LexisNexis® Legal Newsroom
Judge Preliminarily OKs Settlement Of Shareholder Case With Directors, Officers

DENVER - A shareholder and certain of a company's directors and officers on March 19 were granted preliminary approval of their settlement agreement by a Colorado federal judge, who found that the settlement was fair and adequate (Cathy E. Yost, individually and on behalf of all others similarly situated v. GeoResources, Inc., et al, No. 12-cv-01307, D. Colo.).

Panel: Former Shareholder Of Failed Bank's Stock Can't Collect On Award

WASHINGTON, D.C. - An investor who sold his shares in Meritor Savings Bank after the bank went into Federal Deposit Insurance Corp. receivership is not entitled to collect on a $276 million award in a derivative suit arising from the FDIC's alleged breach of an acquisition agreement with the bank, the Federal Circuit U.S. Court of Appeals found March 21, affirming an underlying ruling (Frank P. Slattery Jr., et al. v. Steven Roth, et al., Nos. 2012-5041, 2012-5068, Fed. Cir.).

Director And Officer Say Court Does Not Have Jurisdiction Over Suit

NEW YORK - A director and an officer of a banking corporation who were sued for negligent misrepresentation told a New York federal court on March 20, that the New York court does not have jurisdiction over a shareholder's suit against them (SBAV LP v. Porter Bancorp, Inc., et al., No. 13-cv-00372, S.D. N.Y.).

1st Circuit: AIG Must Cover Failed Bank Executives' Claims

BOSTON - The First Circuit U.S. Court of Appeals on March 20 ruled that AIG Insurance Co. - Puerto Rico (AIG) must pay attorney fees and costs incurred by the directors and officers of the failed Westernbank Puerto Rico in a $176 million coverage suit, upholding a district court's order (W Holding Company Inc., et al. v. AIG Insurance Co. - Puerto Rico, No. 12-2508, 1st Cir.).

Panel: Investor Failed To Plead Misrepresentation In Securities Lawsuit

NEW YORK - A federal judge in New York properly dismissed a shareholder's complaint against Merrill Lynch, Pierce, Fenner & Smith Inc. and others because the shareholder failed to plead a material misrepresentation or omission or market manipulation in making their federal and common-law securities claims, a Second Circuit U.S. Court of Appeals panel ruled March 19 (Cellular South Inc. v. Merrill Lynch, Pierce, Fenner & Smith Inc., No. 12-3640, 2nd Cir.).

Securities Class Action Settlements Reach 14-Year Low, Cornerstone Report Shows

BOSTON - Although 2012 saw the number of securities class action settlements reach a 14-year low, the total settlement dollars for the year increased by more than 100 percent over 2011, according to a report released March 20 by Cornerstone Research.

Freddie Mac Sues LIBOR Panel Banks And Others Over Losses

ALEXANDRIA, Va. - Member banks of the London Interbank Offered Rate (LIBOR) panel and certain of their subsidiaries violated federal antitrust laws by manipulating and suppressing the LIBOR, which caused Freddie Mac to sustain large investment losses, Freddie Mac argues in a complaint filed March 19 (The Federal Home Loan Mortgage Corp. v. Bank of America Corp., et al., No. 13-342, E.D. Va.).

Vice Chancellor Denies Director/Officer's Motion To Dismiss Shareholder Suit

WILMINGTON, Del. - A Delaware vice chancellor denied a company's president and sole director's motion to dismiss a shareholder's suit on March 18, holding that the claims in the instant case are not the same as the claims previously litigated in a New York lawsuit (Leilani Zutrau individually and on behalf of Ice Systems, Inc., v. John C. Jansing, No. 7457-VCP, Del. Chanc.; 2013 Del. Ch. LEXIS 71).

Indemnification Agreement Does Not Violate ERISA, California Federal Judge Rules

RIVERSIDE, Calif. - Employee Retirement Income Security Act Section 410(a) does not void an indemnification agreement between an employee stock ownership plan (ESOP) and its trustee where the agreement expressly prohibits indemnification if a court enters a final, nonappealable judgment finding the trustee liable for breach of fiduciary duties under ERISA, a federal court in California ruled March 15 in dismissing the U.S. Department of Labor's (DOL) claim (Seth D. Harris v. GreatBanc Trust Company, et al., No. EDCV12-1648, C.D. Calif.).

High Court Declines To Review Standing Ruling In Mortgage-Backed Securities Suit

WASHINGTON, D.C. - The U.S. Supreme Court on March 18 declined review of a Second Circuit U.S. Court of Appeals ruling that a pension fund has standing to assert claims for relief on behalf of mortgage-backed securities purchasers even though the pension fund lacks standing to assert the claims on its own behalf (Goldman, Sachs & Co., et al. v. NECA-IBEW Health & Welfare Fund, No. 12-528, U.S. Sup.).

Directors And Officers Say They Validly Exercised Business Judgment

WILMINGTON, Del. - A company and certain of its directors and officers told a Delaware court on March 13 that their decisions were not irrational and were a valid exercise of business judgment and that, therefore, a shareholder suit against them should be dismissed (In re Sirius XM Shareholder Litigation, No. 7800-CS, Del. Chanc.).

Senate Report: JPMorgan Concealed Losses To 'London Whale' Derivatives

WASHINGTON, D.C. - A U.S. Senate subcommittee on March 14 released an investigative report showing that financial giant JPMorgan Chase & Co. concealed material information regarding billions of dollars in losses sustained to a massive set of synthetic credit derivatives, known as the "London Whale" derivatives.

Judge Remands Suit Against Directors And Officers, Saying Removal Was Improper

NEW YORK - A federal judge in New York on March 11 granted a motion to remand a shareholder's suit against a company's directors and officers, finding that the removal of the case was improper under the forum defendant rule (Alexander Horbal v. J. Andrew Damico, et al., No. 12-cv-03213, S.D. N.Y.).

Proskauer, Chadbourne Get Stay In Stanford Ponzi Scheme Lawsuit

DALLAS - A federal judge in Texas on March 8 granted a joint stipulation to stay proceedings filed by the court-appointed receiver of convicted Ponzi schemer R. Allen Stanford's businesses and the Official Stanford Investors Committee, as well as two law firms and a former partner of the firms, ruling that the instant action would be stayed pending a judge's ruling in a related action (Ralph S. Janvey, et al. v. Proskauer Rose LLP, et al., No. 13-0477, N.D. Texas).

Shareholder Opposes Dismissal Of Lawsuit Against Directors And Officers

FORT LAUDERDALE, Fla. - A shareholder told a Florida federal court on March 6 that it sufficiently represents the interests of other shareholders in a suit against a company's directors and officers (Frederick Siegmund v. Xuelian Bian, et al., No. 12-cv-62539, S.D. Fla.).

Reconsideration Of Ruling Dismissing Securities Suit Not Proper, Judge Rules

NEW YORK - A federal judge in New York on March 4 denied lead plaintiffs' motion for reconsideration of his ruling dismissing a securities class action lawsuit for failure to plead scienter and loss causation, ruling that they have failed to show that reconsideration is warranted (In re CRM Holdings, Ltd. Securities Litigation, No. 10-0975, S.D. N.Y.; 2013 U.S. Dist. LEXIS 30116).

Judge: Defendants Would Suffer Prejudice If Stay Granted In Derivative Suit

NEW ORLEANS - A federal judge in Louisiana on March 5 denied an investors' motion to stay a shareholder derivative action against a company's officers and directors, ruling that "the factors do not weigh in favor of granting a stay" (Jonathan Strong v. Dean E. Taylor, et al., No. 11-392, E.D. La.; 2013 U.S. Dist. LEXIS 29234).

Judge: Whistle-Blower Will Be Given Chance To Plead His Claims

HARRISON, Ark. - A federal judge in Arkansas on March 5 refused to dismiss a motion to dismiss in a whistle-blower wrongful termination lawsuit, ruling that the former employee will be given an opportunity to show that his assistance in a Securities and Exchange Commission investigation into alleged federal securities law violations led to his employment termination (Bryan Hix v. FedEx Corp., et al., No. 12-3050, W.D. Ark.; 2013 U.S. Dist. LEXIS 29224).

MRV Directors Agree To $3M Settlement In Backdating Lawsuit

LOS ANGELES - Members of the board of directors of MRV Communications Inc. will pay $3 million to settle claims that they engaged in an illegal stock options backdating scheme, according to a motion for preliminary approval of settlement filed March 1 in California federal court (In re MRV Communications, Inc., No. CV 08-3800 GAF $(RCx$), C.D. Calif.).

Court Lacks Jurisdiction Over State Securities Law Claims, Judge Rules

WASHINGTON, D.C. - A federal judge in the District of Columbia on March 1 dismissed an investor's securities class action lawsuit, ruling that he lacked subject matter jurisdiction over the investor's state law claims (Kathryn Lynn Campbell v. American International Group Inc., No. 12-115, D. D.C.; 2013 U.S. Dist. LEXIS 28723).

Judge: Fraud-On-The- Market Presumption Of Reliance Properly Rebutted

NEW YORK - A defendant in a securities class action lawsuit has rebutted the fraud-on-the-market presumption of reliance, a federal judge in New York ruled Feb. 28 in dismissing the lawsuit (GAMCO Investors Inc. v. Vivendi, S.A., No. 03-5911; GAMCO Global Series Funds Inc., et al. v. Vivendi, S.A., No. 09-7962, S.D. N.Y.; 2013 U.S. Dist. LEXIS 28506).

Judge: There Is No Federal Jurisdiction In Suit Against Directors And Officers

WASHINGTON, D.C. - A federal judge in Washington on March 1 dismissed a shareholder's suit, noting that the parties do not have complete diversity and that the claims are all under state laws (Kathryn Lynn Campbell v. American International Group, Inc., et al., No. 12-cv-00115, D. D.C.).

Panel Partially Vacates District Court Ruling In Securities Suit

NEW YORK - A Second Circuit U.S. Court of Appeals panel on March 1 partially vacated and remanded a ruling that a lead plaintiff in a securities class action lawsuit failed to plead facts that would allow the court to draw a "reasonable inference" that a seller/sponsor of mortgage-backed securities certificates, certain of its officers and directors and underwriters of the certificates concealed their abandonment of underwriting standards in offering documents in violation of federal securities laws (New Jersey Carpenters Health Fund v. The Royal Bank of Scotland Group PLC, et al., No. 12-1707, 2nd Cir.; 2013 U.S. App. LEXIS 4317).

Chancellor: Breach Of Fiduciary Duty Claims Preempted By McWane Doctrine

WILMINGTON, Del. - Dismissal of breach of fiduciary duty claims filed by investors in a lawsuit against current and former officers and directors of a snack food manufacturer is proper because the claims are preempted by the McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co. doctrine, a Delaware Chancery Court chancellor ruled Feb. 28 (In re Diamond Foods Inc. Derivative Litigation, No. 7657-CS, Del. Chanc.; 2013 Dec. Ch. LEXIS 55).

Cornerstone Research Releases 2012 Merger And Acquisition Litigation Report

BOSTON - Shareholders challenged 93 percent of all merger and acquisition (M&A) transactions that were valued over $100 million and 96 percent of all transactions valued over $500 million in 2012, according to a report released by Cornerstone Research on Feb. 27.