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Securities Fraud Lawsuits

Putting securities fraud lawsuits in context

There are roughly 2,800 public companies trading on the NYSE, 5,000 public companies traded on the NASDAQ and roughly 10,000 public companies traded over the counter.  On average roughly 200 companies are sued each year for securities fraud, or 1%.  We on the plaintiffs bar are often criticized as being sue happy, but the simple fact is that these are rare lawsuits.

Getting on the securities fraud lawyers radar screen

How do such a small percentage of companies end up on our radar screen?  It is usually one of two events:  First, the company could do an about face on some important fact that causes a sudden and large drop in the stock price.  Often too, an external event leads to this sudden stock drop.  

OK, so what is securities fraud

Securities fraud at its most basic is really about one question and one question only:  Did the CEO or other senior executives lie to you!   I am talking about the basic definition of a “lie” one that each of our parents taught us when we were seven years old:  misrepresenting a known fact or hiding something important.  (Did your mom ever tell you “not telling something important is just as bad as lying.”)  Same thing here.

To me it is really that simple.  Two quick follow on points:  Much of all securities fraud work is first finding the lie and then proving it.   It can be really hard to prove.  The law is such that we must prove knowledge of a lie before we can take a deposition, look at emails or do any type of discovery into the underlying facts.

Second point is this, securities fraud lawyers on both sides of the “v” will read this and scream, “Pressly that is an unfair and gross oversimplification.  You know better.”  Calm down.  I get it.  We lawyers have turned this basic concept into volumes of treatises and we spend our day arguing nuanced points:  What is a “material” lie?  What is knowledge and when must it be proven?  How could you not discuss the “fraud on the market” theory?  “You bastardized our important work building impressive damage models.”  I get it.  I get it all, but I stand by the basic point that at the heart of any securities fraud lawsuit is a simple, garden variety lie.

Questions I get every day after a securities fraud lawsuit has commenced

  1. Is there insurance coverage?  Most often the answer is "yes", especially for larger capitalized public companies.
  2. Why all the press releases?  Federal law
 
Kinross Gold Corp. Securities Fraud Class Action Settlement

The lawsuit alleges Kinross and certain of its former officers and directors violated of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under Section 10(b, resulting from Kinross’ public statements between August 10, 2011 and January 16, 2012.

Houston American Energy Securities Fraud Class Action Settlement

The lawsuit alleges Houston American Energy violated the federal securities laws by issuing false and misleading statements regarding the amount of recoverable oil reserves in the CPO4 drilling block (in which Houston American Energy owned a substantial interest), as well as the success of the Houston American Energy’s oil drilling efforts in that region. 

Regions Financial Corporation Securities Fraud Class Action Settlement

The lawsuit argues that Regions Financial Corporation made materially false and misleading statements and omissions about the quality of Regions’ loans, the adequacy of its loan loss reserves, and that value of its Goodwill. 

OmniVision Technologies Securities Fraud Class Action Settlement

OmniVision is a leading global provider of CMOS image sensors to, among others, leading mobile phone and tablet manufacturers and original equipment manufacturers. OmniVision’s image sensors were used in several smartphone products including the 2009 and 2010 versions of the Apple iPhone.

OCZ Technology Group Securities Fraud Class Action Settlement

The lawsuit alleges that OCZ Technology Group violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder by the Securities and Exchange Commission. 

PhotoMedex Securities Fraud Class Action Settlement

This case alleges that the PhotoMedex falsely represented or omitted certain facts regarding PhotoMedex’s business status, performance and prospects regarding the efficacy of the PhotoMedex’s core product and the PhotoMedex’s financial status, success and prospects in Japan. 

Hemispherx Biopharma, Inc. Securities Class Action Settlement

This case alleges Hemispherx Biopharma violated Federal Securities Laws (specifically Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §78j(b) and 78(t)(a)) and Rule 10b-5. 

Cyan Securities Fraud Class Action Settlement

The lawsuit alleged that  Cyan, Inc.'s Registration Statement and Prospectus violated the Securities Act of 1933 by failing to warn investors that Cyan revenues depended on two limited life projects, a broadband stimulus project and a fiber-to-the-tower installation project, and that both projects were in the process of winding down.

Gentiva Securities Fraud Class Action Settlement

The lawsuit asserts that Gentiva violated federal securities law, including the Securities Exchange Act of 1934 

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