Just days after the U.S. Supreme Court agreed to take up the Facebook/Cambridge Analytica securities case concerning risk factor disclosures (as discussed here), the Court has now agreed to take up yet another securities case, this time in a case involving Nvidia and involving the standards for pleading scienter and falsity under the PSLRA. The NVIDIA case involves alleged fraud in connection with the company’s disclosures concerning its sales of graphics processing units (GPU) to cryptocurrency companies as a component of its overall GPU sales. The specific questions the case presents to the Supreme Court concern what and how a plaintiff must plead when pleading scienter and falsity. Because the case involves the PSLRA’s “exacting pleading requirements,” the case potentially could prove to be very significant. A copy of the Court’s June 17, 2024 Order granting the petition for writ of certiorari can be found here.Continue Reading Supreme Court Agrees to Take Up Nvidia Securities Suit On Pleading Standards Issues
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Capital One Data Breach-Related Securities Suit Dismissed
Readers of this blog know that in recent years, plaintiffs’ lawyers have filed a number of D&O lawsuits against companies that experience cybersecurity-related incidents. Overall, the plaintiffs’ track record on these cases is at best mixed, and a number of high-profile cases have been dismissed. In the latest example of the dismissal of a cybersecurity-related securities suit, the court in the Capital One Financial Corporation data breach-related securities class action lawsuit has granted the defendants’ motion to dismiss. The September 13, 2022 dismissal order in the case can be found here.
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SPAC-Related Securities Suit Partially Survives Dismissal Motion
As readers of this blog well know, over the last 18 months or so there has been an onslaught of SPAC-related securities class action litigation. Most of these cases have only just been filed and therefore have not yet reached the motion to dismiss stage. However, a number of the earlier filed cases are now reaching that dismissal motion stage, and although the results so far are mixed, some of the cases are surviving the initial pleading hurdles, at least in part.
On July 1 ,2022, and in the latest example of a SPAC-related securities suit surviving the dismissal motion at least in part, Northern District of California Judge Susan Illston partially denied the motion to dismiss in the SPAC-related securities suit filed against Velodyne Lidar and certain of the executives of the SPAC into which Velodyne merged. As discussed below, there are several interesting features of Judge Illston’s opinion, a copy of which can be found here.
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Motion to Dismiss Granted in SPAC-Related Securities Suit Against Gaming Company
As readers of this blog know, as a follow-on effect to the massive wave of SPAC activity in the U.S., there has also been a surge of securities class action lawsuits involving companies that engaged in SPAC transactions. Many of these suits have only just been filed, so it is too early to tell how they will fare. But some of the cases are now reaching the motion to dismiss stage. If the recent motion to dismiss ruling in the SPAC-related lawsuit against mobile gaming technology company Skillz is any indication, many of these cases could encounter substantial hurdles as they go forward.
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Dismissal Denied in SPAC-Related Securities Suit Alleging Supply Chain Misrepresentations
As I have noted in recent posts (here, for example), SPAC-related securities suit filings continue to accumulate and represent a significant current securities litigation phenomenon. But while the number of suits continues to mount, relatively few of these cases have yet reached the dismissal stage. In a recent ruling, however, the defendant company’s motion to dismiss in a SPAC-related securities suit was substantially denied as to the company itself and its top executives. In particular, the claims based on allegations that the company, Romeo Power, and its senior officials made supply chain misrepresentations were sustained, though the related claims against three former executives of the SPAC with which Romeo had merged were dismissed. A copy of the June 2, 2022 opinion in the case can be found here.
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A Detailed Look at the 2021 Securities Litigation Against Life Sciences Companies
In the latest edition of its annual report, the Sidley Austin law firm takes a detailed look at important securities litigation developments in 2021 relating to life sciences companies. The report includes not only a review of life sciences companies’ securities litigation class action filings trends but also examines life sciences companies’ track record in the courts, both with respect to motions to dismiss in the district courts and on appeal. The law firm’s report, entitled “Securities Class Actions in the Life Sciences Sector: 2021 Annual Survey” can be found here. The same site also includes a link to a short summary of the report.
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COVID-19-Related Securities Suit Against Diagnostic Testing Company Dismissed
As I have noted in numerous prior posts on this site, over the course of the last two years plaintiffs’ lawyers have filed a host of COVID-19-related securities claims. With the passage of time, many of these cases have now worked their way to the motion to dismiss stage. Although the results have been mixed, the dismissal motions have been granted in several cases. In the latest example of favorable outcome for a COVID-19-related lawsuit defendant, the court in the COVID-19-related securities suit pending against Chembio Diagnostics and its executives recently granted the corporate defendants’ dismissal motion. However, in an odd twist, the court denied the dismissal motion of the company’s offering underwriters. A copy of the court’s February 23, 2022 order in the case can be found here.
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SEC Proposes Amendments to Rule 10b5-1 Trading Plan Provisions
As I noted at the time, earlier this year SEC Chair Gary Gensler spoke publicly about the need for revisions to Rule 10b5-1, the regulatory provision that allows corporate executives, subject to certain requirements, to trade in their holdings of their companies’ securities. Rule 10b5-1 has long been criticized because of perceived abuses. On December 15, 2021, the SEC released proposed revisions to the Rule. Among other things, the proposed revisions strengthen the requirements to access the affirmative defenses afforded under the Rule, and also enhance disclosure requirements for companies whose executives enter into trading plans pursuant to the Rule. The proposed changes are subject to a 45-day comment period after the proposed amendments are published in the Federal Register.
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A Detailed Look at 2020 Securities Litigation Against Life Sciences Companies
In the latest edition of the law firm’s annual report, Sidley Austin takes a detailed look at important securities litigation developments in 2020 relating to life sciences companies. The report includes not only a review of life sciences companies’ securities litigation class action filings trends but also examines life sciences companies’ track record in the courts, on motions to dismiss in the district courts and on appeal. The law firm’s report, entitled “Securities Class Actions in the Life Sciences Sector: 2020 Annual Survey” can be found here. The law firm’s two-page report summary can be found here.
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FedEx “NotPetya” Cyberattack Securities Suit Dismissed
In my recent annual round-up of the top stories in the world of D&O liability, I noted that among the key D&O issues is the possibility of claims against corporate directors and officers arising out of cybersecurity incidents. One of the more interesting cybersecurity-related D&O claims in recent years is the securities class action lawsuit a plaintiff shareholder filed against FedEx in connection with the company’s disclosures concerning the “NotPetya” virus cyberattack on its European operations. What made the lawsuit interesting is that it involved not the company’s disclosures at the time of the cyber incident but rather concerned the company’s subsequent statements about the company’s recovery from the attack and the attack’s longer-term impact on its finances, operations, and business strategy. In a February 4, 2021 opinion (here), Southern District of New York Judge Ronnie Abrams granted the defendants’ motion to dismiss the FedEx NotPetya securities lawsuit, with prejudice. As I discuss below, the opinion has some interesting lessons on the importance of precautionary disclosure.
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