Corporate Securities Law Blog

Mutual fund companies have traditionally argued that they are exempt from the whistleblower protections of the Sarbanes-Oxley Act (“SOX”) because the funds themselves do not have any employees. Massachusetts District Court Judge Douglas P. Woodlock soundly rejected that argument in a ruling issued March 31 and, in so doing, may have opened the door to a tidal wave of whistleblower suits against mutual fund companies.
 

The new healthcare laws signed by President Obama on March 23rd and 30th, and specifically the Patient Protection and Affordable Care Act (PPACA), includes a significant modification to the "in-office ancillary services" exception of the Stark Law.  Physicians who refer patients for MRI, CT or PET services, to an entity in which the referring physician has a financial interest, including the physician's own office or medical group, must now provide written notice to the patient of the patient's ability to utilize an alternative supplier. Additionally, the notice must include a list of alternative suppliers. This amendment not only applies to referrals to a separate entity, but it also applies to referrals within a group practice. 

All physicians and medical groups that have in-house MRI, CT, or PET imaging services (or that refer to an outside entity in which they have a financial interest) will need to make written financial disclosures to patients to comply with the new law in order to qualify for Medicare reimbursement. Failure to comply could result in civil monetary penalties of $10,000 per medical imaging procedure.

On Thursday, March 18, 2010, President Obama signed into law the “Hiring Incentives to Restore Employment Act” (HR 2847) (the “HIRE Act”). The President’s signature sets the effective date for numerous HIRE Act provisions with an effective date geared to the March 18, 2010 date of enactment.

In In re Omnicom Group, Inc. Securities Litigation, No. 08-0612-CV, 2010 WL 774311 (2d Cir. Mar. 9, 2010), the United States Court of Appeals for the Second Circuit affirmed the district court’s grant of summary judgment dismissing a securities fraud class action for failure to proffer sufficient evidence to support a finding of loss causation.  The Second Circuit held that plaintiffs failed to show that the decline in the issuer’s stock price occurred as a result of a disclosure of new information about the alleged fraud. At most, the investor losses arose from the negative press and investor concerns about possible accounting problems. As the Second Circuit stated, however, an issuer is not responsible under the securities laws for losses arising merely from “investors’ concerns that other unknown problems [are] lurking.
 

Third Thursday Emerging Company Webinars
April 15, 2010
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With the increasing numbers of companies which were once thought to be giants of industry filing for bankruptcy, more opportunities to purchase major assets are becoming available to savvy buyers looking to expand their business or asset base. The Bankruptcy Code provides debtors with the ability to liquidate all or a part of their assets through court-supervised sales and buyers with the ability to obtain those assets at more favorable prices than they would pay if the sale were consummated outside of a bankruptcy.