The U.S. Supreme Court recently agreed to hear an appeal of a Ninth Circuit decision that could have a significant impact on future securities fraud claims nationwide. At issue is how heavy a burden plaintiffs will bear in...more
As discussed in our September 1, 2021 post, the SEC brought its first “shadow insider trading” case against Matthew Panuwat, a company employee who purchased options in a competitor’s shares shortly after learning his...more
6/14/2024
/ Confidential Information ,
Corporate Governance ,
Criminal Convictions ,
Criminal Prosecution ,
Enforcement Actions ,
Insider Trading ,
Material Nonpublic Information ,
Materiality ,
Misappropriation ,
Publicly-Traded Companies ,
Risk Mitigation ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
The U.S. Supreme Court has now resolved the split in lower courts, discussed in our March 14, 2024 post, over whether plaintiffs may bring a securities fraud claim based solely on a corporation’s omission from public filings...more
4/17/2024
/ Corporate Issuers ,
Disclosure Requirements ,
False Statements ,
Item 303 ,
Macquarie Infrastructure Corp v Moab Partners LP ,
Misleading Statements ,
Omissions ,
Regulation S-K ,
Rule 10b-5 ,
SCOTUS ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act of 1934 ,
Securities Violations
Corporate executives know they must disclose in their companies’ financial statements trends or uncertainties affecting their business. Such disclosure is a requirement of Item 303 of SEC Regulation S-K....more
3/19/2024
/ C-Suite Executives ,
Corporate Governance ,
Disclosure Requirements ,
Enforcement Actions ,
Failure To Disclose ,
Material Misrepresentation ,
MD&A Statements ,
Misrepresentation ,
Publicly-Traded Companies ,
Regulation S-K ,
Rule 10b-5 ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation ,
Securities Regulation ,
Shareholder Litigation ,
Split of Authority
When corporate executives discuss important company news in SEC filings or on stock-analyst conference calls, they know their words will be scrutinized by listeners and the broader market. Misstatements could give rise to...more
10/9/2023
/ Annual Reports ,
Class Action ,
Class Certification ,
Conflicts of Interest ,
Corporate Counsel ,
Department of Justice (DOJ) ,
Disclosure Requirements ,
Form 10-K ,
Goldman Sachs ,
Material Misstatements ,
Materiality ,
Securities Litigation ,
Stock Prices
Amidst all the controversy and legal proceedings involving Elon Musk, one could overlook the fact that he and his company Tesla are on trial now in U.S. District Court for securities fraud. Yet they are: a jury has been...more
It has now been 20 years since the historic collapse of WorldCom, Inc. (“WorldCom” or the “Company”). A review of the WorldCom collapse yields some continuing lessons for corporate counsel....more
7/26/2022
/ Attorney-Client Privilege ,
Board of Directors ,
Corporate Management ,
Fiduciary Duty ,
Internal Controls ,
Privileged Communication ,
Risk Management ,
Shareholder Approval ,
Stock Trades ,
WorldCom ,
Written Consent
A recent Delaware Chancery Court decision highlights the liability risks faced by directors and sponsors of special purpose acquisition companies (“SPACs”) and the importance of robust disclosure in protecting against those...more
1/25/2022
/ Board of Directors ,
Breach of Duty ,
Business Judgment Rule ,
Corporate Governance ,
Mergers ,
Personal Liability ,
Public Disclosure ,
Risk Management ,
Shareholder Litigation ,
Shareholders ,
Special Purpose Acquisition Companies (SPACs) ,
Sponsors
With the Delta variant surge, many companies have delayed plans for a return to in-person board and committee meetings. The go-to alternative, in many cases, will be a return to video conferences, which worked well in the...more
9/30/2021
/ Attorney-Client Privilege ,
Board Meetings ,
Board of Directors ,
Confidential Business Information (CBI) ,
Consent ,
Coronavirus/COVID-19 ,
Corporate Governance ,
Data Privacy ,
Evidence ,
Privacy Concerns ,
Risk Management ,
Videoconference ,
Virtual Meetings
The SEC’s filing of its first shadow trading case earlier this month signals the agency’s willingness to pursue actions based on expanded theories of insider trading liability.
In a federal court complaint, the SEC on...more
In a closely followed case concerning class certification in securities fraud class actions, the U. S. Supreme Court has held that the generic nature of a company’s statements should be considered in determining whether such...more
6/28/2021
/ Arkansas Teacher Retirement System v Goldman Sachs Group ,
Basic v Levinson ,
Burden of Persuasion ,
Burden of Proof ,
Certiorari ,
Class Action ,
Class Certification ,
Conflicts of Interest ,
Goldman Sachs ,
Investors ,
Presumption of Reliance ,
SCOTUS ,
Securities Exchange Act ,
Securities Litigation ,
Shareholders
Special purpose acquisition companies (“SPACs”), it seems, are everywhere. SPACs have been around for decades, but use of a SPAC to take a company public without a traditional initial public offering (“IPO”) has recently...more
The National Defense Authorization Act (“NDAA”) became law on January 1, 2021 after Congress overrode a presidential veto of the legislation. While the NDAA appropriates funds for defense-related activities and the...more
In its first enforcement action against a public company for misleading disclosures regarding COVID-19’s business impact, the SEC released a December 4 Order Instituting Proceedings against The Cheesecake Factory Inc. and...more
A recent decision by the U.S. Court of Appeals for the Second Circuit shows how an investor’s entering into a confidentiality agreement with an issuer of securities may support insider trading charges against the...more
Liu v. Securities and Exchange Commission, the U.S. Supreme Court decision this week affirming the SEC’s right to seek disgorgement, displayed a striking consensus on the securities regulatory agency’s ability to seek...more
6/26/2020
/ 15 U.S.C. § 78u(d)(5) ,
Administrative Authority ,
Business Expenses ,
Calculation of Damages ,
Corporate Misconduct ,
Disgorgement ,
Enforcement Actions ,
Equitable Relief ,
Kokesh v SEC ,
Lack of Authority ,
Liu v Securities and Exchange Commission ,
Net Profits ,
Remedies ,
SCOTUS ,
Securities and Exchange Commission (SEC)
Federal, state and local law enforcement and consumer protection agencies have been issuing alerts and investigating cases regarding efforts by fraudsters to exploit the coronavirus crisis for profit. The SEC is taking...more
In the last two years, plaintiffs’ lawyers have increasingly been bringing lawsuits under the Securities Act of 1933 (“Securities Act”), such as claims relating to public offerings, in state rather than federal court. ...more
In the last two years, plaintiffs’ lawyers have increasingly been bringing lawsuits under the Securities Act of 1933 (“Securities Act”), such as claims relating to public offerings, in state rather than federal court....more
A decision last week from the U.S. District Court for the Southern District of New York illustrates the broad reach of prosecutors and regulators in pursuing recipients of insider trading tips, despite the case-law...more
12/14/2018
/ Appeals ,
Breach of Duty ,
Dirks v SEC ,
Embezzlement ,
Fraud ,
Illegal Tipping ,
Insider Trading ,
Judge Rakoff ,
Motion to Dismiss ,
Personal Benefit ,
Rule 10b-5 ,
Securities Act of 1933 ,
Securities Fraud ,
US v Newman ,
US v Salman
The U.S. Supreme Court yesterday rejected the Securities and Exchange Commission’s longtime method of appointing administrative law judges (ALJs) to hear actions brought by its enforcement division. In Lucia v. Securities and...more
6/22/2018
/ Administrative Law Judge (ALJ) ,
Administrative Proceedings ,
Appeals ,
Appointments Clause ,
Constitutional Challenges ,
Enforcement Actions ,
Final Written Decisions ,
Lucia v SEC ,
Officers of the United States ,
Remand ,
Reversal ,
SCOTUS ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Special Trial Judges (STJs)
Stock traders who thought they could trade freely on gifts of inside information so long as the givers were not their close friends should rethink their strategy. The U.S. Court of Appeals for the Second Circuit this week...more
The Supreme Court yesterday agreed to consider whether the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) precludes state court jurisdiction in actions that solely allege violations under the Securities Act of...more
A five-year statute of limitations applies to actions by the Securities and Exchange Commission for disgorgement, the U.S. Supreme Court ruled today. The decision imposes a significant new limit on the SEC’s ability to seek...more
In a case with important consequences for SEC enforcement, the U.S. Supreme Court has agreed to address whether a five-year statute of limitations applies to SEC actions seeking disgorgement of ill-gotten gains.
Courts...more