Justia U.S. 8th Circuit Court of Appeals Opinion SummariesArticles Posted in Securities Law
Zola v. TD Ameritrade, Inc.
Plaintiffs filed separate class action complaints against TD Ameritrade, alleging that the company breached its duty of best execution when it routed client orders to buy and sell securities to trading venues that paid TD Ameritrade top dollar for its order flow. The Eighth Circuit affirmed the district court's dismissal of the complaint because the state law claims were precluded by the Securities Litigation Uniform Standards Act of 1998 (SLUSA). In this case, the gravamen of plaintiffs' claims involved a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security. View "Zola v. TD Ameritrade, Inc." on Justia Law
Ryan v. Ryan
Stacy Ryan filed suit against Streck, Inc. and Connie Ryan, alleging violations of section 10(b) of the Securities Exchange Act of 1934, Securities and Exchange Commission Rule 10b-5, and multiple violations of Nebraska law in connection with Streck's redemption of Stacy's stock. The Eighth Circuit held that the district court did not err in granting defendants' motion to dismiss because Stacy did not plausibly plea that defendants' wrongful actions caused her loss. Furthermore, the district court did not abuse its discretion in denying the motion to alter or amend the judgment. However, the district court erred in denying Stacy's Federal Rule of Civil Procedure 59(e) motion. Therefore, the court remanded for further consideration of the motion to alter or amend presented newly discovered evidence warranting alteration of the order dismissing her breach of contract claim. View "Ryan v. Ryan" on Justia Law
Lewis v. Scottrade, Inc.
The Eighth Circuit affirmed the district court's dismissal of plaintiff's putative class action alleging that Scottrade violated the Missouri Merchandising Practices Act, breach of a common law fiduciary duty, and unjust enrichment. Plaintiff alleged that Scottrade routinely routes customer limit orders for the purchase and sale of securities to trading venues that pay rebates to sending brokers, violating Scottrade's duty of best execution in buying and selling securities on behalf of its customers. The court held that the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1), preempted plaintiff's action because the allegations in plaintiff's state law class action complaint, fairly read, alleged material misrepresentations or omissions, or the use of a manipulative or deceptive device or contrivance, in connection with the purchase and sale of covered securities. View "Lewis v. Scottrade, Inc." on Justia Law
SEC v. Topwater Exclusive Fund III
In this second appeal in an SEC enforcement action against Marlon Quan and entities he controlled, including the hedge fund SCAF, three investors in SCAF challenged orders entered by the district court pertaining to the receivership, the entry of judgment against SCAF, and the pro rata distribution of SCAF's assets to investors. The Eighth Circuit affirmed the district court's judgment and held that the investors have identified no error in the district court's approval of the First Stipulation, which was within the district court's broad discretionary power; the district court did not abuse its discretion in the approval of the Second Stipulation; there was no basis to conclude that the district court abused its discretion in applying a pro rata distribution to all investors; and the investors have waived their arguments regarding legal fees and expenses. View "SEC v. Topwater Exclusive Fund III" on Justia Law
Macomb County Employees Retirement System v. Stratasys Ltd.
Stratasys shareholders filed a securities fraud action claiming several company promotional statements were knowingly false. The Eighth Circuit affirmed the district court's determination that these statements were mere puffery and that the shareholders failed to sufficiently plead that Stratasys knew its statements were false when made. In this case, the statements the shareholders claim were materially misleading were so vague and such obvious hyperbole that no reasonable investor would rely upon them. Therefore, without tying the timing of the knowledge to the allegedly misleading statements, the shareholders did not plead facts sufficient to support a strong inference of scienter. View "Macomb County Employees Retirement System v. Stratasys Ltd." on Justia Law
American Chemicals & Equipment Inc. 401(K) Retirement Plan v. Principal Management Corp.
ACE filed suit against LifeTime Funds' investment adviser, PMC, for breach of its section 36(b) fiduciary duty to the LifeTime Funds under the Investment Company Act (ICA) of 1940, 15 U.S.C. 80a-35(b). ACE based its excessiveness-of-adviser-fees challenge on all or part of the adviser fees paid to PMC by the funds in which the LifeTime Funds invest, fees which indirectly reduced the net asset values of the LifeTime Funds. The Eighth Circuit affirmed the district court's entry of judgment for PMC based on lack of statutory standing, holding that ACE cannot sue on behalf of a fund in which it lacks an interest. In this case, each mutual fund was a separate unregistered investment company and ACE had no security interest in the underlying funds. Therefore, the cross appeal and the motion to dismiss the cross appeal were moot or denied as moot. View "American Chemicals & Equipment Inc. 401(K) Retirement Plan v. Principal Management Corp." on Justia Law
SEC v. Crawford
The SEC filed suit against Crawford for acting as unregistered brokers in violation of section 15(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78o(a). The district court granted the SEC summary judgment, permanently enjoined Crawford, and ordered disgorgement. The Supreme Court announced in Kokesh v. SEC, No. 16-529, slip op. at 11 (U.S. June 5, 2017), that disgorgement, as it is applied in SEC enforcement proceedings, operates as a penalty under 28 U.S.C. 2462. Because any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued, the SEC concedes that section 2462 barred it from seeking disgorgement. Therefore, the Eighth Circuit vacated the disgorgement order. The court also held that the district court did not err in finding section 2462 did not bar the SEC's suit for the injunction, and the district court did not err in rejecting Crawford's finder exception or finder defense. Accordingly, the court affirmed in all other respects. View "SEC v. Crawford" on Justia Law
Cromeans v. Morgan Keegan & Co.
Class representatives challenged the district court's denial of their motion to enforce the settlement agreement in a securities settlement, and the district court's denial of a subsequent motion to alter or amend. The Eighth Circuit affirmed the district court's judgment and denied defendants' motion to dismiss. The court explained that this case continues to present a live controversy and the Stipulation explicitly granted that the district court would have continuing jurisdiction for the purposes of enforcing the agreement and addressing settlement administration matters. The court also held that the case was not prudentially moot where the district court has the ability to provide an effective remedy; the district court did not err in interpreting the Stipulation according to its unambiguous meaning and in holding that defendants complied with the Stipulation's payment obligations; and the district court did not err by holding that the meaning of the Stipulation was unambiguous as matter of law and, in doing so, the district court did not place a burden of proof on any party. View "Cromeans v. Morgan Keegan & Co." on Justia Law
Posted in: Contracts, Securities Law
West Virginia Pipe Trades v. Medtronic, Inc.
Appellants, retirement and investments funds, challenge the district court's grant of summary judgment to Medtronic on their securities fraud class action. Appellants alleged a number of securities laws violations related to Medtronic’s INFUSE product, including making false statements and employing a scheme to defraud the market. Section 10b of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), makes illegal the use of a manipulative or deceptive device in connection with the sale or purchase of a security by any instrumentality of interstate commerce. 17 C.F.R. 240.10b-5. Scheme liability concerns the use of “any device, scheme, or artifice to defraud” and “any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.” 17 C.F.R. 240.10b-5(a), (c). In this case, because Appellants could not have discovered with reasonable diligence sufficient information to plead scienter with the particularity necessary to survive a motion to dismiss prior to June 27, 2011, Appellants brought their complaint within the two-year statute of limitations. The court rejected Medtronic's argument that Appellants’ scheme liability claim is barred as a matter of law by Janus Capital Group, Inc., and Stoneridge Investment Partners, LLC. Accordingly, the court affirmed the judgment. View "West Virginia Pipe Trades v. Medtronic, Inc." on Justia Law
Automated Matching Sys. v. SEC
AMSE appealed the Commission's final order denying AMSE's application for a limited volume exemption from registration as a national securities exchange under section 5 of the Securities Exchange Act of 1934, 15 U.S.C. 78a et. seq., and the district court’s dismissal of AMSE’s complaint for lack of jurisdiction. The court found that the Commission’s determination that it did not have discretion to grant a low-volume exemption to AMSE because it proposed to act as a self-regulatory organization (SRO) was reasonable; the Commission reasonably concluded that an exempt exchange could not be an SRO and that permitting an exchange to wield the broad powers of an SRO when the Commission is not statutorily required to exercise oversight would contradict the careful balance prescribed by Congress to protect the public interest and investors; and, therefore, the Commission's conclusion is well-reasoned and does not constitute an abuse of discretion. The court also concluded that AMSE has failed to establish circumstances permitting for district court review. Accordingly, the court denied the petition for review and affirmed the district court's judgment. View "Automated Matching Sys. v. SEC" on Justia Law