Justia Securities Law Opinion Summaries

Plaintiffs alleged that the shares they purchased in Century Aluminum Company were issued under a materially false and misleading prospectus supplement which was treated as part of the company's registration statement for purposes of section 11 of the Securities Act of 1933, 15 U.S.C. 77k. The court concluded that plaintiffs' failure to plead the traceability of their shares meant that they lacked statutory standing under section 11, but failure to allege statutory standing resulted in failure to state a claim on which relief could be granted, not the absence of subject matter jurisdiction. The district court should therefore have addressed the company's motion to dismiss under Rule 12(b)(6), not Rule 12(b)(1). Notwithstanding this error, the court affirmed the dismissal under Rule 12(b)(6). View "Petzschke, et al v. Century Aluminum Co., et al" on Justia Law

In 2011, BEST fired Aslin, a securities broker, to remain compliant with the Financial Industry Regulatory Authority “Taping Rule,” which requires securities firms to adopt monitoring measures when too many of their brokers have recently worked for “Disciplined Firms.” Instead of adopting such measures, the employer may terminate brokers. FINRA, a private corporation, is registered with the Securities and Exchange Commission as a “national securities association.” The Maloney Act provides for establishment of private self-regulatory organizations to oversee securities markets, 15 U.S.C. 78o. The SEC must approve FINRA’s rules and may abrogate, add to, and delete FINRA rules. Aslin filed suit alleging that FINRA violated his due process rights by including him on the list of brokers from Disciplined Firms without providing him the opportunity to challenge the designation. The district court dismissed, concluding that Aslin failed to state a claim because he was not deprived of a protected property or liberty interest. The Seventh Circuit affirmed Since Aslin sought only injunctive and declaratory relief to prevent application of the rule to him, the controversy ended in 2012, after which Aslin was no longer included on the list of brokers from Disciplined Firms and the case was moot. View "Aslin v. Fin. Indus. Regulatory Auth., Inc." on Justia Law

National Elevator, lead plaintiff on behalf of investors who purchased VeriFone stock, appealed the dismissal of its securities fraud class action. National Elevator alleged that VeriFone, the CEO and former Chairman of the Board of Directors, and the company's former CFO and Executive Vice President, violated sections 10(b), 20(a), and 20A of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), 78t-1(a), and 78t(a), and Securities and Exchange Commission Rule 10-b, 17 C.F.R. 240.10b-5(b), in connection with a December 2007 restatement of financial results. The court held that National Elevator adequately pleaded violations of section 10B and Rule 10b as to all defendants; its section 20A claim against the individual defendants was sufficiently pled; but the section 20(a) claim was properly dismissed. Accordingly, the court affirmed in part and dismissed in part. View "National Elevator Industry Pension Fund v. VeriFone Holdings, Inc., et al" on Justia Law

Plaintiffs are five pension funds operated by the State of Ohio for public employees that invested hundreds of millions of dollars in 308 mortgage-backed securities (MBS) between 2005 and 2008, all of which received a “AAA” or equivalent credit rating from one of the three major credit-rating agencies. The value of MBS collapsed during this period, leaving the Funds with estimated losses of $457 million. The Funds sued under Ohio’s “blue sky” laws and a common-law theory of negligent misrepresentation, alleging that the Agencies’ ratings were false and misleading and that the Funds’ reasonable reliance on those ratings caused their losses. The district court dismissed. The Sixth Circuit affirmed. Even if a credit rating can serve as an actionable misrepresentation, the Agencies owed no duty to the Funds and the Funds’ allegations of bad business practices did not establish a reasonable inference of wrongdoing View "OH Police & Fire Pension Fund v. Standard & Poor's Fin. Servs., LLC" on Justia Law

Argentina appealed from permanent injunctions entered by the district court designed to remedy Argentina's failure to pay bondholders after a default in 2001 on its sovereign debt. The district court granted plaintiffs summary judgment and enjoined Argentina from making payments on debt issued pursuant to its 2005 and 2010 restructurings without making comparable payments on the defaulted debt. The court held that an equal treatment provision in the bonds barred Argentina from discriminating against plaintiffs' bonds in favor of bonds issued in connection with the restructurings and that Argentina violated that provision by ranking its payment obligations on the defaulted debt below its obligations to the holders of its restructured debt. Accordingly, the court affirmed the judgment of the district court; found no abuse of discretion in the injunctive relief; and concluded that the injunction did not violate the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. 1602-1611. However, given the need for clarity as to how the injunctions were to function, the court remanded for further proceedings. View "NML Capital, Ltd. v. The Republic of Argentina" on Justia Law

The Stanford Defendants brought this case under the Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Com. Code 24.001 et seq., to recover approximately $1.6 million in political contributions made to various political committees by the Stanford Defendants between 2000 and 2008. Because the court concluded that (1) the Receiver could stand in the shoes of the creditors of the Stanford Defendants, (2) the Receiver's TUFTA claims were brought within one year after the transfers were or reasonably could have been discovered by the claimant, and (3) they were not preempted, the court rejected the Committees' arguments and affirmed the judgment of the district court. View "Janvey v. Democratic Senatorial Campaign, et al" on Justia Law

Defendant appealed from a Memorandum and Order of Restitution by the district court resentencing him to pay restitution to the victims of a massive "pump-and-dump" securities fraud scheme he and his co-conspirators designed and executed. Defendant contended, inter alia, that the district court should have released some or all of defendant's money held by the court pending his resentencing. The court held that a district court could exercise its authority under the All Writs Act, 28 U.S.C. 1651(a), to restrain a convicted defendant's funds in anticipation of sentencing. Therefore, the court affirmed the restitution order. View "United States v. Catoggio" on Justia Law

This case arose out of securities issued by a group of Minnesota liability companies (Geneva) and purchased by defendants (Investors) in 2007 and 2008. Plaintiff, a licensed broker-dealer and member of the Financial Industry Regulatory Authority (FINRA), served as managing broker-dealer for the offering. The district court's grant of plaintiffs' motion for a preliminary injunction and denial of defendants' motion to compel arbitration was challenged on appeal. Because the court held that the district court correctly concluded that defendants were not plaintiffs' "customers" under the FINRA Code of Arbitration Procedure for Customer Disputes, the court affirmed the judgment. View "Berthel Fisher & Co., et al v. Larmon, et al" on Justia Law

Defendants appealed from the district court's award to plaintiff, suing on behalf of an issuer of securities, the short-swing profits realized by defendants from trading in the issuer's stock in violation of Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78p(b). Defendants challenged plaintiff's constitutional standing to maintain the action, arguing that the proscribed trading caused no actual injury to the issuer to establish a genuine case or controversy. The court concluded that short-swing trading in an issuer's stock by a 10% beneficial owner in violation of Section 16(b) of the Act caused injury to the issuer sufficient for constitutional standing. Accordingly, the court affirmed the judgment. View "Donoghue v. Bulldog Investors General Partnership" on Justia Law

Goodyear announced in 2003 that it would restate its earnings for some prior years. The next day, shareholders filed class-action lawsuits against Goodyear and several of its officers and directors. The SEC also commenced an investigation. Eventually, the lawsuits were dismissed and the investigation terminated. Goodyear incurred $30 million of legal and accounting costs and sought recovery from two of its insurers. After several years of litigation, Goodyear released its claim against National Union in exchange for payment of $10 million, but the excess policy with Federal states that coverage attaches only after National Union pays out the full amount of its liability limit, which was $15 million rather than the $10 million that National Union paid. The district court granted summary judgment to Federal. The Sixth Circuit affirmed, rejecting arguments based on Ohio’s “public policy favoring settlements,” and that the settlement did not prejudice Federal in any way. View "Goodyear Tire & Rubber Co. v. Nat'l Union Fire Ins. Co." on Justia Law