The current Supreme Court term promised to be an interesting one from a securities law standpoint, as the Court had agreed to take up two cases dealing with key securities class action litigation issues. One of those cases is the securities case involving the Facebook/Cambridge Analytica’s user data scandal. The Facebook case would have required the Court to address an important and recurring disclosure related issue. However, on November 22, 2024, the Court issued a single-line order stating that “the writ of certiorari is dismissed as improvidently granted,” meaning that the Supreme Court’s consideration of the Facebook case will now not go forward, and the Ninth Circuit’s ruling in the case, in which the appellate court reversed in part the district court’s dismissal of the case, will now stand. A copy of the Supreme Court’s November 22, 2024, order can be found here.

Continue Reading U.S. Supreme Court Dismisses Facebook Case, Saying Writ Improvidently Granted

As I have previously noted on this site (for example, here), a long-standing and frequently recurring litigation pattern has been the filing of a corporate or securities lawsuit in the wake of an antitrust enforcement action. In the latest example of this pattern, the card payment processing company Visa has been hit with a securities class action lawsuit after the DOJ launched an antitrust enforcement action against the company in September. There are several interesting features to this new lawsuit, as discussed below. The November 20, 2024, complaint against Visa can be found here.

Continue Reading Antitrust Enforcement Action Against VISA Leads to Follow-On Securities Suit
Michael W. Peregrine
Ashley Hoff

There is no doubt that the upcoming change in Presidential administration will have important implications across a wide range of issue. In some cases, the change will present unique challenges for corporate boards. As boards work their way through these changes and challenges, they will also face an altered corporate compliance oversight environment. In the following guest post, Michael W. Peregrine and Ashley Hoff of the McDermott Will & Emery LLP law firm consider the implications of this changed environment for corporate boards. I would like to thank Michael and Ashley 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is the author’s article.

Continue Reading Guest Post: The Board’s Post-Election Oversight of Corporate Compliance
Alex Hopkins

In a guest post published on this site in October 2023 (here), Jane Njavro of Woodruff Sawyer took a look at the perennial issues surrounding the structure of D&O insurance for foreign subsidiaries of domestic U.S. companies. In the following guest post, Alex Hopkins, AVP & Counsel, Travelers Bond & Specialty Insurance, takes a further look at these issues and reviews the compliance, coverage, and claims management considerations involved. I would like to thank Alex for allowing me to publish his article 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 Alex’s article.

Continue Reading Guest Post: Managing D&O Compliance, Coverage, and Claims Beyond U.S. Borders

One of the more interesting developments in the securities litigation arena over the past several years has been the continuing influx of pandemic-related securities class action lawsuit filings. Here we are now approaching what will be the sixth year since the initial outbreak of COVID-19 in the U.S. and yet the pandemic-related suits are continuing to come in. In the latest example, last week a shareholder plaintiff filed a securities class action lawsuit against the toy company Hasbro, alleging that the company misled investors by claiming that the level of inventory it built up in response to pandemic lockdown-related consumer demand was appropriate, only to later announce it would have to incur substantial inventory reduction costs. A copy of the November 13, 2024, complaint against Hasbro can be found here.

Continue Reading Toy Company Hit with Pandemic-Related Securities Suit

This past week, The D&O Diary was on assignment in Chicago to attend the 2024 PLUS Conference. Hard to believe, but this year’s version was the 37th installment in the annual series. It was as well-attended and well-organized as always. The event was held at the Sheraton Grand Hotel Riverwalk, right on the Chicago River. Chicago is one of my favorite places to visit and it was great to be back again. It was also great to see so many old friends and to make some new friends as well, as reflected in the pictures below.

Continue Reading Chicago PLUS Conference 2024

It is now well-recognized, as Bloomberg columnist Matt Levine has famously said, that “Everything Everywhere is securities fraud.” Just the same, it does come as a surprise sometimes to see the things that make their way into securities class action lawsuit complaints. In the latest example of this phenomenon at work, a plaintiff shareholder has filed a securities class action lawsuit against the restaurant company Chipotle Mexican Grill, as a result of a social media campaign raising questions about the chain’s meal portions. To combat the social media chatter, the company concentrated on providing generous portions, which cut into the company’s margins – and drew a securities lawsuit. A copy of the November 11, 2024, complaint in the suit can be found here.

Continue Reading Social Media Squabble Over Restaurant Portions Begets Securities Suit

When it became public a few weeks ago that the SEC had disbanded its Climate and ESG Task Force, the SEC emphasized that it was not taking its eye off of ESG-related issues. In the latest example of the SEC’s continuing ESG-related monitoring, late last week the ESG announced that it had settled charges against investment adviser Invesco Advisers. The agency alleged that the company had made misleading statements about the percentage of company-wide assets under management that integrated ESG factors in investment decisions. In settling the charges, the company agreed to pay a $17.5 million civil penalty. The SEC’s November 8, 2024, press release about the charges and the settlement can be found here. The SEC’s November 8, 2024, cease-and-desist order in the matter can be found here.

Continue Reading SEC Charges Investment Adviser With ESG-Related Misleading Statements

Some of you may have heard: there was a Presidential election in the United States last Tuesday, as a result of which there will be a change in administration next January. This upcoming change almost certainly means a categorical shift in the regulatory environment in Washington, including in particular at the SEC. Many of the SEC’s regulatory initiatives under the Biden administration may be rolled back. In particular, the new administration likely will pull the plug on the SEC’s pending climate change disclosure guidelines. These likely developments at the federal level may mean that, as Cydney Posner noted in a November 7, 2024, post on the Cooley law firm’s PubCo blog (here), State level actions “may, in many ways, take on much larger significance.”

For that reason, it is worth taking a closer look at the ruling last week in the federal court lawsuit in which various business groups led by the U.S. Chamber of Commerce are challenging the California statutes requiring companies “doing business” in the state to make certain climate change-related disclosures. As discussed below, the Court has denied the plaintiffs’ pre-discovery motion for summary judgment on First Amendment grounds. The court’s interesting ruling may provide some indication of the future direction of the litigation, as well as on the likelihood that the California statutes will eventually compel companies to make the mandated disclosures. A copy of the Central District of California’s November 5, 2024, order can be found here.

Continue Reading What Now for Climate Change Disclosure Requirements?

Short sellers have a complicated relationship to securities class action litigation, as several prior posts on this site have noted (most recently here). Among the more unusual roles short sellers can play in a securities suit is to serve as lead plaintiff. One recent high-profile case where a short seller acted as lead plaintiff is the suit filed against Overstock, its founder and former CEO, Patrick Byrne, and other executives. The short seller alleged, with some plausibility, that Overstock and Byrne had attempted to mount a “short squeeze” targeted at the short sellers. The district court granted the defendants’ motion to dismiss, and in an interesting October 15, 2024, opinion, the Tenth Circuit affirmed the district court. The appellate court’s opinion has several interesting features, as discussed below.

Continue Reading Tenth Circuit Affirms Dismissal of Short Seller’s Securities Suit Against Overstock