On August 23, 2011, the U.S. Court of Appeals for the Second Circuit affirmed a lower court’s dismissal of a claim under Section 11 of the Securities Act of 1933 brought on behalf of purchasers in a public offering, holding that plaintiffs failed to plead that the alleged misstatements were subjectively false.
The United States Court of Appeals for the Seventh Circuit has issued an opinion that relieves plaintiffs in securities litigation from making any showing of loss or materiality at the class certification stage.
The US Federal Deposit Insurance Corporation (FDIC) estimates that by the end of 2010, more than 300 banks will have failed, and that the cost of resolving these failures may reach $100 billion over the next four years.
Two recent state appellate court cases demonstrate the division in the law regarding whether holders of securities can maintain a cause of action related to alleged fraud and negligent misrepresentation.
On May 10, 2010, the US District Court for the Southern District of New York held that accounting statements of goodwill and loan loss reserves are statements of opinion, and that they create liability under Sections 11 and 12 of the Securities Act only when a defendant did not actually hold the challenged opinion at the time it was made.
On April 27, 2010, the US Supreme Court issued a decision that effectively tolled the statute of limitations applicable to securities fraud litigation until plaintiffs discover or reasonably should have discovered sufficient evidence of scienter to plead a fraud claim in conformity with the Private Securities Litigation Reform Act (PSLRA), i.e., fraudulent intent.
The Illinois Appellate Court for the First District has held that the statute of limitations in an accounting malpractice case resulting in increased tax liability begins to run either when the taxpayer receives the statutory deficiency notice pursuant to Internal Revenue Code section 6212 or when the taxpayer agrees with the IRS’s proposed deficiency assessments, not when the taxpayer has reason to believe there is a controversy relating to the return.