WeWork may not have been able to complete its once-planned IPO, but even so it now has something that many IPO companies often experience – a shareholder class action lawsuit. On November 4, 2019, a WeWork investor filed a lawsuit in California state court on behalf the company’s minority shareholders as well as on behalf of the company itself. As discussed below, the shareholder complaint makes a number of interesting allegations and raises some interesting issues as well. Continue Reading WeWork, SoftBank, Neumann Hit with Shareholder Lawsuit

The D&O Diary is on assignment in Europe this week, with the first stop on the itinerary in London. I have been to London in November many times before and I know that the weather can be OK or it can be lousy. On this trip,  I had a pretty even mixture of both. But even if there were no single full day of sunshine, there was also no single entirely rainy day. In between the intermittent rain, I had several chances to enjoy some late fall sunshine in London. Continue Reading Autumnal London

While the most common type of whistleblower may be a disgruntled employee, others can be whistleblowers, too. And as a recent SEC enforcement action highlights, interfering with these others’ attempts to communicate with the SEC can violate the agency’s whistleblower protection rules. In an amended complaint filed on November 4, 2019 in a pending SEC enforcement action, the agency alleges that the defendant company and one of its principals violated the SEC’s whistleblower rules by requiring the company’s investors to enter agreements in which the investors agreed not to contact the SEC or other regulatory enforcement authorities. The SEC alleges that these actions violated the agency’s whistleblower rules. A copy of the SEC’s November 4, 2019 press release about the amended complaint can be found here.   Continue Reading SEC’s Whistleblower Protections Extend Beyond Just Employees

Most public company D&O insurance policies provide coverage for the corporate entity only for “Securities Claims.” But what constitutes a “Securities Claim”? That is the question the Delaware Supreme Court addressed in a recent appeal of an insurance coverage dispute in which a bankruptcy trustee had sued Verizon for breach of fiduciary duty, unlawful payment of a dividend, and violation of the uniform fraudulent transfer act. The trial court had entered summary judgment for Verizon, ruling that the bankruptcy trustee’s claims represented “Securities Claims” within the meaning of the policy. In an October 31, 2019 decision (here), the Delaware Supreme Court reversed the lower court, ruling that the bankruptcy trustee’s claims were not Securities Claims within the meaning of the policy. As discussed below, the decision raises some interesting issues. Continue Reading Delaware Supreme Court: What is a “Securities Claim”?

In its June 2017 decision in Kokesh v. SEC  (discussed here), the U.S. Supreme Court held that disgorgement in an SEC enforcement action represents a “penalty,” and therefore a SEC enforcement action  claim for disgorgement is subject to a five-year statute of limitation. In reaching this decision, the Court emphasized (in footnote 3 to the opinion) that it was only deciding the statute of limitations issue, and was emphatically not reaching the larger issue of whether the SEC has the proper authority to order disgorgement in enforcement proceeding.

 

Having previously reserved this larger question in Kokesh, the Court has now agreed to take up a case that will address head-on the question of whether the SEC has the authority to order a disgorgement. On November 1, 2019, the Court granted the petition for a writ of certiorari in the case of Liu v. SEC, which will require the Court to decide whether the SEC may seek may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation even though the Supreme Court determined in Kokesh that disgorgement is a penalty.  The Court’s November 1, 2019 order granting the writ of certiorari can be found here. Continue Reading Supreme Court to Consider SEC’s Authority to Seek and Obtain Disgorgement

Nessim Mezrahi

The length of the class period is one of the most significant variables in defining the make-up of the plaintiff class in securities class action litigation. As discussed in the following guest post from Nessim Mezrahi, the length of the class period not only affects the aggregate damages of the class but it also could be a key factor in the selection of the lead plaintiff. As a result, Mezrahi suggests, the length of the class period is a consideration that deserves greater attention. Mezrahi is cofounder and CEO of SAR, a securities class action data analytics and software company.  A version of this article previously was published on Law 360. I would like to thank Nessim for allowing me to publish his article 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 like to submit a guest post. Here is Nessim’s article. Continue Reading Guest Post: Securities Class Period Selection Deserves Greater Scrutiny

Securities class action lawsuits have been an important part of the litigation scene in Australia for many years. But even though the current class action procedural regime has been in place since 1992, no Australian securities class action lawsuit ever went all the way to judgment – that is, no case ever went to judgment until last week. On October 24, 2019, the Federal Court of Australia issued a post-trial Order in the TPT Patrol Pty Ltd as trustee for Amies Superannuation Fund v Myer Holdings Limited. The court’s ruling, a copy of which can be found here, contains a number of interesting points and could have important implications. A detailed October 25, 2019 memo from the Clyde & Co law firm about the judgment can be found here.   Continue Reading Australian Securities Class Action Suit Reaches Judgment for the First Time

Once again, wildfires are raging across the length of California, from San Francisco to Los Angeles. Once again, the electricity transmission facilities of PG&E are thought to have caused or contributed to at least some of the wildfires. And once again, in the wake of the wildfires, shareholders have launched a securities class action lawsuit against company executives. As discussed below, the new lawsuit is the latest example of the way in which transformative changes arising from climate change can lead to directors’ and officers’ liability litigation. Continue Reading Securities Suit Arising From Climate Change-Caused Conditions Hits Utility

In the wake of the U.S. Supreme Court’s March 2018 Cyan decision, in which the Court affirmed that state court’s retain concurrent jurisdiction for liability action under the ’33 Act, plaintiffs’ lawyers have initiated a number of Section 11 actions in the courts of a number of states. This new wave of state court Securities Act lawsuits is now making its way through the courts. As the cases have progressed, in some instances the state courts have granted the defendants’ motions to dismiss. The latest example of a state court granting a defendants’ motion has now occurred in the Connecticut state court claim alleging ’33 Act violations in connection with Pitney-Bowes September 2017 debt note IPO. The Connecticut court’s October 24, 2019 order granting the defendants’ motion to strike, a copy of which can be found here, raises a number of interesting issues. Continue Reading Connecticut State Court Knocks Out Post-Cyan Securities Act Liability Action