1. Securities Litigation Update March 15, 2012 Presented to: Securities Subsection Colorado Bar Association Tamara Hoffbuhr-Seelman Fairfield and Woods, P.C. 1700 Lincoln Street, Suite 2400 Denver, CO 80203 303.894-4406 www.fwlaw.com

2. Application of Janus: Background Janus Capital Group Inc. v. First Derivative Traders, 131 S.Ct. 2296 (2011)  Redefines “makers” of untrue statements under Rule 10b-5(b) as those with ultimate authority.  One who prepares and publishes a statement on behalf of another is not its “maker”.

3. Application of Janus: Recent cases  Argument by corporate officers that company is “maker” rejected  In re Merck, 2011 WL 3444199 (D.N.J. Aug. 8, 2011)  SEC v. Das, 2011 WL 4375787 (D. Neb. Sep. 20, 2011)  SEC v. Daifotis, 2011 WL 3295139 (Cal. Aug. 1, 2011)  Local 703 v. Regions, 2011 U.S. Dist. LEXIS 93873 (N.D. Ala. Aug. 23, 2011)  S.Dist. NY split on whether parent may be liable for statements made by subsidiary  Roseville v. Energy Solutions, 2011 WL 4527328 (S.D.N.Y. Sept. 30, 2011) Judge Koeltl  In re Optimal, 2011 WL S.D.N.Y Oct. 14, 2011) Judge Scheindlin

4. Application of Janus: Expansion beyond 10b-5(b) Courts split over expansion to other sections  N.D. of CA in refusing to dismiss §17(a) and §34(b) claims, “Janus was not a touchstone to change myriad laws that happen to use the word ‘make’...”  In contrast, S.D. of NY applied Janus to dismiss §17(a) claim. Plaintiffs pleading scheme liability under 10b-5(a) and (c)  At least one court (S.D. of NY) applied Janus to dismiss these claims

5. “Say-on-Pay” Litigation: Last Luncheon Trend of dismissals except for one case based upon Ohio law: Pension Fund v. Cox, No. 1:11-CV-451 WL 4383368 (S.D. Ohio Sept. 20, 2011)

6. “Say on Pay” Litigation: Update  Two more cases dismissed for failure to plead demand futility  PA state court denied motion to dismiss without explanation, Schatz v. Redling No. 11-24985 LEXIS (Feb. 13, 2012)  N.D. CA court dismissed but with leave to amend complaint. Concludes shareholder vote on executive compensation “has substantial evidentiary weight”. Laborers’ Local v. Intersil, 5:11-CV-04093 LEXIS (N.D. Cal. March 7, 2012)

7. Section 11 Claims  2nd Cir. clarifies sec. 11 claims based on opinion. Fait v. Regions Financial Corp., No. 10-2311-cv (2nd Cir. Aug. 23, 2011).  Amounts in issuer’s financial statements may be statements of opinion that cannot be challenged unless plaintiffs allege defendants did not believe those amounts to be accurate at the time of the offering.

8. Insider Trading Remains one of the SEC’s highest priorities. $92.8M settlement Raj Rajaratnam in Nov. 2011 largest insider trading settlement ever reached by SEC Number of settlements declined from 74 in FY10 to 68 in FY11 Median settlement value with companies declined from $581k in FY10 to $243k in FY11 Median settlement value with individuals increased from $141k in FY10 to $192K Of the 334 whisteblower tips received by SEC by Nov. 2011, 25 involved insider trading

9. Insider Trading – Recent interesting cases Inadvertent disclosure, SEC v. Goetz, No. 3:11-CV-01220 (S.D. Cal. June. 3, 2011) Example of low benefit standard for tippees, SEC v. Deskovick, 2:11-CV-01522 (D.N.J. Mar. 17, 2011) Trading by insider’s spouse, SEC v. Marovitz, 1:11-CV- 05259 (N.D. Ill. Aug. 3, 2011)

10. SOX Whistleblower Case - Question of First Impression Generally, SOX’s whistleblower provision protects certain employees who report activity or provide evidence of fraud and violations of the SEC’s rules or regulations. SOX protections do not apply to employees of a contractor or subcontractor of public company. Lawson v. FMR LLC, No. 10-2240 (1 st Cir. Feb. 3, 2012)

11. FINRA cases 2 nd Cir. rules FINRA cannot sue to collect fines. Fiero v. FINRA, 09-CV-1556 (2 nd Cir. 2011) FINRA panel orders investor claimants to pay brokerage firm $75k in legal fees for “frivolous” claims. Vogelback v. Quincy Cass Associates, FINRA Case No. 10-04022.

12. SEC Policy Regarding Admission of Wrongdoing Jan. 6, 2012 SEC modified its long-standing policy of allowing corporations that settle civil actions with SEC to enter into agreements which they neither admit nor deny any wrongdoing. SEC denies this change was a result of the rejection of a proposed SEC settlement with Citigroup by Judge Rakoff in the S.D. of New York

13. The Policy Applies to cases with parallel criminal proceedings where the corporation admits to, or is actually convicted of, a criminal offense relating to the same conduct. In all other cases, SEC’s general policy of allowing corporations to settle civil actions or administrative proceedings without admitting or denying wrongdoing remains.

14. Tamara Hoffbuhr-Seelman Director Fairfield and Woods, P.C. 303.894.4406 thoffbuhr@fwlaw.com@fwlaw.com