(Reuters) – Corporate scandal is like a spot of rot on a piece of fruit: Even if the rot hasn’t ruined the whole apple, you’d rather pick a different one. It’s the downside of corporate branding. One wormhole can make the whole brand seem unappetizing to prospective customers. Or, to put the phenomenon in a real-world context, after news broke that GM failed to recall cars with a potentially deadly flaw in their ignition switch mechanism, sales of GM cars and trucks dipped, even though they weren’t affected by the defect. The GM brand was at least temporarily devalued by the ignition switch scandal.
The Securities and Exchange Commission on Thursday accused the litigation financier RD Legal Capital and its founder, New Jersey lawyer Roni Dersovitz, of deceiving investors in the $170 million fund about where their money was being deployed. By 2015, as The Wall Street Journal was the first to report, Dersovitz’s interrelated funds were heavily concentrated in an anti-terror case accusing Iran of responsibility for the 1983 bombing of Marine barracks in Beirut. But even though more than $100 million of RD Legal’s capital was tied up in the litigation against Iran, according to the SEC order instituting an administrative proceeding against the funds, RD principals allegedly told investors repeatedly that their exposure to the case was limited and that the funds’ primary strategy was buying legal fee receivables in cases that had already been settled.
(Reuters) – The litigation over allegedly defective Chinese-made drywall should be a triumphant emblem of the American tort system.
A stark battle between corporate and public interests is taking place in a courtroom in Bridgeport, Connecticut, where the families of 10 children killed in the 2012 massacre at Sandy Hook Elementary School are suing Remington Arms, the company that makes and sells the semi-automatic weapon used by the killer. The fight is over Remington’s marketing and sales information. Last spring, Connecticut Superior Court Judge Barbara Bellis refused to dismiss the families’ suit, which claims Remington is liable for the children’s deaths because it disregarded the unreasonable risk of entrusting a military-style weapon to civilians and violated Connecticut’s trade practices law. Though Bellis found only that she has jurisdiction to hear the case – rejecting Remington’s argument that the federal Protection of Lawful Commerce in Arms Act deprives her of jurisdiction – she set a trial date and ordered discovery to proceed.
(Reuters) – The reputation of the plaintiffs’ bar – always a vulnerable target for the business lobby – has not been enhanced by long-running litigation stemming from the 2010 BP Deepwater Horizon oil spill. The good work by members of the plaintiffs’ steering committee, who negotiated and subsequently defended one of the biggest private settlements in U.S. history has been overshadowed by accusations against their supposedly less scrupulous colleagues.
(Reuters) – The Securities and Exchange Commission’s three commissioners will vote Wednesday on tweaks to rules governing administrative proceedings before SEC in-house judges, despite complaints from the white-collar defense bar that the proposed rule changes do not resolve the fundamental unfairness of trying enforcement actions before in-house SEC judges.
(Reuters) – Based on the opinion he wrote a year ago, U.S. District Judge Richard Andrews of Wilmington, Delaware, was not bowled over by the work performed by plaintiffs lawyers who reached a shareholder derivative settlement in 2013 with board members of AmerisourceBergen Corporation, or ABC. The settlement agreement — in which ABC agreed to cancel the grant of more than 272,000 stock options, worth about $5 million, to its CEO — said ABC would not oppose a few award of $1 million to Levi & Korsinsky and Farnan. Judge Andrews awarded only $550,000 — and said he would have granted only $250,000 had it not been for ABC’s acquiescence to the higher fee.
(Reuters) – Giant global banks know how to take a hint.
In May, when the 2nd U.S. Circuit Court of Appeals revived antitrust claims by investors in bonds and other financial instruments pegged to the benchmark London Interbank Offered Rate, the appellate judges raised an intriguing possibility. The 2nd Circuit found that the trial judge presiding over consolidated Libor litigation, U.S. District Judge Naomi Reice Buchwald of Manhattan, mistakenly concluded that because the Libor rate-setting process was collaborative, not competitive, investors could not show an antitrust injury. Collusive rate-rigging is on its face a violation of federal antitrust law, according to the 2nd Circuit. Customers who overpaid because of rate manipulation have suffered an antitrust injury.
(Reuters) – Will we ever know exactly why Hillary Clinton used a private email system while she was Secretary of State?
(Reuters) – The U.S. Constitution does not give private citizens the right to own a weapon that automatically sprays multiple rounds of bullets for as long as the trigger is pressed, according to an opinion issued Friday by a three-judge panel of the 5th U.S. Circuit Court of Appeals. The appeals court upheld a 1986 federal law banning possession of machine guns, holding that the Second Amendment, as interpreted by U.S. Supreme Court precedent, doesn’t cover all “ordinary military equipment.”