Federal Securities Law Blog : Federal Securities Lawyer & Attorney : Porter Wright Law Firm : Securities Exchange Law : Serving Ohio, Washington DC, Florida

On Monday, June 11, 2012, the Supreme Court granted a Writ of Certiorari in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (U.S. Jun. 11, 2012) to decide whether, in a misrepresentation case under SEC Rule l0b-5, the court must require proof of materiality before certifying a plaintiff class based on the fraud-on-the-market theory (and whether the court must allow the defendants to present evidence rebutting the applicability of the fraud-on-the-market theory before certifying the class).

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The U.S. Supreme Court ruled today that the two-year time limit for bringing an action under § 16(b) of the Securities Exchange Act of 1934 is not tolled until after the filing of a § 16(a) disclosure statement. The case involves the right of an issuer (or, in this case, a shareholder bringing a derivative suit) to recover short swing profits obtained by a beneficial owner, director, or officer by reason of his relationship to the issuer under Exchange Act 16(b). Under §16(b), a corporation (or shareholder) may bring an action against corporate insiders who realize profits from the purchase and sale of the corporation’s securities within any 6-month period. The Act provides that such suits must be brought within "two years after the date such profit was realized." The Supreme Court vacated a January 2011 decision by the Ninth Circuit that a § 16(b) claim is subject to tolling and remanded the case to the District Court for further proceedings (including consideration of other equitable tolling principles).

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On Monday, June 27, 2011, the Supreme Court granted Certiorari in Credit Suisse Securities (USA) LLC v. Simmonds, Case No. 10-1261. The case involves the right of an issuer (or, in this case, a shareholder bringing a derivative suit) to recover short swing profits obtained by a beneficial owner, director, or officer by reason of his relationship to the issuer under Exchange Act 16(b).

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Today, the Supreme Court ruled that a mutual fund investment adviser cannot be held liable for the statements in a prospectus made by the adviser's client (the mutual fund itself). Janus Capital Group, Inc. v. First Derivative Traders, No. 09-525, slip op. (Jun. 13, 2011). In doing so, the Court rejected the argument of the Government in an amicus brief that a private plaintiffs should be permitted to sue a person who provides false or misleading information to another person, who then includes that information in a statement. A copy of the opinion is available on the Supreme Court's website.

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In order to prevail in a private securities fraud action, a plaintiff must demonstrate that defendants' deceptive conduct caused his or her economic loss – a concept known as "loss causation." Today, the Supreme Court unanimously ruled that class action plaintiffs do not need to prove loss causation in order to obtain class certification. Erica P. John Fund, Inc. v. Halliburton, Inc., No. 09-1403, slip op. (Jun. 6, 2011).  A copy of the opinion is available on the Supreme Court's website.

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