Securities

Subscribe to Securities

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 Failla ruled (among other things) that generalized statements in Chipotle’s filings about its commitment to food safety could not be the basis for fraud:…
Continue Reading Judge Failla Again Dismisses Securities Fraud Case Over Food-Borne Illness Outbreaks at Chipotle

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…

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 Judge Rakoff agreed, noting that “mere receipt of compensation and the maintenance of a profitable professional business relationship for auditing services does not constitute a sufficient motive for purposes of pleading scienter.”  Plaintiffs also failed to allege any facts connecting PwC’s auditing services to “red flags” of fraud at Petrobras.
…
Continue Reading Judge Rakoff Dismisses 10(b) Claims Against PwC for Alleged Petrobras Bribery Scheme, But Allows Section 11 Claims to Proceed Despite Omnicare

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 material impact on our results of operations or financial condition.”  In an amended 10-K following a Wall Street Journal story, however, the company admitted that the DOJ and SEC had been investigating potential FCPA violations and that an “adverse outcome could have a material effect on our business, financial condition or results of operations.”

Judge Oetken concluded that these facts amounted to a “plausible” claim of securities fraud because the company chose to speak on the subject of government investigations, but did so in an incomplete and inaccurate manner:…
Continue Reading Judge Oetken Denies Motion to Dismiss Securities Case Accusing Och-Ziff of Incomplete Statements Regarding Government Investigations

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 plaintiffs alleged that the company should have disclosed the SEC investigation when it received “Wells” notices. Judge Koeltl disagreed:…
Continue Reading Judge Koeltl: Movie Studio Had No Duty to Disclose “Wells” Notices Regarding Control Fight With Carl Icahn

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 prior to the IPO.  Judge Sweet certified a class of all persons who purchased Facebook stock during or traceable to the IPO on May 17, 2012, with two subclasses for institutional and individual/retail investors.
…
Continue Reading MDL Investor Class Certified in Facebook IPO Actions

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…

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 District while we were away:

  • Judge Berman vacated the NFL’s four-game suspension of New England Patriots quarterback Tom Brady for his alleged role in deflating footballs used during the 2015 AFC Championship Game.  Judge Berman concluded that “Brady had no notice that he could receive a four-game suspension for general awareness of ball deflation by others or participation in any scheme to deflate footballs, and non-cooperation with the ensuing Investigation.”

…
Continue Reading SDNY Blog Returns as Steptoe Blog

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 confidential witnesses were not given the chance to confirm the statements attributed to them and at least four believed they were misquoted or misleadingly quoted.  This risk of error, Judge Engelmayer concluded, counsels in favor of better diligence before filing a complaint. On the second point, Judge Engelmayer concluded that it was a matter of “decency” to alert confidential witnesses that their identities might eventually be revealed:…
Continue Reading Judge Engelmayer: Lawyers Using Confidential Witnesses in Complaints Should Confirm Their Testimony and Warn of Risks of Being Outed