Saturday, October 25, 2014

Court Hands Fraudster Stanford 110-Year Sentence, Orders Him to Pay $5.9 Billion Judgment

The U.S. District Court for the Southern District of Texas June 14 sentenced convicted fraudster R. Allen Stanford to 110 years in prison for master-minding a decades-long $7 billion Ponzi scheme, the Justice Department announced that day (United States v. Stanford, S.D. Tex., 09-00342, 6/14/12).

BNA INSIGHTS: 2011 Securities Litigation Highlights

The year 2011 was a remarkable one in securities litigation, with notable decisions from the Supreme Court and a number of interesting rulings from Circuit and District Courts as well. The Supreme Court issued three decisions covering important merits-related and class certification-related issues in securities class actions, following two significant securities decisions in 2010. Three of these five decisions from the last two years could be characterized as “plaintiff-friendly”— from a Supreme Court generally considered to be “pro-business.”

Jury Convicts Billionaire Stanford over Role in $7 Billion Ponzi Scheme

Texas billionaire R. Allen Stanford was convicted March 6 in the U.S. District Court for the Southern District of Texas on fraud and obstruction charges stemming from his alleged operation of a decades-long, $7 billion Ponzi scheme involving fraudulent certificates of deposit (United States v. Stanford, S.D. Tex., Cr. No. H-09-342, 3/6/12).

In a release that day, prosecutors said that after a six-week trial and three days of deliberation, jurors found Stanford liable on 13 of the 14 counts with which he was charged.

BNA INSIGHTS: Is Civil Loss Causation Applicable to Federal Criminal Sentencings?

The Supreme Court’s 2005 decision in Dura Pharmaceuticals, Inc. v. Broudo is the seminal authority on the appropriate measure of loss caused by a defendant’s fraudulent conduct in a civil securities fraud action…

Mutual Fund Investment Adviser Not Liable For Fund Prospectus’s Alleged Misstatements, Supreme Court Finds

An investment adviser that is a legally separate entity from the mutual fund that files an allegedly misleading prospectus cannot be held primarily liable in a private action under Securities and Exchange Commission Rule 10b-5 for “mak[ing]” a false statement…

If You Smell Smoke, When Do You Report the Fire? The Impact of the Matrixx Case on Disclosure of Adverse Event Reports

Under the recently decided case of Matrixx Initiatives Inc. v. Siracusano, the U.S. Supreme Court held that reports of “adverse events” that were experienced by a small number of users of a Matrixx product could constitute a material fact which should be disclosed, even if the reports were not “statistically significant” evidence that the adverse event was caused by the product. In coming to this conclusion, the court found that other, “contextual” factors lent support to the reports and that therefore (as stated in Basic Inc. v. Levinson 3 ) there was arguably “a substantial likelihood that the disclosure of the omitted fact [i.e., the potential existence of a causal relationship] would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.”

Class Securities Fraud Plaintiffs Score Supreme Court Victory in Suit Against Zicam Maker

In a major victory for class securities fraud plaintiffs, a unanimous U.S. Supreme Court concluded March 22 that shareholders may proceed with their claims that drug manufacturer Matrixx Initiatives Inc…

Citing Morrison Ruling, Court Narrows Class Suit over Alleged Fraud by France’s Vivendi SA

In a long-awaited ruling, the U.S. District Court for the Southern District of New York Feb. 22 significantly narrowed class securities fraud charges against Vivendi Universal S.A. and two former executives who allegedly made material misstatements about the French media conglomerate’s finances, causing its stock to trade at artificially high levels between 2000 and 2002…

OUTLOOK 2011: Supreme Court Set to Act on Pleading of Materiality, Loss Causation in Fraud Cases

In 2011, securities lawyers could see dramatic changes in litigation practice, as the U.S. Supreme Court turns its focus to fraud pleading requirements—in particular, materiality and loss causation.

Less clear, however, is what those changes will mean for litigants, regardless of what the justices ultimately decide. While…

BNA INSIGHTS: Defending Securities Law Claims Stemming from Mortgage Documentation Issues

In the fall of 2010, allegations surfaced that a number of U.S. mortgage servicing companies may have bypassed legally required steps to foreclose on a home. These allegations indicated that employees of some of the major loan servicers signed, and in some instances, back-dated thousands of documents, representing that the employees had personal knowledge of facts about…

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