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Under the PSLRA, to state a 10b-5 securities fraud claim, a plaintiff must plead specific facts that make the inference that the defendant acted with fraudulent intent more persuasive than the opposing inference of innocent mistake.  Although it is possible to allege facts making the requisite strong showing of scienter even if the complaint does not allege facts showing the… Read More

The district court wrongly dismissed this suit under SLUSA because plaintiffs did not allege a claim cognizable under federal securities laws.  They claimed that the defendant broker had switched their accounts from commission-based to fee-based without first performing a suitability analysis to see whether plaintiffs, who were buy-and-hold investors, would benefit from the change in fee structure.  That omission was… Read More

Under the Private Securities Litigation Reform Act, forward looking statements are not actionable if accompanied by meaningful cautionary statements, or if not made with actual knowledge of their falsity.  Here, plaintiffs claimed that Tesla's stated goal of producing 5,000 Model 3 cars per week by the end of 2017 was misleading, and led to a drop in stock price once… Read More

One way to prove loss causation in a securities fraud suit is to show that the defendant corporation's stock, traded in an efficient market, dropped significantly after a disclosure of information correcting the prior misrepresntations on which the plaintiff sues.  The plaintiff must also show that the corrective disclosure was a substantial factor in causing the stock drop.  This decision… Read More

Under 15 USC 78u(d)(5), in an action commenced by the SEC, the court may award "any equitable relief that may be appropriate or necessary for the benefit of investors."  The term "equitable relief" allows the court to grant the categories of relief typically available in equity as shown by consulting works on equity jurisprudence.  Those works show that restitution or… Read More

In determining whether the Securities Litigation Uniform Standards Act (SLUSA) preempts a state court class action alleging fraud in connection with securities transactions, a district court should not dismiss the action without first allowing the plaintiff leave to amend—as it might do so to eliminate class claims and by that or other means avoid SLUSA preemption. Read More

Under Delaware law, a plaintiff must satisfy a stricter test to excuse failure to demand action from a corporation’s board of directors before filing a shareholder derivative suit, if the suit challenges the board’s neglect rather than its affirmative decision. Read More

Only negligence, not scienter, need be shown to state a claim under Section 14(e), the provision of the Securities Exchange Act that makes it unlawful for a person to make a false statement or engage in any fraudulent or manipulative acts in connection with a tender offer. Read More

The exhaustion of remedies doctrine requires a petitioner who sought expungement of Financial Industry Regulatory Authority (FINRA) disciplinary history to first to seek relief from FINRA and the Securities and Exchange Commission (SEC) before bringing state court action for expungement of public records. Read More

The dismissal of a securities class action on the ground it violates prohibition on lawsuits on behalf of 50 or more plaintiffs alleging state law claims of misrepresentation in connection with the purchase of a federally registered security is a 12(b)(1) dismissal for lack of jurisdiction, not a 12(b)(6) dismissal on the merits; as a result, a dismissed plaintiff may… Read More

The Sarbanes-Oxley Act's whistleblower protection section applies to protect employees who report potential securities law violations internally to their supervisors as well as employees who report violations to the SEC.  Read More

A $30 million arbitration award is vacated as the arbitrator exceeded his powers by awarding punitive damages that the claimant first requested the day before the arbitration hearing.  Read More

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