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Securities
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July 25, 2024
Mr. Cooper Picks Up Flagstar Resi Mortgage Unit For $1.4B
Flagstar Bank NA announced Thursday that it has inked a $1.4 billion deal to sell its residential mortgage servicing business to nonbank mortgage originator Mr. Cooper, as Flagstar and parent New York Community Bancorp eye a turnaround.
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July 25, 2024
Ackman Sets $4B IPO Target For New Pershing Square Fund
Hedge-fund giant Bill Ackman expects the initial public offering of his new closed-end fund to raise $2.5 billion to $4 billion as he seeks to shore up investor support just days before the IPO's anticipated pricing, according to a securities filing Thursday.
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July 25, 2024
Hertz Tells Chancery Warrant Holders Are Misreading Contract
A pair of investment funds that acquired 9 million warrants from Hertz after its bankruptcy and later sued the car rental company for breach of contract misinterpreted the warrant agreement, and their lawsuit should be dismissed, Hertz said in a response to the complaint brought before Delaware's Court of Chancery.
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July 25, 2024
Hedge Fund Manager Ordered To Disgorge $67M In Profits
A hedge fund manager who copped to running a $100 million securities fraud scheme has been ordered by a New Jersey federal court to pay back the $67 million in profits she earned through misleading 40 investors about the fund's performance.
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July 25, 2024
Binance, Ex-CEO Say FTX Users Can't Blame Them For Fallout
Crypto exchange Binance, its former CEO and its U.S. arm told a Florida federal judge that a lawsuit from spurned users of now-defunct competitor FTX wrongly tries to blame two social media posts from Binance founder Changpeng Zhao for FTX's stunning collapse rather than the fraudulent conduct of FTX executives.
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July 25, 2024
Paramount-Skydance Deal Is Redstone Windfall, Investor Says
A shareholder of Paramount Global Class B common stock on Wednesday sued chairwoman Shari Redstone and several members of its board over the allegedly "unfair" merger with Skydance Media LLC, claiming the deal is being orchestrated to cash out Redstone's investments in Paramount at a substantial premium compared to other stockholders.
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July 25, 2024
3rd Circ. Says Service Flub Sinks SEC's Ponzi Scheme Win
The Third Circuit on Wednesday vacated a $500,000 default judgment against a Swiss resident accused of operating a $1.4 million Ponzi scheme, finding email service used by the U.S. Securities and Exchange Commission was improper under the Hague Service Convention.
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July 25, 2024
Via Renewables Investor Sues In Chancery Over Buyout Deal
A former common stockholder of Via Renewables Inc. has sued the Houston energy company's board members and controlling stockholders in Delaware's Court of Chancery, alleging they breached their fiduciary duties in connection with a June 13 buyout that took the company private.
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July 25, 2024
Vanguard Opposes Investors' Cert. Bid In Tax Liability Suit
A group of investors accusing Vanguard of violating its fiduciary duties by triggering a sell-off of assets that left smaller investors with massive tax bills shouldn't be granted class certification, the asset manager told a Pennsylvania federal court.
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July 25, 2024
Mass. Court Revives Malpractice Suit Over Late Arbitration
Massachusetts' intermediate-level appellate court on Thursday revived a legal malpractice suit against a pair of attorneys who allegedly waited too long to file an arbitration on their client's behalf, finding that a lower court was wrong to grant the lawyers a pretrial win.
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July 25, 2024
Manufacturer Dodges Workers' 401(k) Fee Suit, For Now
An Illinois federal judge threw out two workers' lawsuit accusing a manufacturing company of saddling its $1.6 billion retirement plan with excessive recordkeeping and administrative fees, but left the door open for them to revise their complaint.
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July 24, 2024
SEC Unlikely To Relitigate Loss On Hedge Fund Regs
The U.S. Securities and Exchange Commission appears ready to accept defeat in its efforts to require more detailed disclosures from private fund managers, with attorneys saying the agency's continued silence since last month's Fifth Circuit loss likely indicates it will not press the issue any further.
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July 24, 2024
FDIC's Hill Says Basel Plan Needs New Draft With All Aboard
The Federal Deposit Insurance Corp.'s second-in-command called Wednesday for federal regulators to move in unison as they revise their controversial Basel III endgame plan for tougher big-bank capital requirements, saying any next draft should be comprehensive and backed by all the agencies involved.
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July 24, 2024
Ex-Arena Group CEO Says He's Owed Fees For Dueling Suits
The former CEO of digital publisher The Arena Group is demanding that the company make its contractual payments to him to cover his costs for dueling lawsuits against one another in separate state courts, according to a Wednesday suit in Delaware Chancery Court.
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July 24, 2024
PE Firm Ran $37M Ponzi-Like Cannabis Scheme, SEC Says
A California private equity fund ran a Ponzi-like scheme, using much of $37 million raised from investors to pay other shareholders instead of putting the money into cannabis companies, the U.S. Securities and Exchange Commission told a California federal court this week.
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July 24, 2024
Meme Stock Investor Opposes Robinhood Settlement For Now
A meme stock investor on Wednesday urged a Florida federal judge to deny a settlement between Robinhood and other traders who say they sustained losses when the exchange restricted trading of certain stocks during a social media fueled run, since he says he hasn't received any details on the deal.
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July 24, 2024
Intelsat Insider Trading Claims Don't Connect, 9th Circ. Rules
The Ninth Circuit on Wednesday affirmed a lower court's dismissal of claims accusing satellite company Intelsat stakeholders of insider trading, saying the suing hedge funds did not properly plead that the shareholders possessed material nonpublic information at the time of their trades.
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July 24, 2024
22% Of FINRA Member Firms Join Remote Inspection Program
The Financial Industry Regulatory Authority said Wednesday that 741 firms have opted to participate in a new pilot program for remote inspections of broker-dealers, representing a 22% share of the regulator's member firms.
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July 24, 2024
Ex-Wells Fargo Director Angles For $32M In ADA Trial
A former Wells Fargo managing director is seeking more than $32 million in economic damages after he said the bank laid him off to avoid dealing with his accommodation request, a North Carolina federal jury heard Wednesday on the third day of his Americans with Disabilities Act trial.
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July 24, 2024
EV Co. Scores Initial OK On $13M Deal To End Investor Suits
A Colorado federal judge has granted preliminary approval to a $13.3 million settlement resolving shareholder lawsuits against commercial electric-vehicle company Lightning eMotors, whose executives and directors had been accused of touting unrealistic growth projections in the lead-up to a 2021 merger.
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July 24, 2024
Navajo Coal Co. Appeals FINRA Arbitration Order In $11M Fight
A Navajo coal-mining company has wasted no time in appealing a Pennsylvania federal judge's order refusing to grant the tribe-owned business's bid to halt arbitration proceedings against a private equity firm in an $11 million dispute over their financing agreement.
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July 24, 2024
NBA's Pelicans Seek To Recoup Crypto Co.'s Sponsor Fees
The NBA's New Orleans Pelicans asked a Louisiana federal court to force cryptocurrency mining company PrimeBlock Operations LLC to either pony up the sponsorship fee it failed to deliver years ago or make good on a subsequent $500,000 settlement offer.
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July 24, 2024
Ex-Pharma Exec Gets Jail For Insider Trading On Kodak Loan
A Manhattan federal judge sentenced a former pharmaceutical executive from South Carolina to three months in prison Wednesday for taking over $500,000 of illegal trading profit based on his advance knowledge that Kodak would get a massive pandemic-era government loan.
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July 24, 2024
Chancery OKs $6M Deal Recovery After 'Voidness' Ruling
The Delaware Supreme Court's partial reversal last year of a vice chancellor's findings that upheld an investment company's foreclosure on $50 million in co-founder equity units cleared the way on Wednesday for the same company to recoup more than $6 million in damages and expenses.
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July 24, 2024
Vista Outdoor Sued In Chancery For Docs On Sale Plans
A Vista Outdoor Inc. stockholder has sued in Delaware's Court of Chancery for records on the company's breakup and sale plan, which saw directors abandon an initial effort to spin off but retain an interest in its sporting products business and instead propose a sale to Czechoslovak Group AS.
Expert Analysis
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Keeping Up With Class Actions: A New Era Of Higher Stakes
Corporate defendants saw unprecedented settlement numbers across all areas of class action litigation in 2022 and 2023, and this year has kept pace so far, with three settlements that stand out for the nature of the claims and for their high dollar amounts, says Gerald Maatman at Duane Morris.
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5 Climate Change Regulatory Issues Insurers Should Follow
The climate change landscape for insurers has changed dramatically recently — and not just because of the controversy over the U.S. Securities and Exchange Commission's climate-related risk disclosure rules, says Thomas Dawson at McDermott.
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What's Extraordinary About Challenges To SEC Climate Rule
A set of ideologically diverse legal challenges to the U.S. Securities and Exchange Commission's climate disclosure rule have been consolidated in the Eighth Circuit via a seldom-used lottery system, and the unpredictability of this process may drive agencies toward a more cautious future approach to rulemaking, say attorneys at Thompson Coburn.
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Series
Swimming Makes Me A Better Lawyer
Years of participation in swimming events, especially in the open water, have proven to be ideal preparation for appellate arguments in court — just as you must put your trust in the ocean when competing in a swim event, you must do the same with the judicial process, says John Kulewicz at Vorys.
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Key Priorities In FDIC Report On Resolving Big Bank Failures
The Federal Deposit Insurance Corp.'s report last month on the resolvability of large financial institutions contains little new information, but it does reiterate key policy priorities, including the agency's desire to enhance loss-absorbing capacity through long-term debt requirements and preference for single-point-of-entry resolution strategies, say attorneys at Freshfields.
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A Recipe For Growth Equity Investing In A Slow M&A Market
Carl Marcellino at Ropes & Gray discusses the factors bolstering appetite for growth equity fundraising in a depressed M&A market, and walks through the deal terms and other ingredients that set growth equity transactions apart from bread-and-butter venture capital investing.
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Opinion
SEC Doesn't Have Legal Authority For Climate Disclosure Rule
Instead of making the required legal argument to establish its authority, the U.S. Securities and Exchange Commission's climate-related disclosure rule hides behind more than 1,000 references to materiality to give the appearance that its rule is legally defensible, says Bernard Sharfman at RealClearFoundation.
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What 100 Federal Cases Suggest About Changes To Chevron
With the U.S. Supreme Court poised to overturn or narrow its 40-year-old doctrine of Chevron deference, a review of 100 recent federal district court decisions confirm that changes to the Chevron framework will have broad ramifications — but the magnitude of the impact will depend on the details of the high court's ruling, say Kali Schellenberg and Jon Cochran at LeVan Stapleton.
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Opinion
SEC Should Be Allowed To Equip Investors With Climate Info
The U.S. Securities and Exchange Commission's new rule to require more climate-related disclosures will provide investors with much-needed clarity, despite opponents' attempts to challenge the rule with misused legal arguments, say Sarah Goetz at Democracy Forward and Cynthia Hanawalt at Columbia University’s Sabin Center for Climate Change.
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What Makes Unionization In Financial Services Unique
Only around 1% of financial services employees are part of a union, but that number is on the rise, presenting both unique opportunities and challenges for the employers and employees that make up a sector typically devoid of union activity, say Amanda Fugazy and Steven Nevolis at Ellenoff Grossman.
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How EB-5 Regional Centers Can Prepare For USCIS Audits
In response to the recently announced U.S. Citizenship and Immigration Services guidelines that require EB-5 regional center audits every five years to verify their compliance with immigration and securities laws, regional centers should take steps to facilitate a seamless audit process, say Jennifer Hermansky and Miriam Thompson at Greenberg Traurig.
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FDIC Bank Disclosure Rules Raise Important Questions
The Federal Deposit Insurance Corp.'s new rules mandating disclosures for nonbanks offering deposit products leave traditional financial institutions in a no-man's land between fintech-oriented requirements and the reality of personal service demanded by customers, say Paul Clark and Casey Jennings at Seward & Kissel.
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Recent Wave Of SEC No-Action Denials May Be Slowing
The U.S. Securities and Exchange Commission in March granted no-action relief to Verizon and others on the grounds that a director resignation bylaw proposal would mean violating Delaware law, bucking recent SEC hesitation toward such relief and showing that articulating a basis in state law is a viable path to exclude a proposal, say attorneys at Winston & Strawn.
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Don't Use The Same Template For Every Client Alert
As the old marketing adage goes, consistency is key, but law firm style guides need consistency that contemplates variety when it comes to client alert formats, allowing attorneys to tailor alerts to best fit the audience and subject matter, says Jessica Kaplan at Legally Penned.
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10b-5 Litigation Questions Follow Justices' Macquarie Ruling
Last month, the U.S. Supreme Court held in Macquarie v. Moab that pure omissions are not actionable under U.S. Securities and Exchange Commission Rule 10b–5(b), creating a slightly higher bar for plaintiffs and setting the stage for further litigation over several issues, say Steve Quinlivan and Sean Colligan at Stinson.