March 4, 2013
The U.S. Supreme Court unanimously ruled in favor of an investment adviser against the SEC holding that the five-year statute of limitations that governs many penalty provisions throughout the U.S. Code begins when a fraud occurs, not when the SEC discovers the fraud. The Court held in Gabelli v. SEC that the SEC must seek civil penalties within five years after alleged conduct occurs, rather than within five years after the SEC discovered (or could have discovered) the conduct.
October 5, 2011
In Fiero v. FINRA, No. 09-1556-cv (2d Cir. Oct. 5, 2011), the United States Court of Appeals for the Second Circuit held that FINRA and other self-regulatory organizations lack the authority to bring federal court actions to collect on their disciplinary fines. Therefore, FINRA can levy fines, but it cannot…
August 24, 2011
The Ninth Circuit Court of Appeals upheld the lower court’s decision in favor of Capital Research and Management (CRMC) in a suit brought by plaintiff shareholders claiming CRMC’s advisory fees were excessive. Plaintiffs had argued that CRMC had misused advisory fees earned from investment companies over the year, which amounted to over $6 billion. They further argued that the shareholders of the funds did not receive any benefits from the economies of scale realized by CRMC. The District Court had ruled that the plaintiffs failed to prove that the advisory fees charged by CRMC were so disproportionately large that they bore no reasonable relationship to the services rendered. In upholding the District Court’s ruling, the 9th circuit stated that the District Court had meticulously applied the Gartenberg standard for determining when fees are excessive.
July 22, 2011
The U.S. Court of Appeals in Washington struck down the “proxy access rule” adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule, had it been effective, would have allowed investors or shareholder groups that own at least 3% of a company’s stock for three years to put their own board nominees on proxy statements.
June 13, 2011
The U.S. Supreme Court ruled in favor of an adviser to a mutual fund, Janus Capital Group Inc. and a subsidiary (Janus), in a case that will limit the ability of shareholders of mutual fund companies to prevail in securities fraud suits.
January 21, 2011
The judge presiding over the legal battle between L.A. money managers TCW Group Inc. and DoubleLine Capital has thrown out TCW’s attempt to effectively shut down DoubleLine’s mutual funds pending a trial.
October 4, 2010
The SEC took the unusual act of “staying” its recently adopted amendments to Rule 14a-8 and new Rule 14a-11 under the Securities Exchange Act of 1934 that would have made it easier for shareholders to nominate director candidates.
July 14, 2010
The Court of Appeals for the D.C. Circuit in American Equity Investment Life Insurance Company v. SEC vacated Rule 151A under the Securities Act of 1933, the SEC's rule that regulated indexed securities.
June 25, 2010
Audit firms of ETFs and mutual funds, as well as other issuers of public securities, are required to be registered with the Public Company Accounting Oversight Board (PCAOB) and are subject to inspection by the PCAOB. In Free Enterprise Fund (FEF) and Beckstead and Watts, LLP v. PCAOB and United States of America, FEF claimed that the PCAOB was unconstitutional.
June 25, 2010
In SEC v. Rorech, the court dismissed the SEC's first credit default insider trading swap case. Click here for an alert about the case.