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The Ninth Circuit affirmed the district court's dismissal of a securities fraud action brought against Yelp and others. Plaintiffs argued that the district court erred by holding that they did not adequately plead falsity, materiality, loss causation, and scienter. The panel held that the disclosure of consumer complaints, without more, in the circumstances of this case did not form a sufficient basis for a viable loss causation theory. Furthermore, allegations of suspicious insider sales of stock without allegations of historical trading data did not create a strong inference of scienter. Finally, the panel affirmed the district court's dismissal of the complaint with prejudice because amendment of the complaint as to loss causation would be futile under current precedent. View "Curry v. Yelp, Inc." on Justia Law

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The Fourth Circuit affirmed the district court's dismissal of Maguire Financial's amended complaint in a securities fraud class action. The court held that Maguire Financial's amended complaint failed to adequately allege scienter where a statement by the CEO of PowerSecure, to securities analysts that the company had secured a "contract renewal" could not form the basis for liability under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78(b), and Rule 10b-5, 17 C.F.R. 240.10b-5, and the Private Securities Litigation Reform Act, 15 U.S.C. 78u-4(b)(2). View "Maguire Financial, LP v. Powersecure International, Inc." on Justia Law

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The Second Circuit affirmed the district court's order granting plaintiffs' motion for class certification in an action asserting violations of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b). The court held that the Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), presumption did not apply because plaintiffs' claims were primarily based on misstatements, not omissions; direct evidence of price impact was not always necessary to demonstrate market efficiency, as required to invoke the Basic Inc. v. Levinson, 485 U.S. 224 (1988), presumption of reliance, and was not required here; defendants seeking to rebut the Basic presumption must do so by a preponderance of the evidence, which defendants failed to do; and the district court's conclusion regarding plaintiffs' classwide damages methodology was not erroneous. View "Waggoner v. Barclays PLC" on Justia Law

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Between 2000 and 2001, plaintiff-appellant Troy Flowers's application for a securities sales license was rejected by Ohio state officials because they found that he was "not of 'good business repute.'" In addition, Flowers was subjected to discipline by securities regulators with respect to his violation of securities laws and regulations and his failure to cooperate in a securities investigation. Flowers filed a complaint against the Financial Industry Regulatory Authority, Inc. (FINRA), seeking an order that FINRA expunge his disciplinary history from its records. The trial court sustained without leave to amend FINRA's demurrer to Flowers's complaint. Because federal securities laws and regulations provided Flowers with a process by which he may challenge FINRA's publication of his disciplinary history, and Flowers has not pursued that process, the Court of Appeal concluded he may not now, by way of a civil action, seek that relief from the trial court. Accordingly, the Court affirmed the trial court's order sustaining the demurrer and its judgment in favor of FINRA. View "Flowers v. Financial Industry Regulatory Authority, Inc." on Justia Law

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The Eleventh Circuit affirmed the district court's dismissal of plaintiff's complaint against FINRA and its denial of plaintiff's motion to remand the case to Florida state court. The court held that removal was proper in this case because suits against self-regulatory organizations (SROs) like FINRA for violating their internal rules "arise under" the Securities Exchange Act of 1934, 15 U.S.C. 78o(a)(1), (b)(1), and therefore fall under the Act's grant of exclusive jurisdiction to the federal district courts. The court also held that the district court correctly dismissed plaintiff's claim because no private right of action exists for SRO members and associated persons to sue SROs for violating their own internal rules. View "Turbeville v. Financial Industry Regulatory Authority" on Justia Law

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The Fifth Circuit affirmed the district court's grant of summary judgment for the SEC on liability and damages in a complaint against defendant and his company for the purchase and resale of unregistered securities. The court affirmed summary judgment as to liability against TJM and defendant where they failed to show that the sales fell under an exception to the registration requirements under Section 5 of the Securities Act of 1933, 15 U.S.C. 77e. Because defendants failed to identify anything in the summary judgment record that would show the transactions at issue occurred in Texas, the court rejected their claim under Rule 504(b)(1)(iii), which allows offerings and sales to avoid registration requirements if they are conducted exclusively according to state law exemptions from registration that permit general solicitation and general advertising so long as sales are made only to accredited investors. The court also held that the district court did not abuse its discretion in barring all future transactions, in ordering a permanent injunction from future securities law violations, and in disgorgement of all revenue. View "SEC v. Kahlon" on Justia Law

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Petitioner challenged the Commission's decision to sustain FINRA's decision to permanently bar him from membership and from working with any of its affiliated members. The DC Circuit held that the Commission reasonably grounded its decision in the record, which extensively evidenced petitioner's acts of misappropriation, his prolonged efforts to cover his tracks through falsehoods, and his repeated and deliberate obstruction of investigators. The court remanded with respect to the permanent bar on petitioner's registration with FINRA and affiliation with its members for the Commission to determine in the first instance whether Kokesh v. SEC, 137 S. Ct. 1635 (2017), has any bearing on his case. View "Saad v. SEC" on Justia Law

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The First Circuit affirmed Appellant’s convictions of securities fraud, wire fraud, and conspiracy to commit both. The convictions arose from Appellant’s writing of false opinion letters so that his two co-conspirators could sell stock to the public in a “pump and dump” scheme. On appeal, Appellant argued that the evidence was insufficient to support his convictions in light of his interpretation of section 3(a)(9) of the Securities Act and that the district court constructively amended the indictment in its instructions to the jury. The First Circuit held (1) even if Appellant’s interpretation of section 3(a)(9) was correct, the evidence was sufficient to support his convictions; and (2) Appellant’s constructive amendment claim was without merit. View "United States v. Weed" on Justia Law

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After the SEC determined that petitioner's conduct violated various securities-fraud provisions, the DC Circuit upheld the Commission's findings that the statements in petitioner's emails were false or misleading and that he possessed the requisite intent. However, the court held that petitioner did not "make" false statements for purposes of Rule 10b-5(b) of the Securities Act of 1934, 15 U.S.C. 78j, because petitioner's boss, and not petitioner himself, retained "ultimate authority" over the statements. The court reasoned that, while petitioner's boss was the "maker" of the false statements, petitioner played an active role in perpetrating the fraud by folding the statements into emails he sent directly to investors in his capacity as director of investment banking, and by doing so with an intent to deceive. Therefore, petitioner's conduct infringed the other securities-fraud provisions he was charged with violating. The court set aside sanctions and remanded for the Commission to reassess the appropriate remedies. Accordingly, the court granted the petition for review in part, vacated the sanctions, and remanded. View "Lorenzo v. SEC" on Justia Law

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FHFA, as conservator for government-sponsored enterprises (GSEs), filed suit against defendants, alleging violations of the Securities Act of 1933 and analogous "Blue Sky laws," the Virginia Securities Act, and the D.C. Securities Act. The FHFA alleged that representations regarding underwriting criteria for certificates tied to private-label securitizations (PLLs) was a material misstatement. The district court rendered judgment in favor of the FHFA under Sections 12(a)(2) and 15 of the Securities Act, and analogous provisions of the Virginia and D.C. Blue Sky laws. The district court also awarded rescission and ordered defendants to refund the FHFA a total adjusted purchase price of approximately $806 million in exchange for the certificates. The Second Circuit found no merit in defendants' argument and held that defendants failed to discharge their duty under the Securities Act to disclose fully and fairly all of the information necessary for investors to make an informed decision whether to purchase the certificates at issue. Accordingly, the court affirmed the judgment. View "Federal Housing Finance Agency v. Nomura Holding America, Inc." on Justia Law