A putative plaintiff class alleged violations of federal securities law by alleged misstatements about asbestos liabilities, the quality of certain receivables and the claimed benefits of a merger. Erica P. John Fund Inc. v. Halliburton, Inc., No. 12-10544 (April 30, 2013). Reviewing recent Supreme Court cases about relevant evidence at the certification stage, including one that reversed the Fifth Circuit about proof of loss causation, the Court held: “price impact fraud-on-the-market rebuttal evidence should not be considered at class certification. Proof of price impact is based upon common evidence, and later proof of no price impact will not result in the possibility of individual claims continuing.” (citing Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, ___ U.S. ___ (Feb. 27, 2013)) The Court rejected a policy argument about the potential “in terrorem” effect of not considering such potentially dispositive evidence about the merits at the certification stage. The district court ruling about this evidence, and the resulting class certification, were affirmed.
An unpublished opinion reversed the vacating of a FINRA arbitration award in Morgan Keegan v. Garrett, No. 11-20736 (Oct. 23, 2012). The Court reversed a finding of fraudulent testimony “because the grounds for [the alleged] fraud were discoverable by due diligence before or during the . . . arbitration.” Id. at 8. The Court also deferred to the panel’s conclusions about the scope of the arbitration as consistent with the authority given by the FINRA rules. Id. at 10-12. Throughout, the opinion summarizes Circuit authority about the appropriate level of deference to the panel in a confirmation seting.
An unpublished opinion affirmed a ruling that an SEC suit about backdating was barred by limitations and the discovery rule did not apply. SEC v. Microtune, No. 11-10594 (Aug. 7, 2012). An interesting analysis of the opinion and its potential broader significance appears in the August 11, 2012 Texas LawBook.
In a detailed opinion that surveyed differing Circuit opinions on several topics, the Court found that “the purchase or sale of securities (or representations about the purchase or sale of securities) is only tangentially related to the fraudulent scheme alleged” in state class actions about the Allen Stanford scandal. Roland v. Green (March 19, 2012). Therefore, the Securities Litigation Uniform Standards Act (SLUSA) did not preclude those actions. The opinion will likely have a significant influence on future cases about the scope of SLUSA in the Fifth Circuit.