Justia Securities Law Opinion SummariesArticles Posted in U.S. 8th Circuit Court of Appeals
SEC v. Dean, et al.
This case stemmed from the SEC's civil enforcement action against former infoUSA financial officers, including defendant. A jury found that defendant violated various securities laws and the district court imposed several civil penalties. Defendant subsequently appealed. The court concluded that defendant could not challenge the sufficiency of the evidence against him because he failed to file a postverdict motion under Federal Rule of Civil Procedure 50(b) after the district court denied his Rule 50(a) motion. The court also concluded that the district court did not err in admitting the testimony of the SEC's expert witness where the expert's use of the primary-purpose test as a means for applying the integrally-and-directly-related standard did not misconstrue a legal issue or alter the legal standard that defendant was required to apply as CFO. The court held, however, that it was not clear whether the jury made the finding necessary for the SEC's section 13(b)(5) of the Securities Exchange Act, 15 U.S.C. 78m(b)(5), claim and, based on the claims the SEC asserted against defendant, the bad-faith finding was unnecessary to a final resolution of the matter. Accordingly, the court vacated the conclusion that defendant violated section 13(b)(5) and the finding that defendant acted in bad faith, remanding for further proceedings. The court affirmed the case in all other respects. View "SEC v. Dean, et al." on Justia Law
United States v. Behren
Defendant pled guilty to one count of securities fraud in violation of 15 U.S.C. 78j(b), 78ff and 17 C.F.R. 240.10b-5 (Rule 10b-5). On appeal, defendant challenged his sentence of five years' imprisonment, arguing that because he had no knowledge that his conduct violated Rule 10b-5, imprisonment was not a permissible sentencing option. However, defendant had admitted to knowing the substance of Rule 10b-5, and this removed him from the protection of the no-knowledge provision. Because defendant failed to carry his burden of showing that he had no knowledge of Rule 10b-5, the court affirmed the judgment. View "United States v. Behren" on Justia Law
Gomes v. American Century Co., et al
Plaintiff, an investor in the Fund, brought Maryland common-law claims and federal racketeering claims for violations of 18 U.S.C. 1962(c) and (d) against defendants, who were the Fund's fiduciaries. On appeal, plaintiff appealed the dismissal of his derivative claims. Applying Maryland law, the court held that demand was required on all of plaintiff's derivative claims and that the participation by directors in alleged wrongdoing was not sufficient to excuse demand. Therefore, the district court correctly dismissed plaintiff's complaint. View "Gomes v. American Century Co., et al" on Justia Law
Berthel Fisher & Co., et al v. Larmon, et al
This case arose out of securities issued by a group of Minnesota liability companies (Geneva) and purchased by defendants (Investors) in 2007 and 2008. Plaintiff, a licensed broker-dealer and member of the Financial Industry Regulatory Authority (FINRA), served as managing broker-dealer for the offering. The district court's grant of plaintiffs' motion for a preliminary injunction and denial of defendants' motion to compel arbitration was challenged on appeal. Because the court held that the district court correctly concluded that defendants were not plaintiffs' "customers" under the FINRA Code of Arbitration Procedure for Customer Disputes, the court affirmed the judgment. View "Berthel Fisher & Co., et al v. Larmon, et al" on Justia Law
United States v. Steffen
Defendant was indicted for bank fraud, mail fraud, and wire fraud. The government alleged that Defendant's sale of collateral pledged as security for a loan from a bank and his failure to carry out his disclosure duties under the security agreement amounted to a scheme to defraud for purposes of the bank, mail, and wire fraud statutes. The district court dismissed the indictment, finding (1) a false representation is a required element of a federal fraud offense and the indictment failed to allege any express misrepresentation by Defendant; and (2) absent a statutory, fiduciary, or independent disclosure duty, nondisclosure was insufficient to state a fraud claim under any of the charged offenses. The Eighth Circuit Court of Appeals affirmed, holding that the district court correctly dismissed the indictment for failure to state an offense, as the indictment failed to sufficiently allege a scheme to defraud under the mail, wire, and bank fraud statutes. View "United States v. Steffen" on Justia Law
McCrary v. Stifel, Nicolaus & Co.
Two individuals brought suit as individuals and on behalf of a putative class of investors, alleging that Stifel, Nicolaus & Co. (Stifel) and two of its employees, Neil Harrison and Roger Compton, violated federal securities law. Stifel and Compton (Defendants) filed a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6) and the Private Securities Litigation Reform Act of 1995 (PSLRA). The district court concluded that Plaintiffs' allegations failed to satisfy the requirements for class action claims under Fed. R. Civ. P. 23(b)(3) and dismissed Plaintiffs' compliant with prejudice. The Eighth Circuit Court of Appeals (1) reversed the district court's order with respect to Plaintiffs' individual claims, holding the district court erred in dismissing the claims without either staying the claims pending arbitration or undertaking an analysis of the claims under the PSLRA; and (2) affirmed the district court's order as it applied to Plaintiffs' class claims, holding that the court correctly determined that the complained failed to state viable class claims under Rule 23. Remanded. View "McCrary v. Stifel, Nicolaus & Co." on Justia Law
Wootten v. Fisher Invs., Inc.
Appellant initiated an arbitration against his former investment advisor, Fisher Investments, Inc. During the arbitration, the arbitrator (1) dismissed Appellant's Missouri statutory claims based on the arbitration agreement's Delaware choice-of-law provision, and (2) sua sponte prohibited Appellant from adding a federal securities law claim. Appellant then filed a civil action against Fisher Investments in federal district court, re-alleging the Missouri statutory and federal securities law claims and seeking a declaration that the arbitration agreement was void. The district court dismissed Appellant's claims without prejudice, concluding that Defendant had to complete arbitration before he could pursue remedies in federal court. The Eighth Circuit Court of Appeals affirmed, holding (1) Appellant was challenging an interim ruling and thus the complete arbitration rule applied, and (2) because the complete arbitration rule applied, the district court did not err in deciding that it did not have jurisdiction to adjudicate Defendant's claims. View "Wootten v. Fisher Invs., Inc." on Justia Law
Platte Valley Bank v. Tetra Fin. Group, LLC
Platte Valley Bank (PVB), a banking corporation, claimed a perfected security interest in certain equipment owned by Heggem Construction, Inc. In 2008, Heggem sold the equipment in a sale and leaseback transaction to Tetra Financial Group, LLC. Tetra later transferred the equipment to Republic Bank, Inc. (with Tetra, Appellees). PVB sued Appellees, claiming Appellees converted the equipment and the collateral proceeds of the sale. The district court granted summary judgment in favor of Appellees, finding the undisputed facts in the record did not support PVB's conversion claims. The Eighth Circuit affirmed, holding (1) the district court did not err in concluding any interference by Appellees with PVB's right in the equipment was not so serious or important as to constitute conversion; and (2) because PVB failed to articulate any significant harm it suffered as a result of Appellees' action with respect to its deposit account, the district court did not err in concluding no conversion occurred. View "Platte Valley Bank v. Tetra Fin. Group, LLC" on Justia Law
Public Pension Fund Group, et al. v. KV Pharmaceutical Co., et al.
Plaintiffs, groups of investors who purchased the securities of KV, brought this class action lawsuit alleging that KV and some of its individual officers committed securities fraud. Plaintiffs alleged that KV made false or misleading statements about its compliance with Food and Drug Administration (FDA) regulations governing the manufacture of pharmaceutical products, and made false or misleading statements about earnings resulting from pharmaceutical products allegedly manufactured in violation of FDA regulations. The court concluded plaintiffs' complaint adequately set forth the reasons why KV's statements about is compliance were false, or at least misleading, at the time they were made; the district court did not err when it determined the investors' complaint did not sufficiently plead that KV made false or misleading statements about earnings tied to the manufacture of generic Metoprolol; the district court correctly dismissed the scheme liability claims against the two individual KV officers; but the district court erred in denying the motion to amend the complaint. Accordingly the court affirmed in part, reversed in part, and remanded for further proceedings. View "Public Pension Fund Group, et al. v. KV Pharmaceutical Co., et al." on Justia Law
S & A Farms, Inc. v. Farms.com, Inc., et al.
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