Justia U.S. 11th Circuit Court of Appeals Opinion Summaries

The SEC brought a civil enforcement action against defendant after he orchestrated a plan to manipulate the amount of money his company was required to set aside to safeguard customer assets. Defendant was subsequently liable for committing securities fraud and on appeal, defendant challenged the district court's holding on liability and the propriety of the resulting injunction. After reviewing the record and having the benefit of oral argument, the court agreed with defendant that the facts as found by the district court did not support securities fraud liability and the court reversed the judgment on this claim. The court held, however, that it was clear from the district court's factual findings that defendant aided and abetted violations of the Securities Exchange Act, 15 U.S.C. 78a et seq., so the court affirmed the judgment finding liability on these counts. Since the court reversed the district court's finding of securities fraud, the court vacated the portion of the injunction restraining defendant from violating section 10(b) of the Exchange Act and Rule 10b-5. The court also vacated the injunction barring defendant from the securities business for life. Defendant contended that the remaining portions of the injunctions were impermissible "obey-the-law" commands and the court agreed in part, vacating these paragraphs of the injunction. View "Securities & Exchange Comm. v. Goble" on Justia Law

In this civil enforcement action, the SEC sued Morgan Keegan, alleging that, in the critical time period of late 2007 and early 2008, Morgan Keegan's brokers (1) misrepresented that auction rate securities (ARS) were safe cash-equivalents with no liquidity risk and (2) despite myriad auction failures and significant trouble in the ARS market, continued to recommend ARS as short-term, liquid investments and failed to disclose the known liquidity risk. The court concluded that the district court erred in granting summary judgment for Morgan Keegan based on the "materiality" element of the securities violations charged. The court's holding was narrow and limited to materiality and did not address whether the SEC had met any other element of its claims or whether the SEC would ultimately prevail in the litigation. Accordingly, the court vacated and remanded. View "Securities & Exchange Comm. v. Morgan Keegan & Co., Inc." on Justia Law

This case concerned the applicability of a standard "no-action clause" in a trust indenture governing a company's notes. The clause at issue stated that a noteholder could not "pursue any remedy with respect to this Indenture or the Securities" unless the noteholder fell within one of two exceptions. At issue was whether noteholders who did not fall within a stated exception to the clause could nonetheless bring fraudulent transfer claims against the issuer of the securities and its directors and officers. Although the district court found the no-action clause inapplicable to the claims, the court disagreed and held that the language of the no-action clause controlled, barring noteholders from bringing suit. View "Akanthos Capital Mgmt., LLC, et al. v. CompuCredit Holdings Corp., et al." on Justia Law

In this securities fraud class action, the investor plaintiffs sued the defendant company and three of its principal officers, alleging that they had made a series of eleven false or misleading statements to the public, in violation of section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, 15 U.S.C. 78a et seq. Plaintiffs claimed that the false statements had the effect of artificially inflating the price of defendant's stock until the truth belatedly came out, at which time the stock price dropped and plaintiffs suffered substantial financial losses. The court held that the district court properly dismissed plaintiffs' claims arising from the alleged misstatements made on March 5, 2004 and July 26, 2004, because plaintiffs have inadequately pled scienter and falsity. However, as for plaintiffs' claims arising out of defendant's February 23, 2005 and March 16, 2005 statements, the court vacated the district court's entry of summary judgment. The court held that the securities laws prohibited corporate representatives from knowingly peddling material misrepresentations to the public, regardless of whether the statements introduced a new falsehood to the market or merely confirmed misinformation already in the marketplace. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings.

These cases stemmed from plaintiff's complaint that defendants conspired to induce plaintiff to purchase the "M/V Pacific" (vessel) - better known as the eponymous "Love Boat" from its television days of the 1970s and 1980s - by fraudulently misrepresenting the vessel's deterioration and defective condition. Plaintiffs brought claims for securities fraud under section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), and Securities and Exchange Commission (SEC) Rule 10b-5, 17 C.F.R. 240.10b-5; maritime torts of fraud in the inducement, recklessness, and negligence/negligent misrepresentation; and common law claims. At issue was whether the district court properly dismissed plaintiff's complaint for lack of subject matter jurisdiction. The court vacated the district court's order dismissing the complaint and remanded for further proceedings where the court could not conclude at that stage in the proceedings that the alleged transfer of title to the shares in the United States was beyond section 10(b)'s territorial reach in light of Morrison v. Nat'l Australia Bank Ltd. Accordingly, the district court erred by dismissing plaintiff's claim on that basis.