morrison & foerster llp Vol 2, No 1. Spring 2009
Inside
-------------------------
4
Enforcement To Be Top
Priority at Schapiro’s SEC
-------------------------
5
U.K. Financial Regulator
Fines Insurance Firm for
Failure to Implement
Anti-Corruption Policies
-------------------------
6
e Legal Aermath of a
Ponzi Scheme
-------------------------
7
e Green Wave and
Related Disclosure Issues
-------------------------
9
Using “Loss Causation” to
Defeat Class Certication
in a Section 10(b) Case
-------------------------
10
Section 10(b) and Rule
10b-5: e U.S. Courts of
Appeals Apply Dierent
Legal Tests for Assessing
the Primary Liability of
Secondary Actors
Securities Litigation, Enforcement,
and White-Collar Criminal Defense
Since early 2007, an unprecedented wave of securities litigation arising from the credit crisis has
rolled through the courts. Initially, the cases focused on financial institutions, attacking them for
their alleged role in creating the crisis. In late 2008, however, plaintiffs expanded their targets to
include tech companies, energy companies, and other businesses. In these cases, plaintiffs typi-
cally claim that companies failed to disclose their vulnerability to the credit crisis. For example,
plaintiffs have sued NextWave Wireless, a San Diego communications company, and Perrigo, a
Michigan pharmaceutical manufacturer, for allegedly failing to disclose risks associated with their
investment in auction rate securities. Similarly, plaintiffs have sued companies that have suffered
from the turmoil in commodities markets and exchange rates, such as Pilgrim’s Pride, which
reported losses arising from hedging corn prices, and Aracruz Cellulose, which announced losses
on currency hedges.
In This Issue
Crisis, scandal, and pushes for more disclosure and regulation all featured prominently in 2008,
and look set to continue unfolding in 2009. So we begin this edition of the Securities Litigation,
Enforcement, and White-Collar Criminal Defense (“SLEW ”) Newsletter with tips for minimizing
the risks of being the target of a lawsuit or enforcement action. e Securities and Exchange
Commission is now under new management, and we provide an overview of what to expect from
the SEC under its new Chairman. Next, we summarize a recent large fine imposed by a United
Kingdom agency enforcing the U.K.’s version of the U.S.’s Foreign Corrupt Practices Act – yet
another signal of how important it is for companies doing business internationally to imple-
ment and monitor internal anti-corruption measures. We then turn to a description of the legal
aftermath of the unveiling of a Ponzi scheme. is edition also features articles about disclosure
issues related to climate change and “green” practices, loss causation issues that can prevent class
certification in securities cases, and when “secondary actors” face liability under Section 10(b) of
the Securities Exchange Act of 1934.
Our practice group, with members in the U.S., Asia, and Europe, hopes you find these articles
informative. anks for reading.
Newsletter
Don’t Get Hit by the Fallout from the Credit Crisis:
Top Tips for Reducing Securities Litigation Risk
By Terri Garland and Brian L. Levine
Continued on Page 2
Securities Litigation, Enforcement,
and White-Collar Criminal Defense
Newsletter
m o r r i s o n & f o e r s t e r l l
pVol 2, No 1. Spring 2009
Inside In This Issue
4
Enforcement To Be Top Crisis, scandal, and pushes for more disclosure and regulation all featured prominently in 2008,
Priority at Schapiro’s SEC and look set to continue unfolding in 2009. So we begin this edition of the Securities Litigation,
5Enforcement, and White-Collar Criminal Defense (“SLEW”) Newsletter with tips for minimizing
U.K. Financial Regulator the risks of being the target of a lawsuit or enforcement action. The Securities and Exchange
Fines Insurance Firm for
Failure to Implement Commission is now under new management, and we provide an overview of what to expect from
Anti-Corruption Policies the SEC under its new Chairman. Next, we summarize a recent large fine imposed by a United
Kingdom agency enforcing the U.K.’s version of the U.S.’s Foreign Corrupt Practices Act - yet
6
The Legal Aftermath of a another signal of how important it is for companies doing business internationally to imple-
Ponzi
Scheme ment and monitor internal anti-corruption measures. We then turn to a description of the legal
7aftermath of the unveiling of a Ponzi scheme. This edition also features articles about disclosure
The Green Wave
and issues related to climate change and “green” practices, loss causation issues that can prevent
class
Related Disclosure
Issues certification in securities cases, and when “secondary actors” face liability under Section 10(b) of
9the Securities Exchange Act of
1934.
Using “Loss Causation” to
Defeat Class Certification Our practice group, with members in the U.S., Asia, and Europe, hopes you find these articles
in a Section 10(b)
Case informative. Thanks for reading.
10
Section 10(b) and Rule
10b-5: The U.S. Courts of Don’t Get Hit by the Fallout from the Credit Crisis:
Appeals Apply Different Top Tips for Reducing Securities Litigation Risk
Legal Tests for
Assessing
the Primary Liability of By Terri Garland and Brian L. Levine
Secondary Actors
Since early 2007, an unprecedented wave of securities litigation arising from the credit crisis has
rolled through the courts. Initially, the cases focused on financial institutions, attacking them for
their alleged role in creating the crisis. In late 2008, however, plaintiffs expanded their targets to
include tech companies, energy companies, and other businesses. In these cases, plaintiffs typi-
cally claim that companies failed to disclose their vulnerability to the credit crisis. For example,
plaintiffs have sued NextWave Wireless, a San Diego communications company, and Perrigo, a
Michigan pharmaceutical manufacturer, for allegedly failing to disclose risks associated with their
investment in auction rate securities. Similarly, plaintiffs have sued companies that have suffered
from the turmoil in commodities markets and exchange rates, such as Pilgrim’s Pride, which
reported losses arising from hedging corn prices, and Aracruz Cellulose, which announced
losses
on currency
hedges. Continued on Page
2
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