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Securities Archives

St. Jude Settles Securities Suit for $39M

As an investor, the companies you invest in have a duty to disclose any information that may affect their stock values. In 2012, a class of investors sued St. Jude Medical Inc. ("St. Jude" or "the Company") for allegedly lying about the quality of the new leads on its cardiac rhythm management ("CRM") devices.

FCPA Violations By Third Parties: What To Watch For

The Foreign Corrupt Practices Act of 1977 ("FCPA") was created to make payments to foreign government officials, in order to obtain or retain business, unlawful. More often than not, the third parties, including agents, consultants and distributors, that assist with these transactions are pursued by the DOJ and SEC for their involvement in FCPA violations.

Study Shows That Investors Profit off of Macroeconomic Announcements Before Their Release

            A working paper recently published on the European Central Bank's website suggests that investors have made millions of dollars by trading according to macroeconomic announcements prior to their release. The paper provides evidence indicating that stock prices shift in the expected direction in response to large-scale United States economic news, but that they do so prior to the release of such news, providing cause to strengthen release procedures to ensure that some investors are not unfairly advantaged by the premature release of non-public economic information.  

Boeing Under Fire with a Putative Class Action

An investor, Tribhuwan Bisht, slapped Boeing with a putative class action lawsuit after being tipped off that Boeing had utilized dishonest accounting practices. Bischt caught wind of the practices through a media report documenting the alleged misbehavior. The tip came from Bloomberg Media's coverage of a possible SEC investigation into the 787 Dreamliner and 747 Jumbo's account.

HCA Settles $215M for Failure to Disclose Whistleblower Case

A company is obligated to disclose to shareholders anything within its knowledge that could affect its stock price. Failure to do so, could result in potential liability. For example, a class of shareholders filed a securities lawsuit against HCA Holdings Inc. ("HCA") alleging that prior to its $4.3 billion initial public offering ("IPO"), HCA failed to disclose an ongoing internal investigation of unnecessary cardiac procedures after a complaint made by a whistleblower. Schuh v. HCA Holdings, Inc., et al. No. 3:11-cv-01033 (M.D. Tn. 2011).

House Panel intervenes in SEC's Insider Trading Investigation

In a past blog post, "Humana Insurance Insider Trading Investigation Includes 44 Funds," we relayed the details of an investigation by the Securities and Exchange Commission ("SEC"). The investigation alleged that before the Centers for Medicare and Medicaid Services ("CMS") made an announcement regarding reimbursement rates for the Medicare advantage program, a senior aide in the House of Representatives leaked information about the rates to a privately held broker-dealer, Height Securities, LLC ("Height"), which provides research, advisory, and investment banking services to institutional investors, financial sponsors and corporations. The SEC claimed that Height passed on the information to its clients. Heights' clients were then able to buy a great deal of shares in healthcare insurance companies, which substantially increased trading for healthcare stocks right before the announcement. When the share price increased due to the positive announcement from CMS, these investors profited and allegedly did so as a result of receiving illegal information.

SEC Anticipates Increase in Whistleblower Tips

The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") is one of many laws that protect consumers from fraudulent acts committed by corporations. In order to increase transparency and expose organizations that engage in illicit activity, Dodd-Frank includes a "whistleblower program" that incentivizes individuals to come forward with information regarding possible securities law violations. If the information is original and leads to a Securities and Exchange Committee ("SEC") enforcement action in which more than $1,000,000 in sanctions is ordered, the SEC is authorized to provide monetary awards between 10 to 30 percent of what it collects to the individual.