The company logo of the Bank of America and Merrill Lynch is displayed at its office in Hong Kong March 8, 2013.
Credit: Reuters/Bobby YipView the original article here
A Moody's sign is displayed on 7 World Trade Center, the company's corporate headquarters in New York, February 6, 2013.
Credit: Reuters/Brendan McDermidBy Jonathan StempelNEW YORK | Fri Aug 23, 2013 6:25pm EDT
NEW YORK (Reuters) - Moody's Corp and its Chief Executive Raymond McDaniel won the dismissal of a lawsuit accusing the parent of Moody's Investors Service of defrauding shareholders by making false statements about the independence and objectivity of its credit ratings.
In a decision made public on Friday, U.S. District Judge George Daniels in Manhattan said the shareholders failed to show a sufficient link between the alleged misstatements and declines in Moody's share price.
The lawsuit by the Teamsters Local 282 Pension Trust Fund of Lake Success, New York and two individuals, Charles McCurley and Lewis Wetstein, concerned alleged conflicts of interest in Moody's "issuer-pays" model, where debt issuers pay for ratings.
First brought in 2007, the lawsuit accused Moody's of inflating its share price by having made statements in its code of conduct, regulatory filings and to the press that concealed conflicts in how it rated structured finance securities.
It said a series of events brought these conflicts to light, and hurt Moody's share price.
These events allegedly included an August 2007 statement by Alabama Sen. Richard Shelby that rating agencies deserve some blame for the U.S. housing crisis, and Moody's October 2007 release of quarterly results and a subsequent analyst downgrade.
They also allegedly included a May 2008 article about Moody's failure to correct a known computer glitch that led to false ratings on complex European debt products known as constant proportion debt obligations.
Daniels, however, concluded that none of these events was linked closely enough with alleged misstatements about Moody's ratings independence to justify a securities fraud claim.
"Plaintiffs fail to establish a connection between the loss-causing events and the actual share price declines as required to survive summary judgment with respect to loss causation," Daniels wrote.
Ira Press, a lawyer for the plaintiffs, did not immediately respond to requests for comment.
Moody's spokesman Michael Adler said the New York-based company is pleased with the court's decision.
The case is unrelated to lawsuits brought in February by the U.S. government and many states accusing McGraw Hill Financial Inc's Standard & Poor's of misleading investors by inflating its credit ratings. S&P has denied wrongdoing.
The case is In re: Moody's Corp Securities Litigation, U.S. District Court, Southern District of New York, No. 07-08375.
(Reporting by Jonathan Stempel in New York; Editing by Carol Bishopric)
View the original article here
A Moody's sign is displayed on 7 World Trade Center, the company's corporate headquarters in New York, February 6, 2013.
Credit: Reuters/Brendan McDermidBy Jonathan StempelNEW YORK | Fri Aug 23, 2013 6:25pm EDT
NEW YORK (Reuters) - Moody's Corp and its Chief Executive Raymond McDaniel won the dismissal of a lawsuit accusing the parent of Moody's Investors Service of defrauding shareholders by making false statements about the independence and objectivity of its credit ratings.
In a decision made public on Friday, U.S. District Judge George Daniels in Manhattan said the shareholders failed to show a sufficient link between the alleged misstatements and declines in Moody's share price.
The lawsuit by the Teamsters Local 282 Pension Trust Fund of Lake Success, New York and two individuals, Charles McCurley and Lewis Wetstein, concerned alleged conflicts of interest in Moody's "issuer-pays" model, where debt issuers pay for ratings.
First brought in 2007, the lawsuit accused Moody's of inflating its share price by having made statements in its code of conduct, regulatory filings and to the press that concealed conflicts in how it rated structured finance securities.
It said a series of events brought these conflicts to light, and hurt Moody's share price.
These events allegedly included an August 2007 statement by Alabama Sen. Richard Shelby that rating agencies deserve some blame for the U.S. housing crisis, and Moody's October 2007 release of quarterly results and a subsequent analyst downgrade.
They also allegedly included a May 2008 article about Moody's failure to correct a known computer glitch that led to false ratings on complex European debt products known as constant proportion debt obligations.
Daniels, however, concluded that none of these events was linked closely enough with alleged misstatements about Moody's ratings independence to justify a securities fraud claim.
"Plaintiffs fail to establish a connection between the loss-causing events and the actual share price declines as required to survive summary judgment with respect to loss causation," Daniels wrote.
Ira Press, a lawyer for the plaintiffs, did not immediately respond to requests for comment.
Moody's spokesman Michael Adler said the New York-based company is pleased with the court's decision.
The case is unrelated to lawsuits brought in February by the U.S. government and many states accusing McGraw Hill Financial Inc's Standard & Poor's of misleading investors by inflating its credit ratings. S&P has denied wrongdoing.
The case is In re: Moody's Corp Securities Litigation, U.S. District Court, Southern District of New York, No. 07-08375.
(Reporting by Jonathan Stempel in New York; Editing by Carol Bishopric)
View the original article here
A Moody's sign is displayed on 7 World Trade Center, the company's corporate headquarters in New York, February 6, 2013.
Credit: Reuters/Brendan McDermidBy Jonathan StempelNEW YORK | Fri Aug 23, 2013 6:25pm EDT
NEW YORK (Reuters) - Moody's Corp and its Chief Executive Raymond McDaniel won the dismissal of a lawsuit accusing the parent of Moody's Investors Service of defrauding shareholders by making false statements about the independence and objectivity of its credit ratings.
In a decision made public on Friday, U.S. District Judge George Daniels in Manhattan said the shareholders failed to show a sufficient link between the alleged misstatements and declines in Moody's share price.
The lawsuit by the Teamsters Local 282 Pension Trust Fund of Lake Success, New York and two individuals, Charles McCurley and Lewis Wetstein, concerned alleged conflicts of interest in Moody's "issuer-pays" model, where debt issuers pay for ratings.
First brought in 2007, the lawsuit accused Moody's of inflating its share price by having made statements in its code of conduct, regulatory filings and to the press that concealed conflicts in how it rated structured finance securities.
It said a series of events brought these conflicts to light, and hurt Moody's share price.
These events allegedly included an August 2007 statement by Alabama Sen. Richard Shelby that rating agencies deserve some blame for the U.S. housing crisis, and Moody's October 2007 release of quarterly results and a subsequent analyst downgrade.
They also allegedly included a May 2008 article about Moody's failure to correct a known computer glitch that led to false ratings on complex European debt products known as constant proportion debt obligations.
Daniels, however, concluded that none of these events was linked closely enough with alleged misstatements about Moody's ratings independence to justify a securities fraud claim.
"Plaintiffs fail to establish a connection between the loss-causing events and the actual share price declines as required to survive summary judgment with respect to loss causation," Daniels wrote.
Ira Press, a lawyer for the plaintiffs, did not immediately respond to requests for comment.
Moody's spokesman Michael Adler said the New York-based company is pleased with the court's decision.
The case is unrelated to lawsuits brought in February by the U.S. government and many states accusing McGraw Hill Financial Inc's Standard & Poor's of misleading investors by inflating its credit ratings. S&P has denied wrongdoing.
The case is In re: Moody's Corp Securities Litigation, U.S. District Court, Southern District of New York, No. 07-08375.
(Reporting by Jonathan Stempel in New York; Editing by Carol Bishopric)
View the original article here
n">(Reuters) - Diamond Foods Inc (DMND.O) will pay about $96 million to settle a lawsuit related to the restatement of its results after an accounting scandal rocked the maker of Emerald Nuts and Kettle Chips last year.
Shares of the company, which also forecast higher-than-expected fourth-quarter sales, rose as much as 20 percent in morning trading on the settlement of the class action lawsuit.
Diamond said it will pay $11 million in cash and issue 4.45 million common shares to a fund to settle the lawsuit against the company and two of its former officers.
According to court documents, the settlement amount, subject to court approval, represents about 25-40 percent of what the lead plaintiffs saw as the maximum damages theoretically recoverable in this case.
Diamond has been trying to get past the scandal that claimed the jobs of its two top executives and caused its planned purchase of Pringles from Proctor & Gamble (PG.N) to fall apart.
The scandal, involving improper accounting of payments to walnut farmers, also led to the restatement that wiped out $56.5 million in profit from fiscal 2010 and 2011.
The company said on Wednesday it denies any wrongdoing related to the claims, which were made on behalf of investors who acquired Diamond stock between October 5, 2010 and February 8, 2012.
Diamond also forecast sales of $196 million to $201 million in the fourth quarter.
Analysts on average were expecting sales of $187.4 million, according to Thomson Reuters I/B/E/S.
The company's shares, which have risen about 40 percent this year, were up 16 percent at $22.27 on Wednesday on the Nasdaq.
The case is Re Diamond Foods Securities Litigation, case number 3:11-cv-05386, in the U.S. District Court for the Northern District of California.
(Reporting by Chris Peters in Bangalore)
View the original article here
n">(Reuters) - Diamond Foods Inc (DMND.O) will pay about $96 million to settle a lawsuit related to the restatement of its results after an accounting scandal rocked the maker of Emerald Nuts and Kettle Chips last year.
Shares of the company, which also forecast higher-than-expected fourth-quarter sales, rose as much as 20 percent in morning trading on the settlement of the class action lawsuit.
Diamond said it will pay $11 million in cash and issue 4.45 million common shares to a fund to settle the lawsuit against the company and two of its former officers.
According to court documents, the settlement amount, subject to court approval, represents about 25-40 percent of what the lead plaintiffs saw as the maximum damages theoretically recoverable in this case.
Diamond has been trying to get past the scandal that claimed the jobs of its two top executives and caused its planned purchase of Pringles from Proctor & Gamble (PG.N) to fall apart.
The scandal, involving improper accounting of payments to walnut farmers, also led to the restatement that wiped out $56.5 million in profit from fiscal 2010 and 2011.
The company said on Wednesday it denies any wrongdoing related to the claims, which were made on behalf of investors who acquired Diamond stock between October 5, 2010 and February 8, 2012.
Diamond also forecast sales of $196 million to $201 million in the fourth quarter.
Analysts on average were expecting sales of $187.4 million, according to Thomson Reuters I/B/E/S.
The company's shares, which have risen about 40 percent this year, were up 16 percent at $22.27 on Wednesday on the Nasdaq.
The case is Re Diamond Foods Securities Litigation, case number 3:11-cv-05386, in the U.S. District Court for the Northern District of California.
(Reporting by Chris Peters in Bangalore)
View the original article here
Wed Aug 21, 2013 12:01pm EDT
n">(Reuters) - Netflix Inc shareholders failed to persuade a federal judge to order the dominant U.S. video rental and streaming company to pay damages for misleading them about business prospects for its streaming operations.
U.S. District Judge Samuel Conti in San Francisco dismissed a lawsuit by shareholders led by the Arkansas Teacher Retirement System and State-Boston Retirement System on Tuesday, saying they failed to fix shortcomings in an earlier version of the suit he dismissed in February.
He said shareholders did not deserve a third chance to pursue the lawsuit, which began in January 2012, soon after Netflix suffered heavy subscriber losses, and its share price plunge.
"All of plaintiffs' allegations - new and old - depend on the tenuous theory that defendants withheld discrete and accurate financial information about streaming while also touting streaming's profitability," Conti wrote. "The court has not found this to be the case."
Stephen Tountas, a partner at Labaton Sucharow for the plaintiffs, did not immediately respond to requests for comment.
Shareholders accused Netflix of misleading them about pricing trends and the relative profitability of its streaming and DVD businesses, while insiders like Chief Executive Reed Hastings sold millions of dollars in company stock.
Netflix's share price fell 76 percent from early July to late October 2011 as the company lost 800,000 U.S. subscribers, set plans to spin off its DVD business, then quickly abandoned the idea.
Much of the decline stemmed from Hastings' decision to scrap a plan that let subscribers stream movies and receive DVDs for $9.99 per month, and instead offer separate streaming- and DVD-only subscriptions for $7.99 per month each.
Netflix later said it acted too quickly and did not explain the issue of rising costs to obtain streaming content well enough.
To keep their case alive, the shareholders cited several new statements from Hastings, other defendants and a confidential witness who they said showed Netflix knew streaming would be less profitable than advertised.
But the judge said statements such as Hastings' assertion in December 2010 that "there is no risk of a big negative thing happening to Netflix" did not support a securities fraud claim.
"Defendants made clear throughout the class period that the success of a streaming-focused business model was contingent on other factors, primarily the growth and retention of Netflix's subscriber base," he said.
Netflix reported more than 37 million streaming customers at the end of June.
Its share price has roughly tripled this year, helped by subscriber growth and its original programs, such as "Arrested Development" and "House of Cards," which last month won 14 Emmy nominations.
Netflix shares fell nearly 2 percent to $268.30 on Wednesday.
Joris Evers, a Netflix spokesman, said the company was pleased with Conti's decision.
The case is In re: Netflix Inc Securities Litigation, U.S. District Court, Northern District of California, No. 12-00225.
(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe)
View the original article here
n">(Reuters) - Diamond Foods Inc (DMND.O) will pay about $96 million to settle a lawsuit related to the restatement of its results after an accounting scandal rocked the maker of Emerald Nuts and Kettle Chips last year.
Shares of the company, which also forecast higher-than-expected fourth-quarter sales, rose as much as 20 percent in morning trading on the settlement of the class action lawsuit.
Diamond said it will pay $11 million in cash and issue 4.45 million common shares to a fund to settle the lawsuit against the company and two of its former officers.
According to court documents, the settlement amount, subject to court approval, represents about 25-40 percent of what the lead plaintiffs saw as the maximum damages theoretically recoverable in this case.
Diamond has been trying to get past the scandal that claimed the jobs of its two top executives and caused its planned purchase of Pringles from Proctor & Gamble (PG.N) to fall apart.
The scandal, involving improper accounting of payments to walnut farmers, also led to the restatement that wiped out $56.5 million in profit from fiscal 2010 and 2011.
The company said on Wednesday it denies any wrongdoing related to the claims, which were made on behalf of investors who acquired Diamond stock between October 5, 2010 and February 8, 2012.
Diamond also forecast sales of $196 million to $201 million in the fourth quarter.
Analysts on average were expecting sales of $187.4 million, according to Thomson Reuters I/B/E/S.
The company's shares, which have risen about 40 percent this year, were up 16 percent at $22.27 on Wednesday on the Nasdaq.
The case is Re Diamond Foods Securities Litigation, case number 3:11-cv-05386, in the U.S. District Court for the Northern District of California.
(Reporting by Chris Peters in Bangalore)
View the original article here
Wed Aug 21, 2013 12:01pm EDT
n">(Reuters) - Netflix Inc shareholders failed to persuade a federal judge to order the dominant U.S. video rental and streaming company to pay damages for misleading them about business prospects for its streaming operations.
U.S. District Judge Samuel Conti in San Francisco dismissed a lawsuit by shareholders led by the Arkansas Teacher Retirement System and State-Boston Retirement System on Tuesday, saying they failed to fix shortcomings in an earlier version of the suit he dismissed in February.
He said shareholders did not deserve a third chance to pursue the lawsuit, which began in January 2012, soon after Netflix suffered heavy subscriber losses, and its share price plunge.
"All of plaintiffs' allegations - new and old - depend on the tenuous theory that defendants withheld discrete and accurate financial information about streaming while also touting streaming's profitability," Conti wrote. "The court has not found this to be the case."
Stephen Tountas, a partner at Labaton Sucharow for the plaintiffs, did not immediately respond to requests for comment.
Shareholders accused Netflix of misleading them about pricing trends and the relative profitability of its streaming and DVD businesses, while insiders like Chief Executive Reed Hastings sold millions of dollars in company stock.
Netflix's share price fell 76 percent from early July to late October 2011 as the company lost 800,000 U.S. subscribers, set plans to spin off its DVD business, then quickly abandoned the idea.
Much of the decline stemmed from Hastings' decision to scrap a plan that let subscribers stream movies and receive DVDs for $9.99 per month, and instead offer separate streaming- and DVD-only subscriptions for $7.99 per month each.
Netflix later said it acted too quickly and did not explain the issue of rising costs to obtain streaming content well enough.
To keep their case alive, the shareholders cited several new statements from Hastings, other defendants and a confidential witness who they said showed Netflix knew streaming would be less profitable than advertised.
But the judge said statements such as Hastings' assertion in December 2010 that "there is no risk of a big negative thing happening to Netflix" did not support a securities fraud claim.
"Defendants made clear throughout the class period that the success of a streaming-focused business model was contingent on other factors, primarily the growth and retention of Netflix's subscriber base," he said.
Netflix reported more than 37 million streaming customers at the end of June.
Its share price has roughly tripled this year, helped by subscriber growth and its original programs, such as "Arrested Development" and "House of Cards," which last month won 14 Emmy nominations.
Netflix shares fell nearly 2 percent to $268.30 on Wednesday.
Joris Evers, a Netflix spokesman, said the company was pleased with Conti's decision.
The case is In re: Netflix Inc Securities Litigation, U.S. District Court, Northern District of California, No. 12-00225.
(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe)
View the original article here
Fri Aug 16, 2013 8:06am EDT
n">(Reuters) - Activist investor Carl Icahn will ask a Delaware court on Friday to fast-track his lawsuit against Dell Inc (DELL.O), a key thrust in his months-long effort to derail CEO Michael Dell's controversial $24.8 billion offer to buy and take private the No. 3 PC maker.
Icahn is trying to accelerate the timeframe on his lawsuit, hoping to head off a September 12 special shareholders' vote on a takeover proposal that the hedge fund billionaire and other major investors argue severely undervalues the company.
The conflict adds more uncertainty to a company that once ruled the global PC market, but is now trying to move into the relatively unfamiliar field of enterprise computing services as mobile devices pummel sales of computers and laptops.
Icahn, who wants to install his own directors on the board and oust the founding CEO, argues that Dell Inc and a special committee overseeing the takeover are short-changing investors.
Dell marks the latest board skirmish for the 77-year old New York investor, who specializes in buying stakes in companies in flux and agitating for change. He has recently had run-ins with management at Biogen (BIIB.O) and Transocean Ltd (RIG.N).
Icahn holds 8.9 percent of Dell Inc, making him the second-largest shareholder behind Michael Dell, with about 16 percent. He wants the company to convene an annual general meeting at the same time it convenes the special vote, since it guarantees a best and final offer from the CEO and his partner, Silver Lake.
That would also delay the special vote, buying Icahn time to nominate his own slate of board directors before a shareholder decision on the buyout offer is taken.
On its part, Dell argues its special committee has done everything it can to safeguard shareholders' interests, and has said the decision to hold the annual general meeting on October 17 means it will occur swiftly after the special vote.
Meanwhile, the company's fundamentals continue to deteriorate. On Thursday, it reported a 72 percent plunge in second-quarter earnings, reflecting the worsening plight of its PC business as well as the questions surrounding its future as a public company.
PLATONIC GUARDIANS?
Icahn's legal team said in court papers that the question before the court is "whether our law will allow these directors to act as Platonic guardians, repeatedly refusing to take 'no' for an answer on the merger, stacking the cards in its favor and deliberately postponing the annual meeting."
Icahn also wants Dell Inc to reverse its decision to nullify abstentions from the buyout offer's vote count, reverting to treating them as opposing votes. Such a move is negative for the CEO's camp, which estimates almost a quarter of eligible shares will abstain from voting.
Friday's courtroom drama is a facet of a months-long battle waged between Michael Dell, who wants to overhaul the company he created in college in 1984 away from the investor spotlight, and major shareholders like Southeastern Asset Management who want a higher price.
The CEO and Silver Lake have already sweetened their offer. On August 2, they delivered what they called their final offer, a special dividend of 13 cents a share on top of a 10-cent increase in the sale price to $13.75 per share, worth $24.8 billion in all.
Leo Strine, the judge on the case, has already considered requests to expedite class actions over the Dell buyout. In a hearing on June 19, he found the board had done enough to protect shareholders. But things have changed since, including the decision not to take abstentions into account.
Strine had cited that as a protection for shareholders.
Also, Dell has now gone 13 months without an annual meeting, which under Delaware law gives shareholders a right to sue to force a meeting. That gave Icahn the opening to ask Strine to move the two meetings to the same day.
(Editing by Edwin Chan, Bill Rigby and Bernard Orr)
View the original article here
Fri Aug 16, 2013 8:06am EDT
n">(Reuters) - Activist investor Carl Icahn will ask a Delaware court on Friday to fast-track his lawsuit against Dell Inc (DELL.O), a key thrust in his months-long effort to derail CEO Michael Dell's controversial $24.8 billion offer to buy and take private the No. 3 PC maker.
Icahn is trying to accelerate the timeframe on his lawsuit, hoping to head off a September 12 special shareholders' vote on a takeover proposal that the hedge fund billionaire and other major investors argue severely undervalues the company.
The conflict adds more uncertainty to a company that once ruled the global PC market, but is now trying to move into the relatively unfamiliar field of enterprise computing services as mobile devices pummel sales of computers and laptops.
Icahn, who wants to install his own directors on the board and oust the founding CEO, argues that Dell Inc and a special committee overseeing the takeover are short-changing investors.
Dell marks the latest board skirmish for the 77-year old New York investor, who specializes in buying stakes in companies in flux and agitating for change. He has recently had run-ins with management at Biogen (BIIB.O) and Transocean Ltd (RIG.N).
Icahn holds 8.9 percent of Dell Inc, making him the second-largest shareholder behind Michael Dell, with about 16 percent. He wants the company to convene an annual general meeting at the same time it convenes the special vote, since it guarantees a best and final offer from the CEO and his partner, Silver Lake.
That would also delay the special vote, buying Icahn time to nominate his own slate of board directors before a shareholder decision on the buyout offer is taken.
On its part, Dell argues its special committee has done everything it can to safeguard shareholders' interests, and has said the decision to hold the annual general meeting on October 17 means it will occur swiftly after the special vote.
Meanwhile, the company's fundamentals continue to deteriorate. On Thursday, it reported a 72 percent plunge in second-quarter earnings, reflecting the worsening plight of its PC business as well as the questions surrounding its future as a public company.
PLATONIC GUARDIANS?
Icahn's legal team said in court papers that the question before the court is "whether our law will allow these directors to act as Platonic guardians, repeatedly refusing to take 'no' for an answer on the merger, stacking the cards in its favor and deliberately postponing the annual meeting."
Icahn also wants Dell Inc to reverse its decision to nullify abstentions from the buyout offer's vote count, reverting to treating them as opposing votes. Such a move is negative for the CEO's camp, which estimates almost a quarter of eligible shares will abstain from voting.
Friday's courtroom drama is a facet of a months-long battle waged between Michael Dell, who wants to overhaul the company he created in college in 1984 away from the investor spotlight, and major shareholders like Southeastern Asset Management who want a higher price.
The CEO and Silver Lake have already sweetened their offer. On August 2, they delivered what they called their final offer, a special dividend of 13 cents a share on top of a 10-cent increase in the sale price to $13.75 per share, worth $24.8 billion in all.
Leo Strine, the judge on the case, has already considered requests to expedite class actions over the Dell buyout. In a hearing on June 19, he found the board had done enough to protect shareholders. But things have changed since, including the decision not to take abstentions into account.
Strine had cited that as a protection for shareholders.
Also, Dell has now gone 13 months without an annual meeting, which under Delaware law gives shareholders a right to sue to force a meeting. That gave Icahn the opening to ask Strine to move the two meetings to the same day.
(Editing by Edwin Chan, Bill Rigby and Bernard Orr)
View the original article here
Judge Thomas Wheeler of the U.S. Court of Federal Claims rejected the government's effort to keep Bernanke from being deposed, saying the Fed chairman was a "central figure" in the decision to bail out AIG.
"Indeed, the court cannot fathom having to decide this multi-billion dollar claim without the testimony of such a key government decision maker," Wheeler wrote. "These facts constitute 'extraordinary circumstances' for the taking of Mr. Bernanke's deposition."
Greenberg's Starr International Co, which once had a 12 percent stake in AIG, is suing over the government's taking of a 79.9 percent stake in the insurer in September 2008 and a separate 1-for-20 reverse stock split in June 2009.
(Reporting by Jonathan Stempel in New York; Editing by Gerald E. McCormick)
