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DOJ to Focus on Individual Accountability for Corporate Misconduct

In her September 9, 2015, memorandum –generally known as the “Yates Memo” - Deputy Attorney General Sally Yates stresses the DOJ’s intent to focus on individual culpability in corporate misconduct investigations and prosecutions.  And in both the Memo, and Yates’ November 16, 2015 speech at the American Bank Association and American Bar...

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BNS Wins Summary Judgment Against the SEC

On July 20, 2015, the Central District entered summary judgment on all claims asserted by the United States Securities & Exchange Commission against our client. The SEC contended that our client -- himself a victim of a Ponzi scheme -- was responsible for repaying over $1 million in withdraws and interstate that the Ponzi schemer had...

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Shareholder records and book inspection qualified right under §220

In United Techs. Corp v. Treppel (2013 Del. LEXIS 608) the Court of Chancery denied defendant United’s request to restrict the use of information obtained through a shareholder records and books inspection under Delaware General Corporation Law §220(c). In 2012, shareholder Lawrence Treppel sent a demand letter to United's board to...

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Terms and Marketing of Annuity Insufficient to Support RICO Fraud Claims

In 2007, Paul Harrington purchased a MarketPower Bonus Index Annuity (the “Annuity”) from Equitrust Life Insurance.  The Annuity uses “index accounts” to generate “index credits” that increase the annuity’s total amount based on periodic changes in the closing value of the S&P 500.  The Annuity also permitted annual withdrawals to...

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ERISA Welfare Plans Subject to General Principles of Contract Law

When M&G Polymers USA purchased a polyester plant in 2000, it also entered into a collective bargaining agreement and pension agreement that provided that specific retirees would “receive a full Company contribution towards the cost of [health care] benefits.”  The agreements were subject to renegotiation three years later.  After the...

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Corporation cannot be designated as Expert

The Delaware Court of Chancery recently ruled that a corporation cannot be delegated as an expert witness in In Re Dole Food Co., Inc. (2015 Del. Ch. LEXIS 47). In the plaintiff’s breach of fiduciary duty case regarding a take-private action of Dole, the defendants identified Stifel, Nicolaus & Company, Inc. (“Stifel”) as their...

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Class Certified for For-Profit Private Education Securities Fraud Suit

The U.S. District Court for the Southern District of California recently certified a class of shareholders for their securities fraud action against Bridgepoint Education, Inc. (In Re Bridgepoint Education, Inc Securities Litigation, 2015 U.S. Dist. LEXIS 5137) Bridgepoint is a for-profit post-secondary education company that owns and operates...

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Sleep time compensable for wage claim class action

In Mendiola v. CPS Securities Solutions, Inc. (60 Cal. 4th 833), Plaintiff security guards brought two class action lawsuits against the security company for failure to pay wages.  The plaintiffs alleged minimum wage and overtime violations for their on-call 24-hour work schedule. The facts of the case were undisputed. ...

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Arbitration Clause on Employment Application Sufficient to Bind Arbitration

The Second Appellate District of the California Court of Appeal reversed a decision refusing to compel arbitration in Cruise v. Kroger Co., et al. (2015 Cal. App. LEXIS 44).  Although Kroger could not establish the actual language of the agreement in effect, provisions of the California Arbitration Act (§1280 et seq.) provided the...

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Separate Derivative Suit subject to Issue Preclusion

In 2010 in Fosbre v. Matthews (2010 WL 2696615), four separate derivative suits against International Gaming Technology ("IGT") and its board of directors were consolidated and eventually dismissed for failure to make a demand on the board or plead demand futility.  In Arduini v. IGT, plaintiff Lawrence Arduini...

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Broughton-Cruz Rule Preempted by Federal Arbitration Act

The Fourth Appellate District of the California Court of Appeals recently abandoned the Broughton-Cruz rule - the California public policy refusing to enforce mandatory arbitration provisions for Unfair Competition, False Advertising, or Consumer Legal Remedies Act claims.  Applying AT&T Mobility LLC v. Concepcion (131 S.Ct. 1740), any state...

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Pleading Particularity for All Elements of Securities Fraud in 9th Circuit

In OPERF v. Apollo Group, Inc. (2014 U.S. App. LEXIS 23677) the Ninth Circuit affirmed dismissal of a securities fraud class action for multiple pleading deficiencies.  The Court also held that the heightened pleading standard under Fed. R. Civ. P. 9(b) and the PSLRA, applies to all securities fraud elements, including loss...

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Offers through social media or company websites under Rule 147.

On October 2, the SEC issued interpretations regarding the application of Rule 147 (17 CFR 230.147), the safe harbor provision under Section 3(a)(11) of the Exchange Act.  Generally known as the “intrastate offering exemption,” issuers can claim this federal registration exemption for offers and sales to residents of the same state the company...

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Evidence of Amount in Controversy not Necessary for CAFA Federal Removal

Earlier this week, the Supreme Court addressed the evidentiary burden of the amount in controversy for federal diversity removal pursuant to CAFA (28 U.S.C. 1332(d)(2)).  A “short and plain statement” suffices, with proof by a preponderance required only if the plaintiff contests the amount alleged. In Dart Cherokee Basin Operating Co,...

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FINRA Rule 12200 Arbitration superseded by subsequent agreement

In two simultaneous appeals, the Second Circuit addressed whether a forum-selection clause supersedes mandatory FINRA arbitration under FINRA Rule 12200. In Goldman, Sachs & Co. v. Empire Schools Financing Authority (764 F.3d 210), the plaintiff commenced arbitration against underwriter Goldman for claims related to issued securities.  Around...

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Foreign-based Crownfuding site Eureeca.com censured and fined by SEC

You probably have heard of kickstarter.com or indiegogo.com, but may not be familiar with Eureeca.com.  Although similar, Eureeca provides a global crowdfunding platform for small and medium sized non-U.S. based companies.  However, neither Eureeca nor any of the securities the website offered were registered with the SEC....

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