Securities Law

Court, Business Back Securities-Suit Limits

A U.S. Supreme Court decision yesterday setting a high pleading standard for investor lawsuits comes as corporations are pressing for even more restrictions on securities litigation. The court ruled that plaintiffs suing for securities fraud must plead “cogent and compelling” facts showing the defendants had an intent to defraud. Tellabs…

Jun 22, 2007 1:05 PM CDT

Backdating Defense Takes a Blow

The defense of the ex-CEO of Brocade Communications suffered a setback yesterday, when a witness was allowed to testify about a statement acknowledging that stock options backdating is wrong. June Weaver, who had worked in Brocade’s human resources department, testified that ex-CEO Gregory Reyes once told her, “It’s not illegal…

Jun 21, 2007 1:28 PM CDT

SEC Sees ‘Outrageous’ Insider Trading

Professionals know insider trading is illegal, so one might think that they’re less likely to do it. However, a surprising number of enforcement cases are being pursued right now that emanate from the ranks of some of the most sophisticated professionals around–Wall Street investment bankers and lawyers, writes Bloomberg in…

Jun 21, 2007 2:02 AM CDT

Brocade Lawyer Protests Surprise Statement

A federal judge in San Francisco will hold a hearing today on whether to admit evidence showing the former CEO of Brocade Communications knew backdating stock options was illegal. The evidence would be a blow to the defense of ex-CEO Gregory Reyes, the Recorder reports. In opening statements on Monday,…

Jun 20, 2007 12:30 PM CDT

Intent at Issue in Backdating Trial

The lawyer for the ex-CEO of Brocade Communications told jurors yesterday that his client had no criminal intent when he routinely backdated stock options grants. About 150 people attended the opening of the San Francisco trial of Gregory Reyes, the first executive to be charged in a backdating case, the…

Jun 19, 2007 1:02 PM CDT

SG View Fails in Antitrust Case

The position advanced by the U.S. Solicitor General failed when the U.S. Supreme Court issued a decision yesterday favoring Wall Street in an antitrust case. The court held that investment banks may not be sued under antitrust laws for conspiring to fix prices of initial public offerings. Such behavior is…

Jun 19, 2007 12:47 PM CDT

Antitrust Ruling Favors Wall Street

The U.S. Supreme Court has ruled that the antitrust laws do not apply to initial public offerings, since they are extensively regulated by federal securities laws. The 7-1 ruling was a victory for Wall Street, Associated Press reports. The case stems from suits claiming investment banks conspired to manipulate the…

Jun 18, 2007 4:16 PM CDT

Lawyer on Witness List in Backdating Trial

A high-tech lawyer who is a former member of the board for Brocade Communications Systems could be called as a witness for both the prosecution and defense in the trial of the company’s ex-CEO. Gregory Reyes is accused of routinely backdating stock options awarded to employees at the data-storage networking…

Jun 18, 2007 3:41 PM CDT

Court to Consider Nasdaq Liability

An en banc appeals court will hear an appeal this week that seeks damages against Nasdaq for touting WorldCom stock in advertising. The full 11th U.S. Circuit Court of Appeals based in Atlanta will hear arguments in the case on Tuesday, according to the Fulton County Daily Report. The suit…

Jun 18, 2007 12:46 PM CDT

Judge Refuses to Remove Milberg Weiss

A federal judge in New York has denied a motion to removed indicted law firm Milberg Weiss & Bershad from a pending securities class action. Judge Shira Scheindlin said the firm and the co-lead plaintiffs have spent years and several million dollars on the case, the New York Law Journal…

Jun 18, 2007 12:31 PM CDT

SEC Sues Lawyers for Aiding Alleged Scheme

A civil lawsuit filed yesterday against two lawyers yesterday by the Securities and Exchange Commission may be a legal first. The suit is apparently the first time the agency has sought damages from lawyers for their legal work rather than their stock trades, the New York Times reports. The suit…

Jun 15, 2007 4:48 PM CDT

Lawyer Settles Insider Trading Case

The former managing partner of Katten Muchin Rosenman’s office in Washington, D.C., has settled a case alleging he bought stock based on confidential client information. David Schwinger agreed to return $13,000 in profit and to pay $26,000 in penalties, according to the Washington Post. The Securities and Exchange Commission alleged…

Jun 14, 2007 7:55 PM CDT

AIG Sues Ex-Execs

American International Group has taken over a shareholder lawsuit against two former top executives. The insurer claims former chief executive Maurice Greenberg and former chief financial officer Howard Smith manipulated earnings and entered into sham reinsurance transactions, Reuters reports. The $1 billion suit says their actions exposed the company to…

Jun 14, 2007 3:21 PM CDT

Glaxo Faces Suits Over Diabetes Drug

Investors in GlaxoSmithKline have filed a lawsuit in New York federal court that claims the drug company misled them about the safety of a diabetes drug. The suit says company officials failed to disclose that its tests showed Avandia was associated with a higher risk of heart attacks, the Wall…

Jun 13, 2007 6:07 PM CDT

SG Gets Bush Views in Securities Case

U.S. Solicitor General Paul Clement solicited President Bush’s views before declining to file an amicus brief in a Supreme Court case brought by investors seeking to hold third parties liable for accounting fraud. A lawyer for Bush indicated the president does not support liability for accountants or other third parties…

Jun 13, 2007 5:37 PM CDT