Securities Law Alert, July 2014
This month’s edition addresses two Supreme Court decisions handed down in June: Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014) (Roberts, C.J.), in which the Court adopted a middle ground in the challenge to the fraud-on-the-market presumption of reliance established in Basic Inc. v. Levinson, 485 U.S. 224 (1988) (Blackmun, J.); and Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014) (Breyer, J.), in which the Court clarified the requirements for pleading an Employee Retirement Income Security Act (ERISA) breach of the duty of prudence claim involving an Employee Stock Ownership Plan (ESOP).
In addition, we discuss three Second Circuit opinions: one holding that funding an ESOP with company stock rather than cash does not constitute fiduciary conduct for ERISA purposes; another vacating Judge Rakoff’s decision denying approval of the SEC’s consent decree with Citigroup; and a third dismissing for lack of standing a challenge by non-settling defendants PricewaterhouseCoopers and Citco to a settlement of certain Madoff-related putative class action claims.
Finally, we address a Fifth Circuit decision reviving a securities fraud action against Houston American Energy Corporation, and a Ninth Circuit decision affirming dismissal of a securities fraud action against Intuitive Surgical.