Justia Securities Law Opinion Summaries

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

Petitioner sought review of an administrative determination sustained by the Securities and Exchange Commission (SEC) that Petitioner mismanaged various brokerage accounts under his supervision. The original determination including sanctions was made by the Financial Industry Regulatory Authority (FINRA). The First Circuit Court of Appeals affirmed, holding, inter alia, (1) FINRA gave Petitioner the substance of due process as required by statute; (2) FINRA and the SEC did not err in finding that investments Petitioner made were unsuitable even though the investments ultimately turned a profit; (3) the findings against Petitioner were well supported; and (4) although one of the exhibits offered against Petitioner had errors, the exhibit's exclusion cured any potential error in the analysis. View "Cody v. SEC" on Justia Law

Plaintiff brought a securities fraud action individually and on behalf of all other persons who purchased or otherwise acquired the common stock of Rigel between certain dates, pursuant to sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b) and 78t(a), and the rules and regulations promulgated thereunder. Plaintiff also brought claims on behalf of itself and persons who purchased Rigel stock traceable to the registration statement and prospectus issued in connection with Rigel's February 2008 stock offering. The court affirmed the district court's order granting defendants' motion to dismiss the complaint where plaintiff failed to meet the pleading requirements. View "Inter-Local Pension Fund GCC/IBT v. Rigel Pharmaceuticals, Inc., et al." on Justia Law

The SEC filed a civil enforcement action against defendants alleging insider trading in violation of section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), and Rule 10b-5, 17 C.F.R. 240.10b-5. The SEC alleged that Defendant Strickland learned material non-public information in the course of his employment and revealed it to Defendant Black, his friend and hedge fund employee, and that Black in turn relayed the information to his boss, Defendant Obus, who traded the information. The court held that the SEC's evidence created genuine issues of material fact as to each defendant's liability under the misappropriation theory and therefore summary judgment for defendants was erroneous. Accordingly, the court vacated and remanded. View "Securities and Exchange Commission v. Obus, et al." on Justia Law

Plaintiff appealed the district court's order dismissing a putative securities class action brought under sections 11, 12(a)(2), and 15 of the Securities Act of 1993, 15 U.S.C. 77k, l(a)(20, o, on behalf of all persons who acquired certain mortgage-backed certificates issued under the same allegedly false and misleading shelf registration statement, but sold in 17 separate offerings by 17 unique prospectus supplements. The court held that plaintiff had class standing to assert the claims of purchasers of certificates backed by mortgages originated by the same lenders that originated the mortgages backing plaintiff's certificates, because such claims implicated "the same set of concerns" as plaintiff's claims. The court further held that plaintiff need not plead an out-of-pocket loss in order to allege a cognizable diminution in the value of an illiquid security under section 11. Accordingly, the court affirmed in part and vacated in part the judgment of the district court and remanded with further instructions to reinstate plaintiff's sections 11, 12(a)(2), and 15 claims to the extent they were based on similar or identical misrepresentations in the Offering Documents associated with certificates backed by mortgages originated by the same lenders that originated the mortgages backing plaintiff's certificates. View "Neca-Ibew Health & Welfare Fund v. Goldman Sachs & Co." on Justia Law

Knight was owner and CEO of Knight Industries, which owned other companies. Bank had provided credit ($34 million) to the companies, which, in 2009, filed bankruptcy petitions. Chatz was appointed trustee and was authorized to retain the Freeborn law firm. Chatz and the Bank alleged that Knight had made fraudulent transfers, had breached duties of good faith and fair dealing and duties to creditors, had misappropriated corporate opportunities, had committed conversion, and had violated securities laws, and demanded $27 million for the companies and $34 million for the Bank. In 2010 Knight filed a chapter 7 petition, listing the claims, value “unknown.” Chatz, appointed as trustee, requested representation by the Freeborn law firm, without disclosing intent to pursue the claims against Knight. The bankruptcy court approved. Later, the Bank and Chatz asked to assign the companies’ claims to the Bank. Knight objected, arguing that approval of the law firm conflicted with the companies having viable claims against Knight. The bankruptcy court overruled Knight’s objection. The district court and Seventh Circuit affirmed. Failure to disclose intent to pursue the claims did not harm Knight, and other remedies are available. It would be inequitable to permit Knight to reap huge benefits from harmless omission.View "Knight v. Bank of America, N.A." on Justia Law