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April 2012 Archives

Consumer Financial Protection Bureau Update

The Dodd-Frank Wall Street Reform and Consumer Protection Act created the Consumer Financial Protection Bureau ("CFPB" or "Bureau") to watch out for consumers' interests in the financial marketplace and, in so doing, to oversee a number of financial products and services. The creation of the CFPB marked the first time in decades that Congress had formed a new federal agency.

In re Toyota Motor Corporation Securities Litigation

This securities litigation arises from allegations that the price of Defendants' stock was artificially inflated as a direct result of Defendants' material representations, omissions, and concealment regarding the unintended acceleration condition in Toyota vehicles. Defendants filed a Motion for Partial Judgment on the Pleadings ("Motion"), arguing that Plaintiffs had not adequately alleged loss causation for several of the statements made by Toyota's corporate spokesperson, Bill Kwong. The statements at issue, which appeared in several newspaper articles, generally pertained to representations by Defendants that the unattended acceleration issue was caused by driver error and media-induced publicity, including the following:

Sarbanes-Oxley Whistleblower Protections Limited By Divided Panel Of First Circuit Court Of Appeals

In Lawson v. FMR LLC, 670 F.3d 61 (1st Cir. 2012), a divided panel of the U.S. Court of Appeals for the First Circuit held on February 3, 2012 that employees of private companies that contract with public companies cannot take advantage of the whistleblower protections of the Sarbanes-Oxley Act ("SOX").

SEC Expands Exchange-Traded Fund Investigation

According to a Reuters report on February 21, 2012, exchange-traded funds ("ETFs") are receiving more attention from the Securities and Exchange Commission ("SEC") after the delay of a big trade of an unnamed but popular ETF. ETFs, which are intended to provide investors access to highly liquid pools of securities, have been around since the mid-1990s. They also allow investors to take magnified short positions on indexes or industry sectors, which are known as "leveraged" ETFs. There is currently about $1 trillion invested in all ETFs, of which leveraged and inverse (or "short" and "ultrashort") ETFs make up 5%, according to one estimate. ETFs also account for almost 30% of the equities traded daily in the American markets, according to a Credit Suisse report.

The Securities Act Of 1933 And Foreign Securities Transactions - Morrison Strikes Again

Two years after the U.S. Supreme Court decided Morrison v. National Australia Bank Ltd., 130 S.Ct. 2869 (2010), the reverberations of this landmark decision continue to be felt. Indeed, in a recent decision by the U.S. District Court for the Southern District of New York, In re Vivendi Universal, S.A. Securities Litigation, No. 02 Civ. 5571 (RJH), et al., 2012 WL 280252 (S.D.N.Y. Jan. 27, 2012), the District Court not only reaffirmed the application of Morrison to the Securities Exchange Act of 1934 (the "Exchange Act"), it broadened Morrison's reach to also include claims brought under the Securities Act of 1933 (the "Securities Act").