About a year ago, we published A New Playbook for Global Securities Litigation and Regulation, in which we detailed dramatic changes in the global securities regulatory and litigation arena driven by various factors, including not only the financial crisis of 2007-2008, but also changes in tolerance in the United States to litigation brought by foreign investors against public companies listed on non-U.S. exchanges.

One year later, the regulatory environment continues to revamp with new rules being issued constantly in the United States to conform to the legislative mandates set forth in the Dodd Frank Act. The United Kingdom and European Union also seek to reinforce previous global initiatives to reform and strengthen the Pan-European financial markets.

What is more ever-present, however, is the marked increase in global enforcement activities by regulators in the United Kingdom, Canada, and the European Union, which are attempts to give teeth to the global financial reforms each jurisdiction felt necessary to potentially prevent a “repeat” of the financial crisis. This article seeks to address the increase in global securities enforcement activity and concludes that continued cooperation and coordination in enforcement activities will be required to seamlessly address the desire to strengthen global regulatory initiatives aimed at harmonizing and centralizing international securities regulation to create safer, more fundamentally sound financial markets for investors.

…continue reading: A New Playbook Part 2 — Global Securities Enforcement Stepping Up

On November 5, 2012, the United States Supreme Court heard oral argument in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds (No. 11-1085) (“Amgen”). In Amgen, Plaintiff/Respondent Connecticut Retirement Plans and Trust Funds (“Connecticut Retirement”) brought a putative class action under the Exchange Act of 1934, alleging that Defendant/Petitioner Amgen and several of its directors and officers misstated and failed to disclose safety information concerning two of its drugs. Amgen contends that it did not mislead investors and that the information it allegedly concealed was widely known.

Background of Amgen and Path to the Supreme Court

The issue in Amgen is the predominance requirement of Federal Rule of Civil Procedure (“Rule”) 23(b)(3), which states that a court may not certify a class for trial without determining that “questions of law or fact common to class members predominate over any questions affecting only individual members.” Because of the near-impossibility of establishing commonality of direct reliance on alleged misstatements in securities fraud litigations, plaintiffs typically rely on a rebuttable presumption of common indirect reliance on the integrity of the market price for the securities at issue. The Supreme Court first recognized this presumption in Basic Inc. v. Levinson, 485 U.S. 224, 241-47 (1988), relying in part on the “fraud-on-the-market” (“FOTM”) theory. The FOTM theory assumes that the market price of securities traded in an efficient market reflects all publicly-available material information, including any material misrepresentations.

…continue reading: Oral Argument in Amgen: Will it Sway the Court?

In November 2012, the United States Supreme Court will again hear an appeal of a federal securities class action in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds (No. 11-1085) (“Amgen”). In the past two years, the Supreme Court has heard no less than five appeals arising from securities class actions.

Amgen requires the Court to reconsider its own landmark decision in Basic Inc. v. Levinson, 485 U.S. 224 (1988), adopting a rebuttable classwide presumption of reliance based on the “fraud-on-the-market” (“FOTM”) theory. The FOTM theory assumes that the market price of securities traded in an efficient market reflects all publicly-available information, including any material misrepresentations. Twenty-five years later, the parties in Amgen ask the Court to resolve whether, in such a case, a district court must (1) “require proof of materiality” concerning the challenged statements and/or (2) “allow the defendant to present evidence rebutting the applicability of the fraud-on-the-market theory” before certifying a class under Fed. R. Civ. P. 23(b)(3). To fully understand the import of these questions, some background on the relevant concepts is helpful.

…continue reading: Materiality and the Fraud-on-the-Market Presumption

Years from now, when historians write the history of the Roberts Court, perhaps they will be able to explain why, in the second half of the first dozen years of the 21st Century, the Supreme Court suddenly became so interested in taking up cases under the federal securities laws. Indeed, a review of recent private 10b-5 jurisprudence reveals that the last two years have generated more United States Supreme Court precedent than the previous eighteen. [1] These cases could have profound implications for how public and private companies around the globe meet their reporting obligations, defend against class actions, and/or maintain their credibility in the eyes of regulators, judges, and investors. We discuss this plethora of recent Supreme Court cases below, concluding with a discussion of Amgen, Inc. v. Connecticut Retirement Plans & Trust Funds, which will be heard by the Supreme Court in November 2012.

…continue reading: The Supreme Court’s Recent Focus on 10b-5 Cases

Key developments in both the litigation and regulatory context are compelling multinational corporations to reassess their global securities litigation and regulatory compliance strategies. In the litigation context, recent U.S. Supreme Court activity has limited the ability of overseas plaintiffs to bring securities class action claims within the United States. As such, plaintiffs have shifted litigation to more flexible jurisdictions in Europe and overseas, thereby forcing global firms listed on multiple exchanges to increasingly defend against securities class action claims and regulatory investigations in numerous jurisdictions. At the same time, governments around the world have responded to the recent financial crisis by bolstering their regulatory capability. Governments have not only adopted more robust legislative regimes with respect to securities regulation, but they have also invested heavily in stronger enforcement protocols.

…continue reading: A New Playbook for Global Securities Litigation and Regulation