Trustee Can’t Sue Investment Banks for Aiding Madoff Ponzi Scam
The U.S. Court of Appeals for the Second Circuit affirmed a lower court ruling that trustee Irving Picard cannot sue the investment banks accused of allegedly aiding and abetting the Madoff Ponzi scam for billions of dollars because the doctrine in pari delicto bars him. Per the doctrine, one wrongdoer can’t recover from another wrongdoer.
Picard sued UBS AG (UBS), JPMorgan Chase & Co. (JPM), HSBC Bank plc, and UniCredit Bank Austria AG, claiming they disregarded warning signs of Madoff’s fraud as they received significant fees. Because Picard is now in “Madoff’s shoes” as the debtor’s representative of Bernard L. Madoff Investment Securities, the court said that he cannot proceed with lawsuits against the parties that took part in the fraud.
The trustee also wanted contribution for payments-about $800 million-that Madoff investment firm customers received under the Securities Investor Protection Act because he says defendants are joint tortfeasers with BLMIS under the law of New York. The 2nd circuit, however, says that SIPA doesn’t give that the right to contribution.
Equinox Investors’ Securities Action Dismissed Again
For the third time, a putative securities class action lawsuit over the customer pricing and financial forecasts of Equinox Inc. and two of its officers has been dismissed. This dismissal, in U.S. District Court for the Northern District of California, is without prejudice.
Per the court, the July 2010 financial forecasts of the court aren’t actionable under the Private Securities Litigation Reform Act’s safe harbor regarding forward looking statements. The court said that the plaintiffs failed to show that defendants were aware that they would not hit revenue targets by percentage points. Per PSLRA, a forward-looking statement falls under that harbor if it is identified to do so and comes with relevant, careful language or the plaintiff doesn’t succeed in proving that the person who issued the statement actually knew it was false. The court also determined that the plaintffs’ allegations of customer pricing don’t support a securities fraud claim.
Securities Lawsuit Against K-Sea Transportation Thrown Out
The U.S. District Court for the District of New Jersey has dismissed a securities class action accusing K-Sea Transportation Partners LP of taking part in accounting improprieties and misleading investors about a changing regulatory environment. Judge William Walls said the plaintiffs knew about the risks involved in investing in the marine transport concern and now cannot claim that they were misled because the economy and K-Sea’s business both didn’t get better.
Plaintiffs had argued that during the period at issue, there had been a shifting regulatory system and K-Sea misled clients about the lessened demand for ships that were single-hull while purportedly violating accounting principals when it didn’t document an asset impairment loss involving its fleet. The court, however, said that defendants did notify investors about the industry’s shifting landscape, as well as the economic lull, and they were not obligated to offer additional grim specifics while disclosing 2009 fiscal year results.
Shareholder Derivative Lawsuit’s Dismissal is Affirmed
The U.S. Court of Appeals for the Ninth Circuit is affirming the tossing out of a shareholder derivative case against a number of International Game Technology Inc.(IGT) officials. The plaintiffs claimed federal securities law violations, breach of fiduciary duty, corporate assets waste, and poor enrichment.
The district court had found that contrary to what the plaintiff asserted, the board of IGNT “did not refuse” the latter’s presuit demand. Affirming, the 9th circuit said that IGT’s chairman sent the lawyers of the plaintiffs a letter via fax informing of the board’s request that he conduct a review of the demand and let them know what he recommended in terms of next steps. The court said this supports the inference that the Board did not reject the demand outright.
Banks Knock Out Madoff Trustee Claims at Second Circuit, AM Law Litigation, June 20, 2013
More Blog Posts:
“Ask and It Shall Be Received”: Securities Brokers Can Wipe Complaints and Even Legal Claims Off Their Public Records, Stockbroker Fraud Blog, June 20, 2013
Former Broker Claims He is the Reason FINRA’s Regional Director Resigned, While Ex-JP Morgan Broker Files Arbitration Claim Against His Former Employer, Institutional Investor Securities Blog, June 18, 2013
Securities Lending Trial Against Wells Fargo & Co. is Underway, Institutional Investor Securities Blog, June 21, 2013