As I noted in a recent post, one of the most distinctive phenomena in the U.S. financial markets this year has been the tremendous amount of IPO activity involving Special Purpose Acquisition Companies (SPACs). According to SPACInsider (here), there have been 243 SPAC IPOs so far in 2020 (as of December 22, 2020), raising total gross proceeds of over $81.3 billion. As I also noted in my prior post, lawsuits relating to SPACs are starting to accumulate. In the latest example of a securities suit relating to a SPAC transaction, a plaintiff shareholder has filed a securities class action against the surviving company following a SPACs acquisition of a target company; the complaint in the lawsuit names as defendants not only the CEO of the surviving company, but also the former president of the SPAC. As discussed below, this new lawsuit may have implications for possible future SPAC-related securities litigation in 2021, and possibly even beyond.
Continue Reading SPAC-Acquired Company Hit with Post-Acquisition Securities Suit

As I have noted in prior posts (most recently here), allegations of bribery and improper payments often lead to follow-on securities class action lawsuits. Although historically claimants in these kinds of securities suits have had mixed results, some of these lawsuits have resulted in significant settlements (including most notably the $3 billion settlement in the Petrobras case). In the latest of these bribery follow-on lawsuits to result in a significant settlement, on December 11, 2020, the parties to the securities lawsuit pending against the Chilean company Chemical and Mining Company of Chile Inc. (a/k/a Sociedad Química y Minera de Chile S.A., or “SQM’) filed with the  court their agreement to settle the lawsuit based on SQM’s agreement to pay $62.5 million. The parties’ December 11, 2020 stipulation of settlement can be found here. The lead plaintiff’s motion for preliminary approval of the settlement can be found here.
Continue Reading Chilean Company Pays $62.5 Million to Settle Bribery-Related Securities Suit

In the same December 11, 2020 Order in which it rejected the bid by the Texas Attorney General to overturn the results of the 2020 Presidential election, the U.S. Supreme Court also agreed to take up a case involving the effort of Goldman Sachs to overturn the certification of a class in the long-running securities lawsuit. The case relates to the bank’s alleged conflicts of interest in structuring collateralized debt obligation securities before the global financial crisis. The case will require the Court to address important questions pertaining to the ability of securities lawsuit defendants opposing class certification to attempt to rebut the presumption of reliance and the extent to which the defendants in opposing class certification can rely on matter that is also relevant to merits-related issues such as materiality.
Continue Reading U.S. Supreme Court Agrees to Take Up Securities Suit Class Certification Issues

A third California state court has ruled that a provision specifying that federal courts are the exclusive forum for the resolution of ‘33 act liability actions is valid and enforceable. This latest decision — in a state court securities class action lawsuit pending against Dropbox — suggests that a broad consensus is emerging in California court to enforce federal forum provisions. But while the Dropbox decision is largely consistent with the prior California state court decisions enforcing FFP, there are certain features of the Dropbox decision that make it noteworthy and interesting in its own right. A copy of the December 4, 2020 decision in the Dropbox case can be found here. A December 8, 2020 memo from the Seyfarth Shaw law firm about the ruling can be found here.
Continue Reading Third California State Court Upholds Enforceability of Federal Forum Provision

Jeffrey Lubitz
Elisa Mendoza

One of the most distinctive and interesting securities class action litigation phenomena in recent years has been the rise of event driven litigation. In the following guest post, Jeffrey Lubitz, Executive Director at ISS Securities Class Action Services, and Elisa Mendoza, Vice President of Operations at ISS Securities Class Action Services, take a detailed look at the event driven securities litigation phenomenon, which they describe as a new driver in the growth of securities suit filings. A complete version of this ISS SCAS white paper with footnotes, endnotes, and sources is available  on the ISS website. I would like to thank Jeff and Elisa for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would l like to submit a guest post. Here is Jeff and Elisa’s article.
Continue Reading Guest Post: Event Driven Securities Litigation: The New Driver in Class Action Growth

recent guest post on this site opined that because of the volume of Section 11 litigation being filed in New York state court, New York’s courts “will have a major role in shaping the standards applied in Securities Act litigation going forward.” If that is the case, then the recent New York appellate court ruling reversing a trial court’s dismissal motion denial in a state court Section 11 action could be significant. According to a December 4, 2020 Law360 article (here), the ruling represents the first time the New York appellate division has addressed the merits of a federal ’33 Act claim since the U.S. Supreme Court’s decision in Cyan. The New York appellate court’s December 3, 2020 ruling can be found here.
Continue Reading NY Appellate Court Reverses Trial Court’s Dismissal Denial in State Court Securities Suit

Nessim Mezrahi

In the following guest post, Nessim Mezrahi takes a look at the Second Circuit’s November 25, 2020 Summary Order in Lea v. TAL Education Group, in which the appellate court reversed the trial court’s dismissal of a securities class action complaint. Many of the plaintiff’s allegations in the complaint were based on matters first raised in a short seller report, a consideration about which Mezrahi has concerns, as discussed below. Mezrahi is co-founder and CEO of SAR, a securities class action data analytics and software company. I would like to thank Nessim for allowing me to publish his article as a guest post on this site. 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 Nessim’s article.
Continue Reading Guest Post: Second Circuit Ruling Exposes D&Os to Exchange Act Claims Based on Biased Short-Seller Research

In reliance on the federal forum provision (FFP) in the company’s corporate charter, a California Superior Court judge has granted the defendants’ motion to dismiss the state court ’33 Act liability action pending against Uber. The ruling represents the second occasion on which a California state court has dismissed a state court ’33 Act liability action in reliance on an FFP in the corporate defendant’s charter, providing further hope that the adoption of FFPs may help companies address the Cyan problem – that is, the possibility of having to face identical ’33 Act liability actions in both state and federal court. The California Superior Court’s November 16, 2020 order in the Uber case can be found here.
Continue Reading State Court Securities Suit Against Uber Dismissed Based on Federal Forum Provision

When I heard that moves by Chinese financial regulators had forced the Shangahi securities market to suspend Ant Group’s massive planned IPO, my first thought was that, if the offering had been planned for the U.S. the called halt to the offering might well give rise to a “failure to launch” claim. However, since Ant Group’s IPO was planned for the Shanghai and Hong Kong exchanges, the possibility of a claim seemed remote. As it has turned out, however, a failure to launch claim has been filed in the U.S. after all, with the added twist that the corporate defendant in the lawsuit is not Ant Group itself, but instead it is Alibaba, the U.S.-listed Chinese Internet commerce company that owns 33% of Ant Group’s equity interest. As discussed below, the new lawsuit against Alibaba has a number of interesting features.
Continue Reading Ant Group’s Scrubbed IPO Triggers U.S. Failure to Launch Claim Against Alibaba

Readers of this blog well know that in recent years there has been unprecedented levels of securities class action litigation activity, and that even in the midst of the current global health crisis plaintiffs’ lawyers have filed what one law firm has characterized as a “wave” of COVID-19-related securities litigation. The heightened pace of securities filings over the last several years has already triggered calls for another round of securities litigation reform. Now, organizations representing business interests have filed a petition with the SEC seeking to have the agency implement a number of reforms to protect businesses from “unjustified COVID-19 lawsuits.”
Continue Reading Petition to SEC Seeks Protection for Companies from Pandemic-Related Securities Suits