Justia Securities Law Opinion Summaries

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

The SEC commenced this civil enforcement action against appellant, a registered investment adviser (Jamerica), and a private investment (Brawta)(collectively, defendants), alleging that their fraudulent misrepresentations and diversion of Brawta funds violated securities laws. Initially, the district court granted a preliminary injunction, froze defendants' assets, and ordered Brawta to undertake and submit a sworn independent accounting. Then the district court granted the SEC summary judgment, permanently enjoining appellant and Jamerica from future violations of securities laws, and ordering them, jointly and severally, to disgorge misappropriated investor funds. The court held that, having reviewed the record de novo, summary judgment was appropriate for the reasons stated by the district court and that appellant's other challenges to the court's orders were without merit. Accordingly, the court affirmed the judgment of the district court. View "SEC v. Brown, et al." on Justia Law

This case involved a fallout of a $3.65 billion Ponzi scheme perpetrated by Minnesota businessman Thomas J. Petters. Appellants, investment funds (collectively, Ritchie), incurred substantial losses as a result of participating in Petters' investment scheme. Ritchie subsequently sued two officers of Petters' companies, alleging that they assisted Petters in getting Ritchie to loan over $100 million to Petters' company. Ritchie's five-count complaint alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(a), (c)-(d), common law fraud, and tortious inference with the contract. The court held that the district court erred in concluding that Ritchie's action was barred by a Receivership Order. The court also rejected arguments challenging the sufficiency of Ritchie's pleadings in the common law fraud count and did not to address other arguments related to abstention, lack of causation, and absolute privilege. Accordingly, the court reversed the judgment of the district court and remanded for further proceedings. View "Ritchie Capital Mgmt., et al. v. Jeffries, et al." on Justia Law

This case concerned the bankruptcy estate of Qualia Clinical Service, Inc. The estate's Chapter 7 Trustee sought to avoid as a preferential transfer a security interest recorded by one of Qualia's creditors shortly before the bankruptcy petition. The bankruptcy court and the Bankruptcy Appellate Panel (BAP) held the security interest voidable. The court held that the bankruptcy court and the BAP properly applied 11 U.S.C. 547(c)(5)(A) to conclude that the preferential transfer in this case, though it concerned an interest in accounts receivable, improved Inova Capital Funding, LLC's position as against Qualia's other creditors and so was not exempt from avoidance under that subsection. The court found Inova's remaining arguments unpersuasive. View "Lange v. Inova Capital Funding, LLC, et al." on Justia Law

Debtor appealed from the bankruptcy court's order confirming his modified Chapter 13 plan over his objection. At issue was whether the bankruptcy court could confirm the debtor's plan which provided for the avoidance of two junior liens on the debtor's principal residence. The court held that 11 U.S.C. 1322(b)(2) did not bar a Chapter 13 debtor from stripping off a wholly unsecured lien on his principal residence. The court also held that the strip off of a wholly unsecured lien on a debtor's principal residence was effective upon completion of the debtor's obligations under this plan and it was not contingent on his receipt of a Chapter 13 discharge. Accordingly, the court reversed the decision of the bankruptcy court and remanded for further proceedings where the debtor must amend his plan to provide for proper treatment of the junior lienholders' claims as unsecured nonpriority claims. View "Fisette v. Keller" on Justia Law

Plaintiff appealed the district court's grant of summary judgment to defendant on his claim of malicious prosecution under Arkansas law. The district court held that plaintiff failed to present evidence sufficient to withstand summary judgment on two of the five elements necessary to sustain his claim. The court held that the district court erred in holding that the evidence was insufficient as a matter of law to sustain plaintiff's claim that defendant brought suit against him on the guaranty without probable cause. The court also held that a jury must decide what was defendant's motive or purpose in suing plaintiff if it in fact understood it had no reasonable chance of prevailing on the merits of its claim against plaintiff. View "Stokes v. Southern States Cooperative, Inc." on Justia Law

Appellant appealed the bankruptcy court's approval of a multi-million dollar, global settlement in one of the largest Ponzi scheme bankruptcies in American history. The settlement had been substantially consummated and the appeal had been rendered largely moot. The court held that the bankruptcy court did not abuse its discretion in approving the settlement where the record upon which the bankruptcy court based its approval of the settlement was sufficient and where the settlement satisfied the Flight Transportation/Drexel factors. Accordingly, the order of the bankruptcy court approving the settlement was affirmed. View "Interlachen Harriet Investment v. Kelley, et al." on Justia Law

The SEC brought a civil action against defendant alleging that, as an outside director of Engineered Support Systems, Inc. (ESSI), he violated numerous federal securities laws by participating in the grant of backdated, "in-the-money" stock options to ESSI officials including his father. At issue was the district court's grant of defendant's Fed. R. Civ. Pro. 50(a)(1) motion for judgment as a matter of law. The court agreed with the district court's conclusion that the SEC had failed to prove the requisite elements of scienter and negligence. The court also held that there was no clear abuse of discretion in excluding any reference to the Incentive Stock Option Agreement between defendant's father and ESSI. Accordingly, the court affirmed the judgment of the district court.View "Sec. and Exch. Comm'n v. Shanahan, Jr." on Justia Law

Defendant pled guilty to one count of securities fraud, alleged in the indictment to be a violation of 15 U.S.C. 78j(b), 78ff, and 17 C.F.R. 240.10(b)-5. At issue was whether the district court erred in holding that defendant was not entitled to the protection of section 78ff(a) because he pled guilty to a statutory offense and the no-knowledge provision was inapplicable to people convicted of violating criminal securities law. The court, reading the plain language of the statute, held that the district court erred when it determined that defendant's guilty plea to a violation of section 78j(b) prevented him from asserting the no-knowledge defense. Thus, defendant was entitled to assert the no-knowledge defense to imprisonment at sentencing. The court held, however, that the district court did not reach the question of whether defendant had met his burden of showing no knowledge under Rule 10(b)-5 and as such, the issue was remanded to the district court for consideration. View "United States v. Behren" on Justia Law

Lead plaintiff in this consolidated, but uncertified, class action securities lawsuit sued defendants alleging violations of section 10(b) and 20(a) of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b) and 78t(a). At issue was whether the district court properly dismissed plaintiff's lawsuit, reasoning that defendants did not have a duty to announce production failures to defendant's investors immediately and, in any event, plaintiff failed to allege "facts giving rise to a strong inference" of scienter as required by section 21D(b) of the Private Securities Litigation Reform Act of 1995, 15 U.S.C. 78u-4(b)(2). The court held that plaintiff did not sufficiently allege an actionable omission or scienter for his claim and therefore, the complaint must be dismissed. The court also held that, because it affirmed the district court's dismissal of plaintiff's section 10(b)/Rule 10b-5 claim, the court affirmed the district court's dismissal of plaintiff's section 20(a) claim. The court further held that the district court did not abuse its discretion in denying plaintiff's motion to amend. Accordingly, the court affirmed the judgment of the district court.