Magistrate Refuses To Allow Early Discovery In Directors, Officers Coverage Suit

SIOUX CITY, Iowa - An Iowa federal magistrate judge on July 11 denied a motion by the Federal Deposit Insurance Corp., as receiver of an insured bank, for early discovery in a directors and officers coverage dispute (Progressive Casualty Insurance Company v. Federal Deposit Insurance Corporation, et al.,  No. C12-4041-DEO, N.D. Iowa, Western Div.; 2012 U.S. Dist. LEXIS 96337).

Panel: Claims On Behalf Of Company Ended With Bankruptcy Filing

NEW YORK - A Second Circuit U.S. Court of Appeals panel, in an unpublished opinion issued July 12, affirmed a lower court decision and found that an investment fund could not bring derivative claims against a company's directors and officers (In re: Ambac Financial Group, Incorporated, No. 11-4643, 2nd Cir.; 2012 U.S. App. LEXIS 14229).

Judge: Triable Issues Exist In Suit Against Former Citigroup Employee

NEW YORK - A federal judge in New York on July 9 denied a former Citigroup Global Markets Inc. employee's motion for summary judgment on claims that he misrepresented the investment quality of certain collateralized debt obligations (CDOs) he structured and marketed for Citigroup in violation of federal securities laws (United States Securities and Exchange Commission v. Brian Stoker, No. 11-7388, S.D. N.Y.).

Panel: GE Shareholder Did Not Show That Company Directors Were Self Interested

NEW YORK - In an unpublished opinion issued July 9, a Second Circuit U.S. Court of Appeals panel affirmed a lower court dismissal of a shareholder derivative suit, holding that the shareholder failed to show that presuit demand on General Electric Co.'s board would have been futile (Albert Stein, Derivatively o/b/o Nominal Defendant General Electric v. Jeffrey R. Immelt, et al.,  No 11-2236, 2nd Cir.; 2012 U.S. App. LEXIS 13888).

Directors And Officers Say Suit Fails Because Of Failure To Show Demand Futility

CINCINNATI - Directors and officers of a company argue in an July 10 brief in Ohio federal court that a shareholder failed to show that presuit demand would have been futile because he did not show particularized facts that at least half of the company's board of directors faced a substantial likelihood of liability for their alleged inaction to put certain corporate governance policies in place (Henry Stanley, derivatively on behalf of Cardinal Health, Inc, v. Colleen F. Arnold, et al., No. 12-cv-00482, S.D. Ohio). Subscribers may view the brief available within the full article.

Directors And Officers Claim Shareholders Failed To Cure Complaint Defects

OAKLAND, Calif. - Google Inc. and certain of its directors and officers argued in a California federal court on July 6 that an amended shareholder derivative complaint should be dismissed because the shareholders allegedly failed to cure defects from an earlier version of the complaint (In re Google Inc. Shareholder Derivative Litigation, No. 11-cv-4248, N.D. Calif.). Subscribers may view the brief in support of motion to dismiss available within the full article.

Judge Lifts Stay In Stanford-Related JPMDL Against Proskauer Rose, Others

DALLAS - A federal judge in Texas on July 3 partially lifted a stay in five class action lawsuits against two law firms and others accused of assisting convicted Ponzi scheme mastermind R. Allen Stanford in his fraud (Michael Gale, et al. v. Proskauer Rose LLP, et al., No. 12-1803; Consuelo Ibarra, et al. v. Proskauer Rose LLP, et al., No. 12-1805; Pam Reed, et al. v. Proskauer Rose LLP, et al., No. 12-1806; Miguel Green, et al. v. Proskauer Rose LLP, et al., No. 12-1808; Juan F. Martin, et al. v. Proskauer Rose LLP, et al., No. 12-1809, N.D. Texas). Subscribers may view the order available within the full article.

Judge Refuses To Grant SEC's Application For SIPC Liquidation Proceedings

WASHINGTON, D.C. - In an issue of first impression, a federal judge in Washington on July 3 refused to grant an application by the Securities and Exchange Commission to compel the Securities Investor Protection Corp. (SIPC) to file an application for a protective decree compelling the SIPC to commence liquidation proceedings on behalf of victims of R. Allen Stanford's massive Ponzi scheme, ruling that the SEC's interpretation of the Securities Investor Protection Act (SIPA) 15 U.S.C.S. § 78aaa , is too broad (Securities and Exchange Commission v. Securities Investor Protection Corp., No. 11-678, D.C. Dist.).

Judge: Washington's Long-Arm Statute Gives Court Rule Over Shareholder Suit

TACOMA, Wash. - A federal judge in Washington on July 3 denied a motion to dismiss and found that a Washington corporation can bring a derivative shareholder suit against a Spanish company and its directors and officers (Enterprises International, Inc. v. Pasaban, S.A., et al., No. 11-cv-05919, W.D. Wash.; 2012 U.S. Dist. LEXIS 92205). Subscribers may view the decision available within the full article.

Judge Dismisses Shareholder Suit For Failure To Prove Presuit Demand Futility

NEW ORLEANS - A federal judge in Louisiana dismissed a shareholder's derivative lawsuit on July 2, finding that the shareholder failed to plead with particularity why presuit demand on the company's board of directors would have been futile (Jonathan Strong, derivatively on behalf of Tidewater Inc. v. Dean E. Taylor, et al., No. 11-cv-00392, E.D. La.; 2012 U.S. Dist. LEXIS 91097).

Parties Agree To $25M Settlement In Securities Suit

BOSTON - Defendants in a securities class action lawsuit agreed June 29 to a $25 million settlement of claims that they concealed an investment fund's exposure to the subprime mortgage lending crisis (In re Evergreen Ultra Short Opportunities Fund Securities Litigation, No. 08-11064, D. Mass.). Subscribers may view the stipulation of settlement available within the full update.

Peter Madoff Pleads Guilty To Role In Ponzi Scheme, Faces 10 Years In Prison

NEW YORK - The brother of convicted Ponzi scheme mastermind Bernard L. Madoff pleaded guilty to aiding in Madoff's massive Ponzi scheme, according to a press release issued June 29 by U.S. Attorney for the Southern District of New York Preet Bharara (USA v. Peter Madoff, No. 10-cr-0228, S.D. N.Y.).

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Shareholders Ask Court To Approve $49M Settlement With Directors And Officers

WILMINGTON, Del. - Shareholders of a corporation asked the Delaware Chancery Court on June 29 to approve a $49 million settlement with the corporation's directors and officers in a shareholder lawsuit over the corporation's merger with another company (In Re Delphi Financial Group Shareholders Litigation, No. 7144-VCG, Del. Chanc.).

Panel Says Shareholders Do Not Have Standing To Sue Corporate Officers

COLUMBIA, S.C. - A South Carolina appellate panel affirmed a lower court decision on June 27, finding that shareholders in Wachovia Corp. could not state direct claims against Wachovia officers because their loss in stock value was not separate and distinct from other Wachovia shareholders (Deborah Rice-Marko, et al. v. Wachovia Corporation, et al., No. 2010-171446, S.C. App.; 2012 S.C. App. LEXIS 174).

Panel Affirms Dismissal Of Securities Suit Over Bank Of America Settlement

NEW YORK - A New York justice properly dismissed a securities lawsuit seeking to intervene in Bank of America's $8.5 billion settlement over Countrywide Home Loans Inc.'s sale of subprime residential mortgage-backed securities because the pooling and servicing agreement for the securities bars the plaintiffs from bringing the action, a state appeals court panel ruled June 28 (Walnut Place LLC, et al. v. Countrywide Home Loans Inc., et al., No. 650497/2011, N.Y. Sup., App. Div., 1st Dept.). Subscribers may view the order available within the full article.

Former IndyMac CEO Settles Securities Class Action Claims For $5.5M

LOS ANGELES - The former chief executive officer of IndyMac Financial Inc. agreed on June 25 to a $5.5 million settlement with shareholders in a securities class action lawsuit brought against the bankrupt financial giant and certain of its former officers and directors for alleged violations of federal securities laws (Sven Mossberg, et al. v. IndyMac Financial, Inc., et al., No. 07-1635, C.D. Calif.). Subscribers may view the stipulation of settlement available within the full article.

Vice Chancellor Says Shareholder Could Not Show That Directors Were Interested

WILMINGTON, Del. - A Delaware Chancery Court vice chancellor dismissed in part a shareholder's derivative suit on June 29, holding that the shareholder failed to show that presuit demand would have been futile (Frank David Seinfeld v. Donald W. Slager, et al., No. 6462-VCG, Del. Chanc.).

Judge: Shareholder Did Not Prove That Directors And Officers Acted In Bad Faith

NEW YORK - A federal judge in New York on June 26 issued a final judgment granting directors and officers of Sirius XM Radio Inc. summary judgment in a shareholder derivative lawsuit (Robert Michael Shenk, Derivatively on behalf of Sirius XM Radio Inc. v. Melvin Alan Karmazin, No. 11-cv-02943, S.D. N.Y.; 2012 U.S. Dist. LEXIS 88367).

Judge: Summary Judgment Not Proper Under Morrison In Securities Lawsuit

NEW YORK - The U.S. Securities and Exchange Commission has properly pleaded its claims against ICP Asset Management LLC and several others, a federal judge in New York ruled in denying the defendants' motion for partial summary judgment in an opinion made available on June 22 (Securities and Exchange Commission v. ICP Asset Management LLC, et al., No. 10-4791, S.D. N.Y.; 2012 U.S. Dist. LEXIS 86561).

Judge: Lead Plaintiffs Failed To Plead Scienter In Securities Class Action

PHOENIX - Lead plaintiffs in a securities class action lawsuit against a for-profit education company and several of its senior management team members have failed to plead scienter or loss causation in making claims that the defendants misrepresented the business and financial condition of the company, a federal judge in Arizona ruled June 22 in dismissing (In re Apollo Group, Inc. Securities Litigation, No. 10-1735, D. Ariz.). Subscribers may view details of the decision available within the full article.

$410M Settlement Reached With Controller Of 4 Madoff Feeder Funds

NEW YORK - In what he called "one of the largest agreements of its kind," New York Attorney General Eric T. Schneiderman on June 25 announced that he had reached a $410 million settlement with J. Ezra Merkin for his role in the Bernard L. Madoff Investment Securities LLC Ponzi scheme (The People of the State of New York v. J. Ezra Merkin, et al., No. 450879/2009, N.Y. Sup., New York Co.).

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Judge Won't Lift Discovery Stay In Securities Class Action Against MGM Mirage

LAS VEGAS - A federal magistrate judge in Nevada on June 21 denied lead plaintiffs' motion to lift a discovery stay in a securities class action lawsuit against MGM Mirage and certain of its former executive officers, ruling that a lifting of the stay is unwarranted (In re MGM Mirage Securities Litigation, No. 09-1558, D. Nev.; 2012 U.S. Dist. LEXIS 85862).

Indiana Panel Says Shareholder Failed To Show Presuit Demand Was Futile

INDIANAPOLIS - An Indiana Court of Appeals panel affirmed a lower court's dismissal of a shareholder derivative lawsuit on June 22, holding that a shareholder had failed to allege particularized facts showing that certain directors of a company faced a substantial likelihood of liability for their alleged breaches of fiduciary duties (William T. Carter, derivatively on behalf of CNO Financial Group, Inc., v. R. Glenn Hilliard, et al. No. 49A02-1106-PL-582, Ind. App.; 2012 Ind. App. LEXIS 294).

High Court Won't Hear Challenge Of Madoff Trustee's Net Equity Investment Method

WASHINGTON, D.C. - The U.S. Supreme Court on June 25 decided not to hear two separate but related appeals of a Second Circuit U.S. Court of Appeals ruling that the method used by the liquidation trustee of Bernard L. Madoff Investment Securities LLC (BLMIS) to determine net equity for individual claimants is proper (Theresa Rose Ryan, et al. v. Irving H. Picard, et al., No. 11-969; Lawrence R. Velvel, et al. v. Irving H. Picard, et al., No. 11-986, U.S. Sup.). See related prior history IN RE: BERNARD L. MADOFF INVESTMENT SECURITIES LLC, 2011 U.S. App. LEXIS 16884.

Judge Grants Final Approval Of Securities Settlement With IMAX, Others

NEW YORK - A federal judge in New York on June 20 granted final approval of a class action settlement with IMAX Corp., certain of its current and former officers and directors and its auditor, ruling that the settlement has met all statutory requirements for approval (In re IMAX Corp. Securities Litigation, No. 06-6128, S.D. N.Y.; 2012 U.S. Dist. LEXIS 86513).