Justia Securities Law Opinion Summaries

Former customers of RCM, a subsidiary of the now-bankrupt Refco, appealed from a dismissal of their securities fraud claims against former corporate officers of Refco and Refco's former auditor. RCM operated as a securities and foreign exchange broker that traded in over-the-counter derivatives and other financial products on behalf of its clients. Appellants, investment companies and members of the putative class, claimed that appellees, former officers and directors of Refco, breached the agreements with the RCM customers when they rehypothecated or otherwise used securities and other property held in customer brokerage accounts. The district court dismissed the claims for lack of standing and failure to allege deceptive conduct. The court held that appellants have no remedy under the securities laws because, even assuming they have standing, they failed to make sufficient allegations that their agreements with RCM misled them or that RCM did not intend to comply with those agreements at the time of contracting. View "Capital Mgmt Select Fund Ltd., et al. v. Bennett et al." on Justia Law

Plaintiff Commonwealth Property Advocates, LLC, acquired title to three pieces of real property in Utah from three defaulting borrowers. Plaintiff then filed three suits in diversity against various Defendants which held interests in the property, seeking to prevent foreclosure. Plaintiff argued Defendants had no authority to foreclose because the notes in each case had been securitized and sold on the open market. Because the security followed the debt, Plaintiff argued once Defendants sold the security they could not foreclose absent authorization from every investor who had purchased an interest in the securitized note. Defendants in all three cases filed motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), and the district court granted those motions. Upon review, the Tenth Circuit found that Plaintiff's diversity jurisdiction claims had no legal basis under Utah law, and as such, the district court properly dismissed all three complaints. View "Commonwealth Prop. Advocates v. Mortgage Elec. Reg. Sys." on Justia Law

Appellant, a former shareholder in Wachovia, sought to recover personally for the decline in value of his shares of Wachovia stock during the recent financial crisis. The district court dismissed the suit, concluding that appellant's complaint stated a claim derivative of injury to the corporation and that he was therefore barred from bringing a direct or individual cause of action against defendants. The court held that because appellant's varied attempts to recast his derivative claim as individual were unavailing, the judgment of the district court was affirmed. View "Rivers, Jr. v. Wachovia Corp., et al." on Justia Law

Defendants, four executives of Gen Re and one of AIG, appealed from convictions of conspiracy, mail fraud, securities fraud, and making false statements to the SEC. The charges arose from an allegedly fraudulent reinsurance transaction between AIG and Gen Re that was intended to cure AIG's ailing stock price. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. The court held that most of the arguments were without merit, but defendants' convictions were vacated because the district court abused its discretion by admitting the stock-price data. View "United States v. Ferguson, et al." on Justia Law

This case was before the court on a petition to review the opinion and order of the Commission permanently denying petitioner, an attorney admitted to practice in New York state, the privilege of appearing or practicing before the Commission, pursuant to rule 102(3)(1)(ii) of the Commission's Rules of Practice, and Section 4C of the Securities and Exchange Act of 1934 (Act), 15 U.S.C. 78a et seq. On appeal, petitioner contended that the procedure employed by the Commission was unconstitutional. The court held that the Commission acted within its authority in sanctioning him; petitioner was on notice of his duty to comply with the New York Bar disciplinary rules and the standard of conduct proscribed by Rule 102(3)(1)(ii) and Section 4C of the Act; there was substantial evidence for the Commission's finding that petitioner engaged in intentional improper professional conduct; and the Commission did not abuse its discretion in its choice of sanctioning petitioner. Accordingly, the petition for review was denied. View "Altman v. SEC" on Justia Law

This case stemmed from the United States' prosecution of Walter A. Forbes for securities fraud. Appellant, Forbes' defense counsel, sent out Freedom of Information Act (FOIA), 5 U.S.C. 552, requests to the SEC, seeking, among other things, the notes of SEC staff members taken during their conversations with certain government witnesses and their attorneys. On appeal, appellant argued that the Department of Justice's disclosure of 11 of the requested set of notes waived work product protection, not only for the documents that were released, but also for the remaining 103 sets of SEC notes. The court held that the controversy was moot with respect to the 11 documents because they had been disclosed by the Justice Department. As to the remaining 103 sets of notes, the court did not believe the SEC waived work product protection or that the Justice Department's action in the criminal trial had that effect. Accordingly, the judgment of the district court was affirmed. View "Williams & Connolly v. SEC" on Justia Law

This appeal concerned the maintenance of a suit for rescission under section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. 78a et seq., by plaintiffs. The district court granted summary judgments to defendants on all claims and awarded defendants attorneys' fees. The court held that a plaintiff suing under section 10(b) seeking rescission must demonstrate economic loss and that the misrepresentation of fraudulent conduct caused the loss. In this case, the court found that the record revealed the rescission was not feasible. Yet employing a rescissionary measure of damages, plaintiffs could be able to convince the finder of fact that plaintiffs were entitled to relief. On that basis, the court reversed the district court's grant of summary judgment on plaintiffs' federal and state securities claims and remanded for consideration under rescissionary measure of damages. With respect to the statute of limitations issue, the court remanded for consideration in light of Merck & Co. The court affirmed the district court's judgment on plaintiffs' state law claims of common law fraud, negligent misrepresentation, mutual mistake, failure of a condition precedent, and unjust enrichment. The court vacated the district court's attorneys' fee award and dismissed the appeal of the award as moot. View "Strategic Diversity, Inc., et al. v. Alchemix Corp., et al." on Justia Law

Plaintiff appealed from the dismissal of his claims against two arbitrators who disqualified him from representing a client. The district court concluded that the claims were barred by arbitral immunity. The court held that the district court had subject matter jurisdiction and correctly dismissed the action because the claims were precluded by arbitral immunity. Accordingly, the judgment was affirmed. View "Sacks v. Dietrich, et al." on Justia Law

Plaintiff and her husband divorced in 2002. He was an executive of defendant, a closely held corporation, a supermarket chain. The divorce decree transferred to wife some of his stock "until such time as [he] is first able to sell" them. He was to pay alimony until 2012 unless he sold the shares sooner and forwarded proceeds to wife. Wife claims that defendant's financial officer told her falsely that husband's shares could be sold only if he died, ceased to be employed by defendant, or ceased being employed in a position that entitled him to buy company stock. She claims she was induced to accept stock in lieu of a cash settlement and to agree that alimony payments would terminate as soon as husband was allowed to sell the stock. Less than two weeks after the earliest day on which husband could stop paying alimony, the company agreed to buy back the shares. The price was $908,000. Wife lost state court litigation and surrendered the shares in exchange $712,000. The district court dismissed, as untimely, wife's suit under the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and SEC Rule 10b-5. The Seventh Circuit affirmed, finding that any violation occurred with the 2002 misrepresentation, more than five years before suit was filed.View "McCann v. Hy-Vee, Inc." on Justia Law

The United States Commodity Futures Trading Commission (CTFC) and the Oklahoma Department of Securities brought suit against multiple corporate defendants (including Prestige Ventures Corporation) and several individuals, Kenneth Lee and his wife and two sons, Simon Yang. The Lees and Mr. Yang appealed pro se a district court's order entered in favor of CTFC. In their complaint, the CTFC alleged that defendants operated a Ponzi scheme that bilked at least 140 investors out of millions of dollars, in violation of a number of provisions of the Commodity Exchange Act and the Oklahoma Uniform Securities Act of 2004. Plaintiffs also alleged that millions of dollars were funneled to Defendants from Prestige by Mr. Lee, in cash and in the form of houses, cars, and boats. The court authorized a receiver to take possession of and sell the houses and boats. further, the court entered a broad array of permanent injunctive orders prohibiting defendants from further dealings in commodity futures and transacting investment-related business in Oklahoma. The court further ordered Defendants to pay over $5 million in restitution and a number of penalties, and ordered Defendants to disgorge large sums of cash. Each of the Lees filed a substantively identical motion for reconsideration of the Order. Having considered these issues and having reviewed the briefs, the record,and the applicable law in light of the applicable review standards, the Tenth Circuit affirmed the judgment of the district court for substantially the reasons stated in the district court’s order of summary judgment and its Order. View "CFTC, et al v. Lee, et al" on Justia Law