Archives: Securities

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Judge Engelmayer Sees Conspiracies

Judge Engelmayer’s opinion in In Re Interest Rate Swaps Antitrust Litigation dissects one of the most interesting questions in anti-trust law—when does an anti-trust complaint fail because a plaintiff only alleges parallel conduct by companies acting in their own self-interest, as opposed to a conspiracy or agreement between them to act in concert. “The crucial question…is … Continue Reading

Judge Sullivan Teaches Apple a Lesson

Activist investor David Einhorn’s hedge fund, Greenlight Capital, withdrew the highly publicized case it brought against Apple alleging that the tech giant tried to ram through a proposal in its annual proxy by “bundling” it with other less controversial proposals. But not before Judge Sullivan gave Greenlight a nice win, and left some important precedents … Continue Reading

Judge Scheindlin Keeps Rating Agencies on the Hot Seat (Update on DOJ Filing)

Judge Scheindlin continues to define the law for rating agencies, finding that they don’t have immunity from fraud claims on the ground that their ratings are merely their own opinions, not statements of fact. That’s pretty significant for lawsuits arising out of the subprime mortgage meltdown. Here’s how she nicely sums up the essence of … Continue Reading

Judge Netburn on PLSRA and Prejudice

The Private Litigation Securities Reform Act of 1995 was passed (over Bill Clinton’s veto) in order to limit frivolous federal securities fraud lawsuits. The Act established strict pleading requirements, and, in order to reduce the costs of litigation, barred discovery during the pendency of a motion to dismiss, which is the routine first line of … Continue Reading

Judge Forrest on “Fabulous Fab” and Securities Fraud

In SEC v. Tourre, Judge Forrest rejected the SEC’s motion to reconsider part of its complaint against Fabrice Tourre, the thirty-something Goldman executive involved in selling subprime mortgage securities to Goldman clients. In an e-mail, Tourre unfortunately referred to himself as ‘Fabulous Fab’ for standing tall while the subprime mortgage market collapsed – a moniker that … Continue Reading

Judge Kaplan on Gaming Machines and Forward Looking Statements

Judge Kaplan recently reminded the Plaintiffs’ bar that there’s room for a company to be publicly optimistic about its prospects without violating the securities laws, even when it turns out that its optimism is misplaced. As Judge Kaplan shows, rosy expectations are quite different from fraud. In Prime Mover Capital Partners v. Elixir Gaming, Judge Kaplan dismissed all but two … Continue Reading

Judge Batts on Madoff Feeder Funds

Judge Batts’ opinion in In Re Kingate Securities Litigation shows how difficult it can be to bring a class action alleging state law claims– even against an off-shore Madoff “feeder fund” that lost $3 billion of its investors’ money.  The funds in question were pass through vehicles which gave investors the “opportunity” to invest with Madoff.  Because they were off-shore, the funds investors … Continue Reading

Judge Sweet On Bear Stearns’ Meltdown

Judge Sweet’s 400 page decision in In re Bear Stearns Companies, Inc. takes us through the collapse of Bear Stearns from three perspectives: a Securities Fraud Complaint against Bear and its accountants, a Derivative Complaint brought by former Bear shareholders who became shareholders of JP Morgan Chase when it acquired Bear in May 30, 2008, and an ERISA … Continue Reading

Judge Crotty Dismisses Negligence Based Securities Claims Against Barclays Despite Losses of £30 Billion

Several of our posts (here, here and here) have discussed the challenges in asserting fraud claims under Section 10(b) of the 1934 Securities Exchange Act.  But, it’s not easy to bring negligence and strict liability claims under Section 11 and 12(a)(2) of the 1933 Securities Act either, as Judge Crotty points out in a clear and crisp opinion … Continue Reading

Judge Baer Dismisses $2 Billion Securities Fraud Claim by U.S. Funds as Extra-Territorial

It is not easy to plead a viable federal securities fraud claim, what with the requirements of the Private Securities Litigation Reform Act, the Supreme Court’s tightening of Rule 8 pleading standards, and the ever more muscular application of the particularity requirements of Rule 9(b).  Now Judge Baer has further upped the ante in Elliott Associates … Continue Reading

Judge Berman on Pleading Securities Fraud

Judge Berman’s cogent opinion in Cayvest Global Mandate Inc., v. Lewis Asset Management Corp (PDF),10 Civ. 695 (S.D.N.Y.) demonstrates the high hurdles a plaintiff faces in making out a securities fraud claim under the Private Securities Litigation Reform Act of 1995 (PSLRA). Plaintiff Cayvest invested $1.9 million in the Defendants’ fund.  Cayvest was told by … Continue Reading

Judge Preska on Auction Rate Securities and Loss Causation

Judge Preska’s opinion in In re Merrill Lynch Auction Rate Securities Litigation, 2010 U.S. Dist. LEXIS 126076 (Nov. 30, 2010 S.D.N.Y.), has an interesting discussion of loss causation under the federal securities laws.  The Louisiana state agency that owns the Superdome (“Superdome”) hired Merrill for debt refinancing advice in 2005.  Merrill advised the Superdome to issue a form … Continue Reading

Judge Stein and Citigroup’s Subprime Meltdown

Judge Stein’s opinion in In re Citigroup Securities Litigation.pdf, 2010 WL 4484650 (S.D.N.Y. November 9, 2010), is key reading for those who want to understand the “gallimaufry of financial instruments” at the heart of Wall Street’s subprime mortgage meltdown.  The financial instruments explained by Judge Stein are: Subprime and Alt-A Mortgages, Residential Mortgage Backed Securities, … Continue Reading