Proxy Statement Fails Sniff Test

On November 4th, a U.S. District Court partially granted Allergan’s motion for a preliminary injunction. Allergan seeks to enjoin defendants from voting their shares at Allergan’s upcoming special shareholder vote on whether to replace Allergan’s directors with those who support the efforts of Valeant Pharmaceutical and Pershing Square to gain control of Allergan. The Court enjoined defendants from voting their proxies or soliciting additional proxies until they make certain corrective disclosures to their proxy statement. Among other things, defendants must disclose more fully their relationship and the Court’s finding that serious questions have been raised regarding whether defendants have engaged in insider trading. Allergan, Inc v. Valeant Pharmaceuticals International, Inc.

Currency’s Collapse, Not Bad Faith, Caused Bank to Close Accounts

On October 31st, the Ninth Circuit affirmed in part and reversed in part plaintiffs’ claims for breach of contract. Plaintiffs purchased EverBank WorldCurrency CDs denominated in Icelandic krona whose principal could rise and fall during the maturity period. When the CDs matured, Icelandic banks were in crisis and the krona had collapsed. As a result, EverBank could not hedge the exchange rate. Upon the CDs maturity, EverBank therefore exercised its contractual right to liquidate the CDs and not renew them. Affirming the entry of summary judgment dismissing plaintiffs’ bad faith breach of contract claim, the Court held no evidence of EverBank’s bad faith exists.

However, a reasonable jury could find that the CDs’ terms and conditions were silent with respect to the currency conversion rate that applied. The Ninth Circuit therefore reversed and remanded that issue. Vathana v. EverBank.