Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

After SouthPeak, a video game publishing company, terminated its CFO after she raised concerns about a misstatement on one of the company's filings with the SEC, a jury found that the company and two of its top officers violated the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1514A(a). The court affirmed the district court's judgment, holding that the retaliatory discharge claims are subject to the four-year statute of limitations under 28 U.S.C. 1658(a), and not the two-year limitations period under section 1658(b)(1); the administrative complaint in this case satisfies the exhaustion requirement; and emotional distress damages are available under the statute. The court rejected SouthPeak's claims regarding perceived inconsistencies in the verdict where the district court did not commit any error. Finally, the court affirmed the district court's decision as to attorneys' fees. View "Jones v. Southpeak Interactive Corp." on Justia Law

Plaintiffs filed suit against MuniMae defendants, alleging that they committed securities fraud by falsely representing that the Company was in full compliance with a new accounting standard enacted in 2003; and concealing the substantial cost of correcting the accounting error. The court affirmed the district court's dismissal of plaintiffs' claims under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and SEC Rule 10b-5, 17 C.F.R. 240.10b-5, for failing to adequately plead scienter; affirmed the district court's dismissal of plaintiffs' claim under sections 11 of the Securities Act of 1933, 15 U.S.C. 77k(a), as time-barred under section 13's statute of repose; affirmed the district court's dismissal of plaintiffs' claim under section 12(a)(2) of the Securities Act, 15 U.S.C. 77(a)(2), for lack of standing; and affirmed the district court's dismissal of the section 15 claim because plaintiffs failed to adequately plead a primary violation of the Securities Act. View "Yates v. Municipal Mortgage & Equity" on Justia Law

This is an adversary proceeding arising out of the bankruptcy of debtor (Derivium). Plaintiff (Grayson), assignee of the Chapter 7 bankruptcy trustee, appealed from a district court judgment affirming the bankruptcy court's decision to grant summary judgment for defendants (Wachovia). The court concluded that the district court did not err in affirming the grant of summary judgment for Wachovia on Grayson's Customer Transfers claim; summary judgment for Wachovia on Grayson's Cash Transfers claim; the bankruptcy court's determinations that the stockbroker defense applied to commissions; and the bankruptcy court's ruling that in pari delicto barred Grayson's tort claims against Wachovia. View "Grayson Consulting, Inc. v. Wachovia Securities, LLC" on Justia Law

Defendants, individual investors, sought to arbitrate claims against plaintiff that arose when the investors purchased allegedly fraudulent securities directly from Inofin. Defendants contended that they were plaintiff's customers because they purchased Inofin securities on the advice of an attorney who, though lacking any formal affiliation with plaintiff, was a business and personal acquaintance of a registered representative of plaintiff. The court held that defendants were not "customers" of plaintiff within the meaning of the Financial Industry Regulatory Authority (FINRA) arbitration provisions. To compel arbitration here would be to expand the scope of the arbitration agreement beyond what the text permitted and the parties intended. Therefore, the court affirmed the judgment of the district court. View "Raymond James Financial Services v. Cary" on Justia Law

Morgan Keegan filed an action seeking to enjoin arbitration proceedings on the ground that under the controlling FINRA Rule, defendants were not "customers" of Morgan Keegan entitled to compel arbitration of their dispute. In their FINRA arbitration claim, defendants asserted that Morgan Keegan engaged in misconduct relating to the valuation and marketing of certain bond funds purchased by defendants through their brokerage firm. At issue on appeal was whether the district court erred in holding that Morgan Keegan was not subject to FINRA arbitration. The court affirmed the district court's judgment because defendants were not "customers" of Morgan Keegan, within the meaning of the disputed FINRA Rule 12200, and, therefore, were not entitled to invoke the mandatory arbitration provision contained in that rule. View "Morgan Keegan & Co., Inc. v. Silverman" on Justia Law

Carilion initiated an arbitration proceeding against UBS and Citi under the Financial Industry Regulatory Authority, Inc. (FINRA) Rule 12200, which required FINRA members to arbitrate disputes with a customer at the customer's request. UBS and Citi commenced this action to enjoin the arbitration proceedings, contending that Carilion was not a "customer" as that term was used in FINRA Rule 12200 and that, in any event, Carilion waived any right to arbitrate by agreeing to the forum selection clause contained in written agreements with UBS and Citi. The court concluded that Carilion, by purchasing UBS and Citi's services, was indeed a "customer" entitled to arbitration under FINRA Rule 12200 and that the forum selection clause did not have the effect of superseding or waiving Carilion's right to arbitrate. Accordingly, the court affirmed the district court's denial of UBS and Citi's motion for injunctive relief. View "UBS Financial Services, Inc. v. Carilion Clinic" on Justia Law

Appellant, a former shareholder in Wachovia, sought to recover personally for the decline in value of his shares of Wachovia stock during the recent financial crisis. The district court dismissed the suit, concluding that appellant's complaint stated a claim derivative of injury to the corporation and that he was therefore barred from bringing a direct or individual cause of action against defendants. The court held that because appellant's varied attempts to recast his derivative claim as individual were unavailing, the judgment of the district court was affirmed. View "Rivers, Jr. v. Wachovia Corp., et al." on Justia Law

The Secretary of the United States Department of Labor ("DOL") petitioned the district court to enforce administrative document subpoenas after a DOL investigation into the management of respondents (collectively, "Funds"), which arose out of a $10.1 million loss of Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1134(a)(1), plan assets, as a result of the Funds' investments in entities related to Bernard L. Madoff. At issue was whether the attorney-client and work product privileges protected some of the materials requested by the Secretary from disclosure and whether the district court erred in applying the fiduciary exception to override these privileges. The court affirmed the district court's order granting the Secretary's petition and held that the fiduciary exception applied to the Funds' claims of attorney-client privilege and no good cause showing was required in the ERISA context. The court also held that the Funds have failed to carry their burden to demonstrate the applicability of the work product doctrine.