LexisNexis® Legal Newsroom
Shareholders Say Presuit Demand On Company's Board Would Have Been Futile

CHICAGO - Shareholders that brought a shareholder derivative lawsuit against certain of a company's directors and officers told a federal court in Illinois on Dec. 16 that the circumstances of the directors' and officers' conduct show that presuit demand upon the company's board of directors would have been futile (Robert J. Casey, et al. v. Christopher B. Begley, et al., No. 11-cv-09074, N.D. Ill.).

SEC Announces $131.8 Million Settlement With Merrill Lynch

WASHINGTON, D.C. - The Securities and Exchange Commission on Dec. 12 announced that Merrill Lynch, Pierce, Fenner & Smith Inc. has agreed to pay $131.8 million to settle claims that it made "faulty disclosures about collateral selection for two collateralized debt obligations (CDOs) that it structured and marketed to investors, and [maintained] inaccurate books and records for a third CDO" in violation of federal securities laws (In the Matter of Merrill Lynch, Pierce, Fenner & Smith Inc., No. 3-15642, SEC).

Judge Dismisses Fraud Claims Against Bank Of America, Former CEO

NEW YORK - A federal judge in New York on Dec. 11 ruled that dismissal of a securities class action lawsuit against Bank of America Corp. (BofA) and its former CEO is proper because shareholders' state-law claims regarding BofA's acquisition of Merrill Lynch & Co. Inc. are precluded by the Securities Litigation Uniform Standards Act (SLUSA) (In re Bank of America Corp. Securities, Derivative and ERISA Litigation, No. 09-2058; [Melgen, et al. v. Bank of America Corp., et al., No. 12-5210], S.D. N.Y.).

U.S. Bancorp To Pay $53M To Settle Repurchase Obligations With Freddie Mac

MINNEAPOLIS - U.S. Bancorp will pay $53 million in cash to Freddie Mac as part of an agreement between the parties to resolve "substantially all repurchase obligations related to representations and warranties made on loans sold to Freddie Mac between 2000 and 2008," the bank announced Dec. 10 in a press release.

Judge Dismisses Shareholder Derivative Suit Without Leave To Amend

SAN FRANCISCO - A federal judge in California dismissed a shareholder derivative suit against Wells Fargo & Co. on Dec. 6 because the shareholder failed to show that presuit demand upon the company's board of directors would have been futile (Richard Gulbrandsen, Derivatively on Behalf of Wells Fargo & Company v. John G. Stumpf, et al., No. 12-cv-05968, N.D. Calif.; 2013 U.S. Dist. LEXIS 172471).

Shareholder Accuses Directors And Officers Of Insider Trading

BOSTON - A company's shareholder told a Massachusetts federal court on Dec. 6 that certain of the company's directors and officers had breached their fiduciary duty to the company by selling stock in the company using inside information (Arkady Livitz v. Harvey J. Berger, et al., No. 13-cv-13097, D. Mass.).

Shareholder Sues Directors And Officers Of Chinese Coal Company

SEATTLE - A shareholder in a Chinese coal energy company told a federal court in Washington state on Dec. 9 that the company's directors and officers have made false and misleading statements about the company's holdings and its alleged revenues (Jay Finkelstein v. Dickson V. Lee, et al., No. 13-cv-2197, W.D. Wash.).

Judge Signs Off On $153M Securities Settlement With Fannie Mae, KPMG

WASHINGTON, D.C. - A federal judge in the District of Columbia on Friday granted final approval of a $153 million securities class action settlement between investors and Fannie Mae and KPMG LLP, ruling that the terms of the settlement and the plan of allocation meet all statutory requirements (In re: Fannie Mae Securities Litigation, No. 04-01639, D. D.C.).

Final Approval Of $500M Countrywide Securities Settlement Granted

LOS ANGELES - A federal judge in California on Dec. 6 granted final approval of a record-setting $500 million securities class action settlement in three related actions against Countrywide Financial Corp. for misrepresenting the investment quality of mortgage-backed securities (MBS) it offered to investors (David H. Luther v. Countrywide Financial Corp., No. 12-5125; Western Conference of Teamsters Pension Plan v. Countrywide Financial Corp., No. 12-5122; and Maine State Retirement System v. Countrywide Financial Corp., No. 10-0302, C.D. Calif.).

Lead Plaintiff, Lead Counsel Appointed In Securities Class Action

WASHINGTON, D.C. - A federal judge in the District of Columbia on Dec. 4 appointed a shareholder as lead plaintiff in a securities class action lawsuit against a pharmaceutical company and certain of its senior officers, ruling that the shareholder has met all requirements to serve in the role (Jeff Small v. Vanda Pharmaceuticals Inc., et al., No. 13-955, D. D.C.; Tuan Hoang v. Vanda Pharmaceuticals Inc., et al., No. 13-1028, D. D.C.; 2013 U.S. Dist. LEXIS 170836).

Judge Denies Partial Summary Judgment In SEC Enforcement Action

SAN FRANCISCO - A federal judge in California on Dec. 3 denied the Securities and Exchange Commission's motion for partial summary judgment in a securities enforcement action against the sponsors of pooled investment funds, ruling that a triable issue of material fact exists as to the each of the SEC's claims that are part of the motion (Securities and Exchange Commission v. Frank Mazzola, et al., No. 12-1258, N.D. Calif.; 2013 U.S. Dist. LEXIS 170427).

Judge Won't Dismiss Securities Claims Against Mining Company, Officers

SEATTLE - A lead plaintiff in a securities class action lawsuit against a mining company and certain of its current and former executive officers has properly pleaded falsity and scienter in making his federal securities law claims, a federal judge in Washington ruled Dec. 2 in denying the defendants' motion to dismiss (In re L&L Energy Inc. Securities Litigation, No. 11-1423, W.D. Wash.).

Bank Of America To Pay Freddie Mac $404M Over Sale Of Subprime Mortgage Loans

CHARLOTTE, N.C. - Bank of America Corp. announced on Dec. 2 that it has reached an agreement with Freddie Mac to pay $404 million "to resolve all remaining representations and warranties claims for residential mortgage loans sold to Freddie Mac through the end of 2009."

Federal Judge Approves Settlement Of Receiver's Claims Against Law Firm

TAMPA, Fla. - A federal judge in Florida on Nov. 26 approved an agreement that calls for law firm Band Weintraub to pay almost $1 million to settle allegations that it helped others evade a settlement with the receiver appointed in a suit arising from Arthur Nadel's $168 million Ponzi scheme (Securities and Exchange Commission v. Arthur Nadel, et al., No. 09-0087, M.D. Fla.).

Judge Trims Claims In Mortgage-Backed Securities Put-Back Action

NEW YORK - A New York state court judge on Nov. 25 granted in part and denied in part a defendant's motion to dismiss a breach of contract lawsuit accusing the defendant of misrepresenting the investment quality of certain mortgage-backed securities (MBS) it securitized and sold, ruling that an investment trust cannot seek reimbursement for loans that were compliant (ACE Securities Corp., Home Equity Loan Trust, Series 2007-HE1, by HSBC Bank USA, National Association, as Trustee, v. DB Structured Products Inc., No. 650327/2013, N.Y. Sup., New York Co.).

Shareholder Asks Court To Give Final Approval To Settlement Of Derivative Suit

NEW YORK - A shareholder told a New York federal court on Nov. 22 that the agreed-upon settlement of a shareholder derivative suit against a company's directors and officers provides a substantial benefit to the company and warrants final approval (Carl Braun v. Zhiguo Fu, et al., No. 11-cv-4383, S.D. N.Y.).

Judge: Shareholders Did Not Show Directors, Officers Breached Fiduciary Duties

CHICAGO - A federal judge in Illinois dismissed a shareholder suit against a company and certain of its directors and officers on Nov. 18, holding that the directors' and officers' actions did not amount to a breach of their fiduciary duty (James Becker, et al. v. Inland American Real Estate Trust, Inc., et al., No. 13-cv-03128, N.D. Ill.; 2013 U.S. Dist. LEXIS 163878).

Directors And Officers Ask Court To Dismiss Suit On Jurisdictional Grounds

DENVER - Certain of a company's directors and officers told a Colorado federal court on Nov. 15 that the court lacks jurisdiction over a shareholder derivative lawsuit because the shareholder has failed, among other things, to prove that there is diversity of citizenship between the parties (Yidam, Ltd. v. Anil Diwan, et al., No. 13-cv-01777, D. Colo.).

2nd Circuit Denies Rehearing In Rajaratnam Insider Trading Case

NEW YORK - Without providing further detail, the Second Circuit U.S. Court of Appeals on Nov. 18 denied a petition for rehearing and/or rehearing en banc, which was filed by former Galleon Group head and convicted inside trader Raj Rajaratnam (United States of America v. Raj Rajaratnam, No. 11-4416, 2nd Cir.).

High Court To Hear Appeal In Securities Suit Challenging Basic Ruling

WASHINGTON, D.C. - The U.S. Supreme Court on Nov. 15 agreed to hear an appeal of a securities class action lawsuit seeking determination of whether the Supreme Court's ruling in Basic Inc. v. Levinson should be modified with regard to its presumption of reliance coming from the fraud-on-the-market theory (Halliburton Co., et al. v. Erica F. John Fund Inc., No. 13-317 U.S. Sup.).

JPMorgan Offers $4.5 Billion Settlement To Mortgage-Backed Securities Trustees

NEW YORK - JPMorgan Chase & Co. will issue a binding offer to the trustees of 330 residential mortgage-backed securities (RMBS) trusts that were issued by J.P. Morgan Chase and Bear Stearns, after reaching a $4.5 billion agreement with 21 institutional investors, according to a JPMorgan press release issued on Nov. 15.

Judge Ends Shareholder Suit Because Shareholder Did Not Show Director Interest

WILMINGTON, Del. - A federal judge in Delaware on Nov. 13 dismissed a shareholder derivative suit against certain of a company's directors and officers, because the shareholder failed to prove that the defendants were financially interested in the outcome of a proxy vote (Ruth Abrams v. James L. Wainscott, et al., No. 11-cv-00297, D. Del.; 2013 U.S. Dist. LEXIS 161556).

Judge Allows Most Of Government's Affirmative Defenses In AIG Takeover Suit

WASHINGTON, D.C. - A District of Columbia federal judge on Nov. 8 granted in part and denied in part a plaintiff's motion to strike affirmative defenses in a lawsuit challenging the U.S. government's takeover of American International Group Inc. (AIG), ruling that the government may make all of its affirmative defenses but its laches defense (Starr International Co. v. The United States, No. 11-779C, Fed. Clms.).

Judge Orders Fund Manager To Pay $7.8M In SEC Securities Fraud Lawsuit

SAN JOSE, Calif. - A federal judge in California on Nov. 6 ordered a fund manager to pay nearly $7.8 million in disgorgement, prejudgment interest and civil penalties for misrepresenting the investment activity of three funds he was managing in violation of the anti-fraud provisions of the federal securities laws (Securities and Exchange Commission v. Small Business Capital Corp., et al., No. 12-3237, N.D. Calif.; 2013 U.S. Dist. LEXIS 159227).

Judge Grants Summary Judgment In Insider Trading Lawsuit

NEWARK, N.J. - Summary judgment against a former employee of Autodesk Inc. who is alleged to have provided inside information to a hedge fund manager as part of an insider trading scheme is warranted because the employee's relationship with the hedge fund manager demonstrates a "personal benefit to the tipper," a federal judge in New Jersey ruled Nov. 6 (Securities and Exchange Commission v. Clay Capital Management LLC, et al., No. 11-5020, D. N.J.; 2013 U.S. Dist. LEXIS 159130).