SEC v. Mapp: SEC's Motion for Summary Judgment Granted in Part and Denied in Part

In SEC v. Mapp, No. 4:16-CV-00246, 2017 BL 401498 (E.D. Tex. Nov. 8, 2017), the United States District Court for the Eastern District of Texas granted in part and denied in part the Securities and Exchange Commission’s (“SEC”) motion for summary judgment and denied William E. Mapp’s (“Defendant”) partial motion for summary judgment.

According to the allegations, Defendant raised approximately $26 million in private securities offerings as CEO for Servergy, Inc., (“Servergy”) from November 2009 to September 2013. Defendant received over $1.4 million in investments from Caleb White (“White”) through Dominion Joint Venture Group No. 1, 2, and 3 (collectively “Dominion JVs”). Servergy also secured $19.4 million from broker dealer WFG Investments, Inc. (“WFG”). Severgy did not file a registration statement for any of its securities offerings.

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Case SummariesSean CuffSean Cuff
Norfolk Cty. Ret. Sys. v. Cmty Health Sys., Inc.: Plaintiffs Plausibly Alleged Securities Fraud

In Norfolk Cty. Ret. Sys. v. Cmty Health Sys., Inc., 877 F.3d 687 (6th Cir. 2017), the United States Court of Appeals for the Sixth Circuit reversed the district court’s judgment in favor of Community Health System shareholders (“Plaintiffs”). The Court of Appeals ruled that under §10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder, Plaintiffs plausibly alleged the value of Community Health Systems’s (“Defendant”) shares fell because of undisclosed practices. Defendant’s profits relied on Medicare fraud, which they failed to disclose. The Plaintiffs allege that the market reacted negatively once those fraudulent practices were revealed, resulting in a loss in the value of their shares.

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Shareholder ActionsJonathan MelfiJon Melfi
SEC v. Cary: Accounting Consultant Charged with Insider Trading

In SEC v. Cary, No. 8:17-cv-01649, 2017 (C.D. Cal. Sept. 21, 2017), the United States Securities and Exchange Commission (“SEC”) filed a complaint against Justin Samuel Cary (“Cary”) in the United States District Court for the Central District of California for alleged violations of the Securities Exchange Act Section 10(b) (“§ 10b”) and Rules 10b-5(a) and 10b-5(c) promulgated thereunder.

According to the complaint, Cary, a certified public accountant, worked as a consultant for NOW CFO, an accounting outsourcing firm.  NOW CFO placed Cary as a consultant with Adaptive Medias from March 2013 through March 2016.  Cary prepared financial statements for Adaptive Medias that were filed with the SEC, and acted as Adaptive Medias’ point of contact for its independent auditors.

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Case SummariesSean CuffSean Cuff
No-Action Letter for Apple Inc. Permitted Exclusion of Policy to Keep Doors closed when Climate Control in Use.

In Apple Inc., 2017 BL 446883 (Dec. 12, 2017), Apple Inc. (“Apple”) asked the staff of the Securities and Exchange Commission (“SEC”) to permit the omission of a proposal submitted by Sustainvest Asset Management, LLC (“Shareholder”) requesting Apple produce a report assessing the climate benefits and feasibility of adopting a store-wide policy to keep entrance doors closed when climate control is in use. The SEC issued the requested no action letter allowing for the exclusion of the proposal under Rule 14a-8(i)(10).

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No Action LettersCarlos SchidlowCarlos Schidlow