Justia Securities Law Opinion Summaries

Pagliara, a licensed securities broker for more than 25 years, maintained a spotless record with the Financial Industry Regulatory Authority (FINRA) except for this case. Under a 2002 licensing agreement, Pagliara served both Capital Trust and NBC until 2008. During that time, Butler followed Pagliara’s recommendation to invest $100,000 in bank stocks that later lost value. Butler’s attorney threatened to sue NBC and Pagliara. NBC retained JBPR for defense. Unbeknownst to NBC and JBPR, Pagliara offered to settle the claim for $14,900, $100 below FINRA’s mandatory reporting threshold. Butler refused. Pagliara then informed NBC of his intent to defend the claim in FINRA Arbitration and objected to any settlement of the “frivolous claim.” NBC insisted that Pagliara not have any contact with Butler, based on the License Agreement signed by the parties, which stated that: “NBCS, at its sole option and without the prior approval of either [Capital Trust] or the applicable Representative, may settle or compromise any claim at any time.” JBPR finalized a $30,000 settlement without obtaining a release for Pagliara. Pagliara sued, alleging breach of fiduciary duty, violation of the Tennessee Consumer Protection Act, and intentional infliction of harm. The district court rejected the claims. The Sixth Circuit affirmed. View "Pagliara v. Johnston Barton Proctor & Rose, LLP" on Justia Law

S&A sued Farms.com alleging that Farms.com violated the Commodity Exchange Act (CEA), 7 U.S.C. 1 et seq., breached its fiduciary duty, committed negligence, and made misrepresentations. The district court granted Farms.com's motion for summary judgment and S&A appealed. The court found that S&A did not sufficiently plead a fraudulent-inducement claim under 7 U.S.C. 6, but only alleged that Farms.com engaged in a fraudulent scheme under 7 U.S.C. 6o(1)(B). The court concluded that the district court did not err by granting Farms.com's motion for summary judgment on S&A's fraud claim where S&A's complaint alleged only a fraudulent scheme, not that Farms.com's failure to register caused it damages. The court also concluded that the district court did not err in granting Farms.com's motion for summary judgment on S&A's breach of fiduciary duty claim where S&A presented no evidence describing a commodity-trading advisor's standard of care or how Farms.com breached that standard of care. View "S & A Farms, Inc. v. Farms.com, Inc., et al." on Justia Law

Plaintiffs are shareholders of nine mutual funds that were registered investment companies under the Investment Company Act of 1940 (ICA), 15 U.S.C. 80(a)-35(b). The Funds were managed and distributed by affiliates of the defendants (collectively, Ameriprise). At issue was whether plaintiffs have set forth sufficient evidence to survive summary judgment on their claim that Ameriprise breached its fiduciary duty under section 36(b) of the ICA. In light of the United States Supreme Court's decision in Jones v. Harris Associates L.P., the court concluded that plaintiffs have not met their burden, and thus the court affirmed the district court's grant of summary judgment in favor of defendants. View "Gallus, et al. v. Ameriprise Financial, Inc., et al." on Justia Law

Appellant, a former shareholder in Wachovia, sought to recover personally for the decline in value of his shares of Wachovia stock during the recent financial crisis. The district court dismissed the suit, concluding that appellant's complaint stated a claim derivative of injury to the corporation and that he was therefore barred from bringing a direct or individual cause of action against defendants. The court held that because appellant's varied attempts to recast his derivative claim as individual were unavailing, the judgment of the district court was affirmed. View "Rivers, Jr. v. Wachovia Corp., et al." on Justia Law

This case was before the court on a petition to review the opinion and order of the Commission permanently denying petitioner, an attorney admitted to practice in New York state, the privilege of appearing or practicing before the Commission, pursuant to rule 102(3)(1)(ii) of the Commission's Rules of Practice, and Section 4C of the Securities and Exchange Act of 1934 (Act), 15 U.S.C. 78a et seq. On appeal, petitioner contended that the procedure employed by the Commission was unconstitutional. The court held that the Commission acted within its authority in sanctioning him; petitioner was on notice of his duty to comply with the New York Bar disciplinary rules and the standard of conduct proscribed by Rule 102(3)(1)(ii) and Section 4C of the Act; there was substantial evidence for the Commission's finding that petitioner engaged in intentional improper professional conduct; and the Commission did not abuse its discretion in its choice of sanctioning petitioner. Accordingly, the petition for review was denied. View "Altman v. SEC" on Justia Law

Appellants brought various claims before Financial Industry Regulatory Authority (FINRA) arbitrators against Ameriprise, a financial-services company, for, inter alia, breach of fiduciary duty, breach of contract, fraud, and negligent misrepresentation related to the decline in value of various financial assets owned by appellants and managed by Ameriprise. Ameriprise answered appellants' FINRA complaint by asserting, principally, that appellants released their claims by operation of a settlement agreement in a class-action agreement suit that had proceeded between 2004 and 2007 in the United States District Court for the Southern District of New York. After FINRA arbitrators denied Ameriprise's motion to stay appellants' arbitration, Ameriprise moved in the district court, in which the class action had been litigated and settled, for an order to enforce the settlement agreement that would enjoin appellants from pressing any of their claims before FINRA arbitrators. The district court concluded that the class settlement barred all of appellants' arbitration claims and therefore granted Ameriprise's motion and ordered appellants to dismiss their FINRA complaint with prejudice. The court held that the district court had the power to enter such an order and that several of appellants' arbitration claims were barred by the 2007 class-action settlement. Therefore, the court affirmed in part. But because the court concluded that appellants' arbitration complaint plead claims that were not, and could not have been, released by the class settlement, the court vacated in part the district court's judgment, and remanded the case for the entry of an order permitting the non-Released claims to proceed in FINRA arbitration. The court dismissed as moot appellants' appeal from the district court's denial of their motion for reconsideration. View "In Re: American Express Finance Advisors Securities Litigation" on Justia Law

Plaintiffs appealed from a decision granting defendants' motion to dismiss plaintiffs' complaints for failure to state a claim upon which relief could be granted. Plaintiffs, participants in two retirement plans offered by defendants, brought suit alleging breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiff alleged that defendants acted imprudently by including employer stock as an investment option in the retirement plans and that defendants failed to provide adequate and truthful information to participants regarding the status of employer stock. The court held that the facts alleged by plaintiffs were, even if proven, insufficient to establish that defendants abused their discretion by continuing to offer plan participants the opportunity to invest in McGraw-Hill stock. The court also held that plaintiffs have not alleged facts sufficient to prove that defendants made any statements, while acting in a fiduciary capacity, that they knew to be false. Accordingly, the judgment was affirmed. View "Gearren, et al. v. The McGraw-Hill Companies, Inc., et al." on Justia Law

Plaintiffs, participants in retirement plans offered by defendants and covered by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., appealed from a judgment dismissing their ERISA class action complaint. Plan documents required that a stock fund consisting primarily of Citigroup common stock be offered among the plan's investment options. Plaintiffs argued that because Citigroup stock became an imprudent investment, defendants should have limited plan participants' ability to invest in it. The court held that plan fiduciaries' decision to continue offering participants the opportunity to invest in Citigroup stock should be reviewed for an abuse of discretion and the court found that they did not abuse their discretion here. The court also held that defendants did not have an affirmative duty to disclose to plan participants nonpublic information regarding the expected performance of Citigroup stock and that the complaint did not sufficiently allege that defendants, in their fiduciary capacities, made any knowing misstatements regarding Citigroup stock. Accordingly, the court affirmed the judgment. View "Gray, et al. v. Citigroup, Inc., et al." on Justia Law

In this securities fraud class action, the investor plaintiffs sued the defendant company and three of its principal officers, alleging that they had made a series of eleven false or misleading statements to the public, in violation of section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, 15 U.S.C. 78a et seq. Plaintiffs claimed that the false statements had the effect of artificially inflating the price of defendant's stock until the truth belatedly came out, at which time the stock price dropped and plaintiffs suffered substantial financial losses. The court held that the district court properly dismissed plaintiffs' claims arising from the alleged misstatements made on March 5, 2004 and July 26, 2004, because plaintiffs have inadequately pled scienter and falsity. However, as for plaintiffs' claims arising out of defendant's February 23, 2005 and March 16, 2005 statements, the court vacated the district court's entry of summary judgment. The court held that the securities laws prohibited corporate representatives from knowingly peddling material misrepresentations to the public, regardless of whether the statements introduced a new falsehood to the market or merely confirmed misinformation already in the marketplace. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Findwhat Investor Group, et al. v. Findwhat.com, et al." on Justia Law

WPP Luxembourg Gamma Three Sarl (WPP) appealed from the district court's dismissal of the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant and cross-appellants cross-appealed the district court's decision to dismiss some of WPP's claims without prejudice. WPP generally alleged violations of the Securities and Exchange Act of 1934, 15 U.S.C. 78(a), that amidst large operating losses unknown to investors, Spot Runner executives solicited WPP to buy shares in it at the same time that executives of the company were selling personally owned shares. The court affirmed the dismissal of the Rule 10b-5(a) and (c) fraudulent scheme against all of the defendants, the dismissal of the Rule 10b-5(b) fraudulent omissions claim against the general counsel for Spot Runner and Spot Runner, and the dismissal of the Rule 10b-5 insider trading claim against Spot Runner. The court reversed the dismissal of the Rule 10b-5(b) omission claims against the founders of Spot Runner. View "WPP Luxembourg Gamma Three Sarl, et al. v. Spot Runner, Inc., et al." on Justia Law