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The Intersection Among Torts, Science, Corporate Law, Insurance & Bankruptcy

GlobalTort

Kirk Hartley

Feb 13, 2013
1 min

Twiqbal, Pleadings, and Subjectivity of Decisions on Accountant Scienter – A Review of the Out

Alison Frankel provided a helpful new post on the conclusions reached by business professors after a study of 144 federal court decisions on scienter in accounting class action cases. The conclusion? "The law of pleading scienter against external auditors in (securities fraud) cases is so vague and inconsistent that, as a practical matter, judges have virtually unfettered discretion to reach any conclusion they deem appropriate." See Alison’s post and links for all the specif

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Kirk Hartley

Jan 16, 2013
1 min

What Happens to Derivative Shareholder Claims When Shareholders Change Due to a Merger After Ruinou

Corporate stock prices can plummet when a company faces a crisis. Suppose the crisis results in a change of ownership via a merger at a significantly reduced share price. Does that mean that ownership of derivative claims is ended for the persons who held the now terminated stock of the troubled company? In a recent post, Alison Frankel explains why the Delaware Supreme Court may soon answer the question in response to a query from the 9th Circuit. The article also notes and

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Kirk Hartley

Nov 15, 2012
1 min

One Federal Judge Approves SEC Clawback Action Against CEOs and CFOs After Restatement of Financials

A new federal ruling denies motions to dismiss an SEC suit seeking to clawback bonuses and stock sale profits from the CEO and CFO of a company that had to restate its financial statements. According to Alison Frankel at On the Case, this is a first of its kind ruling because it confronts constitutional law challenges to section 304 of SOX, a long-existing but barely used provision permitting the SEC to bring clawback suits after restatement of financials. If that conclusion

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Kirk Hartley

Aug 3, 2012
1 min

Citi’s Senior Execs Damned by Comments from the Foreperson of the Jury in the Stoker/Citi Tria

Citi and other large banks should be very grateful for the Twiqbal rule that keeps knocking out cases on pleading motions. Indeed, imagine the punitive damages verdict if Citi’s senior execs were put on trial for its actions for CDOs. The point is made plain as more comments and explanations emerge from the federal jury that heard the Stoker/Citi trial before Judge Rakoff. Susan Beck has a great post about an interview of the jury foreperson (Mr. Brendler), and it all should

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Kirk Hartley

Jun 15, 2012
1 min

Financial Industry Risks Go Up – Gupta Convicted for Insider Trading, and 110 Years for Stanfo

Not a good week for the financial industry, and reputation risks increase accordingly. The jury did not take long to find Mr. Gupta guilty of insider trading. And, Allen Stanford was sentenced to 110 years in prison for financial fraud. The Sunday morning talk shows will have plenty of grist. "Messagers" will have spin. The litigation industry will continue to grow. #Securities

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Kirk Hartley

Jun 14, 2012
1 min

Interesting Proposal to Put Highly Paid Financiers at Personal Risk If Their Firms Fail

A D & O Diary post includes some interesting back and forth proposals by smart people about whether highly paid financiers should be required to have personal money at risk as a deterrent to excessive risk taking. Much of the premise is tied to the stories of highly paid executives walking away unscathed and unburdened following financial fiascos. It’s an interesting debate. Until solutions are created, the litigation industry will continue to grow. Indeed, but for the TwIqba

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Kirk Hartley

Jun 12, 2012
1 min

Materiality of a Misrepresentation by a Public Company – The US Supreme Court Has Granted Cert

The US Supreme Court granted certiorari yesterday on a significant issue for securities litigation class actions. The case is a securities claim in the Ninth Circuit against Amgen, and involves Amgen’s statements about product safety for two products. Scotusblog includes a concise summary of the "materiality" issue, and links to the opinion below and the briefs in the Supreme Court. The grant apparently arises from conflicts between the circuits. "Issue(s): (1) Whether, in a

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Kirk Hartley

May 24, 2012
1 min

Occupy Wall Street Subgroup Files Cogent Amicus Brief Supporting Judge Rakoff on SEC Settlements

An "Occupy Wall Street" subgroup is making its mark in securities litigation and regulation. The point is illustrated by the story below from Susan Beck at American Lawyer. Ms Beck reports on an amicus brief filed by Occupy in the ongoing appeal to the Second Circuit on Judge Rakoff’s review of an SEC settlement. The article also reports on the group filing a significant 325 page comment letter with the SEC. The authors are described as having roots in Wall Street law firm

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Kirk Hartley

Apr 13, 2012
1 min

SEC Report on Cross-Border Securities Litigation

The SEC has issued a new report on cross-border securities litigation. Kevin LaCroix has the story in a new post. Here’s the introductory paragraph – the post adds useful commentary and links: "On April 11, 2012, as required by the Dodd-Frank Act, the SEC released its study of cross-border private securities litigation, entitled “Study on the Cross-Border Scope of the Private Right of Action Under Section 10(b) of the Securities Exchange Act of 1934” (here). This Commission s

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Kirk Hartley

Mar 6, 2012
1 min

Goldman Sachs Ripped – Again – This Time by the Top Judge in Delaware Chancery

Unlike lawyers and other professionals, investment banking firms are not bound by any kind of ethical code. Therefore, Goldman Sachs and others act accordingly. Here’s a link to one of many cogent summaries of the latest ripping of Goldman’s "ethics." The issues also are explored in an m & a conference. This time the ripping lies in an opinion by the top judge in Delaware’s famed chancery court. Chancellor Strine is seldom bashful, but his El Paso opinion reveals fundamenta

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Kirk Hartley

Feb 28, 2012
1 min

Traders of Bonds Issued by Nations Figure Out that Choice of Law Matters as to What Can Happen to th

"Hey, what does the contract say about choice of law?" That’s a question bond traders are asking now that they’ve figured out they may not get paid – much – by Greece. Interesting conversations on the topic are out there- OpinioJuris has the best post I’ve seen in terms of specific facts and links to real data. Hopefully the Epicurean Dealmaker will weigh in with some words on the topic. #Securities

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Kirk Hartley

Feb 13, 2012
1 min

Compilation of Materials on Waves of Suits Related to M & A

Kevin LaCroix at D & O Diary put together a new post compiling several new presentations on the vast amounts of litigation related to corporate M & A. #Securities

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Kirk Hartley

Jan 23, 2012
2 min

Can IPO Terms Actually Preclude Investor Class Actions and Other Traditional Rights of Traditional S

Carlyle Group’s IPO papers include – so far – terms purporting to preclude future class actions over securities disclosures. Ahead should be a decision by the SEC on what it will say about the use of such terms. The story in a bit of detail is on the Conglomerate blog. The overall terms of the IPO are characterized in more detail – and more harshly – by Professor Davidoff in a very pointed article on DealBook. As he notes, the offering also eliminates most other traditional s

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Kirk Hartley

Jan 10, 2012
4 min

Investment Banker Skewers Academics Who Miss the Picture on Risk and Compensation

Candor is refreshing. Specifically, a new academic paper apparently suggests that incentive structures at banks at large banks was not a factor in the financial debacle. That conclusion of course does nto pass the smell test. Happily, rather than accepting a tenuous form of exoneration, The Epicurean Dealmaker skewers the study for missing the real world points. He/she or also make the point that public sharing full data would make studies far more useful. TED’s conclusion? "

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Kirk Hartley

Dec 9, 2011
1 min

Defining An Earnings Metric That Excludes Litigation Costs – GSK Embraces a New “Core Ea

Reuters brings this interesting story of GlaxoSmithKline creating a new metric – core earnings – that excludes various categories of costs, including costs for litigation. According to the article, the metric brings GSK in line with some other large pharma entities. One might think the new metric is at least in part a testament to the fact that the litigation industry does matter as companies face large claims. Here’s a key excerpt from the article: "GSK, which announced in J

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Kirk Hartley

Dec 6, 2011
1 min

Prosecuting Wall Street

This past weekend, US television magazine 60 Minutes added its voice to the dialog about the absence of criminal prosecutions for the Wall Street fiasco. The transcript is here from interviews with 2 "whistleblowers" – one senior executive from Countrywide and a less senior Chase executive. #Securities

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Kirk Hartley

Sep 26, 2011
2 min

Recurring Tactics and Strategies in Securities Fraud Litigation Over Chinese Entities, and Defamatio

AmLaw Litigation Daily includes this interesting post by David Bario on recurring litigation patterns and tactics in securities fraud litigation regarding Chinese entities, as well as related lawsuits against short sellers who game the market with phony news. Note especially the perceived strategic importance of avoiding discovery. Key excerpts are set out below: "Silvercorp’s preemptive strike against the short-sellers represents a bold new twist in the unfolding China secur

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Kirk Hartley

May 12, 2011
1 min

Galleon’s Leader Goes Down On All Counts !

Great to see these convictions. And, remember, the original charges involved insider trading in 37 stocks, but the government winnowed it to 14 stocks to simplify trial. Let’s hope there are many more wiretaps, indictments, guilty pleas and convictions. From the WSJ: NEW YORK–Raj Rajaratnam, a billionaire hedge-fund impresario who built his fortune in the relentless cultivation of corporate contacts, was convicted Wednesday on all 14 counts of securities fraud and conspir

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Kirk Hartley

Jan 11, 2011
1 min

Securities Suits Move Out of the US and in to a Dutch Court – Was Morrison a True Win ?

As previously covered here and here, litigants need to be careful about their strategic wishes and choices. One wonders what the Morrison litigants are feeling now that securities litigation is moving ahead in a Dutch court. American Lawyer Daily has the full story by David Bario. Here are some key excerpts: "On Monday, a foundation formed under Dutch law and backed by the two plaintiffs firms filed suit in the Netherlands against Fortis, various bank officers and directors

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Kirk Hartley

Sep 9, 2010
1 min

International Lawyers Commenting on Netherlands as Settlement Forum for Global Securities Claims Aga

Having more or less won the so-called f-cubed securities cases to limit US jurisdiction on securities claims, defendants in securities claims now have to deal with the consequences of their "wins." One consequence is that they face issues on where and how to obtain global settlements and/or purportedly valid settlement injunctions. Therefore, lawyers and jurisdictions are now dancing on where global settlements may be obtained. On that subject, here is the link to a fairly d

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