Posts tagged Sixth Circuit.
The Sixth Circuit this week rejected the "definitively and specifically" standard that had required a Sarbanes-Oxley whistleblower's "reasonable belief" to closely track each element of the legal cause of action for the fraud she reports has occurred. The Circuit instead aligned with more recent authority requiring only a subjective belief that is objectively reasonable, given the whistleblower's training and experience. Sarbanes-Oxley makes it illegal for a public company to retaliate against an employee who reports fraud or assists in investigations or enforcement ...

The US Sixth Circuit last week narrowed its standard for adequately pleading scienter in PSLRA cases using a collective-knowledge theory to impute knowledge to a corporate defendant from among various employees. In Omnicare, the Court limited collective-knowledge scienter by imposing the helpful, but unremarkable, requirement that such a pleading demonstrate a reasonably close connection between the collectively-held-knowledge and the issuance of the misstatement (or decision not to correct a prior omission). In re Omnicare, Inc. Securities Litigation, No. 13-5597 (6th

Posted in: PSLRA

Ruling in a case of first impression, the Sixth Circuit rejected an implied cause of action under Section 36(a) of the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq. Although the Circuits remain split, recent decisions (after 2001) agree on the point. Two pension funds sued an exchange-traded fund (ETF), its investment advisor (IA) and its trust-company-affiliate (BTC), claiming BTC's Lending Agent fee "' 35% of all net revenue on the ETF's securities-lending activity - was excessive. The Court affirmed dismissal of the express Section 36(b) claim for breach of fiduciary ...

Posted in: SEC
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