Corporate Securities Law Blog

In Kiobel v. Royal Dutch Petroleum Co., Nos. 06-4800-CV, 06-4876-CV, 2010 WL 3611392 (2d Cir. Sept. 17, 2010), the United States Court of Appeals for the Second Circuit dismissed claims by Nigerian citizens against various multinational oil producers under the Alien Tort Statute, 28 U.S.C. § 1350 (“ATS”), alleging that the corporate defendants aided and abetted human rights violations by the Nigerian military. The Court held that the ATS does not provide federal subject matter jurisdiction for claims against corporations. In so holding, the Court reasoned that the scope of liability under the ATS is defined by international law, and that international law does not yet recognize the concept of corporate tort liability.
 

Today, Business Roundtable and the Chamber of Commerce of the United States filed a Petition for Review in the U.S. Court of Appeals for the District of Columbia Circuit challenging the legality of the SEC's recently-adopted proxy access rules (See our blog posts here and here.) The proxy access rules grant shareholders who have held three percent (3%) of the outstanding stock of a company for at least three (3) years the right to include a limited number of director nominees in the company's proxy statement.

Congress recently enacted the "2010 Small Business Jobs Act," which includes an assortment of tax breaks and incentives for small businesses (as well as a few revenue raisers). 

Continue reading for a summary of some of the tax breaks and incentives provided by the act. 

In Iowa Public Employees’ Retirement System v. MF Global, Ltd., No. 09-3919, 2010 WL 3547602 (2d Cir. Sept. 14, 2010), the United States Court of Appeals for the Second Circuit vacated the dismissal of plaintiffs’ securities fraud claims and remanded the case to the district court, holding that the district court applied the “bespeaks caution” doctrine erroneously to statements that contained both present and future elements.  This decision provides guidance as well to the application in the Second Circuit of the safe harbor for forward-looking statements established under the Private Securities Litigation Reform Act of 1995 (the “Reform Act”), 15 U.S.C. § 78u-5.
 

A number of domestic jurisdictions (Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas, Utah and Puerto Rico) have enacted "series LLC" statutes, which provide for the creation of limited liability companies (LLCs) with separate "series."  Although such statutes generally do not treat each series as a separate entity for state law purposes, the association of members with one or more particular series is similar to direct ownership in that series, in that the terms of such members' rights, duties, and powers with respect to such series are specifically identified.  Series LLC statutes also typically provide that the debts, liabilities and obligations of one series generally are enforceable only against the assets of that series and not against assets of other series or of the series LLC.
 

In Malack v. BDO Seidman, LLP, No. 09-4475, 2010 WL 3211088 (3d Cir. Aug. 16, 2010), the United States Court of Appeals for the Third Circuit declined to recognize a presumption of reliance based upon the so-called “fraud-created-the-market” theory to state a claim under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and, consequently, satisfy the predominance requirement of Federal Rule of Civil Procedure 23(b)(3) for certifying a class. In so holding, the Third Circuit followed the Seventh Circuit and the recent trend of federal courts to narrow and limit Section 10(b) liability to its current contours.
 

On September 16, 2010, the SEC's final rules for proxy access were published in the Federal Register.  The proxy access rules are effective 60 days after such publication, and accordingly, will be effective on November 15, 2010.  In order to take advantage of the new proxy access rules, nominating shareholders must file a Schedule 14N with the SEC no earlier than 150 calendar days, and no later than 120 calendar days, before the anniversary of the date that the company mailed its proxy materials for the prior year’s annual meeting. As such, to determine whether the new rules will affect a company’s 2011 proxy season, subtract 120 days from the anniversary of the date the 2010 proxy materials were mailed to shareholders. If the resulting date is on or after November 15, 2010, the new rules will be in effect for the company’s 2011 proxy season, provided the company is not a smaller reporting company or a foreign private issuer. See our blog SEC Adopts Mandatory Proxy Access Rule for Shareholder Director Nominations -- Applicable for 2011 Proxy Season (August 27, 2010) for additional information regarding the new proxy access rules.
 

On August 13, 2010, New York State Governor David Paterson signed into law amendments to New York's Power of Attorney Law (A.8392-C/S.7288-A) (the "2010 Amendments"). The 2010 Amendments become effective September 12, 2010 and will be retroactive to September 1, 2009, the effective date of the prior amendments to the New York State Power of Attorney Law that caused uncertainty and debate among transactional attorneys due to its onerous requirements and absence of a carve out for certain commercial transactions.