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Securities
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June 07, 2024
Battle Lines Drawn As Major Del. Corporate Law Tweak Looms
On Tuesday morning, seven Delaware state senators are set to open the first public round of debates on a fast-tracked Delaware General Corporation Law amendment package that would allow boards to cede some governance rights to big stockholders and Delaware Court oversight for some corporate actions to other jurisdictions.
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June 07, 2024
SEC Fines Asian Food Supplier $3.9M Over Splurging Ex-CEO
The U.S. Securities and Exchange Commission has reached a $3.9 million settlement with HF Foods Group Inc. over claims that the food distributor issued false and misleading disclosures, just two days after the regulator settled with two HF Foods executives in a separate case over similar claims.
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June 07, 2024
Atty Comms Are Fair Game After NJ Guilty Plea, Feds Say
Prosecutors told a New Jersey federal court Friday that communications between convicted and later pardoned fraudster Eliyahu Weinstein and Shlomo Erez, his Israeli attorney, must be turned over in Weinstein's new fraud case as Erez pled guilty to involvement in the alleged scheme in late May.
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June 07, 2024
Baker Donelson Can't Ax Ponzi Scheme Suit, Receiver Says
A federal receiver has urged a Mississippi federal judge to reject Baker Donelson's summary judgment bid seeking a pretrial win on civil conspiracy claims the firm allowed a nine-figure timber business Ponzi scheme to unfold,
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June 07, 2024
Shein's Pursuit Of London IPO Proves US-China Rift Persists
Online fashion giant Shein's expected pivot to London rather than the United States for its initial public offering — triggered by persistent tensions between China and the U.S. — will be closely watched by IPO prospects mulling where to list their shares in a dicey geopolitical climate, experts say.
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June 07, 2024
Emboldened SEC Spells Double Trouble For Defense Bar
The U.S. Securities and Exchange Commission's enforcement division has taken an increasingly aggressive stance in recent years thanks in part to an influx of federal prosecutors joining the agency and court decisions that have gradually become more permissive on parallel civil and criminal investigations, defense lawyers say.
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June 07, 2024
Former Allianz Unit Exec Admits Role In $6B Fund Fraud
A former portfolio manager at Allianz SE's U.S. unit told a Manhattan federal judge Friday that he lied to investors about the risks of the German finance giant's now-defunct Structured Alpha Funds, admitting to his role in a $6 billion fraud.
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June 06, 2024
Tesla Sued Over Vote On Revived $55B CEO Pay, Texas Move
Tesla, its board of directors and CEO Elon Musk were hit with a proposed class action in Delaware Chancery Court on Thursday over the company's plan to seek stockholder approval for the same $55.8 billion Musk compensation plan voided in January, along with reincorporation of Tesla as a Texas company.
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June 06, 2024
NY Prosecutor Says DOJ Self-Disclosure Policies Are Working
The proliferation of policies across the U.S. Department of Justice crediting firms and individuals for voluntarily self-disclosing misconduct indicates the approach is effective, even though instances of such disclosures aren't overwhelming, a senior federal prosecutor in New York told a gathering of compliance officers on Thursday.
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June 06, 2024
Health Co. CEO Sold Stock Amid Souring Cigna Deal, Jury Told
A stock analyst told California federal jurors Thursday he noticed in disclosure forms that the founder of healthcare company Ontrak Inc. was starting to sell company shares a few weeks before Cigna announced it was terminating its $90 million contract with the company.
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June 06, 2024
Treasury Eyes AI As OCC Chief Calls For More 'Accountability'
The U.S. Department of the Treasury on Thursday launched an inquiry into the rollout of artificial intelligence in financial services, a move that came as the Office of the Comptroller of the Currency's acting chief cautioned that a Wall Street "nightmare" scenario involving the technology "seems uncomfortably plausible."
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June 06, 2024
White Collar Boutique Sued By Ex-Client Over Representation
White collar boutique Clark Smith Villazor LLP and one of its name partners is facing a lawsuit from a former client, a convicted securities fraud defendant who claims the firm caused him to be arrested by the FBI and face millions of dollars in fines.
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June 06, 2024
Calif. Judge Pauses Wells Fargo Investor Row Over State Case
A California federal judge has paused a pension system's proposed class action accusing top Wells Fargo & Co. officers of enabling a "culture of lawlessness," making way for a state court suit that alleges similar wrongdoing.
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June 06, 2024
SEC Sued For Info On Text Message Sweeps
The American Securities Association sued the U.S. Securities and Exchange Commission in Florida federal court on Thursday, pushing for the disclosure of evidence it says could shed light on how the regulator came to impose billions of dollars' worth of fines against firms whose employees communicate business-related information over unmonitored texting and chat apps.
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June 06, 2024
Pharma Co. Misled Investors On Seizure Drug Trial, Suit Says
Marinus Pharmaceuticals has been hit with a proposed shareholder class action alleging that the company understated the risks of an epilepsy drug trial and did not warn investors that trial enrollment would be suspended when it failed to meet certain criteria.
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June 06, 2024
Investors Say Fund Preyed On Alums For RICO Scheme
A group of Chinese and American investors alleged this week that they were ripped off to the tune of millions of dollars by a group of fraudsters who, through a series of fraudulent bank loans, bogus tax filings and false advertising, induced them into putting their money into a Los Angeles real estate project.
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June 06, 2024
NY AG Says $1B Crypto Pyramid Scheme Targeted Immigrants
The New York Attorney General's Office on Thursday accused a digital assets trading firm, its founders and an affiliated crypto mining firm of running a billion-dollar pyramid scheme that defrauded hundreds of thousands of investors, many of whom are members of Haitian and other immigrant communities.
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June 06, 2024
Kwok's 'Whole Movement Is A Scam,' Ex-Fundraiser Tells Jury
A former top deputy in exiled Chinese billionaire Ho Wan Kwok's anti-Chinese Communist Party movement testified in Manhattan federal court this week that she raised millions of investor dollars out of a deep belief in the cause, but has since realized the entire enterprise was a "scam."
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June 06, 2024
Ex-Autonomy CEO, VP Both Cleared In HP Criminal Fraud Trial
A California federal jury on Thursday acquitted former Autonomy CEO Michael Lynch and former finance Vice President Stephen Chamberlain of criminal fraud and conspiracy charges following an 11-week trial over allegations that the two conned HP into overpaying billions for the British tech company.
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June 06, 2024
Trump Media SPAC Sponsor Must Post Bond In Chancery Row
Dissenting members of the LLC sponsor for the blank check company that took Trump Media & Technology Group public in March must post a hefty 10% security for potential losses on more than 1.5 million shares — now trading at $46 — snarled in a sponsor control dispute.
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June 06, 2024
Biote Investors Sue Cooley, SPAC After Huge Merger Loss
Family trust investors in Biote Corp. have sued Cooley LLP and the "hormone optimization" company's top brass over the $700 million merger Biote completed with a special purpose acquisition company, saying the deal was a "disastrous transaction to divert approximately $70 million of merger consideration to themselves and gain control of an enterprise they did not build."
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June 06, 2024
Latham Leads Robinhood In $200M Buy Of Crypto Exchange
Robinhood said on Thursday that it will buy cryptocurrency exchange Bitstamp for approximately $200 million, as the electronic trading platform looks to scale up its global services for digital assets.
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June 05, 2024
Tokenizing Real Assets Touches Crypto Concerns, Reps Say
Putting stocks and other real-world assets on the blockchain is markedly different from issuing cryptocurrencies, but federal lawmakers on Wednesday showed that the debate about how to regulate so-called tokenization is decidedly similar when it comes to weighing its potential efficiencies against threats to privacy and consumer protection.
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June 05, 2024
Adviser Can't Unfreeze Assets To Pay Atty Fees
A Connecticut federal judge is standing by his earlier decision refusing to release $50,000 in frozen assets to pay the attorneys of an investment adviser and his wife, who face a $5.9 million fraud suit from the U.S. Securities and Exchange Commission.
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June 05, 2024
Bank Shareholders Say Venezuelan Takeover Cost Them $27M
Shareholders in a small Miami bank told jurors Wednesday that board members working for the Venezuelan government had taken control of the bank and cost shareholders $27 million by engaging with the sanctioned Venezuelan government.
Expert Analysis
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Innodata Suit Highlights 'AI Washing' Liability Risk For Cos.
A class action against software company Innodata over so-called AI washing, one of the first of its kind, underscores the litigation and enforcement risks that can arise from the U.S. Securities and Exchange Commission's novel theory about misleading artificial intelligence capabilities, say attorneys at Bracewell.
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Tips For CCOs Submitting Annual Compliance Reports
Recent settlement actions by the U.S. Commodity Futures Trading Commission, coupled with statements made by both CFTC and U.S. Securities and Exchange Commission leadership, demonstrate why this year's chief compliance officer annual report filing is no ordinary exercise, and highlight the increasing importance of the report and its usage, say attorneys at Steptoe.
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Fintech 'Prenups': Planning For A Card Program Breakup
After a year of economic downturns, some banks and their fintech partners are realizing they may have rushed to the altar without a good prenup, but planning ahead can curb both foreseeable and unexpected issues in the event of a termination of a bank-fintech card-issuing agreement, say Andrew Grant at Ketsal and Richard Malish at Community Federal Savings Bank.
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SEC's Final Climate Disclosure Rules: What Cos. Must Know
While the U.S. Securities and Exchange Commission's scaled-back final rules requiring public companies to disclose certain climate-related information still face challenges in court, companies should begin preparing now to comply with the rules, say Celia Soehner and Erin Martin at Morgan Lewis.
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Caremark 2.0 Lends Shareholders Agency Against Polluters
The Caremark doctrine has been liberalized by recent Delaware court decisions into what some have termed a 2.0 version, making derivative cases against corporations far more plausible and invigorating oversight duty on environmental risks like toxic spills and air pollution, say Joshua Margolin and Sean Goldman-Hunt at Selendy Gay.
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BIPA's Statutory Exemptions Post-Healthcare Ruling
The Illinois Supreme Court's November opinion in Mosby v. Ingalls Memorial Hospital, which held that the Biometric Information Privacy Act's healthcare exemption also applies when information is collected from healthcare workers, is a major win for healthcare defendants that resolves an important question of statutory interpretation, say attorneys at Quinn Emanuel.
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2nd Circ.'s Nine West Ruling Clarifies Safe Harbor Confusion
The Second Circuit’s recent ruling in Nine West’s Chapter 11 suit clarifies that courts in the circuit will apply a transfer-by-transfer analysis to determine the applicability of Section 546(e) of the Bankruptcy Code, and that to be safe harbored, a financial institution must act as an agent with respect to the specific transfer at issue, says Leonardo Trivigno at Carter Ledyard.
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Opinion
European Union Criticisms Of The FCPA Are Misguided
Some in the European Union have criticized U.S. enforcement of the Foreign Corrupt Practices Act for what they perceive as jurisdictional overreach, but this appears to overlook the crucial fact that jurisdiction is voluntary, and critics should focus instead on the lack of equivalent laws in their own region, say John Joy and YuTong Wang at FTI Law.
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What Fed's Credit-Linked Note FAQ Means For Capital Relief
U.S. banks that seek to mitigate their loss of liquidity under the Basel III capital requirements by issuing direct credit-linked notes should turn to recent Federal Reserve FAQs for insight into how this new use of synthetic securitizations may reshape risk and regulation in the U.S. market, says Cris Cicala at Stinson.
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Wildfire Challenges For Utility Investors: Regs And Financing
For investors in public utilities, wildfire liability considerations include not only regulatory complexities, but also bankruptcy claims resolution, financing judgments and settlements, and how to leverage organizational structures to maximize investment protections, say David Botter and Lisa Schweitzer at Cleary.
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Del. Dispatch: How Moelis Upends Stockholder Agreements
The Delaware Court of Chancery's Moelis decision last month upended the standard corporate practice of providing governance rights in stockholder agreements and adds to a recent line of surprising decisions holding that long-standing, common market practices violate Delaware law, say attorneys at Fried Frank.
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Litigation Inspiration: A Source Of Untapped Fulfillment
As increasing numbers of attorneys struggle with stress and mental health issues, business litigators can find protection against burnout by remembering their important role in society — because fulfillment in one’s work isn’t just reserved for public interest lawyers, say Bennett Rawicki and Peter Bigelow at Hilgers Graben.
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Wildfire Challenges For Utility Investors: Liability Theories
The greater frequency and scale of wildfires in the last several years have created operational and fiscal challenges for electric utility companies, including new theories of liability and unique operational and risk management considerations — all of which must be carefully considered by utility investors, say David Botter and Lisa Schweitzer at Cleary.
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Under The Hood Of The SEC Securitization Conflict Rule
Elanit Snow and Julia Vitter of Proskauer consider the U.S. Securities and Exchange Commission's recently finalized rule that prohibits conflicts of interest in certain securitization transactions, uncovering what the new regulation does and doesn’t entail, why it was adopted, and how commenters' remarks affected the process.
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Series
Skiing Makes Me A Better Lawyer
A lifetime of skiing has helped me develop important professional skills, and taught me that embracing challenges with a spirit of adventure can allow lawyers to push boundaries, expand their capabilities and ultimately excel in their careers, says Andrea Przybysz at Tucker Ellis.