Archives: Securities

A Trial Lawyer for the Supreme Court?

In the last quarter-century and more, no current member of the Supreme Court tried a lawsuit of any kind to a judge or jury. Almost none of the justices has ever tried a civil case to verdict. And before their honors became appellate judges, only one of their number served as a full-time trial judge. Does … Continue Reading

Chaos in the Lower Courts?

By Barry Barnett on February 29, 2016 Posted in Antitrust, Arbitration, Class Actions, Commercial, Corporate, and Contracts, Energy, Fees, Intellectual Property, Procedure, Securities

How will lower federal courts react to the loss of a 5-4 pro-business majority on the U.S. Supreme Court?… Continue Reading

Justice Scalia & Me

By Barry Barnett on February 22, 2016 Posted in Antitrust, Arbitration, Class Actions, Commercial, Corporate, and Contracts, Procedure, Securities

In this post, I will tell you my Antonin Scalia story — and about his role in limiting class actions.… Continue Reading

Why Some Deals Result in Disputes

By Barry Barnett on November 23, 2015 Posted in Arbitration, Class Actions, Commercial, Corporate, and Contracts, Energy, Securities

Last Thursday, the Association for Corporate Growth hosted a talk in Dallas about deals that result in a lawsuit or arbitration. Several dozen deal-makers, mergers and acquisitions lawyers, and consultants attended. The Honorable Jeff Kaplan of JAMS, Elizabeth Brandon of Vinson & Elkins, and I gave the talk. Ladd Hirsch of Diamond McCarthy organized and … Continue Reading

The Cost of Funding Litigation Expenses

By Barry Barnett on October 26, 2015 Posted in Antitrust, Class Actions, Commercial, Corporate, and Contracts, Energy, Intellectual Property, Securities

Big dollars in business cases Expenses in big-dollar lawsuits can run into the millions of dollars. An antitrust class action that I’ve handled since 2003, for instance, cost more than $8 million. The law firms representing the class fronted all that money, with no assurance we would ever get any of it back. Why would … Continue Reading

The Cost of Third-Party Litigation Funding

By Barry Barnett on October 19, 2015 Posted in Antitrust, Commercial, Corporate, and Contracts, Energy, Fees, Intellectual Property, Securities

Sizable expenses A big commercial case can cost millions in expenses — by which I mean out-of-pocket costs that the plaintiff or its counsel must pay net of attorneys’ fees. A portfolio of cases — for infringement of a patent or family of patents, say — can run many millions more. Who will bear that … Continue Reading

Fifth Circuit Misapplies Comcast, Affirms Class Anyway

By Barry Barnett on September 10, 2015 Posted in Class Actions, Energy, Procedure, Securities

Modest decision In Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), a 5-4 majority — over an extraordinary joint dissent by Justices Ginsburg and Breyer — had to work hard to make a modest ruling. The Court held that plaintiffs seeking class treatment under Rule 23(b)(3) sometimes may have to plausibly link their theory of liability … Continue Reading

Flimsy Opinions and Securities Fraud

By Barry Barnett on March 24, 2015 Posted in Class Actions, Securities

False opinions Giving a knowingly false opinion about a public company can expose the company and its insiders to liability for securities fraud under federal law. But what about an opinion that they truly believe but for which they have a flimsy basis? The Supreme Court held today that the lack of rigor may indeed … Continue Reading

Loss Due to Lack of Loss Causation Wins Appeal; Error Caused Ruling, Fifth Circuit Says

By Barry Barnett on October 3, 2014 Posted in Class Actions, Securities

Cla, … Continue Reading

Workers Catch a Break on Some ERISA Claims

By Barry Barnett on June 30, 2014 Posted in Class Actions, Securities

A June 25th ruling by the Supreme Court cleared the way for workers to bring claims under the Employee Retirement Income Secuirity Act of 1974 against ERISA plan fiduciaries who imprudently allow or require the employees to invest in their employers' stock. But the window of liability for imprudent fiduciaries might not last very long — … Continue Reading

Securities Class Actions Take Hit

By Barry Barnett on June 23, 2014 Posted in Class Actions, Securities

Basic survives — barely The Supreme Court held today that plaintiffs in securities fraud cases may continue to use a 26-year-old presumption that "the price of stock traded in an efficient market reflects all public, material information — including material misstatements." Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, slip op. at 1 … Continue Reading

Second Circuit Okays SEC’s No-Admit Pact with Citigroup

By Barry Barnett on June 4, 2014 Posted in Class Actions, Securities

Investors who wished for a helping hand in pursuing claims against banks that sold them exotic debt instruments instead got a kick in the pants from the Second Circuit today. No no-admit deals In 2011, U.S. District Judge Jed Rakoff famously refused to approve a consent decree between the Securities and Exchange Commission and Citigroup. The pact … Continue Reading

Wyly Jury Finds for SEC

By Barry Barnett on May 12, 2014 Posted in Securities

A multi-week jury trial in the Southern District of New York ended today with a verdict for the Securities and Exchange Commission against Sam Wyly and the estate of his brother Charles Wyly Jr. The SEC alleged that the Wylys had used offshore trusts to make secret trades and that they received more than $550 … Continue Reading

RICO Can Reach Across the Pond, Second Circuit Holds

By Barry Barnett on April 25, 2014 Posted in Antitrust, Securities

Get ready, folks, for a new wave of cases under the Racketeer-Influenced and Corrupt Organizations Act of 1970 — RICO, for short. The Second Circuit ruled this week that a case by the European Community and EC member states may proceed with a RICO case against RJR Nabisco for money laundering and worse. European Community v. RJR … Continue Reading

Court to Decide If Class Actions Extend Deadline for Individual Securities Fraud Claims

By Barry Barnett on March 11, 2014 Posted in Class Actions, Securities

The Supreme Court granted review on March 10 in a case that involves "American Pipe tolling" of limitations. If that sounds unfamiliar, Blawgletter explained the underlying Second Circuit decision last year as follows: If you have a claim under the Securities Act of 1933, you need to act promptly — within one year after you knew … Continue Reading

Outsiders May Blow Whistle on Fraud, Supreme Court Holds

By Barry Barnett on March 4, 2014 Posted in Securities

The Sarbanes-Oxley Act came in the wake of Enron's sudden sinking. It aimed in part to foster the early blowing of whistles on fraud at "publicly traded" companies in order to avoid further titanic shipwrecks al-la the Greatest Company in the World's. The Act did so in part by barring retaliation against "an employee" who … Continue Reading

High Court Cuts Reach of SLUSA

By Barry Barnett on February 26, 2014 Posted in Class Actions, Securities

Many lower courts have given the Securities Litigation Uniform Standards Act of 1998 a wide preemptive scope. In those courts, a black-hole-like SLUSA devours all cases that come within a light year of its omnivorous gullet. If a lawsuit said pretty much anything about buying or selling an interest in a company — BAM! Into … Continue Reading

Give Us All Your Money

By Barry Barnett on February 10, 2014 Posted in Securities

Alfred S. Teo, Sr., hid the fact that he owned a lot of stock in Musicland. He did so in reports he filed with the Securities and Exchange Commission. He also bought 45,000 shares of Musicland stock on the basis of a Musicland insider's tip that Best Buy wanted to make a best buy of Musicland. Teo admitted all … Continue Reading

Insider Trading Cases Just Got Easier

By Barry Barnett on February 6, 2014 Posted in Class Actions, Securities

You know that Jeffrey Abraham convinced the Second Circuit last month to revive an insider trading case against Xcelera big wigs. But did you know the case has Greater Import than Blawgletter told you about? It does. As Jeff tells us: The more important parts of the holding, in my opinion, are that in a claim … Continue Reading

Federal Bar on Insider Trading Applies to Obscure Stocks

By Barry Barnett on February 4, 2014 Posted in Class Actions, Securities

Say you own shares of stock in Podunk Corp. Perhaps you won them in a poker game. You can't sell them on a stock exchange; no one has done what federal securities law requires in order to "register" the stock. You know almost nothing about what Podunk has done in the last five years. You … Continue Reading

Nuveen Loses Bond Case Over Loss Causation

By Barry Barnett on September 19, 2013 Posted in Securities

Do federal securities laws make your head hurt? Sometimes they cause Blawgletter's synapses to misfire. Take today. In Nuveen Municipal High Income Opportunity Fund v. City of Alameda, No. 11-17391 (9th Cir. Sept. 19, 2013), the ruling turned on what our securities-lawyer friends call "loss causation". Which they contrast with "transaction causation". Stay with us, … Continue Reading

Class Wins Reprieve for Section 11 Securities Act Claim over Merger

By Barry Barnett on August 20, 2013 Posted in Class Actions, Securities

People who commit to buy a stock on Day 1 can't complain about misrepresentations that the stock issuer made on Day 2 or later. E.g., APA Excelsior III L.P. v. Premiere Techs., Inc., 476 F.3d 1261, 1267 (11th Cir. 2007). The later lies could not have induced you to buy the shares, the theory goes. … Continue Reading

Trustee of Junky Debt Earned Contingent Fee, Second Circuit Rules; Timing Is Everything

By Barry Barnett on August 1, 2013 Posted in Securities

The hey-day for exotic bets on credit risk spanned most of the first decade of the 21st century. The popping of the housing bubble in 2008 did it in. People lost homes that they bought with debt they couldn't repay; and plenty of investors watched in horror as the value of the junk they'd bought — collateralized debt … Continue Reading

Snappy and Bitey Review High Court’s 2012-13 Commercial Cases; “Now Is the Time, Cato!”

By Barry Barnett on July 1, 2013 Posted in Antitrust, Class Actions, Intellectual Property, Securities

Snappy reclines. The Empire State Building looms in the mid-distance. Bitey consults his notes. He clears his throat. Bitey: The U.S. Supreme Court's summer break started last week, Snaps, and the time has come for us to look at the . . . uh . . . results of the 2012-13 Term for those commercial cases we love … Continue Reading