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…

Court Approves Historic, $7.2 Billion Forfeiture for Victims of Bernard Madoff’s Ponzi Scam

The U.S. Bankruptcy Court for the Southern District of New York Jan. 13 approved an agreement between the Justice Department and the estate of the late Jeffrey Picower to forfeit more than $7.2 billion in proceeds traceable to…

Hedge Funds with Swaps May Not Sue in U.S. over Porsche’s Handling of VW Shares, Court Rules

The hedge funds that held swap agreements tied to German corporation Volkswagen’s shares cannot pursue U.S. securities fraud claims that Porsche Automobil Holding SE, also a German corporation, and two of its executives manipulated the price of VW’s shares, the U.S. District Court for the…

BNA INSIGHTS: Whistleblowers and the Resurgence of Internal Investigations

Many companies have come to doubt the value of cooperating with the Securities and Exchange Commission by self-reporting possible violations of the securities laws. As statistics show, while companies that self-report to the SEC arguably may receive some leniency in terms of sanctions, the vast majority are still rewarded with a black eye—they are named in SEC Enforcement actions. 1 The SEC’s recent case charging Bank of America, which had self-reported the facts, with securities law violations in…

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