Justia Securities Law Opinion Summaries

CVS Corp. and Caremark Rx Inc. merged in 2007, creating CVS Caremark Corporation. In 2010, Plaintiffs filed this putative class action against CVS Caremark and certain of its current and former employees. The complaint was later amended to add new plaintiffs - the retirement systems of the city of Brockton and the counties of Plymouth and Norfolk, Massachusetts (collectively, the Retirement Systems). The Retirement Systems claimed that Defendants made material misrepresentations in violation of the Securities Exchange Act and rule 10b-5 of the Securities and Exchange Commission. Specifically, the Retirement Systems alleged that CVS Caremark's CEO's statements in an earnings call with investors caused a drop in CVS Caremark's share price. The district court granted Defendants' motion to dismiss the complaint for failure to state a claim for relief. The First Circuit Court of Appeals vacated the dismissal of the complaint and remanded, holding that Plaintiffs' complaint alleged loss causation sufficiently plausible to foreclose dismissal. View "Mass. Ret. Sys. v. CVS Caremark Corp." on Justia Law

Plaintiffs are investors who purchased Omnicare securities in a 2005 public offering. They sold their securities a few weeks later and sought relief under the Securities Act of 1933,15 U.S.C. 77k, alleging that the registration statement was materially misleading. Omnicare is the nation’s largest provider of pharmaceutical care services for the elderly and other residents of long-term care facilities in the U.S. and Canada. Plaintiffs claimed that Omnicare was engaged in a variety of illegal activities including kickback arrangements with pharmaceutical manufacturers and submission of false claims to Medicare and Medicaid. The Registration Statement stated “that [Omnicare’s] therapeutic interchanges were meant to provide [patients with] . . . more efficacious and/or safer drugs than those presently being prescribed” and that its contracts with drug companies were “legally and economically valid arrangements that bring value to the healthcare system and patients that we serve.” The district court dismissed the suit against Omnicare, its officers, and directors, holding that plaintiffs had not adequately pleaded knowledge of wrongdoing. The Sixth Circuit reversed with regard to claims of material misstatements or omissions of legal compliance, but affirmed with respect to claims that revenue was substantially overstated in violation of Generally Accepted Accounting Principles. View "IN State Dist. Counsel v. Omnicare, Inc." on Justia Law

Defendant appealed from a post-judgment order barring him from acting as an officer or director of a public company for ten years, pursuant to section 21(d)(2) of the Securities Exchange Act of 1934, 15 U.S.C. 78u(d)(2). The SEC accused defendant of insider trading and, after the entry of a consent judgment, in which defendant neither admitted nor denied the allegations in the complaint, the SEC moved for an officer and director bar pursuant to section 21(d)(2). The court held that the district court did not err in relying on the six Patel factors in this case. The 2002 Amendment, by lowering the threshold of misconduct required to impose the officer and director bar, did not undermine the usefulness of the Patel factors, which indicated where evidence of unfitness might be found in a defendant's conduct. In light of the circumstances presented, the district court reasonably determined that a ten year ban was warranted and, therefore, did not abuse its discretion. Accordingly, the court affirmed the judgment. View "SEC v. Bankosky" on Justia Law

The Kepleys owned 30% of ATA’s outstanding capital stock. Lanz bought one share of Series A Convertible Preferred Stock in the corporation and a right to purchase common stock. At that time, Lanz, ATA, and its shareholders entered into an agreement, prohibiting sale of restricted shares (including Lanz’s share) to ATA’s competitors. In 2010, the Kepleys learned that Lanz sought to sell his share and purchase option to Crimson, an ATA competitor, for $2,799,000. The Kepleys sued, contending that Crimson’s president told them that they could not afford the Lanz shares or litigation and that Crimson would “shut it down or squeeze them out.” The Kepleys sold their shares to Crimson. Lanz did not complete the sale of his stock and remained a shareholder in ATA, 30 percent of which Crimson then owned. The Kepleys sought the difference between the sale price and the fair market value of the shares. The district court dismissed, finding that the Kepleys lacked standing because their alleged injury amounted to diminution in stock value, suffered by the corporation, and only derivatively shared by the Kepleys. The Sixth Circuit reversed, holding that the Kepleys, who are no longer shareholders and cannot pursue derivative claims, have standing for a direct suit. View "Kepley v. Lanz" on Justia Law

Appellant purchased nonrecourse notes (Notes) in the amount of two million dollars, issued by the Puerto Rico Conservation Trust Fund (PRCTF). The Notes were not registered under the Securities Act based on an exemption from registration. The Notes later went into default, and Appellant sued Banco Popular de Puerto Rico (BPPR), trustee of the Notes, and Wilmington Trust Company (WTC), indenture trustee of the securities that the PRCTF purchased with Note proceeds. Appellant brought suit in federal district court, premising his assertion of subject matter jurisdiction on the Edge Act and the Trust Indenture Act of 1939 (TIA). The district court dismissed the amended complaint for want of subject matter jurisdiction. The First Circuit Court of Appeals affirmed, holding (1) Appellant's suit did not arise under federal law; and (2) the district court did not abuse its discretion in refusing to permit Appellant to file a delayed amended complaint asserting a new theory of liability because Appellant proffered no good reason for the delay. View "Nikitine v. Wilmington Trust Co." on Justia Law

Several individual investors appealed from the district court's dismissal of their complaint alleging securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq. This litigation arose out of a fraudulent scheme engaged in a now-defunct broker-dealer (Baron). The court concluded that the investors have sufficiently pleaded with particularity that certain Baron investors (Dweck) provided knowing and substantial assistance in financing and facilitating the Baron fraud. While such allegations would easily be sufficient in an SEC civil action, or a federal criminal action because this knowing and substantial assistance constituted, at the least, aiding and abetting, they did not meet the standards for private damage actions under Section 10(b). Nevertheless, with the investors' state law claims - civil conspiracy to defraud and aiding and abetting fraud - the complaint alleged sufficient involvement by Dweck in the scheme to survive a motion to dismiss. Therefore, the court vacated the dismissal and remanded the state law claims for further proceedings. The court affirmed the dismissal of the federal securities claims. View "Fezzani v. Bear, Stearns & Co." on Justia Law

Jacob was convicted of selling an unregistered security, 15 U.S.C. 77e(a), and was sentenced to 14 months’ imprisonment and $241,630.95 in restitution. He was granted permission to travel to Australia two weeks after sentencing. He had been traveling to Australia for work while on bond before sentencing, had returned to be sentenced, and pledged to earn additional money to pay restitution. Five days after he was to report, the probation office informed the court that Jacob had failed to surrender as ordered, and his attorney suggested that he may have fled the country. The government then moved to dismiss Jacob’s pending appeal under the fugitive disentitlement doctrine. Jacob failed to respond to his attorney’s motion to withdraw, missed his deadline to file an opening brief, sent the court a rambling email arguing the merits of his appeal, and told his probation officer that he had no intention of returning to the U.S. The Seventh Circuit dismissed his appeal. View "United States v. Jacob" on Justia Law

Appellants, purchasers of stock, alleged that appellees made material misstatements and omissions in an IPO Registration Statement and prospectus for a September 2009 public offering of the stock in violation of sections 11, 12(a)(2), and 15 of the Securities Act of 1933, 15 U.S.C. 78a et seq. Because appellants failed to plausibly allege a material misstatement or omission in the prospectus, each of their claims failed. Accordingly, the court affirmed the district court's grant of appellees' motion to dismiss for failure to state a claim under the Act. View "Miyahira, et al. v. Vitacost.com, Inc., et al." on Justia Law

A putative class of plaintiffs sought to recover damages from defendants for securities fraud under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b). This litigation arose out of alleged misrepresentations by Halliburton concerning three primary aspects of its operations. Based on its finding that common issues predominated and that the other Rule 23 class prerequisites were satisfied, the district court certified the class. The court agreed with the district court that defendants were not entitled to use evidence of no market price impact to rebut the fraud-on-the-market presumption of reliance at class certification. The court concluded that Halliburton's price impact evidence did not bear on the question of common question predominance, and was thus appropriately considered only on the merits after the class had been certified. The court rejected the Fund's waiver challenge. Accordingly, the court affirmed the judgment. View "Erica P. John Fund, Inc. v. Halliburton Co., et al" on Justia Law

Three securities exchanges filed with the SEC proposed changes to their fee-setting rules for the acquisition of certain proprietary market data. Petitioners, two trade associations, requested the Commission to suspend the rules pursuant to its authority under the Securities Exchange Act of 1934, 15 U.S.C. 78s(b)(3)(C), contending that they were unlawful under NetCoalition I. When the SEC failed to do so, petitioners sought review in this court. The court held that the plain text of section 19(b)(3)(C), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, was clear and convincing evidence to the court of Congress's intent to preclude review of a rule change at the filing stage. Further, petitioners failed to demonstrate extraordinary circumstances for mandamus relief. The court declined to reach any other justiciability or jurisdictional question presented by the petitions. Accordingly, the court dismissed the petitions. View "NetCoalition v. SEC" on Justia Law