The Right to Financial Privacy Act. The US Court of Appeals for the Seventh Circuit enforced CFTC subpoenas served on a precious metal wholesaler, precious metal dealer and precious metal depository. The subpoenas sought information concerning appellants’ purchases and sales of precious metals. Although the appellants responded to the subpoenas, they redacted customer names and contact information claiming that they could not reveal that information without first contacting the customers as required by the Right to Financial Privacy Act. The Seventh Circuit held that appellants are not “consumer finance institutions” under the Act. According to the court, appellants provide financing to enable their customers’ purchases of precious metals, no evidence exists that appellants provide cash loans or do anything more than provide bridge loans for the purchase of precious metals, and therefore appellants are not “consumer finance institutions” and must produce unredacted versions of the responsive documents. (5/29/2013) CFTC v. Worth Bullion Group, Inc.
Securities Act lawsuit is reinstated. In Omnicare I, the US Court of Appeals for the Sixth Circuit affirmed the dismissal of plaintiffs’ claims brought under Section 10(b) of the Securities Exchange Act of 1934 for failure to plead loss causation. However, it reversed the dismissal of claims brought under Section 11 of the Securities Act of 1933. On remand, the district court found that the Section 11 claims sounded in fraud. Because plaintiffs failed to meet the heightened pleading standards for fraud, it once against dismissed the claims. Reversing in part, the Sixth Circuit held that because Section 11 effectively provides for strict liability, the district court improperly required plaintiffs to plead knowledge in connection with the claims arising from defendants’ alleged misstatements concerning their legal compliance. Claims arising from alleged GAAP misstatements, however, were properly dismissed for failure to meet the particularity requirements of Rule 9(b). (5/23/2013) Indiana State District Council of Laborers and Hod Carriers Pension and Welfare Fund v. Omnicare, Inc.