LexisNexis® Legal Newsroom
2nd Circuit Overturns Portion Of Its Opinion In SEC Market Timing Suit

NEW YORK - A U.S. Supreme Court ruling affirmed only a portion of a federal district court's dismissal of claims in a Securities and Exchange Commission lawsuit against a portfolio manager and another man, a Second Circuit U.S. Court of Appeals panel ruled May 3 in affirming dismissal of the particular claims but declining to do so with regard to any other claims (Securities and Exchange Commission v. Marc J. Gabelli, et al., Nos. 10-3581, 10-3628 and 10-3760, 2nd Cir.; 2013 U.S. App. LEXIS 9128).

Shareholder: Business Judgment Rule Invalid In Directors', Officers' Defense

CHICAGO - The plaintiff in a shareholder derivative lawsuit told an Illinois federal court on May 2 that presuit demand upon a company's board of directors is excused because the business judgment rule does not apply to the granting of shares in excess to those allowed by the company's incentive plan (Jan Donnawell v. Daniel Hamburger, et al., No. 12-cv-09074, N.D. Ill.).

Judge Approves Revlon Directors' And Officers' Shareholder Suit Settlement

WILMINGTON, Del. - A federal judge in Delaware on April 30 approved a $400,000 settlement of a shareholder derivative lawsuit against directors and officers of Revlon Inc. (Richard Smutek, derivatively on behalf of Revlon Inc., v. Ronald O. Perelman, et al., No. 10-cv-00392, D. Del.).

Judge Trims Claims In Grocery Store Chain Securities Class Action

NEWARK, N.J. - A federal judge in New Jersey on April 30 trimmed federal securities law claims brought by lead plaintiffs in a securities class action lawsuit who allege that a grocery store chain and others misrepresented the company's business and financial condition in violation of federal securities law (Ricky Dudley v. Christian W.E. Haub, et al., No. 11-5196, D. N.J.; 2013 U.S. Dist. LEXIS 61386).

Panel Affirms Grant Of Class Certification In Securities Lawsuit

NEW ORLEANS - A federal district court did not err in granting class certification in a securities class action lawsuit because price impact evidence does not bear on the inquiry into whether common issues predominate under Federal Rule of Civil Procedure 23(b)(3), a Fifth Circuit U.S. Court of Appeals panel ruled April 30 (Erica John Fund, et al. v. Halliburton Co., et al., No. 12-1398, 5th Cir.).

Lead Plaintiffs Pleaded Scienter, Loss Causation In Securities Suit, Judge Rules

ST. LOUIS - Lead plaintiffs in a securities class action against a drug company and certain of its current and former executive officers have properly pleaded scienter and loss causation in making their federal securities law claims, a federal judge in Missouri ruled April 30 (Public Pension Fund Group, et al. v. KV Pharmaceutical Co., et al., No. No. 08-1859, E.D. Mo.; 2013 U.S. Dist. LEXIS 61361).

Judge Dismisses Securities Class Action Lawsuit With Prejudice

OAKLAND, Calif. - Lead plaintiffs and defendants in a securities class action accusing the defendants of misrepresenting an information technology company's business and financial condition in violation of federal securities law have agreed to proceed with the filing of a second amended complaint and dismiss the action with prejudice, according to court documents filed in California federal court on April 29 (In re Cisco Systems Inc. Securities Litigation, No. 11-1568, N.D. Calif.).

Wells Fargo Settles MedCap Ponzi Scheme Claims For $105 Million

SANTA ANA, Calif. - Wells Fargo Bank NA on April 30 agreed to pay $105 million to settle consolidated class action claims alleging that it breached its contract by giving noteholders' funds to Medical Capital Holdings Inc. (MedCap) as part of MedCap's alleged $1 billion Ponzi scheme (In Re: Medical Capital Securities Litigation $(Steven Masonek, et al. v. Wells Fargo Bank NA, No. 09-1048, Kenneth Bain, et al. v. Wells Fargo Bank, et al., No.10-0548, James L. Abbate, et al. v. Wells Fargo Bank, et al., No.10-6561$), No. 10-ml-2145, C.D. Calif.).

Shareholder Says Directors And Officers Breached Their Fiduciary Duties

WILMINGTON, Del. - A shareholder bringing a derivative lawsuit against certain directors and officers of a company over the directors' and officers' alleged violation of a shareholder-approved equity awards plan told a Delaware federal court on April 25 that he has adequately pleaded facts to support his claim that the directors and officers breached their fiduciary duties (Clark Leips, derivatively on behalf of Mindspeed Technologies, Inc., v. Raouf Y. Halim, et al., No. 13-cv-00015, D. Del.).

Report: Slight Increase In Securities Lawsuit Filings In First Quarter

NEW YORK - The number of securities and business litigation and enforcement lawsuits filed in the first quarter of 2013 increased slightly from the fourth quarter of 2012, but the numbers were still "significantly lower than the annual average of the previous four years," according to a quarterly report made available on April 30 by insurance analytics and research provider Advisen Ltd.

Vice Chancellor Denies Motion To Dismiss Shareholder Derivative Case

WILMINGTON, Del. - A Delaware vice chancellor denied a company's directors' and officers' motion to dismiss a shareholder derivative lawsuit on April 25, finding that the shareholder had pleaded particularized facts that raise a reasonable doubt that the directors and officers acted in good faith in failing to respond to the shareholder's demand that the board of directors investigate an alleged weaknesses in the corporation's internal controls (George Rich, Jr., Derivatively on Behalf of Fuqi International, Inc., v. Yu Kwai Chong, et al., No. 7616-VCG, Del. Chanc.; 2013 Del. Ch. LEXIS 106).

Judge Remands State's Lawsuit Against Standard & Poor's To State Court

HARTFORD, Conn. - A federal judge in Connecticut on April 24 granted the State of Connecticut's motion to remand a lawsuit alleging that a subsidiary of Standard & Poor's Financial Services LLC violated the state unfair trade practices law, ruling that the defendants' removal of the action to federal court was untimely (State of Connecticut v. The McGraw-Hill Companies Inc., et al., No. 13-311, D. Conn.; 2013 U.S. Dist. LEXIS 58528).

Lead Plaintiff Failed To Plead Recklessness In Securities Suit, Judge Rules

NEW YORK - A federal judge in New York on April 25 dismissed a lead plaintiff's second amended securities class action complaint against certain current and former executive officers of Eastman Kodak Co., ruling that the lead plaintiff failed to show recklessness on the part of the defendants in pleading scienter (Timothy A. Hutchinson v. Antonio M. Perez, et al., No. 12-1073, S.D. N.Y.).

DuPont Board Members Say Shareholder's Derivative Suit Should Be Dismissed

WILMINGTON, Del. - Directors and officers of E. I. du Pont de Nemours Co. told a Delaware federal court on April 23 that a shareholder has failed to adequately plead that presuit demand upon the company's board of directors would have been futile (Robert Zomolosky, derivatively on behalf of E.I. Du Pont De Nemours and Company v. Ellen Kullman, et al., No. 13-cv-00094, D. Del.).

News Corp. Directors And Officers Settle Shareholder Dispute For $139 Million

WILMINGTON, Del. - Parties to a shareholder derivative suit against directors and officers of News Corp. informed a Delaware vice chancellor on April 22 that they had reached a $139 million settlement of their dispute (In re News Corporation Shareholder Derivative Litigation, No. 6285-VCN, Del. Chanc.).

Judge: Lead Plaintiffs Failed To Plead Federal Securities Law Claims

MIAMI - Lead plaintiffs in a securities class action lawsuit against a cruise line and several of its executive officers have failed to plead any of their federal securities law claims relating to the defendants' alleged issuance of false and misleading statements regarding the company's business and financial condition, a federal judge in Florida ruled April 19 (In re Royal Caribbean Cruises Ltd. Securities Litigation, No. 11-22855, S.D. Fla.).

2nd Circuit: Court Erred In Denying Remand To State Court In Securities Suit

NEW YORK - A federal district court erred in denying American International Group Inc.'s motion to remand a complaint filed against Bank of America Corp., certain of its subsidiaries and others under provisions of the Edge Act, a Second Circuit U.S. Court of Appeals panel ruled April 19 (American International Group Inc., et al. v. Bank of America Corp., et al., No. 12-1640, 2nd Cir.).

Directors, Officers Rely On Business Judgment Rule Against Shareholder Complaint

CHICAGO - Directors and officers of a company claimed in an Illinois federal court on April 19 that they are protected from a shareholder's allegations under the business judgment rule (Frank Jeffers v. Retail Properties of America, Inc., et al., No. 12-cv-08522, N.D. Ill.).

Judge: Shareholders Failed To Plead Any Of Their Federal Securities Law Claims

SAN FRANCISCO - Shareholders in a securities class action have failed to plead any of their federal securities law claims in connection with a biotechnology company's alleged issuance of misrepresentations regarding the development of a DNA sequencing system, a federal judge in California ruled April 15 (Thomas J. Primo, et al. v. Pacific Bionsciences of California Inc., et al., No. 11-6599, N.D. Calif.; 2013 U.S. Dist. LEXIS 53643).

Fifth Third Agrees To Pay $16M To Settle Federal Securities Law Claims

CINCINNATI - Fifth Third Bancorp and a number of other defendants agreed to pay $16 million to settle claims that Fifth Third misrepresented its involvement in the subprime securities market in violation of federal securities laws, according to documents filed April 16 in Ohio federal court (The Eshe Fund v. Fifth Third Bancorp, No. 08-0421, S.D. Ohio).

Countrywide Reaches $500M Settlement In Mortgage-Backed Securities Class Actions

LOS ANGELES - Countrywide Financial Corp. will pay $500 million to shareholders in three related securities class action lawsuits to settle claims that it misrepresented the investment quality of mortgage-backed securities (MBS) in what is being called the largest-ever MBS class action recovery under the Securities Act of 1933, according to a press release issued by class counsel on April17 (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.).

Shareholder: N.Y. Federal Court Holds Jurisdiction Over Director And Officer

NEW YORK - An investor told a New York federal court on April 10 that numerous reasons exist as to why the New York federal court has jurisdiction over a bank, one of its directors and one of its officers regarding a shareholder lawsuit (SBAV LP v. Porter Bancorp, Inc., et al., No. 13-cv-00372, S.D. N.Y.).

Judge Dismisses FDIC's Securities Claims Against Countrywide As Time-Barred

LOS ANGELES - Dismissal of federal securities law claims brought by the Federal Deposit Insurance Corp., as receiver for a failed bank, against Countrywide Securities Corp., certain of its subsidiaries and others is proper because the FDIC's claims are time-barred, a federal judge in California ruled April 8 (In re Countrywide Financial Corp. Mortgage-Backed Securities Litigation, No. 11-ML-2265, $(Federal Deposit Insurance Corp., as Receiver for Colonial Bank, v. Countrywide Securities Corp., et al., No. 12-6911$), C.D. Calif.).

Pension Plan Failed To Plead Scienter In Securities Class Action, Judge Rules

OKLAHOMA CITY - A pension plan failed to plead scienter in arguing that the nation's second largest natural gas producer and certain of its current and former officers and directors misrepresented the company's business and financial condition in violation of federal securities law, a federal judge in Oklahoma ruled April 10 in dismissing the pension plan's amended complaint (Dvora Weinstein, et al. v. Aubrey K. McClendon, et al., No. 12-465, W.D. Okla.).

Vice Chancellor OKs Settlement Of Shareholder Suit Against Directors, Officers

WILMINGTON, Del. - A vice chancellor in a Delaware court gave final approval to the settlement of a shareholder lawsuit on April 10, finding that it was fair and adequate (In re Gen-Probe Inc. Shareholders Litigation, No. 7495-VCL, Del. Chanc.).