Securities Law

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Courts issued two seemingly conflicting rulings on whether AI generated materials are protected. Heppner (S.D.N.Y.) found that documents created with a consumer version of Claude AI were not privileged or work product because the tool exposed data to a third party provider. Warner (E.D. Mich.) reached the opposite result the…

A recent decision in United States v. Heppner appears to be the first federal ruling to directly address attorney‑client privilege and work‑product issues arising from a non‑lawyer’s use of a consumer-grade insecure AI tool for legal research. The court held that materials generated through Anthropic’s consumer version of Claude were…

Aerospace startups often begin with a dream to provide cheaper, better, or faster solutions for aviation and space flight, and the ambition to make that dream a reality.  Although optimism fuels innovation, as aerospace startups transition from venture funding into public markets, shareholders may misconstrue their forward-looking optimism as actionable promises. Diamond v. Firefly Aerospace Inc., et al. is a putative class action that highlights this tension.

Imagine you are an investor and you decide to file a lawsuit after a company that you invest in suffers a stock drop. When you get to the courthouse, you find that you are the first person to file a federal securities class action on these facts. However, because of the Private Securities Litigation Reform Act (PSLRA), the district court chooses another party to be “lead plaintiff” in the litigation. Under the control of that lead plaintiff, the court dismisses the case prior to class certification, and you want to appeal that decision. Do you have standing? Your name is in the case caption for the active complaint. You were, in fact, the very first plaintiff in this action. But you aren’t the lead plaintiff anymore. 

Counsel for public companies—it may be time to take another look at your litigation disclosures. A recent federal district court opinion held that one company’s use of the phrase “without merit” to describe ongoing litigation in its public filings could give rise to federal securities fraud claims. The ruling serves as the latest admonition to exercise care in crafting litigation disclosures.

In late-July, the U.S. Securities and Exchange Commission brought insider trading charges against a former manager at Coinbase—the largest crypto asset trading platform in the United States. The charges are the latest move in the agency’s efforts to regulate cryptocurrency, and could spur an increase in cryptocurrency-related securities litigation.

In…

Corporate boards are subject to a duty of oversight, as part of their duty of loyalty to their company.  As outlined by Delaware’s famously stringent Caremark standard, pleading a violation of that duty is often difficult.  However, the Delaware Court of Chancery has issued several recent opinions addressing duty of oversight claims where they held the plaintiffs successfully met the Caremark standard.  These decisions serve as important reminders for corporate boards to thoughtfully carry out their oversight duties, in order to ensure that their internal controls, reporting systems, and other oversight-related practices are sufficiently comprehensive.