Justia Securities Law Opinion Summaries

Plaintiff, the former General Counsel of McAfee, alleged that McAfee maliciously prosecuted and defamed him in an attempt to deflect attention from large-scale backdating of stock options within the company. McAfee moved to strike plaintiff's claims pursuant to California's anti-Strategic Litigation Against Public Participation (anti-SLAPP) statute, Code Civ. Proc., 425.16. The district court denied the motion as to plaintiff's malicious prosecution claims, but granted it as to his claims for defamation and false light invasion of privacy. Both sides appealed. The court held that plaintiff had not demonstrated that his claims have the requisite degree of merit to survive McAfee's anti-SLAPP motion: McAfee had probable cause to believe plaintiff was guilty of a crime and plaintiff's claims for defamation and false light invasion of privacy were time-barred. Accordingly, the court affirmed in No. 10-15670 and reversed in 10-15561. View "Roberts v. McAfee, Inc." on Justia Law

Appellants brought various claims before Financial Industry Regulatory Authority (FINRA) arbitrators against Ameriprise, a financial-services company, for, inter alia, breach of fiduciary duty, breach of contract, fraud, and negligent misrepresentation related to the decline in value of various financial assets owned by appellants and managed by Ameriprise. Ameriprise answered appellants' FINRA complaint by asserting, principally, that appellants released their claims by operation of a settlement agreement in a class-action agreement suit that had proceeded between 2004 and 2007 in the United States District Court for the Southern District of New York. After FINRA arbitrators denied Ameriprise's motion to stay appellants' arbitration, Ameriprise moved in the district court, in which the class action had been litigated and settled, for an order to enforce the settlement agreement that would enjoin appellants from pressing any of their claims before FINRA arbitrators. The district court concluded that the class settlement barred all of appellants' arbitration claims and therefore granted Ameriprise's motion and ordered appellants to dismiss their FINRA complaint with prejudice. The court held that the district court had the power to enter such an order and that several of appellants' arbitration claims were barred by the 2007 class-action settlement. Therefore, the court affirmed in part. But because the court concluded that appellants' arbitration complaint plead claims that were not, and could not have been, released by the class settlement, the court vacated in part the district court's judgment, and remanded the case for the entry of an order permitting the non-Released claims to proceed in FINRA arbitration. The court dismissed as moot appellants' appeal from the district court's denial of their motion for reconsideration. View "In Re: American Express Finance Advisors Securities Litigation" on Justia Law

This case stemmed from defendant's operation of a fraudulent investment fund. Defendant's Ponzi scheme took almost $13 million from over 50 investors and petitioners were among the investors. Petitioners appealed the district court's order dismissing their third-party petition to adjudicate property interests in forfeited property. The court held that the district court erred in holding that petitioners lacked prudential standing. The court also held that the district court erred when it found that the Government's interest in the funds was superior to petitioners' interests. Accordingly, the court reversed the district court's dismissal of the petition and remanded for further proceedings. View "United States v. Wilson" on Justia Law

As part of a civil enforcement action brought by the SEC, the district court entered a disgorgement order against Peter S. Cahill, imposing joint and several liability for the full proceeds of his sales of stock in a small, thinly traded corporation not listed on a major stock exchange. Cahill challenged the order. The court held that because Cahill presented no evidence in rebuttal, the district court did not clearly err in finding that the SEC had met its burden to show that his ill-gotten gains were the full proceeds of his stock sales at inflated prices resulting from a fraudulent "pump and dump" scheme. Neither did the district court abuse its discretion in crafting the disgorgement remedy. Inclusion of the transferred funds was consistent with the court's precedent. Absent any rationale for a different approach, the court joined other circuits in holding that the imposition of joint and several liability for the amount ordered to be disgorged did not require proof of a close relationship among the defendants beyond their collaboration in the fraudulent scheme in violation of the securities laws. Accordingly, because Cahill's evidentiary objections were also unavailing, the court affirmed the order of disgorgement. View "Securities and Exchange Comm'n v. Whittemore, et al." on Justia Law

Plaintiffs appealed from a decision granting defendants' motion to dismiss plaintiffs' complaints for failure to state a claim upon which relief could be granted. Plaintiffs, participants in two retirement plans offered by defendants, brought suit alleging breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiff alleged that defendants acted imprudently by including employer stock as an investment option in the retirement plans and that defendants failed to provide adequate and truthful information to participants regarding the status of employer stock. The court held that the facts alleged by plaintiffs were, even if proven, insufficient to establish that defendants abused their discretion by continuing to offer plan participants the opportunity to invest in McGraw-Hill stock. The court also held that plaintiffs have not alleged facts sufficient to prove that defendants made any statements, while acting in a fiduciary capacity, that they knew to be false. Accordingly, the judgment was affirmed. View "Gearren, et al. v. The McGraw-Hill Companies, Inc., et al." on Justia Law

Plaintiffs, participants in retirement plans offered by defendants and covered by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., appealed from a judgment dismissing their ERISA class action complaint. Plan documents required that a stock fund consisting primarily of Citigroup common stock be offered among the plan's investment options. Plaintiffs argued that because Citigroup stock became an imprudent investment, defendants should have limited plan participants' ability to invest in it. The court held that plan fiduciaries' decision to continue offering participants the opportunity to invest in Citigroup stock should be reviewed for an abuse of discretion and the court found that they did not abuse their discretion here. The court also held that defendants did not have an affirmative duty to disclose to plan participants nonpublic information regarding the expected performance of Citigroup stock and that the complaint did not sufficiently allege that defendants, in their fiduciary capacities, made any knowing misstatements regarding Citigroup stock. Accordingly, the court affirmed the judgment. View "Gray, et al. v. Citigroup, Inc., et al." on Justia Law

Defendant, the former Chief Executive Officer of Brocade Communications (Brocade or the Company), a company the developed and sold data switches for networks, appealed his conviction in a second criminal trial for securities fraud and making false filings; falsifying corporate books and records; and making false statements to auditors in violation of securities laws. Defendant was previously convicted of violating the securities laws but the court vacated that conviction because of prosecutorial misconduct and remanded for a new trial. In this appeal, the court held that there was no evidence of sufficient facts in the record to support any allegation of prosecutorial misconduct. The court also held that there was sufficient evidence of materiality to support defendant's conviction. The court further held that the district court did not abuse its discretion by not giving defendant's proposed jury instruction. Accordingly, the court affirmed the judgment. View "United States v. Reyes" on Justia Law

The SEC commenced this civil enforcement action against appellant, a registered investment adviser (Jamerica), and a private investment (Brawta)(collectively, defendants), alleging that their fraudulent misrepresentations and diversion of Brawta funds violated securities laws. Initially, the district court granted a preliminary injunction, froze defendants' assets, and ordered Brawta to undertake and submit a sworn independent accounting. Then the district court granted the SEC summary judgment, permanently enjoining appellant and Jamerica from future violations of securities laws, and ordering them, jointly and severally, to disgorge misappropriated investor funds. The court held that, having reviewed the record de novo, summary judgment was appropriate for the reasons stated by the district court and that appellant's other challenges to the court's orders were without merit. Accordingly, the court affirmed the judgment of the district court. View "SEC v. Brown, et al." on Justia Law

Defendant, a licensed financial adviser, pled guilty to 34 counts of mail fraud (18 U.S.C. 1341), wire fraud (18 U.S.C. 1343), and bank fraud (18 U.S.C. 1344) based on his solicitation of bank clients to invest in speculative real estate transactions that he controlled, unrelated to bank products, an illegal practice in the securities industry known as "selling away." The Government accused him of collecting $1.55 million between October 2002 and January 2006. The district court denied his motion to withdraw the plea when he claimed that his prior attorney, unprepared to go to trial, had browbeaten him. The court imposed a sentence of 180 months and $1.3 million in restitution. The Third Circuit affirmed. With no evidence of actual innocence and the death of some of the government's elderly witnesses, there was no "fair and just" reason to allow withdrawal of the plea. Because defendant was an investment advisor when he initiated the fraud, the court properly applied a four-level enhancement at section 2B1.1(b)(16)(A); an obstruction of justice enhancement was justified by defendant's lies concerning his guilty plea and his contact with witnesses. View "United States v. Siddon" on Justia Law

Plaintiffs appealed from a dismissal of their complaint, which sought a declaratory judgment that, inter alia, the Financial Industry Regulatory Authority, Inc. (FINRA) lacked the authority to bring court actions to collect disciplinary fines as imposed. The court held that the heavy weight of evidence suggested that Congress did not intend to empower FINRA to bring court proceedings to enforce its fines and that the 1990 Rule Change did not authorize FINRA to judicially enforce the collection of its disciplinary fines. View "John J. Fiero and Fiero Brothers, Inc. v. FINRA" on Justia Law