Justia Securities Law Opinion Summaries

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, the SEC promulgated a rule requiring certain companies to disclose payments made to foreign governments relating to the commercial development of oil, natural gas, or minerals. Petitioners challenged the statute and the regulation, raising constitutional and statutory claims. The court dismissed the petition for review for lack of jurisdiction. Because petitioners have simultaneously filed a complaint in the district court, the court need not consider transferring the petition to that court. Additionally, the court's dismissal of the petition was without prejudice to petitioners' suit in the district court. View "American Petroleum Institute, et al v. SEC" on Justia Law

Defendant pled guilty to one count of securities fraud in violation of 15 U.S.C. 78j(b), 78ff and 17 C.F.R. 240.10b-5 (Rule 10b-5). On appeal, defendant challenged his sentence of five years' imprisonment, arguing that because he had no knowledge that his conduct violated Rule 10b-5, imprisonment was not a permissible sentencing option. However, defendant had admitted to knowing the substance of Rule 10b-5, and this removed him from the protection of the no-knowledge provision. Because defendant failed to carry his burden of showing that he had no knowledge of Rule 10b-5, the court affirmed the judgment. View "United States v. Behren" on Justia Law

Appellants 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 Appellants 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. Appellants brought their suit in federal district court, premising their 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 that Appellants' suit did not arise under federal law. View "Calderon-Serra v. Wilmington Trust Co." on Justia Law

Plaintiffs appeal from the district court's order denying their motion for remand to state courts. This is an interlocutory appeal of a question certified by the district court, calling for interpretation of the jurisdictional provisions of the Edge Act, 12 U.S.C. 632. Whether the district court's denial of remand was proper turns on whether the dispute falls within section 632. The court concluded that the dispute did not fall within section 632's grant of jurisdiction so that removal from state to federal court was not authorized by the statute. Therefore, the court vacated the district court's order denying remand. View "AIG v. Bank of America" on Justia Law

Plaintiffs filed a putative class action, claiming that fiduciaries for their retirement plans violated the Employee Retirement Income Security Act, 29 U.S.C. 1001, by continuing to offer employer stock as an investment option while the stock price dropped. The individual retirement account plan at issue allowed employees to choose among more than 20 investment funds with different risk profiles that had been selected by plan fiduciaries. ERISA imposes on the fiduciaries a duty to select only prudent investment options. One of the investment options in the Plan was the M&I Stock Fund, consisting of M&I stock, under an Employee Stock Ownership Plan. In 2008- 2009, M&I’s stock price dropped by approximately 54 percent. The district court applied a presumption of prudence, found that plaintiffs’ allegations could not overcome it, and dismissed without addressing class certification. The Seventh Circuit affirmed, stating that plaintiffs’ theory would require the employer and plan fiduciaries to violate the plan’s governing documents and “seems to be based often on the untenable premise that employers and plan fiduciaries have a fiduciary duty either to outsmart the stock market, which is groundless, or to use insider information for the benefit of employees, which would violate federal securities laws.” View "White v. Marshall & Ilsley Corp." on Justia Law

Plaintiffs appealed from the district court's grant of the United States' motion to dismiss plaintiffs' complaints against the SEC for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Plaintiffs also appealed from the district court's denial of plaintiffs' motion for relief from judgment under Rule 60(b). Plaintiffs sought to hold the United States liable for SEC employees' failure to detect Bernard Madoff's Ponzi scheme and for the financial losses that plaintiffs claimed they suffered as a result. The court affirmed the district court's dismissal of plaintiffs' claims, finding that the SEC's actions, along with its regrettable inaction, were shielded by the Discretionary Function Exception to the Federal Tort Claims Act (FTCA), 28 U.S.C. 2680(a). View "Molchatsky, et al. v. United States" on Justia Law

Plaintiffs, former employees of brokerage firms, filed four class actions challenging California's forced-patronage statute, section 450(a) of the California Labor Code. At issue was whether federal securities law preempted the enforcement of California's forced-patronage statute against brokerage houses that forbid their employees from opening outside trading accounts. The court affirmed the judgment and concluded that the district court correctly determined that the Securities Exchange Act of 1934, 15 U.S.C. 78o(g), and related self-regulatory organizations (SROs) rules preempted plaintiffs' forced-patronage suits. View "McDaniel, et al v. Wells Fargo Investments, LLC, et al" on Justia Law

Plaintiff brought a derivative suit on behalf of Goldman Sachs under Section 16(b) of the Securities Exchange Act, 15 U.S.C. 78p(b), seeking to require defendant to disgorge all profits from short-swing transactions in Goldman Sachs shares. On appeal, plaintiff challenged the district court's orders and judgment granting defendant's motion to dismiss pursuant to Rule 12(b)(6). The court agreed with the district court that plaintiff failed to plead that defendant was a beneficial owner under Section 16(b) and Rule 16a-1, 17, C.F.R. 240, 16a-1. The court also declined to extend the term "beneficial owner" to encompass, perforce, "tippers" who provided insider information, in exchange for payment, to another party who engaged in the short-swing trading of shares. Accordingly, the court affirmed the orders and judgment of the district court. View "Mercer v. Gupta" on Justia Law

FHFA, as conservator of Fannie Mae and Freddie Mac, sued UBS for fraud and misrepresentation in connection with the marketing and sale of mortgage-backed securities. The district court denied UBS's motion to dismiss and certified its decision for interlocutory appeal. The court held that the "extender statute" in section 4617(b)(12) of the Housing and Economic Recovery Act of 2008 (HERA), Pub. L. No. 110-289, 122 Stat. 2654, applied to this action, and thus concluded that the district court correctly denied UBS's motion to dismiss for untimeliness. The court further held that FHFA had standing to bring this action and the district court correctly denied UBS's motion to dismiss for lack of standing. View "Federal Housing Fin. Agency v. UBS Americas Inc." on Justia Law

The Securities and Exchange Commission filed a civil enforcement action against 12 defendants, alleging that they violated registration, disclosure, and anti-fraud provisions of federal securities law, in connection with a “reverse merger” that involved creation of a shell company for the purpose of OTC trading, followed my merger of a private company into the shell, with an exchange of stock. A reverse merger enables a private company to access public markets without undertaking the expensive process of an initial public offering. One of the defendants, Tsai, has formed more than 100 shell companies.The district court granted the SEC partial summary judgment and granted permanent injunctions against the defendants. Tsai appealed. The Sixth Circuit affirmed entry of the injunction. Tsai’s failure to challenge findings with respect to his industry experience and education means the court did not abuse its discretion in finding he had at least some degree of scienter. View "Secs. & Exch. Comm'n v. Sierra Brokerage Servs, Inc." on Justia Law