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New York Law Journal

Federal Jurisdiction Over State Securities Claims

In their Corporate and Securities Litigation column, Margaret A. Dale and Mark D. Harris, write: In Merrill Lynch v. Manning, the Supreme Court affirmed a Third Circuit decision holding that the test for federal jurisdiction under the exclusive jurisdiction provision of the Securities Exchange Act of 1934 is the same as for "arising under" jurisdiction under 28 U.S.C. §1331, the general federal-jurisdiction statute. The court was not asked to apply §1331, however, and so it left open the question of whether and when a state-law claim may "arise under" federal law.
11 minute read

The Legal Intelligencer

Defendants Look for Broader Interpretation of 'Halliburton II'

This month marks the two-year anniversary of the U.S. Supreme Court's seminal securities class action decision, Halliburton v. Erica P. John Fund (Halliburton II), 134 S. Ct. 2398 (2014), which allows defendants to rebut—at the class certification stage—the fraud-on-the-market presumption of reliance permitted under Basic v. Levinson, 485 U.S. 224 (1988). According to Halliburton II, defendants may rebut the Basic presumption by showing that their alleged misrepresentations had no impact on the defendant company's stock price. Notably, the court held that defendants may show lack of price impact with appropriate evidence that either "the asserted misrepresentation (or its correction) did not affect the market price of the defendant's stock." Reiterating its decision in Basic, the court explained that "'any showing that severs the link between the alleged misrepresentation and ... the price received (or paid) by the plaintiff ... will be sufficient to rebut the presumption of reliance.'"
10 minute read

New York Law Journal

New Fraud Conspiracy Charge Lodged Against Shkreli, Greebel

Ex-pharmaceutical executive Martin Shkreli and attorney Evan Greebel pleaded not guilty on Monday to an additional criminal charge related to an alleged scheme to defraud investors.
4 minute read

New York Law Journal

Elements of Fraud Absent, Panel Says in Dismissing $70M Suit

Dismissal of a fraud suit brought by a prominent private equity fund against stockholders of an Israeli company was warranted, as the complaint failed to satisfy any of the three components of a fraud claim, an appellate court ruled.
12 minute read

New York Law Journal

Greenberg Loses Another Round in State High Court

The state may legally pursue the disgorgement of bonuses it claims were fraudulently received by former American International Group CEO Maurice "Hank" Greenberg just before financial difficulties at the insurance and financial services giant came to light in the 2000s.
20 minute read

New York Law Journal

Circuit Rebuffs Challenge to SEC Administrative Proceedings

Constitutional challenges to the legitimacy of administrative law judges who preside over SEC cases must wait until the proceedings are no longer pending, and they cannot be made in federal district courts, the Second Circuit held Wednesday.
6 minute read

Delaware Business Court Insider

Situational and Structural Conflicts Inherent in Proxy Contests

On May 19, in Pell v. Kill, C.A. No. 12251-VCL, the Delaware Court of Chancery preliminarily enjoined certain directors of Cogentix Medical Inc. from completing a board reduction plan, under which such directors sought to reduce the size of the board from eight to five members.
8 minute read

Delaware Business Court Insider

Disregard of Speculative Financial Projections Was Not Bad Faith

In a stockholder challenge to a sale of the company, a plaintiff may rebut the business judgment rule by pleading facts that support a reasonable inference that at least half of the directors, who approved the sale, were not disinterested or independent in breach of their fiduciary duty of loyalty. While the prohibition against self-interested transactions by the board is the most fundamental obligation under the duty of loyalty, the good-faith corollary to the duty of loyalty under In re The Walt Disney Derivative Litigation, 907 A.2d 693, 754-55 (Del. Ch. 2005), is "something of a catch-all," providing a "fiduciary out from the business judgment rule." Good faith under the duty of loyalty prohibits "intentional dereliction of duty, [or] inaction in the face of a duty to act," which allegations support a claim for bad faith. In a bad-faith claim, the board's intentional action, or inaction in the face of a known duty to act, cannot be explained "as in the corporate interest: res ipsa loquitor." The Delaware Court of Chancery has emphasized that pleading facts to support a bad-faith claim is the "most difficult path to overcome dismissal" and that such facts are a "rara avis."
14 minute read

New York Law Journal

Dingee v. Wayfair Inc.

Failure to List Competitor in IPO Registration Statement, SEC Filings Not a Material Omission
3 minute read

New York Law Journal

Francisco v. Abengoa, S.A.

Actions Consolidated, Lead Plaintiff Appointed In Fraud Case Against Clean Technology Firm
3 minute read

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