Federal Court Says City Is Immune From State Securities Law Claims
It’s a good situation when you can make the rules for everyone else but immunize yourself from those same rules. California’s Corporate Securities Law of 1968 declares it unlawful for any “person” to offer or sell a security by means of any written or oral communication that includes an untrue statement of material fact or omits to state a material Read more...
Second DCA Takes Issue With Fourth DCA Over Privity
Privity is one those requirements that isn’t intrinsically interesting and yet it is extremely important. Over the last year, I’ve written several posts discussing the privity requirement (or lack thereof) under the Corporate Securities Law of 1968, including these posts: Court Rejects Control Requirement For Director Liability (discussing Hellum v. Breyer, 194 Cal.App.4th 1300 (2011)); Is Privity Required Or Not Required Read more...
Pipeline Pig Promise Produces No Prudhoe Pork For Plaintiff
What We’ve Got Here is A Failure to Pig In 2006, BP Exploration (Alaska) Inc. shut down its pipelines and oil production in Prudhoe Bay, Alaska after leaks were discovered in two of its pipelines. Both leaks resulted from internal corrosion due to sediment in the pipes. A year later, BP pled guilty to one count of violating the Clean Water Read more...
Supreme Court Resolves Janus Controversy But The Gates of War Are Not Entirely Closed
Yesterday, the U.S. Supreme Court issued its decision in Janus Capital Group, Inc. v. First Derivative Traders. In a 5-4 decision, the Court found that to be liable under Rule 10b-5, a person must “make” the material misstatement. According to Justice Thomas writing for the majority, a person is a “maker” of a statement when that person “is the person or entity Read more...
Section 25501.5 – “A Riddle, Wrapped In A Mystery, Inside An Enigma”
Last December, I wrote this post about Corporations Code § 25501.5 that asked ”What do it mean?”. In general, the statute authorizes an action for rescission (or damages, if the security is no longer owned) by any person “who purchases a security from or sells a security to a broker-dealer that is required to be licensed and has not”. However, the statute makes little sense when the security was acquired in Read more...
Concurrent Jurisdiction Found For Covered Class Actions
In 1997, I testified at an oversight hearing before the United States Senate Banking, Housing & Urban Affairs Committee regarding securities litigation abuses. At the time, Congress was considering whether to enact legislation to stop plaintiffs from filing securities class actions in state court in order to avoid stricter federal standards applicable to class action lawsuits. Both the Securities and Exchange Commission Read more...
NY District Court Finds That Same Plaintiff In ARS Case Has No California Securities Law Claims
In this Friday the 13th post, I wrote about The Anschutz Corporation’s (TAC) success in having California law apply to its negligent representation claims against the defendant New York rating agencies. Thus, it may come as a surprise to learn that a different federal district court judge has rejected TAC’s California securities law claims. TAC had filed a complaint alleging Read more...
Court Applies California Common Law To New York Rating Agencies
In another auction rate securities (ARS) case, The Anschutz Corporation (TAC) brought suit against several rating agencies alleging negligent misrepresentation. The Anschutz Corp. v. Merrill Lynch & Co., Fed. Sec. L. Rep. (CCH) P96,258 (N.D. Cal. March 27, 2011). District Judge Susan Illston’s opinion is interesting because she tackles the question of whether California or New York law should apply. Moreover, Read more...
Is Privity Required Or Not Required Under Section 25500?
California Corporations Code Section 25400 lists a variety of acts that are considered to manipulate the price of securities. Section 25400 was modeled on Section 9(a) – (e) of the Securities Exchange Act of 1934. Although Section 25400 declares these acts to be “unlawful”, the statute does not technically impose liability. The legislature left that duty to Corporations Code Section 25500 which Read more...
Court Rejects Control Requirement For Director Liability
Outside directors and their counsel should take note of yesterday’s decision by the First District Court of Appeal in Hellum v. Breyer. The case analyzes what a plaintiff must plead in attempting to assert liability against directors of an issuer that has allegedly violated the registration requirements of the Securities Act of 1933 and the qualification requirements of the Corporate Read more...
