Justia U.S. D.C. Circuit Court of Appeals Opinion Summaries

Plaintiff filed a securities class action contending that AIG and its board of directors wrongfully reduced the value of certain securities issued by AIG. The court affirmed the district court's dismissal of the suit for lack of subject matter jurisdiction because the Securities Litigation Uniform Standards Act of 1998 (SLUSA), 15 U.S.C. 77p(d) and 78bb(f)(3), does not confer federal jurisdiction over plaintiff's state-law claims. View "Campbell v. AIG, et al." on Justia Law

The SEC sought a court order compelling SIPC to liquidate a member broker-dealer, SGC. SGC played an integral role in a multibillion-dollar financial fraud carried out through a web of companies. At issue was whether SIPC could instead be ordered to proceed against SGC to protect the CD investors' property. The court affirmed the district court's denial of the application to order SIPC to liquidate SGC where, under the Securities Investor Protection Act, 15 U.S.C. 78ccc(a)(1), the CD investors did not qualify as customers of SGC under the operative statutory definition. View "SEC v. Securities Investor Protection Corp." on Justia Law

Plaintiffs, former Carlyle Capital investors, filed suit alleging that Carlyle Capital made material misstatements and omissions in its June 2007 sale of securities and thereby violated the federal securities laws. Plaintiffs also alleged violations of Dutch law. The court concluded that, given the accurate disclosure in the initial June 19 Offering Memorandum and the additional accurate disclosure in the June 29 Supplemental Memorandum, plaintiffs have not sufficiently alleged any material misstatements or omission. Carlyle Capital had no duty under federal securities laws to make further disclosures in the Offering Memorandum or to the press release accompanying the Supplemental Memorandum. Therefore, the district court properly dismissed plaintiffs' federal claims. Applying the choice-of-law rules for the District of Columbia, not Dutch law, the court concluded that plaintiffs failed to sufficiently allege common-law fraud or misrepresentation. View "Wu, et al. v. Stomber, et al." on Justia Law

In response to the Congo war, Congress created Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 15 U.S.C. 78m(p), which requires the SEC to issue regulations requiring firms using "conflict minerals" to investigate and disclose the origin of those minerals. The Association challenged the SEC's final rule implementing the Act, raising claims under the Administrative Procedure Act (APA), 5 U.S.C. 500 et seq.; the Securities Exchange Act, 15 U.S.C. 78a et seq.; and the First Amendment. The district court rejected all of the Association's claims and granted summary judgment for the Commission and intervenor Amnesty International. The court concluded that the Commission did not act arbitrarily and capriciously by choosing not to include a de minimus exception for use of conflict materials; the Commission could use its delegated authority to fill in gaps where the statute was silent with respect to both a threshold for conducting due diligence and the obligations of uncertain issuers; the court rejected the Association's argument that the Commission's due diligence threshold was arbitrary and capricious; the Commission did not act arbitrarily and capriciously and its interpretation of sections 78m(p)(2) and 78m(p)(1)(A)(i) was reasonable because it reconciled these provisions in an expansive fashion, applying the final rule not only to issuers that manufacture their own products, but also to those that only contract to manufacture; and the court rejected the Association's challenge to the final rule's temporary phase-in period, which allowed issuers to describe certain products as "DRC conflict undeterminable." The court also concluded that it did not see any problems with the Commission's cost-side analysis. The Commission determined that Congress intended the rule to achieve "compelling social benefits," but it was "unable to readily quantify" those benefits because it lacked data about the rule's effects. The court determined that this benefit-side analysis was reasonable. The court held that section 15 U.S.C. § 78m(p)(1)(A)(ii) & (E), and the Commission’s final rule violated the First Amendment to the extent the statute and rule required regulated entities to report to the Commission and to state on their website that any of their products have “not been found to be 'DRC conflict free.'" The label "conflict free" is a metaphor that conveys moral responsibility for the Congo war. By compelling an issuer to confess blood on its hands, the statute interferes with the exercise of the freedom of speech under the First Amendment. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Nat'l Assoc. of Manufacturers, et al. v. SEC, et al." on Justia Law

Petitioner sought review of the SEC's imposition of a civil penalty after the Commission found that petitioner failed to supervise a subordinate who violated securities laws. The court upheld the Commission's decision, concluding that the Commission did not abuse its discretion or act arbitrarily or capriciously in imposing the penalty. The court rejected petitioner's claim that the penalty violated the Excessive Fines Clause of the Eighth Amendment. View "Collins v. SEC" on Justia Law

Plaintiffs brought this action against the Commission seeking a declaratory judgment that recently adopted regulations of the Commission regarding derivatives trading were unlawfully adopted and invalid, and seeking to vacate and set aside those regulations and to enjoin their enforcement. Plaintiffs contended that the Commission violated the Administrative Procedure Act, 5 U.S.C. 500 et seq., in its rulemaking by: (1) failing to address rationales for broadening Commodity Pool Operators (CPOs) exemptions; (2) failing to comply with the Commodity Exchange Act, 7 U.S.C. 2(a), and offering an inadequate evaluation of the rule's costs and benefits; (3) including swaps in the trading threshold, restricting its definition of bona fide hedging, and failing to justify the five percent threshold; and (4) failing to provide an adequate opportunity for notice and comment. The court concluded, however, that the Commission did not act unlawfully in promulgating the regulations at issue. Accordingly, the court affirmed the district court's grant of summary judgment in favor of the Commission. View "Investment Company Inst., et al. v. CFTC" on Justia Law

FINRA filed a complaint against petitioner, charging that he violated FINRA rules by submitting false expense reports for reimbursement of nonexistent business travel and for a fraudulently purchased cellular telephone. In his petition for review, petitioner argued that the SEC abused its discretion in upholding a lifetime bar based on his violation of the National Association of Securities Dealers (NASD) Conduct Rule 2110. The court remanded to the SEC for further consideration, agreeing with petitioner that the SEC abused its discretion in failing to adequately address all of the potentially mitigating factors that the agency should have considered when it determined the appropriate sanction. View "Saad v. SEC" on Justia Law

Three securities exchanges filed with the SEC proposed changes to their fee-setting rules for the acquisition of certain proprietary market data. Petitioners, two trade associations, requested the Commission to suspend the rules pursuant to its authority under the Securities Exchange Act of 1934, 15 U.S.C. 78s(b)(3)(C), contending that they were unlawful under NetCoalition I. When the SEC failed to do so, petitioners sought review in this court. The court held that the plain text of section 19(b)(3)(C), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, was clear and convincing evidence to the court of Congress's intent to preclude review of a rule change at the filing stage. Further, petitioners failed to demonstrate extraordinary circumstances for mandamus relief. The court declined to reach any other justiciability or jurisdictional question presented by the petitions. Accordingly, the court dismissed the petitions. View "NetCoalition v. SEC" on Justia Law

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, the SEC promulgated a rule requiring certain companies to disclose payments made to foreign governments relating to the commercial development of oil, natural gas, or minerals. Petitioners challenged the statute and the regulation, raising constitutional and statutory claims. The court dismissed the petition for review for lack of jurisdiction. Because petitioners have simultaneously filed a complaint in the district court, the court need not consider transferring the petition to that court. Additionally, the court's dismissal of the petition was without prejudice to petitioners' suit in the district court. View "American Petroleum Institute, et al v. SEC" on Justia Law

MBIA sued as the third party beneficiary of the Pooling and Servicing Agreements (PSAs) of a failed bank. It alleged that the FDIC as conservator of the successor bank had "approved," the PSAs and then breached its "Put Back" obligations under those agreements, resulting in investor claims of MBIA-issued insurance policies. At issue was whether payments made by MBIA to investors in mortgage securitizations of a failed bank constituted "administrative expenses" entitled to priority under the Financial Institutions, Reform, Recovery, and Enforcement Act (FIRREA), 12 U.S.C. 1821(d)(11)(A). The court held that the district court properly rejected MBIA's broad interpretation of "approved" in section 1821(d)(20) and dismissed MBIA's damage claims in counts I-V and VIII as prudentially moot in light of the FDIC's No Value Determination; the district court did not err in dismissing counts VI-VII for failure to state a claim; and the court rejected MBIA's alternative theory of recovery, claiming that FDIC Corporate was obligated under 12 U.S.C. 1821(m)(13) to fund the failed bank's losses. Accordingly, the court affirmed the judgment. View "MBIA Ins. Corp. v. FDIC" on Justia Law