Justia Securities Law Opinion Summaries

Plaintiff purchased a Life Fund 5.1, L.L.C. Capital Appreciation Bond from a company that subsequently filed for bankruptcy. More than two years after purchase, plaintiff sued the defendants for misrepresentations and omissions in the sale of securities, fraud, breach of fiduciary duty, and negligence. The district court granted the defendants' motion for summary judgment, ruling that the statute of limitations for each of the plaintiff's claims had run before she brought suit. Plaintiff appealed, and the Court of Civil Appeals affirmed. The question this case presented for the Supreme Court's review was whether the district court erred in granting the defendants' motion for summary judgment based on the expiration of the statutory limitations periods. As a threshold matter, the Court determined when plaintiff's claims accrued and whether the statute of limitations for each claim ran or was tolled from the accrual date based upon the discovery rule. After review, the Court held that defendants did not submit sufficient evidentiary material to support their arguments as to when the statute of limitations began to run on each claim. Therefore the Court reversed the grant of summary judgment and remanded the case for further proceedings. View "Horton v. Hamilton" on Justia Law

Plaintiffs here were a class of entities and individuals who purchased the stock of Abiomed, Inc. Plaintiffs brought suit against Abiomed and two of its officers (collectively, Defendants), alleging that Defendants committed securities fraud by making false and misleading statements that caused Plaintiffs to purchase Abiomed stock at artificially inflated prices. The district court granted Defendants’ motion to dismiss, concluding that Plaintiffs had plausibly alleged that Defendants made false or misleading statements that had a material effect on Abiomed’s stock price but that Plaintiffs failed to adequately plead scienter, as is required for pleadings in securities fraud cases. The First Circuit affirmed, holding that the district court did not err in concluding that Plaintiffs failed to sufficiently allege that Defendants made the allegedly false or misleading statements with the “conscious intent to defraud or a ‘high degree of recklessness.’” View "Fire & Police Pension Ass’n of Colo. v. Abiomed, Inc." on Justia Law

This shareholder derivative suit was one of several suits alleging that Smith & Wesson Holding Corporation, a major gun manufacturer incorporated in Nevada, made misleading public statements in 2007 about demand for its products. In reaction to these cases, Smith & Wesson formed a Special Litigation Committee (SLC) to investigate and evaluate the viability of any of these claims and to make a recommendation to Smith & Wesson’s Board whether to pursue any of these claims. The SLC issued a final report recommending against filing any claims. In 2010, Plaintiff asserted Nevada state law claims against Smith & Wesson’s officers and directors, including breach of fiduciary duty and waste of corporate assets. On the basis of the SLC’s conclusions, Defendants, former and current officers and directors of Smith & Wesson, moved for summary dismissal under Delaware law, as adopted by Nevada. The district court granted the motion. The First Circuit affirmed, holding that the district court did not err in finding as a matter of law that the SLC was independent and that the SLC’s investigation was reasonable and conducted in good faith. View "Sarnacki v. Golden" on Justia Law

Plaintiffs petitioned for rehearing from the court's summary order and from the opinion filed the same day. The complaint alleged that Bear Stearns was liable as the clearing broker for Baron's fraud. The court reaffirmed its holding that Bear Stearns' conduct as alleged in the Amended Complaint is not sufficient to state a claim for relief under Section 10(b) and Rule 10(b)(5) of the Securities Exchange Act, 15 U.S.C. 78j, 17 C.F.R. 10b-5. Therefore, the petition for panel rehearing with respect to Bear Stearns is denied. The court next addressed the SEC's arguments made in an amicus brief. The court concluded that plaintiffs' and the SEC's concerns that the court's opinion disregarded ATSI Commc'ns, Inv. v. Shaar Fund, Ltd. are wholly unfounded. The facts alleged in this complaint do not involve any ongoing market affected by false pricing signals by Isaac Dweck. Rather, they involve misrepresentations to the victims by Baron salespeople as to how the price they were charging for particular securities was arrived. There is no presumption of reliance based on any identifiable market, and given the lack of an allegation that any plaintiff knew of the stock parking or prices used therein, no allegation of reliance upon the parking transactions at issue. View "Fezzani v. Bear, Stearns & Co." on Justia Law

After SouthPeak, a video game publishing company, terminated its CFO after she raised concerns about a misstatement on one of the company's filings with the SEC, a jury found that the company and two of its top officers violated the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1514A(a). The court affirmed the district court's judgment, holding that the retaliatory discharge claims are subject to the four-year statute of limitations under 28 U.S.C. 1658(a), and not the two-year limitations period under section 1658(b)(1); the administrative complaint in this case satisfies the exhaustion requirement; and emotional distress damages are available under the statute. The court rejected SouthPeak's claims regarding perceived inconsistencies in the verdict where the district court did not commit any error. Finally, the court affirmed the district court's decision as to attorneys' fees. View "Jones v. Southpeak Interactive Corp." on Justia Law

Jeffrey Campbell sold investments in Beverly Hills Development Corporation (BHDC) while he was a registered agent of Horner, Townsend & Kent, Inc. (HTK), a broker-dealer licensed to sell securities in the state. After resigning from HTK, Campbell began soliciting investments from and selling BHDC notes to Plaintiffs. When they discovered that they had been scammed, Plaintiffs filed suit against Campbell and HTK. During discovery, Campbell pleaded no contest to selling unregistered securities and was ordered to pay restitution. The district court granted summary judgment for HTK on Plaintiffs’ claims of securities violations, negligent misrepresentation, and negligent training and supervision, and regarding a release signed by one investor; and (2) denied Plaintiffs’ motion for reconsideration in which they alleged negligence, control-person liability, and material aid. The Supreme Court remanded in part, holding that the district court erred when it denied all of Plaintiffs’ requests for attorney fees. The Court otherwise affirmed. Remanded. View "Burdick v. Townsend" on Justia Law

This appeal stemmed from a putative securities fraud class action brought by lead plaintiff Nitesh Banker on behalf of all persons who purchased common stock in Gold Resource Corporation (GRC) during the class period between January 30, 2012, and November 8, 2012. GRC, a Colorado corporation, was a publicly traded mining company engaged in Mexico in the exploration and production of precious metals, including gold and silver. GRC’s aggressive business plan called for a dramatic increase in mining production during its initial years. Plaintiff alleged the "El Aguila" project experienced severe production problems during the class period, and that defendants knew about these problems but concealed them from investors. Plaintiff alleged GRC and four of its officers and directors committed securities fraud in violation of federal securities laws. He also asserted claims against individual defendants as "control persons." The district court dismissed the complaint with prejudice pursuant to Fed. R. Civ. P. 12(b)(6), holding that plaintiff failed to meet the heightened pleading standard for scienter required by the Private Securities Litigation Reform Act of 1995. Plaintiff appealed. But finding no reversible error, the Tenth Circuit affirmed. View "In re: Gold Resource Corp." on Justia Law

Even after receiving investments from four investors of over $20 million from 2001 to 2005, Access Cardiosystems, Inc. filed for Chapter 11 bankruptcy protection in 2005. Four investors filed a third amended complaint against Access’s founder, director, and officer, Randall Fincke, alleging, among other claims, that Fincke had violated the Massachusetts blue sky law. The bankruptcy court found as a matter of fact that Fincke had made a false statement of material fact to investors in violation of the blue sky law and that one such investor was entitled to $1.5 million in damages for his investments that Fincke solicited “by means of” that material misstatement. On appeal, these findings were affirmed by the district court. The Supreme Court affirmed, holding (1) the bankruptcy court did not err in finding that Fincke knew or should have known of the falsity of the misstatement and that the falsity could not be cured by warnings; (2) it was not inconsistent for the bankruptcy court to find this particular misstatement was material to investors; and (3) the bankruptcy’s finding as to damages was not in error. View "Fincke v. Radley" on Justia Law

Plaintiffs filed suit under Sections 10(b) and 20(a) of the Securities and Exchange Act, 15 U.S.C. 78j(b) and 78t(a), alleging that Morgan Stanley and six of its officers and former officers made material misstatements and omissions during the class period in an effort to conceal the company's exposure to and losses from the subprime mortgage market. The district court dismissed all claims for failure to state a claim. The court affirmed, concluding that the district court properly dismissed plaintiffs' claim that defendants' omission of information purportedly required to be disclosed under Item 303 of Regulation S-K, 17 C.F.R. 229.303(a)(3)(ii), violated Section 10(b). The court also affirmed the district court's order dismissing plaintiffs' other claims in a summary order issued simultaneously with this decision. View "Fjarde AP-Fonden v. Morgan Stanley" on Justia Law

Defendant appealed the district court's judgment imposing liability on him for violations of the Louisiana Securities Law, La. Rev. Stat. Ann. 51.701 et seq. The court denied plaintiffs' motion to dismiss defendant's appeal for lack of jurisdiction; plaintiffs' argument that defendant should be held liable under federal law are not properly before the court because they failed to file a cross-appeal; the district court erred in requiring the jury to find the elements of a Rule 10b-5 of the Securities and Exchange Ac tof 1934, 15 U.s.C. 78j(b), claim to impose liability under Section 712 of the Louisiana Securities Law, but this error was committed at defendant's insistence and his complaints are foreclosed; defendant's claim that the evidence does not support the district court's judgment of liability under Louisiana Securities Law fails; whether or not plaintiffs are correct that the jury found the requisite elements to hold defendant liable under Rule 10b-5, this argument is not properly before the court; as a codefendant was liable to plaintiffs as a seller of securities under Section 714(A), defendant should have been held jointly and severally liable for the total damages award under Section 714(B); but, because plaintiffs have not cross-appealed, they are without jurisdiction to correct this error. Accordingly, the court affirmed the judgment. View "Heck v. Triche" on Justia Law