Federal Rule of Civil Procedure 9 provides:

(b) Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.

That said, there are certain causes of action under the securities laws, like claims under Section 11 and 12 of the Securities Act, that do not require plaintiffs to prove that the defendant had any particular state of mind.  These claims do not, therefore, sound in fraud by their nature.  And, because the PSLRA did not alter the pleading standards for claims under the Securities Act, that means Section 11 and 12 claims are ordinarily subject to the more limited demands of Rule 8 pleading.

Nonetheless, federal courts have generally agreed that if a particular plaintiff’s allegations in a particular case come across as rather fraudy, the higher pleading standard will apply.  Plaintiffs have therefore gone to great lengths to avoid alleging fraud in connection with Securities Act claims, which can be particularly challenging when Section 10(b) claims arise out of the same facts – plaintiffs usually try to completely separate the two sets of allegations in their complaints, which is part of the reason why securities fraud complaints can be hundreds of pages long and exceedingly complex (which can be, naturally, another basis for dismissal, see, e.g., United Assoc. Nat’l Pension Fund v. Carvana Co., 2024 WL 863709 (D. Ariz. Feb. 29, 2024)).

Anyway, this all becomes particularly awkward when the statement alleged to be false concerns a matter of opinion.  That’s because opinion statements can be misleading if they are uttered under circumstances that obscure the basis for the opinion, but can only be false if they are subjectively disbelieved by the speaker – i.e., if the speaker misportrays his or her own actual opinion.  It’s very difficult to imagine that someone could accidentally or negligently misstate what they actually, you know, believe, which means opinion statements might almost always require Rule 9(b) pleading.

Or so I assumed.

In Pino v. Cardone Capital (which is a case I blogged about two years ago, after its first trip to the Ninth Circuit), the Ninth Circuit held that a Section 12 claim would not necessarily sound in fraud and require Rule 9(b) pleading, even for subjectively disbelieved opinion statements.  In that case, the plaintiff’s complaint contained a commonplace disclaimer that none of the claims sounded in fraud; on that basis, the district court dismissed the complaint, treating the disclaimer as an admission that certain opinion statements were not subjectively disbelieved.  The Ninth Circuit reversed, finding that the disclaimer did not bar allegations of subjective disbelief, and also, that the complaint sufficiently alleged subjective disbelief, noting that, in the usual course, claims under Section 11 and 12 do not sound in fraud and do not require Rule 9(b) pleading.  The court made no attempt to offer a theory of mind or probe the mysteries of the human soul; it simply held what it held.

So. There you go.

And another thing.  On this week’s Shareholder Primacy podcast, Mike Levin and I talk to Professor Joseph Grundfest, and then to Delaware litigator Joel Fleming, about Prof. Grundfest’s papers on Delaware attorney fee awards. Here on Apple, here on Spotify, and here on YouTube.

Stacie Strong recently posted Pro Bono Publico Versus Pro Bono Presidential on SSRN. It’s a look at the propriety of agreements to perform pro bono work to escape punitive executive orders against law firms. This is how the abstract describes it:

This Essay considers the propriety of these pro bono agreements from several perspectives. First, this Essay considers the voluntary nature of pro bono and examines the propriety of the executive branch coercing private lawyers to accede to particular pro bono obligations. Second, this Essay discusses the nature of pro bono activities as a means of assisting indigent individuals and considers whether presidential efforts to direct how private law firms fulfill their pro bono obligations constitute an improper privatization of the executive branch’s policy goals, particularly given presidential cuts to and curtailment of conventional public means of fulfilling those policy goals. Third, this Essay considers whether and to what extent the executive orders and settlement agreements discussed herein violate hard or soft principles of international law. The Essay concludes with brief suggestions about how to proceed going forward.

My initial reaction to these orders was to wonder whether services performed as consideration for a settlement even qualify as pro bono. The lawyers are being paid with the settlement of a claim–does that mean it isn’t really pro bono? Strong notes that the “conception of pro bono can vary by state.” She also agrees that “the legal services at issue fall outside the standard definition of pro bono.”

They appear to fall outside at least one federal definition as well. The Department of Justice has a definition for the Executive Office for Immigration Review (EOIR). That definition provides that “Pro Bono legal services are “those uncompensated legal services performed for indigent aliens or the public good without any expectation of either direct or indirect remuneration, including referral fees (other than filing fees or photocopying and mailing expenses).” 8 C.F.R. § 1003.61(a)(2) (emphasis added). 

If you’re performing services as part of a settlement, I’d prefer not to classify those services as pro bono.

My quibbles to the side about the definition of pro bono, Strong raises some, well, strong arguments that the orders violate separation of powers principles and undercut the rule of law. It’s worth a read for an informed take on the issue.

We invite submissions of paper abstracts for the Fall series of the Miami Law & Finance Workshop. The workshop will take place online on Fridays from 1pm to 2pm EST. We welcome papers on all finance-related topics, including corporate law and finance.

Abstracts should be sent to the workshop co-organizers nikita.aggarwal@miami.edu,cbradley@law.miami.edu and ggeorgiev@miami.edu no later than Friday July 18th, 2025, with the following information:
– Name of author(s)
– Affiliation
– Summary of paper’s main thesis, contribution to the prior literature, and methods employed (Abstract length: 500-1000 words max).

We will notify selected authors by July 25th. Note that selected authors must be ready to send a complete draft of their paper to us at least one week before the scheduled date of the workshop, which we will circulate to the discussant and registered workshop participants.

Call for Papers

The University of Richmond School of Law, in partnership with the University of Illinois College of Law, UCLA School of Law, and Vanderbilt Law School, invites submissions for the Twelfth Annual Workshop for Corporate & Securities Litigation. This workshop will be held on Thursday, October 23 and the morning of Friday, October 24, 2025 in Richmond, Virginia. 

Overview 

This annual workshop brings together scholars focused on corporate and securities litigation to present their scholarly works. Papers addressing any aspect of corporate and securities litigation or enforcement are eligible, including securities class actions, fiduciary duty litigation, and SEC enforcement actions. We welcome scholars working in a variety of methodologies, as well as both completed papers and works-in-progress. Authors whose papers are selected will be invited to present their work at a workshop hosted by the University of Richmond School of Law. Participants will pay for their own travel, lodging, and other expenses. 

Submissions 

If you are interested in participating, please send the paper you would like to present, or an abstract of the paper, to corpandsecworkshop@gmail.com by Friday, June 20, 2025. Please include your name, current position, and contact information in the e-mail accompanying the submission. Authors of accepted papers will be notified in late July. 

Questions 

Any questions concerning the workshop should be directed to the organizers: Jessica Erickson (jerickso@richmond.edu), Jim Park (james.park@law.ucla.edu), Amanda Rose (amanda.rose@vanderbilt.edu), and Verity Winship (vwinship@illinois.edu). 

My work and travel schedules this spring have led to a decrease in my substantive (and other) blogging of late. (I am reminded of a blog post I wrote years ago on a similarly busy travel summer, with a follow-up post here ) I hope to slowly catch up in the coming weeks. This week, I am in Prague and Budapest, the latter for an international remedies forum at which I will share some work emanating out of my ongoing research on blockchain fraud. More on that another time . . . .

Today, however, I want to follow up on my blog post from last May on ESG Greenwashing. The article I referenced in that post was recently published. Entitled ESG and Insider Trading: Legal and Practical Considerations, the SSRN abstract is set forth below.

This Article preliminarily explores the contours of ESG information as a potential basis for unlawful insider trading under Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 adopted by the U.S. Securities and Exchange Commission under Section 10(b). Insider trading violations under Section 10(b) and Rule 10b-5 are rooted in a person’s (1) trading of securities while in possession of material nonpublic information or (2) tipping another with material nonpublic information. ESG information has the capacity to be both material and nonpublic. ESG information, like other significant information, may be at the heart of insider trading and related enforcement activity if trading or tipping is effected with the requisite knowing state of mind.

The Article anticipates and prognosticates on this enforcement activity, investigating core legal questions and offering related analyses and observations. The reflections offered may be useful to those who may possess ESG information and desire to trade or tip (and their advisors); policymakers in the U.S. Congress and at the SEC; enforcement agents in the U.S. Department of Justice and at the SEC; the judiciary; and business firms (and their advisors). For example, prospective and actual securities traders and tippers may gain awareness of the liability-generating capacity of ESG information in an insider trading context. Moreover, the Article may support government and regulatory officials and judges in efficient and effective rulemaking, enforcement activities, and adjudication of related cases and controversies. Takeaways for business firms may include, for example, wisdom about best practices for the retention of material nonpublic ESG information and refining the contents of insider trading compliance plans.

I had some fun writing this to honor our fabulous colleague Jill Fisch. Her work, of course, spans both topics at the core of my article–environmental, social, and governance issues and insider trading. I have enjoyed and cited to her work in both areas over the years.

This article follows on my earlier piece on ESG information and materiality doctrine, which I blogged about last summer. I had some interesting conversations about that work last week at the 2025 Annual Conference on Legal Issues in Social Entrepreneurship and Impact Investing—In the US and Beyond, hosted at NYU Law by the Grunin Center for Law and Social Entrepreneurship and the Impact Investing Legal Working Group. Folks from outside the United States also are looking at issues relating to the materiality of ESG information and impacts and want to understand more about materiality doctrine here in the United States.

The next piece in that line of my scholarship is on the effect of ESG information on compliance programs, plans, and policies. If any of you are working in that space, please let me know. I already know that Diane Lourdes Dick and Joe Yockey are working on a piece of interest on the governance of toxic data. (They presented it at the Law and Society Association Annual Meeting in Chicago last month. Joe’s LinkedIn post on their work can be found here.) But I remain interested in knowing if others have recent or ongoing research to which I can cite.

Earlier this week, The University of Tennessee Frank Winston College of Law (yes, a new name, with a great story behind it!) announced my appointment as the incoming director of the Clayton Center for Entrepreneurial Law. You can find the full story here. I posted the news on social media earlier in the week. Thanks to those of you who commented and contacted me in response to those posts.

As I said there and have told many of you, I am truly excited to take on this new role for the academic program in which I have worked for 25 years–the program that brought me to Tennessee and the College of Law in 2000 after nearly 15 years of practice up in Boston, Massachusetts. I assume the directorship on August 1. I am grateful to the center’s interim director, Brian Krumm, who has ably managed the center since the 2024 retirement of longtime director George Kuney.

The Clayton Center is rooted in entrepreneurship, being the namesake of James L. Clayton, a 1964 graduate of the Winston College of Law who is the founder of Knoxville-based Clayton Homes, Inc., now a subsidiary of Berkshire Hathaway Inc. However, the center supports “all things business”–transactional business law and practice, business dispute resolution, business law counseling, and enterprise-level compliance. A curricular concentration, contract drafting courses, field placements, a business law journal, and a visiting professor program are the mainstays of the Clayton Center, supplemented by periodic symposia and other events hosted throughout the year. I look forward to the challenge of managing this academic program. Please do not hesitate to reach out to learn more.

Proxy votes have begun to come in at this point and we’ve got some early results on the reincorporation front. (Some earlier posts on this topic are available here, here, and here.)

Overall Status

I broke down and just created a chart for 2025 attempts to shift to Nevada. I had previously only been tracking attempts to move after SB21 in Delaware.

2025 Nevada Domicile Shifts
 FirmResultNotes
 1Fidelity National FinancialPass 
 2MSG SportsPass 
 3MSG EntertainmentPass 
 4Jade BiosciencesPassJade merged with Aerovate.
 5BAIYU HoldingsPassAction by Written Consent
 6RobloxPass 
 7Sphere EntertainmentPass 
 8AMC NetworksPass 
 9Universal Logistics Holdings, Inc.PassAction by Written Consent
 10Revelation BiosciencesFail97% of votes cast were for moving.  There “were 1,089,301 broker non-votes regarding this proposal”
 11Eightco HoldingsFailVotes were 608,460 in favor and 39,040 against with 763,342 broker non-votes.
 12DropBoxPassAction by Written Consent
 13Forward IndustriesPendingThis is New York to Nevada.
 14NuburuPending 
 15Xoma RoyaltyPass 
 16Tempus AIPass 
 17AffirmPending 

There is also some action going the other way with UPEXI attempting to move to Delaware.

Fidelity National Vote

One thing worth highlighting here is that Fidelity National succeeded on its second attempt to shift to Nevada. Previously in 2024, it secured 1110,277,692 votes in favor with 107,467,828 votes against. With about 27,000,000 broker non-votes, this wasn’t enough for the necessary majority. This year the votes were different with 147,059,505 votes cast in favor of the move and 74,874,567 votes cast against the move.

So what changed? As I covered in an earlier post, Fidelity National’s Nevada charter increased shareholder protections above the Nevada default threshold. This may have shifted some votes and makes it something to watch for future efforts.

Mercado Libre Update

One notable development, Mercado Libre pulled its proposal to shift from Delaware to Texas. I covered the proxy here. On June 9, Mercado Libre withdrew the proposal without explanation. The proxy had given a list of reasons why Mercado Libre wanted to shift its incorporation to Texas. It stated that the decision was the “result of deliberation and consideration, including discussions with management and outside legal counsel.”

So what changed? I’m assuming it’s some new factual development and not something that the earlier analysis and deliberation would have considered, but this is ultimately just speculation.

I’ve been blogging long enough that I forget my prior rants, so I’m diving into this one because I don’t remember discussing it before, but if I did, forgive me.

Anyway, today’s rant is about the “statements before the class period” rule, most recently employed in Stephans v. Maplebear, 2025 WL 1359125 (N.D. Cal. May 9, 2025).

The rule, roughly, is that, in the context of a class action, Section 10(b) plaintiffs can’t bring claims based on statements that are made prior to the beginning of the class period.  In Maplebear – which is Instacart, by the way – public trading began on September 19, 2023, so that’s when the class period began.  The rule was employed to bar the class from alleging that certain statements made during the IPO roadshow were false and had defrauded class members.

Let’s break this down in general, and then talk about Instacart.

The “class period,” in a typical Section 10(b) action, defines the investors on whose behalf the action is brought. In your typical 10(b) fraud on the market case, the class period will include anyone who bought (or sold) a particular security between Date A and Date B. It defines the investors who are, formally, plaintiffs in the action and, potentially, bound by its resolution.

Now, let’s think about Section 10(b).  Under Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975), to be a proper 10(b) plaintiff, an investor must have traded in response to the fraud – bought or sold in response to a false statement. In other words, by definition, any proper Section 10(b) plaintiff must have traded after the false statement was made.

How far after? There’s no rule at all, beyond the statute of limitations.  The plaintiff only needs to show reliance.  Maybe that’s harder to prove if the statement is further back from the trade, but maybe not impossible.  In the fraud on the market context, it only requires a showing that the statement was influencing stock prices at the time of the particular plaintiff’s trade.  That could be less plausible the further back the statement was, but that’s a factual question.  See Basic v. Levinson, 421 U.S. 723 (1988) (“We note there may be a certain incongruity between the assumption that Basic shares are traded on a well-developed, efficient, and information-hungry market, and the allegation that such a market could remain misinformed, and its valuation of Basic shares depressed, for 14 months, on the basis of the three public statements. Proof of that sort is a matter for trial…”).

So, let’s return to the purported rule, that statements made before the class period can’t be the basis of a claim.

If you think of the class period as a definition of plaintiffs participating in the case – all investors who traded between Date A and Date B – it is incoherent to say, as a matter of law, if the statements preceded Date A, they could not be relevant the claims of a later trader.  Why would that be the case?  From the point of view of each individual trader who made a purchase after Date A, the pre-Date A statements were plausibly ones on which that trader could have relied.

After all, in a typical Section 10(b) case, you might have a class period that encompasses a period of time – maybe a year – with multiple false statements during that time. Many individual investors who traded during that period will have traded after particular statements but before others; all of those individuals get to sue based on the statements that came before their individual trades, and damages will eventually be calculated based on the statements that preceded (but not followed) their individual trades. That’s just how a Section 10(b) class action works.

For example, suppose Defendant Evil makes a false statement on January 1, January 10, January 11, and January 30.  An investor trades on January 11, January 14, and January 31.

There is no reason to believe that, factually, as a matter of law, that investor did not rely on the January 1 and January 10 statements.  If it’s a fraud on the market case, and there were no revelations of the truth until, say, February, then the investor probably has a strong argument that he or she “relied” on the Jan 1 and Jan 10 statements, along with the others that preceded the trades.

Now, suppose a lawyer brings a class action on investors’ behalf, and defines the class as, investors who traded between January 11 and January 31. That’s all the complaint says – it’s filed on behalf of investors who purchased in a class period defined as Jan 11 to Jan 31. 

Nothing has changed about the information on which our trader relied, or about the information that affected stock prices at the time of her trading. The mere fact that an attorney chose to only bring claims by investors who bought on particular dates in no way answers the question as to what those investors relied on.  And if a case can be made they relied on statements on January 1 and January 10, it shouldn’t matter that the attorney representing them arbitrarily chose to begin the class period later.

Yet somehow, there really is a line of caselaw that says, no statements before the class period are actionable.  Why?

Sometimes, there’s a telephone-like game going on. For example, some cases say pre-class period statements are inactionable absent a showing of reliance, and that kind of works its way into the caselaw as a bright line rule barring claims based on pre-class period statements at all.  For example, the Maplebear case cited Irving Firemen’s Relief & Ret. Fund v. Uber Techs, 2018 WL 4181954 (N.D. Cal. Aug. 31, 2018) for the proposition that “Statements made outside of the proposed class period are not actionable,” except what that case actually said was, “As far as pre-class statements, Plaintiff presents little in the way of binding or persuasive authority to support that, absent a showing of reliance, these representations are actionable.” (emphasis added).

Other times, courts take the class period itself as something like a legal admission.  For example, in In re Clearly Canadian Secs. Litig., 875 F. Supp. 1410 (N.D. Cal. 1995), the court held “the class period defines the time during which defendants’ fraud was allegedly alive in the market, statements made or insider trading allegedly occurring before or after the purported class period are irrelevant to plaintiffs’ fraud claims.”  That phrasing seems to be interpreting the complaint itself to be alleging that the pre-class period statements did not impact the market.  But even if you assume the court is accurately characterizing the plaintiffs’ allegations – the statements were only “alive” during particular time periods – that doesn’t mean they were only uttered during those time periods, and there’s no bright line that can define how much earlier they must have been uttered.

So, yes, if a particular complaint is sloppy enough to definitively allege that no statements prior to the start of the class period affected stock prices, then sure, it’s reasonable to take that allegation at face value.  But plenty of complaints won’t be anywhere near that sloppy.

Now, there are other kinds of issues in these cases, and the Maplebear/Instacart case illustrates one.  The shares only began public trading on September 19, 2023, so that’s when the class period begins.  The false statements were made prior to public trading.  It’s a fraud on the market case, so you might make the argument that the pre-trading statements could not have been absorbed by traders at the particular moment they were uttered, and therefore could not have impacted stock prices. But that strikes me as very much a factual question, i.e, could information-hungry traders on September 19 have considered the earlier statements in making their trades, even though no market had absorbed them during that earlier time?  It might even be an “in connection with” dispute, i.e., you might say the earlier statements were not foreseeably related to securities trading if there was no public market (maybe that’s a good argument if the statements were made in a limited setting; less plausibly if they were made during the IPO roadshow, as in Maplebear). 

But my point is, none of this is conducive to a bright line rule that statements made prior to the class period are categorically inactionable – which is unfortunately the direction in which some courts have gone.

And another thing.  On this week’s Shareholder Primacy podcast, Mike and I talk about Saba Captial’s activist attacks on closed end funds, and the campaign waged by Impactive Capital at WEX. Here on Apple, here on Spotify, and here on YouTube.

STETSON UNIVERSITY COLLEGE OF LAW, Florida’s first law school, invites applicants from entry-level and lateral candidates for several faculty positions. Our hiring priorities focus on candidates who are enthusiastic about enhancing our existing institutional strengths and helping us develop new areas of excellence. We welcome applications from qualified candidates across all areas and specializations. Specifically, we seek individuals with expertise in business law, civil procedure, constitutional law, criminal law, legal research and writing, professional responsibility, and tax law.

The Faculty Appointments Committee will review applicants until all positions are filled. The review of lateral applicants will begin in May and will continue on a rolling basis throughout the summer.

Stetson Law was founded in 1900 and is excited to celebrate its 125th Anniversary this year. Stetson Law has a national reputation for its advocacy program, ranked #1 in the nation, and its legal writing program, ranked #3 in the nation, by U.S. News and World Report. It also boasts renowned centers, institutes, and clinics in various fields, such as advocacy, elder law, higher education, biodiversity and the environment, legal communication, Caribbean law, and veterans law.

Stetson University includes a College of Arts and Sciences, a School of Music, and a School of Business Administration, the latter of which supports the law school’s joint JD/MBA program. Stetson nurtures a vibrant intellectual community, situated on a beautiful campus, just minutes from Florida’s Gulf Coast, in the Tampa Bay area, the nation’s 17th largest metro area. We encourage potential applicants to visit our website at https://www.stetson.edu/portal/law/ to learn more about our school, our community, and our programs.

Stetson encourages applications from those who will contribute to our stimulating and diverse cultural and intellectual environment. Stetson’s Equal Employment Opportunity policy is available at: Our Commitment to Non-Discrimination and Equal Opportunity.

Applicants should email a cover letter that explains their teaching and scholarly interests, along with a current curriculum vitae and contact information for at least three professional references, to Professors Royal Gardner, Alicia Jackson, and Louis Virelli at facultyappointments@law.stetson.edu.

The University of Maine School of Law, in the coastal city of Portland, Maine, is seeking a full-time visitor for the Spring 2026 semester. Our primary curricular needs are the first-year Property course and related upper-level courses, including natural resources. The visiting appointment may be at the Professor, Associate Professor, Assistant Professor, or Professor of Practice level, depending on the experience of the candidate. Salary will be commensurate with qualifications and experience.

Required: Applicants must possess a J.D. degree or its equivalent, an excellent academic record, and a record or promise of successful teaching and student mentoring, including an ability and willingness to incorporate innovative teaching approaches into the curriculum.

To apply, please submit an application to: mainelawsearch@maine.edu. Please include (1) a cover letter that fully describes your qualifications and experiences, (2) your curriculum vitae, and (3) contact information for three professional references. 

Review of applications will begin immediately and continue until the position is filled. You may email any questions to mainelawsearch@maine.edu.

Appropriate background screening will be conducted for the successful candidate. The University of Maine System is an equal opportunity institution committed to nondiscrimination.