Securities Litigation

Practice Points

What you need to know in a quick-to-read format. Find all of the Securities Litigation committee’s Practice Points in this archive.


Key Takeaways from ABA Panel on FINRA’s 2021 Exam Findings and Regulatory Priorities
By Taylor E. Anderson and David G. Buffa – February 24, 2021
The report revamps two prior FINRA publications—its retrospective exams findings and its priorities letter—into one streamlined document that is required reading for every financial services industry legal and compliance professional.

Tips for Preparing and Using Exhibits in Remote Video Depositions
By John E. Clabby –  February 17, 2021
Pointers from an experienced litigator, from initial outline drafting, through sharing exhibits in advance with opposing counsel and the witness, to the use of exhibits on the record.

Recent Legislation Expands SEC’s Ability to Pursue Disgorgement
By Charles D. Riely, Gabriel K. Gillett, Philip B. Sailer, Grace C. Signorelli-Cassady, and Howard S. Suskin –  February 12, 2021
Various issues stemming from the changes will likely have to be resolved by the courts going forward.


Seventh Circuit Issues New Class Certification Decision
By Danielle S. Myers –  July 22, 2020
The ruling touches on price impact and several other hot topics.

New COVID-19 Securities Developments: Class Action Omissions Theory and SEC Enforcement Actions
By Gabriel K. Gillett, Katherine M. Funderburg, Paul B. Rietema, and Howard S. Suskin – May 20, 2020
As companies continue to grapple with the economic impact of the pandemic, expect to see an uptick in shareholder litigation stemming from alleged omissions and misrepresentations.

Early Lessons from the First COVID-19 Securities Class Action Lawsuits to Hit Cruise Line and Pharmaceutical Company
By Craig C. Martin, Paul B. Rietema, Howard S. Suskin – May 20, 2020
Directors and officers of public companies should exercise great care in any public statements regarding the impact of COVID-19 on their businesses, and carefully consider and document the steps they are taking to oversee and respond to COVID-19 developments.

A Guide to Representing Parties in SEC Investigations in the Time of Coronavirus
By Matthew Allen, Michael Dicke, Daniel Nathan, and Trace Schmeltz – April 28, 2020
Enforcement actions are not slowing because of the coronavirus. Here's what to know and how to represent your clients during quarantine.

Delaware Supreme Court Declares Federal Forum Provisions in Corporate Charters are “Facially Valid”
By Gabriel K. Gillett, Michael F. Linden, and Howard S. Suskin – April 2, 2020
Companies and litigators should continue to watch the Delaware courts for developments as parties bring as-applied challenges.

Second Circuit Allows Insider Trading to Be Proven Without Personal Benefit
By Stephen L. Ascher, Anthony S. Barkow, Anne Cortina Perry and Charles D. Riely – January 21, 2020
The decision could have important implications on the scope of insider trading liability and may make it easier for criminal prosecutors to bring such cases.


Four Tips for Broker-Dealers to Effectively Navigate the Enhanced Standard of Conduct Under Reg. BI
By Louis Mendez – November 18, 2019
Learn what you need to know before June 30, 2020.

Second Circuit Creates Split on Investment Company Act Private Right of Action
By Gabriel Gillett and Howard Suskin – August 6, 2019
We will have to wait and see how other courts may weigh in, and whether or not the Supreme Court will ultimately resolve the split.

Eighth Circuit Reminds: The First Principle of Arbitration Is Get Consent
By Gabriel Gillett – August 5, 2019
The court held an employment agreement’s arbitration clause was unenforceable as there was no evidence the employee had assented to the agreement.

The SEC’s Regulation Best Interest: How to Prepare for the New Standard of Conduct
By Daniel Nathan, Daniel Streim, Nicholas Peterson, and Trace Schmeltz – June 19, 2019
At its heart, Reg B-I enhances the standard of conduct broker-dealers must meet when serving retail customers, but the package of initiatives also addresses investment advisers’ obligations.

Five Strategies for Effectively Trying FINRA Disciplinary Cases
By James D. Bedsole and Michael R. Gaico – April 22, 2019
When FINRA enforcement actions culminate in a disciplinary proceeding before FINRA’s Office of Hearing Officers, defense counsel are faced with a unique (and often unfamiliar) proceeding.

How Broad Is “Scheme” Liability Under Rule 10b-5 Following Lorenzo v. SEC?
By Jessica Ortiz, Caleb Hayes-Deats, and Michelle Parthum – April 5, 2019
It could be one of the most significant securities cases of the past decade.

The SEC’s Focus on Controls
By Brian Neil Hoffman – March 25, 2019
Public companies, auditing firms, and both of their personnel should pay attention to several important points, considering the continued enforcement activity in this area.


Ninth Circuit Weighs In on the Proper Use of Judicial Notice and Incorporation by Reference
By Erika Oliver – October 31, 2018
While easy to recite, these doctrines have proved difficult to properly employ.

What Every Broker-Dealer Needs to Know about Protecting Vulnerable Investors from Financial Exploitation
By Heather K. Murphy – October 26, 2018
As baby boomers and their parents advance in age, legal protections for senior investors are improving and changing rapidly.

New Special Proceeding Option for Simplified FINRA Arbitrations
By Matthew P. Allen – September 20, 2018
The Supreme Court’s decision in Lucia has some obvious—and some more subtle—consequences.

New Special Proceeding Option for Simplified FINRA Arbitrations
By Joel M. Everest – September 12, 2018
The option will be available beginning September 17, 2018.

Supreme Court Does Not Extend American Pipe’s Tolling Provisions to Individual Class Members Seeking to File Subsequent Class Actions
By Joshua D. Jones – June 11, 2018
The Court resolved a circuit split as to whether the tolling rule set forth in the Court’s American Pipe opinion permitted the filing of new, otherwise time-barred class actions by putative class members.

Pursuing Accounting Fraud Still Adds Up For the SEC
By Brian Neil Hoffman – May 9, 2018
Three recent cases highlight several critical points for public companies, auditors, and their personnel.

Ninth Splits with Five Sister Circuits in Holding that §14(e) Claims Require Negligence, Not Scienter, to State a Claim
By Danielle Myers – April 23, 2018
The panel also affirmed that section 14 does not establish private right of action for shareholders.

D.C. Circuit Holds that the PCAOB Improperly Excluded Accounting Expert from Assisting Witness
By Daniel Nathan – April 12, 2018
The court confirms that individuals under investigation have a right to be accompanied by counsel, including an accounting expert of their choosing.

Supreme Court Unanimously Upholds Concurrent Jurisdiction for Securities Act of 1933 Claims
By Danielle Myers – March 20, 2018
Cyan holds that “[s]tate-court jurisdiction over 1933 Act claims thus continues undisturbed.”

Fifth Circuit Strikes Down DOL Fiduciary Duty Rule
By Julie Firestone – March 19, 2018
After Chamber of Commerce et al v. U.S. Department of Labor, what's next for firms and advisers?

Supreme Court Limits Dodd-Frank Protection of Whistleblowers to Individuals Who First Report Violations of the Securities Laws to the SEC
By Joshua D. Jones – February 21, 2018
The case is Digital Realty Trust Inc. v. Paul Somers.

Supreme Court to Decide Whether SEC’s ALJs Have Been Properly Appointed Under the Constitution
By Joshua D. Jones – January 18, 2018
The uncertainty surrounding this issue is clear from the circuit split that currently exists.


Second Circuit Makes Class Certification in Securities Cases Easier
By Sandra D. Grannum, Kevin DeMaio, and Edward J. Scarillo – December 6, 2017
Learn why the court clarified that plaintiffs do not need to provide an "event study" to demonstrate market efficiency at the class certification stage in putative class actions.

The Bureau of Consumer Financial Protection Class Action Waiver Rule Overturn Has No Effect on FINRA Members
By Sandra D. Grannum – November 28, 2017
A new rule from the CFPB intended to prevent class action waivers in arbitration provisions for contracts covering certain consumer financial products has come and gone in less than two months.

Tips for Financial Institutions During the Extended “Transition Period” for the DOL Fiduciary Duty Rule
By Julie Firestone – November 27, 2017
Firms and advisers should remember that the transition period is still in force.

Voices of Recovery Podcast Series
By ABA CoLAP – November 10, 2017
The ABA Commission on Lawyer Assistance Programs debuted the first of a series of podcasts that will address substance use disorders, mental health issues, addiction, and recovery issues.

Who Needs Family or Friends? Report on Post-Salman Insider Trading Case
By Matthew P. Allen – August 31, 2017
An inside tipper's gift of inside information to a consulting client is now a sufficient "personal benefit" to the tipper to trigger insider trading liability.

SEC Stays Administrative Proceedings that Are Subject to Tenth Circuit Review
By Joshua D. Jones – May 30, 2017
The agency took this action in response to the Tenth Circuit’s opinion in Bandimere v. United States Securities and Exchange Commission.

Countering Attempts of Subject-Matter Jurisdiction Divestment by Relief Defendants
By Rory Zamansky – May 9, 2017
The central question in SEC v. World Capital Market, Inc., was whether a relief defendant may divest a district court of jurisdiction simply by asserting a claim of entitlement to the disputed funds in their possession.

District Court Rules in Favor of Mutual Fund Advisor in Second Recent Excessive-Fee Trial
By Aaron Morris – May 4, 2017
The New Jersey District Court decision is among a trend of developments over the past year benefiting mutual fund advisors.

Do Not Forget to Use of FINRA's Party Portal for Cases Filed on or After April 3, 2017
By Peter J. Tepley – April 21, 2017
Practitioners need to be aware of the agency's new changes.

FINRA Seeks Input from Stakeholders as Part of Its FINRA360 Initiative
By Joshua D. Jones – March 27, 2017
This outreach is part of the SRO’s ongoing attempt at a comprehensive review of its operations and programs.

Constitutional Challenge to SEC Administrative Law Judge Upheld by Tenth Circuit
By Rory Zamansky – January 9, 2017
The sole question was whether the commission's administrative law judges are inferior officers under the Appointments Clause.

Pleading Section 11 Liability for Secondary Offerings
By Adam M. Apton – January 4, 2017
Our courts should honor the legislative intent behind Section 11 and decline to dismiss meritorious claims prematurely on procedural grounds.


Supreme Court Affirms Broader View of “Personal Benefits” that Can Trigger Insider-Trading Liability
By Matthew P. Allen – December 12, 2016
In a unanimous decision, SCOTUS sided with the Ninth Circuit in U.S. v. Salman.

Notable Developments in Excessive Fee Litigation
By Aaron T. Morris – November 28, 2016
Forthcoming trial decisions in Russell and Hartford may provide guidance as to the future of litigation under Section 36(b).

SEC Approves Rule Change Regarding Pre-Hearing Motions to Dismiss in FINRA Arbitrations
By Peter J. Tepley and Rebecca A. Beers – November 20, 2016
The approved rule change will amend Rules 12504 and 13504 by adding new language as Rule 12504(a)(6)(C) and 13504(a)(6)(C).

Multi-Level Marketing Companies Can Be Pyramid Schemes
By Rory Zamansky – November 14, 2016
The SEC brought a complaint against TelexFree and other defendants.

FINRA Proposes Rule Changes Aimed to Increase Protection of Vulnerable Clients
By Joshua D. Jones – October 24, 2016
The agency looks to help the elderly and people with disabilities.

Ethics Board Explains Proper Conduct under Flat-Fee Arrangements
By Katerina E. Milenkovski – August 23, 2016
Advisory opinion addresses where to keep flat fees and related issues.

Pro-Defense Post-Halliburton II Circuit Court of Appeals Ruling: IBEW Local 98 Pension Fund v. Best Buy
By Laura J. O'Rourke – June 10, 2016
It's the first appellate court opinion interpreting and applying the rebuttable presumption of reliance standard at the class certification stage.

Who's That Peeking in My Window?: SEC Scrutiny of Private Companies
By Bret Leone-Quick – June 7, 2016
Private companies are not as insulated from SEC scrutiny as they may think.

Eighth Circuit Reverses Class Certification Based on Price Impact Evidence
By Mollie Kornreich and Patrick G. Rideout – May 10, 2016
The panel agreed with the district court that because “plaintiffs presented a prima facie case that the Basic presumption applie[d] to their claims, defendants had the burden to come forward with evidence showing a lack of price impact.”

New Regulations Impose Fiduciary Standard on Retirement Fund Brokers
By Lance C. McCardle – April 11, 2016
The actual impact of the new rules is not yet clear.

Second Circuit Rules in Indiana Public Retirement System v. SAIC, Inc.
By Adam M. Apton – April 4, 2016
The court reversed a dismissal of securities fraud violations under Section 10(b) of the Securities Exchange Act of 1934.

Second Circuit Applies Omnicare to Statements of Opinion in Sanofi
By Adam M. Apton – March 30, 2016
SDNY Holds State Court Lacks Jurisdiction over Class Action Securities Act Claims
By Aaron T. Morris – February 16, 2016
The court addressed an issue that has "split federal district courts."

Latest SEC Report on Rating Agencies Resurrects Questions Concerning Conflicts of Interest
By Pavitra Kumar – February 16, 2016
The commission’s findings resurrect questions raised in 2008 and 2014 of whether this compensation model should be improved or completely overhauled.


JPMorgan to Pay $307 Million for Failing to Disclose Conflicts
By Lance C. McCardle – December 30, 2015
On December 18, 2015, the Securities and Exchange Commission (SEC) announced that two JPMorgan Chase & Co. wealth management subsidiaries admitted wrongdoing and will pay $307 million to settle allegations that they put customers’ funds into the bank’s own investment products, which generated fees for JPMorgan, without disclosing the conflict of interest to clients.

Non-GAAP Measures: The SEC Awakens
By Adoria Lim – December 22, 2015
Recent DOJ Memos and Investigations into Corporate Wrongdoing
By David N. Mahler – December 4, 2015
Since 1999, the Department of Justice (DOJ) has issued a series of memoranda outlining the contours of criminal liability for corporate wrongdoing.

Coscia Verdict Highlights Different Approaches to High-Frequency Trading
By Paul Hinton and Shaun Ledgerwood – November 12, 2015
The jury finding that commodities trader Michael Coscia’s high-frequency trading behavior constituted spoofing will send a trader to prison.

UBS Puerto Rico Agrees to $34 Million Settlement with the SEC and FINRA
By Lance C. McCardle – October 6, 2015
In connection with the settlements, UBS PR neither admitted nor denied the charges.

Second Circuit Rules in Favor of Argentina in Bondholder Dispute
By Abigail Sheehan – September 23, 2015
The court found that the overly broad class definition made it impossible to determine an "identifiable and administratively feasible class."

Second Circuit Denies Employees' Arbitration Bid
By Catherine Phillips Crowe – September 23, 2015
The court acknowledged that both employees had added additional facts to their FINRA statement of claim, but found that the new facts were not necessary to prove Citigroup’s liability and therefore did not establish a different factual predicate from the settled litigation.

Judge Sheindlin Rules in In re Vivendi Universal, S.A. Securities Litig.
By Aaron T. Morris – September 23, 2015
Judge Shira Scheindlin of the Southern District of New York determined that one class member was not entitled to a recovery because it did not rely on a false statement when it purchased the company's stock.

Second Circuit Rules in Acticon AG v. China North
By Adam Apton – September 14, 2015
The court provided guidance on what allegations may be sufficient to plead scienter in a Section 10(b) claim.

Dole Insiders Liable for $148 Million Following Merger
By Mollie Kornreich – September 10, 2015
The court found that Murdock and Carter took various steps to depress the share value, including suspending a share repurchase program

District Court Rules on Class Certification in Halliburton
By Mollie Kornreich – September 10, 2015
The decision illustrates how certification may play out in Section 10(b) cases in the wake of the Supreme Court's decision.

Supreme Court to Consider Scope of Federal Jurisdiction Over Securities Claims
By Mollie Kornreich – July 25, 2015
On June 30, 2015, the U.S. Supreme Court granted a petition for a writ of certiorari filed by Merrill Lynch and other financial institutions seeking to appeal a Third Circuit decision that held a shareholder lawsuit asserting state-law claims regarding alleged short selling should be remanded to state court.

Second Circuit Rules in Cohen v. UBS Financial Services
By Stuart D. Roberts – July 25, 2015
The United States Court of Appeals for the Second Circuit held that rule 13204 of the FINRA Code of Arbitration Procedures does not prevent member firms from enforcing otherwise sound arbitration agreements and class/collective action waivers.

Energy Markets Exempted from Price Manipulation Claims
By Catherine R. McLeod – July 7, 2015
Private litigants will not find a safe harbor under the Commodity Exchange Act when bringing energy-related claims alleging manipulation in organized energy markets.

Legislative Prohibition on Fee-Shifting Signed into Law by Delaware Governor
By George Aguilar and Michael Nicoud – July 7, 2015
The law prohibits Delaware companies from passing liability for attorney fees and expenses of the corporation to shareholders seeking to bring an internal corporate claim.

SEC Considers Issuing Guidance on Use of Administrative Proceedings
By Laura J. O'Rourke – May 19, 2015
There is no current timeline or estimated date by which the guidelines may be issued.

Legislative Prohibition on Fee-Shifting Signed into Law by Delaware Governor
By George Aguilar and Michael Nicoud – July 7, 2015
The law prohibits Delaware companies from passing liability for attorney fees and expenses of the corporation to shareholders seeking to bring an internal corporate claim.

Cornerstone Reports that Class Action Securities Settlements Hit 16-Year Low
By Mollie Kornreich – April 21, 2015
Total settlement value fell from $4.8 billion in 2013 to $1.1 billion due primarily to the lower number of unusually large settlements.

SCOTUS Rules in Omnicare, Resolves Circuit Split
By Mollie Kornreich and Patrick G. Rideout – April 21, 2015
The Court unanimously held that an issuer cannot be held liable for making an "untrue statement of material fact" in violation of Section 11 of the Securities Act of 1933 if the statement at issue is a sincere expression of pure opinion, regardless of whether an investor can ultimately prove the belief wrong.

Court Eases Requirements to Plead Securities Fraud Claims
By Andrew J. Kennedy – February 18, 2015
In Public Emples. Ret. Sys. of Miss. v. Amedisys, Inc., the U.S Court of Appeals for the Fifth Circuit reinstated a complaint in a consolidated securities class action.

Second Circuit Finds Failure to Make Item 303 Disclosure May Be Actionable Under Section 10(b)
By Mollie Kornreich – February 17, 2015
In so holding, the court addressed “a matter of first impression” in the circuit and found that “failure to make a required Item 303 disclosure in a 10-Q filing is indeed an omission that can serve as the basis for a Section 10(b) securities fraud claim,” so long as the omission is material and the other elements of the claim are satisfied.

Second Circuit Reverses Insider Trading Convictions
By Mollie Kornreich – January 13, 2015
Prosecutors failed to establish defendants’ knowledge that the tipster received a benefit for disclosing inside information.