Justia Securities Law Opinion Summaries

The Court Appointed Receiver for the Stanford International Bank Ltd. filed a fraudulent transfer claim against defendant, a former international advisor to the Stanford entities. The court concluded that there was a legally sufficient evidentiary basis for the jury’s finding that the Receiver did not discover and could not reasonably have discovered the transfers to defendant and their fraudulent nature until after February 15, 2010, and that, therefore, the Receiver’s fraudulent transfer claim was timely under the Texas Uniform Fraudulent Transfer Act’s, Tex. Bus. & Com. Code 24.010 statute of repose. Therefore, the district court did not err in denying defendant's post-verdict motion for judgment as a matter of law as to the fraudulent transfer. The court did not reach the alternative issues raised by defendant. Finally, the court denied defendant's request to abate this appeal where defendant did not object during trial to this specific language in the jury instruction and he did not request a jury finding on market value even though the parties presented conflicting evidence of market value at trial. Further, defendant failed to brief this issue on the merits. Accordingly, the court affirmed the judgment. View "Janvey v. Romero" on Justia Law

In 2012, a private equity firm purchased a trucking company now owned by Buyer through a merger transaction. Plaintiff initiated this action as the representative of the selling securityholders (Securityholders) to recover a preclosing tax refund. Buyer, in response, asserted several counterclaims. Securityholders sought to dismiss Buyer’s counterclaims. The Court of Chancery (1) denied Securityholders’ motion to dismiss Buyer’s common law fraud claim insofar as that claim asserted fraud based on extra-contractual statements made to Buyer before it entered the merger agreement, as Buyer was not prevented from asserting a claim for fraud based on representations outside the four corners of the merger agreement; (2) granted Securityholders’ motion to dismiss Buyer’s claim under the Delaware Securities Act and Buyer’s claim of unilateral mistake, as these claims failed to state a claim for relief; and (3) granted Plaintiff’s motion for summary judgment concerning the tax refund claim, as Buyer had no defense to Plaintiff’s motion. View "FdG Logistics LLC v. A&R Logistics Holdings, Inc." on Justia Law

TriQuint Semiconductor, Inc., and its directors were defendants in two consolidated shareholder derivative suits filed in Washington State. TriQuint moved to dismiss those suits on the ground that its corporate bylaws establish Delaware as the exclusive forum for shareholder derivative suits. The trial court denied TriQuint’s motion to dismiss, and the Supreme Court allowed TriQuint’s petition for an alternative writ of mandamus. After review, the Supreme Court concluded that, as a matter of Delaware law, TriQuint’s bylaw was a valid forum-selection clause and bound its shareholders. The Court also concluded that, as a matter of Oregon law, the bylaw was enforceable. The Court issued a peremptory writ of mandamus directing the trial court to grant TriQuint’s motion to dismiss. View "Roberts v. TriQuint Semiconductor, Inc." on Justia Law

This appeal was the most recent appeal in a series of lawsuits that have arisen over the sale of bonds by a corporation wholly owned by the Lac du Flambeau Band of Lake Superior Chippewa Indians (collectively, “the Tribal Entities”). In a prior action, the Seventh Circuit held that a bond indenture constituted an unapproved management contract under the Indian Gaming Regulatory Act (“IGRA”) and was therefore void. Following more than three years of litigating the validity of other bond-related documents in federal and state court, the Tribal Entities instituted a tribal court action seeking a declaration that the bonds are invalid under the IGRA as well as tribal law. Certain “Financial Entities” and Godfrey & Kahn S.C. sought an injunction in the Western District of Wisconsin to preclude the Tribal Entities from pursuing their tribal court action. The district court preliminarily enjoined the Tribal Entities from proceeding against the Financial Entities but allowed the tribal action to proceed against Godfrey. The Seventh Circuit affirmed in part and reversed in part, holding that the district court (1) did not abuse its discretion in enjoining the tribal court action against the Financial Entities; but (2) made several errors of law in assessing whether Godfrey had established a likelihood of success on the merits. Remanded. View "Stifel, Nicolaus & Co., Inc. v. Lac Du Flambeau Band of Lake Superior Chippewa Indians" on Justia Law

Plaintiff, a stockholder in DeVry, which operates for-profit colleges and universities, filed a shareholders’ derivative suit against DeVry’s board of directors. A 2005 incentive plan authorized awards of stock options to key employees, including the CEO. The plan limited awards to 150,000 shares per employee per year. Nonetheless, the company granted Hamburger, who became its CEO in 2006, options on 184,100 shares in 2010, 170,200 in 2011, and 255,425 in 2012. DeVry, discovering its mistake, reduced each grant under the 2005 plan to 150,000 shares, but allocated Hamburger 87,910 shares available under the company’s 2003 incentive plan, which held shares that had not been allocated. Only the company’s Plan Committee, not the Compensation Committee, was authorized to grant stock options under the 2003 plan; there was no Plan Committee in 2012. The grant of 87,910 stock options was approved by the Compensation Committee, and then by the independent directors as a whole. The Seventh Circuit affirmed dismissal. The directors who approved the Compensation Committee’s recommendation were disinterested: the recommendation was a valid exercise of business judgment. Administration of the 2003 plan by the Compensation Committee, given the nonexistence of the Plan Committee, was not “a clear or intentional violation of a compensation plan,” View "Donnawell v. Hamburger" on Justia Law

In 2005, the Harrises bought tens of thousands of shares in Bancorp through a TD Ameritrade account. Six years later, the Harrises sought to hold some of their Bancorp stock in another form, registered in their name and reflected in a physical copy of a certificate signifying their ownership. TD Ameritrade refused to convert the Harrises’ form of ownership, stating that all Bancorp stock was in a “global lock,” prohibiting activity in the stock, including changing the Harrises’ form of ownership. The lock was created because someone had fraudulently created hundreds of millions of invalid shares of Bancorp stock. The Harrises sued, alleging that TD Ameritrade had violated SEC Rule 15c3-3 and Nebraska’s version of the Uniform Commercial Code. The Sixth Circuit affirmed dismissal.. Neither the SEC Rule nor Nebraska’s Commercial Code creates a private right of action to vindicate the alleged problem. View "Harris v. TD Ameritrade, Inc." on Justia Law

American Century, a mutual fund, offers investment portfolios, including Ultra Fund. Ultra Fund invested in PartyGaming, a Gibraltar company that facilitated internet gambling. In 2005, PartyGaming made an initial public offering of its stock, which was listed on the London Stock Exchange. In its prospectus, PartyGaming noted that the legality of online gaming was uncertain in several countries, including the U.S.; 87 percent of its revenue came from U.S. customers. PartyGaming acknowledged that “action by US authorities … prohibiting or restricting PartyGaming from offering online gaming in the US . . . could result in investors losing all or a very substantial part of their investment.” Ultra Fund purchased shares in PartyGaming totaling over $81 million. In 2006, following increased government enforcement against illegal internet gambling, the stock price dropped. Ultra Fund divested itself of PartyGaming, losing $16 million. Seidl, a shareholder, claimed negligence, waste, and breach of fiduciary duty against American Century. The company refused her demand to bring an action. Seidl brought a shareholder’s derivative action. The Eighth Circuit affirmed summary judgment for the defendants, concluding that Seidl could not bring suit where the company had declined to do so in a valid exercise of business judgment. The litigation committee adopted a reasonable methodology in conducting its investigation and reaching its conclusion. View "Seidl v. Am. Century Co., Inc" on Justia Law

Plaintiffs appealed the district court’s dismissal of a securities class action against ZAGG, Inc. and its former CEO and Chairman, Robert Pedersen, alleging violations of the antifraud provisions of the securities laws. The plaintiffs alleged Pedersen failed to disclose in several of ZAGG’s SEC filings the fact that he had pledged nearly half of his ZAGG shares (or approximately 9 percent of the company), as collateral in a margin account. The district court dismissed the complaint for a failure to plead particularized facts giving rise to a strong inference that Pedersen acted with an intent to defraud as required by the Private Securities Litigation Reform Act of 1995 (PSLRA). The Tenth Circuit found that the PSLRA subjected plaintiffs to a heightened pleading requirement of alleging intent to defraud with particularized facts that give rise to an inference that is at least as cogent as any competing, nonculpable explanations for a defendant’s conduct. After review, the Tenth Circuit agreed with the district court that the plaintiffs did not meet that standard here. View "Swabb v. ZAGG, Inc." on Justia Law

Trinity, a New York Episcopal parish, owns Wal-Mart stock and requested that Wal-Mart include its shareholder proposal in Wal-Mart’s proxy materials. Trinity’s proposal, linked to Wal-Mart’s sale of high-capacity firearms at about one-third of its 3,000 stores, asked Board of Directors to develop and implement standards for use in deciding whether to sell a product that “especially endangers public safety,” “has the substantial potential to impair the reputation of Wal-Mart,” and/or “would reasonably be considered by many offensive to the family and community values integral to the Company’s promotion of its brand.” The Securities and Exchange Commission’s “ordinary business” exclusion lets a company omit a shareholder proposal from proxy materials if the proposal relates to ordinary business operations. Wal-Mart obtained a “no-action letter” from the SEC, indicating that there would be no recommendation of an enforcement action against Wal-Mart if it omitted the proposal from its proxy materials. Trinity filed suit. The district court held that, because the proposal concerned the company’s Board (rather than management) and focused principally on governance (rather than how Wal-Mart decides what to sell), it was outside ordinary business operations. The Third Circuit reversed. “Stripped to its essence, Trinity’s proposal goes to the heart of Wal-Mart’s business: what it sells on its shelves.” View "Trinity Wall Street v. Wal-Mart Stores, Inc" on Justia Law

Because a 1999 issue of cumulative preferred stock was impairing the company’s ability to raise capital, Emmis signed holders of 60% of the preferred shares to swaps. Emmis purchased shares; the owners delivered their shares to an escrow. Closing was deferred for five years, during which the sellers agreed to vote their shares as Emmis instructed. Emmis did this because, once it purchased any share outright, it would be retired and lose voting rights, Ind. Code 23-1-25-3(a). Emmis repurchased addition preferred stock in a tender offer and reissued it to a trust for bonuses to workers who stuck with the firm through the financial downturn. The trustee was to vote this stock at management’s direction. Senior managers and members of the board were excluded, leaving them free to propose and vote without a conflict of interest. The plans allowed Emmis to control more than 2/3 of the votes. Emmis then called on owners of common and preferred stock to vote on whether the terms of the preferred stock should be changed. The cumulative feature of the stock’s dividends and other rights were eliminated. Plaintiffs, who own remaining preferred stock, sued. The district court rejected claims under federal and Indiana law. The Seventh Circuit affirmed. Indiana, apparently alone among the states, allows a corporation to vote its own shares, which may be good, or may be bad, but the ability to negotiate better terms, or invest elsewhere, rather than judicially imposed “best practices,” is how corporate law protects investors View "Corre Opportunities Fund, LP v. Emmis Commc'ns Corp." on Justia Law