Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

Plaintiffs filed suit under federal securities laws and state blue sky laws, alleging that Sanofi made materially false or misleading statements regarding its breakthrough drug, Lemtrada, designed to treat multiple sclerosis. The district court granted defendants' motion to dismiss for failure to state a claim. The court agreed with the district court's reasoning and holding. The court writes principally to examine the impact of the Supreme Court’s decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, decided after the district court rendered its decision. Given the sophistication of the investors here, the FDA’s public preference for double‐blind studies, and the absence of a conflict between defendants’ statements and the FDA’s comments, the court concluded that no reasonable investor would have been misled by defendants’ optimistic statements regarding the approval and launch of Lemtrada. Issuers must be forthright with their investors, but securities law does not impose on them an obligation to disclose every piece of information in their possession. As Omnicare instructs, issuers need not disclose a piece of information merely because it cuts against their projections. Accordingly, the court affirmed the judgment. View "In re Sanofi Sec. Litig." on Justia Law

Five former employees of Credit Suisse began arbitration proceedings before FINRA concerning employment-related disputes. The employees had entered into employment agreements with Credit Suisse that included provisions to resolve all employment‐related disputes by arbitration before a private arbitration provider.Credit Suisse sought to compel the employees to dismiss the FINRA arbitration and pursue their claims in a non‐FINRA arbitral forum. The district court granted Credit Suisse's petition and entered judgment ordering the employees to pursue their claims in a non‐FINRA arbitral forum. The court concluded that FINRA Rule 13200 does not prohibit the enforcement of pre‐dispute waivers of a FINRA arbitral forum. Accordingly, the court affirmed the district court's judgment. View "Credit Suisse Secs. LLC v. Tracy" on Justia Law

The SEC brought a civil enforcement proceeding against defendants and a jury subsequently found defendants liable for multiple claims of securities fraud. At issue is the district court's asset freeze order. The court held that the entry of the asset freeze order did not violate the Bankruptcy Code’s automatic stay; the order fell within the “governmental unit” exception to the automatic stay provision, did not constitute impermissible “enforcement of a money judgment,” and did not run afoul of SEC v. Brennan; and it was properly supported by a showing of ill‐gotten gains. Because the court is unable to determine whether sufficient evidence supports imposition of the order against the remaining seven Relief Defendants, the cause is remanded to the district court with instructions. View "SEC v. Miller" on Justia Law

This appeal concerns the proper application of Section 510(b) of the Bankruptcy Code in the Lehman bankruptcies. LBI, the debtor, was lead underwriter of unsecured notes issued by Lehman Holdings, its affiliates. After the bankruptcy of both the Lehman entity that issued the notes, Lehman Holdings, and the Lehman entity that was lead underwriter on the issuances, LBI, the Junior Underwriters were held to account for the noteholders' losses, and incurred loss for defense and settlements. The Junior Underwriters filed suit asserting claims for contribution or reimbursement against the liquidation estate of Debtor LBI. The bankruptcy court construed the statute to require subordination of the Junior Underwriters’ contribution claims. The court, however, adopted the district court's construction of section 510(b), holding that in the affiliate securities context, “the claim or interest represented by such security” means a claim or interest of the same type as the affiliate security. Claims arising from securities of a debtor’s affiliate should be subordinated in the debtor’s bankruptcy proceeding to all claims or interests senior or equal to claims in the bankruptcy proceeding that are of the same type as the underlying securities. Accordingly, the court affirmed the judgment of the district court. View "ANZ Securities v. Giddens" on Justia Law

The FHFA filed a summons with notice in state court asserting breach of contractual obligations to repurchase mortgage loans that violated representations and warranties and then Quicken removed the action to federal court. Plaintiff, as trustee of the subject residential mortgage‐backed securities trust, took control of the litigation and filed the complaint. Quicken moved to dismiss the suit. The court affirmed the district court's conclusion that (1) the statute of limitations ran from the date the representations and warranties were made; (2) the extender provision of the Housing and Economic Recovery Act,12 U.S.C. 4617(b)(12), did not apply to the Trustee’s claim; and (3) the Trustee’s claim for breach of the implied covenant of good faith and fair dealing was duplicative. View "Deutsche Bank Nat'l v. Quicken Loans" on Justia Law

Plaintiff appealed the district court's summary judgment dismissal of his suit against defendants. At issue is the whistleblower protection provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, Title IX, 922(a), 124 Stat. 1376, 1841, which added section 21F to the Exchange Act of 1934, 15 U.S.C. 78u-6. The SEC issued a regulation to clarify that, for the purposes of the employment retaliation protections provided by Section 21F, an individuals's status as a whistleblower does not depend on adherence to the reporting procedures specified in Exchange Act Rule 21F-9(a). The court concluded that, under SEC Rule 21F-2(b)(1), plaintiff is entitled to pursue Dodd-Frank remedies for alleged retaliation after his report of wrongdoing to his employer, despite not having reported to the Commission before his termination. Accordingly, the court reversed the judgment of the district court and remanded for further proceedings. On remand, the district court will have an opportunity to consider the R&R’s recommendation to dismiss, without prejudice to amendment, for lack of a sufficient allegation of a termination entitled to Dodd-Frank protection, and any other arguments made by defendants in support of their motion to dismiss. View "Berman v. Neo@Ogilvy LLC" on Justia Law

Plaintiffs, purchasers of Green Mountain common stock, filed a putative securities class action, alleging that Green Mountain and some of its executives made fraudulent misrepresentations about Green Mountainʹs inventory, business performance, and growth prospects in a manner designed to mislead investors about the strength of Green Mountainʹs business, in violation of federal securities law. The court held that the complaint alleges misleading statements of material fact and a compelling inference of scienter. Accordingly, the court vacated the district court's grant of defendants' motion to dismiss and remanded for further proceedings. View "Employees' Retirement System v. Green Mountain Coffee Roasters" on Justia Law

Plaintiffs, purchasers of Green Mountain common stock, filed a putative securities class action, alleging that Green Mountain and some of its executives made fraudulent misrepresentations about Green Mountainʹs inventory, business performance, and growth prospects in a manner designed to mislead investors about the strength of Green Mountainʹs business, in violation of federal securities law. The court held that the complaint alleges misleading statements of material fact and a compelling inference of scienter. Accordingly, the court vacated the district court's grant of defendants' motion to dismiss and remanded for further proceedings. View "Employees' Retirement System v. Green Mountain Coffee Roasters" on Justia Law

Plaintiffs, special-purpose investment entities, filed suit in New York state court against defendants, several parties responsible for structuring, offering, and managing collateralized debt obligations (CDOs). Plaintiffs allege, among other things, fraud in connection with disclosures about the construction of three CDOs. After removal to federal court, the district court dismissed the complaint under Rule 12(b)96) and denied plaintiffs' request to replead. The court concluded that the district court erred in aspects of its dismissal of plaintiffs’ fraud claim and also exceeded the bounds of its discretion in denying plaintiffs leave to amend the complaint as to the remaining claims. Accordingly, the court reversed in part, vacated in part, and remanded for further proceedings. View "Loreley Financing (Jersey) No. 3 v. Wells Fargo Securities, LLC" on Justia Law

After Lehman entered into a Securities Investor Protection Act (SIPA), 15 U.S.C. 78lll(2)(A), liquidation, Doral submitted timely claims asserting that it was entitled to recover the profit from a repurchased agreement. The SIPA Trustee denied these claims, concluding that Doral was not a “customer” of Lehman, and therefore was not protected by SIPA. Doral promptly objected to the Trustee’s denial, but shortly thereafter transferred its claims to CarVal. The bankruptcy court affirmed the Trustee's determination that the repos did not make Doral or CarVal a customer under SIPA. The court concluded that an investor who delivers securities to a broker‐dealer as part of a repurchase agreement is not protected by SIPA because the investor did not entrust assets to the broker‐dealer. Accordingly, the court affirmed the lower courts' determination that CarVal is not a customer for purposes of SIPA. View "CarVal v. Giddens" on Justia Law