Justia Securities Law Opinion Summaries

The issue on appeal to the Supreme Court was whether the appellate court erred in reversing a trial court's denial of Harold Wright's exception of res judicata. Mr. Wright was paralyzed and incapacitated by a medical accident in 1973. He received $1.7 million in damages. The court declared Mr. Wright an interdict and appointed his wife as his curatrix. In conjunction with the proceeding, the court issued an order allowing the curatrix to invest the damages in long-term bonds. No portion of the Mr. Wright's capital estate could be withdrawn from any long range investments without specific orders from the court. Through his investment bank Defendant A.G. Edwards & Sons, Inc. (and with the court's permission), Mr. Wright received disbursements from the invested damages award. In 2002, Mrs. Wright sued Defendant alleging breach of fiduciary duty. Specifically, she argued that A.G. Edwards and its agents misappropriated the entire $1.7 million and disbursed principal in violation of the court's order. Furthermore, Mrs. Wright alleged that when one of her account managers left A.G. Edwards to work for Morgan Stanley, he took Mr. Wright's remaining principal with him. The dispute went to arbitration. While pending, Mr. Wright died, thereby terminating the interdiction proceeding. An arbitration panel issued an award in favor of Defendants. Mr. Wright's estate then filed a motion with the district court, and Defendants filed several exceptions including an exception of res judicata where they contended the arbitration proceeding precluded further court action. The trial court denied the exception, and the appellate court reversed, dismissing the estate's claims. Upon review, the Supreme Court found that the arbitration award was unconfirmed, and therefore did not have a preclusive effect. Accordingly, the Court reversed the appellate court's ruling and remanded the case for further proceedings.View "Interdiction of Harold Wright" on Justia Law

The parties to this lawsuit claimed rights to a punch press used in the manufacturing business of now-defunct Vitco Industries. Plaintiff, Gibraltar Financial Corporation, held a perfected security interest in Vitco's tangible and intangible property, including its equipment. Defendants, several entities including Prestige Equipment, who had acquired the press, and Key Equipment Finance, claimed that the security interest did not cover the press because the press was not Vitco's equipment, but rather, the press had been leased to Vitco by Key Equipment. The trial court granted summary judgment in favor of Defendants after concluding that the lease was a true lease. The court of appeals affirmed. The Supreme Court reversed, holding that genuine issues of material fact existed regarding whether the press was leased. The Court noted that no evidence was on the record relating to the economic expectations of Vitco and Key Equipment at the time the transaction was entered into. Remanded. View "Gibraltar Fin. Corp. v. Prestige Equip. Corp." on Justia Law

This case arose from a Ponzi scheme perpetrated by Marsha Schubert, operating as "Schubert and Associates" (Schubert). Defendants Marvin and Pamela Wilcox were among the appellants in an earlier case that appealed summary judgments obtained by the plaintiffs on the theory of unjust enrichment against 158 "relief" defendants who had received more money than they invested in the scheme. Plaintiffs had sought to recover all amounts the relief defendants had received from the scheme in excess of their original investment. On remand, the state Department of Securities and the Receiver (Department) moved for summary judgment against the Wilcoxes on grounds that they were not entitled to the equitable relief provided for innocent investors because they were partners with Schubert and were actively involved in the check-kiting scheme operated by Schubert that supported the Ponzi scheme. In response, the Wilcoxes disputed that they were partners with Schubert. They stated that they were not aware of the existence of a Ponzi scheme in their dealings with Schubert. The trial judge granted partial summary judgment in favor of the plaintiffs on the issue of liability, finding that there was no genuine issue of material fact pertaining to the liability of the Wilcoxes on the Department's unjust enrichment claim. The trial judge found that by virtue of their participation in the Schubert check-kiting scheme, the Wilcoxes were not innocent investors. The trial court found that the Wilcoxes were unjustly enriched by all monies netted from their association with Schubert's Ponzi and check-kiting schemes. The Wilcoxes appealed to the Supreme Court. Upon review, the Supreme Court found that the evidentiary material provided by the Wilcoxes failed to raise disputes to meet their burden to overcome the motion for summary judgment. Accordingly, the Court affirmed the trial court's decision. View "Depart. of Securities ex rel. Faught v. Wilcox" on Justia Law

Defendant Money & More Inc. (M&M) allegedly maintained and operated a Ponzi scheme. Pursuant to a petition filed by the State, the district court issued a temporary restraining order freezing Defendants' assets and later entered a preliminary injunction. Several hundred individuals and dozens of corporations that made fraudulent investments formed Money & More Investors LLC (MMI) and assigned to it their rights, interests, and claims against Defendants, who included the individuals comprising M&M. After reaching a settlement agreement with Defendants, MMI filed a motion to intervene in the State's preservation action. The district court granted MMI both intervention as of right under Utah R. Civ. P. 24(a) and, in the alternative, permissive intervention under Utah R. Civ. P. 24(b). The Supreme Court affirmed the grant of intervention as of right, holding that MMI met all the elements of rule 24(a) where (1) MMI's motion to intervene was timely; (2) MMI had a direct interest relating to the property; (3) MMI sufficiently established that the original parties to the suit would inadequately represent MMI's interests; and (4) MMI would be bound by the judgment.View "State v. Bosh" on Justia Law

Liberty commenced this action against the Trustee under the Indenture, seeking injunctive relief and a declaratory judgment that the proposed Capital Splitoff would not constitute a disposition of "substantially all" of Liberty's assets in violation of the Indenture. The Court of Chancery concluded, after a trial, that the four transactions at issue should not be aggregated, and entered judgment for Liberty. The Court of Chancery concluded that the proposed splitoff was not "sufficiently connected" to the prior transactions to warrant aggregation for purposes of the Successor Obligor Provision. The court agreed with the judgment of the Court of Chancery and affirmed.View "The Bank of New York Mellon Trust Co. v. Liberty Media Corp." on Justia Law

The Secretary filed an administrative complaint alleging that three hedge funds offered by Bulldog Investors violated section 301 of G.L.c. 110A by offering unregistered securities to a Massachusetts resident through a publicly available website and an e-mail message. The Secretary adopted the hearing officer's finding of a violation and ordered Bulldog Investors to cease and desist from committing any further violations and to take all necessary actions to ensure that future offers and sales of securities complied with section 301. The court held that the challenged provisions of the Massachusetts law were part of a constitutionally permissible disclosure scheme and, to the extent that they restricted speech, they were tailored in a reasonable manner to serve a substantial state interest in promoting the integrity of capital markets by ensuring a fully informed investing public. Accordingly, the court affirmed the judgment.View "Bulldog Investors, et al. v. Secretary of the Commonwealth" on Justia Law

Jean W. Reed, Mary W. Haynes, and Susan W. Stockham ("the sisters") sued Regions Bank ("Regions"), Morgan Asset Management, Inc. ("MAM"), Morgan Keegan & Company, Inc. ("Morgan Keegan"), and Regions Financial Corporation ("RFC"), alleging several claims related to the investment of assets belonging to two trusts set up for the benefit of Reed and Haynes. MAM, Morgan Keegan, and RFC unsuccessfully moved the Jefferson Circuit Court to dismiss the claims against them, arguing among other things, that the claims were derivative in nature and could be asserted only in compliance with Rule 23.1, Ala. R. Civ. P., with which the sisters did not comply. MAM, Morgan Keegan, and RFC petitioned the Supreme Court for a writ of mandamus to direct the circuit court to grant their motion to dismiss. Upon review, the Supreme Court found that the sisters had not alleged an injury distinct from that suffered by the trusts' funds; the claims against MAM, Morgan Keegan, and RFC in their complaint were derivative and did not comply with Rule 23.1 for asserting such claims. The sisters therefore lacked standing to sue. The Court granted the petition and issued the writ. View "Reed v. Regions Bank" on Justia Law

Callan Associates petitioned the Supreme Court for the writ of mandamus to direct the Montgomery Circuit Court to dismiss an action filed by Carol Perdue in her role as the legal guardian of Anna Perdue, who sued on behalf of the Wallace-Folsom Prepaid College Trust Fund. Ms. Perdue opened an account with the Trust Fund on behalf of her Daughter Anna. After making monthly payments, Anna would be entitled to reduced in-state tuition and fees. The Trust's assets pooled all such contributions and invested them so that designated beneficiaries would receive the promised benefits. The Trust hired Callan Associates as an investment consultant. The Trust's management notified beneficiaries that because of the stock market downturn of 2009, the Trust's assets were negatively impacted. Subsequently, Ms. Perdue sued on behalf of Anna and the Trust, contending that Callan and the Trustees mismanaged the Trust's assets. Callan moved to dismiss which the Circuit Court denied. On appeal to the Supreme Court, Callan argued that Ms. Perdue lacked standing to bring her claims. Furthermore, Callan argued that Ms. Perdue's claims were not ripe for adjudication since none of the beneficiaries have had tuition paid from the Trust. The Supreme Court concluded that "Callan's motion to dismiss in the trial court was well founded"; therefore the Court granted Callan's petition and issued the requested writ to direct the trial court to dismiss Ms. Perdue's claims.View "Perdue v. Callan Associates, Inc." on Justia Law

Defendant AIA Services Corporation entered into a stock redemption agreement with Appellant Reed Taylor to purchase all of his shares in AIA Services for a $1.5 million down payment promissory note and a $6 million promissory note, plus other consideration. When AIA failed to pay the $1.5 million when it became due, Appellant and AIA agreed to modify the stock redemption agreement. AIA was a still unable to make payments under the new terms. Appellant then filed suit to recover the amounts owed on the two promissory notes. The district court granted partial summary judgment in favor of AIA and dismissed six of Appellant's causes of action after finding the revised stock redemption agreement was unenforceable. On appeal, Appellant argued the redemption agreement complied with state law and was still enforceable. Upon review, the Supreme Court affirmed the district court's holding that the agreement was illegal and unenforceable and affirmed the court's dismissal of Appellant's six causes of action.View "Reed J. Taylor v. AIA Services " on Justia Law

CML, a junior secured creditor of JetDirect, sued JetDirect's present and former officers directly and derivatively for breaching their fiduciary duties. The Vice Chancellor dismissed all four of CML's claims. The court affirmed the judgment because CML, as a JetDirector creditor, lacked standing to sue derivatively on JetDirect's behalf.View "CML V, LLC, et al. v. Bax, et al." on Justia Law