Corporate Defense and Disputes

Important developments in U.S. securities law, white collar criminal defense, regulatory enforcement and other emerging issues impacting financial services institutions, publicly traded companies and private investment funds

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Corporate Defense and Disputes

Pinning Down Corporate Leadership

By Joseph Hartunian

January 15, 2021

An interesting shareholder derivative suit was filed on November 30, 2020 in the Northern District of California against Pinterest, Inc. Pinterest, a visual discovery engine popular for collecting ideas for weddings and aggregating recipes, went public in April 2019. The complaint alleges that Pinterest executives “breached their fiduciary duties to the [c]ompany by perpetrating or knowingly ignoring the long-standing and systemic culture of discrimination and retaliation at Pinterest.” Pinterest allegedly payed unequal salaries to women…

Corporate Defense and Disputes

Cakes Gone Bad: The Cheesecake Factory Faces Securities Scrutiny

By Joseph Hartunian & Mee (Rina) Kim

January 15, 2021

COVID-related securities claims continue to rattle the marketplace. On December 7, a leading plaintiffs firm announced an investigation on behalf of shareholders of The Cheesecake Factory Inc., just days after the SEC announced it was settling charges against the company for making misleading disclosures about the impact of the COVID-19 pandemic on its business operations and financial condition. The SEC’s action was its first charging a public company for actions tied to the worldwide pandemic.…

Corporate Defense and Disputes

SolarWinds Government Data Breach Leads to Securities Action

By Brooke Gottlieb & Joseph Hartunian

January 6, 2021

The massive data breach of the United States Commerce and Treasury Departments that has roiled the federal government has resulted in federal securities litigation. On January 4, 2021, Plaintiff-Shareholder Timothy Bremer filed a class action complaint against SolarWinds and SolarWinds’ corporate executives in the United States District Court for the Western District of Texas. SolarWinds provides information technology and infrastructure management software products to entities around the globe, including to various U.S. government vendors in…

Corporate Defense and Disputes

Supreme Court to Consider Securities Class Action Issue

By Peter Duffy Doyle & Julia Alonzo

December 15, 2020

On December 11, 2020, the United States Supreme Court granted certiorari in a shareholder securities litigation against Goldman Sachs.[1] On appeal, Goldman argues that federal securities law permits issuer defendants in purported class actions to rebut the presumption of reliance where the alleged misstatements are of such a generic nature that they could not be expected to have impacted the stock price. The Supreme Court could decide a split between the Second and Seventh…

Corporate Defense and Disputes

Second Circuit Upholds Insider-Trading Conviction and Clarifies Scope of Requisite Fiduciary Relationship

By Jonathan Richman

September 23, 2020

The Second Circuit yesterday affirmed the insider-trading conviction of a doctor who, in breach of a confidentiality agreement, had traded on nonpublic information about a drug trial in which he had been participating. The decision in United States v. Kosinski (2d Cir. Sept. 22, 2020) held that: A person can be convicted of insider trading under both the “classical theory” (as a temporary insider) and the “misappropriation theory”; A contractual agreement to keep information confidential can…

Corporate Defense and Disputes

Corporate Scienter Requires Link Between Employees with Knowledge and the Alleged Misstatements

By Jonathan Richman

May 28, 2020

The Court of Appeals for the Second Circuit held yesterday that a securities-fraud plaintiff cannot establish corporate scienter without pleading facts showing that employees who allegedly knew of underlying corporate misconduct had some connection to the corporation’s purportedly false or misleading public statements. The decision in Jackson v. Abernathy should prevent securities plaintiffs from establishing “collective” or corporate scienter in the absence of factual allegations showing a corporate speaker’s awareness of the underlying alleged misconduct…

Corporate Defense and Disputes

Delaware Supreme Court Rules That Corporate Charters Can Require Litigation of Federal Securities Act Claims in Federal Court

By Jonathan Richman

March 18, 2020

The Delaware Supreme Court ruled today that Delaware corporations can adopt charter provisions requiring that actions under the federal Securities Act of 1933 be filed in a federal court. The decision in Salzberg v. Sciabacucchi gives Delaware corporations a way to avoid state-court or multi-forum litigation of Securities Act claims by channeling all such cases into the federal system, where they can be managed more effectively – and where they are subject to the more…

Corporate Defense and Disputes

California Federal Court Holds that U.S. Securities Laws Apply to Unsponsored, Unlisted ADRs

By Jonathan Richman

January 30, 2020

The U.S. District Court for the Central District of California held on January 28, 2020 that the federal securities laws apply to U.S. transactions in unlisted, unsponsored American Depositary Receipts (“ADRs”) for a foreign issuer’s shares. The decision in Stoyas v. Toshiba Corporation also held that principles of international comity and forum non conveniens do not preclude an exercise of supplemental jurisdiction over U.S. investors’ claims under Japanese law arising from purchases of a Japanese…

Corporate Defense and Disputes

Second Circuit Holds that a “Personal Benefit” Is Not Required for Insider Trading Under Criminal Securities Statute

By Jonathan Richman

January 2, 2020

The Second Circuit held earlier this week that the criminal statute proscribing securities fraud permits convictions for insider trading without proof that the provider of material, nonpublic information received a personal benefit in exchange for that information, even though proof of a personal benefit would be required under the general securities-law statute prohibiting insider trading. The decision in United States v. Blaszczak could ease prosecutors’ burden in obtaining convictions for insider trading by enabling the…

Corporate Defense and Disputes

SEC Adopts Final Rule on “Test-the-Waters” Communications

By William J. Tuttle & Karen J. Garnett

October 2, 2019

On September 25, 2019, the Securities and Exchange Commission (the “SEC”) adopted Rule 163B under the Securities Act of 1933, as amended (the “Securities Act” ), which permits all issuers, including business development companies (“BDCs”) and registered investment companies (collectively, “Funds”), to gauge market interest in contemplated registered securities offerings by engaging in oral or written communications (“test-the-waters” communications) with certain potential investors prior to, or following, the filing of a registration statement. Read the …

Corporate Defense and Disputes

Important developments in U.S. securities law, white collar criminal defense, regulatory enforcement and other emerging issues impacting financial services institutions, publicly traded companies and private investment funds

Blog Authors

Pinning Down Corporate Leadership

Cakes Gone Bad: The Cheesecake Factory Faces Securities Scrutiny

SolarWinds Government Data Breach Leads to Securities Action

Supreme Court to Consider Securities Class Action Issue

Second Circuit Upholds Insider-Trading Conviction and Clarifies Scope of Requisite Fiduciary Relationship

Corporate Scienter Requires Link Between Employees with Knowledge and the Alleged Misstatements

Delaware Supreme Court Rules That Corporate Charters Can Require Litigation of Federal Securities Act Claims in Federal Court

California Federal Court Holds that U.S. Securities Laws Apply to Unsponsored, Unlisted ADRs

Second Circuit Holds that a “Personal Benefit” Is Not Required for Insider Trading Under Criminal Securities Statute

SEC Adopts Final Rule on “Test-the-Waters” Communications

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