MARC R. ROSEN

A federal appeals court, in U.S. Securities and Exchange Commission v. Christopher Clark, recently reversed a lower court’s decision and remanded the case for a jury trial on civil insider trading claims based on suspicious trading and circumstantial evidence, with no direct proof of wrongdoing by the defendant. With this new ruling, the Securities and…

The U.S. Department of Justice (the “DOJ”) and the U.S. Securities and Exchange Commission (the “SEC”) recently brought criminal charges and civil claims for insider trading against Terren S. Peizer (“Peizer”), the Chief Executive Officer and Chairman of the Board of Directors of Ontrak Inc., a publicly traded healthcare company, despite Peizer’s use of a…

Non-compete agreements have long been a staple in the employment arena, despite their potentially anti-competitive effect. They are both common and highly controversial. In the best light, they are seen as a means of balancing the employee’s right to seek other employment with the employer’s legitimate interest in protecting itself from unfair competition by a…

A recent decision from the Delaware Chancery Court has established, for the first time, that the remedy of reverse veil-piercing is recognized under Delaware law. The decision, Manichean Capital, LLC v. Exela Technologies, Inc., resolves a dispute regarding the availability of reverse veil-piercing and augments the remedies for minority shareholders dissenting from a merger. Background…

A recent decision by a Delaware bankruptcy court highlights the important consequences that can flow from a debtor-in-possession (“DIP”) finance stipulation reached early in a case. The decision, in Official Committee of Unsecured Creditors v. The CIT Group /Business Credit, Inc. (In re Jevic Holding Corp.), held that a chapter 7 trustee was barred by…

A series of decisions (and a recent brief) have highlighted some of the new issues that are arising in Safe Harbor litigation. In particular, they show how the courts are wrestling with questions concerning: Which entity in a complex transaction is considered the “initial transferee” for Safe Harbor purposes? How are courts interpreting the Safe…

The Delaware Supreme Court has held that fraudulent conduct by corporate officers and directors is insurable in Delaware.  This consequential decision, RSUI Indemnity Company v. Murdock, 2021 BL 76083 (Del. Mar. 3, 2021), is inconsistent with the public policy of many other states, and likely will have an immediate effect on Delaware-based corporations involved in…

The United States Supreme Court has issued an opinion that clarifies the extent to which the automatic stay imposes obligations on creditors that seized their debtor’s property pre-petition and resolves a broad split among the circuit courts. The decision, City of Chicago v. Fulton, provides protection for creditors but adds to the burdens faced by…

A recent decision from a New York bankruptcy court provides guidance on how federal courts may approach requests for prejudgment interest in fraudulent conveyance cases. The decision, Picard v. BAM LP, highlights a risk faced by defendants in litigation of lengthy duration and provides practical guidance on how federal judges may exercise their discretion regarding…

A recent decision by the New York Court of Appeals adds teeth to the ability of real estate lenders to dissuade borrowers from filing bankruptcy and highlights the risks faced by borrowers that choose bankruptcy – and those that assist them. The decision, Sutton 58 Associates LLC v. Pilevsky, permits a lender to pursue a…

A recent decision from a Michigan bankruptcy court shows potential limits to Safe Harbor defenses to clawback actions and may provide new hope to trustees and other clawback plaintiffs that seek to push back against defendant-friendly decisions in the Second Circuit. The decision, In re Greektown Holdings, LLC, highlights the importance of appropriately and carefully…

A recent decision by a New York district court confirms that the defendant-friendly holding of the Second Circuit’s Tribune decision (discussed in our prior alert) will be applied broadly to benefit defendants and rejects efforts by plaintiffs to work around Tribune. The decision, In re Nine West LBO Securities Litigation, reaffirms the vitality of the…

A recent unreported decision by a New York bankruptcy court suggests that commercial tenants whose operations were suspended under mandatory shutdown orders as a result of the pandemic may be able to escape their rent obligations that relate to the shutdown period. Background The debtor in the case, In re Edison Price Lighting, Inc., is…

By Opinion and Order dated August 3, 2020 in the case of State of New York v. United States Department of Labor, Judge J. Paul Oetken, of the United States District Court for the Southern District of New York, invalidated four key components of the regulations issued by the Department of Labor (“DOL”) clarifying the…

The Second Circuit has affirmed, on appeal, the dismissal of an attempt by the Lehman Brothers estate to unwind payments made in connection with a series of collateralized debt obligation (“CDO”) structures. The decision, Lehman Brothers Special Financing Inc. v. Branch Banking and Trust Company (In re Lehman Brothers Holdings, Inc.), marks the third time that…

In a decision of consequence to securities industry participants, the U.S. Supreme Court just answered a long-unresolved question and ruled, in Liu v. Securities and Exchange Commission, that the U.S. Securities and Exchange Commission could ask courts to order disgorgement of ill-gotten gains. In doing so, the Supreme Court affirmed and at the same time, to some…

The legal landscape has changed dramatically since the commencement of the #MeToo movement. Companies’ potential exposure to employment law liability has significantly increased, but now employment claims are not the only ones requiring the attention of the corporate world. A new ground for liability against corporations and their high-level executives has emerged under the federal securities…

The U.S. Supreme Court recently settled a long-standing split among the federal appeals courts concerning whether a plaintiff alleging trademark infringement under the Lanham Act must first demonstrate the defendant acted willfully in order to recover a disgorgement of profits. Justice Gorsuch, writing for the Court, rejected Second Circuit authority and held that mens rea, or…

A series of recent decisions may provide boosts for the positions of lenders. Post-Petition Interest on an Oversecured Claim In re Family Pharmacy, Inc. held that Missouri law, like New York law, distinguishes between permissible default interest and impermissible penalties. However the case diverges from the majority view adopted by several circuit courts of appeal insofar…

As we manage the many dislocations resulting from the COVID-19 pandemic, some of the more ordinary tasks still need to be undertaken. One such task is notarization. How can one subscribe and swear “before” a notary in this age of social distancing? Fortunately, workarounds are available, some new and some already existing pre-pandemic. New York State Notarization Using…

Investment funds continue to grapple with COVID-19, responding to fluctuating financial markets and the ongoing economic, strategic and practical challenges facing them. During this tumultuous period, the funds’ limited partners, perhaps struggling with liquidity issues of their own, may be at risk of defaulting on capital calls triggered by the funds and their general partners. These defaults…

New York Governor Andrew Cuomo signed the Stop Hacks and Improve Electronic Data Act (the “SHIELD Act”), amending New York’s data breach laws (N.Y. Gen. Bus. Law § 899-aa) to address the growing cybersecurity risks faced by businesses, employees and consumers. The SHIELD Act now requires businesses and employers collecting private information of New York residents,…

COVID-19 has caused major disruption to businesses, commerce and the financial markets. With the CDC and WHO projecting that the coronavirus is only in its early stages in the United States, businesses and individuals may feel the burden of the effects of COVID-19 for the foreseeable future. As the flow of goods and services continues…

A recent decision by the Bankruptcy Court for the District of New Jersey, In re Modell’s Sporting Goods, Inc., illustrates the difficult problems caused by the COVID-19 pandemic, the ways that parties to a bankruptcy case may react and issues distressed companies, their creditors and stakeholders should consider in the current climate before a bankruptcy petition…

A review of the two bankruptcy law decisions issued by the Supreme Court in its most recent term (Mission Product Holdings Inc. v. Tempnology, LLC and Taggart v. Lorenzen) shows that the Court may be tilting against avoidance actions in ways that should provide comfort to avoidance defendants. Mission Product Holdings Inc. v. Tempnology, LLC…

The most recent decision in the long-running Tribune Company Fraudulent Conveyance Litigation multi-district case shores up safe harbor defenses to clawback actions that had been challenged following the Supreme Court’s Merit Management decision. The decision approves a broad reading of the statutory definition of “financial institution,” and thus extends the protection of the safe harbor…

The United States Bankruptcy Court for the Southern District of New York held last week that a foreign corporation that had issued debt pursuant to an indenture with a New York choice of law and New York forum selection clause and had commenced an insolvency proceeding in its home jurisdiction may file for chapter 15…

The Co-Chief of the Securities and Exchange Commission’s Asset Management Unit (the “AMU”) recently provided a revealing and important glimpse into the SEC’s priorities in bringing enforcement actions in the investment fund community. Julie M. Riewe gave an overview of the AMU’s capabilities and accomplishments in the five years since it was formed, and provided…

While recent news has been about decisions which potentially limit liability in insider trading cases, little attention has been paid to one which potentially expands the reach of the securities fraud statutes.  In Stratte-McClure v Morgan Stanley, the Court of Appeals for the Second Circuit recently held that mere silence in a required public filing…

On January 22, 2015, a federal district court, in U.S. v. Conradt, vacated the guilty pleas of four men accused of insider trading.  This decision is the first to follow U.S. v. Newman, the recent landmark appellate ruling limiting the government’s ability to pursue insider trading cases. In the course of granting the defendants’ motions…

On December 10, 2014, the United States Court of Appeals for the Second Circuit reversed the convictions of two hedge fund managers for insider trading and conspiracy to commit insider trading. The Second Circuit’s opinion in U.S. v. Newman significantly narrowed the definition of insider trading and made it more difficult for prosecutors to pursue…

A recent decision by Judge Jed Rakoff of the District Court for the Southern District of New York, Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, provides reassurance to foreign investors in off-shore funds that payments they receive are beyond the reach of avoidance actions brought under the U.S. bankruptcy laws. The…

When entering into a contract, parties need to know that they could be agreeing to arbitration without knowing it. A New York federal court recently held that the parties’ agreement to utilize a third-party appraisal procedure in the event of a dispute entitles the successful party to exercise important enforcement rights relating to arbitration, even…

The New York County District Attorney’s Office recently announced the indictment of a former analyst with a New York City hedge fund alleging that the analyst illegally accessed and duplicated proprietary and highly confidential information relating to the firm’s trading methods. The analyst is charged with multiple counts of Unlawful Use of Secret Scientific Material,…

A recent decision of the United States District Court for the Southern District of New York has held that Section 10(b) of the Securities Exchange Act of 1934 does not require companies to disclose their receipt of a Wells Notice. The SEC provides the target of an investigation with a Wells Notice whenever the Enforcement…

In a controversial but important decision, the highest state court in New York has held that an employer can terminate the employment of its chief compliance officer for voicing objections to allegedly improper trading practices. Issued last week, the decision of the New York State Court of Appeals in Sullivan v. Harnisch, 2012 N.Y. Lexis…

A recent decision by New York’s Appellate Division for the First Department, Gotham Partners, L.P. v. High River Limited Partnership, 2010 NY Slip Op. 6149, 2010 N.Y. App. Div. LEXIS 6223 (1st Dept. 2010), confirms that the wording of an indemnification provision must be very specific in order to afford indemnified parties the full protection…