In an opinion dated yesterday, Judge Castel dismissed a suit challenging the proposed merger between a Chilean bank (Itau) and a Brazlian bank (CorpBanca) because the plaintiff, Cartica, was not a “purchaser” or “seller” in relation to the alleged fraud.  It was merely a stockholder. In doing so, he took one side of an issue that has divided the lower courts:
Continue Reading Judge Castel Rules 10(b) Claims Are Limited to Buyers and Sellers, Even in Injunction Cases

Thomson Reuters today moved to dismiss a whistleblower complaint from a former employee who claimed that he was fired for complaining internally, and to the FBI, that the company’s selective release of certain survey data constituted insider trading. The motion argues that the Dodd-Frank whistleblower protections apply only to those who raise complaints with the SEC, and relies heavily on a recent Fifth Circuit’s recent, Asadi, holding as much.  Prior to Asadi, Judges Furman and Sand had found that internal reporting would suffice (see our prior post on Judge Furman’s ruling here), but Thomson Reuters’s motion asks that the judge in its case, Judge Scheindlin, follow Asadi instead. The definition of “whistleblower” under Dodd-Frank is limited to those who report to the SEC, but there is a separate provision, 15 U.S.C. § 78u-6(h)(1)(A)(iii), prohibiting retaliation for a broader category of conduct.  Judges Furman and Sand found that this provision was in tension with the “whistleblower” definition, but Thomson Reuters argues that that the two provisions could be harmonized:

Continue Reading Thomson Reuters’s Dismissal Motion Argues that Dodd-Frank Covers Only Whistleblowers Reporting to SEC

On Monday, Judge Scheindlin dismissed securities fraud claims brought by a putative class of investors in Optimal, an investment fund that invested 100% of its assets with Bernie Madoff and his firm. On March 6, Judge Scheindlin had issued an Order to Show Cause why the plaintiffs’ securities law claims should not be dismissed in light of the Second Circuit’s decision in <emAbsolute Activist Value Master Fund, Ltd. v. Ficeto, which clarified the scope of extraterritorial application of the Exchange Act after the Supreme Court’s decision in Morrison v. National Australia Bank. In briefing, the plaintiffs argued not that their investments in Optimal took place in the U.S., but instead that their purchases of shares in the fund were “‘in connection with the purchase or sale of a security listed on an American stock exchange’ –namely, Madoff’s purported trades on the New York Stock Exchange.” The plaintiffs sought to rely on the “broad interpretation generally given to the phrase ‘in connection with’” by courts.
Continue Reading Judge Scheindlin Throws Out Madoff-Related Securities Fraud Case Under Morrison