The interpretation and application of the federal securities laws has in recent years proven to be a rapidly changing arena. For that reason, it is a particularly welcome development that the authors of the “Federal Securities Litigation: A Deskbook for the Practitioner” have released the latest update of their single-volume resource on litigation under the U.S. federal securities laws. The authors – Daniel Kramer and Audra Soloway of the Paul Weiss law firm, Jeff Hammel and David Brodsky of the Latham & Watkins law firm – have produced a fully updated version of the book, with changes reflecting important recent developments in the securities case law. The result is an updated volume that is clear, concise, and well-organized. Information about the 2016 update can be found here.
The updated edition is organized with practitioners in mind. The book’s structure and content anticipates the kinds of practical issues that a practitioner might face, including, for example, pleading venue and personal jurisdiction. The book also addresses obscure but occasionally critical issues such as, for example, the definition of “security” for purposes of pleading the existence of a security.
The book includes substantial updates reflecting areas of the law that have changed significantly or that have become increasingly important in recent years. For example, the book includes an updated sub-chapter on transnational securities fraud claims in light of the U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank, as well as a sub-chapter on pleading scienter under the PSLRA in light of the U.S. Supreme Court’s 2007 decision in Tellabs v. Makor Issues & Rights, Ltd.
I was particularly interested to read the authors’ treatment of evolving problems in Section 11 cases, including cases involving statements of opinion in light of the U.S. Supreme Court’s 2015 opinion in Omnicare v. Laborers District Council Construction Industry Pension Fund; as well as recurring questions involving statute of limitations and statute of repose questions arising under the American Pipe doctrine (about which, refer here).
The book also contains separate chapters addressing less familiar areas of the federal securities law that from time to time can be critically important in securities lawsuits, including, for example, Sections 12(a)(1) and 12(a)(2) of the Securities Act and Sections 13, 14, and 18 in the Exchange Act. In light of the significant increase in recent months of federal court merger objection lawsuits asserting Section 14 claims, these part of the book may be particularly relevant and helpful.
While perusing the volume, I was amused to find, in the book’s discussion of the “bespeaks caution” doctrine, a discussion of the Third Circuit’s 1993 decision in the In re Donald Trump Casino Securities Litigation, a case involving inaccurate projections of revenues and earnings for an as yet unfinished casino-hotel. The issuer’s statement of belief that its casinos would generate sufficient income to meet the debt service requirement was held immaterial in light of the fact that the prospectus gave specific warnings as to the uncertainty of projected revenues. Thus, no reasonable investor could believe other than that the bonds, which promised to pay 14 percent interest at a time when high quality bonds paid 9 percent, were a risky investment that might result in loss or default. In other words, those aggrieved that the issuer had promised more than it delivered cannot be heard to complain, because any reasonable person would understand that the entire deal was a risky proposition. I will refrain from attempting to connect this earlier incident to more contemporary events.
I recommend this updated volume for anyone whose activities require them to be fully informed about litigation under the federal securities laws. Prospective readers will want to understand, however, that this volume addresses the federal securities laws’ substantive provisions and requirements. It does not address many of the procedural aspects under the federal securities laws, such as the procedural requirements of the PSLRA (for example, involving lead plaintiff requirements and determinations). The volume also does not address the many procedural issues that can arise when securities lawsuits are asserted as class actions (such as, for example, class certification issues). Rather the book represents a single volume resource for anyone who needs to quickly know about and understand the substantive requirements of the various provisions of the federal securities laws.