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  • Southern District Of New York Dismisses In Part Securities Fraud Claims Against Major Industrial Conglomerate, Allowing Claims Based Upon Factoring In Financial Filings To Proceed
     
    09/10/2019

    On August 29, 2019, Judge Jesse M. Furman of the U.S. District Court for the Southern District of New York dismissed most of the securities fraud claims in a putative class action against a major industrial conglomerate (the “Company”), and certain of its current and former executives, brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.  AP-Fonden v. Gen. Elec. Co., 2019 BL 325702 (S.D.N.Y. Aug. 29, 2019).  Plaintiffs alleged defendants concealed performance problems in the Company’s insurance and power divisions.  The Court found, among other things, that plaintiffs did not adequately plead claims based upon allegedly misrepresented liabilities in the Company’s long-term care (“LTC”) insurance portfolio.  The Court did not, however, dismiss plaintiffs’ claim that the Company failed to disclose that it used “factoring” arrangements to generate current revenue by selling future revenues to third parties.
  • Second Circuit Holds That Commodities Exchange Act Antifraud And Private Right Of Action Provisions Do Not Apply Extraterritorially
     
    09/04/2019

    On August 29, 2019, the United States Court of Appeals for the Second Circuit affirmed the dismissal of an action under the Commodities Exchange Act (“CEA”) alleging that defendants manipulated the foreign benchmark for the price of Brent crude oil by using fraudulent bids, offers and transactions.  Prime International Trading Ltd, et al., v. BP PLC, et al., No. 17-2233 (2d Cir. Aug. 29, 2019).  The Court held that the CEA provisions at issue did not apply extraterritorially because they lacked a “clear statement of extraterritorial effect” and the alleged misconduct was predominantly foreign.
    CATEGORY: Jurisdiction
  • Second Circuit Finds New Private Right Of Action Under Investment Company Act Of 1940
     
    09/04/2019

    Rejecting a widely-held consensus, on August 5, 2019, the United States Court of Appeals for the Second Circuit held that Section 47(b)(2) of the Investment Company Act (“ICA”) creates an implied private right of action for rescission in favor of a party to a contract that allegedly violates the ICA (or whose performance allegedly violates the ICA).  Oxford University Bank v. Lansuppe Feeder, Inc., No. 16-4061 (2d Cir. Aug. 5, 2019).
    CATEGORY: Standing
  • Southern District Of New York Dismisses Putative Class Action Against Digital Services Company For Failure To Adequately Allege Misstatements And Scienter
     
    09/04/2019

    On August 28, 2019, Judge Lorna G. Schofield of the United States District Court for the Southern District of New York dismissed a putative class action against the digital services and development company Synacor, Inc. and certain of its officers asserting claims under Section 10(b) of the Securities Exchange Act of 1934.  Lefkowitz, et al. v. Synacor, Inc., et al., 18-CV-2979 (LGS) (S.D.N.Y. Aug. 28, 2019).  Plaintiffs alleged misrepresentations regarding revenue projections relating to a contract with a major customer, the customer’s control over monetizing the contract and weaknesses in the company’s internal controls for financial reporting.  The Court held that the alleged misrepresentations in question were either not actionable or were inadequately pleaded with respect to scienter, and therefore dismissed the complaint in its entirety, but granted leave to replead. 
  • Southern District Of Florida Dismisses Putative Class Action Against Beverage Company For Failure To Adequately Allege Misstatements, Scienter And Loss Causation
     
    09/04/2019

    On August 29, 2019, Judge K. Michael Moore of the United States District Court for the Southern District of Florida dismissed a putative class action against National Beverage Corporation and certain of its officers asserting claims under Section 10(b) of the Securities Exchange Act of 1934.  Luczak v. National Beverage Corporation, et al., 18-cv-61631-KMM (S.D. Fla. Aug. 29, 2019).  Plaintiff alleged that defendants’ public statements contained misrepresentations regarding the company’s main product (a brand of sparkling water), the use of purportedly unique proprietary methods to drive growth, and sexual harassment allegations with respect to the company’s CEO.  The Court held that the alleged misrepresentations were inadequately pleaded with respect to either falsity, scienter or loss causation, and therefore dismissed the complaint in its entirety.
  • District Of Maryland Dismisses Exchange Act Claims For Failure To Adequately Allege Scienter
     
    08/27/2019

    ​On August 19, 2019, Judge Richard Bennett of the United States District Court for the District of Maryland dismissed a putative securities class action involving claims brought under Sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934 (the “Exchange Act”) against a sports apparel company (the “Company”) and one of its executives.  In re Under Armour Securities Litigation, No. 17-cv-00388 (D. Md. Aug. 19, 2019).  Plaintiffs alleged that the Company misrepresented its financial health by concealing that consumer demand had declined and the Company had resorted to discounting to prop up its sales.  In a prior decision, the Court had dismissed plaintiffs’ claims but permitted plaintiffs to replead the Exchange Act claims to attempt to plead scienter.  The Court held, however, that plaintiffs’ further amended complaint suffered from the same defects as their prior complaint, and therefore dismissed the action with prejudice.
  • Fifth Circuit Affirms Dismissal Of Putative Securities Class Action Against Home Furnishings Retailer For Failure To Adequately Allege Scienter
     
    08/27/2019

    On August 19, 2019, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal by a Northern District of Texas court of a putative securities class action asserting a Section 10(b) claim under the Securities Exchange Act of 1934 (the “Exchange Act”) against a home furnishings retailer (the “Company”) and two of its senior officers.  Municipal Employees’ Retirement System of Michigan v. Pier 1 Imports Inc. et al., No. 18-10998 (5th Cir. Aug. 19, 2019).  Plaintiff alleged that defendants failed to disclose that the Company’s inventory was too high and was subject to significant “markdown risk” because it had too much inventory that was too “seasonal” and “subject to changing consumer tastes.”  The Court affirmed the district court’s decision that plaintiff’s allegations did not adequately support the required strong inference of scienter.
  • Northern District Of California Dismisses Putative Securities Class Action For The Second Time Against Generic Drug Maker For Inadequate Pleading, This Time Without Leave To Amend
     
    08/20/2019

    On August 12, 2019, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California dismissed without leave to amend a putative securities class action against a pharmaceutical company, and certain of its officers, under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.  New York Hotel Trades Council & Hotel Assoc. of N.Y.C., Inc. Pension Fund v. Impax Laboratories Inc., No. 16 Civ. 6577 (N.D. Cal. Aug. 12, 2019).  As to alleged misrepresentations regarding alleged price fixing, the Court held that the announcement of a government investigation cannot, as a matter of law, amount to a “corrective disclosure” sufficient to allege loss causation.  As to other alleged misrepresentations regarding price erosion as to certain drugs, the Court held that plaintiff failed to plead a false statement, materiality, and/or scienter.    
  • District Of New Jersey Allows Class Action Based On Alleged Price-Fixing To Proceed Against Pharmaceutical Company
     
    08/13/2019

    On August 6, 2019, Judge Katherine S. Hayden of the United States District Court for the District of New Jersey denied a motion to dismiss a putative securities class action asserting claims under Sections 10(b) and 14(a) of the Securities Exchange Act of 1934, and Rules 10b-5 and 14a-9 promulgated thereunder.  In re Allergan Generic Drug Pricing Sec. Litig., No. 16- CV-9449, 2019 WL 3562134 (D.N.J. Aug. 6, 2019).  Plaintiffs alleged that a pharmaceutical company and several of its executives participated in a price-fixing conspiracy that caused the prices of six generic drugs sold by the company to increase dramatically during the alleged class period—as ultimately revealed through a U.S. Department of Justice investigation—and that defendants made material misstatements and omissions regarding the alleged conspiracy.  The Court held that plaintiffs adequately pleaded their claims, including with respect to material misstatements, scienter and loss causation.
  • New York State Court Holds PSLRA Bars Discovery In State Securities Act Cases Pending A Motion To Dismiss
     
    08/13/2019

    On August 7, 2019, New York State Supreme Court Justice Andrew Borrok issued a stay of discovery, pending resolution of a motion to dismiss, in a putative class action asserting claims under the Securities Act of 1933.  In re Everquote, Inc. Sec. Litig., Index No. 651177/2019, 2019 WL 3686065 (Sup. Ct. N.Y. Cnty. Aug. 7, 2019).  Justice Borrok held that the automatic discovery stay under the Private Securities Litigation Reform Act of 1995 (“PSLRA”) applied to Securities Act claims brought in state court.
    CATEGORY: Discovery
  • Eastern District Of New York Dismisses Putative Class Action Against Pharmaceutical Company For Failure To Adequately Allege Misstatements And Scienter
     
    08/13/2019

    On August 6, 2019, Judge Edward R. Korman of the United States District Court for the Eastern District of New York dismissed a putative securities class action asserting claims against a pharmaceutical company and certain of its officers under Section 10(b) of the Securities Exchange Act of 1934.  In re Aceto Corp. Sec. Litig., No. 18-CV-2425 (ERK-AYS) (E.D.N.Y. Aug. 6, 2019).  Plaintiff alleged that defendants made misrepresentations in connection with disclosures concerning the company’s compliance with internal controls, earnings forecasts, and regarding the valuation of goodwill and intangible assets.  The Court held that the complaint failed to plead an actionable misstatement or scienter, but granted leave to replead.
  • Southern District Of New York Grants Reconsideration And Dismisses Exchange Act Claims Against Underwriter Of Regulation A+ Offering, Finding Plaintiffs Failed To Adequately Allege Scienter
     
    08/06/2019

    On July 29, 2019, Judge Denise Cote of the United States District Court for the Southern District of New York granted reconsideration of her prior decision and dismissed securities fraud claims brought against an underwriter in a putative securities class action.  In re Longfin Corp. Securities Class Action Litigation, 1:18-cv-02933 (DLC) (S.D.N.Y. July 29, 2019).  As discussed in our prior post, plaintiffs filed securities law claims against a financial and technological services company (the “Company”), its executives, and the lead underwriter (“Underwriter”) of the Company’s Regulation A+ (“Reg A+”) offering in 2017 (the “Offering”).  On April 11, 2019, the Court granted the Underwriter’s motion to dismiss claims brought under the Securities Act of 1933, but denied its motion to dismiss plaintiffs’ claim that the Underwriter committed fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder.  In granting the Underwriter’s motion for reconsideration and dismissing the Exchange Act claims, the Court found that plaintiffs’ Second Amended Complaint (“SAC”) failed to plausibly allege the Underwriter knew and participated in an alleged fraudulent “scheme” and that the more compelling inference was that the Company lied to the Underwriter to secure its participation in the Offering.
    CATEGORIES: Exchange ActSchemeScienter
  • Southern District Of New York Dismisses Putative Class Action Against Building Materials Company For Failure To Adequately Allege Misstatements And Scienter
     
    07/23/2019

    On July 12, 2019, Judge Valerie Caproni of the United States District Court for the Southern District of New York dismissed a putative securities class action brought against the building materials company Cemex and certain of its officers, asserting claims under the Securities Exchange Act of 1934.  Schiro v. Cemex, S.A.B. de C.V., No. 18-CV-2352 (VEC), 2019 WL 3066487 (S.D.N.Y. July 12, 2019).  Plaintiffs alleged that defendants misrepresented the company’s internal controls and compliance with anti-bribery laws and failed to disclose an alleged bribery scheme involving the company’s Colombian subsidiary.  The Court held the misrepresentations in question were either not actionable or were inadequately pleaded with respect to scienter, and therefore dismissed the complaint in its entirety, while granting leave for plaintiffs to amend.
  • New York Supreme Court Dismisses Securities Act Of 1933 Claims, Holding That Plaintiffs’ Allegations Of Misleading Statements Are Inactionable Forward-Looking Statements Or Opinions Under Omnicare
     
    07/23/2019

    On July 11, 2019, Justice Andrew Borrok of the New York State Supreme Court, County of New York, Commercial Division, dismissed a putative securities class action against a Brazilian based online retailer (the “Company”), certain of its executives and directors, and its underwriters in connection with the Company’s initial public offering (“IPO”).  In re Netshoes Sec. Litig., Index No. 157435/2018 (Sup. Ct., N.Y. Cty., July 11, 2019).  Plaintiffs—purchasers of the Company’s stock—brought claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”), claiming that defendants made materially false and misleading statements in a registration statement filed with the SEC in connection with the IPO.  The Court dismissed the Securities Act claims without prejudice, finding that the allegations were inactionable opinions under the Supreme Court’s decision in Omnicare, Inc. v. Laborers Dist. Council Const. Indus., 135 S. Ct. 1318 (2015), or were inactionable because they were about past performance, were forward-looking, or were expressions of puffery.
  • Fifth Circuit Affirms Dismissal Of Class Action Against Pipeline Operator For Failure To Adequately Allege Misstatements Or Scienter
     
    07/23/2019

    On July 16, 2019, the United States Court of Appeals for the Fifth Circuit affirmed a decision by the United States District Court for the Northern District of Texas that dismissed a putative class action against the oil and gas pipeline operator Plains All American Pipeline, certain of its officers, directors and related parties, and the underwriters for the securities offerings at issue.  Police & Fire Ret. Sys. of the City of Detroit v. Plains All Am. Pipeline, L.P., —Fed. App’x—, 2019 WL 3213543, slip. op. (5th Cir. 2019).  As discussed in our prior post, plaintiffs, investors who purchased equity and debt instruments issued by entities affiliated with Plains All American Pipeline in seven different public offerings, brought claims under the Securities Exchange Act of 1934 and the Securities Act of 1933, alleging that statements regarding the company’s compliance program were false in light of events surrounding a May 2015 oil spill.  The district court dismissed plaintiffs’ second amended complaint with prejudice, finding that plaintiffs either did not allege an actionable misstatement or did not sufficiently plead scienter.  The Fifth Circuit affirmed.
  • Federal Court Denies Motion To Dismiss Section 20A Insider Trading Claims, Finding Plaintiffs Sufficiently Pleaded Scienter Where Allegations Were “Equally Compelling” As The Opposing Inference
     
    07/09/2019

    On July 1, 2019, Judge Michael A. Shipp of the United States District Court for the District of New Jersey denied a motion to dismiss a complaint alleging insider trading in violation of Section 20A of the Securities Exchange Act of 1934.  In re Valeant Pharma. Int’l Inc. Sec. Litig., 15-7685 (MAS) (LHG) (D.N.J. July 1, 2019).  The complaint asserts the Section 20A claims against a board member of a large pharmaceutical corporation (the “Company”) and an investment advisory firm and affiliates co-founded by that board member that traded in the Company’s stock.  The Court, which had already considered and denied a motion to dismiss the Section 10(b) and Rule 10b-5 claims in a prior ruling, concluded that the complaint adequately alleged Section 20A claims and denied the motion to dismiss.
    CATEGORIES: Insider TradingScienter
  • District Of Connecticut Certifies Class In Cryptocurrency Mining Suit, Holding That Proposed Class Could Establish Reliance Based On Common Proof
     
    07/02/2019

    On June 21, 2019, Judge Michael P. Shea of the United States District Court for the District of Connecticut granted plaintiffs’ motion to certify a class of investors in an action alleging that two cryptocurrency companies falsely represented that they were using investors’ money to mine for cryptocurrency when, in fact, they were engaged in a Ponzi scheme.  Plaintiffs asserted claims against the companies and their owners under Section 10(b) of the Securities Exchange Act of 1934, Connecticut securities law, and for common law fraud.  Audet v. Fraser, No. 3:16-CV-0940 (MPS), 2019 WL 2562628 (D. Conn. June 21, 2019).  The Court held that each of the requirements for class certification was satisfied and, in particular, that even though no presumption of reliance was available, reliance on misrepresentations could be established on a class-wide basis based on common proof. 
  • Eastern District Of New York Dismisses Putative Class Action Regarding Mutual Fund Disclosures For Failure To Adequately Allege Misstatements And Omissions
     
    07/02/2019

    On June 25, 2019, Judge Arthur Spatt of the United States District Court for the Eastern District of New York dismissed with prejudice a putative securities class action brought by investors in a mutual fund asserting violations of the Securities Act of 1933 (“Securities Act”) against the fund’s registrant, certain executives, investment advisor, and underwriter.  Emerson v. Mutual Fund Series Trust, No. 2:17-CV-02565 (ADS) (GRB), 2019 WL 2601664 (E.D.N.Y. June 25, 2019).  Plaintiffs alleged that the fund’s offering materials misrepresented that the fund was low-risk, when in fact it engaged in speculative investments that exposed the fund to substantial downside risk in rising markets.  Id. at *1.  The Court held that the complaint alleged “no actionable misstatements or omissions,” and dismissed the complaint with prejudice.  Id. at *15.
  • Supreme Court Denies Petition For Certiorari In Toshiba, Leaving In Place Arguable Circuit Split Regarding Extraterritorial Reach Of Section 10(b)
     
    07/02/2019

    On June 24, 2019, the United States Supreme Court denied a petition for certiorari to review a decision from the United States Court of Appeals for the Ninth Circuit, which held that a foreign issuer that has no involvement in establishing or selling ADRs can be subject to liability under Section 10(b) of the Securities Exchange Act of 1934 as long as plaintiff purchased or sold the ADRs in a domestic transaction.  Toshiba Corp. v. Auto. Indus. Pension Trust Fund, et al., No. 18-486 (U.S. June 24, 2019).  Pursuant to its typical practice, the Court did not comment on its reasons for denying certiorari. 
    CATEGORY:
  • Supreme Court Expands Scope Of Confidential Information Disclosure Exemption Under Freedom Of Information Act
     
    07/02/2019

    On June 24, 2019, the United States Supreme Court, in an opinion by Justice Gorsuch, held that information that “is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy” is protected from disclosure under the Freedom of Information Act (“FOIA”) pursuant to Exemption 4 thereto, which protects “commercial or financial information obtained from a person and privileged or confidential.”  Food Mktg. Inst. v. Argus Leader Media, —U.S.—, 2019 WL 2570624 (June 24, 2019).  The Court thus reversed a decision of the Eighth Circuit that had required an additional showing that disclosure would cause “substantial competitive harm.” 
    CATEGORY:
  • Southern District Of New York Dismisses Putative Class Action Against Brazilian Mining Company For Failure To Allege A Domestic U.S. Securities Transaction

    06/25/2019

    On June 18, 2019, Judge Richard Berman of the United States District Court for the Southern District of New York dismissed a putative securities class action brought by a Cayman Islands branch of a Brazilian bank against a Brazilian mining company (the “Company”) and its Brazilian parent companies on behalf of investors in certain of the Company’s bonds. Banco Safra S.A. - Cayman Islands Branch v. Samarco Mineracao S.A., et al, 1:16-cv-08800 (S.D.N.Y. June 18, 2019). Plaintiff alleged that defendants made misrepresentations about the safety of the Company’s mining operations in the wake of an “environmental disaster” in Brazil involving the bursting of one of the Company’s dams in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder. Plaintiff also alleged violations of Section 20(a) of the Exchange Act, along with claims for common law fraud, aiding and abetting fraud, and negligent misrepresentation. The bonds at issue were not listed on a U.S. securities exchange and had been initially offered only outside the United States, and plaintiff’s alleged purchases were largely made in the secondary market. The Court, in dismissing the amended complaint, held that plaintiff failed to allege a U.S. domestic securities transaction as required to overcome the presumption against the extraterritorial application of the U.S. securities laws.

    CATEGORIES: Exchange ActJurisdiction
  • Northern District Of California Dismisses Putative Class Action Against Cybersecurity Company Based On Failure To Adequately Allege Misrepresentations And Scienter
     
    06/25/2019

    On June 14, 2019, Judge William Alsup of the United States District Court for the Northern District of California dismissed a putative class action against a cybersecurity company (the “Company”) and certain of its executives. SEB Inv. Mgmt. AB v. Symantec Corp., No. 18-02902 (N.D. Cal. June 14, 2019). After the Company announced that its audit committee had commenced an internal investigation and had voluntarily contacted the SEC after a former employee raised unspecified concerns, plaintiff, an investor in the Company, alleged that defendants made misrepresentations in connection with the Company’s growth as a result of its acquisition of two security firms, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. The Court held that plaintiff failed to allege actionable material misrepresentations and/or scienter as to various categories of alleged misstatements, and dismissed the complaint without prejudice.
     
  • Southern District Of New York Denies Motion For Judgment On The Pleadings, Rejecting Argument That Code Of Conduct Statements Were Inactionable Puffery
     
    06/18/2019

    On June 11, 2019, Judge Colleen McMahon of the United States District Court for the Southern District of New York denied defendants’ motion for judgment on the pleadings in a putative securities class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against a jewelry retailer (the “Company”) and certain of its senior executives.  In re Signet Jewelers Limited Sec. Litig., No. 16-cv-6728, 2019 WL 2428529 at *1 (S.D.N.Y. Nov. 26, 2018).  Plaintiff alleged that certain declarations filed in connection with a separate gender discrimination case rendered false and misleading the Company’s public statements about its commitment to preventing gender discrimination.  Rejecting defendants’ argument that the Company’s statements were inactionable puffery, the Court ruled that plaintiff had adequately pleaded that the statements were material because, among other things, they appeared to be directly and specifically at odds with the conduct alleged in the complaint.
     
  • Southern District Of New York Dismisses Putative Class Action Against Mining Company As Time-Barred And For Failure To Adequately Allege Misrepresentations And Scienter
     
    06/11/2019

    On June 3, 2019, Judge Analisa Torres of the United States District Court for the Southern District of New York dismissed a putative class action against the mining company Rio Tinto and certain of its executives.  Colbert v. Rio Tinto plc, 17 Civ. 8169 (AT) (DCF) (S.D.N.Y. June 3, 2019).  Plaintiff—purportedly on behalf of a class of purchasers of Rio Tinto’s American Depositary Receipts (“ADRs”)—alleged that defendants made misrepresentations regarding Rio Tinto’s investment and mining operations in Mozambique, in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder.  The Court held that certain of plaintiff’s claims were time-barred and the remaining claims failed to adequately allege an actionable misrepresentation or scienter.
  • Supreme Court Holds That Third-Party Counterclaim Defendants May Not Remove An Action Based On The General Removal Statute Or CAFA
     
    06/04/2019

    On May 28, 2019, the Supreme Court held in a 5-4 decision authored by Justice Thomas that a third-party counterclaim defendant was not permitted to remove class action claims against it under the general removal statute, 28 U.S.C. § 1441 (“Section 1441”), or the Class Action Fairness Act, 28 U.S.C. § 1453 (“CAFA”).  Home Depot U. S. A., Inc. v. Jackson, No. 17-1471, 587 U.S. ___ (2019).  The Court held that the term “defendant” in the two removal provisions at issue applies only to “the party sued by the original plaintiff” and should not be expanded to include third-party counterclaim defendants.  As noted in our prior post when the case was argued before the Supreme Court, this decision is the first time the Supreme Court has discussed the scope of Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941), which addressed analogous language in Section 1441’s predecessor and held that a plaintiff who originally filed an action in state court would not be permitted to later remove it to federal court as a “defendant” once counterclaims were filed against it.
  • Fifth Circuit Affirms Dismissal Of Putative Class Action, Holding That Grant Of Employee Stock Option Did Not Constitute A Sale, And That Plaintiffs Failed To Adequately Plead A Duty To Disclose
     
    06/03/2019

    On May 24, 2019, the United States Court of Appeals for the Fifth Circuit affirmed in a unanimous decision the dismissal of a putative securities class action against a major financial services company and several of its subsidiaries in relation to their alleged involvement in Enron’s “financial manipulation.”  Lampkin et al. v. UBS PaineWebber Inc. et al., No. 17-20608 (5th Cir. May 24, 2019).  Plaintiffs—(i) individual retail-brokerage customers of defendants, and (ii) former Enron employees who acquired Enron stock options through Enron’s stock option plan—alleged defendants violated Section 11 and Section 12 of the Securities Act of 1933 (the “Securities Act”) by acting as an underwriter and seller of Enron securities and were liable for materially false and misleading statements contained in Enron’s prospectuses and registration statements.  Plaintiffs also alleged defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder by failing to disclose their alleged knowledge of Enron’s alleged manipulation of its “public financial appearance.” 
  • State Court Stays Discovery Under The PSLRA During Pendency Of Motion To Strike
     
    05/29/2019

    On May 15, 2019, Judge Charles T. Lee of the Connecticut Superior Court at Stamford granted a protective order staying discovery pending a motion to strike in an action alleging violations of the Securities Act of 1933 (the “Securities Act”) against an issuer, certain officers and the underwriters (“Defendants”) in connection with an initial public offering.  City of Livonia Retiree Health & Disability Benefits Plan v. Pitney Bowes Inc., No. X08 FST CV 18 6038160 S (Conn. Super. Ct. May 15, 2019).  In Cyan Inc. v. Beaver Cty. Employees Ret. Fund, 138 S. Ct. 1061 (2018) (“Cyan”), the Supreme Court of the United States held that the substantive protections of the Private Securities Litigation Reform Act (“PSLRA”) necessarily apply “wherever” an action proceeds.  Relying on this, the Connecticut court determined that 15 U.S.C. § 77z-1(b)(1) of the Securities Act, which provides for a stay of discovery during the pendency of a motion to dismiss, applies to actions filed in state court.  Though there have been decisions going both ways on the issue of whether the PSLRA discovery stay applies in state court, this is the first opinion to analyze the issue thoroughly in the wake of Cyan and should serve as persuasive authority in other jurisdictions.
    CATEGORIES: JurisdictionPSLRA
  • Southern District Of Florida Dismisses Claims Against Individual Defendants Related To Initial Coin Offering For Failure To Adequately Allege “Seller” Status Or Reliance
     
    05/23/2019

    On May 13, 2019, Judge Robert N. Scola, Jr., of the United States District Court for the Southern District of Florida dismissed all claims asserted against four individual defendants under Sections 12(a)(1) of the Securities Act of 1933 (the “Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) in an action against the cryptocurrency company Centra Tech, Inc. and certain of its officers and celebrity promoters.  Rensel v. Centra Tech, Inc., et al., No. 17-24500-Civ-Scola (S.D. Fla. May 13, 2019).  Plaintiffs alleged that the company made a series of misrepresentations while marketing an initial coin offering, and that the individual defendants were responsible as “sellers,” because they encouraged the purchase of unregistered securities.  Addressing the individual defendants’ motions to dismiss, the Court dismissed plaintiffs’ Securities Act claims for failure to adequately allege that the individual defendants were “sellers” within the meaning of the Securities Act and dismissed plaintiffs’ Exchange Act claims for failure to adequately allege reliance.
    CATEGORY: Reliance
  • Northern District Of Illinois Dismisses State Law Claims As Barred By SLUSA
     
    05/23/2019

    On May 13, 2019, Judge Charles P. Kocoras of the United States District Court for the Northern District of Illinois dismissed with prejudice a putative class action against TD Ameritrade and an investment advisory company as barred by the Securities Litigation and Uniform Standards Act (“SLUSA”).  Gray v. TD Ameritrade, Inc., No. 18 C 00419, 2019 WL 2085136 (N.D. Ill. May 13, 2019).  Plaintiffs asserted state common law and statutory claims based on allegations that defendants had placed investors into trading strategies that had been misrepresented as conservative.  The Court held that because plaintiffs’ claims coincided with a covered securities transaction, they were prohibited under SLUSA.
    CATEGORY: SLUSA
  • District Of Massachusetts Dismisses Putative Class Action For Lack Of Standing
     
    05/23/2019

    On May 16, 2019, Judge F. Dennis Saylor IV of the United States District Court for the District of Massachusetts dismissed a putative class action against the medical device company ReWalk Robotics and certain of its officers and directors under the Securities Exchange Act of 1934 (“Exchange Act”).  Yan v. ReWalk Robotics Ltd., No. 17 Civ. 10169 (D. Mass. May 16, 2019).  As discussed in our prior post, the Court previously dismissed, with prejudice, claims under the Securities Act of 1933 (“Securities Act”) related to an IPO registration statement for failure to identify a false or misleading statement in the registration statement.  The Court also dismissed, for lack of standing, Exchange Act claims based on alleged post-IPO misstatements, because the sole lead plaintiff only purchased stock in the IPO.  The prior dismissal of the Exchange Act claims, however, was without prejudice.  The lead plaintiff then moved for leave to amend the complaint to add a plaintiff who purportedly had standing to bring the Exchange Act claims.  The Court again held that plaintiff lacked standing, and further held that the lack of standing was fatal to the putative class action and could not be cured by amendment.
    CATEGORY: Standing
  • Fifth Circuit Revives Securities Fraud Claims In Suit Between Former Business Associates
     
    05/23/2019

    On May 15, 2019, the United States Court of Appeals for the Fifth Circuit partially revived a securities fraud suit brought by a doctor and his business partner against two former business associates under the Securities Exchange Act of 1934 (the “Exchange Act”).  Masel v. Villarreal, —F.3d—, 2019 WL 2120536 (5th Cir. May 15, 2019).  Plaintiffs alleged that defendants induced them to enter into a joint business enterprise through material misrepresentations and omissions about the effectiveness of defendants’ medical billing service.  The Court held that the complaint adequately stated a claim against one of the individual defendants and her associated business entities, but that it was properly dismissed as to another individual defendant.
  • District Court Dismisses Putative Class Action Asserting Securities Fraud, Holding That Plaintiffs Failed To Adequately Allege Actionable Material Misstatements Or Omissions And Scienter
     
    05/14/2019

    On April 30, 2019, the United States District Court for the District of Massachusetts granted a motion to dismiss a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder against a biopharmaceutical company (the “Company”) and certain of its executives, and claims under Section 20(a) of the Exchange Act against the executives.  In re Ocular Therapeutix, Inc. Securities Litigation, No. 17-CV-12288 (D. Mass. Apr. 30, 2019).  Plaintiffs alleged that defendants made misstatements regarding manufacturing issues with respect to an ocular pain drug developed by the Company.  The Court held that plaintiffs failed to adequately allege actionable misstatements or omissions and scienter, and granted the motion to dismiss.
  • Second Circuit Summarily Affirms Dismissal Of Putative Securities Fraud Class Action Against Pharmacy Benefits Manager Company, Finding That Plaintiffs Failed To Adequately Allege Material Misstatements And Scienter

     
    05/14/2019

    On May 7, 2019, the United States Court of Appeals for the Second Circuit summarily affirmed the judgment by Judge Edgardo Ramos of the United States District Court for the Southern District of New York granting defendants’ motion to dismiss in a putative securities class action.  In re Express Scripts Holdings Co. Securities Litigation No. 18-cv-1850 (2d Cir. May 7, 2019).  Plaintiffs alleged that defendants—a pharmacy benefit manager (“the Company”) and certain of its officers—violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) by making materially false or misleading statements in connection with the purchase or sale of securities.  As discussed in our prior post, the District Court granted defendants’ motion to dismiss, finding that plaintiffs did not adequately plead that defendants made any misleading statements or that defendants acted with the requisite scienter.  On appeal, plaintiffs argued that the District Court incorrectly held that the Amended Complaint failed to adequately allege that defendants made materially false and misleading statements and omission and acted with scienter.  The Second Circuit affirmed in a summary order.  Summary orders do not have binding precedential effect.
  • New York Federal Court Dismisses Charter School’s Section 10(b) Claims For Lack Of Standing, Rejecting Plaintiff’s Constructive Seller Theory
     
    05/07/2019

    On April 10, 2019, Judge Loretta A. Preska of the United States District Court for the Southern District of New York dismissed an action asserting violations of Section 10(b) of the Securities and Exchange Act of 1934 and claims under state law against a broker-dealer (the “Broker-Dealer”) and several individuals who participated in a bond offering facilitated by the Broker-Dealer.  Palm Beach Maritime Museum v. Hapoalim Sec. USA, Inc., 19 Civ. 908 (LAP), 2019 WL 1950139 (S.D.N.Y. Apr. 10, 2019).  Plaintiff, a non-profit corporation approved as a charter school in Florida, alleged that defendants made materially false statements in connection with a bond purchase agreement to finance plaintiff’s purchase and expansion of property.  The Court held that plaintiff lacked standing to pursue its Section 10(b) claim because it was not the buyer or seller of a security. 
     
    CATEGORIES: Exchange ActStanding
  • The Second Circuit Affirms Denial Of Plaintiffs’ Motion For Leave To Amend Securities Class Action On The Ground That Any Such Amendment Would Be Futile
     
    05/07/2019

    On April 29, 2019, the United States Court of Appeals for the Second Circuit affirmed the denial of plaintiffs’ motion for leave to file an amended complaint alleging securities fraud against an international pharmaceutical corporation (the “Company”) and several of its past and present executives.  Steamfitters’ Indus. Pension Fund v. Endo Int’l PLC, 18-1669-cv (2d Cir. Apr. 29, 2019).  Upon reviewing the district court’s decision de novo, the Second Circuit concluded that an amendment would be futile because the alleged misrepresentations and omissions contained in plaintiffs’ proposed amended complaint (the “Proposed Amended Complaint”) failed to allege any plausible violation of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5.
  • After Oral Argument, Supreme Court Dismisses Emulex Appeal, Prompting Speculation As To Court’s View Regarding Existence Of Private Right Of Action Under Section 14(e), While Leaving In Place Circuit Split Regarding Section 14(e)’s Required Mental State
     
    04/30/2019

    On April 23, 2019, the Supreme Court dismissed the writ of certiorari as “improvidently granted” in a closely-watched appeal raising the question whether an assertion of mere negligence is sufficient to plead and prove a claim under Section 14(e) of the Securities Exchange Act of 1934 and—perhaps—whether a private right of action exists under Section 14(e) at all.  Emulex Corporation, et al. v. Varjabedian, —U.S.—, slip op. (Apr. 23, 2019).  As discussed in our prior post, most of the oral argument concerned whether a private right of action under Section 14(e) exists, but some justices expressed concern over whether the Court should weigh in on that question because it was not presented below.
  • Western District Of Washington Revives Securities Class Action Previously Dismissed For Failure To Adequately Allege Material Misstatements And Scienter
     
    04/30/2019

    On April 19, 2019, Judge John C. Coughenour of the United States District Court for the Western District of Washington denied a motion to dismiss a putative class action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against Zillow Group, Inc. and certain of its executives.  In re Zillow Group, Inc. Securities Litig., No. C17-1387-JCC, 2019 WL 1755293 (W.D. Wash. Apr. 19, 2019).  Plaintiffs alleged misstatements by defendants regarding a Consumer Financial Protection Bureau (“CFPB”) investigation into, among other things, potential violations of the Real Estate Settlement Procedures Act (“RESPA”) that allegedly arose out of Zillow’s “co-marketing” program between real estate agents and mortgage lenders.  As discussed in our prior post, the Court had previously granted defendants’ motion to dismiss plaintiffs’ first amended complaint, but allowed plaintiffs leave to file a second amended complaint.  In considering the second amended complaint, the Court explained how plaintiffs had cured the defects the Court noted in its prior ruling regarding allegations of material misstatements and scienter.
  • Supreme Court Holds That Parties Must Unambiguously Consent To Class Arbitration
     
    04/30/2019

    On April 24, 2019, the United States Supreme Court, in a 5-4 decision authored by Chief Justice Roberts, held that an agreement ambiguous as to whether arbitration had been agreed for class claims as well as individual claims could not provide a contractual basis for class arbitration.  Lamps Plus, Inc. v. Varela, 587 U.S. ___, 2019 WL 1780275 (2019).  The Court addressed two questions:  (i) whether the Court had jurisdiction, given that the district court had compelled arbitration in connection with its dismissal of the underlying claims; and (ii) whether state contract law principles could be applied to interpret an arbitration clause that was ambiguous with regard to the authorization of class arbitration as authorizing such arbitration.  The Court held that it had jurisdiction because dismissal of the underlying claims qualified as a “final decision” under the Federal Arbitration Act (“FAA”).  On the merits issue, the Court held that a contract that was ambiguous as to whether class arbitration was permitted lacked the explicit “consent” to such arbitration required under the FAA.
    CATEGORY: Class Actions
  • Supreme Court Hears Argument On Whether Mere Negligence Is Sufficient To Sustain Investor Claims Under Section 14(e) Of The Exchange Act In Connection With A Tender Offer And—Perhaps—Whether A Private Right of Action Exists Under Section 14(e) At All
     
    04/23/2019

    On April 15, 2019, the Supreme Court heard argument in a closely-watched case asking whether mere negligence is sufficient to plead and prove a claim under Section 14(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) in connection with a tender offer and – perhaps – whether a private right of action exists under Section 14(e) at all.  Emulex Corporation, et al. v. Varjabedian, No. 18-459 (Apr. 15, 2019).  The argument was particularly lively, with the Justices posing numerous questions about both a defendant’s required mental state, as well as whether an implied right of action ought to be recognized – although it remains unclear whether the Court will actually decide the latter question.
    CATEGORIES: Exchange ActScienter
  • Southern District Of New York Dismisses Claim That Underwriter Of Regulation A+ Offering Was A Seller Of Unregistered Securities, But Allows Securities Fraud Claim To Proceed Past The Pleading Stage
     
    04/23/2019

    On April 11, 2019, Judge Denise Cote of the United States District Court for the Southern District of New York granted in part and denied in part an underwriter’s motion to dismiss a putative class action lawsuit filed against a financial and technological services company (the “Company”), its executives, and the lead underwriter (“Underwriter”) of the Company’s Regulation A+ (“Reg A+”) offering in 2017 (the “Offering”).  In re Longfin Corp. Securities Class Action Litigation, 1:18-cv-02933 (DLC) (S.D.N.Y. Apr. 11, 2019).  Reg A+ was created to exempt certain categories of offerings from registration requirements and is an alternative to a traditional initial public offering.  Plaintiffs alleged that all defendants sold unregistered securities in violation of Section 12(a)(1) of the Securities Act of 1933 (“Securities Act”) in order to list on the NASDAQ, and committed fraud in violation of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and that certain of the individual defendants were liable under Section 20(a) of the Exchange Act and/or engaged in insider trading in violation of Section 20A of the Exchange Act.  The gravamen of plaintiffs’ claims is that the Company fraudulently issued more than 400,000 Class A shares to 24 individuals for $0 consideration in order to meet the NASDAQ’s listing requirement that the Company has issued 1,000,000 publicly held shares.  With respect to the Underwriter’s motion to dismiss, the Court dismissed the Securities Act claim, finding that it was not a “seller” of securities, but held that the Exchange Act claim could proceed because plaintiffs’ amended complaint adequately alleged, for the purpose of the motion to dismiss, the Underwriter’s knowledge and participation in a “scheme” under Rule 10b-5.
  • Central District Of California Sustains Putative Class Action Against Canadian Silver Company And Its Auditor For Failing To Disclose Major Potential Tax Liability In Its Public Financial Statements
     
    04/16/2019

    On March 25, 2019, Judge Christina A. Snyder of the United States District Court for the Central District of California denied a motion to dismiss a class action filed against a Canadian silver company (the “Company”), current and former executives of the Company, and its auditor and tax consultant (the “Auditor”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  In Re Silver Wheaton Corp. Secs. Lit., No. 2:15-cv-05146; 2:15-cv-5173 (C.D. Cal. Mar. 25, 2019).  Plaintiffs allege defendants failed to disclose USD$207 million in Canadian tax liabilities and that the Auditor wrongfully issued clean audit opinions.  The Court held that plaintiffs sufficiently pleaded claims against all defendants.  Of particular note, while the Court acknowledged several hurdles that generally result in the dismissal of claims against auditors, it held that those hurdles had been surmounted by plaintiffs given the unique circumstances of the case.
  • District of Colorado Dismisses Putative Class Action Against Restaurant Chain For Failure To Adequately Allege Misstatements Or Omissions
    04/09/2019

    On March 29, 2019, Judge Wiley Y. Daniel of the United States District Court for the District of Colorado dismissed with prejudice a putative securities class action asserting claims under the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against the restaurant chain Chipotle and certain of its executives.  Nardy v. Chipotle Mexican Grill, Inc., No. 1:17-cv-1760 (WYD) (STV), slip op. (D. Colo. Mar. 29, 2019), ECF No. 64.  Plaintiffs alleged that, in the wake of foodborne illness outbreaks at Chipotle restaurants, defendants made misrepresentations and omissions regarding the company’s compliance with food safety regulations and its implementation and training of employees on food safety practices.  The Court held that plaintiffs’ various allegations failed to assert actionable misrepresentations, or in certain cases did not adequately allege scienter, or loss causation.
  • Southern District Of New York Dismisses Putative Class Action Against Pharmaceutical Company For Failure To Adequately Allege Misstatements And Scienter
     
    04/09/2019

    On March 28, 2019, Judge William H. Pauley of the United States District Court for the Southern District of New York granted a motion to dismiss a putative securities class action asserting claims under the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against a pharmaceutical company and certain of its executives.  Gagnon v. Alkermes PLC, —F. Supp. 3d—, 2019 WL 1388700 (S.D.N.Y. Mar. 28, 2019).  Plaintiff alleged that defendants made misleading statements in investor and analyst calls and public filings concerning the efficacy of the company’s opioid-dependence drug Vivitrol and the reasons for increased revenue from Vivitrol, which plaintiff alleged actually resulted from deceptive marketing and lobbying tactics.  Id. at *2.  The Court held that all but one of the alleged misstatements were not actionable, and as to the one actionable misstatement, plaintiff had failed to adequately allege scienter.  Because the Court had previously given plaintiff an opportunity to replead, the action was dismissed with prejudice.
  • Southern District Of New York Holds Scienter Adequately Alleged In Putative Class Action Against Forex Services Company
     
    04/09/2019

    On March 28, 2019, Judge Ronnie Abrams of the United States District Court for the Southern District of New York largely denied a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  In re Global Brokerage, Inc., 17-cv-00916 (RA) (S.D.N.Y. Mar. 28, 2019).  Plaintiffs principally alleged that defendants, a foreign exchange trading and services company and certain of its executives, made misleading statements or omissions regarding (a) the company’s reliance on an agency-trading model and (b) the nature of payments the company received from another company, “Effex,” that had been spun-off from the defendant company.  The Court had dismissed plaintiffs’ prior amended complaint without prejudice, holding, inter alia, that plaintiffs had not adequately alleged scienter.  The Court held, however, that plaintiffs’ second amended complaint adequately alleged actionable misrepresentations and scienter as to the majority of claims and all but one individual defendant.
  • Second Circuit Affirms District Court’s Denial Of Motions To Remand, Finding That Removal Prior To Service Of The Complaints Was Proper Under The “Forum Defendant Rule”
     
    04/09/2019

    On March 26, 2019, the United States Court of Appeals for the Second Circuit affirmed the removal and dismissal of claims brought against two pharmaceutical companies.  Gibbons v. Bristol-Myers Squibb Company and Pfizer Inc., No. 17-2638 (2d. Cir. Mar. 26, 2019).  Plaintiffs asserted over a dozen claims across multidistrict litigation (“MDL”) against defendants alleging that plaintiffs or their decedents suffered injuries as a result of the allegedly improper design of and insufficient warning labels for a certain blood-thinning drug used to reduce the risk of stroke in patients with atrial fibrillation that was manufactured and distributed by defendants.
    CATEGORIES: PreemptionRemoval
  • Southern District Of New York Pares Claims In Putative Class Action Against Pharmaceutical Company
     
    04/09/2019

    On March 29, 2019, Judge J. Paul Oetken of the United States District Court for the Southern District of New York partially granted a motion to dismiss claims under the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in a putative class action against a pharmaceutical company and certain of its executives.  In re Mylan N.V. Securities Litigation, No. 16-cv-7926 (JPO) (S.D.N.Y. Mar. 29, 2019).  Plaintiffs alleged that defendants made misleading statements regarding, among other things, an alleged rebate scheme involving the company’s EpiPen, and the alleged inflation of prices for various generic drugs.  After the Court dismissed in part plaintiffs’ first amended complaint as noted in our prior post, plaintiffs filed a second amended complaint that added an executive as a defendant, new allegations to support scienter for previously dismissed claims, a new alleged corrective disclosure in support of loss causation arguments, and additional claims asserting fraud based on the failure to disclose illegal anticompetitive misconduct.  The Court held certain of plaintiffs’ new allegations based on anticompetitive behavior were inadequately pleaded but permitted one claim to go forward, and also held that certain new allegations of scienter were sufficient.
  • District Court Dismisses Putative Class Action, Holding That Company’s Optimistic Guidance Fell Within PSLRA Safe Harbor Provision
     
    03/26/2019

    On March 15, 2019, Judge Edward M. Chen of the United States District for the Northern District of California dismissed a putative class action asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 against a camera technology company (“Company”), along with its officers and executives.  Park v. GoPro, Inc., et. al., 18-cv-00193-EMC (N.D. Cal. Mar. 15, 2019).  Plaintiffs claimed defendants made false statements during an earnings call following the announcement of the Company’s results for the third quarter of the 2017 fiscal year (“Q3 2017”), and engaged in suspicious stock transactions.  The Court dismissed the action on the ground that plaintiffs did not adequately plead falsity or scienter.
  • Southern District Of Texas Dismisses Putative Class Action Against Oil And Gas Exploration Company For Failure To Adequately Allege Scienter
     
    03/19/2019

    On March 13, 2019, Judge Lee H. Rosenthal of the United States District Court for the Southern District of Texas granted a motion to dismiss claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder in a putative class action against an oil and gas exploration and production company and certain of its officers.  Edgar v. Anadarko Petroleum Corporation, et al., No. 17-cv-01372 (S.D. Tex. Mar. 13, 2019).  After the Court dismissed the prior amended complaint as noted in our prior post, plaintiff filed a second amended complaint attempting to add allegations supporting an inference of scienter.  The Court held, however, that the amended complaint still failed to adequately allege scienter, and therefore dismissed the action with prejudice.
    CATEGORY: Scienter
  • Southern District Of New York Dismisses Action Against Automobile Logistics Company For Failure To Adequately Allege Misstatements Or Scienter
     
    03/19/2019

    On March 8, 2019, Judge William H. Pauley of the United States District Court for the Southern District of New York granted a motion to dismiss an action asserting claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against a provider of logistics to automobile manufacturers and certain of the company’s officers.  River Birch Capital, LLC, v. Jack Cooper Holdings Corp., No. 17-CV-9193, 2019 WL 1099943 (S.D.N.Y. Mar. 8, 2019).  The Court held that plaintiff failed to allege any actionable misstatements or omissions and, further, that plaintiff failed to adequately allege scienter.  Because the Court had previously given plaintiff an opportunity to replead, the action was dismissed with prejudice.
  • Second Circuit Affirms Dismissal Of Putative Securities Class Action, Holding That The Occurrence Of Regulatory Problems Do Not Render Materially Misleading Generic Positive Statements Regarding A Corporation’s Compliance Efforts
     
    03/12/2019

    On March 5, 2019, the United States Court of Appeals for the Second Circuit affirmed the dismissal of a putative securities class action against Cigna and several of its officers.  Minohor Singh v. Cigna Corporation, et al., No. 17-CV-3484 (2d Cir. Mar. 5, 2019).  Plaintiffs alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by making a series of materially misleading statements concerning Cigna’s compliance with regulatory requirements.  Defendants filed a motion to dismiss.  Judge Vanessa L. Bryant of the United States District Court for the District of Connecticut granted the motion, holding that plaintiffs did not adequately allege material misstatements and scienter.  Plaintiffs appealed.  The Second Circuit affirmed, emphatically, agreeing that plaintiffs failed to adequately plead actionable material misrepresentations. 
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