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Securities Blog Digest |
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August 9, 2010
NERA Releases Updated Study of Japanese Securities Litigation
Posted by
The D&O Diary
The amount of damages awarded in 2009 Japanese securities cases exceeded "the aggregate amount of securities litigation damages determined by court decisions in Japan for the entire previous decade," according to a new study of Japanese securities litigation from NERA Economic Consulting. The report, dated August 2, 2010 and entitled "Trends in Japanese Securities Litigation: 2009 Update," and which can be found here, updates the NERA report released last year that surveyed Japanese securities litigation from 1998-2008. According to the report, there were 39 total cases filed in 2009, of which 14 related to misstatements, the same number of misstatement cases as in 2008. The balance of the filings largely involve broker-dealer cases, of which there were 23 in 2009, 12 of which related to unlisted stock trading. The most significant trend noted... View full post: http://www.dandodiary.com/2010/08/articles/international-d-o/nera-releases-updated-study-of-japanese-securities-litigation/
August 6, 2010
New Century Financial Settles
Posted by
The 10b-5 Daily
Thirteen former officers and directors of New Century Financial Corp., an Irvine, California-based mortgage finance company that collapsed in 2007, have agreed to the preliminary settlement of the securities class action pending against them in the C.D. of California. The case, originally filed in February 2007, was one of the first subprime cases and stems from disclosures relating to the company’s loan-repurchase losses. The settlement is for $65 million, which will be funded by the individuals' insurers. In addition, KPMG will pay $45 million and the underwriter defendants will pay $15 million to settle the related claims against those entities. View full post: http://www.the10b-5daily.com/archives/001092.html
Around The Web
Posted by
The 10b-5 Daily
A couple of interesting items from around the web. (1) A former Grant & Eisenhofer ("G&E") attorney has sued the firm on behalf of Tyco investors. The suit alleges that G&E collected excessive fees for its role as lead counsel in the Tyco securities class action. Tyco settled for nearly $3 billion. G&E subsequently requested and received (over the objections of three institutional investors) an attorneys' fees award of $464 million. The new suit alleges that G&E actually had a contract with the Teachers Retirement System of Louisiana, one of the co-lead plaintiffs, to limit its fee request to $210 million and to oppose anything higher. Bloomberg has an article on the suit, while Am Law Daily raises some questions about its validity. (2) In the wake of the National Australia Bank ("NAB") decision, plaintiffs have argued that... View full post: http://www.the10b-5daily.com/archives/001093.html
The SEC Is Reportedly Ready to Open Up Proxy Access
Posted by
PomTalk
Investors, shareholder groups and unions’ long fight for the right to hold corporate directors accountable through Proxy Access may soon be over as the right to Proxy Access may arrive this month, according to yesterday’s Wall Street Journal, SEC Set to Open Up Proxy Process. See also New York Times, S.E.C. Said to Open Up Proxy Access. Acording to the WSJ, the SEC is expected to pass a proxy access rule that would give large shareholders – those who own a 3 % stake in a company for at least two years – the right to directly nominate directors on corporate ballots alongside the company’s choices, with the cost being borne by the company. Currently, if shareholders want to propose a slate of directors, they need to pay for the costs of a separate proxy fight. The SEC is expected to... View full post: http://www.pomtalk.com/pomtalk/2010/08/the-sec-is-reportedly-ready-to-open-up-proxy-access.html#trackback
August 5, 2010
Executive Protection: D&O Insurance - The Insuring Agreement
Posted by
The D&O Diary
In a prior post, I published the first in what I intend to be an occasional series of articles on the nuts and bolts of Directors’ and Officers’ Liability Insurance. I continue the series here with the second post in the series. In this post, I take a look at the most basic component of the D&O insurance policy – the insuring agreement. This basic policy clause contains the most critical terms, the definitions of which often determine whether or not a claim will be covered under the policy. The Insuring Clause: Though the precise formulations may (and often do) vary from policy to policy, all D&O insurance policies more or less provide coverage for Loss arising from Claims first made during the policy period alleging Wrongful Acts against Insured Persons. Each one of these... View full post: http://www.dandodiary.com/2010/08/articles/d-o-insurance/executive-protection-do-insurance-the-insuring-agreement/
PMI Settles
Posted by
The 10b-5 Daily
The PMI Group, Inc. (NYSE: PMI), a Walnut Creek-based holding company that though its subsidiaries provides residential mortgage insurance and credit enhancement products, has announced the preliminary settlement of the securities class action pending against the company in the N.D. of California. The case, originally filed in March 2008, stems from allegations that PMI and certain of its officers and directors made materially misleading statements regarding the company’s business, including its investment in Financial Guaranty Insurance Company, Inc., and that the company materially overstated its financial results. The settlement is for $31 million and will be paid by the company's insurers. Interestingly, PMI also disclosed the terms of the "blow" provision in the settlement agreement: "Defendants will have the option to... View full post: http://www.the10b-5daily.com/archives/001091.html
August 4, 2010
Guest Post: A Response to the Vivendi Plaintiffs About Morrison v. National Australia Bank
Posted by
The D&O Diary
Earlier this week, I hosted a guest post from the counsel for the plaintiffs in the Vivendi securities class action lawsuit, in which plaintiffs’ counsel summarized their position on the impact that the U.S. Supreme Court’s decision in Morrison v. National Australia Bank had on their case. In response to their post, University of Minnesota Law Professor Richard Painter prepared the following commentary and submitted it to me for publication here. By way of background, Professor Painter’s opening reference is to George Conway of the Wachtell Lipton firm, who, as reported in the prior post on this topic, briefed and argued the Morrison case for National Australia Bank, and who has been quoted as characterizing the position of the Vivendi plaintiffs on this issue as “Completely nuts, N-U-T-S.” Here are Professor Painter’s comments... View full post: http://www.dandodiary.com/2010/08/articles/securities-litigation/guest-post-a-response-to-the-vivendi-plaintiffs-about-morrison-v-national-australia-bank/
Crunching The Numbers On Credit Crisis Securities Class Action Suits: It Pays To Play
Posted by
Securities Litigation Watch
Recently, a number of studies have been published analyzing case filing trends for securities class actions as of mid-year 2010. Such studies include those conducted by Advisen (report here), Cornerstone Research/Stanford Law School (report here), and NERA (report here). While these studies use different sources and, in some cases, different methodologies to track and analyze data, they all point to a similar observation: that securities class action filings have been on a downward trend since late 2009 and that trend appears to be due in large part to the drying-up of credit crisis class action litigation. It tends to makes sense. The overvaluation of mortgage-backed securities driven by an unregulated lending market created an unprecedented global recession with stock prices plummeting into the... View full post: http://blog.riskmetrics.com/slw/2010/08/post.html
Class Action Filings Down But Settlement Amounts Up
Posted by
PomTalk
As recently reported on DandODiary.com, NERA and Cornerstone have both recently published their mid-year Securities Litigation Studies. Though conducted differently, the bottom line result of both studies was the same. Securities class action filings are down this year from last year. Notably this decline has been offset by other types of lawsuits, such as breach of fiduciary duty claims and substantial credit crisis state court derivative litigation. Companies in the financial services industry are still the most frequently targeted. Interestingly, the NERA study also notes that there is an increasing upward trend in median settlement amounts. The median in 1996 was $3.7 million, and only exceeded $6 million once between 1996 and 2004. However, since 2005, the median has exceeded $... View full post: http://www.pomtalk.com/pomtalk/2010/08/class-action-filings-down-but-settlement-amounts-up.html#trackback
August 3, 2010
First-Filed Subprime Securities Suit Settles for $125 Million
Posted by
The D&O Diary
The New Century Financial securities class action lawsuit – which was the first of the subprime-related securities class action lawsuits when it was filed in February 2007 – has been settled for $124,827,088, subject to court approval. The plaintiffs’ July 30, 2010 unopposed motion for settlement approval can be found here. The settlement actually consists of three separate settlement stipulations and three corresponding settlement funds. Of the total settlement amount, $65,077, 088 will be paid on behalf of the thirteen former New Century directors and officers; $44,650,000 will be paid on behalf of KPMG, New Century’s auditor; and $15 million will be paid on behalf of the offering underwriter defendants. The $65 million to be paid in the class action settlement on behalf of the individual directors and officers is actually part of a larger... View full post: http://www.dandodiary.com/2010/08/articles/securities-litigation/firstfiled-subprime-securities-suit-settles-for-125-million/
SDNY Issues Promising Decision Limiting Martin Act Preemption
Posted by
PomTalk
US District Judge Victor Marrero of the Southern District of New York has issued an opinion holding that New York’s Blue Sky law, the “Martin Act,” does not preempt private common law causes of action related to the sale of securities. The opinion in the case Anwar v. Fairfield Greenwich Ltd., No. 09 Civ. 0118 (VM) (S.D.N.Y. July 29, 2010) effectively overturns a large body of prior case law within the New York federal courts previously holding that the Martin Act, which empowers the Attorney General to prosecute fraudulent practices in the securities market, preempts private causes of action in connection with the sale of securities. Because Martin Act claims require no showing of deceitful intent, preemption was typically limited to causes of action requiring no showing of... View full post: http://www.pomtalk.com/pomtalk/2010/08/sdny-issues-promising-decision-limiting-martin-act-preemption.html
August 2, 2010
Guest Post: Vivendi Plaintiffs' Argument on the Impact of Morrison v. National Australia Bank
Posted by
The D&O Diary
In a series of recent posts (most recently here), I have been taking a look at the practical impact that the U.S. Supreme Court’s June 24, 2010 decision in Morrison v. National Australia Bank will have on securities litigation in the United States involving non-U.S. companies. Among the cases seemingly most impacted by the decision is the Vivendi securities class action lawsuit pending in the Southern District of New York. Not only is the defendant company domiciled outside the United States, but about three quarters of its shareholders reside in France and most presumably purchased their shares on non-U.S. exchanges. The question of whether these shareholders may assert a claim in a U.S. court under U.S. law is particularly acute due to the... View full post: http://www.dandodiary.com/2010/08/articles/securities-litigation/guest-post-vivendi-plaintiffs-argument-on-the-impact-of-morrison-v-national-australia-bank/
July 30, 2010
The New Wall Street Reform and Consumer Protection Act: Proxy Access and the SEC
Posted by
PomTalk
As we should all know by now, last week, on July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. For the complete text, click here or click here. Strengthening Corporate Governance through Proxy Access is specifically addressed. See Title IX – Investor Protections and Improvements to the Regulation of Securities, Subtitle G – Strengthening Corporate Governance, Sec. 971. Proxy Access. Proxy access makes it easier for shareowners to nominate their own candidates for corporate board directors by letting them place their nominees for director on the company’s proxy card. Currently, the only way that shareowners can present alternative director candidates at a U.S. public company is by waging a full-blown... View full post: http://www.pomtalk.com/pomtalk/2010/07/the-new-wall-street-reform-and-consumer-protection-act-proxy-access-and-the-sec.html
Compare and Contrast
Posted by
The 10b-5 Daily
NERA Economic Consulting and Cornerstone Research (in conjunction with the Stanford Securities Class Action Clearinghouse) have released their 2010 midyear reports on securities class action filings. The different methodologies employed by the two organizations have led to different numbers, but the trendlines are the same. The findings for the first half of 2010 include: (1) Filings have declined, with a decrease in credit crisis cases being one of the key factors. NERA counts 101 filings (for an annualized total of 202 filings, down from 221 filings in 2009) and Cornerstone counts 71 filings (for an annualized total of 142 filings, down from 168 filings in 2009). For some insight into why NERA has a larger total, see footnote 5 in its report. (2) The lag time between the end of the class period and... View full post: http://www.the10b-5daily.com/archives/001090.html
July 29, 2010
The Wall Street Reform Act's "New and Improved" Whistleblower Provision
Posted by
PomTalk
On July 15, the Senate voted to adopt the Dodd-Frank Wall Street Reform and Consumer Protection Act. President Obama signed the Act into law a week later. One provision of particular interest amends the Securities Exchange Act of 1934 to provide new financial rewards for whistleblowers. By providing “original information” to the SEC that leads to a successful enforcement action which recovers at least $1 million, whistleblowers stand to earn upwards of 30% of the recovery. And they are now guaranteed at least 10% – the old statutory maximum, which applied only in connection with limited types of actions. The precise size of whistleblower awards is at the discretion of the SEC. Factors the SEC will consider include... View full post: http://www.pomtalk.com/pomtalk/2010/07/the-wall-street-reform-acts-new-and-improved-whistleblower-provision.html
A Failed Bank, A Lawsuit, and Some Interesting Questions
Posted by
The D&O Diary
Though 268 banks have failed since January 1, 2008, there has been relatively little litigation related to the failed banks, as least so far. For example, the FDIC only recently filed its first action against former directors and officers of a failed bank (as discussed here). There have also been relatively few suits brought by private investors as well, though that could change. The failed bank lawsuits do continue accumulate, however, including an investor lawsuit recently filed in state court in Georgia that both has some interesting features and that may present some interesting potential D&O insurance coverage issues. The case in question was initiated on July 22, 2010 in Fulton County (Georgia) State Court by three investors in Georgian Bankcorporation. The company operated Georgian Bank in Atlanta, which was taken over by... View full post: http://www.dandodiary.com/2010/07/articles/failed-banks/a-failed-bank-a-lawsuit-and-some-interesting-questions/
July 28, 2010
Another “Perfect Storm” for Public Pensions?
Posted by
PomTalk
There is a big accounting issue out there that demands attention between now and October. The Governmental Accounting Standards Board (“GASB”) has proposed new discounting and expected return rules for public pension plans. If implemented following public hearings in October, these rules would institutionalize the imposition of a single weighted average rate equivalent to that of the highest grade municipal bonds on both the assets and liabilities of public pensions. The effect of such a device is to both lower the expected returns of public pension plans, while concomitantly increasing their present liabilities. A perfect storm for a pension plan is where the values of the risky assets in the properly diversified pension portfolio plummet in a bear market, while interest rates also fall. The discount rate applied to... View full post: http://www.pomtalk.com/pomtalk/2010/07/another-perfect-storm-for-public-pensions.html
NYC Pensions May Join in Hedge Fund Trend
Posted by
PomTalk
The pension funds for New York City firefighters, police and civil employees are currently contemplating investments in hedge funds for the first time. To that end, the city comptroller has recently sought out proposals from hedge fund consultants, which he will be receiving through August 9th. Should the city funds decide to open their portfolios to hedge fund investments, they would be joining a larger trend that has pension funds increasingly putting their money into alternative investments. For example, the California State Teachers’ Retirement System (“CalSTRS”) has credited its recent bump in returns to a shift of its assets towards alternative investments, including hedge funds. Similarly New Jersey’s state pension fund has recently considered expanding the percentage of assets it allocates to... View full post: http://www.pomtalk.com/pomtalk/2010/07/nyc-pensions-may-join-in-hedge-fund-trend.html#trackback
Cornerstone Releases Mid-Year 2010 Securities Class Action Litigation Study
Posted by
The D&O Diary
On July 28, 2010, Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse issued the most recent entry in the series of mid-year 2010 securities class action litigation studies. Its report, entitled "Securities Class Action Litigation: 2010 Mid-Year Assessment" can be found here. The related July 28 press release can be found here. Consistent with the earlier studies that have been released, the Cornerstone study reports that securities class action litigation continued to decline in the first-half of 2010. According to the study, there were 71 class action securities lawsuits in the first six months of 2010, which represents about a 15% decline from the 84 that were filed in the first half of 2009. The 2010 first half filings represent the lowest semiannual total since... View full post: http://www.dandodiary.com/2010/07/articles/securities-litigation/cornerstone-releases-midyear-2010-securities-class-action-litigation-study/
Morrison Precludes F-Squared Cases, Too, Court Concludes
Posted by
The D&O Diary
The Supreme Court’s decision last month in the Morrison v. National Australia Bank precludes so-called "f-cubed" claims (claims brought by foreign plaintiffs who bought foreign stock on a foreign exchange). An unanswered question is whether Morrison also precludes "f-squared" claims – that is, claims by Americans who bought their shares of foreign companies on foreign exchanges. In a July 27, 2010 opinion, Southern District of New York Judge Victor Marrero ruled in the Credit Suisse Group case that Morrison also precludes the f-squared claims as well. Background: As discussed at greater length here, In the majoirty opinion in Morrison, the U.S. Supreme Court said that the relevant portions of the U.S. securities laws related solely to "transactions in securities listed on... View full post: http://www.dandodiary.com/2010/07/articles/securities-litigation/morrison-precludes-fsquared-cases-too-court-concludes/
July 27, 2010
NERA Releases Mid-Year 2010 Securities Litigation Study
Posted by
The D&O Diary
Largely as a result in the decline of the number of new credit crisis related cases, the number of new securities class action lawsuits filings is "on track to decline for a second successive year from their 2008 peak," according to a NERA Economic Consulting report entitled "Trends 2010 Mid-Year Study: Filings Decline as the Wave of Credit Crisis Cases Subsides, Median Settlements at Record High," released on July 27, 2010. The report can be found here and NERA’s July 27, 2010 press release about the report can be found here. According to NERA, there were 101 securities class action lawsuit filings in the first half of the year. That filing level projects to 202 filings for the year, which would represent a decline from the 221 filings in 2009 and the 221 filings in 2008, as well as the... View full post: http://www.dandodiary.com/2010/07/articles/securities-litigation/nera-releases-midyear-2010-securities-litigation-study/ |