Justia Securities Law Opinion Summaries

The class representative of federal securities class actions appealed the dismissal of the unsecured creditor claim and amended claim he filed in the pending Chapter 7 bankruptcy proceeding of lead class counsel, Green Jacobson, P.C. The Eighth Circuit held that the claim for the cy pres distribution was no longer an issue because the distribution had been returned by the charity and deposited with the district court clerk for ultimate distribution for the benefit of the NationsBank class; the negligent supervision claim was time-barred; the disgorgement claim was not time-barred by Missouri's five year statute of limitations; and the bankruptcy court did not err in disallowing the bankruptcy claim as premature and lacking in supporting foundation. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Oetting v. Sosne" on Justia Law

Plaintiffs filed separate class action complaints against TD Ameritrade, alleging that the company breached its duty of best execution when it routed client orders to buy and sell securities to trading venues that paid TD Ameritrade top dollar for its order flow. The Eighth Circuit affirmed the district court's dismissal of the complaint because the state law claims were precluded by the Securities Litigation Uniform Standards Act of 1998 (SLUSA). In this case, the gravamen of plaintiffs' claims involved a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security. View "Zola v. TD Ameritrade, Inc." on Justia Law

Stacy Ryan filed suit against Streck, Inc. and Connie Ryan, alleging violations of section 10(b) of the Securities Exchange Act of 1934, Securities and Exchange Commission Rule 10b-5, and multiple violations of Nebraska law in connection with Streck's redemption of Stacy's stock. The Eighth Circuit held that the district court did not err in granting defendants' motion to dismiss because Stacy did not plausibly plea that defendants' wrongful actions caused her loss. Furthermore, the district court did not abuse its discretion in denying the motion to alter or amend the judgment. However, the district court erred in denying Stacy's Federal Rule of Civil Procedure 59(e) motion. Therefore, the court remanded for further consideration of the motion to alter or amend presented newly discovered evidence warranting alteration of the order dismissing her breach of contract claim. View "Ryan v. Ryan" on Justia Law

The Eighth Circuit affirmed the district court's dismissal of plaintiff's putative class action alleging that Scottrade violated the Missouri Merchandising Practices Act, breach of a common law fiduciary duty, and unjust enrichment. Plaintiff alleged that Scottrade routinely routes customer limit orders for the purchase and sale of securities to trading venues that pay rebates to sending brokers, violating Scottrade's duty of best execution in buying and selling securities on behalf of its customers. The court held that the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1), preempted plaintiff's action because the allegations in plaintiff's state law class action complaint, fairly read, alleged material misrepresentations or omissions, or the use of a manipulative or deceptive device or contrivance, in connection with the purchase and sale of covered securities. View "Lewis v. Scottrade, Inc." on Justia Law

In this second appeal in an SEC enforcement action against Marlon Quan and entities he controlled, including the hedge fund SCAF, three investors in SCAF challenged orders entered by the district court pertaining to the receivership, the entry of judgment against SCAF, and the pro rata distribution of SCAF's assets to investors. The Eighth Circuit affirmed the district court's judgment and held that the investors have identified no error in the district court's approval of the First Stipulation, which was within the district court's broad discretionary power; the district court did not abuse its discretion in the approval of the Second Stipulation; there was no basis to conclude that the district court abused its discretion in applying a pro rata distribution to all investors; and the investors have waived their arguments regarding legal fees and expenses. View "SEC v. Topwater Exclusive Fund III" on Justia Law

Stratasys shareholders filed a securities fraud action claiming several company promotional statements were knowingly false. The Eighth Circuit affirmed the district court's determination that these statements were mere puffery and that the shareholders failed to sufficiently plead that Stratasys knew its statements were false when made. In this case, the statements the shareholders claim were materially misleading were so vague and such obvious hyperbole that no reasonable investor would rely upon them. Therefore, without tying the timing of the knowledge to the allegedly misleading statements, the shareholders did not plead facts sufficient to support a strong inference of scienter. View "Macomb County Employees Retirement System v. Stratasys Ltd." on Justia Law

ACE filed suit against LifeTime Funds' investment adviser, PMC, for breach of its section 36(b) fiduciary duty to the LifeTime Funds under the Investment Company Act (ICA) of 1940, 15 U.S.C. 80a-35(b). ACE based its excessiveness-of-adviser-fees challenge on all or part of the adviser fees paid to PMC by the funds in which the LifeTime Funds invest, fees which indirectly reduced the net asset values of the LifeTime Funds. The Eighth Circuit affirmed the district court's entry of judgment for PMC based on lack of statutory standing, holding that ACE cannot sue on behalf of a fund in which it lacks an interest. In this case, each mutual fund was a separate unregistered investment company and ACE had no security interest in the underlying funds. Therefore, the cross appeal and the motion to dismiss the cross appeal were moot or denied as moot. View "American Chemicals & Equipment Inc. 401(K) Retirement Plan v. Principal Management Corp." on Justia Law

The SEC filed suit against Crawford for acting as unregistered brokers in violation of section 15(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78o(a). The district court granted the SEC summary judgment, permanently enjoined Crawford, and ordered disgorgement. The Supreme Court announced in Kokesh v. SEC, No. 16-529, slip op. at 11 (U.S. June 5, 2017), that disgorgement, as it is applied in SEC enforcement proceedings, operates as a penalty under 28 U.S.C. 2462. Because any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued, the SEC concedes that section 2462 barred it from seeking disgorgement. Therefore, the Eighth Circuit vacated the disgorgement order. The court also held that the district court did not err in finding section 2462 did not bar the SEC's suit for the injunction, and the district court did not err in rejecting Crawford's finder exception or finder defense. Accordingly, the court affirmed in all other respects. View "SEC v. Crawford" on Justia Law

Class representatives challenged the district court's denial of their motion to enforce the settlement agreement in a securities settlement, and the district court's denial of a subsequent motion to alter or amend. The Eighth Circuit affirmed the district court's judgment and denied defendants' motion to dismiss. The court explained that this case continues to present a live controversy and the Stipulation explicitly granted that the district court would have continuing jurisdiction for the purposes of enforcing the agreement and addressing settlement administration matters. The court also held that the case was not prudentially moot where the district court has the ability to provide an effective remedy; the district court did not err in interpreting the Stipulation according to its unambiguous meaning and in holding that defendants complied with the Stipulation's payment obligations; and the district court did not err by holding that the meaning of the Stipulation was unambiguous as matter of law and, in doing so, the district court did not place a burden of proof on any party. View "Cromeans v. Morgan Keegan & Co." on Justia Law