The Revolving Door Spins Again

On January 24, President Obama announced his nominee for Chairman of the Securities Exchange Commission – Mary Jo White, a former United States Attorney for the Southern District of New York.

By selecting White, the President is signaling an interest in seeing a more forceful approach at the Commission. Indeed, if confirmed, White will be the first former criminal prosecutor to head the SEC. Previous SEC chairs, by contrast, had established careers in private legal practice, in academia, in business, and in government, either as legislators or, in the case of Harvey Pitt, as general counsel to the SEC (before his long career in private legal practice) — but not as criminal prosecutors. Although White has little regulatory or policymaking experience, she brings to the table a wealth of experience in enforcement, which has been a top priority for the SEC in recent years.

As the United States Attorney for the Southern District of New York from 1993 to 2002, White is best known for winning convictions for the 1993 World Trade Center bombing and for the 1998 bombings of two U.S. embassies in Africa as well as for winning the conviction of mobster John Gotti. The President emphasized, “Today . . . there are rules to end taxpayer-funded Wall Street bailouts once and for all. But it’s not enough to change the law. We also need cops on the beat to enforce the law.” Read More

Supreme Court Hears Argument in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds

Securities class action lawyers are looking to the U.S. Supreme Court this term to clear up an issue that has been at the center of several prominent securities class actions, specifically, what is the standard for class certification where the class members’ reliance on defendants’ alleged misstatements is presumed under the fraud-on-the-market theory of reliance. Last term, in a class action ruling in an employment case, Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 1541 (2011), the Court signaled that class certification may require “a preliminary inquiry into the merits of a suit,” singling out elements of the fraud-on-the-market theory as an example.

On November 5, the Supreme Court heard argument in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, a securities fraud putative shareholder class action presenting the question of how far a court should consider a merits issue when deciding whether to certify a class. The appeal in Amgen is from a Ninth Circuit decision that affirmed the district court’s order certifying a plaintiff class of purchasers of Amgen stock. Defendants opposed class certification on the ground that the rebuttable presumption of reliance under the fraud-on-the-market theory requires not only that the market for Amgen stock was efficient, but that the alleged misstatements were material. Defendants offered evidence that the alleged misstatements in the case were immaterial. Therefore, according to defendants, reliance could not be presumed, and the proposed plaintiff class could not be certified because common issues did not predominate. The Supreme Court took the case in order to determine whether the district court was correct to disregard defendants’ evidence of immateriality on the ground that materiality is an issue appropriately considered at trial or at summary judgment rather than at the class certification stage. Read More