Justia Securities Law Opinion Summaries
Articles Posted in U.S. 5th Circuit Court of Appeals
Plaintiff filed suit against GE Energy, alleging violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 15 U.S.C. 78u-6(h) (the "whistleblower-protection provision", because GE Energy terminated him after he made an internal report of a possible securities law violation. The court concluded that the plain language of section 78u-6 limited protection under the whistleblower provision to those individuals who provided information relating to a violation of the securities laws to the SEC. In this instance, plaintiff did not provide any information to the SEC and, therefore, he did not qualify as a "whistleblower" under Dodd-Frank. Accordingly, the court affirmed the district court's dismissal of his claim. View "Asadi v. G.E. Energy (USA), L.L.C." on Justia Law
A putative class of plaintiffs sought to recover damages from defendants for securities fraud under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b). This litigation arose out of alleged misrepresentations by Halliburton concerning three primary aspects of its operations. Based on its finding that common issues predominated and that the other Rule 23 class prerequisites were satisfied, the district court certified the class. The court agreed with the district court that defendants were not entitled to use evidence of no market price impact to rebut the fraud-on-the-market presumption of reliance at class certification. The court concluded that Halliburton's price impact evidence did not bear on the question of common question predominance, and was thus appropriately considered only on the merits after the class had been certified. The court rejected the Fund's waiver challenge. Accordingly, the court affirmed the judgment. View "Erica P. John Fund, Inc. v. Halliburton Co., et al" on Justia Law
The Stanford Defendants brought this case under the Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Com. Code 24.001 et seq., to recover approximately $1.6 million in political contributions made to various political committees by the Stanford Defendants between 2000 and 2008. Because the court concluded that (1) the Receiver could stand in the shoes of the creditors of the Stanford Defendants, (2) the Receiver's TUFTA claims were brought within one year after the transfers were or reasonably could have been discovered by the claimant, and (3) they were not preempted, the court rejected the Committees' arguments and affirmed the judgment of the district court. View "Janvey v. Democratic Senatorial Campaign, et al" on Justia Law
Defendant sold investors secured debt obligations (SDOs) based on the loans his company made to used-car purchasers. Defendant misrepresented his credentials and insurance coverage on the investments and marketed his investment offerings as though they were as safe as FDIC-backed certificates of deposit. After a jury trial in which Defendant represented himself, Defendant was convicted of securities fraud. The district court sentenced him to twenty-five years in prison, three years' supervised release, and almost $7.3 million in restitution. The Fifth Circuit Court of Appeals affirmed the conviction and sentence, holding (1) the district court did not plainly err in admitting a civil order at trial; (2) the jury did not convict Defendant on an invalid alternative theory; (3) the district court properly managed Defendant's pro se representation; (4) the evidence was sufficient to support the convictions; and (5) the district court did not err in imposing the sentence. View "United States v. Bruteyn" on Justia Law
Posted in: Civil Rights, Constitutional Law, Criminal Law, Securities Law, U.S. 5th Circuit Court of Appeals
Karen Cook was appointed receiver over the assets of a number of related corporations and individuals, who the SEC alleged violated multiple federal securities laws. Cook discovered that before the SEC filed its civil complaint, the corporate entities involved had made charitable contributions to the American Cancer Society (ACS). Cook moved to recover the donations on behalf of the receivership, arguing that they qualified as fraudulent transfers under Texas' Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Co. Code 24.005(a). The court held that the receiver's attempt to liken the scheme in question to a "Ponzi-like fraud," and therefore reduce her burden to proving "presumed intent to defraud," failed for lack of evidence. Accordingly, the court reversed the judgment of the district court. View "The American Cancer Society v. Cook" on Justia Law
Roland, et al. v. Green, et al.; Troice, et al. v. Proskauer Rose, LLP, et al.; Troice, et al. v. Willis of Colorado Inc., et al.
This consolidated appeal arose out of an alleged multi-billion dollar Ponzi scheme perpetrated by R. Allen Stanford through his various corporate entities. These three cases dealt with the scope of the preclusion provision of the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1)(A). All three cases sought to use state class-action devices to attempt to recover damages for losses resulting from the Ponzi scheme. Because the court found that the purchase or sale of securities (or representations about the purchase or sale of securities), was only tangentially related to the fraudulent scheme alleged by appellants, the court held that SLUSA did not preclude appellants from using state class actions to pursue their recovery and reversed the judgment. View "Roland, et al. v. Green, et al.; Troice, et al. v. Proskauer Rose, LLP, et al.; Troice, et al. v. Willis of Colorado Inc., et al." on Justia Law
Plaintiffs, and other owners of Dell Inc. common stock, alleged that defendants violated the securities laws between by fraudulently inflating reported revenues, engaging in erroneous accounting, and disseminating false information to the public. The district court granted defendant's motion to dismiss with prejudice and plaintiffs appealed. While the appeal was pending, plaintiffs moved in the district court for class certification and approval of a proposed settlement agreement. The district court certified a class and approved the class-action settlement. Two groups of objectors to the settlement subsequently appealed, claiming numerous deficiencies in the proceedings. The court held that appellants have demonstrated their membership in a class and have standing to bring their objections; the district court did not abuse its discretion when it systematically analyzed the proposed settlement under each of the Reed factors and found that none counseled against approving the settlement; the district court did not abuse its discretion in certifying the class as defined; the district court did not abuse its discretion in approving the settlement's claims-making process; the district court did not abuse its discretion in approving the elimination of the de minimus provision in the original plan of allocation; the district court's decision not to reissue notice or reopen the filing period was not an abuse of discretion; objectors presented no reason to conclude that the judgment was an abuse of discretion; and there was no basis for concluding that the district court abused its discretion in setting the amount of attorney's fees and in awarding interest in the fee award. Accordingly, the court affirmed the judgment of the district court. View "In Re: Dell Inc, et al." on Justia Law
Appellants, investors in a commodity pool, brought suit alleging that futures commission merchants violated the Commodity Exchange Act, 7 U.S.C. 1-27f, by aiding and abetting an investment pool operator in his scheme to defraud investors. The district court dismissed the complaint for failure to state a claim against the futures commission merchants. The court held that the district court acted properly in dismissing the investors' aiding and abetting claims where the merchants had no reason to know that the operator was operating as a commodity pool or trading on behalf of other investors, let alone that the operator was running a fraudulent Ponzi scheme. The court also held that, even if the merchants' actions could be construed as negligent, they were not severely reckless. Accordingly, the judgment of the district court was affirmed. View "Amacker, et al. v. Renaissance Asset, et al." on Justia Law
This case arose when the SEC brought suit against Stanford Group Company (SGC), along with various other Stanford entities, including Stanford International Bank (SIB), for allegedly perpetrating a massive Ponzi scheme. In this interlocutory appeal, defendants appealed the preliminary injunction that the receiver subsequently obtained against numerous former financial advisors and employees of SGC, freezing the accounts of those individuals pending the outcome of trial. The court held that the district court had the power to decide the motion for preliminary injunction before deciding the motion to compel arbitration; the district court did not abuse its discretion in granting a preliminary injunction; the preliminary injunction was not overbroad; and the district court acted within its power to grant a Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Com. Code Ann. 24.005(a)(1), injunction rather than an attachment; and that the court did not have jurisdiction to rule on the motion to compel arbitration. Accordingly, the court affirmed and remanded the motion to compel arbitration for a ruling in the first instance. View "Janvey v. Alguire, et al." on Justia Law
Posted in: Arbitration & Mediation, Banking, Business Law, Corporate Compliance, Securities Law, U.S. 5th Circuit Court of Appeals
Defendant, former Enron Corporation CEO, appealed a conviction of conspiracy, securities fraud, making false representations to auditors, and insider trading. At issue was whether the error committed by the district court in submitting the honest-services theory to the jury was harmless as to any of defendant's convictions. The court held that the error was harmless and thus concluded beyond a reasonable doubt that the verdict would have been the same absent the alternative-theory errors where the jury was presented with overwhelming evidence that defendant conspired to commit securities fraud.