April 2015

In an opinion Tuesday, Judge Forrest dismissed various class action suits accusing stock exchanges of improperly allowing high-frequency traders to pay to obtain and trade on market data faster than other investors.  The plaintiffs subscribed to market data via subscriber contracts that, in turn, incorporated the terms of standardized market data dissemination “plans.”  Those plans, which the SEC approved, stated the data would be provided on “fair and reasonable terms” that are “not discriminatory” (or used similar language). Judge Forrest ruled that the claims were preempted by the detailed federal statutory and regulatory regime governing stock exchanges:
Continue Reading Judge Forrest: “Flash Boys” Suit Against Exchanges is Preempted by Federal Law

In an opinion Friday, Judge Scheindlin largely denied Barclays’ motion to dismiss a securities fraud class action alleging that Barclays misled investors about its anonymous trading platform, or “dark pool,” referred to as “LX.”  At the outset, Judge Scheindlin found it appropriate for the plaintiffs to have borrowed substantially from the New York Attorney General’s

In an opinion today, Judge Furman ruled that a male student, who was suspended from Columbia University for sexual assault, did not allege facts sufficient to go forward with his gender discrimination suit against the school.  The plaintiff alleged that the school’s disciplinary process was unfair and came to the wrong conclusion, but Judge Furman found that he failed “to establish gender as a plausible motivating factor behind the investigation and ultimate punishment”:
Continue Reading Judge Furman Dismisses Gender Discrimination Suit by Male Student Suspended from Columbia for Sexual Assault

In an opinion today, Judge Berman denied a motion to enjoin an SEC administrative enforcement proceeding.  The proceeding was challenged on the ground that SEC administrative law judges are too insulated from executive oversight for purposes Article II of the Constitution, as interpreted by the Supreme Court in Free Enterprise Fund v. Pub. Co. Accounting Oversight Ed., 561 U.S. 477 (2010). Judge Berman agreed with the plaintiff on a threshold procedural point:  he ruled that the issues could be raised in district court, as opposed to raising them exclusively in the administrative proceeding itself (or on direct appeal to the Court of Appeals), because, absent a collateral challenge, the plaintiff would endure the very proceeding she was trying to block.  As Judge Berman observed: “The American Heritage New Dictionary of Cultural Literacy, 3d. Ed. (2005), defines the colloquial expression ‘you can’t unscramble an egg’ to mean ‘some processes are irreversible.’” But Judge Berman found the plaintiff was unlikely to succeed on the merits because he found that SEC ALJs’ insulation from removal was appropriate, given their adjudicatory (rather than policymaking) functions:
Continue Reading Judge Berman Refuses to Block SEC ALJ Proceeding; Finds ALJ Tenure Protections Likely Constitutional

In an opinion yesterday, Judge Rakoff denied a motion to dismiss an SEC complaint against two individuals who traded stocks after learning about an impending acquisition from a co-worker, Thomas Conradt, who, in turn, learned the information from his roommate Trent Martin.  The opinion begins by acknowledging the “difficulties” with having insider trading defined by case law instead of by statute:
Continue Reading Judge Rakoff, Acknowledging “Difficulties” In Defining Insider Trading, Upholds SEC Complaint Notwithstanding Newman Decision

In an opinion yesterday, Judge Presksa granted judgment to the creator of a play called “3C” that parodies the 70’s TV show “Three’s Company.”  She found that the play fell within the bounds of “fair use” because (among other reasons) it was “transformative”:
Continue Reading Judge Preska Rejects Copyright Challenge to Play Parodying “Three’s Company”