Securities Litigation

Does Newman Apply to Misappropriation Theory Insider-Trading Cases?

February 23, 2015
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The Second Circuit’s groundbreaking decision in United States v. Newman, No. 13-1837 (2d Cir. Dec. 10, 2014) is already having an impact on insider-trading prosecutions. On January 22, 2015, a judge in the Southern District of New York held that the Second Circuit’s landmark decision also applies to insider-trading cases brought under the “misappropriation” theory […]

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Second Circuit Holds Item 303 Duty to Disclose Can Form Basis of Securities Fraud Suit

February 9, 2015
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In Stratte-McClure v. Morgan Stanley, 2015 WL 136312 (2d Cir. Jan. 12, 2015), the Second Circuit Court of Appeals held that the omission of information required to be disclosed under Item 303 of Regulation S‐K (“Item 303ʺ) can serve as the basis for a securities fraud claim under Section 10(b) of the Securities Exchange Act […]

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SEC Announces 2015 Exam Priorities

February 6, 2015
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The Securities and Exchange Commission (“SEC”) recently announced its examination priorities for the upcoming year. The report highlights areas of risk that the agency’s Office of Compliance Inspections and Examinations (“OCIE”) will target when examining registered firms. The SEC’s 2015 exam priorities should be required reading for investment advisers, broker-dealers, and transfer agents. As noted […]

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NY District Court Rules Internal Tipsters Not “Whistleblowers” Under Dodd-Frank

January 27, 2015
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The federal courts continue to struggle with the definition of a Dodd Frank “whistleblower.” In Berman v. Neo@Ogilvy, No. 14-cv-523, a judge in the Southern District of New York ruled that the statute’s anti-retaliation provisions do not protect employees who report internally. The ruling conforms to the Fifth Circuit’s holding in Asadi v. G.E. Energy (USA), […]

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Ninth Circuit Weighs In on Pleading Standard for Securities Fraud Claims

January 26, 2015
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The Ninth Circuit Court of Appeals recently addressed the pleading standard that applies to the loss causation element of a securities fraud claim. In Oregon Pub. Emp. Ret. Fund v. Apollo Group Inc., 2014 WL 7139634 (9th Cir. Dec. 16, 2014), the Ninth Circuit agreed with the Fourth, Seventh, and Second Circuits in ruling that […]

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Delaware Supreme Court Holds Court of Chancery Can Limit Use of Books and Records Information

January 23, 2015
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The Supreme Court of Delaware recently held that the state’s Court of Chancery could restrict the forums in which shareholders can use information obtained in a books and records inspection pursuant to Section 220 of the Delaware General Corporation Law. The case is United Technologies Corp. v. Treppel, No. 127, 2014 (Del. Dec. 23, 2014). […]

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NY Appeals Court Rules Business Judgment Rule Applies in Going Private Transactions

January 16, 2015
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The New York Appellate Division for the First Department recently held that the business judgment rule should be applied to a minority shareholder lawsuit challenging the terms of a going private transaction. The case is In re Kenneth Cole Productions, Inc. Shareholder Litigation, Index No. 650571/12 (N.Y. App. Div. 1st Dep’t Nov. 20, 2014). The Facts of […]

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FINRA Reminds Firms to Avoid Stifling Whistleblowers in Settlement Agreements

January 15, 2015
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The Financial Industry Regulatory Authority (“FINRA”) recently issued Regulatory Notice 14-40, which cautions firms against using confidentiality provisions in settlement agreements to deter whistleblowers.  As highlighted in the notice, FINRA rules expressly prohibit settlement agreements that include confidentiality provisions restricting a customer or any other person from communicating with regulatory authorities such as FINRA or […]

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SEC’s Use of Administrative Proceedings Under Fire

January 14, 2015
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The Securities and Exchange Commission (“SEC”) is increasingly turning to administrative proceedings rather than the federal courts to prosecute enforcement actions. The practice has not only drawn intense criticism, but also is being challenged in court. Over the past several decades, Congress has expanded the SEC’s authority to bring enforcement actions through administrative proceedings rather […]

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Second Circuit Decision Raises the Bar for Insider Trading Prosecutions

December 22, 2014
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The Second Circuit Court of Appeals recently overturned the insider-trading convictions of two New York hedge fund traders. The court’s groundbreaking decision in United States v. Newman, No. 13-1837 (2d Cir. Dec. 10, 2014) will make it more difficult for prosecutors to impose criminal liability on tippees who are not aware that insiders had disclosed […]

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