Guest Post: Constitutionality of SEC’s ALJs Headed to Supreme Court?

sarah good

Sarah A. Good

laura hurtado

Laura C. Hurtado

One of the recurring questions in the securities regulatory enforcement arena has been the question of whether or not the Securities and Exchange Commission’s use of administrative law judges violates the U.S. Constitution. As discussed in the following guest post from Sarah A. Good and Laura C. Hurtado of the Pillsbury law firm, the Tenth Circuit, in direct conflict with a prior decision from the D.C. Circuit, recently held that the SEC’s appointment of administrative law judge’s violates the constitution. The circuit split suggests that this issue may be on its way to the U.S. Supreme Court.

 

I would like to thank Sarah and Laura for their willingness to allow me to publish their article as a guest post. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah and Laura’s guest post. Continue Reading

Court Holds U.S. Securities Laws Apply to OTC Transactions in Volkswagen’s Sponsored ADRs

vwDuring the more than six years since the U.S. Supreme Court issued its opinion in Morrison v National Australia Bank, the lower courts have worked out a host of issues about how Morrison applies in a variety of circumstances. One issue that has continued to percolate is the question of how the Morrison decision applies to non-U.S. companies that have American Depository Receipts (ADRs) trading over- the-counter (OTC) in the U.S.

 

These issues arose again the U.S. securities class action lawsuit that Volkswagen ADR investors filed against the company and related defendants based on allegations involving the company’s recent high-profile vehicle emissions scandal. The Volkswagen defendants argued in reliance on Morrison that the U.S. securities laws do not apply to the OTC transactions in the company’s ADRs. In an interesting January 4, 2017 opinion (here), Northern District of California Judge Charles R. Breyer held that the U.S. securities laws do indeed apply to over-the-counter transactions in the U.S. of Volkswagen’s sponsored Level 1 ADRs. Continue Reading

D&O Insurance: Despite Trial Court “Fraud” Determination, Fraud Exclusion Not Triggered

delawareIn an August 27, 2015 post-trial opinion (discussed here), Delaware Vice-Chancellor Travis Laster found that Dole Foods CEO David Murdock, and the company’s General Counsel and Chief Operating Officer, C. Michael Carter, had committed “fraud” in connection with a November 2013 “going private” transaction. However, according to a December 21, 2016 Delaware Superior Court decision in the subsequent insurance coverage litigation, because Laster’s findings of fraud were not part of the subsequent post-settlement final judgment in the case, the fraud exclusion in Dole’s D&O insurance program did not preclude coverage for the settlement. Anyone interested in understanding how the fraud exclusion in a D&O policy operates will want to read this opinion. A copy of the Delaware Superior Court opinion can be found here.
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The Top Ten D&O Stories of 2016

tenWhile the world of directors’ and officers’ liability is always dynamic, the D&O liability arena was particularly eventful during 2016, with significant implications for what may lie ahead in 2017 – and possibly for years to come.  With full awareness that a complete inventory of key 2016 events could actually be much longer, here is a list of the Top Ten D&O stories of 2016. Continue Reading

2016 Securities Lawsuit Filings Surge to Record Levels

wooden-judges-gavelLargely driven by a surge in the number of federal court merger objection class action lawsuits, the number of securities class action lawsuit filings during 2016 reached record high levels. The number of filings in 2016 accelerated as the year increased, with a significantly greater number of filings in the year’s second half, compared to the number of filings in the year’s first half. Continue Reading

Long-Running Halliburton Securities Suit Settles for $100 Million

halliburtonAccording to the company’s December 23, 2016 press release (here), Halliburton has reached an agreement to settle the long-running securities class action pending against the company and certain of its directors and officers for $100 million. During its 14-year existence, the storied case had made two trips to the U.S. Supreme Court and three trips to the Fifth Circuit. The settlement is subject to court approval. Nate Raymond’s December 23, 2016 Reuters article about the settlement can be found here. Continue Reading

A Watershed Event in Litigation Funding Industry and More Thoughts About Litigation Funding

gavel1Any question that litigation funding has become a very big business was completely eliminated by the December 14, 2016 announcement of the merger between Burford Capital Ltd., the world’s largest publicly traded litigation funding firm, and GKC Holdings, LLC, the parent company of Gerchen Keller Capital, the largest privately held litigation funding firm. When the combination is completed the merged company will have $2 billion committed to litigation and a current portfolio of more than $1.2 billion in litigation investments, with hundreds of millions of dollars of capital available for further litigation investments.  Continue Reading

Data Breach-Related Shareholder Derivative Lawsuit Filed Against Wendy’s

wendysCyber-breach related D&O lawsuits have not fared particularly well. Indeed, after the shareholder derivative lawsuit against the board of Home Depot was recently dismissed, it was unclear what the future direction for cybersecurity litigation against corporate officials might be. But though the future direction of this type of litigation is unclear, it seemed unlikely despite the poor track record that we had seen the last of these cases. Among other things, it seemed likely that entrepreneurial plaintiffs’ lawyers would continue to try to identify their litigation opportunity for these kinds of cases. As it has now turned out, we didn’t have to wait long for confirmation that despite the dismissals we had not seen the last of the cyber breach-related D&O lawsuits.  Continue Reading

Class Action Litigation in Australia Poised for Further Growth

australiaClass actions have been a big deal in the U.S. for a long time now, but what is really interesting is that class actions (and other forms of collective action) are now becoming a big deal outside of the U.S. One place in particular where class actions have become a very big deal indeed is in Australia. As detailed in a recent study, class actions have in recent years become a well-established part of Australia’s litigation landscape. Recent judicial developments seem likely to make Australia an even more attractive jurisdiction for class action litigation. Continue Reading

Bribery-Related Follow-On Securities Suit Filed Against U.K.-Based Rio Tinto

rio tintoIn yet another securities suit following on news of a bribery or corruption investigation, and in the latest securities suit involving a global mining company, on December 12, 2016, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against the world’s second-biggest mining company, U.K.-based Rio Tinto plc, and certain of its current and former officers. The complaint arises out of the company’s recent announcement of a corruption investigation involving its operations in the Simandou iron mine, located in southern Guinea. As discussed below, this latest lawsuit exemplifies a number of the key securities litigation filing trends that have arisen this year. Continue Reading

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