Fluvanna County, VA Can Sue Over Bond Offering Advice, Says Supreme Court of Virginia
Virginia’s highest court has reinstated a securities fraud lawsuit filed by Fluvanna County, Virginia Board of Supervisors against Davenport & Co. The county claims that the investment concern gave it faulty bond offering advice about the building of a new high school.
The Board said that it depended on this investment advice when deciding to put out standalone bonds that caused it to incur $18 million in excess payments. It then sued Davenport in circuit court, making numerous contentions, including breach of fiduciary duty, gross negligence, and Virginia securities law violations. That court ‘sustained the demurrer with prejudice’ and would not let the board make amendments to pleadings. It said that the separation of powers doctrine won’t let the court resolve the securities case because then it would have to look into the Board’s motives. The latter then appealed.
Now, the Supreme Court of Virginia has waived its common law legislative immunity from civil liability, saying that board of supervisor members/legislatures of a municipality are not within the scope of state and federal Constitutional legislative immunity, and it is allowing the securities case to go forward.
Plaintiff Sues Her Brother for New York Securities Fraud
The U.S. District Court for the Southern District of New York says that plaintiff Judy Soley’s breach of fiduciary claim against her brother, Peter Wasserman, can be tried in front of a jury. Wasserman served as Soley’s financial adviser. He had tried to strike the jury demand from Soley’s New York securities fraud lawsuit. She is accusing him of mishandling her money.
The court found that the breach of fiduciary claim is legal and can get a jury trial. However, Judge Kimba Wood said that the nature of Soley’s claim for an accounting is equitable and has to be tried in court. Soley wants compensatory damages, not restitution.
Ruling That Investment Bank’s Offer to Buy Minority Shares Triggered Company’s First Refusal Rights Is Affirmed
The Pennsylvania Superior Court has decided that investment banking concern Insight’s offer to buy plaintiff TeleTracking Technologies Inc.’s minor stock was bona fide and did trigger the latter’s right of first refusal. This means that the healthcare technology concern did get the right to purchase the interest of the minority shareholders on the same terms under which Insight was willing to buy the stock.
That right is noted under a 1999 shareholder agreement. (TeleTracking Technologies is a privately held corporation. The minority had about 27% of the stock.) In March 2011, the minority shareholders told the company that Insight had agreed to by the minority stock for $37.35 million and that $16,805,762 had been put in an escrow account.
TeleTracking then submitted an action seeking a declaration that its duty to match Insight’s offer for the stock wasn’t activated under the agreement. It contended that the investment concern’s offer wasn’t bona fide and that it would not be able to buy the shares under the conditions and terms that Insight had set in its offer. The trial court, however, said the offer was bona fide and that the company’s matching rights had been triggered. The state’s Superior Court affirmed, noting that, per “pertinent precedent,” additional limits could not be imposed on the ability of the minority shareholders to sell their stock.
Soley v. Wasserman (PDF)
Pa. Court: Offer for Minority Shares Triggered Company’s First Refusal Rights, Bloomberg/BNA, April 15, 2013
More Blog Posts:
Three Cedar Brook Financial Partners Brokers’ Licenses Are Suspended Over Allegedly False & Misleading Statements About Subprime Mortgage-Backed Security IMH Fund and Medical Capital Holdings Inc., Stockbroker Fraud BLog, April 24, 2013
The 11th Circuit Revives SEC Fraud Lawsuit Against Morgan Keegan Over Auction-Rate Securities, Institutional Investor Securities Blog, May 8, 2012
Oppenheimer & Co. Must Buyback $6M in Auction-Rate Securities from Investor, Says FINRA Arbitration Panel, Institutional Investor Securities Blog, January 11, 2012