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

In the latest example of a securities class action lawsuit arising out of data breach or other cybersecurity incident, on October 24, 2019, a plaintiff shareholder filed a securities class action lawsuit against California-based software company Zendesk. The lawsuit follows after the company announced disappointing second quarter financial results in July and then announced in early October that customer account information had been accessed. The lawsuit is most recent in a series of lawsuits in which companies experiencing cybersecurity incidents get hit with securities lawsuits. Continue Reading Zendesk Hit with Data Breach-Related Securities Suit

John Reed Stark

In a series of recent actions, the SEC has demonstrated its aggressive approach toward cryptocurrency regulation and enforcement. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a detailed look at the SEC’s recent actions and considers the actions’ implications. A version of this article originally appeared on Securities Docket. I would like to thank John for his willingness to allow 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 John’s article. Continue Reading Guest Post: The SEC Triples Down on its Cryptocurrency Crackdown

Most primary D&O insurance policies are written on a global basis, meaning that the policy’s coverage will respond to claims wherever they arise, anywhere in the world. However, in recent years, as a result of tax, regulatory, indemnification, and currency questions, both insurance buyers and insurers have become concerned about the potential need for companies to have locally admitted policies in place in foreign jurisdictions where the companies have operations. The question about whether or not a company should have a local policy has become a perennial issue. In an October 16, 2019 post on Woodruff Sawyer’s blog entitled “Foreign Subsidiaries and D&O Insurance: Are you Prepared to Place?” (here), Jane Njavro takes an interesting look at the issues surrounding these questions. As discussed below, these questions raise a number of recurring concerns. Continue Reading Do D&O Insurance Policyholders Need Local Policies in Foreign Jurisdictions?

As I have detailed in prior posts, in the latest variant in the merger objection litigation game, the plaintiffs agree to dismiss their lawsuit after the defendant companies make additional disclosures and agree to pay the plaintiffs’ counsel a “mootness fee.” The absence of any court involvement in the case resolution makes this an attractive alternative for the plaintiffs’ lawyers. However, at least one court recently intervened in order to upset this cozy game.

 

As discussed here, in a blistering June 2019 opinion, Northern District of Illinois Judge Thomas Durkin, exercising what he called his “inherent authority,” acted to “abrogate” the parties’ settlement in the litigation arising out of the acquisition of Akorn , Inc. by Frensenius Kabi AG, and ordered the plaintiffs’ lawyers to return to Akorn their $322,000 mootness fee, ruling that the additional disclosures to which the company agreed were “worthless to shareholders” and that the underlying lawsuits should have been “dismissed out of hand.”

 

Now, in the brief to the Seventh Circuit filed on their appeal of Judge Durkin’s order, the plaintiffs argue that Judge Durkin’s order was “void” because Judge Durkin lacked jurisdiction, had “no authority to continue” after the parties’ settlement, and that he “drastically overstepped the bounds of [the court’s] inherent authority.”  The plaintiffs brief sets the stage for what may prove to be a very interesting appellate decision. Continue Reading Plaintiffs Argue District Court Lacked Authority to Set Aside Their Mootness Fee Settlement

D&O insurance policies sometimes contain Major Shareholder Exclusions, precluding coverage for claims brought by shareholders’ with ownership percentages above a certain specified ownership threshold. But when is the shareholder’s ownership percentage to be determined – at the time of policy inception or at the time of the claim? This issue was among the D&O insurance coverage question presented in a recent case before the Third Circuit. The appellate court, applying Delaware law, found that the exclusionary language involved was ambiguous, and therefore resolved the issue in the policyholder’s assignee’s favor. As discussed below, the appellate court’s ruling is interesting in a number of different respects.

 

The Third Circuit’s opinion in the case can be found here. The Wiley Rein law firm’s October 19, 2019 post about the decision on its Executive Summary Blog can be found here. Continue Reading Third Circuit Finds Major Shareholder Exclusion Ambiguous

Whistleblowing has a long and respected tradition in the United States. In more recent times, whistleblowing and its protections have been part of several legislative schemes, including, for example, the creation in the Dodd-Frank Act of the SEC Whistleblower Program. The recent whistleblower complaint about President Trump’s July 2019 phone call with Volodymyr Zelensky, the President of Ukraine, underscores the continued important role of whistleblowing in the our political and business culture. As the events surrounding the recent whistleblowing complaint also show, whistleblowing is often regarded as a provocative act, and that, at a minimum, whistleblowing can be highly divisive.

 

A recently published book, “Crisis of Conscience: Whistleblowing in the Age of Fraud,”  written by journalist Tom Mueller, takes a detailed look at the role of whistleblowing in our culture, and the ways in which, despite all of the surrounding controversy, whistleblowing remains an indispensable part of maintaining order and enforcing our values and expectations. Continue Reading  Book Review: “Crisis of Conscience: Whistleblowing in the Age of Fraud”