Justia Securities Law Opinion SummariesArticles Posted in U.S. Court of Appeals for the Eleventh Circuit
SEC v. Levin
The SEC filed suit against defendant, alleging violations of the registration provisions of the Securities Act, 15 U.S.C. 77a et seq., and fraud in the sale of securities in violation of the Securities and Exchange Act, 15 U.S.C. 78a et seq. The court awarded summary judgment to the SEC, finding no merit in defendant's affirmative defenses. A jury found defendant liable on the fraud claims. The court concluded that the district court erred in granting summary judgment to the SEC because it found the Banyon note offerings were not eligible for a Regulation D exemption from the registration requirements of Section 5 of the Securities Act. The court held that Rule 508(a) not only preserves the safe harbor for certain insignificant deviations in private actions, but it also preserves the safe harbor in SEC enforcement actions. In this case, the court reasoned that defendant established a genuine dispute of material fact whether the Banyon note offering, as a whole, falls under the safe harbor provision in Rule 508. The court also concluded that defendant failed to show serious prejudice to his case from the district court's denial of the motion for continuance; the district court properly based the disgorgement order upon defendant's gains and not the investors' losses; and the district court did not plainly err in questioning defendant and another witness during trial. Accordingly, the court affirmed in part, reversed in part, and remanded. View "SEC v. Levin" on Justia Law
Hotz v. Galectin Therapeutics, Inc.
In February 2014, appellant-plaintiff Glynn Hotz purchased 16,000 shares of appellee-defendant Galectin Therapeutics, Inc. (“Galectin”), a small biopharmaceutical company headquartered in Norcross, Georgia. The price for Galectin common stock was $17.90 per share. In July 2014, news outlets began to report that Galectin had paid promotional firms to write flattering articles about Galectin and to “tout” Galectin’s stock price. Days later, Galectin’s stock price crashed, losing over half its value, falling from a price of $15.91 per share to $7.10 per share in one day. After suffering stock losses, Hotz filed a consolidated class action complaint against Galectin in May 2015. Hotz appealed the district court’s Rule 12(b)(6) dismissal of his complaint for failure to state a claim. Hotz argued: (1) that Galectin made material misstatements and omissions of fact by not disclosing that it had paid the promotional firms to tout Galectin stock; and (2) that certain Galectin officers and directors were liable for the company’s actions in their personal capacity as “controlling persons” of Galectin under section 20(a) of the Exchange Act. After thorough review, and with the benefit of oral argument, the Eleventh Circuit found no reversible error and affirmed. View "Hotz v. Galectin Therapeutics, Inc." on Justia Law
Dusek v. JPMorgan Chase & Co.
In the aftermath of Bernard Madoff's arrrest, the district court appointed a trustee for the liquidation of BLMIS, Madoff's investment advisory business. Several class actions were filed against JPMorgan by customers who directly had capital invested with BLMIS. JPMorgan entered a global resolution on January 6, 2014, involving three settlements. This putative class action seeks to hold liable JPMorgan and two JPMorgan employees: John Hogan, who served as Chief Risk Officer and later Chairman of Risk for JPMorgan, and Richard Cassa, who served as Client Relationship Manager for one of Madoff’s accounts. The district court granted defendants' motion to dismiss the Second Amended Complaint. The court affirmed the judgment, finding that appellants' Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78t(a), claim was untimely and that appellants' federal Racketeer Influenced and Corrupt Organization Act (RICO), 18 U.S.C. 1961, claim was barred by the Private Securities Litigation Reform Act (PSLRA), 18 U.S.C. 1964(c). View "Dusek v. JPMorgan Chase & Co." on Justia Law
Hill, Jr. v. SEC
Congress set forth a detailed process for exclusive judicial review of final Commission orders in the federal courts of appeals. An SEC administrative enforcement action culminates in a final order of the Commission, which in turn is reviewable exclusively by the appropriate federal court of appeals under 15 U.S.C. 78y. At issue in this consolidated appeal is whether respondents in an SEC administrative enforcement action can bypass the Securities Exchange Act’s, 15 U.S.C. 78u(d), 78u-1, 78u-2, 78u-3, review scheme by filing a collateral lawsuit in federal district court challenging the administrative proceeding on constitutional grounds. From the text of the statute, the court could fairly discern Congress’s general intent to channel all objections to a final Commission order - including challenges to the constitutionality of the SEC ALJs or the administrative process itself - into the administrative forum and to preclude parallel federal district court litigation. The court found no indication that respondents’ constitutional challenges are outside the type of claims that Congress intended to be reviewed within this statutory scheme. Accordingly, the district court erred in exercising jurisdiction and the court vacated the district court’s preliminary injunction orders and remanded with instructions to dismiss each case for lack of jurisdiction. View "Hill, Jr. v. SEC" on Justia Law
SEC v. Graham
The SEC waited more than five years to commence an action for declaratory relief, injunctive relief, and disgorgement against defendants, who allegedly violated federal securities law by selling unregistered securities. Defendants raised the five-year statute of limitations as an affirmative defense in their motions for summary judgment. The district court dismissed the case based on the statute of limitations set out in 28 U.S.C. 2462. Section 2462, with few exceptions, bars the government from bringing suit to enforce “any civil fine, penalty, or forfeiture” after five years from when the claim first accrued. The court concluded that the SEC is time-barred from proceeding with its claims for declaratory relief and disgorgement because, under the plain meaning of section 2462, these remedies are a penalty and a forfeiture, respectively. But, because an injunction is not a penalty under section 2462, the court remanded for further proceedings on that remedy. Accordingly, the court affirmed in part, reversed in part, and remanded. View "SEC v. Graham" on Justia Law
Fried v. Stiefel Labs., Inc.
Plaintiff filed suit against Stiefel Labs and its president, Charles Stiefel, on several grounds, including a violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, 15 U.S.C. 78j(b), 17 C.F.R. 240.10b-5. Plaintiff requested that the jury instructions, in order to prevail on a claim under Rule 10b-5(b), require plaintiff to prove only that defendants failed to disclose material information. The district court refused to include the jury instruction. The court concluded that plaintiff's jury instruction misstated the law because Rule 10b-5(b) does not prohibit a mere failure to disclose material information. Accordingly, the court affirmed the judgment. View "Fried v. Stiefel Labs., Inc." on Justia Law