Justia Securities Law Opinion Summaries

In case no. 1130590, Kathryn L. Honea appealed the denial of her motion to vacate an arbitration award entered in favor of Raymond James Financial Services, Inc. ("Raymond James"), and Bernard Michaud, an employee of Raymond James (collectively, "RJFS"). In case no. 1130655, RJFS appealed the trial court's denial of its motion to dismiss for lack of jurisdiction; that appeal was dismissed. Honea opened several investment accounts with Raymond James. Honea and Raymond James executed a "client agreement" that included an arbitration provision. Honea filed a complaint in the Jefferson Circuit Court asserting that she had opened four accounts with Raymond James and that Michaud had acted as her financial advisor as to those accounts. She alleged that RJFS engaged in "abusive brokerage practices" in that her investments were not diversified, "were far too risky," and "were of poor quality." The arbitration panel dismissed Honea's breach-of-fiduciary-duty, negligence, wantonness, fraud, and Alabama Securities Act claims and proceeded to hear the breach-of-contract claims. An arbitration panel entered an award in favor of RJFS. The arbitration panel found that "Michaud did not sufficiently know his client nor make sufficient inquiry to attempt to know his client, her holdings, and/or her investment experience. These failures contributed to losses in [Honea's] account." However, the arbitration panel "denied" Honea's breach-of-contract claims, stating that they were "barred by the applicable statutes of limitations." Although the Alabama Supreme Court found one contract appeared to govern this case and that RJFS breached its duties by failing to properly understand Honea's investment knowledge before March 2000, Honea contended that allegedly improper transactions--the excessive use of margin and overly aggressive, high-risk trading occurring after March 2000--represented independent breaches of the FINRA rules. Those claims accrued within the six-year limitations period before her complaint was filed. Further, any knowledge by Honea of her losses did not mean that the trading activity was proper. Thus, to the extent that any transactions after March 2000 would be considered separate breaches of contract unrelated to the failure to properly know Honea, her holdings, or her investment experience, or setting up an "unsuitable" account, the Court found Honea demonstrated probable merit--for purposes of a Rule 59(g) hearing--that those claims would not be barred by the statute of limitations. Honea demonstrated that, in relation to the certain breach-of-contract claims, she was entitled to a Rule 59(g) hearing on her motion to vacate the arbitration award. View "Honea v. Raymond James Financial Services, Inc." on Justia Law

Appointing a registered agent under Wis. Stat. 180.1507 does not signify consent to general personal jurisdiction in Wisconsin.Plaintiffs filed this suit against Defendant, alleging that Defendant fraudulently misrepresented the quality of mortgages underlying certain securities. Defendant moved to dismiss the complaint for lack of personal jurisdiction. The circuit court dismissed the complaint, concluding that Wisconsin courts could not exercise general jurisdiction over Defendant. The court of appeals reversed, holding that by maintaining a Wisconsin agent to receive service of process, Defendant subjected itself to the general jurisdiction of Wisconsin courts and actually consented to personal jurisdiction. The Supreme Court reversed, holding that Defendant’s compliance with section 180.1507 did not, on its own, confer general jurisdiction in Wisconsin. View "Segregated Account of Ambac Assurance Corp. v. Countrywide Home Loans, Inc." on Justia Law

The SEC filed suit against Crawford for acting as unregistered brokers in violation of section 15(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78o(a). The district court granted the SEC summary judgment, permanently enjoined Crawford, and ordered disgorgement. The Supreme Court announced in Kokesh v. SEC, No. 16-529, slip op. at 11 (U.S. June 5, 2017), that disgorgement, as it is applied in SEC enforcement proceedings, operates as a penalty under 28 U.S.C. 2462. Because any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued, the SEC concedes that section 2462 barred it from seeking disgorgement. Therefore, the Eighth Circuit vacated the disgorgement order. The court also held that the district court did not err in finding section 2462 did not bar the SEC's suit for the injunction, and the district court did not err in rejecting Crawford's finder exception or finder defense. Accordingly, the court affirmed in all other respects. View "SEC v. Crawford" on Justia Law

In 2007-2008, Lehman Brothers raised capital through public securities offerings. Petitioner, the largest public pension fund in the country, purchased some of those securities. A 2008 putative class action claimed that financial firms were liable under the Securities Act of 1933, 15 U.S.C. 77k(a), for their participation as underwriters in the transactions, alleging that certain registration statements for Lehman’s offerings included material misstatements or omissions. More than three years after the relevant offerings, petitioner filed a separate complaint with the same allegations. A proposed settlement was reached in the putative class action, but petitioner opted out. The Second Circuit affirmed dismissal of the individual suit, citing the three-year bar in Section 13 of the Act. The Supreme Court affirmed. Section 13’s first sentence states a one-year limitations period; the three-year time limit is a statute of repose, not subject to equitable tolling. Its instruction that “[i]n no event” shall an action be brought more than three years after the relevant securities offering admits of no exception. The statute runs from the defendant’s last culpable act (the securities offering), not from the accrual of the claim (the plaintiff’s discovery of the defect). Tolling is permissible only where there is a particular indication that the legislature did not intend the statute to provide complete repose but instead anticipated the extension of the statutory period under certain circumstances. The timely filing of a class-action complaint does not fulfill the purposes of a statutory time limit for later-filed suits by individual class members. View "California Public Employees’ Retirement System v. ANZ Securities, Inc." on Justia Law

Girdwood Mining Company transferred stock and mineral royalty interests to Comsult LLC pursuant to a contract between the parties. Girdwood Mining later refused to perform its obligations with respect to the stock and royalty interests, arguing that the contract transferring the stock and royalty interests was illegal. The superior court ruled that because the contract was illegal, it would not grant relief to either party. Comsult appealed seeking enforcement of its stock and royalty interests. the Alaska Supreme Court held that Comsult’s stock and royalty interests and its rights to enforce them remained valid, and therefore reversed the superior court’s decision. View "Comsult LLC v. Girdwood Mining Company" on Justia Law

Benjamin Ashmore appealed the district court's order dismissing him as the plaintiff in a whistleblower action under the Sarbanes-Oxley Act, 18 U.S.C. 1514A. Instead, the trustee of Ashmore's bankruptcy estate was substituted as plaintiff. The Second Circuit dismissed the appeal for lack of jurisdiction because the district court's dismissal of the case as to Ashmore and the substitution of the trustee as plaintiff were interlocutory orders that were not immediately appealable. The court vacated the temporary stay of the district court proceedings and denied Ashmore's pending motion to stay as moot. View "Ashmore v. CGI Group, Inc." on Justia Law

Plaintiff filed a securities class action alleging claims arising out of the Initial Public Offering (IPO) shares for Vivint Solar. The Second Circuit affirmed the district court's dismissal of the complaint, holding that the "extreme departure" test in Shaw v. Digital Equipment Corp., 82 F.3d 1194 (1st Cir. 1996), is not the law of this circuit and that Vivint's omissions were not material under the test set forth in DeMaria v. Andersen, 318 F.3d 170 (2d Cir. 19 2003), to which the court adhered. The court also held that Vivint did not mislead shareholders regarding the company's prospects in Hawaii. View "Stadnick v. Vivint Solar, Inc." on Justia Law

Class representatives challenged the district court's denial of their motion to enforce the settlement agreement in a securities settlement, and the district court's denial of a subsequent motion to alter or amend. The Eighth Circuit affirmed the district court's judgment and denied defendants' motion to dismiss. The court explained that this case continues to present a live controversy and the Stipulation explicitly granted that the district court would have continuing jurisdiction for the purposes of enforcing the agreement and addressing settlement administration matters. The court also held that the case was not prudentially moot where the district court has the ability to provide an effective remedy; the district court did not err in interpreting the Stipulation according to its unambiguous meaning and in holding that defendants complied with the Stipulation's payment obligations; and the district court did not err by holding that the meaning of the Stipulation was unambiguous as matter of law and, in doing so, the district court did not place a burden of proof on any party. View "Cromeans v. Morgan Keegan & Co." on Justia Law

The Pioneer Centres Holding Company Employee Stock Ownership Plan and Trust and its trustees sued Alerus Financial, N.A. for breach of fiduciary duty in connection with the failure of a proposed employee stock purchase. The district court granted summary judgment to Alerus after determining the evidence of causation did not rise above speculation. The Plan appealed, claiming the district court erred in placing the burden to prove causation on the Plan rather than shifting the burden to Alerus to disprove causation once the Plan made out its prima facie case. In the alternative, the Plan argued that even if the district court correctly assigned the burden of proof, the Plan established, or at the very least raised a genuine issue of material fact regarding, causation. Finding no reversible error, the Tenth Circuit affirmed the district court. View "Pioneer Centres Holding Co v. Alerus Financial, N.A." on Justia Law

The Alaska Supreme Court affirmed the appraisal panel’s valuation of Calais Company, Inc. (a closely held corporation), but reversed the superior court’s denial of shareholder Deborah Ivy’s request for post-judgment interest. Ivy sued Calais in 2007 seeking dissolution of the company. The parties settled, and Calais agreed to buy out Ivy’s shares of the company based on a valuation of Calais conducted by a three-member appraisal panel. The appraisers returned an initial valuation in 2009. The superior court approved that valuation, but Calais appealed. The Supreme Court reversed and remanded, concluding that the appraisers had failed to understand their contractually assigned duty. The appraisal panel returned a second valuation in October 2014, which the superior court again approved. Ivy appealed again, arguing: (1) that on remand the superior court improperly instructed the appraisers; (2) that the appraisers made substantive errors in their valuation; and (3) that she was entitled to post-judgment interest. View "Ivy v. Calais Company, Inc." on Justia Law