Justia Securities Law Opinion Summaries

Articles Posted in U.S. 9th Circuit Court of Appeals
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Plaintiff appealed from the dismissal of his claims against two arbitrators who disqualified him from representing a client. The district court concluded that the claims were barred by arbitral immunity. The court held that the district court had subject matter jurisdiction and correctly dismissed the action because the claims were precluded by arbitral immunity. Accordingly, the judgment was affirmed. View "Sacks v. Dietrich, et al." on Justia Law

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Plaintiff brought this securities fraud action against defendant, a biotechnology company and several of its officers, alleging that, by misstating and failing to disclose safety information about two of the company's products used to treat anemia, they violated the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), 78t(a), and Rule 10b-5, 17 C.F.R. 240.10b-5. At issue was what a plaintiff must do to invoke a fraud-on-the-market presumption in aid of class certification. The court joined the Third and Seventh Circuits in holding that plaintiff must (1) show that the security in question was traded in an efficient market, and (2) show that the alleged misrepresentation were public. As for the element of materiality, plaintiff must plausibly allege that the claimed misrepresentations were material. In this case, plaintiff plausibly alleged that several of defendants' public statements about its pharmaceutical products were false and material. Coupled with the concession that the company's stock traded in an efficient market, this was sufficient to invoke the fraud-on-the-market presumption of reliance. Therefore, the district court did not abuse its discretion in certifying the class. View "Connecticut Retirement Plans and Trust Funds v. Amgen Inc., et al." on Justia Law

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Plaintiff, the former General Counsel of McAfee, alleged that McAfee maliciously prosecuted and defamed him in an attempt to deflect attention from large-scale backdating of stock options within the company. McAfee moved to strike plaintiff's claims pursuant to California's anti-Strategic Litigation Against Public Participation (anti-SLAPP) statute, Code Civ. Proc., 425.16. The district court denied the motion as to plaintiff's malicious prosecution claims, but granted it as to his claims for defamation and false light invasion of privacy. Both sides appealed. The court held that plaintiff had not demonstrated that his claims have the requisite degree of merit to survive McAfee's anti-SLAPP motion: McAfee had probable cause to believe plaintiff was guilty of a crime and plaintiff's claims for defamation and false light invasion of privacy were time-barred. Accordingly, the court affirmed in No. 10-15670 and reversed in 10-15561. View "Roberts v. McAfee, Inc." on Justia Law

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This case stemmed from defendant's operation of a fraudulent investment fund. Defendant's Ponzi scheme took almost $13 million from over 50 investors and petitioners were among the investors. Petitioners appealed the district court's order dismissing their third-party petition to adjudicate property interests in forfeited property. The court held that the district court erred in holding that petitioners lacked prudential standing. The court also held that the district court erred when it found that the Government's interest in the funds was superior to petitioners' interests. Accordingly, the court reversed the district court's dismissal of the petition and remanded for further proceedings. View "United States v. Wilson" on Justia Law

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Defendant, the former Chief Executive Officer of Brocade Communications (Brocade or the Company), a company the developed and sold data switches for networks, appealed his conviction in a second criminal trial for securities fraud and making false filings; falsifying corporate books and records; and making false statements to auditors in violation of securities laws. Defendant was previously convicted of violating the securities laws but the court vacated that conviction because of prosecutorial misconduct and remanded for a new trial. In this appeal, the court held that there was no evidence of sufficient facts in the record to support any allegation of prosecutorial misconduct. The court also held that there was sufficient evidence of materiality to support defendant's conviction. The court further held that the district court did not abuse its discretion by not giving defendant's proposed jury instruction. Accordingly, the court affirmed the judgment. View "United States v. Reyes" on Justia Law

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This case arose when the SEC instituted an enforcement action against several companies, which, among other things, led to the court appointment of a receiver. Debtor was an attorney who represented some of the defendants in this enforcement action. At issue was whether the exception to discharge in 11 U.S.C. 523(a)(19) applied when the debtor himself was not culpable for the securities violation that caused the debt. The bankruptcy court held that the debt was subject to discharge; the district court disagreed and held that the debt was excepted from discharge in bankruptcy. The court held that section 523(a)(19) prevented the discharge of debts for securities-related wrongdoings only in cases where the debtor was responsible for that wrongdoing and debtors who could have received funds derived from a securities violation remained entitled to a complete discharge of any resulting disgorgement order. Therefore, the court reversed the judgment of the district court. View "Sherman, et al. v. Securities and Exchange Comm'n" on Justia Law

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This case stemmed from a tax transaction involving Henry Samueli, the co-founder of Broadcom Corporation, and his investment advisor. At issue was whether a purported securities loan with a fixed term of at least 250 days and possibly as long as 450 days, entered into not for the purpose of providing the borrower with access to the lent securities, but instead for the purpose of avoiding taxable income for the lender, qualified for nonrecognition treatment as a securities loan pursuant to section 1058 of the Internal Revenue Code. The court agreed with the Tax Court's conclusion that the transaction did not meet the requirements of section 1058 and therefore affirmed the judgment of the Tax Court. View "Samueli, et al. v. Comm'r of Internal Revenue; Ricks, et al. v. Comm'r of Internal Revenue" on Justia Law

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This was an appeal by objector, a Nevada attorney, seeking review of the Nevada district court's order denying his motion to quash a subpoena for bank records of his client trust account. The district court concluded that it did not have the authority to consider objector's motion since the subpoena was issued by another district court. The court held that it had jurisdiction over the appeal in the circumstances of this case because the bank had no incentive to disobey the subpoena and force an otherwise appealable contempt order. The court affirmed the district court because it correctly interpreted the provisions of Rule 45 of the Federal Rules of Civil Procedure governing issuance and quashing subpoenas. View "Securities and Exchange Comm., et al. v. CMKM Diamonds, Inc., et al." on Justia Law

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WPP Luxembourg Gamma Three Sarl (WPP) appealed from the district court's dismissal of the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant and cross-appellants cross-appealed the district court's decision to dismiss some of WPP's claims without prejudice. WPP generally alleged violations of the Securities and Exchange Act of 1934, 15 U.S.C. 78(a), that amidst large operating losses unknown to investors, Spot Runner executives solicited WPP to buy shares in it at the same time that executives of the company were selling personally owned shares. The court affirmed the dismissal of the Rule 10b-5(a) and (c) fraudulent scheme against all of the defendants, the dismissal of the Rule 10b-5(b) fraudulent omissions claim against the general counsel for Spot Runner and Spot Runner, and the dismissal of the Rule 10b-5 insider trading claim against Spot Runner. The court reversed the dismissal of the Rule 10b-5(b) omission claims against the founders of Spot Runner. View "WPP Luxembourg Gamma Three Sarl, et al. v. Spot Runner, Inc., et al." on Justia Law

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This case arose from the IRS's investigation of a type of tax shelter known as a "Son-of-Boss" (a variant of the Bond and Options Sales Strategy (BOSS) shelter). Petitioner appealed the Tax Court's decision in favor of the Commissioner of Internal Revenue. The court held that the IRS properly sent petitioner an affected item notice of deficiency because the deficiency required a partner-level determination. The court also held that the Tax Court had jurisdiction to redetermine affected items based on the partnership item determinations in the Final Partnership Administrative Adjustment (FPAA). Therefore, the court affirmed the judgment of the Tax Court. View "Napoliello v. Commissioner of Internal Revenue" on Justia Law