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Mealey's Securities

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.
August 07, 2025
SEC Division Addresses Whether Liquid Staking Of Crypto Assets Involves Securities

WASHINGTON, D.C. — In its efforts to provide clarity on the application of federal securities laws to crypto assets, the Securities and Exchange Commission’s Division of Corporation Finance issued a statement specifically addressing liquid staking.
August 06, 2025
2nd Circuit Denies Rehearing Of Decision In Suit To Void Stock Purchase Agreement

NEW YORK — A Second Circuit U.S. Court of Appeals panel denied an aerospace company’s petition for rehearing en banc and panel rehearing of its decision to dismiss its case seeking to void a stock purchase agreement (SPA) with a hedge fund alleging that the hedge fund violated federal securities laws by not registering as a dealer; the panel had found that under the terms of the agreement, the hedge fund did not have to be a registered dealer.
August 05, 2025
Parties Ordered To Submit Briefing Schedule In SEC Fraud Row With Insurance Mogul

WINSTON-SALEM, N.C. — After reviewing the U.S. Securities and Exchange Commission’s status report, a North Carolina federal judge on Aug. 4 issued a docket-only order advising the parties to submit a briefing schedule within 10 business days of insurance mogul Greg Lindberg or a co-defendant being sentenced in related criminal proceedings to the SEC’s suit alleging that Lindberg, his advisory services company and its former executive defrauded clients of more than $75 million.
August 01, 2025
Judge Approves $10 Million Settlement In NFT Securities Class Row With DraftKings

BOSTON — A Massachusetts federal judge issued an order approving a $10 million settlement between parties in a class suit accusing DraftKings Inc. of violating securities laws through its sale of nonfungible tokens (NFTs).
August 01, 2025
3rd Circuit Affirms Class Certification In J&J Asbestos Stock Suit

PHILADELPHIA — A judge properly certified an asbestos talc securities class after finding that each of six disclosures about the safety of talc or the presence of asbestos in Johnson & Johnson talc led to a drop in the company’s stock price, a divided Third Circuit U.S. Court of Appeals said in a divided nonprecedential opinion affirming class certification.