In 2008, investors in the Parkcentral hedge fund lost as much as $3 billion dollars when Parkcentral’s investment in commercial mortgage-backed securities (“CMBS”) was devalued. The investors, limited partners of Parkcentral, sued employees of Parkcentral’s general partner alleging that they breached fiduciary duties by making material misrepresentations and omissions regarding the nature of Parkcentral’s investments and hedging strategy. In particular, the investors ... Keep Reading »
Securities Class Action Articles
The latest class action developments and trends in the securities industry, including news, key cases, and strategies.
Eleventh Circuit Affirms Securities Fraud Class Certification, Remands for Evidence to Rebut Presumption of Market Efficiency
In Local 703 v. Regions Financial Corp., No. 12:14168 (Aug. 6, 2014), the Eleventh Circuit reviewed the certification of a securities fraud class action brought by investors against Regions for allegedly misrepresenting its asset value and financial stability during the financial crisis, purportedly resulting in artificially high stock prices. The district court found that all class certification requirements had been met, and that the investors had introduced ... Keep Reading »
Second Circuit Doubles Down on Rule Preventing Non-Settling Parties from Objecting to Class Settlement
The robustness of the rule preventing non-settling defendants from objecting to a class settlement has received a boost from the Second Circuit. The class settlement at issue involved the claims of investors against a hedge fund manager for damages and restitution of lost funds as a result of Madoff’s Ponzi scheme. Only one provision of the settlement was at stake: whether the settlement could allow class members to submit to the jurisdiction of the district court for ... Keep Reading »
Basic Survives, But Defendants Must Have Opportunity To Show Lack Of Price Impact To Rebut “Fraud-On-The-Market” Presumption Of Reliance Prior To Class Certification
Earlier this week the Supreme Court reaffirmed the validity of the “fraud-on-the-market” presumption of reliance that significantly eases the burden on investors in obtaining certification of private securities fraud class actions, but held that defendants must be permitted an opportunity at the class certification stage to rebut the presumption through direct or indirect evidence showing that the alleged misrepresentations did not impact the stock price. In the more ... Keep Reading »
Damage Models Create Individualized Issues For Pre-Explosion Subclass Of BP Shareholders, But Present No Impediment For Post-Explosion Subclass
The Southern District of Texas recently denied certification of a subclass of BP shareholders who purchased shares prior to the Deepwater Horizon explosion and alleged that misstatements regarding safety improvements caused them to buy BP shares at inflated prices. The court, however, certified a subclass of shareholders who purchased shares after the disaster and alleged that BP’s misstatements regarding the scope of the damage from the explosion and oil spill ... Keep Reading »
Court Rejects Two Common Methods of Proving Reliance on Class-wide Basis
Plaintiffs in a securities fraud class action containing over 2,000 individual investors were unable to convince a New York District Court that the reliance element of their claims was susceptible to a common method of proof for all putative class members thereby precluding certification under Rule 23(b)(3). Plaintiffs alleged that defendants misrepresented the involvement a certain individual, known for his investment expertise, would have in the management of their ... Keep Reading »
Securities Class Actions Receive Increased Scrutiny: District Court Applies “Stringent Standards” Of Dukes And Comcast To Deny Certification
The United States District Court for the Northern District of Texas recently denied certification of a putative securities law class after finding that plaintiff failed to put forth actual facts showing adequacy and predominance, as required to satisfy the “stringent standards” of Rule 23 pursuant to the Supreme Court’s decisions in Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. v. Behrend, as well as the Fifth Circuit’s decision in the securities law context in Berger ... Keep Reading »