Mealey's Securities : Mealey's : Legal News & Analysis

Mealey's Securities

July 31, 2024
Investor: CrowdStrike Misled Investors About Testing Before Global Tech Outage

AUSTIN, Texas — A retirement system says in a putative class complaint filed on July 30 in a Texas federal court that a cybersecurity company and certain of its executives issued misleading claims to investors about its internal testing systems before a recent software glitch caused a global outage of computers on the Microsoft Windows operating system, leading to a steep drop in value for the company’s stock.
July 30, 2024
Judge Won’t Dismiss Stock Loss Claims Over ‘Sham’ Wells Fargo Interviews

OAKLAND, Calif. — A California federal judge on July 29 denied a motion by Wells Fargo & Co. and certain of its executives to dismiss a putative class complaint brought by a group of shareholders, holding that the shareholders adequately established that the company was aware of a widespread practice of using fake interviews to give the impression of complying with internal diversity hiring practices before news about the interviews led to a drop in stock value.
July 30, 2024
Judge: No Misleading Claims About Stock Conversion In Premerger Statements

NEW YORK — A New York federal judge dismissed a putative class complaint brought by former employees of a satellite manufacturer who claimed that the company and certain of its executives issued misleading statements in violation of federal securities laws about the company’s merger with a special purpose acquisition company (SPAC), with the judge holding that the employees failed to show that the company made misleading statements about the redemption rate of shares after the merger.
July 30, 2024
Federal Magistrate: Some Investor Claims Over 2023 Derailment Should Be Tossed

NEW YORK — Investors failed to show that railroad company Norfolk Southern Corp. and certain of its executives had an obligation to disclose previous federal compliance failures in the company’s strategic plan, which meant that the investors failed to show that the plan was false or misleading, a federal magistrate judge said in a report recommending that some claims related to the strategic plan be dismissed from a putative class complaint alleging that the company misled investors leading up to a February 2023 train derailment in Ohio.
July 29, 2024
After Forced Deal, Insurer Sues Reinsurer’s Former Parent Company In Federal Court

NEW YORK — Alleging a “$300 million fraud,” an insurer sued a holding company in New York federal court, asserting claims for securities and common-law fraud and breach of contract in connection with the insurer’s April 14 purchase of Bermuda-based reinsurer JRG Reinsurance Company Ltd.
July 26, 2024
Federal Judge: Fraud Conviction Justifies Summary Judgment In Related SEC Action

SAN FRANCISCO — A California federal judge on July 25 granted the Securities and Exchange Commission’s motion for summary judgment against the final defendant remaining in an enforcement action related to an insider trading scheme orchestrated by a friend of the man, with the judge citing a criminal conviction against the man on charges arising from the same conduct as the primary reason.
July 26, 2024
9th Circuit: Fund’s Insider Trading Claims Against Broadcaster’s Investors Fail

SAN FRANCISCO — A California federal judge did not err in dismissing allegations of insider trading brought by two hedge funds against large investors in a satellite communications company, a Ninth Circuit U.S. Court of Appeals panel held, agreeing with the lower court judge that the hedge funds failed to show that the investors possessed material nonpublic information about a meeting the company had with the Federal Communications Commission.
July 25, 2024
Judge: Investors Show Falsity Of Some Equipment Testing Claims From Company

SAN FRANCISCO — A federal judge in California largely granted a technology company’s motion to dismiss a second amended putative class complaint brought by investors alleging that the company and certain of its executives issued false statements about the testing of equipment that would be used to create a new type of battery; however, the judge found that the investors had adequately substantiated their claims regarding three allegedly false statements issued by the company.
July 25, 2024
New York Federal Judge Agrees To Limit Expert Testimony In Securities Fraud Case

BROOKLYN, N.Y. — A New York federal judge partially granted the government’s motion to exclude expert witnesses retained by two men charged with securities and wire fraud after finding that some testimony is inadmissible under Daubert v. Merrell Dow Pharmaceuticals Inc. and Federal Rule of Evidence 702.
July 24, 2024
Judge Gives 1st Nod To $434M Settlement In Under Armour Securities Suit

BALTIMORE — A Maryland federal judge granted preliminary approval to a proposed $434 million settlement in a class action brought by investors claiming that Under Armour Inc. and its former CEO violated federal securities laws by making false claims about demands for the company’s products, finding that the proposed settlement is fair and adequate for the purposes of preliminary approval.
July 24, 2024
Federal Judge: No Fees To Hedge Fund After Mixed Verdict In SEC Enforcement

BOSTON — A federal judge in Massachusetts held in a July 23 order that a hedge fund manager and his fund are not entitled to attorney fees under the Equal Access to Justice Act (EAJA) after partially prevailing on claims brought by the Securities and Exchange Commission, finding that the SEC’s initial position was substantially justified.
July 24, 2024
Investors Seek Approval Of $200M Settlement Of Uber IPO Misstatement Allegations

SAN FRANCISCO — Investors who brought claims against ride sharing company Uber Technologies Inc. and certain of its executives told a federal court in California that they had settled their allegations that the company issued a series of misleading statements in the lead-up to its May 2019 initial public offering (IPO); the investors say Uber agreed to settle the claims for $200 million.
July 23, 2024
Judge Certifies Class In Securities Case Brought Against Electric Vehicle Maker

LOS ANGELES — A federal judge in California granted a motion for class certification filed by investors who say an electric car manufacturer and certain of its executives hid from investors that the company knew that it would be selling its vehicles at a significant loss ahead of its initial public offering (IPO), finding that the investors had satisfied all four requirements for class certification.
July 23, 2024
Investors Did Not Allege Scienter In Suit Over Sports Drink Claims, Judge Says

NEW YORK — A federal judge in New York dismissed with prejudice a putative class complaint in which investors claimed that a cannabis health care company and certain of its executives misled them about the success of a sports drink subsidiary, finding that the investors failed to plead scienter by relying too much on confidential witnesses they failed to show had access to the information they claimed to have had.
July 19, 2024
Judge Tosses Most Of SEC Complaint Over Cyberattack For Failure To Show Falsity

NEW YORK — A federal judge in New York on July 18 largely dismissed a first-of-its-kind suit brought by the Securities and Exchange Commission against a software company and its head of information security accusing them of issuing false statements about the company’s software that was the target of alleged state-sponsored cyberattacks from Russia, finding that many of the SEC’s claims “impermissibly rely on hindsight and speculation.”
July 19, 2024
Federal Judge Won’t Dismiss SEC Claims Against Salesman In Drilling Case

DALLAS — A federal judge in Texas denied a motion from the former chief operating officer (COO) of a fracking business, finding that the Securities and Exchange Commission had adequately established its claims that the man took part in a scheme to defraud investors through unregistered sales of shares for the claims to survive dismissal.
July 19, 2024
Discovery Deadline Unchanged In SEC Suit Against Owner Of Insurers In Receivership

WINSTON-SALEM, N.C. — A North Carolina federal magistrate judge granted in part a joint motion to extend the case schedule in the U.S. Securities and Exchange Commission’s suit alleging that an advisory services company, its former executive and its former owner, who also owned insurers now in receivership, defrauded clients of more than $75 million, allowing an extra 30 days for “additional fact discovery” but keeping the deadline for close of discovery.
July 18, 2024
1st Circuit Upholds Finding Advisory Firm, President Violated Securities Laws

BOSTON — A First Circuit U.S. Court of Appeals panel upheld a Massachusetts federal judge’s decision to enter summary judgment against a man and his financial advisory company, along with a host of other orders from the judge, finding that the Securities and Exchange Commission adequately showed that the man and the firm recklessly and repeatedly issued misrepresentations about an investment strategy employed by the firm.
July 18, 2024
Former Hedge Fund Exec Is Sentenced To Probation In Securities Fraud Case

BROOKLYN, N.Y. — The last of three former hedge fund executives that a New York federal jury found guilty of securities fraud and conspiracy to commit securities fraud for an alleged scheme involving a reinsurer has been sentenced to two years of probation “with a special condition of 6 months home detention,” a $5,000 fine and a $200 special assessment.
July 17, 2024
Judge: Investors Didn’t Show Pharmaceutical Company’s Projections Are False

NEWARK, N.J. — A federal judge in New Jersey dismissed without prejudice a putative class complaint brought by investors who said a biopharmaceutical company and certain of its executives misled investors about the amount of capital available to the company to test its stem cell treatment for a type of blood cancer, finding that the investors failed to allege a material misrepresentation about the funding.
July 16, 2024
Investors Seek Approval Of $434M Settlement With Under Armour In Securities Case

BALTIMORE — Plaintiff investors in a class action alleging that Under Armour Inc. and its former CEO violated federal securities laws by making false claims about demand for the company’s products on July 15 sought preliminary approval from a federal court in Maryland of a $430 million settlement with the company.
July 12, 2024
Federal Judge: Investors’ Requested Amendment Of Securities Suit Would Be Futile

GREENBELT, Md. — A federal judge in Maryland rejected investors’ motion to amend their putative class complaint alleging that a quantum computing company and executives made false statements about its products, leading to a stock value drop once the alleged truth was revealed, finding that the proposed amended complaint did not address the issues that caused the judge to dismiss the complaint with prejudice in September.
July 12, 2024
SEC Settles Claims Against Fund Manager It Said Took Customer Investments

TRENTON, N.J. — A federal judge in New Jersey entered judgment against an investment fund and its founder that the Securities and Exchange Commission accused of running a scheme that defrauded investors of at least $3 million, after the man and the fund both agreed to the entry of a judgment against them.
July 11, 2024
SEC Voluntarily Dismisses Firm From Enforcement Action After Owner’s Settlement

NEW YORK — The Securities and Exchange Commission voluntarily dismissed a defunct investment adviser firm from a complaint wherein the SEC alleged that the firm’s owner signed off on statements issued by the firm substantially overstating the fund’s assets; the fund’s owner settled with the SEC in May.
July 10, 2024
3rd Circuit Affirms Injunction Against Executive Accused Of Insider Trades

PHILADELPHIA —A Third Circuit U.S. Court of Appeals panel on July 9 upheld a New Jersey federal judge’s decision to freeze the assets of the chief scientific officer of a biopharmaceutical company and several investment funds he operates, agreeing with the judge that the Securities and Exchange Commission had adequately shown that the man had likely sold shares in response to material nonpublic information but disagreeing with the standard the judge used to reach that decision.