Dean N. Razavi

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The US District Court for the Northern District of Georgia denied a motion for partial summary judgment in the Security and Exchange Commission’s insider trading case against Earl Arrowood and Parker Petit. The SEC alleges that Arrowood purchased shares of Matria Healthcare after receiving non-public information from Petit—Matria’s then-CEO—regarding a potential merger. Petit moved for …

The US District Court for the Western District of North Carolina dismissed a shareholder securities fraud claim against CommScope, Inc. and its officers, holding that the company’s alleged misrepresentations constituted either forward-looking statements or were not misleading. Plaintiffs alleged that CommScope—a communications infrastructure corporation—misled shareholders by forecasting unreasonable sales growth in 2008, based on internal …

The US District Court for the Western District of Texas certified a class of common stock purchasers in an action against Pain Therapeutics, Inc. (PTI) and its directors. The plaintiff’s complaint, which alleges that PTI misled investors concerning its efforts to obtain Federal Drug Administration approval for the painkiller REMOXY. 
Continue Reading “Sophisticated Plaintiff” Found to Be Adequate Class Representative

The US District Court for the District of Delaware dismissed a class action for securities fraud against former officers and directors of a geothermal energy company, in which the plaintiffs alleged that the defendants had misrepresented the capacity of a prominent power plant and their ability to construct more plants. In 2008, the energy company …

The US District Court for the Northern District of Illinois dismissed securities fraud claims against WMS Industries (WMS), a gaming and slot machine manufacturer, and certain of its executives, holding that a would-be class representative failed to plead with the heightened requirements prescribed by the Private Securities Litigation Reform Act. WMS issued guidance predicting growth …

In the first Federal appellate decision to address the issue head on, the U.S. Court of Appeals for the Fifth Circuit last week held that an individual is not personally liable as an “employer” under the Fair Labor Standards Act (FLSA) merely by their status as an LLC member. The plaintiff was a bartender at a bar owned by Pasha Entertainment Group, LLC, and alleged that he was not paid an hourly wage in violation of the FLSA. The LLC being out of business, the plaintiff sued the defendant, a member of the LLC, in his individual capacity. If an individual has exerted “actual operational control,” that individual can be personally liable for FLSA violations committed by a company.
Continue Reading Member of LLC Not an Employer Under the Fair Labor Standards Act

Whether former Arthur Andersen accountants violated professional standards and should be subject to sanctions for their audits of Enron more than 15 years ago has been a subject of protracted litigation. In the latest round, last week, three accountants were rebuffed by a Texas state appeals court which held that state regulators followed appropriate procedures in sanctioning the accountants in connection with audits of Enron completed in 1997 and 1998. The plaintiff accountants had their professional licenses revoked or suspended after the Texas State Board of Public Accountancy (the Board) reviewed the accountants’ approval of Enron’s off-balance sheet treatment of two entities, which resulted in artificially increasing the company’s income. The Board had overruled decisions of an administrative law judge, who had recommended far less severe sanctions. The plaintiffs sought judicial review of the administrative ruling, claiming that the Board reach its decision in illegal closed-door sessions.
Continue Reading Enron Auditors May Still Face Disciplinary Actions