663, 5th Cir., 2018 U.S. App. LEXIS 4620).



Rehearing Denied; Panel's Absolute Immunity Ruling In Securities Suit Stands
NEW YORK - A Second Circuit U.S. Court of Appeals panel's December ruling overturning a lower court's determination that U.S. stock exchanges are entitled to absolute immunity from shareholder lawsuits will stand after the Second Circuit on March 13 declined to grant the exchanges' petition for rehearing or rehearing en banc (Providence, R.I., et al. v. BATS Global Markets Inc., et al., No. 15-3057, 2nd Cir.).



Judge Grants Interlocutory Appeal, Certifies Question In IPO Suit To 3rd Circuit
NEWARK, N.J. - Although defendants in a securities class action have failed to show that a federal district court committed any reversible error in granting in part and denying in part motions for summary judgment, a federal judge in New Jersey on Feb. 21 granted the defendants' request for interlocutory appeal, certifying a question to the Third Circuit U.S. Court of Appeals (Robin J. Dartell, et al. v. Tibet Pharmaceuticals Inc., et al., No. 14-3620, D. N.J.).



Securities Suit Dismissed For Failure To Plead Underlying Antitrust Conspiracy
DENVER - A lead plaintiff in a securities class action failed to plead with particularity the existence of an underlying antitrust conspiracy to support its claim that a broiler chicken producer and others violated federal securities laws by concealing their involvement in an illegal price-fixing scheme, a federal judge in Colorado ruled March 14 in granting the defendants' motion to dismiss for failure to plead falsity (Patrick Hogan v. Pilgrim's Pride Corp., et al., No. 16-2611, D. Colo., 2018 U.S. Dist. LEXIS 41909).



In High Court Briefing, Parties Argue That SEC ALJs Are Inferior Officers
WASHINGTON, D.C. - The U.S. Supreme Court should determine that Securities and Exchange Commission administrative law judges (ALJs) are inferior officers and, therefore, are subject to the appointments clause of the U.S. Constitution, defendants and the SEC argue in merits briefs filed Feb. 21 in the Supreme Court (Raymond J. Lucia, et al. v. Securities and Exchange Commission, No. 17-130, U.S. Sup.).



Investors Should Be Allowed To Proceed With Securities Claims, Amici Say
WASHINGTON, D.C. - Allowing investors to proceed with their claims in a securities class action lawsuit pursuant to the American Pipe & Construction Co. v. Utah tolling doctrine illustrates the doctrine's necessary application to class certification while providing defendants with adequate notice of the underlying claims against them," amici curiae argue in a Feb. 28 brief filed in the U.S. Supreme Court (China Agritech Inc. v. Michael Resh, et al., No. 17-432, U.S. Sup.).



High Court Asked To Weigh In On Proper Way To Rebut Presumption Of Reliance
WASHINGTON, D.C. - The U.S. Supreme Court should review a Second Circuit U.S. Court of Appeals ruling in a securities class action lawsuit to resolve a split among the federal circuit courts as to the proper way to rebut the fraud-on-the-market presumption of reliance established in the high court's Basic Inc. v. Levinson ruling and to resolve confusion among the lower courts as to Basic's proper application, defendants argue in a Feb. 26 petition for writ of certiorari (Barclays PLC, et al. v. Joseph Waggoner, et al., no. 17-1209, U.S. Sup.).



Panel Hears Oral Arguments In Appeal Of Scienter, Loss Causation Ruling
SAN FRANCISCO - A Ninth Circuit U.S. Court of Appeals panel on March 13 heard oral arguments in an appeal of a securities class action ruling in which a federal district court dismissed a lead plaintiff's second amended complaint for failure to plead scienter or loss causation in arguing that a company and certain of its senior executives misrepresented the company's executive compensation and internal financial controls in violation of federal securities law (Thomas Cunningham v. Identiv Inc., et al., No. 17-15220, 9th Cir.).



9th Circuit To Weigh In On Sufficiency Of Scienter Claims In Securities Suit
SAN FRANCISCO - Lead plaintiffs and defendants in a securities class action lawsuit against identity theft protection provider LifeLock Inc. and certain of its senior officers recently asked the Ninth Circuit U.S. Court of Appeals to determine whether a federal district court in Arizona properly rejected the lead plaintiffs' scienter allegations in dismissing their second amended complaint (Oklahoma Police Pension and Retirement System, et al. v. LifeLock Inc., et al., No. 17-16895, 9th Cir.).



Wynn Resorts Hit With Shareholder Suits Over Sexual Misconduct Allegations
LAS VEGAS - The board of directors for casino operator Wynn Resorts Ltd. breached its fiduciary duty and was unjustly enriched because of its efforts to conceal years of alleged sexual misconduct by the company's former CEO, Stephen A. Wynn, the state of Oregon argues in a March 6 shareholder derivative complaint filed in Nevada state court (Oregon, et al. v. Stephen A. Wynn, et al., No. A-18-770578-B, Nev. Dist., Clark Co.).



Consumer Asserts UCL, Negligence Class Claims Against Bitcoin Exchange
SAN FRANCISCO - A consumer on March 1 filed a class action complaint in a California federal court against a Bitcoin exchange, asserting causes of action for violation of California's unfair competition law (UCL) and negligence in relation to the way it handled the sale of a new cryptocurrency known as Bitcoin cash (Jeffrey Berk v. Coinbase Inc., et al., No. 4:18-cv-01364, N.D. Calif.).



Class Action: Reinsurance Broker Aided, Abetted In Breach Of Fiduciary Duty
WILMINGTON, Del. - In a March 9 class action filed on behalf of stockholders in a Delaware trial court, a global consulting company and a multinational risk adviser, insurance brokerage and reinsurance brokerage company are accused of aiding and abetting in the breach of fiduciary duties owed by former CEOs during two companies' merger (The Regents of the University of California v. John J. Haley, et al., No. 2018-0166, Del. Chanc.).



Stockholders Seek Class Cert In Suit Against Bankrupt Reinsurance, Insurance Provider
WILMINGTON, Del. - Common stockholders of a bankrupt insurance and reinsurance services company on March 2 moved for certification of their class and appointment of class representatives and counsel in a Delaware bankruptcy court lawsuit in which the company is accused of laying off employees without proper notice under the Workers' Adjustment and Retraining Notice Act (WARN Act) (In re: Patriot National Inc., et al., Chapter 11, No. 18-10189, Michelle L. Cole, et al. v. Patriot National Inc., et al., Adv. Pro. No. 18-5, D. Del. Bkcy.).



When Strategies Go Awry: Part 4 In A Series On Cognitive Biases And Their Impact
By Laura A. Frase But Wait - I Remember It Differently: Cognitive Biases That Mess with Our Memories "'It's a poor sort of memory that only works backwards' the Queen remarked."



BNP Subsidiary To Plead Guilty To Role In FX Market Antitrust Scheme
NEW YORK - The U.S. subsidiary of BNP Paribas S.A. will pay $90 million after pleading guilty in New York federal court to its role in a massive price-fixing conspiracy in the foreign exchange (FX) market, according to a U.S. Department of Justice press release issued Jan. 26 (United States of America v. BNP Paribas USA Inc., No. 10-cr-061, S.D. N.Y.).



Shkreli's Sentencing Date Pushed Back To Allow Parties To Argue Loss, Forfeiture
BROOKLYN, N.Y. - The sentencing date for former pharmaceutical company CEO and hedge fund manager Martin Shkreli following his conviction on charges relating to his operation of a Ponzi scheme has been pushed back to March after a federal judge in New York on Jan. 31 issued a minute order setting a briefing schedule to allow government prosecutors and Shkreli's counsel to debate loss amount and forfeiture in the action (United States of America v. Martin Shkreli, No. 15-637, E.D. N.Y.).



Ex-FDA Deputy Director Sentenced, Ordered To Pay $108,000 For Insider Trading
NEW YORK - A New York federal judge on Jan. 25 sentenced a former Food and Drug Administration official to time served and ordered him to forfeit $108,000 for his role in a scheme to get insider information about generic drug approvals and to make financial gains when securities prices rose or fell (United States of America v. Gordon Johnston, No. 16-cr-406, S.D. N.Y.).



Attorney Invited To Brief, Argue As Amicus Curiae In SEC Judges Appeal
WASHINGTON, D.C. - An attorney may brief and argue an appeal of a District of Columbia Circuit U.S. Court of Appeals ruling that Securities and Exchange Commission administrative law judges (ALJs) are constitutional officers pursuant to the appointments clause of the U.S. Constitution, the U.S. Supreme Court ruled Jan. 18 (Raymond J. Lucia, et al. v. Securities and Exchange Commission, No. 17-130, U.S. Sup.).



Outpatient Dialysis Provider To Pay $4M To Settle Stock-Drop Suit
BOSTON - A provider of outpatient dialysis services will pay $4 million to settle claims that it concealed its involvement in an insurance fraud scheme in violation of federal securities laws, according to a motion for preliminary approval of settlement filed by lead plaintiffs on Jan. 31 in a Massachusetts federal court (Mary Esposito v American Renal Associates Holdings Inc., et al., No. 16-11797, D. Mass.).



Investor Group Named Lead Plaintiff In Securities Suit, May Aggregate Losses
BOSTON - A group of investors may aggregate their losses and has met all statutory requirements to serve as lead plaintiff in a securities class action lawsuit against a biopharmaceutical company and two of its senior officers over misrepresentations that they made regarding the company's prospects for its herpes treatment, a federal judge in Massachusetts ruled Feb. 12 in granting the investor group's motion for appointment as lead plaintiff (Steven Emerson, et al. v. Genocea Biosciences Inc., et al., No. 17-12137, D. Mass., 2018 U.S. Dist. LEXIS 22228).



Lead Plaintiff Appointed In Tesla Stock-Drop Investor Class Action
SAN FRANCISCO - A shareholder was appointed lead plaintiff in a securities class action lawsuit against high-performance electric vehicles manufacturer Tesla Inc. and certain of its current and former executive officers, and his choice of counsel was appointed as lead counsel on Feb. 2 after a federal judge in California ruled that both the shareholder and lead counsel met all requirements to serve in their roles (Gregory Wachos v. Tesla Inc., et al., No. 17-5828, N.D. Calif.).



Judge: Forward-Looking Statements Did Not Contain Cautionary Language
SAN DIEGO - Although certain statements made by a provider of genetic sequencing systems regarding sales forecasts of one of its product lines were forward-looking, they were not accompanied by the necessary cautionary language as statutorily required, a federal judge in California ruled Jan. 22 in granting in part and denying in part a motion to dismiss filed by defendants in the securities class action lawsuit (In re Illumina Inc. Securities Litigation, No. 16-3044, S.D. Calif., 2018 U.S. Dist. LEXIS 10938).



Lead Plaintiffs' Loss Causation Arguments Survive Motion To Dismiss
SAN DIEGO - Lead plaintiffs in a securities class action lawsuit are not required to show a revelation of fraud to prove loss causation, a federal judge in California ruled Feb. 1 in denying the defendants' motion to dismiss (Brad Mauss v. NuVasive Inc., et al., No. 13-2005, S.D. Calif., 2018 U.S. Dist. LEXIS 16941).



General Proximate Cause Test Found To Be Proper Test For Pleading Loss Causation
SAN FRANCISCO - A federal district court's application of a general proximate cause test was the proper test for determining loss causation in a securities class action lawsuit brought by shareholders against a solar energy company and certain of its current and former executive officers, a Ninth Circuit U.S. Court of Appeals panel ruled Jan. 31 in affirming the lower court's ruling and clarifying the lower court's question on appeal (Mineworkers' Pension Scheme v. First Solar Inc., No. 15-17282, 9th Cir., 2018 U.S. App. LEXIS 2450).



Shareholders Found To Have Pleaded Falsity, Scienter In Stock-Drop Suit
LOS ANGELES - Shareholders have pleaded the required falsity and scienter in claiming that a microturbine technology solutions provider and two of its senior officers concealed significant backlog issues with revenue it had received from its Russian distributor in violation of federal securities laws, a federal judge in California ruled Feb. 9 in denying a motion to dismiss (In re Capstone Turbine Corp. Securities Litigation, No. 15-8914, C.D. Calif., 2018 U.S. Dist. LEXIS 22995).



Investor Class Certified In Securities Suit Against Medical Technology Company
MINNEAPOLIS - Shareholders have properly shown that an investor class in a securities class action lawsuit against a medical technology provider and several of its current and former executive officers meets all statutory requirements for certification, a federal judge in Minnesota ruled Jan. 30 in granting class certification, albeit with a shorter class period than proposed (West Virginia Pipe Trades Health & Welfare Fund v. Medtronic Inc., et al., No. 13-1686, D. Minn.; 2018 U.S. Dist. LEXIS 14744).



Lead Plaintiffs Appointed In Securities Suit Against Semiconductor Developer
BROOKLYN, N.Y. - Two shareholders have the largest financial interest in a securities class action lawsuit against a developer of 4G semiconductor solutions for wireless broadband applications and two of the company's senior officers and have met federal requirements to serve as lead plaintiffs, a federal judge in New York ruled Feb. 6 in appointing the shareholders lead plaintiffs and approving their choice of counsel as co-lead counsel (In re Sequans Communications S.A. Securities Litigation, No. 17-4665, E.D. N.Y., 2018 U.S. Dist. LEXIS 20665).



Judge: Evidence Not Sufficient To Alter Dismissal Ruling In Securities Suit
SAN FRANCISCO - Although a shareholder's motion to alter judgment in a securities class action lawsuit is procedurally proper and timely, newly discovered evidence is still insufficient to cure the shareholder's scienter and loss causation pleading deficiencies, a federal judge in California ruled Feb. 9 in denying the motion (Likar Rok v. Identiv Inc., et al., No. 15-5775, N.D. Calif., 2018 U.S. Dist. LEXIS 21916).



Misstatements In Securities Suit Found Not To Be Forward-Looking, Puffery
CHARLOTTE, N.C. - A technology-based provider of advanced fossil and renewable power generation equipment and two of its senior officials have failed to show that its alleged misstatements and omissions in a securities class action lawsuit are forward-looking, puffery or optimistic statements or that the statements were not made with the requisite scienter, a federal judge in North Carolina ruled Feb. 8 in denying the defendants' motion to dismiss (Eric Ollila v. Babcock & Wilson Enterprises Inc., et al., No. 17-109, W.D. N.C., 2018 U.S. Dist. LEXIS 20587).



Lead Plaintiffs Found To Have Properly Pleaded Scienter In Securities Suit
ANN ARBOR, Mich. - Lead plaintiffs in a securities class action lawsuit have pleaded the necessary elements of scienter in making their federal securities law claims against a pharmacy company and have not pleaded fraud by hindsight as defendants contend, a federal judge in Michigan ruled Jan. 19 in denying the defendants' motion to dismiss (David N. Zimmerman v. Diplomat Pharmacy Inc., et al., No. 16-14005, E.D. Mich., 2018 U.S. Dist. LEXIS 8661).



Parties Ordered To Submit Joint Statement On Issue Of Control-Person Liability
SALT LAKE CITY - A federal judge in Utah on Feb. 5 ordered parties to submit a joint statement of facts and questions for certification to the Utah Supreme Court to clarify what the applicable standard is for determining control-person liability under the Utah Uniform Securities Act (Gil A. Miller v. Union Central Life Insurance Co., No. No. 14-575, D. Utah, 2018 U.S. Dist. LEXIS 19388).



Shareholders Found To Have Failed To Plead Particularity, Reliance
NEW YORK - Shareholders have failed to plead the requisite particularity in arguing that a poultry processing company and certain of its executive officers engaged in two antitrust conspiracies designed to drive up the price of broiler chickens and are unable to show that they relied on the defendants' alleged misstatements covering up the fraud because the defendants' involvement in the alleged scheme was already known when the shareholders purchased their shares, a federal judge in New York ruled Jan. 19 in granting the defendants' motion to dismiss (Gordon Gamm, et al. v. Sanderson Farms Inc., et al., No. 16-8420, S.D. N.Y., 2018 U.S. Dist. LEXIS 9944).



Report Shows 2017 Securities Class Action Filings Most Since PSLRA Enactment
BOSTON - Federal merger and acquisition (M&A) transaction securities class action lawsuit filings more than doubled in 2017 helping the total number of filings for the year to reach record numbers for the second straight year - the most since the Private Securities Litigation Reform Act of 1995 (PSLRA), 15 U.S.C. 78u-4, was enacted, according to an annual report released by economic and financial consulting firm Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse on Jan. 30.



Report: Securities Class Action Filings Reached Record Numbers In 2017
NEW YORK - Federal securities class action lawsuit filings reached record numbers in 2017, thanks in large part to the nearly 200 filed federal merger-objection suits, equating to a 44 percent increase over 2016 and a third straight year of securities class action filing growth, according to a report released on Jan. 29 by securities, finance and commerce economic consultant NERA Economic Consulting.



Extending American Pipe To Follow-On Class Actions Erroneous, Defendants Argue
WASHINGTON, D.C. - The Ninth Circuit U.S. Court of Appeals erred in holding that the U.S. Supreme Court's ruling in American Pipe & Construction Co. v. Utah tolls the statute of limitations to permit a previously absent class member to bring a subsequent class action outside the applicable limitations period because American Pipe tolls only the limitations period during the pendency of a putative class action "for absent class members to file individual claims if the class fails," petitioners argue in a Jan. 22 merits brief filed with the Supreme Court (China Agritech Inc. v. Michael Resh, et al., No. 17-432, U.S. Sup.).



5th Circuit Asked To Decide Whether Pension Fund Pleaded Scienter
NEW ORLEANS - Parties in a securities class action lawsuit against an oilfield products supplier and certain of its executive officers recently asked the Fifth Circuit U.S. Court of Appeals to determine whether a federal district court failed to properly consider a pension fund's scienter allegations in determining whether the pension fund properly pleaded its federal securities law claims against the defendants (Alaska Electrical Pensions Fund v. Flotek Industries Inc., et al., No. 17-20308, 5th Cir.).



5th Circuit Determination Of Falsity, Scienter, Loss Causation Ruling Sought
NEW ORLEANS - Parties in a securities class action lawsuit against natural foods retailer Whole Foods Market Inc. and others recently asked the Fifth Circuit U.S. Court of Appeals to determine whether a Texas federal district court erred in dismissing the lead plaintiff's second amended complaint for failure to plead falsity, scienter and loss causation (Employees' Retirement System of the State of Hawaii v. Whole Foods Market Inc., et al., No. 17-50840, 5th Cir.).



5th Circuit Asked To Decide If Class Was Properly Certified In Securities Suit
HOUSTON - Parties in a securities class action lawsuit against an appliance retailer and others recently asked the Fifth Circuit U.S. Court of Appeals to determine whether a federal district court properly considered price impact and whether the correct damages methodology was applied in considering the length of the class period (Laborers Pension Trust Fund - Detroit and Vicinity, et al. v. Conn's Inc., et al., No. 17-20525, 5th Cir.).



District Court Got Scienter, Loss Causation Rulings Wrong, Investor Says
PHILADELPHIA - A federal district court erred in dismissing an amended securities class action complaint for failure to properly plead scienter or loss causation because the lead plaintiff properly pleaded a strong inference that dietary supplement retailer GNC Holdings Inc. was marketing substandard and illegal products in contradiction to its public statements that it boasted strict standards, the lead plaintiff argues in a Jan. 16 appellant brief filed in the Third Circuit U.S. Court of Appeals (James Martin, et al. v. GNC Holdings Inc., et al., No. 17-3303, 3rd Cir.).



Court's Selective Disclosures Ruling In Securities Suit Erroneous, Investors Say
NEW YORK - A federal district court erred in granting summary judgment in favor of defendants in a securities class action lawsuit against Barclays Bank PLC and two of its senior officers by determining that the defendants' selective disclosures of their alleged fraud would not have misled investors "as a matter of law" instead of whether "reasonable investors" would have been misled, lead plaintiffs argue in a Jan. 25 appellant brief filed in the Second Circuit U.S. Court of Appeals (In re Barclays Bank PLC Securities Litigation, No. 17-3293, 2nd Cir.).



Aetna, Board Of Directors Sued Over Lack Of Needed Merger Deal Information
NEW HAVEN, Conn. - A shareholder filed a securities class action complaint against insurance provider Aetna Inc. and its board of directors on Feb. 5 in Connecticut federal court, seeking to halt the company's proposed merger deal with CVS Health Corp. until shareholders are provided with information necessary to make a well-informed decision in connection with the proposed transaction (Joel Rosenfeld v. Aetna Inc., et al., No. 18-0213, D. Conn.).



When Strategies Go Awry: Part 3 In A Series On Cognitive Biases And Their Impact
By Laura A. Frase Loss Aversion and its Collaborators or