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Securities
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April 26, 2024
CBD Co's CEO Agrees To Pay $350K To End SEC Suit
The one-time chief officer of cbdMD Inc. has agreed to pay $350,000 to end a civil enforcement action brought by the U.S. Securities and Exchange Commission accusing him of defrauding investors of a private investment fund he managed.
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April 26, 2024
Locke Lord Strikes $12M Deal To End Claims Over Gas Fraud
Locke Lord LLP will likely pony up $12.5 million to settle claims it stood by as its clients carried out a fraudulent $122 million oil and gas scheme, with a Texas federal magistrate judge recommending approval of the settlement at a hearing in Fort Worth.
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April 26, 2024
Therapy Co. SPAC Investors To Settle Del., Ill. Merger Suits
An attorney for a blank-check company that took ATI Physical Therapy Inc. public told Delaware's Court of Chancery it has agreed to settle two proposed stockholder class actions in conjunction with pending federal class and derivative suits in the Northern District of Illinois.
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April 26, 2024
JPMorgan Says Ex-Adviser Is Pilfering Clients For Wells Fargo
J.P. Morgan has accused a former investment management adviser of trying to poach clients for her new job at a competing Wells Fargo unit, saying she's been making unsolicited phone calls and sending emails to convince clients to leave in breach of her employment contract.
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April 25, 2024
Tesla Says Investors May Want To Influence Shareholder Vote
Tesla on Thursday questioned the motives of investors who want billions of dollars in company stock put into a trust, saying that their push to hasten the court's decision in their suit over Elon Musk's compensation plan raises concerns that they want to "elicit commentary" ahead of a shareholder meeting.
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April 25, 2024
Crypto Co. DCG Hires 1st Legal Chief Amid New York AG Fight
The head of cryptocurrency conglomerate Digital Currency Group on Thursday said the firm has appointed its first chief legal officer, hiring the former top lawyer of payment management firm Billtrust as DCG fights a lawsuit by New York's attorney general and other disputes.
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April 25, 2024
QuidelOrtho Execs Lied About COVID Test Revenue, Suit Says
A QuidelOrtho Corp. investor on Thursday filed a derivative shareholder suit in New York federal court against board members and executives of the diagnostic healthcare company, alleging they made misleading statements about the company's ability to maintain a high margin revenue after sales of its COVID-19 detection tests plunged.
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April 25, 2024
FDIC Tables Plans To Scrutinize Big 'Passive' Bank Investors
Federal Deposit Insurance Corp. leaders on Thursday debated two competing proposals intended to address concerns about asset managers and other investors amassing outsized influence over banks whose shares they own, ultimately taking the rare step of tabling the measures as neither garnered majority support.
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April 25, 2024
5th Circ. Axes Class Claims Over Anadarko's $900M Write-Off
The Fifth Circuit on Thursday decertified a class of Anadarko Petroleum Corp. shareholders who claim they lost money on the company's bad oilfield bet, ruling a lower court judge didn't allow the company to respond to an expert report that tied a stock price drop to a $900 million write-off disclosure.
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April 25, 2024
McDermott Judge U-Turns, Says Some Investors Deserve Cert.
A Texas federal magistrate judge reversed his recommendation that investors be denied class certification in litigation over McDermott International's $6 billion merger with Chicago Bridge & Iron, saying a former CB&I shareholder class "should be certified now" and a putative McDermott stock purchaser class be created for subsequent consideration.
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April 25, 2024
Crypto Co. Sues 'Crusading' Gensler Over SEC's Ether Stance
Cryptocurrency software company Consensys Software Inc. sued the U.S. Securities and Exchange Commission on Thursday in Texas federal court over the agency's treatment of the Ethereum network's ether token as a security after the company received a so-called Wells notice that agency staff intends to recommend an enforcement action over its products.
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April 25, 2024
Real Estate Exec Can't Escape Shareholder's Self-Dealing Suit
A California federal judge ruled that a derivative shareholder suit accusing the president of a real estate management and investment firm of misusing nearly $35 million of company revenue now passes the so-called Zuckerberg test since the plaintiff sufficiently pled that demand on the company's board members would be futile.
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April 25, 2024
Outlets Ask Fla. Court To Toss Trump's $1.5B Truth Social Suit
Several news outlets that were sued by Donald Trump's social media company over reports that it lost $73 million following a merger have urged a Florida state court to dismiss the lawsuit, saying defamation wasn't sufficiently alleged and the articles were substantially true.
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April 25, 2024
Zendesk Beats Shareholders' Suit Over $10B PE Takeover
Zendesk Inc. has defeated a securities class action in California federal court accusing the customer service software company of undervaluing itself to get a $10.2 billion go-private merger with private equity firms approved by Zendesk shareholders.
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April 25, 2024
PHX Minerals Stockholders Sue In Del. To Change Bylaws
A proposed class of PHX Minerals Inc. stockholders has sued the natural gas and oil mineral company and its board in Delaware state court, arguing that the company's bylaws must be changed to bring them into compliance with the Delaware General Corporation Law.
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April 25, 2024
SEC Says Texas Crypto Mining Co. Execs Ran $5.6M Fraud
A crypto asset mining and hosting company and two of its principals face U.S. Securities and Exchange Commission claims they defrauded about 64 investors with an unregistered securities offering that raised $5.6 million, spending investor funds lavishly on themselves while neglecting to set up, or in some cases even buy, the mining equipment they had said they would get.
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April 25, 2024
7th Circ. OKs Pausing Nail Polish IP Suit For Ownership Fight
A company registered in New Jersey that sells nail polish has failed to persuade a federal appeals court to let it move ahead with its trade secrets case in a Chicago federal court against its former business partners in China until first resolving an ownership dispute "lurking just beneath the surface."
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April 25, 2024
Chancery Seeks More Info About Bond In Truth Social Case
A Delaware vice chancellor said Thursday she needs more information from the sponsor of the blank-check company that took Donald Trump's Truth Social public about a bond it requested during litigation with some of the company's stockholders.
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April 25, 2024
Autodesk Faces Investor Suit Over Internal Controls
Software company Autodesk has been hit with a proposed class action alleging the company's stock price dropped after investors learned it lacked proper internal controls due to issues with its free cash flow and operating margin practices.
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April 25, 2024
4 Takeaways From DOL's Final ERISA Investment Advice Regs
The U.S. Department of Labor’s finalized regulations broadening who qualifies as a fiduciary under the Employee Retirement Income Security Act will bring more investment advisers under the purview of federal benefits law, but the final version contains some important differences from what the DOL initially proposed. Here are four key takeaways.
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April 25, 2024
3rd Circ. Lets Mallinckrodt Off Sanofi's Royalty Hook
A Third Circuit panel said Thursday that Mallinckrodt PLC's Chapter 11 bankruptcy could sever its obligation to pay Sanofi-Aventis US LLC royalties on sales of an autoimmune disease drug, finding that Sanofi's contract to sell Mallinckrodt the rights to the drug created a claim ripe to be extinguished.
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April 25, 2024
SEC, Trade Group Ask DC Circ. To Revive Proxy Advisory Rule
The U.S. Securities and Exchange Commission and a leading trade group called on the D.C. Circuit Thursday to revive a rule imposing heightened disclosure requirements on proxy advisory firms, appealing a lower court decision that threw out the requirements.
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April 25, 2024
Former Fuel Co. GC, CEO Must Pay $750K In SEC Fraud Suit
The former general counsel and CEO of an Arizona fuel company accused of conspiring to defraud investors out of $30 million have reached consent orders with the U.S. Securities and Exchange Commission and agreed to pay nearly $750,000 in fines, disgorgement and restitution.
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April 25, 2024
WWE Shareholders Combine Chancery TKO Merger Suits
Delaware's Court of Chancery will decide this summer whether teams led by Block & Leviton, Bernstein Litowitz or Robbins Geller will represent World Wrestling Entertainment Inc. stockholders in a consolidated class suit against founder Vincent McMahon and others over the company's $21 billion merger with the Endeavor Group.
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April 25, 2024
Ga. Fund Manager Stole Millions And Fled Country, SEC Says
An Atlanta financier was hit with a U.S. Securities and Exchange Commission civil suit Wednesday alleging he ripped off investors in his nearly $10 million hedge fund, stealing millions to enrich himself while falsifying records of the fund's purported success.
Expert Analysis
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A Post-Mortem Analysis Of Stroock's Demise
After the dissolution of 147-year-old firm Stroock late last year shook up the legal world, a post-mortem analysis of the data reveals a long list of warning signs preceding the firm’s collapse — and provides some insight into how other firms might avoid the same disastrous fate, says Craig Savitzky at Leopard Solutions.
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Predicting DeFi Regulations At Home And Abroad In 2024
Though decentralized finance has advocates on both sides of the Atlantic in figures like U.S. SEC Commissioner Hester Peirce and U.K. Prime Minister Rishi Sunak, DeFi in 2024 seems likely to be folded into existing regulatory frameworks in the U.K. and EU, while anti-crypto scrutiny may discourage DeFi’s growth in the U.S., say Daniel Csefalvay and Eric Martin at BCLP.
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Opinion
Exxon Court Should Clarify Shareholder Proposal Exclusion
ExxonMobil last month took the unusual action of asking a Texas federal judge whether a proposal from climate activists seeking to limit oil and gas sales could be excluded from its 2024 proxy statement, and the court should use this opportunity to reevaluate SEC policy and set clear limits on when shareholder proposals can be included, says Stephen Bainbridge at UCLA School of Law.
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Mitigating The Risk Of Post-Closing M&A Earnout Disputes
Today's uncertain deal environment makes a well-crafted earnout an excellent way for parties to accomplish a desired transaction that would not otherwise occur, but transacting parties also need to take key steps to avoid the risk of post-closing disputes that earnouts can present, say Chad Barton and Claire Lydiard at Holland & Knight.
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Understanding SEC's Focus Amid Lack Of Final AI Rules
Although the U.S. Securities and Exchange Commission's proposed rules to govern artificial intelligence are likely far from being finalized, understanding existing regulatory provisions that could address AI risks with respect to development, disclosure, compliance and data protection could help firms anticipate and avoid pitfalls, say attorneys at Skadden.
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Preparing For DOJ's Data Analytics Push In FCPA Cases
After the U.S. Department of Justice’s recent announcement that it will leverage data analytics in Foreign Corrupt Practice Act investigations and prosecutions, companies will need to develop a compliance strategy that likewise implements data analytics to get ahead of enforcement risks, say attorneys at Cozen O'Connor.
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How High Court SEC Case Could Affect The ITC
While the U.S. Supreme Court’s upcoming ruling in U.S. Securities and Exchange Commission v. Jarkesy will likely spare the U.S. International Trade Commission from major operative changes, the ITC’s ability to issue penalties for violations of its orders may change, say Gwendolyn Tawresey and Ryan Deck at Troutman Pepper.
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Open Questions After Elastos Crypto Class Action Settlement
The recent settlement in Owen v. Elastos Foundation resolving a class action fight over whether Elastos was required to register an initial coin offering with U.S. regulators has raised several questions that may be of interest to lawyers litigating cryptocurrency-related cases, including whether a crypto token constitutes a security under U.S. law, says Bradley Simon at Schlam Stone.
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Del. Segway Dismissal Suggests Execs Not Liable For Biz Risk
While the debate continues within the Delaware Chancery Court over whether Caremark liability applies to matters of pure business risk, the court's recent rejection of Segway’s suit against the ex-president who oversaw financial difficulties suggests the court is uninterested in undermining the deference the business judgment rule grants corporate fiduciaries, say attorneys at Dechert.
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$32.4M Fine For Info Disclosure Is A Stark Warning For Banks
The New York State Department of Financial Services and the Federal Reserve's fining of a Chinese state-owned bank $32.4 million last month underscores the need for financial institutions to have policies and procedures in place to handle confidential supervisory information, say attorneys at Sidley.
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Exxon ESG Proxy Statement Suit May Chill Investor Proposals
Exxon Mobil’s recent use of a Texas federal lawsuit to intimidate shareholders into withdrawing a climate-friendly proxy proposal could inspire more public companies to sue to avoid adopting ESG resolutions — a power move that would chill activist investor participation and unbalance shareholder-corporate relations, say Domenico Minerva and James Fee at Labaton Keller.
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Series
Coaching High School Wrestling Makes Me A Better Lawyer
Coaching my son’s high school wrestling team has been great fun, but it’s also demonstrated how a legal career can benefit from certain experiences, such as embracing the unknown, studying the rules and engaging with new people, says Richard Davis at Maynard Nexsen.
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Implications For Digital Assets After SEC Settlement With DAO
The U.S. Securities and Exchange Commission's December settlement with BarnBridge — finding that the decentralized autonomous organization's products were securities under federal law — foreshadows increased enforcement attention on digital assets, and reveals arguments the SEC may use in similar disputes with decentralized finance protocols, say attorneys at K&L Gates.
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SG's Office Is Case Study To Help Close Legal Gender Gap
As women continue to be underrepresented in the upper echelons of the legal profession, law firms could learn from the example set by the Office of the Solicitor General, where culture and workplace policies have helped foster greater gender equality, say attorneys at Ocean Tomo.
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Bitcoin ETF Approval Doesn't Mean SEC Approves Of Crypto
While the U.S. Securities and Exchange Commission's approval last month of 11 applications for spot exchange-traded funds tracking bitcoin is a landmark moment for the crypto-asset industry, investors who are hopeful that the SEC will approve similar crypto-based ETFs may be disappointed, says attorneys at Mintz.