Justia Securities Law Opinion Summaries

The Secretary filed an administrative complaint alleging that three hedge funds offered by Bulldog Investors violated section 301 of G.L.c. 110A by offering unregistered securities to a Massachusetts resident through a publicly available website and an e-mail message. The Secretary adopted the hearing officer's finding of a violation and ordered Bulldog Investors to cease and desist from committing any further violations and to take all necessary actions to ensure that future offers and sales of securities complied with section 301. The court held that the challenged provisions of the Massachusetts law were part of a constitutionally permissible disclosure scheme and, to the extent that they restricted speech, they were tailored in a reasonable manner to serve a substantial state interest in promoting the integrity of capital markets by ensuring a fully informed investing public. Accordingly, the court affirmed the judgment.View "Bulldog Investors, et al. v. Secretary of the Commonwealth" on Justia Law

Jean W. Reed, Mary W. Haynes, and Susan W. Stockham ("the sisters") sued Regions Bank ("Regions"), Morgan Asset Management, Inc. ("MAM"), Morgan Keegan & Company, Inc. ("Morgan Keegan"), and Regions Financial Corporation ("RFC"), alleging several claims related to the investment of assets belonging to two trusts set up for the benefit of Reed and Haynes. MAM, Morgan Keegan, and RFC unsuccessfully moved the Jefferson Circuit Court to dismiss the claims against them, arguing among other things, that the claims were derivative in nature and could be asserted only in compliance with Rule 23.1, Ala. R. Civ. P., with which the sisters did not comply. MAM, Morgan Keegan, and RFC petitioned the Supreme Court for a writ of mandamus to direct the circuit court to grant their motion to dismiss. Upon review, the Supreme Court found that the sisters had not alleged an injury distinct from that suffered by the trusts' funds; the claims against MAM, Morgan Keegan, and RFC in their complaint were derivative and did not comply with Rule 23.1 for asserting such claims. The sisters therefore lacked standing to sue. The Court granted the petition and issued the writ. View "Reed v. Regions Bank" on Justia Law

Callan Associates petitioned the Supreme Court for the writ of mandamus to direct the Montgomery Circuit Court to dismiss an action filed by Carol Perdue in her role as the legal guardian of Anna Perdue, who sued on behalf of the Wallace-Folsom Prepaid College Trust Fund. Ms. Perdue opened an account with the Trust Fund on behalf of her Daughter Anna. After making monthly payments, Anna would be entitled to reduced in-state tuition and fees. The Trust's assets pooled all such contributions and invested them so that designated beneficiaries would receive the promised benefits. The Trust hired Callan Associates as an investment consultant. The Trust's management notified beneficiaries that because of the stock market downturn of 2009, the Trust's assets were negatively impacted. Subsequently, Ms. Perdue sued on behalf of Anna and the Trust, contending that Callan and the Trustees mismanaged the Trust's assets. Callan moved to dismiss which the Circuit Court denied. On appeal to the Supreme Court, Callan argued that Ms. Perdue lacked standing to bring her claims. Furthermore, Callan argued that Ms. Perdue's claims were not ripe for adjudication since none of the beneficiaries have had tuition paid from the Trust. The Supreme Court concluded that "Callan's motion to dismiss in the trial court was well founded"; therefore the Court granted Callan's petition and issued the requested writ to direct the trial court to dismiss Ms. Perdue's claims.View "Perdue v. Callan Associates, Inc." on Justia Law

Defendant AIA Services Corporation entered into a stock redemption agreement with Appellant Reed Taylor to purchase all of his shares in AIA Services for a $1.5 million down payment promissory note and a $6 million promissory note, plus other consideration. When AIA failed to pay the $1.5 million when it became due, Appellant and AIA agreed to modify the stock redemption agreement. AIA was a still unable to make payments under the new terms. Appellant then filed suit to recover the amounts owed on the two promissory notes. The district court granted partial summary judgment in favor of AIA and dismissed six of Appellant's causes of action after finding the revised stock redemption agreement was unenforceable. On appeal, Appellant argued the redemption agreement complied with state law and was still enforceable. Upon review, the Supreme Court affirmed the district court's holding that the agreement was illegal and unenforceable and affirmed the court's dismissal of Appellant's six causes of action.View "Reed J. Taylor v. AIA Services " on Justia Law

CML, a junior secured creditor of JetDirect, sued JetDirect's present and former officers directly and derivatively for breaching their fiduciary duties. The Vice Chancellor dismissed all four of CML's claims. The court affirmed the judgment because CML, as a JetDirector creditor, lacked standing to sue derivatively on JetDirect's behalf.View "CML V, LLC, et al. v. Bax, et al." on Justia Law

This case stemmed from a dispute between a hedge fund manager and the hedge fund's seed investor. The central issue was contractual and involved whether the hedge fund manager could use the Gate Provision in the Partnership Agreement to lock up the seed investor. The court held that the hedge fund manager's refusal to honor the withdrawal request and return the seed investor's capital in full was a violation of the Seeder Agreement and a breach of contract. The court held that, in the alternative, even if the Gates were potentially applicable, it was a breach of fiduciary duty for the hedge fund manager to use the Gates solely for a selfish reason. Therefore, the court ordered the immediate return to the seed investor of all of its capital and awarded interest to compensate it for the delay. The court also disposed of several other claims raised by the hedge fund manager and the seed investor.View "Paige Capital Mgmt., LLC, et al. v. Lerner Master Fund, LLC et al." on Justia Law

Defendants Kohlberg Kravis Roberts & Company, L.P. (KKR), KKR Associates, KKR Partners II, and Crimson Associates, L.P., as well as several individuals, petitioned the Supreme Court for the writ of mandamus to direct a circuit court to vacate its order that denied their motion to dismiss Plaintiffs' complaint because it lacked personal jurisdiction. The plaintiffs in this action were 46 individuals, partnerships, corporations, foundations, trusts and retirement and pension funds located throughout the country that invested in certain promissory notes issued as part of a leveraged recapitalization of Bruno's Inc., a supermarket-grocery business with its headquarters in Alabama. Plaintiffs contended that despite a negative due-diligence report from its forensic accountant, KKR decided to proceed with its acquisition of Bruno's. In order to achieve the recapitalization, Plaintiffs alleged that Defendants made material, fraudulent misrepresentations to the Plaintiffs' investment money manger that induced them into purchasing the notes. Based on the torts allegedly committed by the individual defendants, the Supreme Court concluded that the circuit court did not err in denying Defendants' motion to dismiss based on lack of personal jurisdiction. The Court denied Defendants' application for the writ of mandamus, and remanded the case for further proceedings. View "27001 Partnership v. Kohlberg Kravis Roberts & Co., L.P." on Justia Law

This case arose when Commerzbank agreed to acquire Dresdner Bank in September 2008. As part of the deal, Commerzbank also acquired Dresdner Bank's trust preferred structures, and holders of Dresdner's trust preferred securities received distributions in both 2009 and 2010. Plaintiff claimed that paying those distributions "pushed," or required Commerzbank to make distributions on, a class of its owned preferred securities in which plaintiff had an interest, and, by the complaint, plaintiff asked the court to enforce that alleged obligation. Plaintiff also sought specific performance of a support agreement that was argued to require the elevation of the liquidation preference of Commerzbank's trust preferred securities in response to a restructuring of one class of the Dresdner securities. The parties filed cross-motions for summary judgment. The court held, among other things, that because the DresCap Trust Certificates did not qualify as either Parity Securities, defendants were entitled to judgment in their favor as a matter of law regarding plaintiff's claim under the Pusher Provision. The court also held that because DresCap Trust Certificates did not qualify as either Parity Securities or Junior Securities, Section 6 of the Support Undertaking was not triggered by amendment of the DresCap Trust IV Certificates. Accordingly, defendants were entitled to judgment in their favor as a matter of law regarding plaintiff's claim that the amendment of the DresCap Trust IV Certificates required defendants to amend the Trusted Preferred Securities.View "The Bank of New York Mellon v. Commerzbank Capital Funding Trust II, et al." on Justia Law

Central Mortgage Company (CMC) sued Morgan Stanley after mortgages for which CMC purchased servicing rights from Morgan Stanley began to fall delinquent during the early financial crisis of 2007. CMC subsequently appealed the dismissal of its breach of contract and implied covenant of good faith and fair dealings claims. The court held that the Vice Chancellor erroneously dismissed CMC's breach of contract claims on the basis of inadequate notice where CMC's pleadings regarding notice satisfied the minimal standards required at this early stage of litigation. The court also held that the Vice Chancellor erroneously dismissed CMC's implied covenant of good faith and fair dealings claim where the claims were not duplicative. Accordingly, the court reversed the Vice Chancellor's judgment dismissing all three of CMC's claims and remanded for further proceedings.View "Central Mortgage Co. v. Morgan Stanley Mortgage Capital Holdings LLC" on Justia Law

In this action, secured parties, as creditors in bankruptcy proceedings and appellees here, attempted in separate cases before the bankruptcy court to execute on four deeds of trust whose affidavits of considerations were missing or improper. Appellants, four trustees in bankruptcy, argued that those defects rendered the deeds of trust invalid such that the trustees possessed the properties free and clear of the creditor's interests. The creditors countered that Md. Code Ann. Real Prop. 4-109 cured the defects at issue. The Court of Appeals accepted certified questions regarding the statute and answered them in the affirmative, holding that Section 4-109 is unambiguous, and pursuant to the plain language of the statute and as confirmed by legislative history, cures the type of defects identified by the trustees, including missing or improper affidavits or acknowledgments, unless a timely judicial challenge is mounted. View "Guttman v. Wells Fargo Bank" on Justia Law