On January 5, the Delaware Court of Chancery ruled that a beneficial stockholder has standing to bring an action for appraisal in its own name when the record stockholder’s actions have perfected the right of appraisal. The court found that Merion Capital LP, the beneficial owner of 1.25 million shares of Ancestry.com held in fungible bulk by the record holder Cede & Co. did not need to prove that the stock it purchased after the record date merger of Ancestry.com had been voted against the deal.
Continue Reading Delaware Court Rules That Beneficial Stockholder May Seek Appraisal in Its Own Name

In a sentencing memorandum filed January 2, the United States Attorney’s Office in Washington asked the US District Court for the Western District of Washington to sentence Dickson Lee, the former chief executive of L&L Energy Inc., to 60 months in prison despite sentencing guidelines that recommend 41–51 months.

Lee is awaiting sentencing after pleading guilty to two counts of securities fraud in violation of 18 U.S.C. § 3148. In anticipation of having L&L Energy listed on the NASDAQ exchange, Lee fabricated the existence of a chief financial officer in documents provided to the Securities and Exchange Commission. Furthermore, Lee fraudulently issued shares of L&L Energy to associates in China in the midst of an SEC investigation in order to make it appear that the sales were not directed by the company and to avoid further disclosure requirements.
Continue Reading Government Seeks Extended Prison Term in Securities Fraud Case

On November 5, Telestrata, LLC brought a derivative shareholder action and direct action against NetTALK.com, Inc., a publicly traded telecommunication company, and NetTALK’s directors and officers, alleging that the individual defendants unlawfully took control of the company to the detriment of shareholders and its authorized directors. Telestrata and NetTALK entered an agreement in February 2014 …

Last week, the Securities and Exchange Commission censured Eureeca Capital SPC, an online, securities-based crowdfunding site incorporated in the Cayman Islands, for failing to implement procedures “reasonably designed” to prevent US citizens from accessing and investing in securities through its website. According to the SEC, the website allowed issuers to raise funds in exchange for …

A registered investment adviser and its principal recently sued the Securities and Exchange Commission for declaratory and injunctive relief to stave off an imminent administrative enforcement action, alleging that the tenure and removal provisions governing SEC administrative law judges (ALJs) violate Article II of the US Constitution.
Continue Reading Investment Adviser Challenges Constitutionality of SEC Administrative Proceedings

The United States Court of Appeals for the Eighth Circuit recently held that whistleblowers may satisfy the False Claims Act’s (FCA) heightened pleading standards without providing representative examples of false claims, such as invoices, as long as they provide other indicia of their reliability, such as personal knowledge of allegedly fraudulent practices. Planned Parenthood of …