Featured Expert Contributor, Corporate Governance/Securities Law
Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law.
Matthew Martoma was a portfolio manager at S.A.C. Capital Advisors, LLC, a hedge fund owned and managed by Steven A. Cohen, which had been the subject of numerous insider trading investigations. One of those investigations resulted in Martoma being charged with insider trading on the stocks of a pair of drug companies developing a new Alzheimer’s disease drug treatment. Martoma had received tips of material nonpublic information about the treatment from two drug company employees. Martoma was convicted and appealed.
In a 2-1 opinion by Chief Judge Katzmann, the Second Circuit affirmed Martoma’s conviction. Its decision in United States v. Martoma is the first major interpretation of the Supreme Court’s decision in Salman v. United States, and the first effort to determine the remaining scope, if any, of the Second Circuit’s 2014 decision in United States v. Newman. Continue reading
In a year when the U.S. Supreme Court heard six(!) cases where Washington Legal Foundation supported grants of certiorari with amicus curiae briefs (leading all non-profit groups “by quite a large margin,” according to EmpiricalSCOTUS.com), it seems a bit churlish to pick on the Court for rejecting a number of important cases. Then again, the entire point of this feature is to identify such oversights. Even though the Court granted some 43 percent of the cases in which WLF supported cert, it still overlooked a host of worthwhile appeals, once again taking on an exceedingly light docket.
One thing stands out in this fourth annual retrospective look at last term’s disappointeds docket: namely, how many so-called business cases the Court granted. Although many commentators have called this a “boring” term, court watchers who value clarity and certainty couldn’t help but appreciate the Court’s resolving multiple controversies that, while minor in the grand scheme of things, have nonetheless vexed litigants and divided lower courts. Perhaps because the Court was down a justice and evenly divided for over a year, it took the opportunity to grant cert to cases on lower-profile subjects that might get passed over when meatier fare is desired. If it did so in a quest for consensus, the happy results are the silver lining of the Court’s unusually long interregnum. Continue reading
An economic system based on free enterprise requires an objective, clear, predictable, stable, and uniform body of rules around which commercial enterprises can organize their business affairs. For 40 years, Washington Legal Foundation (WLF) has championed fundamental free-enterprise principles in courts and regulatory agencies, as well as in the court of public opinion.
Because the US Supreme Court has the last word on many laws and regulations that affect free enterprise, WLF focuses a significant portion of its litigation activities each year on convincing the justices to decide cases in a manner that promotes legal clarity and uniformity. This past term, which concluded at the end of June, was one of WLF’s most successful in its long history of Supreme Court advocacy. Our view not only prevailed in 8 of the 10 cases in which we filed amicus briefs on the merits, but in 6 of those 10 cases, WLF also successfully supported the Petitioner’s effort to obtain Supreme Court review. Below is a list of those cases with links to press releases and related WLF commentary:
Cases in which WLF filed briefs at the cert. and merits stages
Cases in which WLF filed a brief only at the merits stage
Most of those decisions, and others that impact America’s free-enterprise system, were discussed at WLF’s 28th annual end-of-the-term Supreme Court briefing:
By Doug Greene and Bret Finkelstein, a Partner and an Associate, respectively, with Lane Powell PC in the firm’s Seattle, WA office.
In a matter of first impression in the Ninth Circuit, the court applied the Supreme Court’s Omnicare standard for pleading the falsity of a statement of opinion in City of Dearborn Heights Act 345 Police & Fire Retirement System v. Align Technology, Inc., — F.3d —, 2017 WL 1753276 (9th Cir. May 5, 2017). The Ninth Circuit decision builds on the momentum for the defense bar following the 2016 Second Circuit opinion in Tongue v. Sanofi, 816 F.3d 199 (2d Cir. 2016), correctly applies the rationale of Omnicare to Section 10(b) cases, and applies the Omnicare falsity analysis to an important category of statements of opinion: accounting reserves.
The Supreme Court’s landmark 2015 decision, Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318 (2015), was originally met with mixed reviews by securities litigators of all stripes. Some commentators—including members of the defense bar—raised alarm following Omnicare, worrying that the decision was a win for plaintiffs because they felt it created a new area of potential liability for statements of opinion that were honestly held, but nonetheless misleading. Continue reading
By Andrew J. Morris, a Partner with Morvillo LLP. Mr. Morris authored a March 10, 2017 WLF Legal Backgrounder, Is the Clock Running out on SEC’s Unchecked Pursuit of Disgorgement Penalties?
In Kokesh v. Securities and Exchange Commission, the US Supreme Court ruled that SEC actions for disgorgement are governed by the five-year statute of limitations for penalties. This decision is a real blow to the SEC: It ends the practice of using disgorgement actions to obtain massive sanctions for conduct that took place many years in the past, outside the limitations period for penalties and forfeitures. The decision also invites defendants to make further challenges to SEC enforcement actions by litigating several related issues.
Implications for Enforcement Proceedings
The Court’s opinion, written by Justice Sotomayor, is summarized in a WLF Legal Pulse post authored last week by UCLA School of Law Professor Stephen Bainbridge. The gist of the decision is that disgorgement is a form of penalty because it involves a defendant who has violated a public law and must pay money to the United States Treasury; this contrasts with non-penalty cases, where the defendant has injured a particular victim and must pay compensation to that victim. And because disgorgement is a penalty, the Supreme Court held, disgorgement actions are covered by 28 U.S.C. § 2462, the five-year statute of limitations for penalties. Continue reading
On June 12 in Microsoft v. Baker, the US Supreme Court unanimously rejected a class-action litigation tactic that created an unfair advantage for plaintiffs in such suits. Both Justice Ginsburg in her majority opinion and Justice Thomas in his concurrence in judgment embraced arguments made in Washington Legal Foundation’s victorious amicus brief. WLF had also filed an amicus brief in support of Microsoft before an en banc panel of the US Court of Appeals for the Ninth Circuit, and further filed in support of the company’s cert petition to the Supreme Court after its loss in the appeals court.
The Baker decision is the fifth consecutive Supreme Court victory for WLF. The other four cases are:
The Court has not yet released opinions in four additional cases in which WLF filed amicus briefs (CalPERS v. ANZ Securities, Inc.; Jennings v. Rodriguez; Ziglar v. Abbasi; and Bristol-Myers Squibb Co. v. Superior Court), and we are also awaiting a decision on the cert petition WLF filed on behalf of its client, Chance Gordon, in Gordon v. Consumer Financial Protection Bureau.
On Tuesday, June 27, 1:00-2:00 pm EST, WLF will be holding its 28th annual US Supreme Court end-of-the-Term briefing, which will focus on the cases noted above as well as other decisions that affect the free-enterprise system and economic liberties. Details appear below:
The U.S. Supreme Court: October 2016 Term Review
>RSVP to attend in person or live online to email@example.com
Featured Expert Contributor – Corporate Governance/Securities Law
Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law.
The Securities and Exchange Commission (SEC) can seek a wide range of sanctions against those who violate the federal securities laws, including various monetary penalties. Most of these causes of action are subject to the 5 year statutes of limitations under 28 U.S.C. § 2462. Section 2462 applies to any “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture.” In Gabelli v. SEC, 568 U. S. 442 (2013), the US Supreme Court held that suits in which SEC seeks monetary civil penalties are subject to § 2462. Until recently, however, SEC claimed—and some lower courts agreed—that actions for disgorgement were not subject to § 2462 or, for that matter, any other statute of limitations.
In a unanimous June 5, 2017, opinion by Justice Sotomayor, however, the Supreme Court held that disgorgement imposed in SEC actions constitutes a penalty and, accordingly, that such suits are subject to the § 2462 limitations period. Kokesh v. SEC, 581 U.S. ___ (2017). [Editor’s Note: Washington Legal Foundation filed an amicus brief in the Court in support of the Petitioner]. Continue reading