Federal courts closed out 2021 with a flurry of securities decisions in the month of December. In this update, we discuss two decisions involving claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 based on (i) alleged “channel stuffing”—a company’s practice of shipping excessive product to its distributors, and recognizing revenue at the time of and on such shipments, when it believes the distributors will not be able to sell all such product in the particular period—and (ii) an allegedly over-hyped COVID-19 vaccine candidate.
In In re Hain Celestial Group, Inc. Securities Litigation, the U.S. Court of Appeals for the Second Circuit revived Section 10(b) claims based on allegations that a company defrauded investors by making public statements attributing growing sales to strong consumer demand, without disclosing that it achieved its sales through “unsustainable” channel stuffing. The court below dismissed the claims, determining that the channel stuffing was legitimate and non-fraudulent. As the court explained, plaintiffs failed to plead that the company offered distributors an “absolute right” to return products; therefore, the company did not improperly book sales achieved through channel stuffing as revenue. According to the court, the company had no obligation to disclose legal sales incentives simply because plaintiffs alleged that they were unsustainable. The Second Circuit, however, reversed based on a perceived flaw in the district...
The Kristo Asafo Mission of Ghana has rejected claims that former Dome-Kwabenya Member of Parliament, Sarah Adwoa Safo, was shot during an incident at the church’s property at Kwabenya, describing...