- Volume 16, Issue #12
- High Court Limits American Pipe Tolling For Class Actions
WASHINGTON, D.C. - Putative class members may not file a new class action lawsuit outside the applicable statute of limitations in lieu of joining an existing class action lawsuit or filing an individual action, the U.S. Supreme Court ruled on June 11, overturning a federal circuit court's determination in a securities class action lawsuit that the American Pipe & Construction Co. v. Utah tolling doctrine tolls the statute of limitations to permit a previously absent class member to bring a subsequent class action outside the applicable limitations period (China Agritech Inc. v. Michael Resh, et al., No. 17-432, U.S. Sup.).
- U.S. Supreme Court Declines Review Of Scienter Pleading Standard Dispute
WASHINGTON, D.C. - The U.S. Supreme Court on May 21 declined review of a Fourth Circuit U.S. Court of Appeals ruling that an investor failed to properly plead scienter in making his federal securities law claims against a company and two of its senior executives in a class action lawsuit (Maguire Financial LP v. PowerSecure International Inc., et al., No. 17-1303, U.S. Sup.).
- Securities Class Action Dismissed For Failure To Plead Falsity, Scienter
NEW YORK - A federal judge in New York on June 11 dismissed an amended shareholder complaint in its entirety and with prejudice, ruling that lead plaintiffs failed to plead falsity or scienter in making their federal securities law claims against an animal pharmaceutical company and certain of its senior executives (In re Aratana Therapeutics Inc. Securities Litigation, No. 17-880, S.D. N.Y., 2018 U.S. Dist. LEXIS 98535).
- Securities Claims Against Drug Maker Dismissed For Failure To Plead Scienter
SEATTLE - A federal judge in Washington on May 24 ruled that the lead plaintiff in a securities class action lawsuit against a biopharmaceutical company and others failed to show that the defendants acted with requisite scienter in allegedly concealing from investors certain safety concerns with the company's blood cancer treatment drug (Samit Patel v. Seattle Genetics Inc., et al., No. 17-41, W.D. Wash., 2017 U.S. Dist. LEXIS 87500).
- New York High Court: Martin Act Claims Subject To 3-Year Limitations Period
ALBANY, N.Y. - In a 4-1 ruling, a divided New York Court of Appeals on June 12 ruled that claims brought pursuant to the Martin Act are governed by a three-year statute of limitations under New York law (The People v. Credit Suisse (USA) LLC, et al., No. 40, N.Y. App., 2018 N.Y. LEXIS 1451).
- Utah High Court Overturns Securities Fraud Statute Of Limitations Ruling
SALT LAKE CITY - Utah's Pattern of Unlawful Activity Act allows the state to establish a pattern of unlawful conduct on crimes that fall outside the statute of limitations, the Utah Supreme Court ruled June 12 in reversing and remanding a state trial court's ruling (Utah v. Scott R. Stewart, No. 20160484, Utah Sup., 2018 Utah LEXIS 76).
- Investor's State Law Claims Not Subject To SLUSA Preclusion, Panel Rules
ATLANTA - An 11th Circuit U.S. Court of Appeals panel on June 8 reversed and remanded an appeal in a securities class action lawsuit, ruling that a federal district court erred in determining that an investor's state law breach of contract and negligence claims were precluded under Title I of the Securities Uniform Standards Act of 1998 (SLUSA) (Jyll Brink v. Raymond James & Associates Inc., No. 16-14144, 11th Cir., 2018 U.S. App. LEXIS 15519).
- Panel: Shareholder's Failure To Respond To Issuance Letter Constituted Consent
CHICAGO - A failure by defendants to include the terms of an issuance of a company's stock in a letter to shareholders did not constitute a violation of federal securities law, and a shareholder's failure to respond to the letter under the terms of a Class A Stock Restriction Agreement (SRA) represented a consent for the issuance under a provision of the SRA, a Seventh Circuit U.S. Court of Appeals panel ruled June 7 in affirming a federal district court's grant of summary judgment in the securities fraud lawsuit (David Bielfeldt, et al. v. Lee C. Graves, et al., No. 15-1419, 7th Cir., 2018 U.S. App. LEXIS 15327).
- Panel Affirms Denial Of Appeal Of Securities Fraud Conviction Ruling
DENVER - A man convicted of securities fraud and money laundering for his role in a securities fraud scheme was not improperly denied a certificate of appealability (COA) after a federal district court denied his motion to vacate or set aside its verdict against him because reasonable jurists would not find the district court's assessment of the man's claim of ineffective appellate counsel to be debatable or wrong, a 10th Circuit U.S. Court of Appeals panel ruled June 5 in denying the man's COA (United States v. Brian W. McKye, No. 17-6207, 10th Cir., 2018 U.S. App. LEXIS 15049).
- 11th Circuit Panel Affirms Dismissal Of Rule 60(d)(1) Action Against SEC
ATLANTA - An 11th Circuit U.S. Court of Appeals panel on May 30 ruled that federal district court did not err in dismissing a pro se plaintiff's amended Federal Rule of Civil Procedure 60(d)(1) complaint against the Securities and Exchange Commission because the plaintiff failed to meet the necessary statutory guidelines filing the complaint (Allen B. Gottlieb v. Securities and Exchange Commission, No. 17-13138, 11th Cir., 2018 U.S. App. LEXIS 14493).
- TD Ameritrade Defendants Dismissed From Securities Class Action
PHILADELPHIA - An investor's unsuitability claim under Section 10(b) of the Securities Exchange Act of 1934 fails because the investor is unable to show that TD Ameritrade Inc. and two of its subsidiaries recommended or purchased securities for her that led to extensive losses on her investments, a federal judge in Pennsylvania ruled May 21 in granting a motion to dismiss (Marianne Antczak v. TD Ameritrade Clearing Inc., et al., No. 17-4947, E.D. Pa., 2018 U.S. Dist. LEXIS 84570).
- Dismissal Of Derivative Suit For Failure To Plead Demand Futility Upheld
SAN FRANCISCO - Shareholders in a derivative lawsuit against certain officers and directors of a solar panel manufacturer failed to plead demand futility, and a federal district court did not err in dismissing their complaint as a result, a Ninth Circuit U.S. Court of Appeals panel ruled June 13 (Clifford Tindall, et al. v. First Solar Inc., et al., No. 17-15185, 9th Cir., 2018 U.S. App. LEXIS 15837).
- Insider Trading Conviction Withstands Habeas Corpus Challenge
NEW YORK - Convicted hedge fund manager Raj Rajaratnam failed to properly raise an argument in support of a challenge of his convictions for insider trading based on Second Circuit precedent on direct appeal and is, thus, "procedurally barred from doing so on a collateral challenge" on a habeas corpus challenge, a Second Circuit U.S. Court of Appeals panel ruled June 1 (Raj Rajaratnam v. United States of America, Nos. 17-1405 and 17-1411, 2nd Cir., 2018 U.S. App. LEXIS 14812).
- Receiver Did Not Exceed Authority Related To Media Statement, 11th Circuit Holds
ATLANTA - The 11th Circuit U.S. Court of Appeals on May 24 affirmed a district court's decision dismissing claims for libel per se and loss of consortium, finding that it did not err in finding that a court-appointed receiver acted within the scope of his authority when he authorized an attorney to speak about whether a party to an underlying case knew about a Ponzi scheme being conducted by a company he controlled (Bruce C. Rosetto, et al. v. Charles Murphy, et al., No. 17-13279, 11th Cir.; 2018 US App LEXIS 13957).
- Judge: Investor's Amended Complaint Failed To Cure Pleading Deficiencies
NEW YORK - The lead plaintiff in a shareholder class action against pharmacy benefits manager (PBM) Express Scripts Holding Co. and certain of its executives failed to cure pleading deficiencies in its second amended complaint after its federal securities law claims had previously been dismissed for the same issues, a federal judge in New York ruled May 22 in granting the defendants' motion to dismiss (In re Express Scripts Holding Co. Securities Litigation, No. 16-3338, S.D. N.Y., 2018 U.S. Dist. LEXIS 85873).
- Lack Of Material Misstatements Leads To Dismissal Of Securities Suit
NEW YORK - A New York federal judge on June 4 ruled that lead plaintiffs in a securities class action lawsuit against a biopharmaceutical company and certain of its executive officers failed to plead that the defendants issued any material misrepresentations or omissions in promoting the efficacy of its Alzheimer's disease (AD) treatment drug in violation of federal securities laws (In re Neurotrope Securities Litigation, No. 17-3718, S.D. N.Y., 2018 U.S. Dist. LEXIS 93508).
- Judge: Company Did Not Mislead Investors About Internet Licensing Compliance
NEWARK, N.J. - In a June 7 unpublished opinion, a federal judge in New Jersey dismissed a third amended securities class action complaint, ruling that a lead plaintiff failed to show that a Chinese social media company and certain of its current and former senior executives issued any misrepresentations in the company's Securities and Exchange Commission filings concealing that the company was not in compliance with Chinese internet licensing laws (Andrew Goldsmith v. Weibo Corp., et al., No. 17-4728, D. N.J., 2018 U.S. Dist. LEXIS 95592).
- Judge: Falsity, Materiality Elements Of Securities Law Claims Properly Pleaded
NEW YORK - A federal judge in New York on June 12 ruled that a lead plaintiff in a securities class action lawsuit properly pleaded falsity and materiality in arguing that a drug maker and certain of its current and former executive officers concealed from investors that the company had overstated its revenues for 2015 in violation of federal securities law (In re Insys Therapeutics Inc. Securities Litigation, No. 17-1954, S.D. N.Y., 218 U.S. Dist. LEXIS 100000).
- Securities Fraud Claims Survive Attempts At Dismissal In Class Action
LOS ANGELES - In a June 7 order, a federal judge in California denied motions to dismiss in a securities class action lawsuit against social media company Snap Inc., certain of its senior executives and directors and underwriters of the company's initial public offering (IPO), ruling that shareholders properly pleaded a material misrepresentation or omission and scienter, as well as damages, in making their federal securities law claims (In re Snap Inc. Securities Litigation, No. 17-3679, C.D. Calif., 2018 U.S. Dist. LEXIS 97704).
- Settlement In Shareholder Derivative Lawsuit Fails To Gain Final Approval
NEW YORK - Reforms agreed to by an investor and several former outside directors of an on-land and offshore wind turbine tower manufacturer in a proposed shareholder derivative lawsuit settlement fail to provide any meaningful benefit to the company the investor or the company's shareholders, a federal magistrate judge in New York ruled May 17 in denying a motion for final approval of the settlement agreement (Alan Scott v. Benjamin Tianbing Wei, et al., No. 15-9691, S.D. N.Y., 2018 U.S. Dist. LEXIS 83645).
- Investor Found To Have Failed To Plead Securities Claims With Particularity
OAKLAND, Calif. - A federal judge in California on June 4 ruled that the lead plaintiff in a securities class action failed to plead any material misrepresentations or omissions or scienter in arguing that a clinical stage biopharmaceutical company and certain of its senior executives concealed from investors certain adverse events observed in a phase III clinical trial for the company's hepatitis B drug in violation of federal securities laws (In re Dynavax Securities Litigation, No. 16-6690, N.D. Calif., 2018 U.S. Dist. LEXIS 93831).
- Agency Tells High Court That Review Of Ruling In Securities Suit Not Needed
WASHINGTON, D.C. - U.S. Supreme Court review of a federal court's ruling that the Housing and Economic Recovery Act of 2008 (HERA) supersedes the statute of repose on certain state and federal securities laws is not necessary because the ruling is in line with similar rulings in every other federal circuit court to review the issue, the Federal Housing Finance Agency (FHFA) argues in a May 18 respondent's brief filed in the Supreme Court (David Findlay, et al. v. Federal Housing Finance Agency, No. 17-1300, and Nomura Securities International Inc. v. Federal Housing Finance Agency, No. 17-1302, U.S. Sup., 2018 U.S. S. Ct. Briefs LEXIS 1965).
- Panel Asked To Decide Whether SOX Whistleblower Evidence Was Properly Barred
SAN FRANCISCO - A plaintiff in a Sarbanes-Oxley Act (SOX) whistleblower lawsuit waived his challenge to a federal district court's ruling excluding certain evidence supporting his claim that he was improperly terminated under SOX's anti-retaliation provisions because he failed to properly address the court's legal reasoning for excluding the evidence in his opening brief on appeal, defendants argue in a June 4 appellee brief filed in the Ninth Circuit U.S. Court of Appeals (Gordon Scott Stroh v. Saturna Capital Corp., et al., No. 17-35607, 9th Cir.).
- Investor Sues To Halt Merger Deal Vote Until Company Provides Needed Information
SAN FRANCISCO - A shareholder on June 13 sued an investment adviser and its board of directors in California federal court, seeking to halt the company's proposed merger deal with a financial planning firm until information necessary for shareholders to vote on the proposed deal is disclosed (Jerry Rubenstein v. Financial Engines Inc., et al., No. 18-3542, N.D. Calif.).
- Biosciences Company Hit With Stock-Drop Suit Over Internal Controls Reporting
NEWARK, N.J. - An investor sued a biosciences company and certain of its senior officers and directors in New Jersey federal court on June 13, alleging that the defendants concealed certain weaknesses in the company's internal controls, allowing it to improperly recognize revenue in violation of federal securities laws (Tim Faulkner v. Akers Biosciences Inc., et al., No. 18-10521, D. N.J.).
- Shareholder Seeks To Enjoin Vote On Merger Of Fracking Proppant Companies
CLEVELAND - An individual shareholder in a company that produces proppants for hydraulic fracturing operations, which is planning to merge with another proppant producer, on May 18 filed a brief in Ohio federal court seeking an order enjoining the shareholder vote until the companies disclose information that he claims was omitted from documents filed with the Securities and Exchange Commission (Melvyn Klein v. Fairmount Santrol Holdings Inc., et al., No. 18-1186, N.D. Ohio).
- Stockholders Sue Financial Company's Directors For Breach Of Fiduciary Duty
WILMINGTON, Del. - Stockholders in a May 21 complaint filed in a Delaware court accuse the directors of a financial company operating in the insurance and reinsurance business of breaching their fiduciary duty by transferring the value of stocks to their benefit (Icahn Partners LP, et al. v. Barry D. Zyskind, et al., No. 2018-0358, Del. Chanc.).
- Stockholder Sues GE Over Losses Sustained For Insurance Reinsurance Business
NEW YORK - A stockholder sued General Electric Co. (GE) and its officers and directors in a New York federal court on May 17, alleging that their actions concerning their insurance and reinsurance business resulted in billions of dollars in damages to the company (Edward Tansey v. Jeffrey R. Immelt, et al., No. 18-04408, S.D. N.Y.).
- Stockholder: GE's Directors Mismanaged Reinsurance Of Long-Term Care Policies
NEW YORK - A stockholder filed a complaint on May 30 against directors and officers of General Electric Co. (GE), alleging that their actions forced GE to retain and reinsure the worst blocks of long-term care (LTC) insurance policies (Henry Zwang v. Jeffrey R. Immelt, et al., No. 18-04746, S.D. N.Y.).