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

LexisNexis® Mealey's™ Emerging Securities Litigation Legal News



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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



Petrobras Agrees To Pay $2.95B To Settle Securities Class Action Claims
NEW YORK - Brazilian oil company Petroleo Brasileiro S.A. (Petrobras) will pay $2.95 billion to settle claims that it concealed from investors its involvement in an illegal bribery and kickback scheme in violation of federal securities laws, according to a press release issued by the company on Jan. 3 (In re Petrobras Securities Litigation, No. 14-9662, S.D. N.Y.).



SEC Settles With Reinsurance Executive On $2.5 Fraudulent Scheme Against Investors
NEW HAVEN, Conn. - A reinsurance executive accused of engaging in a $2.5 million fraudulent scheme settled claims brought by the Securities and Exchange Commission on Jan. 11 after the SEC filed a complaint in Connecticut federal court (Securities and Exchange Commission v. David S. Haddad, et al., No. 18-00055, D. Conn.).



Shkreli Co-Conspirator Found Guilty On Conspiracy Claims
BROOKLYN, N.Y. - A federal jury in New York on Dec. 27 convicted former Katten Muchin Rosenman attorney and outside counsel for pharmaceutical company Retrophin Inc. Evan Greebel for his role as co-conspirator of former Retrophin CEO Martin Shkreli's massive securities fraud scheme (United States of America v. Evan Greebel, No. 15-cr-0637, E.D. N.Y.).



Oil Company Liable For Fraud In Fracking Investment Scheme, Bankruptcy Judge Says
SAN ANTONIO - A federal bankruptcy judge in Texas on Dec. 29 ruled that an energy company and its affiliates that solicited investments in hydraulic fracturing ventures were liable for fraud, but determined that specific Texas securities laws were not broken (In re: Primera Energy LLC [Frederick Patek, et al. v. Brian K. Alfaro, et al.], No. 15-51396, Adv. No. 15-5047, W.D. Texas Bkcy., 2017 Bankr. LEXIS 4439).



U.S. Supreme Court To Weigh In On Constitutionality Of SEC Judges
WASHINGTON, D.C. - The U.S. Supreme Court on Jan. 12 agreed to hear 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 (Raymond J. Lucia, et al. v. Securities and Exchange Commission, No. 17-130, U.S. Sup.).



$290M Settlement Reached In Related Valeant Insider Trading Suits
SANTA ANA, Calif. - Defendants in a pair of related securities class action lawsuits alleging an insider-trading and front-running scheme regarding pharmaceutical company Valeant Pharmaceuticals International Inc.'s attempt at a hostile takeover of Allergan Inc. will pay $290 million to settle the claims against them, according to a press release issued by Valeant on Dec. 29 (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.).



2 Arizona Men Settle SEC Insider Trading Claims For $370K
PHOENIX - Two men have agreed to pay nearly $370,000 to settle claims that they engaged in insider trading scheme in violation of federal securities laws, according to a stipulation of settlement filed in Arizona federal court on Dec. 14 (Securities and Exchange Commission v. Lanny Brown, et al., No. 17-4630, D. Ariz.).



Parties Agree To $110M Accounting Fraud Class Action Settlement
NEW YORK - A data and metrics provider for the media, advertising and marketing industries will pay $110 million to settle claims that it and certain of its current and former officers and directors violated federal securities law by engaging in a massive accounting fraud, lead plaintiffs claim in a motion for preliminary approval of settlement and stipulation of settlement filed Jan. 12 in New York federal court (Fresno County Employees' Retirement Association, et al. v. comScore Inc., et al., No. 16-1820, S.D. N.Y.).



Judge Approves Final Class Settlement Related To $40M Stock Offering
NEW YORK - A New York federal judge on Dec. 14 ordered that a class action settlement reached with the officers of an energy firm and its underwriters in relation to the offering of $40 million in preferred stock from the company receive final approval and that the claimants be awarded fees (Vaccaro v. New Source Energy Partners, L.P., No. 15-8954, S.D. N.Y., 2017 U.S. Dist. LEXIS 205785).



Tech Company To Pay More Than $1.3M To Settle Stock-Drop Claims
BOSTON - A digital audio and video editing software marketer will pay nearly $1.33 million to settle claims that certain of its executive officers misrepresented the company's business and financial condition the wake of its launch of a new software product offering in violation of federal securities laws, the lead plaintiff in the action says in a motion for preliminary approval of settlement filed Nov. 30 in Massachusetts federal court (Prakash Mohanty v. Avid Technology Inc., et al., No. 16-12336, D. Mass.).



High Court Strikes Supplemental Brief In SLUSA Preemption Suit
WASHINGTON, D.C. - The U.S. Supreme Court on Jan. 8 granted a communications networks hardware and software supplier's motion to strike shareholders' supplemental brief challenging a California Superior Court ruling that the shareholders in a securities class action are not preempted by the Securities Litigation Uniform Standards Act (SLUSA) from bringing their Securities Act of 1933 claims (Cyan Inc. v. Beaver County Employees Retirement Fund, et al., No. 15-1439, U.S. Sup.).



Panel: Court Did Not Err In Ruling That Claims Were Preempted By SLUSA
ST. LOUIS - A federal district court did not err in dismissing an investor's class action lawsuit against a securities brokerage for allegedly violating the terms of its "duty of best execution" because the investor's claims were preempted by the Securities Litigation Uniform Standards Act (SLUSA), an Eighth Circuit U.S. Court of Appeals panel ruled Jan. 5 in affirming (Nicholas Lewis v. Scottrade Inc., No. 16-3808, 8th Cir., 2018 U.S. App. LEXIS 493).



9th Circuit Affirms Dismissal Of UCL, Other Claims As Barred By Securities Law
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Dec. 29 affirmed a district court's dismissal of claims for violation of California's unfair competition law (UCL) and other claims asserted against a financial services firm in relation to trades it made to a securities company, finding that all the causes of action were barred by the Securities Litigation Uniform Standards Act (SLUSA) (Francis X. Fleming Jr. v. The Charles Schwab Corporation, et al., Nos. 16-15179, 16-15189, 9th Cir., 2017 U.S. App. LEXIS 26982).



High Court Defers Ruling On Securities Class Action Petition After Settlement
WASHINGTON, D.C. - The U.S. Supreme Court on Jan. 16 granted a joint emergency motion to defer consideration of a petition for a writ of certiorari in an appeal of a securities class action lawsuit that asks it to provide guidance to lower courts as to the evidence that is necessary under Supreme Court precedent to prove reliance (Petroleo Brasileiro S.A. v. Universities Superannuation Scheme Limited, et al., No. 17-664, U.S. Sup.).



2nd Circuit Will Not Reconsider Ruling In Dark Pool Securities Class Appeal
NEW YORK - The Second Circuit U.S. Court of Appeals on Jan. 5 said it will not reconsider its Nov. 6 ruling that a federal judge did not err in granting a motion for class certification filed by shareholders in a securities class action lawsuit even though the judge erred in applying the U.S. Supreme Court's ruling in Affiliated Ute Citizens of Utah v. United States Affiliated Ute Citizens of Utah v. United States (Joseph Waggoner, et al. v. Barclays PLC, et al., No. 16-1912, 2nd Cir.).



Class Certified In Securities Lawsuit Against Drug Company, Others
SANTA ANA, Calif. - Certification of a class of investors in a securities lawsuit against pharmaceutical company Puma Biotechnology Inc. and certain of its executive officers is proper because the lead plaintiff has met all statutory requirements for approval, a federal judge in California ruled Dec. 8 in granting the plaintiff's motion (Hsingching Hsu v. Puma Biotechnology Inc., et al., No. 15-0865, C.D. Calif., 2017 U.S. Dist. LEXIS 206236).



Investors Found To Have Properly Pleaded Scienter In Fiat Stock Securities Suit
FLINT, Mich. - Automobile manufacturer Fiat Chrysler Automobiles N.V. (FCA) and certain of its executive officers have failed to show that lead plaintiffs in a securities class action lawsuit have not properly pleaded materiality or scienter in claiming that the defendants misrepresented the company's American retail sales in violation of federal securities laws, a federal judge in Michigan ruled Dec. 14 in denying the defendants' motion to dismiss (Carl Palazzolo, et al. v. Fiat Chrysler Automobiles N.V., et al., No. 16-12803, E.D. Mich., 2017 U.S. Dist. LEXIS 205572).



Lack Of Scienter, Loss Causation Lead To Dismissal Of Securities Claims
DALLAS - Lead plaintiffs in a securities class action against an energy industry equipment and services provider and certain of its former senior officers failed to plead scienter or loss causation in arguing that the defendants mispresented the company's business and financial condition in violation of federal securities laws, a federal judge in Texas ruled Dec. 27 in granting the defendants' motion to dismiss (Margaret Budde, et al. v. Global Power Equipment Group Inc., et al., No. 15-1679, N.D. Texas, 2017 U.S. Dist. LEXIS 212254).



Investor Failed To Plead Misstatements, Scienter In Securities Suit, Judge Rules
NEW YORK - A lead plaintiff in a securities class action lawsuit against an energy company and certain of its current and former executive officers failed to plead any material misrepresentation or omissions or scienter to support his federal securities law claim that the defendants concealed that the company's former CEO neglected his responsibilities to the company while secretly exercising control over another company that did significant business with the energy company, a federal judge in New York ruled Jan. 10 in granting the defendants' motions to dismiss (Jeffrey Fries v. Northern Oil & Gas Inc., et al., No. 16-6543, S.D. N.Y., 2018 U.S. Dist. LEXIS 5307).



6th Circuit Panel Rules That District Court Erred In Loss Causation Analysis
CINCINNATI - A federal district court erred in dismissing a shareholder class action against the operator of the country's largest for-profit hospital system and certain of its executive officers for failure to plead loss causation because lead plaintiffs have shown that the filing of a complaint against the company alleging Medicare fraud and the defendants' own disclosures that the company's stock was down were sufficient corrective disclosures, a Sixth Circuit U.S. Court of Appeals panel ruled Dec. 13 in reversing and remanding (Norfolk County Retirement System v. Community Health Systems Inc., et al., No. 16-6059, 6th Cir., 2017 U.S. App. LEXIS 25136).



Securities Suit Remanded For Proper Application Of Basic Reliance Standard
NEW YORK - It is unclear whether a federal district court properly applied the correct standard in determining that defendants in a securities class action lawsuit failed to properly rebut the presumption of reliance by a preponderance of the evidence as required pursuant to the U.S. Supreme Court's ruling in Basic Inc. v. Levinson, a Second Circuit U.S. Court of Appeals panel ruled Jan. 12 in vacating and remanding the lower court's grant of class certification (Arkansas Teachers Retirement System, et al. v. Goldman Sachs Group Inc., et al., No. 16-0250, 2nd Cir., 2018 U.S. App. LEXIS 810).



SEC Halts Trading Of Chinese-Based Cryptocurrency Shares
WASHINGTON, D.C. - For the second time in two months, the Securities and Exchange Commission on Jan. 5issued an order of suspension of trading to a cryptocurrency trading company over concerns about the company's business operations and market activity (In The Matter Of UBI Blockchain Internet Ltd., File No. 500-1, SEC).



Securities Exchanges' Actions Not Regulatory, 2nd Circuit Panel Rules
NEW YORK - A federal district court erred in ruling that a group of securities exchanges have absolute immunity from shareholder claims regarding the exchanges' alleged involvement in a market manipulation scheme because none of the exchanges' conduct is alleged to have been regulatory, a Second Circuit U.S. Court of Appeals panel ruled Dec. 19 in vacating and remanding (City of Providence, R.I., et al. v. BATS Global Markets Inc., et al., No. 15-3057, 2nd Cir., 2017 U.S. App. LEXIS 25556).



Panel Affirms Dismissal Of Suit Alleging Fiduciaries Did Not Protect ESOP From Harm
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on Jan. 8 affirmed a lower federal court's dismissal of a putative class action alleging that the fiduciaries of a publically traded company's stock ownership plan breached their duties by failing to protect the plan from harm caused by the artificial inflation of the company's stock price due to fraud and misrepresentation (Todd Graham, et al v. v. Richard Fearon, et al., No. 17-3407, 6th Cir., 2018 U.S. App. LEXIS 407).



Judge: Plaintiff's Pleading Of Falsity, Scienter Insufficient In Securities Action
SAN JOSE, Calif. - A California federal judge on Dec. 18 dismissed a securities lawsuit on grounds that the second amended complaint failed to plead falsity and scienter sufficient to meet the "demanding requirements" of the Private Securities Litigation Reform Act (PSLRA) (Howard Welgus v. TriNet Group Inc., et al., No. 15-3625, N.D. Calif.; 2017 U.S. Dist. LEXIS 2077778).



Earnings Call Statements Not Protected By Safe Harbor Provision, Judge Rules
NEWARK, N.J. - Statements made by defendants in a securities class action lawsuit against a pet food company and certain of its executive officers in 2015 investor earnings calls were not forward-looking or protected by the safe harbor provision of the Private Securities Litigation Reform Act (PSLRA), and the lead plaintiff has shown that the defendants knew that their statements were false when they made them, a federal judge in New Jersey ruled Jan. 12 in denying the defendants' motion to dismiss (Gary Curran v. Freshpet Inc., et al., No. 16-2263, D. N.J., 2017 U.S. Dist. LEXIS 5833).



Shareholder Seeks Reversal Of Attorney Fee Ruling In Securities Class Action
NEW YORK - A federal district court erred in determining that class counsel may seek an award of attorney fees in a securities class action that was subject to a fee-shifting provision from a common settlement fund because it failed to consider the "strong presumption" standard set forth in the U.S. Supreme Court's ruling in Perdue v. Kenny A ex rel. Winn, which states that the attorneys' unenhanced lodestar is a reasonable attorney fee, a shareholder argues in a Dec. 6 appellant brief filed in the Second Circuit U.S. Court of Appeals (Timothy Faig, et al. v. Jeffries LLC, et al., No. 17-2662, 2nd Cir.).



Investors Seek To Overturn District Court's Partial Dismissal In Securities Suit
SAN FRANCISCO - A federal district court's partial dismissal of claims in a securities class action lawsuit against a for-profit secondary education provider and certain of its current and former officers and directors should be reversed because a federal district court judge erred in ruling that shareholders failed to plead any materially misleading statements regarding the defendants' alleged misstatements about the company's rollout of its online classroom, the shareholders argue in a Dec. 22 brief filed in the Ninth Circuit U.S. Court of Appeals (Rameses Te Lomingkit, et al. v. Apollo Education Group Inc., et al., No. 17-16634, 9th Cir.).



California Man Bilked Investors Of Over $1.22B In Ponzi Scheme, SEC Argues
MIAMI - A California man bilked more than 8,400 investors nationwide of more than $1.22 billion through a series of unregistered securities offerings as part of a massive Ponzi scheme, the Securities and Exchange Commission alleges in a complaint filed Dec. 20 in Florida federal court (Securities and Exchange Commission v. Robert H. Shapiro, et al., No. 17-24624, S.D. Fla.).



Cryptocurrency Companies Hit With Lawsuits Over Securities Law Violations
A number of lawsuits have recently been filed in federal district courts throughout the country pertaining to the rise in popularity of the cryptocurrency market.



When Strategies Go Awry: Part 2 in a Series on Cognitive Biases and Their Impact
By Laura A. Frase Anchoring Effect: "Draggin the Line"1 in Litigation and Negotiation One of the most well researched cognitive bias is the Anchoring Effect; "the human tendency to adjust judgments or assessments higher or lower based on previously disclosed external information - the anchor."2 This mental short-cut involves starting with an initial known number or information (explicitly or implicitly conveyed) and then adjusting to generate the final answer for which we are searching. Once we believe we have reached the realm of a plausible answer, we stop adjusting from the initial reference point. For example, we want to purchase a quart of cream. We know the price of a quart of milk so we adjust from that number to estimate the cost of the same amount of cream. If we want to buy a particular car, we may recall prices for similar makes and models and use those numbers to estimate the cost of the car we want to purchase. The numbers or information we start with and use as comparisons are anchors.



U.S. Supreme Court Hears Oral Arguments In SLUSA Preemption Appeal
WASHINGTON, D.C. - In writing the Securities Litigation Uniform Standards Act (SLUSA), Congress intended to eliminate concurrent jurisdiction for many federal claims arising from the Securities Act of 1933, even if it took an "obtuse" approach to saying as much, counsel for Cyan Inc. told the U.S. Supreme Court on Nov. 28 in oral arguments in an appeal of a California Superior Court ruling that shareholders in a securities class action are not preempted by SLUSA from bringing their Securities Act claims (Cyan Inc. v. Beaver County Employees Retirement Fund, et al., No. 15-1439, U.S. Sup.).



U.S. High Court Hears Dodd-Frank Whistleblower Oral Arguments
WASHINGTON, D.C. - The statutory definition of whistleblower applies to the anti-retaliation provision of the Dodd-Frank Act, Kannon K. Shanmugam of Williams & Connolly in Washington, counsel for Digital Realty Trust Inc., told the U.S. Supreme Court justices during oral argument on Nov. 28 (Digital Realty Trust Inc. v. Paul Somers, No. 16-1276, U.S. Sup.).



Supreme Court Will Review Application Of American Pipe Tolling Doctrine In Securities Suit
WASHINGTON, D.C. - The U.S. Supreme Court on Dec. 8 announced that it will determine whether the Ninth Circuit U.S. Court of Appeals properly ruled that 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.).



Drug Company To Pay $24M To Settle Claims In Securities Class Action Suit
CHICAGO - Pharmaceutical company Akorn Inc. has agreed to pay $24 million to settle claims that it and certain of its current and former executive officers misrepresented the company's financial results in violation of federal securities laws, according to a motion for preliminary approval of settlement filed by lead plaintiffs in Illinois federal court on Nov. 20 (In re Akorn Inc. Securities Litigation, No. 15-1944, N.D. Ill.).



Investor Group Named Lead Plaintiff In Drug Company's Stock Drop Suit
SAN FRANCISCO - An investor group is the most appropriate candidate for lead plaintiff because it has the largest financial stake in the litigation and meets all other statutory requirements to serve in the role, a federal judge in California ruled Dec. 8 in appointing the investor group as lead plaintiff (Inchen Huang v. Depomed Inc., et al., No. 17-4830, N.D. Calif., 2017 U.S. Dist. LEXIS 202580).



9th Circuit Panel Hears Oral Argument In Accounting Misrepresentation Lawsuit
SAN FRANCISCO - Parties in a securities class action lawsuit against a company that sells renewable energy and certain of its executive officers asked a Ninth Circuit U.S. Court of Appeals panel on Dec. 4 to determine whether a federal district court erred in dismissing the action for failure to plead scienter under a holistic approach (James Webb v. SolarCity Corp., et al., No. 16-16440, 9th Cir.).



4th Circuit Affirms Dismissal Of Securities Suit For Failure To Plead Scienter
RICHMOND, Va. - Shareholders in a securities class action lawsuit against an energy provider and its CEO have failed to show that the CEO acted with the requisite scienter in misrepresenting to investors that the company had secured a contract renewal with a large customer because they have not shown that he knew his statements were misleading at the time he made them, a Fourth Circuit U.S. Court of Appeals panel ruled Nov. 15 in affirming a federal judge's dismissal of the action (Maguire Financial LP, et al. v. PowerSecure International Inc., et al., No. 16-2163, 4th Cir., 2017 U.S. App. LEXIS 22968).



Pension Fund Found To Have Failed To Plead Falsity, Scienter In Securities Suit
CHICAGO - Dismissal of a securities class action lawsuit against a for-profit college and certain of its current and former senior executives is warranted because the lead plaintiff in the action failed to plead falsity or scienter in making its federal securities law claims against the defendants, a federal judge in Illinois ruled Dec. 6 in granting the defendants' motion (Pension Trust Fund for Operating Engineers v. DeVry Education Group Inc., et al., No. 16-5198, N.D. Ill., 2017 U.S. Dist. LEXIS 200272).



Judge: Investors Pleaded Scienter In Making Federal Securities Law Claims
NEW YORK - Shareholders in a securities class action lawsuit against car maker Fiat Chrysler Automobiles N.V. (Chrysler), certain of its executive officers and others have properly pleaded scienter and falsity in making their federal securities law claims by showing that the defendants concealed certain emissions-based issues with several of Chrysler's automobiles, a federal judge in New York ruled Nov. 13 in denying the defendants' motion to dismiss (Victor Pirnik v. Fiat Chrysler Automobiles N.V., et al., No. 15-7199, S.D. N.Y.; 2017 U.S. Dist. LEXIS 187264).



Panel: Shareholders Properly Pleaded Scienter In Securities Class Action
NEW YORK - A federal district court erred in dismissing a securities class action lawsuit against a China-based online and mobile commerce company and certain of its senior officers because shareholders had properly pleaded that the defendants acted with the requisite scienter by concealing that the company was subject to administrative proceedings by China's State Administration for Industry and Commerce (SAIC) in the months leading up to its initial public offering (IPO), a Second Circuit U.S. Court of Appeals panel ruled Dec. 5 in reversing and remanding (Christine Asia Co. Ltd., et al. v. Jack Yun Ma, et al., No. 16-2519, 2nd Cir.).



9th Circuit Panel Affirms HP Shareholder Derivative Action Settlement Approval
SAN FRANCISCO - A federal judge did not abuse his discretion in approving the terms of a third proposed settlement in a shareholder derivative lawsuit stemming from Hewlett-Packard Co.'s (HP) acquisition of a British software company because the settlement, among other things, caused HP to enact certain corporate governance measures, a Ninth Circuit U.S. Court of Appeals panel ruled Nov. 28 (In re: Hewlett-Packard Co. Shareholder Derivative Litigation, No. 15-16688, 9th Cir., 2017 U.S. App. LEXIS 24055).



District Court's Dismissal Of Securities Suit Not Erroneous, Panel Rules
SAN FRANCISCO - A federal district court did not err in dismissing a securities class action lawsuit against crowd-sourced review platform Yelp Inc. and certain of its executive officers because the lead plaintiff in the action failed to show that the disclosure of consumer complaints, without more, is sufficient to plead loss causation, a Ninth Circuit U.S. Court of Appeals panel ruled Nov. 21 (Joseph Curry, et al. v. Yelp Inc., et al., No. 16-15104, 9th Cir., 2017 U.S. App. LEXIS 23563).



Majority Of Claims In Securities Fraud Suit Are Time-Barred, Judge Rules
WEST PALM BEACH, Fla. - Dismissal of a majority of claims in a securities fraud lawsuit against Children of America (COA), certain of its affiliates and others is warranted because those claims are time-barred under their respective statutes of limitations, a federal judge in Florida ruled Dec. 1 in granting in part and denying in part the defendants' motion to dismiss (Daniel Martin v. World Wide Child Care Corp., et al., No. 17-80188, S.D. Fla., 2017 U.S. Dist. LEXIS 199033).



Judge Certifies Investor Class In Securities Suit Against SeaWorld, Others
SAN DIEGO - Lead plaintiffs in a securities class action lawsuit against SeaWorld Entertainment Inc. and certain of its current and former executive officers over their alleged concealment of the negative impact the document "Blackfish" had on the company's business and financial condition have met all statutory requirements to certify the class of investors, a federal judge in California ruled Nov. 29 in certifying the class (Lou Baker v. SeaWorld Entertainment Inc., et al., No. 14-2129, S.D. Calif., 2017 U.S. Dist. LEXIS 196235).



Federal Judge Partially Grants TRO In Ponzi Scheme Lawsuit
DENVER - A federal judge in Colorado on Nov. 14 granted in part and denied in part the Securities and Exchange Commission's motion for a temporary restraining order (TRO) in a lawsuit stemming from a Ponzi scheme orchestrated by a hedge fund manager, ruling that the SEC has properly shown that it is likely to succeed on its claims against the estate of the manager and his investment company but has failed to show which of the Ponzi scheme proceeds the other defendants received were ill-gotten gains (SEC v. End of the Rainbow Partners LLC, et al., No. 17-2670, D. Colo., 2017 U.S. Dist. LEXIS 187534).



Government Changes Course, Asks High Court To Review SEC ALJ Appointment Dispute
WASHINGTON, D.C. - In a change of course, the U.S. government in a Nov. 29 respondent's brief asked the U.S. Supreme Court to review an appeal of a District of Columbia Circuit U.S. Court ruling that Securities and Exchange Commission administrative law judges (ALJs) are constitutional officers pursuant to the appointments clause of the U.S. Constitution (Raymond J. Lucia, et al. v. Securities and Exchange Commission, No. 17-130, U.S. Sup.).



Ruling In Securities Suit Conflicts With Supreme Court Precedent, Investor Says
RICHMOND, Va. - The lead plaintiff in a securities class action lawsuit against an energy provider and its CEO asked the Fourth Circuit U.S. Court of Appeals on Nov. 29 to rehear its appeal of a federal district court's dismissal of its amended complaint for failure to plead scienter, claiming that the panel's opinion affirming the lower court's ruling is in conflict with U.S. Supreme Court and Fourth Circuit precedent (Maguire Financial LP, et al. v. PowerSecure International Inc., et al., No. 16-2163, 4th Cir.).



Rehearing Sought Of 2nd Circuit Ruling In Barclays Securities Lawsuit
NEW YORK - Rehearing of a Second Circuit U.S. Court of Appeals panel's ruling affirming a federal district court's grant of class certification in a securities lawsuit is necessary because the panel's ruling is in conflict with U.S. Supreme Court and federal circuit court precedent, defendants argue in a Nov. 20 petition for rehearing and rehearing en banc (Joseph Waggoner, et al. v. Barclays PLC, et al., No. 16-1912, 2nd Cir.).



2nd Circuit Asked To Decide If Amendment Of Securities Complaint Was Futile
NEW YORK - Parties in a securities class action lawsuit recently asked the Second Circuit U.S. Court of Appeals to determine whether a federal district court erred in denying the lead plaintiff's motion for leave to file a third amended complaint in the action because amendment would be futile (Waterford Township Police & Fire Retirement System v. Regional Management Corp., et al., No. 17-0598, 2nd Cir.).



Panel Asked To Decide If Securities Suit Was Properly Dismissed Under Morrison
SAN FRANCISCO - Parties in a securities class action lawsuit against an electronic and energy products and services manufacturer and provider recently asked the Ninth Circuit U.S. Court of Appeals to determine whether a federal district court erred in dismissing U.S. federal and Japanese securities law claims under the U.S. Supreme Court's transactional test established in Morrison v. National Australia Bank (Automotive Industries Pension Trust Fund, et al. v. Toshiba Cop., No. 16-56058, 9th Cir.).



Parties Debate Whether Denial Of Leave To Amend Securities Suit Was Proper
PHILADELPHIA - Parties in an appeal of a securities class action lawsuit against a company and certain of its current and former executive officers and directors recently asked the Third Circuit U.S. Court of Appeals to determine whether a federal district court erred in denying a lead plaintiff's request for leave to amend its complaint (City of Cambridge Retirement System, et al. v. Altisource Asset Management Corp., et al., No. 17-2471, 3rd Cir.).



Federal Prosecutors Seek $7.3M Forfeiture From Shkreli In Criminal Action
BROOKLYN, N.Y. - Federal prosecutors in the criminal proceedings against convicted former pharmaceutical company CEO and hedge fund manager Martin Shkreli on Nov. 30 asked a federal judge to require him to forfeit more than $7.3 million he obtained as part of his role in the securities fraud scheme to defraud investors (United States of America v. Martin Shkreli, No. 15-637, E.D. N.Y.).



Investors: Defendants In Securities Suit Admitted To Misrepresentations
NEW YORK - Dismissal of federal securities law claims in a class action lawsuit against a property and casualty insurer and certain of its executive officers and directors, its independent auditors and underwriters of the company's various stock offerings is not necessary because the defendants admitted to their alleged misrepresentations in the company's restatement of its 2016 financial results, shareholders argue in a Dec. 1 motion to dismiss (In re AmTrust Financial Services Inc. Securities Litigation, No. 17-1545, S.D. N.Y.).



Defendants In Stock-Drop Suit Seek Dismissal Of Federal Securities Law Claims
HOUSTON - Defendants in a securities class action lawsuit against a worldwide provider of professional services and technologies within the government services and hydrocarbons industries on Dec. 4 asked a federal judge in Texas to dismiss federal securities law claims because shareholders failed to plead a material misrepresentation, scienter of loss causation (In re KBR Inc. Securities Litigation, No. 17-1375, S.D. Texas).



Investors Failed To Plead Loss Causation In Securities Suit, Defendants Say
LOS ANGELES - Lead plaintiffs in a securities class action lawsuit against a drug maker, certain of its current and former officers and directors and others have failed to plead loss causation in arguing that the defendants engaged in an illegal stock-pumping scheme in violation of federal securities laws, the defendants argue in a Nov. 10 motion to dismiss filed in California federal court (Arthur Kaye IRA FCC, et al. v. ImmunoCellular Therapeutics Ltd., et al., No. 17-3250, C.D. Calif.).



Shareholders Seek To Halt Proposed Vote On Ruby Tuesday Acquisition Deal
KNOXVILLE, Tenn. - Ruby Tuesday Inc. shareholders filed three related securities class action lawsuits in Tennessee federal court between Nov. 13 and Nov. 14, seeking to halt a proposed merger deal in which Ruby Tuesday would be acquired, arguing that the company, its CEO and board of directors and others failed to properly provide shareholders with information necessary to conduct a vote on the proposed deal in violation of federal securities law (Jonathan Raul v. Ruby Tuesday Inc., et al., No. 17-494; Larry Patterson v. Ruby Tuesday Inc., No. 17-495; and David Breslau v. Ruby Tuesday Inc., et al., No. 17-496, E.D. Tenn.).



When Strategies Go Awry: Part I In A Series On Cognitive Biases And Their Impact
By Laura A. Frase We make decisions every day. With simple questions, we normally rely upon intuition, feelings, instincts or automatic reactions to make a decision (ex: do I turn left or right?). Our brains make thousands, if not millions, of these types of decisions, with seemingly little effort or analysis. "Judgment pervades human experience."1 These intellectual shortcuts save time, take less effort and allow us to choose quickly. We do not take the time, for example, to decide which foot to put forward when we walk; we decide automatically or on "gut instinct". If we fully analyzed every simple decision, we would be paralyzed and unable to function in our daily lives. We traditionally believe that we make rational and logical decisions; we "absorb information, process it, and come up with an optimal answer of solution."2 Yet, the fact that we err is undisputed. Our missteps sometimes come when we use these same intuitive shortcuts (known as heuristics) to make complex decisions, particularly when we are dealing with uncertain or unknown information. Countless qualitative studies demonstrate that our ability to analyze intricate facts or numbers is involuntarily thwarted by various cognitive, social and emotional responses which may ultimately force us toward illogical reasoning. As lawyers, we are not immune. Why, for example, do some parties reject generous offers? Why do we invest significant resources into "losing" cases? How does the first demand, even if it is outrageous, tilt negotiations? Why do our brains play these games?