Justia Securities Law Opinion Summaries

Plaintiff filed suit against Defendants in California state court for business-related torts. Plaintiff then voluntarily dismissed his complaint and re-filed his action in the federal district court, alleging several federal securities law violations. The federal court exercised supplemental jurisdiction over Plaintiff's state-law claims. Thereafter, Plaintiff voluntarily dismissed his complaint and filed the present action in a Tennessee state court, pleading three of the state-law claims that formed the basis for his two previously dismissed lawsuits. The trial court granted summary judgment for Defendants, concluding that Plaintiff's claims were barred by Plaintiff's second voluntary dismissal in federal court. The court of appeals affirmed. The Supreme Court reversed, holding that a plaintiff's second voluntary dismissal of supplemental state-law claims filed in federal court does not preclude the plaintiff from later re-filing an action based on the same claims in Tennessee state court. Remanded. View "Cooper v. Glasser" on Justia Law

After Petitioner sold certain properties, he used the proceeds to purchase fractional interests in commercial office buildings. The fractional interests were called Tenants in Common Interests (TICs), and each of the TICs was promoted by a company called DBSI, Inc. DBSI later filed a petition for bankruptcy, and the properties underlying Petitioner's TICs became the subject of foreclosure proceedings. The bankruptcy court determined that many of DBSI's transactions were fraudulent. Petitioner filed a complaint against Cassidy Turley Maryland (Defendant), under whose advice Petitioner acted in purchasing the TICs, alleging that Defendant failed to disclose material facts regarding the investment. The circuit court granted summary judgment for Defendant. The Court of Appeals affirmed in part and reversed in part, holding (1) Petitioner's investment in this case was a "security" for purposes of the Maryland Securities Act; (2) the circuit court erred in determining that Petitioner's claims under the Act relating to fraud and misrepresentation by Defendant were barred by limitations; (3) the court erred in concluding that Petitioner's common law tort claims were time-barred as a matter of law; and (4) the court did not err in deciding to reserve judgment on the admissibility of a bankruptcy examiner's report until it had further information. View "Mathews v. Cassidy Turley Md., Inc." on Justia Law

The Securities and Charities Division of the Mississippi Secretary of State Office brought charges against Marshall Wolfe and Jack Harrington for securities violations pertaining to their operation of SteadiVest, LLC. The Secretary of State found that Wolfe and Harrington had violated Mississippi securities laws, and fines were levied against them. Wolfe and Harrington appealed, and the Chancery Court affirmed. Wolfe and Harrington then appealed to the Supreme Court. After review of the Circuit and Chancery Court records, the Supreme Court found that the chancellor did not err in affirming the Secretary of State's finding that Wolfe and Harrington had violated Mississippi Code Section 75-71-501. The Secretary of State's decision was supported by substantial evidence, was not arbitrary or capricious, did not go beyond the Secretary of State's power, and did not violate Wolfe's or Harrington's statutory or constitutional rights. However, the Court found the method used to assess penalties against Wolfe and Harrington was improper, and reversed on that issue. View "Harrington v. Ofc. of Mississippi Sec'y of State" on Justia Law

Petitioner Raymond James Financial Services required its clients (the investors) to sign an agreement to arbitrate all disputes arising out of the handling of their investments. At issue in this case was whether Florida's statute of limitations that is applicable to a "civil action or proceeding" applies to arbitration proceedings. In 2005, the investors filed a joint claim for arbitration against Raymond James, alleging federal and state securities violations and negligent supervision. The investors filed an action in state court seeking a declaration that the statute of limitations applied only to judicial actions and thus did not limit the time in which to bring their arbitration claims. The trial court granted declaratory judgment in favor of the investors. The court of appeal affirmed. The Supreme Court concluded that the investors' arbitration claims in this case were barred by the statute of limitations, holding that Florida's statute of limitations applies to arbitration because an arbitration proceeding is within the statutory term "civil action or proceeding" found in Fla. Stat. 95.011. View "Raymond James Fin. Servs., Inc. v. Phillips" on Justia Law

The issue before the Supreme Court in this case was an interlocutory appeal by the Court of Chancery of a preliminary injunction halting consummation of a stock purchase agreement under which Vivendi, S.A. would have divested itself of its controlling interest in Appellee Activision Blizzard, Inc., and an Activision stockholder. Appellees convinced the trial court that the company’s charter required that a majority of the public stockholders vote in favor of the transaction. The relevant provision applied to "any merger, business combination, or similar transaction" involving Vivendi and Activision. The trial court held that Activision's purchase of its own stock would be a business combination because significant value would be transferred to Vivendi in exchange for Activision's acquisition of a newly-formed Vivendi subsidiary that held Vivendi's Activision stock. In October 2013, the Supreme Court reversed, and this opinion set forth the basis for its decision. View "Activision Blizzard, Inc., et al. v. Hayes, et al." on Justia Law

Rahman filed a securities class action against KB, an importer of infant furniture and products, and individuals, alleging violation of Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 and (2) and Section 20(a) of the Exchange Act. The complaint alleged that defendants misled investors by artificially inflating KB’s stock price by issuing deceptive public financial reports and press releases dealing with compliance with customs laws and overall financial performance. A second amended complaint specified failure to disclose product recalls, safety violations, and illegal staffing practices. The district court dismissed for failure to satisfy the heightened scienter pleading standard required by the Private Securities Litigation Reform Act, 15 U.S.C. 78u-4(b)(2). The Third Circuit affirmed. View "Rahman v. Kid Brands, Inc." on Justia Law

This appeal stemmed from the collapse of the hedge fund Lipper Convertibles. On appeal, plaintiffs challenged the district court's grant of summary judgment on their federal claims against Lipper Convertibles' auditor, PwC, under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq., as well as their state law claims of fraud and negligent misrepresentation. The court concluded that there was a genuine dispute as to whether plaintiffs suffered a direct injury at the time of investment by purchasing their shares in Lipper Convertibles funds at fraudulently inflated prices. Accordingly, the court vacated the district court's grant of summary judgment on the Section 10(b) claims and remanded to the district court to consider in the first instance PwC's scienter argument and for further proceedings. The court affirmed the state law claims. View "CILP Assocs., L.P. v. PriceWaterhouse Coopers LLP" on Justia Law

Through their companies, Pilon and her husband falsely represented that one investment program would generate significant returns that Pilon would use to pay off the investors’ mortgages within two years, and make a bonus cash payment to investors. Many investors refinanced mortgages to invest. With respect to another investment program, Pilon falsely represented that money would be invested in a high-yield fund and that investors would receive 100 percent on their investments within about 90 days. Pilon hinted at religious and humanitarian purposes. Pilon paid early investors’ mortgages with later investors’ money (a Ponzi scheme). About 40 people invested $4,000 to $110,000, losing a total of $967,702. The Illinois Department of Securities ordered Pilon to cease offering investments; she ignored the order. When the scheme unraveled and investors lost their homes, Pilon was indicted for wire fraud. Pilon, a member of a sovereign citizen movement, unsuccessfully moved to dismiss for lack of jurisdiction. Immediately before jury selection, Pilon stated her intent to plead guilty; when the government proffered the facts, Pilon denied everything. After testimony by eight government witnesses, Pilon admitted to the scheme and pleaded guilty. In calculating Pilon’s guideline range, the court applied an enhancement for abuse of a position of trust, declined to credit Pilon for acceptance of responsibility, and sentenced Pilon to 78 months’ incarceration, in the middle of the range, and imposed $967,702 in restitution. The Seventh Circuit affirmed. View "United States v. Pilon" on Justia Law

The SEC settled an enforcement action against firms that executed trading orders on the New York Stock Exchange and placed the money obtained as a result of the enforcement actions into funds for distribution to injured customers. The SEC ordered the remaining funds to be disbursed to the United States Treasury. On appeal, petitioner, who had filed class actions against the firms, challenged the SEC's disbursement order seeking to invoke the court's statutory jurisdiction under 15 U.S.C. 78y. The court concluded that petitioner failed to plead an injury in fact sufficient to afford it Article III standing. For every Covered Transaction in which petitioner was identified as the injured customer, petitioner had already received a distribution from the Fair Funds that fully compensated it for that Covered Transaction. Accordingly, the court dismissed the petition for lack of subject matter jurisdiction. View "Martin v. U.S. S.E.C." on Justia Law

An investor pursued a claim against an investment company over losses he incurred due to the failure of some of the company's bond funds. A Financial Industry Regulatory Authority arbitration panel ruled in the investor's favor. The investment company subsequently petitioned the chancery court to vacate the award based on the alleged bias of two members of the arbitration panel. The trial court vacated the award and remanded for a second arbitration before a new panel. The court of appeals dismissed the investor's appeal for lack of subject matter jurisdiction because the trial court's order did not expressly confirm or deny the arbitration award. The Supreme Court reversed, holding that the trial court's order was, in fact, an appealable order "denying confirmation" of an arbitration award under Tenn. Code Ann. 29-5-319(a)(3). Remanded.View "Morgan Keegan & Co. v. Smythe" on Justia Law