Last week, the Securities and Exchange Commission submitted an amicus brief in support of an appellant before the US Court of Appeals for the Third Circuit, urging the court to adopt its interpretation of whistleblower anti-retaliation protections set forth in Section 21F of the Securities Exchange Act of 1934. Section 21F, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, directs the SEC to pay monetary awards to individuals who report securities violations to the SEC and prohibits employers from retaliating against whistleblowers. A New Jersey district court dismissed appellant’s complaint in April, holding that the anti-retaliation provisions do not protect individuals who only report violations internally. 
Continue Reading SEC Urges Third Circuit to Adopts Its Interpretation of Whistleblower Retaliation Protections

On December 10, a New York district court judge dismissed a securities fraud class action brought by investors in China North East Petroleum Holdings, Ltd. against former director Robert Bruce (and others) on the ground that the complaint failed to plead scienter.
Continue Reading Southern District Dismisses Complaints Against China North Director and Consultant

The Delaware Court of Chancery recently dismissed corporate mismanagement and breach of fiduciary duty claims filed by a dissenting stockholder, but ordered that the surviving corporation in a merger was required to pay the merger consideration to the dissenting stockholder when the statutory appraisal period expired. 

Plaintiffs Ram and Neena Mehta (“Plaintiffs”) owned shares of Smurfit-Stone Container Corporation, which had declared bankruptcy in 2009 and, post-bankruptcy, merged with Rock-Tenn Company in 2011. Plaintiffs made a timely demand for appraisal after the merger announcement but never perfected their statutory rights. In fact, Plaintiffs withdrew their appraisal demand roughly a year after making it, and no other stockholder filed an appraisal petition. Rock-Tenn, however, refused to pay the merger consideration to Plaintiffs unless Plaintiffs agreed to broad settlement terms.
Continue Reading Delaware Chancery Requires Payment of Merger Consideration to Dissenting Stockholder After Expiration of Appraisal Period

The Delaware Court of Chancery recently held that, for purposes of responding to a non-party subpoena, documents held by the foreign affiliate of a US corporation were not within the US corporation’s “possession, custody, or control” and therefore were not required to be produced. 

Theravectys SA had a contract with Henogen SA, a Belgium-based manufacturer of biomolecules. Theravectys sued Immune Design Corporation on the theory that Immune Design Corporation induced Henogen to breach its contract with Theravectys and/or that Immune Design Corporation misused Theravectys’s confidential and proprietary information. Theravectys then served non-party Novasep Inc., a Pennsylvania-based corporate affiliate of Henogen, with various discovery requests.
Continue Reading Delaware Chancery Clarifies Discovery Obligations of Domestic Affiliate of Foreign Company

The US Court of Appeals for the Fifth Circuit recently held that multiple partial “corrective” disclosures collectively may satisfy the requirements of pleading loss causation in a securities fraud class action, even if no single disclosure alone is sufficient. 
Continue Reading Fifth Circuit Holds Multiple Disclosures Establish Loss Causation in Securities Action

The US District Court for the Southern District of New York recently dismissed a securities class action against a battery manufacturer, finding that the plaintiffs failed to plead a causal connection between the alleged revenue misstatements and a drop in the company’s stock price. 
Continue Reading District Court Dismisses Securities Class Action for Failure to Show Causal Connection

On July 28, Smith & Wesson Holding Corporation, one of the largest gun manufacturers in the United States, agreed to pay more than $2 million to settle Securities and Exchange Commission charges alleging that it had bribed foreign officials to sell firearms in other countries in violation of the Foreign Corrupt Practices Act (FCPA). In the settlement, Smith & Wesson neither admitted nor denied that SEC’s findings.   
Continue Reading Smith & Wesson Pays $2 Million to Resolve SEC Charges

The Securities and Exchange Commission recently announced that Peter Jenson, the former chief operating officer of Harbinger Capital Partners LLC, agreed to pay a $200,000 civil penalty to resolve charges that he aided the firm and its owner, Phillip Falcone, in misappropriating fund assets to pay Falcone’s personal taxes. 
Continue Reading Former Chief Operating Officer Settles SEC Fraud Claims