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Mealey's Securities

  • September 05, 2025

    United States Urges High Court To Find No Private Right Of Action In ICA Provision

    WASHINGTON, D.C. — The United States and four other entities filed amicus curiae briefs in the U.S. Supreme Court, agreeing with closed-end funds (CEFs) that the court should find that Congress did not intend there to be a private right of action in Section 47(b) of the Investment Company Act of 1940 (ICA) and reverse the Second Circuit U.S. Court of Appeals’ decision finding the funds violated the ICA.

  • September 04, 2025

    SEC, CFTC Issue Project Crypto-Crypto Sprint Statement

    WASHINGTON, D.C. — Divisions of the Securities and Exchange Commission and the Commodities Futures Trading Commission announced a cross-agency initiative to further the SEC’s Project Crypto and the CFTC’s Crypto Sprint in order to coordinate their efforts to enable the trading of certain spot crypto assets.

  • September 04, 2025

    3rd Circuit Affirms Dismissal Of Securities Claims Over Walmart’s Opioid Sales

    PHILADELPHIA — A panel of the Third Circuit U.S. Court of Appeals affirmed a district court’s dismissal of a putative class complaint brought by an investor against Walmart Inc. and certain of its executives, finding that Walmart’s statements regarding criminal and civil investigations into its sale of opioids conducted by federal officials in Texas were not misleading and that its disclosures during the investigation were sufficient.

  • September 04, 2025

    Hearing Held On Viability Of Juul Share Dilution Claims

    WILMINGTON, Del. — A hearing was held Sept. 3 in the Delaware Chancery Court on motions filed by Juul Labs Inc. (JLI), its founders and board members and affiliated investment vehicles to dismiss a derivative complaint accusing them of breach of fiduciary duty for allegedly orchestrating financing that diluted the value of JLI shares before giving 1.2 billion JLI shares to the investment vehicles at a low price.

  • September 04, 2025

    Split 9th Circuit Finds Lower Court Used Wrong Standard In Evaluating IPO Suit

    PASADENA, Calif. — A split panel of the Ninth Circuit U.S. Court of Appeals vacated in part and remanded a lower court’s decision in a securities action brought by investors against financial services company Robinhood Markets Inc., certain of its senior executives and directors and underwriters of the company’s initial public offering (IPO), finding the lower court applied the wrong legal standards in evaluating the investors’ theories based on Section 11 of the Securities Act of 1933’s “misleading” prong and Item 303 of Securities Exchange Commission Regulation S-K.

  • September 03, 2025

    Briefly: Class Seeks Approval Of $15M Deal In Securities Fraud Case About Pipeline

    PHILADELPHIA — The lead plaintiffs in a long and winding securities fraud class action related to the construction of a hydraulic fracturing pipeline on Sept. 2 filed a brief in Pennsylvania federal court seeking final approval of a class action settlement for a cash payment of $15 million.

  • September 03, 2025

    2nd Circuit Finds Investment Manager Exempt From Short-Swing Profit Violation

    NEW YORK — A Second Circuit U.S. Court of Appeals panel found that an investment manager, its client fund and its chief investment officer who served on a biotech company’s board of directors did not engage in an illegal short-swing transaction when they obtained an $87 million profit from selling its stock in the biotech company because the company’s board had approved the sale in advance.

  • September 02, 2025

    For Now, Texas Can’t Enforce Law On ESG, DEI Issues Against 2 Proxy Advisory Firms

    AUSTIN, Texas — A Texas law concerning proxy advisers’ consideration of environmental, social and governance (ESG), diversity, equity and inclusion (DEI) and sustainability factors that otherwise went into effect Sept. 1 will not be enforced against two proxy advisory firms under preliminary injunctions that a Texas federal judge granted Aug. 29.

  • September 02, 2025

    Split 2nd Circuit: Investors Alleged Actionable Misstatements Against Peloton

    NEW YORK — A split panel of the Second Circuit U.S. Court of Appeals found that investors plausibly alleged Peloton Interactive Inc. and its executives stated two actionable material misstatements, vacating in part a lower court’s dismissal of the investors’ stock-drop suit against the company and executives.

  • August 29, 2025

    Funds Argue Congress Intended No Private Right Of Action In ICA Provision

    WASHINGTON, D.C. — In their petitioner brief in the U.S. Supreme Court, closed-end funds (CEFs) argued that the court should find “Congress didn’t create an implied private right of action in Section 47(b) of the [Investment Company Act of 1940 (ICA)]” and reverse the Second Circuit U.S. Court of Appeals’ decision finding the funds violated the ICA.

  • August 28, 2025

    5th Circuit Partially Grants Associations’ Petition Challenging Securities Rules

    NEW ORLEANS — A panel of the Fifth Circuit U.S. Court of Appeals granted in part a petition by three institutional investment management membership associations challenging rules the Securities and Exchange Commission adopted in 2023 to increase transparency in the securities lending and short sale markets, holding the SEC did not “consider and quantify the cumulative economic impact of the rules” but rejecting the associations’ other arguments.

  • August 27, 2025

    1st Circuit: Investors Plausibly Alleged Fraudulent Statements In Stock Drop Suit

    BOSTON — The First Circuit U.S. Court of Appeals reversed a district court’s dismissal of investors’ securities fraud class action against a global drug-development company and two of its officers, finding that the investors had plausibly alleged that the defendants “knowingly or recklessly misled investors as to problems lurking in its supply chain” of long-tailed macaques for drug-development research and safety testing, leading to an artificial rise, then drop, in stock price.

  • August 27, 2025

    SEC, Crypto Asset Firm Withdraw Cross-Appeals Over Civil Penalty Ruling

    NEW YORK — The Securities and Exchange Commission and a crypto asset firm withdrew their cross-appeals of a New York federal court’s ruling requiring the crypto firm to pay more than $120 million as a civil penalty after the court granted the SEC’s motion for entry of final judgment on the commission’s allegations that cryptocurrencies sold by the firm were effectively unregistered securities.

  • August 25, 2025

    Discovery, Summary Judgment Rulings Vacated In Securities Row Against Reinsurer

    PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel vacated a lower court’s discovery and summary judgment rulings in investors’ suit against a reinsurer and three former executives over allegations that they violated federal securities laws by omitting historical loss ratios from loss reserves disclosures, finding those omitted historical loss ratios to be material and that discovery had not been completed.

  • August 25, 2025

    6th Circuit Vacates Class Certification In Action Against FirstEnergy

    CINCINNATI — A Sixth Circuit U.S. Court of Appeals panel vacated a lower court’s class certification order in a suit against FirstEnergy Corp. brought by investors regarding a bribery scheme that delivered approximately $2 billion to the company through lobbying the Ohio Legislature to pass House Bill 6, finding that the lower court applied the wrong presumption in certifying the class.

  • August 20, 2025

    Investors’ Fraud Claims Over Ethylene Oxide Statements Are ‘Flawed,’ Company Says

    CINCINNATI — A company that sterilizes medical equipment has filed a brief in the Sixth Circuit U.S. Court of Appeals arguing that it should dismiss the appeal of investors who allege the company committed securities fraud in relation to statements it made about litigation involving a subsidiary of the company over personal injury claims connected to exposure to ethylene oxide (EtO), the chemical used in the sterilization process. The company argues that the investors assert the “same flawed arguments” on appeal that they asserted at the lower court.

  • August 20, 2025

    Insured Sues D&O Insurer For Defense Costs Arising From Securities Fraud Suit

    WILMINGTON, Del. — A corporation insured sued its directors and officers liability insurer in a Delaware federal court for breach of contract and seeks a declaration that the insurer must promptly reimburse it for the costs it has incurred in defending an underlying securities fraud lawsuit brought by shareholders.

  • August 19, 2025

    Insurer Seeks Reconsideration In Suit Over Forced Deal Involving Reinsurer

    NEW YORK — An insurer argues in a New York federal court that reconsideration of dismissal of its federal securities law claims is warranted because the court overlooked laws and facts and disregarded allegations that misrepresentations and transactional conduct tied to the insurer’s compelled April 2024 purchase of the equity of reinsurer JRG Reinsurance Co. Ltd. occurred domestically.

  • August 18, 2025

    High Court Denies Rehearing Case To Address Disgorgement, Materiality Questions

    WASHINGTON, D.C. — The U.S. Supreme Court on Aug. 18 denied an investment officer and his investment firm’s petition for rehearing asking the court to reconsider its decision not to grant certiorari to address questions regarding an award of disgorgement and the materiality of alleged misrepresentations under the Investment Advisors Act of 1940.

  • August 15, 2025

    3rd Circuit Holds Shareholder Can’t Opt Out Of Class Action 3 Years Late

    PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel affirmed a lower court’s ruling that a pharmaceutical company’s shareholder could not opt out of a settlement of a securities fraud class action more than three years after the class opt-out period ended, finding that the shareholder’s continued separate action against the company did not properly show its intent to opt out of the class.

  • August 14, 2025

    Sales Agents Violated Securities Laws By Selling Interests In Life Settlements

    PASEDENA, Calif. — A panel of the Ninth Circuit U.S. Court of Appeals affirmed a lower court’s finding that the fractured interests in life settlements were investment contracts under federal securities laws and therefore an investment firm’s sales agents violated federal law by selling unregistered securities and not being registered as broker-dealers, noting that the company’s control of the selection of policies and the fractional nature of the interests satisfy the Howey test.

  • August 14, 2025

    9th Circuit Denies Review Of SEC’s Denial Of Request To Amend Settlement Rule

    HONOLULU — A panel of the Ninth Circuit U.S. Court of Appeals denied a petition of the New Civil Liberties Alliance (NCLA) and individuals who had entered into settlements with the Securities and Exchange Commission to review the SEC’s denial of the NCLA’s request to amend an SEC rule requiring defendants to agree to not publicly deny allegations against them before entering into a settlement with the SEC because the requirement violates the First Amendment; the panel found the rule is not unconstitutional, citing longstanding precedent that allows the voluntary waiver of constitutional rights.

  • August 11, 2025

    6th Circuit Stays Discovery Of Utility’s Documents Pending Mandamus Petition

    CINCINNATI — Investigatory documents from law firms retained by an electric utility company suspected of wrongdoing in a securities bribery scandal are protected by the attorney-client privilege and the work product doctrine, a Sixth Circuit U.S. Court of Appeals panel found, deeming the company likely to succeed on a petition for mandamus related to an order to compel and granting the company’s motion to stay discovery pending the petition’s resolution.

  • August 08, 2025

    Judge Approves Settlement Of Shareholder Action Against Zoom For Privacy Policies

    WILMINGTON, Del. — A federal judge in Delaware approved a settlement in a shareholder derivative action against Zoom Video Communications Inc. that alleged that certain current and former directors of the company misrepresented the company’s privacy and securities practices; under the terms of the settlement, Zoom will adopt and implement several governance reforms including establishing a cybersecurity committee and enhancing Zoom’s guidelines relating to stock trading plans.

  • August 07, 2025

    Trading Company Urges High Court To Address Nonsignatory Enforcement Of Arbitration

    WASHINGTON, D.C. — In a reply brief in support of its petition for a writ of certiorari in the U.S. Supreme Court, a trading company urges the court to determine whether a nonsignatory to an arbitration agreement can compel a signatory to arbitrate a dispute between them to address a split among appellate courts. The trading company seeks to arbitrate securities fraud claims brought against it by investors who signed an arbitration agreement with another party to the alleged fraud.