Mayhall Fondren Blaize

Business litigation may involve investors' fraud claims

Business litigation covers just about any filed conflict between two businesses. These are often dealing with contractual disputes over the delivery of, or payment for, goods or products sold. But the dispute can certainly deal with another subject matter altogether. One area of business litigation that occurs in Louisiana and other jurisdictions is over the solicitation and sale of a company's securities. Such actions can be brought as class actions on behalf of more than one investor, if the facts justify it.

One recent case may illustrate the point. An investor has filed a class action against software developer Code Rebel Corp. The complaint, filed in a federal district court, alleges that Code Rebel solicited and sold investment securities based on false and/or misleading statements. The suit seeks class status for anyone who bought Code Rebel securities between Aug. 17, 2015 and May 5, 2016.

The Securities and Exchange Commission often gets involved in such disputes and the federal agency may even have caused the litigation by first conducting a publicized investigation against the alleged wrongdoing company. In this case, in fact, the SEC has stepped in to suspend trading on the company's stock at least until May 20. The SEC may extend the ban at that time if it determines it to be necessary for the protection of investors.

While the SEC investigation is in essence more of a civil procedure than a criminal one, the agency may turn over evidence of criminal fraud to the U.S. Attorney's Office for a decision on whether to prosecute criminally. Throughout the lawsuit, the SEC investigation and any criminal investigation, the company's business litigation lawyers will be actively defending the company's position. The process in Louisiana will be the same in any other jurisdiction because the case is essentially dealing with federal law, which does not change from state to state.

Source: bizjournals.com, "Class action lawsuit filed against Code Rebel", Kathleen Gallagher, May 11, 2016

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