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Court weighs securities fraud class-action cases
Legal Focuses |
2014/03/05 13:27
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The Supreme Court is considering whether to abandon a quarter-century of precedent and make it tougher for investors to band together to sue corporations for securities fraud.
The justices hear arguments Wednesday in an appeal by Halliburton Co. that seeks to block a class-action lawsuit claiming the energy services company inflated its stock price.
A group of investors says it lost money when Halliburton's stock price dropped after revelations the company misrepresented revenues, understated its liability in asbestos litigation and overstated the benefits of a merger.
Justices threw out the company's first attempt to block the lawsuit in 2011. But Halliburton is now urging the court to overturn a 25-year-old decision that sparked a tidal wave of securities-related, class-action lawsuits against publicly traded companies and has led to billions in settlements.
The court's 1988 decision in Basic v. Levinson says shareholders who claim they were defrauded by false statements in securities filings don't have to prove they actually relied on the statements. Rather, the court reasoned that any misrepresentation would be reflected in the current stock price. Even if investors are not aware of the misstatements, they are presumed to be aware of them because they affect the stock price.
This presumption, known as the "fraud-on-the-market theory," has become the driving force for modern class-action securities cases. But some economists have questioned whether this theory makes sense anymore, saying it doesn't account for the sometimes random and arbitrary nature of stock trading. |
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CA man sentenced on drug charge in fed court in SD
Legal Focuses |
2014/02/28 14:47
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A California man has been sentenced in federal court in South Dakota for his role in a conspiracy to distribute marijuana.
U.S. Attorney Brendan Johnson says 29-year-old Brett McFarland, of Korbel, Calif., was sentenced to five years in prison to be followed by four years of supervised release.
McFarland pleaded guilty last November to a drug distribution conspiracy charge. A money laundering conspiracy charge was dropped.
Johnson says McFarland has agreed to forfeit to the government his interest in proceeds from the sale of property in Petrolia, Calif., that was bought with drug proceeds. |
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Court: Spain can extradite Liberty Reserve founder
Legal Focuses |
2014/02/24 14:32
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A Spanish court has ruled that a man accused of being behind one of the world’s biggest money laundering businesses can be extradited to the U.S. to face charges there.
Arthur Budovsky, who founded currency transfer and payment processing company Liberty Reserves, can appeal the ruling, the National Court said late Friday. Spain’s government must also approve the decision for an extradition to happen.
It wasn’t immediately clear if Budovsky would appeal. The 40-year-old Costa Rican, who was arrested at Madrid airport in May 2013, has acknowledged founding Liberty Reserve in 2006, but says he sold his share to stay on only as a consultant.
U.S. officials accuse Budovsky of using Liberty Reserve as a kind of underworld bank which handled about $6 billion worth of illicit transactions. |
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Fla. man guilty of lesser counts in music shooting
Legal Focuses |
2014/02/20 14:09
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Prosecutors say they may retry a Florida man on first-degree murder charges in the fatal shooting of a teenager after an argument over loud music.
A jury convicted Michael Dunn, a 47-year-old software developer, on Saturday of attempted murder for shooting into a carful of teenagers after the argument, but jurors couldn't agree on the most serious charge of first-degree murder. A mistrial was declared on that charge. State Attorney Angela Corey said her office would consider seeking a retrial.
Meanwhile, defense attorney Cory Strolla said he plans to appeal based on several issues, including how the jury could reach guilty verdicts on four counts and deadlock on another.
Dunn was charged with fatally shooting 17-year-old Jordan Davis, of Marietta, Ga., in 2012 after the argument over loud music coming from the SUV occupied by Davis and three friends outside a Jacksonville convenience store. Dunn, who is white, had described the music to his fiancee as "thug music." He claimed he acted in self-defense.
The trial was Florida's latest to raise questions about self-defense and race, coming six months after George Zimmerman was acquitted in the shooting of 17-year-old Trayvon Martin in Sanford, about 125 miles south of Jacksonville. The Dunn trial was prosecuted by the same State Attorney's Office that handled the Zimmerman case. |
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Appeals court reinstates BP shareholders' lawsuit
Legal Focuses |
2014/02/17 16:13
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A federal appeals court on Thursday reinstated a shareholders lawsuit filed against BP Alaska in the wake of two oil spills in 2006 on the North Slope that exposed problems with the company's pipeline maintenance program.
A three-judge panel of the 9th U.S. Circuit Court of Appeals reversed the U.S. District Court of Western Washington on several claims.
Shareholders sued BP in 2008, claiming management made misleading statements about the conditions of the company's pipelines, and its maintenance and leak detection program after the first spill of 200,000 gallons onto the North Slope tundra two years earlier. The lawsuit claims BP made the statements knowingly or with deliberate recklessness.
The shareholders claim BP's share price fell 4 percent after the second spill five months later and the subsequent field shutdown for maintenance.
The Associated Press left messages seeking comment for attorneys on both sides of the case.
BP spokeswoman Dawn Patience said in an emailed statement that the company had not had an opportunity to study the decision, so "it would not be appropriate to comment."
BP Exploration Alaska Inc. was fined $20 million in 2007 after pleading guilty to a federal environmental crime for failing to prevent the crude spill, the largest ever at Prudhoe Bay.
The problems became known after the March 2006 spill prompted the FBI and the Environmental Protection Agency to open an investigation into maintenance practices at the 30-year-old field.
They found that thick sludge caked along the bottom of the leaky pipe was protecting colonies of bacteria that produce a corrosive acid. The acid had eaten an almond-sized hole in the steel over the course of several years, and that's where the spill occurred.
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Judge finds Citgo guilty of Clean Air Act felonies
Legal Focuses |
2014/02/06 15:41
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A South Texas judge has fined Citgo Petroleum more than $2 million after finding it guilty of felony violations of the U.S. Clean Air Act by its Corpus Christi refinery.
U.S. District Judge John Rainey handed down his verdict and punishment Wednesday in Corpus Christi.
Dozens of residents near Citgo's Corpus Christi refinery testified that they were sickened by pollution from the refinery. The Corpus Christi Caller-Times reports prosecutors accused the Venezuelan-owned company of not installing roofs on two oil-water separator tanks the company operated between 1994 and 2003.
Dick DeGuerin of Houston, who represented Citgo, said the company will appeal the conviction.
Melissa Jarrell, a Texas A&M-Corpus Christi associate criminal justice professor, predicted the verdict could prompt other air pollution victims to seek similar prosecutions elsewhere. |
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