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Securities Class Actions, Greenhouse Gas, And Bank Fraud Mens Rea

By William Peacock, Esq. on June 23, 2014 | Last updated on March 21, 2019

It's another busy Monday on First Street, with opinions handed down in cases involving securities class actions ("fraud on the market"), EPA greenhouse gas regulation (can they do that?) and the mental state of mind required to be convicted of a federal bank fraud statute.

It's a weird assortment of cases, and probably not the ones you were hoping for, but if environmentalism, holding corporations accountable, or making a federal case out of passing bad checks is your thing, read on for the roundup:

Halliburton Co. v. Erica P. John Fund: 'Fraud on the Market' Presumption Limited

There's a Basic presumption (pun by coincidence) that the price of stock in the market reflects all known information, including material misinformation released by company. This makes "fraud on the market" class actions possible, as investors don't have to point to a specific misleading statement to bring suit.

The presumption stands after today, but with a caveat: companies should now be able to introduce evidence at the class certification stage to show that the alleged misstatements didn't affect stock prices.

Utility Air Regulatory Group v. EPA: Greenhouse Gas Regs. Can Piggyback on Other Regs.

Talk about an irrelevant opinion: while the EPA hoped to regulate 86 percent of industrial greenhouse gas emissions, this narrows that to 83 percent, with a few landfills exempt. And even then, the EPA might be able to reach more under other statutory provisions that weren't at issue in today's contest.

The short version of today: While the EPA can't slap greenhouse gas regulations on otherwise unregulated greenhouse gas sources, it can do so as part of existing regulation programs -- PSD (Prevention of Significant Deterioration) and Title V -- that already cover most large, stationary industrial sources.

Loughrin v. United States: I Want to Hurt Somebody, Not a Bank Specifically

Guy passes bad checks at a Target, then returns the merchandise for cash. His defense to federal bank fraud charges? He intended to defraud Target, not the bank. Clever, huh?

Not quite. The Supreme Court today held that Section 1344(2) only requires that the defendant intend to obtain bank property (here, money) and that the means used is a false statement (fraudulent checks passed to a third-party). There is no requirement of intent to defraud the bank directly -- ignorance of the ultimate victim is no excuse, so to speak.

This case, much like the "wife attacking girlfriend with toxic chemicals" case from earlier this term, both beg the question: why are we federalizing minor criminal squabbles?

More Odd Splits

You expect to see some division towards the end of the term, as the tougher cases without consensus are pushed back for further debate, exchanging of drafts and memos, etc. But this?

It may just be me, but there seem to be a lot of ultra-fractured and cross-ideological opinions this term:

  • Loughron was Kagan, Roberts, Kennedy, Ginsburg, Breyer, and Sotomayor, with Scalia and Thomas joining in part, and sharing a concurrence. Alito wrote a separate concurrence in part and in the judgment.
  • Utility Air was Scalia writing an opinion that had different judges joining different sections, some joining in full, and some writing their own opinions concurring in part and dissenting in part.
  • Halliburton was Roberts, with liberal and conservative justices joining and writing concurrences, while Thomas penned an opinion concurring in the judgment, with Scalia and Alito joining him.

We saw similar weird splits and lineups earlier this month as well.

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