Case Summaries

[03/10] Sec. & Exch. Comm'n v. Tambone
In SEC's action against executives of a registered broker-dealer for allegedly allowing certain preferred customers to engage in market timing, district court's dismissal of the SEC's Rule 10b-5(b) claim is affirmed as the SEC's expansive interpretation of "make" as used in Rule 10b-5(b) is inconsistent with the text of the rule and with the ordinary meanings of the phrase "to make a statement," inconsistent with the structure of the rule and relevant statutes, and in considerable tension with Supreme Court precedent. (En Banc opinion)

[03/10] Citigroup Global Markets, Inc. v. VCG Special Opportunities Master Fund Ltd.
In an appeal from a district court's order granting plaintiff's motion for a preliminary injunction and enjoining defendant from proceeding with an arbitration initiated against plaintiff before the Financial Industry Regulatory Authority, the order is affirmed where the "serious questions" standard for assessing a movant's likelihood of success on the merits remains valid in the wake of recent Supreme Court cases, and neither the district court's assessment of the facts nor its application of the law supported a finding of abuse of discretion.

[03/09] In re: Omnicom Group, Inc. Secs. Litig.
In a securities class action alleging that defendants fraudulently accounted for a transaction, summary judgment for defendants is affirmed where: 1) plaintiffs failed to prove loss causation because their expert's testimony did not suffice to draw the requisite causal connection between the information in the article at issue and the fraud alleged in the complaint; and 2) the generalized investor reaction of concern causing a temporary share price decline was far too tenuously connected -- indeed, by a metaphoric thread -- to the transaction to support liability.

[03/03] Teachers' Ret. Sys. of La. v. PriceWaterhouseCoopers LLP
In a shareholder derivative action brought on behalf of AIG for breach of fiduciary duty against PricewaterhouseCoopers under New York law, the Delaware Supreme Court certifies the following question to the New York Court of Appeals: Would the doctrine of in pari delicto bar a derivative claim under New York law where a corporation sues its outside auditor for professional malpractice or negligence based on the auditor's failure to detect fraud committed by the corporation; and, the outside auditor did not knowingly participate in the corporation's fraud, but instead, failed to satisfy professional standards in its audits of the corporation's financial statements?

[02/26] D&J Tire Inc. v. Hercules Tire & Rubber Co.
In an action by a minority shareholder for breach of fiduciary duty arising out of defendant-executive's failure to disclose that defendant corporation was in talks to be acquired when the executive served as a mandatary on plaintiff's behalf to redeem his shares, summary judgment for defendant is vacated where: 1) because Louisiana's prescription statute did not bar plaintiff's rescission claim, the district court needs to determine whether plaintiff could prove that defendant's directors failed to disclose a material fact; 2) because defendant's directors were acting in their official capacity when redeeming plaintiff's stock, Connecticut courts would impose a fiduciary duty to disclose material facts in this situation; and 3) there was no reason, under Louisiana law, to apply another prescriptive period merely because defendant was also CFO of the corporation when the claim was based on his duties as mandatary.

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