Tag Archives: Securities

Judge Failla Again Dismisses Securities Fraud Case Over Food-Borne Illness Outbreaks at Chipotle

In a detailed 74-page opinion yesterday, Judge Failla dismissed a securities fraud complaint against Chipotle arising from its alleged failure to properly disclose to investors various matters relating to the food-borne illness outbreaks that caused its stock to drop.  She had dismissed an earlier version of the complaint last year, as we covered here. Judge … Continue Reading

Second Circuit Affirms Judge Forrest’s Dismissal of “Flash Boys” Suit

In an opinion Friday, the Second Circuit affirmed Judge Forrest’s dismissal of a complaint (see our prior coverage here) accusing stock exchanges of improperly allowing high-frequency traders to pay to obtain and trade on market data faster than other investors — the conduct at issue in the Michael Lewis book “Flash Boys.”  The Second Circuit agreed that … Continue Reading

Second Circuit Rules That District Court Should Have Limited, But Not Excluded Entirely, Damages Expert Testimony in Pfizer Securities Class Action

The Second Circuit today held, in a shareholder class action accusing Pfizer of concealing the cardiovascular risks of two drugs, that Judge Swain should not have excluded entirely the testimony of the plaintiffs’ damages expert — a decision which had effectively ended the case (see our prior posts here and here).  The Second Circuit agreed with Judge … Continue Reading

Judge Rakoff Dismisses 10(b) Claims Against PwC for Alleged Petrobras Bribery Scheme, But Allows Section 11 Claims to Proceed Despite Omnicare

Last week, Judge Rakoff granted Pricewaterhouse Coopers’ motion to dismiss Section 10(b) claims brought as part of the ongoing class action over an alleged bribery and kickback scheme at Brazilian oil giant Petrobras.  PwC’s Brazilian member firm had served as Petrobras’ independent auditor.  PwC argued that the fourth amended complaint had failed to properly allege scienter, and … Continue Reading

Judge Oetken Denies Motion to Dismiss Securities Case Accusing Och-Ziff of Incomplete Statements Regarding Government Investigations

In an opinion today, Judge Oetken allowed portions of securities class action against the asset management firm Och-Ziff Capital Management to proceed past a motion to dismiss.  Och-Ziff had said in a series of public filings: “We are not currently subject to any pending regulatory, administrative or arbitration proceedings that we expect to have a … Continue Reading

Judge Koeltl: Movie Studio Had No Duty to Disclose “Wells” Notices Regarding Control Fight With Carl Icahn

In an opinion Friday, Judge Koeltl dismissed a shareholder class action against the movie studio Lions Gate.  The case concerned how the company disclosed an SEC enforcement action over how Lions Gate handled various transactions designed to ward off efforts by investor Carl Icahn for control.  The SEC action was ultimately settled for $7.5 million, and the … Continue Reading

MDL Investor Class Certified in Facebook IPO Actions

This week, Judge Sweet granted the motion for class certification as part of the ongoing multi-district litigation over Facebook’s alleged negligent misstatements or omissions surrounding its 2012 IPO.  Central to the litigation are calls made by Facebook’s treasurer to underwriter analysts to revise revenue projections downward, and the extent that this information spread through the investment community … Continue Reading

JPML Transfers Antitrust Cases Alleging Bank Manipulation of Treasuries Markets to Judge Gardephe

Last week, the Judicial Panel on Multidistrict Litigation transferred 25 actions pending in three districts to Judge Gardephe as part of a MDL concerning Treasury securities.  According to the Order, the actions all allege that “over 20 defendant banks conspired to manipulate Treasury securities auctions overseen by Federal Reserve Bank of New York, as well as the market … Continue Reading

SDNY Blog Returns as Steptoe Blog

The SDNY Blog is relaunching as a publication of Steptoe & Johnson LLP.  We expect to post several times a week on decisions and other developments in the Southern District of New York.  You can find us right here at www.sdnyblog.com, or follow us on Twitter or Facebook. Here’s a quick summary of what’s been happening in the Southern … Continue Reading

Judge Engelmayer: Lawyers Using Confidential Witnesses in Complaints Should Confirm Their Testimony and Warn of Risks of Being Outed

In an opinion today allowing a securities class action to be dismissed without prejudice, Judge Engelmayer expressed concern about the lawyers using confidential witnesses in complaint without confirming the accuracy of the statements attributed to them or warning the witnesses that their identity might have to be revealed. On the first point, the complaint’s 11 … Continue Reading

Judge Forrest: “Flash Boys” Suit Against Exchanges is Preempted by Federal Law

In an opinion Tuesday, Judge Forrest dismissed various class action suits accusing stock exchanges of improperly allowing high-frequency traders to pay to obtain and trade on market data faster than other investors.  The plaintiffs subscribed to market data via subscriber contracts that, in turn, incorporated the terms of standardized market data dissemination “plans.”  Those plans, which … Continue Reading

Judge Scheindlin Allows Class Action Over Barclays “Dark Pool” to Proceed

In an opinion Friday, Judge Scheindlin largely denied Barclays’ motion to dismiss a securities fraud class action alleging that Barclays misled investors about its anonymous trading platform, or “dark pool,” referred to as “LX.”  At the outset, Judge Scheindlin found it appropriate for the plaintiffs to have borrowed substantially from the New York Attorney General’s … Continue Reading

Judge Swain, Based on “Implicit” Overruling of Second Circuit, Rules 3-Year Limit to Sue Over False Securities Offerings Is Not Subject to “Extender” Law

In an opinion today, Judge Swain ruled Section 13 of the Securities Act, which states that no action may be brought “more than three years after the security was bona fide offered to the public” was not extended by the so-called “FDIC Extender Provision” of the Financial Institutions Reform, Recovery, and Enforcement Act (or “FIRREA”) … Continue Reading

Judge Engelmayer Rejects Class Certification Premised on Extra Shares Being “Secretly” Available and Depressing Price

In an opinion today in a securities fraud case, Judge Engelmayer denied a class certification motion that was based on a somewhat novel theory:  the plaintiffs allege that insiders of a company called SmartHeat publicly touted a “lockup” restricting their ability to sell shares, but then secretly “unlocked” those shares, thereby causing extra shares to … Continue Reading

Judge Scheindlin: Auditors’ Failure to Investigate Tax Preparer’s Opinions is Not Fraud

In an opinion last week, Judge Scheindlin denied the plaintiffs in a securities class action leave to amend their complaint to assert securities fraud claims against the company’s auditors, PriceWaterhouseCoopers and Ernst & Young. The proposed amendment would have alleged that PwC and E&Y took at face value the erroneous opinion of a third party … Continue Reading

Judge Gardephe Dismisses Class Action Accusing Avon of Hiding FCPA Exposure

In an opinion today, Judge Gardephe dismissed a securities class action accusing Avon of defrauding its investors about its compliance with the FCPA.  Avon’s management received a whistleblower letter about bribes to Chinese officials, and Judge Gardephe found that it was not fraudulent for Avon to investigate the allegations before disclosing them:… Continue Reading

Judge Castel Rules 10(b) Claims Are Limited to Buyers and Sellers, Even in Injunction Cases

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 … Continue Reading

Judge Swain Dismisses GM “Channel Stuffing” Securities Class Action

In an opinion yesterday, Judge Swain dismissed a securities class action accusing GM of “channel stuffing” — forcing excess inventory onto dealers to create the appearance of improving revenue — because the inventory at dealerships was fully disclosed: The fundamental flaw of Lead Plaintiff’s thesis is that is own Amended Complaint reflects public knowledge of … Continue Reading

Judge Forrest Grants Summary Judgment to Auditors in Case of Missing Subsidiary

In an opinion today, Judge Forrest granted summary judgment to two affiliated accounting firms in a securities fraud suit arising from what Judge Forrest described as an accounting firm’s “worst nightmare”: An accounting firm’s worst nightmare might be to wake up one morning and discover that the company that one of its teams had audited … Continue Reading

Judge Swain Stays Securities Class Action Pending Supreme Court Challenge to Fraud-on-The-Market Presumption

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 … Continue Reading

Judge Stanton Dismisses Suit Challenging Bank Loans to Alleged “Pyramid Scheme” Herbalife

In an Order today, Judge Stanton dismissed a suit brought by an investor who shorted Herbalife stock and who accused Bank of America, JP Morgan and Wells Fargo of lending money to support Herbalife’s “pyramid scheme,” thereby “preventing Herbalife from collapsing” and rendering his short position worthless: To sustain his claim [the plaintiff] must argue … Continue Reading

Judge Forrest Rejects Securities Class Action Settlement Because “Settlement Class” Failed Certification Standards

In an opinion yesterday, Judge Forrest rejected a proposed securities class action settlement in which the settlement class was defined identically to a class that she had earlier ruled could not be certified. The earlier certification denial was based in part on the plaintiffs’ failure to show class-wide reliance under the “fraud-on-the-market” presumption. The parties … Continue Reading

Judge Sweet Denies Facebook’s Motion to Dismiss Federal Securities Claims

In an opinion filed last week but just posted to the ECF docket this morning, Judge Sweet denied the motion of Facebook and its underwriter banks to dismiss federal securities claims arising from the May 2012 Facebook IPO.  Noting specifically that the complaint does not allege securities fraud, Judge Sweet permitted the class action complaint of … Continue Reading
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