Justia Securities Law Opinion Summaries

The NCUA filed suit under the Securities Act of 1933, 15 U.S.C. 77a et seq., against Wachovia and Nomura for making false and misleading statements in their offerings of residential mortgage-backed securities (RMBS) purchased by Wescorp. The district court dismissed the claims, ruling that 12 U.S.C. 1787(b)(14) (the Extender Statute) did not supplant the statute of repose contained within 15 U.S.C. 77m, and therefore that the NCUA’s claims were time-barred. The court concluded that the district court erred in holding that the Extender Statute does not supplant the 1933 Act's statute of repose. The court held that the Extender Statute replaces all preexisting time limitations - whether styled as a statute of limitations or a statute of repose - in any action by the NCUA as conservator or liquidating agent. The court further held that the Extender Statute’s scope - “any action brought by the [NCUA]” - includes actions such as this one, in which the NCUA asserts statutory claims rather than common law tort or contract claims. Because the court concluded that NCUA claims were timely filed, the court vacated and remanded the district court's dismissal of the claims as time-barred. View "NCU Admin. Bd. v. Nomura Home Equity Loan" on Justia Law

ESG was a group of investors formed to purchase pre-Initial Public Offering (pre-IPO) Facebook shares. ESG’s managing agent negotiated the purchase with a man he believed to be "Ken Davis." "Ken Davis" was an alias for Troy Stratos, an alleged con artist. Venable represented "Dennis" in the Facebook deal, which is the subject of this securities fraud suit. After learning that ESG had been defrauded, managing agent Burns panicked and hid the news from ESG. ESG claims it did not learn of the alleged fraud and that their money had been stolen until November 2012. ESG filed suit against Stratos and Venable and attorney Meyer on March 6, 2013, alleging eight causes of action. The district court dismissed ESG's complaint, and subsequently the first amended complaint (FAC), with prejudice. The court held that ESG's federal securities fraud claim is sufficiently pled under FRCP 9(b) and the Private Securities Litigation Reform Act, 15 U.S.C. 78j(b), 17 C.F.R. 240.10b–5; ESG's state law fraud claim, which parallels the federal securities fraud claim, is sufficiently pled under FRCP 9(b); ESG’s nonfraud state law claims for conversion, unjust enrichment, unfair competition, aiding and abetting fraud, and conspiracy to commit fraud are sufficiently pled under FRCP 8(a)(2); and ESG's breach of fiduciary duty claim is barred by Cal. Civ. Proc. Code 340.6's one-year statute of limitations. Finally, the court concluded that neither the aiding and abetting fraud claim nor the conspiracy to commit fraud claim is barred by Cal. Civ. Code 1714.10’s Agent’s Immunity Rule. Accordingly, the court affirmed in part, reversed in part, and remanded. View "ESG Capital Partners v. Venable LLP" on Justia Law

Plaintiff, a retiree with significant trading experience, received $500,000 following her husband’s death. After consulting with Jennifer Huang, her long-time commodity trading advisor, and James Kelly, an account executive at her futures commission merchant (FCM), Peregrine, plaintiff decided to place the funds in a new account with Peregrine. Plaintiff subsequently filed suit claiming that Kelly and Peregrine disregarded her account instructions and permitted Huang to conduct unauthorized trades in the account, in violation of 7 U.S.C. 6b(a) and 17 C.F.R. 166.2–166.3. The ALJ ruled in favor of plaintiff, but the CFTC reversed. Applying a substantial evidence standard, the court concluded that substantial evidence supports the CFTC’s decision that Kelly made no material misrepresentation or omission, that there was no unauthorized trading, and that the record does not support a finding of fraud. Accordingly, the court denied the petition for review. View "Chenli Chu v. US Commodity Futures Trading Comm'n" on Justia Law

Jacksonville filed a putative class action against CVB alleging violations of Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. 240.10b-5. The district court granted CVB's motion to dismiss. The court concluded that vague optimistic statements by CVB officials are not actionable and the district court correctly dismissed the claims based on these boasts, characterizing them as puffery. Further, CVB's statements describing the Southern California real estate market and Generally Accepted Accounting Principles (GAAP) violations were not misleading. The court concluded, however, that the second amended complaint (SAC) sufficiently alleges falsity and scienter as to the “no serious doubts” statements in the 10-K on March 4, 2010, and the 10-Q on May 10, 2010. The court also concluded that the SAC adequately plead loss causation. The court held that the announcement of an investigation can “form the basis for a viable loss causation theory” if the complaint also alleges a subsequent corrective disclosure by the defendant. Therefore, the court dismissed the second amended complaint with respect to the "no serious doubts" representations made in the 10-K and the 10-Q and remanded for further proceedings. The court otherwise affirmed the judgment. View "Jacksonville Pension Fund v. CVB" on Justia Law

After the parties reached a settlement in a securities class action, the district court approved the settlement and awarded attorneys' fees. Class counsel appealed, contending that the fee award was arbitrary. The court concluded that the district court's choice to apply the lodestar method, rather than the percentage-of-fund method, was well within the district court’s discretion. However, the court vacated and remanded for recalculation of the fee, concluding that the district court's near total failure to explain the basis of its award was an abuse of discretion. View "McGee v. China Electric Motor, Inc." on Justia Law

ChinaCast founder and CEO Ron Chan embezzled millions from his corporation and misled investors through omissions and false statements. At issue was whether Chan’s fraud can be imputed to ChinaCast, his corporate employer, even though Chan’s actions was adverse to ChinaCast’s interests. The court agreed with the Third Circuit and concluded that Chan's fraudulent misrepresentations - and, more specifically, his scienter or intent to defraud - can be imputed to ChinaCast. The court concluded that imputation is proper because Chan acted with apparent authority on behalf of the corporation, which placed him in a position of trust and confidence and controlled the level of oversight of his handling of the business. Accordingly, the court dismissed the complaint alleging securities fraud under Rule 12(b)(6). View "Costa Brava P'ship v. ChinaCast Educ. Corp." on Justia Law