Second Circuit Holds that Stock Price Recovery Soon After Drop Does Not Negate Inference of Economic Loss and Loss Causation at the Pleading Stage
In a securities fraud action, the Second Circuit Court of Appeals recently held that “the fact that the price of the stock recovered soon after the price dropped does not negate an inference of economic loss and loss causation at the pleading stage.” Acticon AG v. China North East Petroleum Holdings Ltd., 692 F.3d 34 (2d.Cir. 2012). Therefore, the Second Circuit reversed the district court’s grant of a motion to dismiss for failure to adequately plead economic loss and loss causation. This ruling will likely make it more difficult for defendants in a securities class action to obtain an early dismissal.
The Second Circuit Rules that a Plaintiff Has Standing to Assert Claims on Behalf of a Putative Class Who Acquired Securities from Offerings from which the Plaintiff Did Not, if the Conduct Complained of Implicates the "Same Set of Concerns"
In NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2nd Cir. 2012), the Second Circuit Court of Appeals ruled that a plaintiff who acquired securities from only two of 17 offerings issued by defendants nevertheless has standing to assert claims on behalf of a putative class of those who acquired securities from all 17 offerings, so long as: (1) the plaintiff alleges that it has personally suffered an actual injury as a result of alleged illegal conduct by a defendant, and (2) that such conduct implicates "the same set of concerns" as the conduct alleged to have caused injury to other members of the putative class.
Lender Liability Counterclaims in Foreclosure Lawsuits
The recent economic crisis has resulted in an increase in foreclosure lawsuits by lenders. While such foreclosure lawsuits may appear to be simple court filings to collect debts that are undisputedly owed, they may result in lender liability counterclaims against lenders. Many such counterclaims are meritless and are brought solely to try to avoid or mitigate the debts. But some counterclaims can expose lenders to significant defense costs and potential liability.