Last week, Apple announced that "it found irregularities in the way it issued stock option grants." This week, the company announced that two lawsuits have been filed against it and current and former officers and directors regarding stock option grants. That didn't take long, did it? Read Apple Sued Over Stock Options Grants to learn more.
In other securities news coming out of California, the Ninth Circuit has thrown out a securities fraud case against AOL. California Teachers Retirement System v. AOL Time Warner, Inc. is a class action suit alleging a scheme to commit securities fraud by overstating the reported revenues of an Internet company, Homestore.com. Homestore eventually restated its revenues, resulting in a decrease in revenues of more than $170 million and corresponding declines in Homestore’s stock value. The district court dismissed the securities claims. The Ninth Circuit affirmed.
The case tests the scope of the Supreme Court's decision in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., which holds that § 10(b) of the '34 Act does not allow recovery for aiding and abetting liability. The Ninth Circuit, not known for its generosity toward securities plaintiffs, affirmed the decision below. It held: "Although we hold that the scope of § 10(b) includes deceptive conduct in furtherance of a 'scheme to defraud,' when all elements of § 10(b) are otherwise satisfied, we conclude that Plaintiff’s complaint insufficiently alleged that Defendants were primary violators of § 10(b) based on their conduct in the furtherance of the scheme."
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