In a one-page Order Wednesday, Judge Swain stayed a securities class action accusing AIG of concealing its exposure to subprime securities pending a ruling from the Supreme Court in Halliburton Co. v. Erica P. John Fund, Inc., a case challenging the presumption of classwide reliance on the price of securities that are traded in efficient markets. The Halliburton case is scheduled for argument in March and a ruling is expected by July. The lead plaintiff argued that other courts have rejected stays pending the Halliburton ruling, but the defendants responded that, unlike in those other cases, fact discovery was already complete. The defendants also argued that Halliburton is a potential “game changer” for securities litigation:
Continue Reading Judge Swain Stays Securities Class Action Pending Supreme Court Challenge to Fraud-on-The-Market Presumption

Judge Swain yesterday granted a motion for judgment on the pleadings in favor of PricewaterhouseCoopers and certain other defendants with respect to certain Securities Act claims in a class action relating to AIG’s subprime exposure.   The complaint alleged that certain accounting statements in offering documents were false, but expressly disclaimed that they were fraudulently made – presumably to avoid having to plead fraud with particularity.  Under the Securities Act, false statements in offering materials can be actionable even without fraudulent intent. After the complaint was filed, the Second Circuit decided  Fait v. Regions Financial, which held that plaintiffs challenging statements of opinion in offering materials must plead and prove that the speaker subjectively disbelieved the claims to recover under the Securities Act.  Judge Swain’s ruling was largely based on Fait.  She concluded that the accounting statements were opinions within the ambit of Fait and also concluded that disputes concerning accounting standards could be decided on the pleadings:
Continue Reading Judge Swain Dismisses Securities Act Claims Against PwC, Citing Recent “Subjective Falsity” Standard From Second Circuit