Journal Title

SMU Law Review

Volume

64

Issue

1

First Page

535

Document Type

Article

Publication Information

2011

Abstract

Securities law opinions under Texas law during this period can be divided into two groups. The first group deals with various fraudulent schemes targeted by the Board. The "free lunch" scam, aimed at senior investors, surfaced in Head v. State where the scammer lost the appeal because the evidence clearly confirmed his failure to inform investors. In Navarro v. Grant Thornton, LLP investors failed in their aiding and abetting lawsuit against the accountants because, absent contact between the accountants and investors, the accountants had no duty to whistleblow to regulators or investors.

The second group involves incompetent lawyers. In S&D Trading Academy, LLC v. AAFIS, Inc., an unregistered investment advisor failed to collect unpaid fees because it did not fit the teacher exception for its day-trading instruction. In Arkoma Basin Project Limited Partnership v. West Fork Energy Company LLC, natural gas producers escaped liability for failing to meet certain projections, although they satisfied the early stages of their projections. In Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, a bank did not misrepresent the quality of mortgages in mortgage backed securities when it stated in the offering materials that it would repurchase the offending mortgages, or substitute qualifying mortgages.

The Fifth Circuit dealt with loss causation and misappropriation theory. In Archdiocese of Milwaukee Supporting Fund, Inc. v. Halliburton Co., that court confirmed its requirement that class-action plaintiffs must show loss causation at the class certification stage before using the fraud-on-the-market rebuttable presumption. Conflicting holdings from other circuits means this case will continue to foster interest. In SEC v. Cuban, the Fifth Circuit reinstated an insider trading case by determining the complaint did allege sufficiently that the tippee misled the tipper in order to misappropriate the confidential information used in trading.

Recommended Citation

George Lee Flint, Jr., Texas Annual Survey: Securities Regulation, 64 S.M.U. L. Rev. 535 (2011).

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