Source: https://www.sec.gov/litigation/amicusbriefs.shtml
Timestamp: 2019-04-24 06:35:39+00:00

Document:
The Commission joined an amicus brief that the Solicitor General filed in the Supreme Court, arguing that the Court should interpret the anti-retaliation provisions of Section 21F(h)(1) of the Securities Exchange Act of 1934, 15 U.S.C. 78u-6(h)(1), to extend to any individual who engages in any of the whistleblowing activities described in Section 21F(h)(1)(A), irrespective of whether the individual makes a separate whistleblower report to the Commission. The brief argues that this interpretation, embodied in Commission Rule 21F-2(b)(1), 17 C.F.R. 240.21F-2(b)(1), reflects the most reasonable construction of the relevant statutory language and, in any event, is entitled to judicial deference because it is a permissible construction of that language and advances important policy objectives, including encouraging internal reporting of potential wrongdoing in appropriate circumstances.
In this private action, investors alleged that the national securities exchanges violated Section 10(b) of the Exchange Act by selling certain co-location services and proprietary data feeds, and providing certain electronic order types, to customers engaged in "high-frequency trading." The Commission's amicus brief in the Second Circuit Court of Appeals explained that the scheme of administrative and judicial review of challenges to certain actions by the national securities exchanges does not deprive the district court of subject matter jurisdiction over the plaintiffs' Section 10(b) claim. The Commission also addressed the scope of absolute immunity from suit enjoyed by self-regulatory organizations, such as the exchanges. The Commission explained that immunity is warranted when the exchanges engage in adjudicatory functions, prosecutorial functions, and other functions that materially relate to the exchanges' regulation of their members. But immunity does not extend beyond member regulation to shield the exchanges from suit where they offer or sell their own products or services. Lawsuits challenging an exchange's conduct may nevertheless be preempted or precluded to the extent plaintiffs' claims conflict with the Commission's own regulation of the exchanges.
In this private action under the Employee Retirement Income Security Act ("ERISA"), the Department of Labor filed an amicus brief describing ways that managers of an employee stock ownership plan ("ESOP") who are aware that the employer's publicly traded securities are materially overvalued due to an undisclosed fraud can satisfy their obligations under ERISA. The Commission filed this complementary amicus brief confirming that such ESOP managers can carry out the alternatives DoL urges in a manner that is not inconsistent with the securities laws. In sum, the ESOP manager can disclose the fraud, or refrain from effecting both purchases and sales on behalf of ESOP participants. The other alternatives DoL identifies, such as whistleblowing or urging other officers to disclose the fraud, may not fulfill duties under the securities laws but do not conflict with them.
The Commission's amicus curiae brief in the Second Circuit Court of Appeals explains that although the creation of a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78m(d), and Section 16(b) of that Act, 15 U.S.C. 78p(b), depends on the specific facts and circumstances of any given case, a typical lock-up agreement executed between shareholders and underwriters as part of an underwritten public offering, standing alone, would not be sufficient to establish such a group. The Commission further explained that an underwriter is entitled to rely on the exemptions provided by Exchange Act Rule 13d-3(d)(4), 17 C.F.R. 240.13d-3(d)(4), and Exchange Act Rule 16a-7, 17 C.F.R. 240.16a-7, even though the underwriter has obtained material non-public information, so long as the underwriter’s purchases and sales are made in connection with the underwriter’s participation in a bona fide underwritten public offering.
The Commission filed amicus briefs in the Second Circuit Court of Appeals (in Daniel Berman v. Neo@Ogilvy LLC, and Liu Meng-Lin v. Siemens AG), the Third Circuit Court of Appeals (Mikael Safarian v. American DG Energy Inc., and David Danon v. Vanguard Group, Inc.), the Sixth Circuit Court of Appeals (John Verble v. Morgan Stanley Smith Barney LLC, and Douglas Deykes v. Cooper-Standard Automotive, Inc.), Douglas Deykes v. Cooper-Standard Automotive, Inc.), the Seventh Circuit Court of Appeals (Neal Verfuerth v. Orion Energy Systems, Inc.), the Eighth Circuit Court of Appeals (Vincent Beacom v. Oracle America, Inc.), the Ninth Circuit Court of Appeals (Paul Somers v. Digital Realty Trust Inc.), and the Eleventh Circuit Court of Appeals (Spencer Duke v. Prestige Cruises International Inc.). The briefs address Commission Rule 21F-2(b)(1), 17 C.F.R. 240.21F-2(b)(1), which interprets the anti-retaliation provisions of Section 21F(h)(1) of the Securities Exchange Act of 1934, 15 U.S.C. 78u-6(h)(1), to extend to any individual who engages in any of the whistleblowing activities described in Section 21F(h)(1)(A), irrespective of whether the individual makes a separate whistleblower report to the Commission. The briefs demonstrate that the interpretation adopted in Rule 21F-2(b)(1) warrants judicial deference because it is a permissible construction of the statutory language and it advances important policy objectives, including encouraging internal company reporting of potential wrongdoing in appropriate circumstances. Moreover, in accordance with 17 C.F.R. 200.30-14(b), the Commission has delegated authority to the Office of the General Counsel to file substantively similar briefs, as it deems appropriate, in other cases in which the validity of Rule 21F-2(b)(1) is challenged.
The Commission joined an amicus brief that the Solicitor General filed in the Supreme Court, arguing that the Court should hold that a statement of opinion is actionable as untrue or misleading under Section 11 of the Securities Act of 1933 if it lacked a reasonable basis under the circumstances, even if the opinion was genuinely held.
The Commission joined an amicus brief that the Solicitor General filed in the Supreme Court, arguing that the Court should not overturn the fraud-on-the-market presumption adopted in Basic v. Levinson, 485 U.S. 224 (1988) and that representative plaintiffs who invoke the presumption when seeking relief for violations of Section 10(b) and Rule 10b-5 need not prove price impact in order to obtain certification of a class under Federal Rule of Procedure 23(b)(3).
The Commission's amicus brief in the Eleventh Circuit Court of Appeals argues that, in general, a corporation is considered an insider with regard to its duty to either disclose or abstain under Section 10(b) of the Exchange Act when trading in its shares on the basis of material, non-public information; and in particular, a privately-held company has a duty to disclose or abstain when repurchasing its shares from its stockholder-employees on the basis of material, non-public information.
The Commission filed an amicus curiae brief in the Second Circuit Court of Appeals arguing that a divided panel incorrectly ruled (over Judge Lohier's dissent) that a defendant, who entered into sham securities transactions designed to give the false appearance of market activity, is shielded from liability for manipulation under Section 10(b) of the Securities Exchange Act of 1934 or Commission Rule 10b-5 because the defendant did not also make false or misleading statements to investors.
The Commission's amicus brief in the Second Circuit Court of Appeals explains that under Rule 16b-6(d), 17 C.F.R. 140.16b-6(d), the expiration of a short call option is treated as a purchase that is matched to the writing the of the option, which is treated as a sale under Rule 16b-6(a), 17 C.F.R. 240.16b-6(a). The Commission further explained that the plain language of Section 16(b) of the Exchange Act of 1934, 15 U.S.C. 78p(b), requires that when the writer of the short call option is a ten percent beneficial owner, the writer must still be a ten percent beneficial owner at the time the option expires unexercised before it is required to disgorge short-swing profits under Rule 16b-6(d).
The Commission filed an amicus curiae brief in the Ninth Circuit Court of Appeals arguing that a series of related contracts offered by hotel developers involving the sale and rental management of individual hotel rooms constituted investment contracts under the federal securities laws where, from the time the sales commenced, the purchasers had so little use or control of the rooms that they had no practical alternative but to ultimately rely on the developers to rent the rooms for a share of the resulting profits.
The Commission and the Solicitor General filed an amicus brief in the Supreme Court arguing that the investment adviser for a group of mutual funds could be held primarily liable under Section 10(b) of the Exchange Act for having made misleading statements in fund prospectuses even though the prospectuses were issued in the names of the funds and the misleading statements were not expressly attributed to the adviser.
Amicus curiae brief filed by the Commission in the Court of Appeals for the Fifth Circuit recommending that Section 806 of the Sarbanes Oxley Act should be construed as applying to an employee of a private contractor, subcontractor, or agent of a public company where the employee engaged in “protected activity” with respect to that public company, and not limit Section 806’s application to only those cases where the contractor, subcontractor, or agent retaliates at the direction of a public company.
In response to a request from the Administrative Review Board of the Department of Labor, the Commission submitted an amicus brief urging the Review Board to hold that, in order to effectuate the Congressional intent to prevent fraud by improving the accuracy of financial statements of reporting companies, the whistleblower protection provision of the Sarbanes-Oxley Act, Section 806, should be interpreted to extend protection to the employees of non-public subsidiaries whose financial results are reported on a consolidated basis with those of the parents in the parent financial statements.
Amicus brief submitted to the U.S. District Court of the Northern District of California in which the Commission discussed Section 13(a) of the Investment Company Act of 1940, which prohibits an investment company from deviating from a policy in respect of concentration of investment in any particular industry, as recited in its registration statement, unless authorized by a majority of its outstanding voting securities, and argued that Section 13(a) required an investment fund to obtain shareholder approval before investing more than 25% of its assets in privately issued mortgage-backed securities after its registration statement disclosed that the fund would limit its investment in any particular industry to less than 25% of total assets.
The Commission and the Solicitor General filed an amicus curiae brief in the Supreme Court of the United States recommending a framework to determine whether Section 10(b) of the Securities Exchange Act (and Rule 10b-5 thereunder) applies to transnational securities frauds involving overseas injuries experienced by foreign investors. The brief explains that a violation of Section 10(b) exists if the transnational securities fraud involves significant conduct in the United States that was material to the fraud's success. Where the U.S. conduct satisfies this standard, the Commission may maintain a civil enforcement action under Section 10(b). For foreign investors to maintain a private securities fraud action, however, the brief argues that an additional showing is required; they must demonstrate that the U.S. conduct was a direct cause of their overseas injury.
Amicus brief submitted to the Court of Appeals for the Second Circuit, taking the following positions concerning the safe harbor for certain forward-looking statements in the Private Securities Litigation Reform Act of 1995: (1) that the provision of the safe harbor excluding forward-looking statements made in a "financial statement prepared in accordance with [GAAP]" does not exclude from the safe harbor forward-looking statements made in the Management Discussion and Analysis section of a Form 10-Q; (2) that an explanatory note in a Form 10-Q indicating that the use of certain forward-looking words is intended to identify a statement as forward-looking generally should be sufficient to "identify[y]" a statement "as a forward-looking statement" under the safe harbor; (3) that misleading risk disclosure cannot be considered “meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement” under the safe harbor; and (4) that a person has “actual knowledge” that a statement of projection or expectation is misleading under the safe harbor if the person subjectively knows that he or she has no reasonable basis upon which to make the statement.
Amicus brief submitted to the Court of Appeals for the D.C. Circuit arguing that limited partnership units in the umbrella, or operating, partnership of a real estate investment trust are "securities" within the meaning of the federal securities laws.
Amicus curiae brief filed in the Supreme Court by the Commission and the Solicitor General arguing that the limitations period for a private securities fraud claim under 28 U.S.C. 1658(b)(1) does not begin to run until the plaintiff has actually discovered, or in the exercise of reasonable diligence ought to have discovered, facts demonstrating that all the elements of a securities-fraud violation can be established.
Amicus curiae brief filed in the Supreme Court by the Commission and the Solicitor General recommending that the Court not grant a petition for certiorari in this private securities litigation. The brief discusses the standard to be applied to determine whether the antifraud provisions of the federal securities laws apply to transnational securities frauds involving foreign purchasers who bought a foreign issuer's securities on a foreign exchange, but where significant aspects of the fraudulent conduct occurred in the United States.
Amicus curiae brief filed by the Commission with the United States Department of Labor's Administrative Review Board recommending that the Board hold that when an attorney brings a whistleblower action under Section 806 of the Sarbanes Oxley Act, he or she may introduce any report that he or she has made pursuant to the Commission's Part 205 Attorney-Conduct Rules, and any responses thereto, when such reports are probative and material to the attorney's claim of illegal retaliation or to refute a defense thereto.
Amicus brief submitted to the Court of Appeals for the Second Circuit arguing that: (1) a brokerage firm customer has standing to bring a private damages action under Section 10(b) when the brokerage firm sells the customer's securities without authorization and converts the proceeds to its own use; and (2) deceptive representations proscribed by Section 10(b) and Rule 10b-5 are not limited to express misrepresentations but also include broker-dealer conduct inconsistent with the shingle theory's implied representation of fair dealing in accordance with standards of the profession.
In a brief amicus curiae to the Supreme Court in which the Commission joined, the United States expresses its views as to how a court should ascertain whether a fund adviser has complied with its fiduciary duty with respect to the receipt of compensation for services under Section 36(b) of the Investment Advisers Act.
Amicus curiae brief filed in the Supreme Court by the Commission and the Solicitor General arguing that a potential plaintiff is on "inquiry notice" regarding a private securities-fraud claim under 28 U.S.C. 1658(b) when he has reason to suspect that the defendant made a false statement with the scienter necessary to constitute a violation of the securities laws, not when he has reason to suspect that the defendant only made a false statement.
Amicus brief in which the Commission urged that purported state law claims against entities that operate components of the national securities clearance and settlement system in compliance with Commission-approved rules are preempted by the Securities Exchange Act of 1934.
Amicus brief submitted to the Court of Appeals for the Second Circuit urging the standard to be applied to determine whether the antifraud provisions of the federal securities laws apply to transnational securities frauds involving foreign purchasers who bought a foreign issuer's securities on a foreign exchange, but where significant aspects of the fraudulent conduct occurred in the United States.
The Commission filed an amicus brief defending its authority under Section 16(b) of the Exchange Act to exempt acquisitions from an issuer by its officers and directors in Rule 16b-3(d) and to exempt reclassifications in Rule 16b-7. The Commission also urged that the 2005 amendments to these rules be found applicable transactions that took place prior to the adoption of the amendments.
Amicus curiae brief filed in the Supreme Court by the Commission and the Solicitor General addressing the interpretation of the heightened pleading requirement for scienter under the Private Securities Litigation Reform Act of 1995.
Amicus brief submitted to the Second Circuit defending the validity Rule 16b-3(d) under the Exchange Act, which exempts from Section 16(b) liability certain transactions between an issuer and its officers and directors, and also arguing that a person who is director by virtue of having deputized another person to represent him on the issuer’s board may take advantage of Rule 16b-3(d)’s exemption regardless of whether he is also a holder of ten percent or more of any class of the issuer’s equity securities.
The safe harbor from registration provided by Rule 144A under the Securities Act of 1933 is not invalidated as to a transaction that substantively and procedurally complies with the Rule solely because of the alleged motives of the security offeror in choosing to rely on that safe harbor.
Amicus brief submitted to Ninth Circuit which addresses (1) the vital importance of cooperation between the Commission staff and criminal authorities conducting their own investigations, and (2) the adequacy of the warnings contained in Commission Form 1662 which advise witnesses in Commission civil investigations of their right to decline to testify in accordance with their Fifth Amendment rights, of the likelihood that information provided to the Commission will be shared with other agencies, and of potential conflicts of interest with counsel representing multiple parties.
Amicus curiae brief requested by the Second Circuit construing the Commission's rules promulgated under Section 16(b) as applied to the purchase of a derivative security and arguing that the 2005 amendment to Rule 16b-7 (which clarifies the rule's application to reclassifications) is permissibly retroactive; that Rule 16b-7 exempted reclassification's even before the 2005 amendment to the rule and that the Commission has authority to exempt reclassifications under Section 16(b).
Brief Addressing (1) the application of Section 16(b), and the rules promulgated under Section 16(b), to hybrid derivative securities; (2) whether the purchase by one company, that is an insider of an issuer, of another company, that holds issuer securities, constitutes a purchase under Section 16(b) of the issuer securities held by the company being bought; and (3) what level of deference is owed by the court to the Commission's amicus brief.
Amicus curiae brief in the Nevada Supreme Court taking the position that the federal regulatory regime under the Securities Exchange Act of 1934 preempts the state-law claims asserted in this case, which seek to impose liability on registered clearing agencies for their operation of key components of the national securities clearance and settlement system in accordance with Commission-approved rules, and for their failure to disclose certain alleged defects in that system.
Amicus brief in which the Commission urged that it acted within its authority in adopting Rule 16b-3(d), which exempts certain grants, awards, and other acquisitions of an issuer's securities by its officers and directors from the short-swing recovery provision in Section 16(b) and that, to the extent a person is a director by having "deputized" someone to be a director on its behalf, and is thereby subject to Section 16, exemptive Rule 16b-3(d) also applies to that person, but for that rule to apply, the board approving the transaction to be covered by the rule must be aware that the deputizing person is a director.
Amicus letter brief where, in response to request from court of appeals, Commission took the position that challenged conduct by underwriters conducting initial public offerings was immune from antitrust liability.
Amicus Curiae brief where the Commission took the position (1) that former member of a company's board of directors, who complains that he was improperly voted off the board, has standing to bring a private right of action under Section 13(d) of the Exchange Act when the former member of the board is also a shareholder of the company who complains that his right to wage a proxy contest was foreclosed by the lack of a Schedule 13D disclosure and (2) that Section 13(d) is not limited in its application to tender offers and contests for control if a company.
At the request of the Supreme Court, the Commission and the Solicitor General filed a brief urging the Court to grant certiorari to resolve a split among the circuits regarding the proper standing for pleading and proving loss causation. This brief may also be found on the USDOJ Solicitor General's web site.
Amicus curiae brief addressing whether the lengthened statute of limitations in Section 804 of the Sarbanes-Oxley Act of 2002 applies to actions brought after the enactment of Sarbanes-Oxley for claims that had already lapsed under the previous limitations period.
Amicus curiae brief urging that the mere fact that undisclosed information is not firm-specific, or that the information is publicly available, does not automatically mean the omission of that information from a disclosure document can never be material.
Amicus curiae brief urging that the mere fact that information could be discovered somewhere in the public domain does not mean that it can never be materially misleading to omit that information from a disclosure document or other statement.
Amicus brief advising that in calculating short-swing profits under Section 16(b) the district court improperly disregarded the offsetting obligation incurred by the defendants to return the shares or, at a minimum, to pay to a trust the market value of the shares at the time of acquisition, and further advising that, if the insider's acquisition of escrow securities is determined to be a "purchase" by him or her, the insider is entitled to the exemption in Rule 16a-9 for his or her subsequent acquisition of stock split shares derived from the escrow shares.
The Commission's amicus brief construes Section 13 of the Securities Act of 1933, the three-year period of repose to begin to run when the security is first offered to the public and also advises the Second Circuit that the period does not run when an offering is conducted as a "private" as opposed to "public" offering.
Amicus curiae brief filed in support of the appellee's petition for rehearing, arguing that a panel of the court incorrectly construed two rules exempting transactions from Section 16(b) of the Securities Exchange Act.
Memorandum Amicus Curiae Submitted at the Request of the Court. The Commission urged that alleged conduct by the underwriters of initial public offerings was immune from antitrust challenge because of the Congressionally established regulatory regime applicable to those underwritings.
Amicus Curiae Brief Addressing Whether California's Standards for Arbitrator Disclosure and Disqualification are Preempted by Federal Law to the Extent They Apply to the Arbitration Systems of the NASD, Inc. and the New York Stock Exchange, Inc.
Amicus Curiae Brief, filed at the request of the court, on whether stock transactions effected as part of a merger were exempt from Section 16(b) of the Securities Exchange Act.
Jan. 2002 Camden Asset Management, L.P., et al., v. Arthur Andersen LLP et al.
Amicus Curiae Brief Addressing the Availability of Rescission as a Remedy for the Charging of Excessive Fees Under the Investment Company Act.
Jul. 2001 Alan Friedman, et al. v. Salomon Smith Barney, Inc., et al.
Amicus Brief Addressing Antitrust Immunity for Certain Stabilizing Conduct by Underwriters Following Public Offerings of Securities.
Amicus brief in which the Commission advised that where there is a binding conversion cap that denies an investor the right to acquire 10% of the underlying equity securities of an issuer, the investor is not, by virtue of his or her ownership of convertible securities, the beneficial owner of more than 10% of those securities, and also advised that floating rate derivative securities are included in the 10% beneficial ownership determination.
May 2000 Schaffer v. CC Investments, LDC, et al.
Amicus brief advising that the Commission had the power to adopt Rule 16a-1(a)(1) defining "beneficial owner" for purposes of Section 16 under its rulemaking and definitional authority contained in Sections 3(b) and 23(a) of the Exchange Act.
Amicus brief in which the Commission advised, with respect to the Rule 16a-1(a)(2)(iii) safe harbor for corporate holdings, that an insider under Section 16 has an indirect pecuniary interest in portfolio securities bought or sold by a corporation in which he or she has a substantial ownership interest and a controlling influence, unless the insider can show that in fact he or she could not have caused or prevented the securities transaction.
Mar. 2000 Morales v. Quintel Entertainment, Inc.
Amicus brief advising that a section 13(d) beneficial ownership group may exist even if it does not have a common objective that is related to corporate control, and also advising (1) that an agreement to exchange an asset for securities may manifest a purpose to acquire the securities and (2) that lock-up provisions, in appropriate circumstances, may demonstrate an agreement to hold and/or dispose of securities.

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