The US District Court for the Northern District of California recently dismissed with prejudice a securities fraud class action against Electronic Arts, Inc. (EA) and its officers, holding that the plaintiffs’ amended complaint failed to identify any actionable misstatements by the defendants. The court had dismissed the plaintiffs’ prior complaint in 2014 with leave to amend.
Continue Reading District Court Dismisses Securities Class Action Against Electronic Arts

The US District Court for the Eastern District of Pennsylvania recently denied a motion to dismiss filed by Urban Outfitters, Inc. and its senior executives in a securities fraud class action. The court found that the plaintiffs’ claims were sufficiently particularized under the heightened pleading standard of the Private Securities Litigation Reform Act of 1995 (PSLRA).
Continue Reading District Court Denies Motion to Dismiss Securities Class Action Against Urban Outfitters

The US Court of Appeals for the Ninth Circuit recently affirmed dismissal of a counterclaim for breach of fiduciary duty brought under Section 242 of the Alberta Business Corporations Act (ABCA), finding that only an Alberta court could provide the remedy provided by the ABCA, and thus the counterclaim failed to state a claim upon which relief could be granted.
Continue Reading Ninth Circuit Honors Canadian Business Law’s Exclusive Remedy Provision

On April 16, the US District Court for the Northern District of Illinois denied a motion to dismiss “spoofing” charges against Michael Coscia, a high-frequency commodities futures trader, finding that the indictment was sufficient because it alleged that Coscia placed orders with an intent to cancel them. Coscia is charged with six counts of “spoofing” under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and six counts of commodities fraud under the 2009 Fraud Enforcement and Recovery Act.
Continue Reading Judge Declines to Dismiss Spoofing Charges Against High Frequency Trader

On April 22, the Securities and Exchange Commission announced that it is awarding a compliance officer between $1.4 million and $1.6 million for voluntarily providing the SEC with information that contributed to a successful enforcement action. According to the SEC, the compliance officer reported the misconduct after “responsible management at the entity became aware of potentially impending harm to investors and failed to take steps to prevent it.” Under Section 21F(b)(1) of the Securities Exchange Act of 1934, a whistleblower must provide the SEC with original information, which may be derived through independent knowledge or independent analysis. When the whistleblower is an employee whose principal duties involve compliance or internal audit responsibilities, the information generally will not be considered “original,” absent an exception. The SEC determined that an exception applied here because the compliance officer “had a reasonable basis to believe that disclosure of the information…[was] necessary to prevent the relevant entity from engaging in conduct that [was] likely to cause substantial injury to the financial interest or property of the entity or investors.”
Continue Reading SEC Grants Compliance Officer $1.4 to $1.6 Million Whistleblower Award

The US District Court for the Southern District of New York recently denied two defendants’ motion to dismiss a Securities and Exchange Commission complaint alleging that they committed insider trading, holding that the complaint adequately pleaded a receipt of personal benefit to the tipper as required by the US Court of Appeals for the Second Circuit’s recent decision in U.S. v. Newman, 773 F.3d 438 (2d Cir. 2014).
Continue Reading SDNY Denies Motion to Dismiss SEC Insider Trading Complaint Despite Newman Holding

The United States Sentencing Commission recently adopted new guidelines for sentencing in cases involving fraud and economic crimes, seeking to better account for the actual harm to victims, individual culpability and the offender’s intent. The revised guidelines will be submitted to Congress on May 1 and will go into effect November 1 unless Congress disapproves of the amendments.
Continue Reading US Sentencing Commission Revises Sentencing Guidelines for Fraud

On April 3, the US Court of Appeals for the Second Circuit denied the request of Preet Bharara, US Attorney for the Southern District of New York, for an en banc hearing after the court issued a ruling in December that drastically limited the scope of insider trading prosecutions. With the original ruling in United States v. Newman left in place, prosecutors will be required to prove beyond a reasonable doubt that the tippee had knowledge of the personal benefit received by the tipper who initially conveyed the insider information.
Continue Reading Second Circuit Refuses to Rehear Groundbreaking Insider Trading Case

The US District Court for the District of Columbia took the unusual step of granting summary judgment against a technology company executive who the Securities and Exchange Commission accused of various violations of the Securities Exchange Act of 1934. The court found the executive, Tamio Saito, the chief technology officer of e-Smart Technologies, made material misrepresentations in connection with the sale of securities under Section 10(b) and failed to file required ownership documents under Section 16(a).
Continue Reading SEC Secures Victory on Fraud Allegations Against Technology Executive