In the latest coronavirus outbreak-related securities suit, a Canadian diagnostic medical testing company that hoped to obtain emergency regulatory authorization for its rapid COVID-19 antigen test has been hit with a securities class action lawsuit after the company failed to obtain the regulatory approvals. A copy of the plaintiff’s complaint, filed on December 17, 2020 in the Central District of California, can be found here. In addition, as discussed below, this past week, the SEC separately filed a coronavirus-related enforcement action against a biotechnology company that touted its ability to provide a blood-based diagnostic test for the coronavirus.
Continue Reading Canadian Testing Company Hit with COVID-19-Related Securities Suit

On December 4, 2020, in what is according to the SEC its first proceeding charging an issuer for misleading investors about the financial effects of the pandemic on company finances and operations, the SEC entered into a settled Cease and Desist Order with The Cheesecake Factory Incorporated based on the agency’s determinations that the company’s late March and early April statements that it was “operating sustainably” were, without further information, misleading to investors.  The SEC’s December 4, 2020 Cease-and-Desist Order can be found  here, and the agency’s December 4, 2020 press release about the Order can be found here.
Continue Reading SEC Charges Cheesecake Factory Over Misleading COVID-Related Disclosures

Technology-based education firm K12, Inc., which hoped to be able to profit from the pandemic-related shift to virtual learning , has been hit with a securities class action lawsuit alleging that the company’s share price declined after school systems using its platform to address their online learning needs allegedly experienced disappointing results. A copy of the shareholder plaintiff’s November 19, 2020 complaint can be found here.
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Since the coronavirus outbreak emerged earlier this year, I have been tracking the COVID-19-related securities class action lawsuits and writing about each of the cases as they have come in. In an October 28, 2020 memo entitled “COVID-19: Lessons from the Second Wave of Securities Fraud Lawsuits” (here), the WilmerHale law firm takes a deeper look at the coronavirus-related securities litigation, with particular focus on the securities suits filed in the May to September 2020 time frame. Along the way, the memo identifies a number of securities lawsuits filed during that period as coronavirus-related that I had not included in my COVID-19 litigation tally. As discussed below, the memo makes several interesting points about the coronavirus-related securities suits. I also discuss below whether or not I agree that the additional cases that the law firm identified in the memo belong on the list of coronavirus-related cases.
Continue Reading Tallying and Analyzing COVID-19-Related Securities Suits

As part of a continuing series of recordings, I have been participating in sessions the Professional Liability Underwriting Society (PLUS) has organized discussing the potential D&O liability and insurance issues arising out of the coronavirus outbreak and the related economic disruption. In each session in the series I have been joined by my good friends

In the latest COVID-19-related securities class action lawsuit filing, the cruise ship company Royal Caribbean Cruises has been hit with a securities suit alleging that the as the viral disease spread earlier this year the company attempted to soft-pedal its statements about the outbreak’s impact on its operations and bookings, as well as about the safety threat that the outbreak represented for ship crews. As discussed further below, the new lawsuit against Royal Caribbean reflects several of the key trends in the coronavirus-related lawsuits. A copy of the new complaint against Royal Caribbean can be found here.
Continue Reading Royal Caribbean Hit with COVID-19-Related Securities Suit

In the latest SEC enforcement action relating to alleged misrepresentations pertaining to the coronavirus outbreak, the agency has filed a securities fraud action against the President and Chief Science Officer of a biotechnology company who allegedly made false statements to investors concerning the status of his company’s COVID-19 test. The enforcement action complaint also contains allegations concerning the individual’s statements about the status of his company’s delinquent SEC reporting. The enforcement action underscores the fact that the SEC intends to enforce the securities laws with respect to company statements falsely suggesting the company is in a position to profit from the coronavirus outbreak. A copy of the SEC’s September 25, 2020 complaint can be found here. The SEC’s September 25, 2020 press release regarding the enforcement action can be found here.
Continue Reading SEC Files COVID-19-Related Enforcement Action Against Biotech Company Exec

In the latest D&O lawsuit based on allegations related to the COVID-19 outbreak, a plaintiff shareholder has filed derivative lawsuit against the board of a vaccine developer, Vaxart, claiming that corporate insiders and the company’s largest investor profited when the company falsely claimed that it was part of the federal government’s accelerated program for the development of a COVID-19 vaccine. The complaint in the lawsuit, which alleges that the defendants violated their fiduciary duties and federal securities laws regarding proxy disclosures, can be found here.
Continue Reading Vaccine Company Hit with COVID-19-Related Derivative Lawsuit

A California-based vaccine development company has been hit with a coronavirus outbreak-related securities class action lawsuit, based on the company’s statements about its COVID-19 vaccine development efforts and about the company’s participation in a federal government vaccine development program. In addition, in a separate development, a different company has been hit with a coronavirus outbreak-related shareholder derivative lawsuit, based on the company’s statements concerning its ability to provide COVID-19 testing kits.
Continue Reading Two Companies Hit with COVID-19-Related D&O Lawsuits

In a development that will come as a surprise to no one who has been reading the business news pages over the last few weeks, Eastman Kodak and certain of its executives have been hit with a securities class action lawsuit based on allegations surrounding the disclosure of a $765 loan to the company from a government agency for the company to develop pharmaceutical materials, including ingredients of COVID-19 drugs, as well as on allegations of insider trading relating to the loan disclosures. As discussed below, the lawsuit is the latest in a series of securities class action lawsuits that have been filed related to the coronavirus outbreak. The complaint in the Kodak lawsuit can be found here.
Continue Reading Kodak Hit With Securities Suit Over COVID-19-Related Loan Disclosure and Related Trading