NorthWest Biotherapeutics Inc (NWBO)

[The Danish Dude]

A very interesting development in the Slack vs. Pirani case, that demands some attention.

Laura Posner our lawyer in the lawsuit from Cohen and Milstein and Joshua Mitts, have been working on an Amicus Brief to the Supreme Court not least focusing on tracing of securities. Perhaps another path for making it possible to address naked shorting in the upcoming discovery mode.

https://www.cohenmilstein.com/case-study/amicus-curiae-brief-%E2%80%93-slack-technologies-llc-et-al-v-fiyyaz-pirani




I asked ChatGBT the following question

I have a question regarding the below text from lawfirm Cohen and Milsteins website. It's about an amici curae, that has been put before the Supreme Court. Can you explain to me the purpose of this and the argument in the Summary

It answered:

The passage you provided discusses an amicus curiae (friend of the court) brief submitted to the Supreme Court by a group of law and business professors in support of the respondent in a case related to federal securities law. Here's an explanation of the purpose of the amicus brief and the arguments presented in the summary:

Purpose of the Amicus Brief:

Clarification of Modern Securities Market: The amici are law and business professors who specialize in federal securities law, financial markets, and accounting. They have submitted this brief to provide the Court with a better understanding of the modern securities market.

Feasibility of Tracing Shares: The amici want to explain how advancements in modern computing power and established accounting methodologies make it possible to trace shares. They argue that transactional records, which are required to be maintained by broker-dealers, exchanges, and regulatory authorities, can be obtained through subpoenas during discovery.

Opposition to Petitioners' Position: The amici argue that the position taken by the petitioners would make it extremely difficult for investors to trace their shares, not only in direct listings but in all contexts intended for Section 11 of the Securities Act to apply. This would result in a significant loss of investor protection.

Summary of Argument:

Debunking the "Impossible to Trace" Myth: The amici express concern that there is a mistaken belief that it's impossible to trace shares for the purpose of establishing standing under Section 11 of the Securities Act of 1933. They argue that this belief is a "myth" and demonstrate that modern computing power and transactional records can make tracing feasible.

Manipulation of Tracing Requirement: Companies are using tactics to deliberately commingle registered and unregistered securities to block tracing, thus nullifying Section 11. The amici find this manipulation unacceptable and argue it could potentially bar Section 11 actions in various contexts.

Support for Tracing Requirement: The amici don't challenge the legitimacy of the tracing requirement, and they agree with Judge Henry Friendly's approach that Section 11 should apply only to registered shares. However, they argue that technological progress now allows tracing to be feasible and cost-efficient.

Alternative to Actual Tracing: The amici propose an alternative approach, suggesting that accounting methods like first in-first out (FIFO) or last in-first out (LIFO) can be used to identify the chain of title by which securities flow from one account to another. They argue that tracing should be enabled rather than assumed impossible in light of modern technology.

Potential for Exploitation: The amici are concerned that maintaining the traditional, outdated language of tracing or assuming its impossibility in the court's decision could incentivize practices that deliberately seek to commingle unregistered securities with registered ones, potentially barring standing and undermining Section 11 litigation.

Remand for Opportunity to Demonstrate Tracing: Instead of simply overturning the Ninth Circuit's decision and ordering dismissal, the amici suggest that the case should be remanded to give plaintiffs an opportunity to demonstrate that they can trace the passage of securities using existing records and accounting rules. This, they believe, will provide clarity and maintain investor protection.

In essence, the amici are arguing for the feasibility of tracing shares in modern financial markets and advocating for a modern procedure that allows for this tracing, rather than assuming its impossibility. They also emphasize the potential dangers of allowing manipulation of the tracing requirement and the importance of maintaining investor protection.

What happened was this (the article is an excellent intro to the case in details).

U.S. Supreme Court Rejects Ninth Circuit Expansion of Section 11 Standing

https://www.wsgr.com/en/insights/us-supreme-court-rejects-ninth-circuit-expansion-of-section-11-standing.html#:~:text=On%20June%201%2C%202023%2C%20the,omissions%20in%20a%20registration%20statement.

Reuters wrote

June 1 (Reuters) - The U.S. Supreme Court on Thursday gave Salesforce Inc's (CRM.N) Slack Technologies another chance to avoid a lawsuit over the workplace communications software company's 2019 direct listing.

In a 9-0 ruling, the justices threw out a lower court's decision that had let the proposed class action lawsuit filed by shareholder Fiyyaz Pirani proceed under what the Supreme Court concluded was an incorrect reading of a federal investor protection law. A direct listing is an alternative to a traditional initial public offering.

I asked BARD what this meant.

The Supreme Court's decision in Pirani v. Slack Technologies means that plaintiffs in Section 11 lawsuits will now have to prove that they would have made a different investment decision if they had known the truth about the securities they purchased. This is known as transaction causation.

Prior to the Supreme Court's decision, plaintiffs in Section 11 lawsuits only had to prove that they had purchased securities that were issued pursuant to a materially misleading registration statement. This was a much lower burden of proof, and it made it easier for investors to sue companies for securities fraud.

The Supreme Court's decision in Pirani v. Slack Technologies makes it more difficult for investors to sue companies for securities fraud. This is because plaintiffs will now have to prove that they actually relied on the misleading information in the registration statement when making their investment decision.

This change in the law could have a significant impact on the number of Section 11 lawsuits filed in the future. It is possible that some investors who would have otherwise filed lawsuits may now decide not to do so, because they will not be able to prove that they would have made a different investment decision.

The Supreme Court's decision is also likely to have an impact on the settlement amounts in Section 11 lawsuits. Because plaintiffs will now have to prove transaction causation, companies may be more likely to resist settlement offers. This could lead to longer and more expensive lawsuits.

Overall, the Supreme Court's decision in Pirani v. Slack Technologies is a significant development in securities law. It makes it more difficult for investors to sue companies for securities fraud, and it could have a negative impact on the ability of investors to recover damages for losses caused by fraudulent registration statements.

The Supreme Court stated this July 3rd.

https://www.supremecourt.gov/DocketPDF/22/22-200/270293/20230703115153772_EFiling%2022-200%20Vac%20Rem%20COSTS%20CA9%207.3.pdf

Again I asked BARD about this

This means that the case is now back in the Ninth Circuit, and the parties will have an opportunity to reargue their case in light of the Supreme Court's decision. It is possible that the Ninth Circuit could reach a different decision on remand, but it is also possible that the court could affirm its original judgment.

It is unclear what the long-term implications of the Supreme Court's decision will be. However, it is clear that the decision has made it more difficult for investors to sue companies for securities fraud.

Here is a summary of the Supreme Court's decision:

The Supreme Court held that Section 11 plaintiffs must show that they would have acted differently if they had known the truth about the securities they purchased. This is known as transaction causation.

The Supreme Court also held that plaintiffs must show that the misleading statements in the registration statement were material to their investment decision.
The Supreme Court vacated the Ninth Circuit's judgment and remanded the case for further proceedings.

With that in mind, lets turn focus on the Amicus Brief. Because what WAS and IS the intention at ALL for Laura Posner and Joshua Mitts regarding this case?

Accordingly, if this Court is dissatisfied with the decision of the Ninth Circuit below, it still would be premature and ill-advised to simply overturn that decision and order dismissal. Given the prevailing confusion over the feasibility of tracing, the better and traditional rule would be to remand the case to give plaintiffs an opportunity to demonstrate that they can trace the actual passage of the securities, using existing records, time-dated tracing, and conventional accounting rules.

And the case was NOT DISMISSED, but remanded BACK to the Ninth Court, allowing for plaintiff to try to document it is actually possible to trace securities.

Again I asked BARD about that statement (the above)

Now that the case has not been dismissed, but is going back to the Ninth Court, will the above now be possible for plaintiffs?

Yes, the above is now possible for plaintiffs, since the Supreme Court has remanded the case to the Ninth Circuit for further proceedings.

The Supreme Court's decision to remand the case suggests that the Court is open to the possibility of plaintiffs being able to trace the actual passage of the securities they purchased, using existing records, time-dated tracing, and conventional accounting rules.

The Ninth Circuit will now need to decide whether to allow plaintiffs to proceed with their tracing efforts. If the Ninth Circuit allows plaintiffs to proceed, they will need to show that they have a reasonable basis for believing that they can trace the securities they purchased to the newly issued registration statement.

If plaintiffs are successful in tracing the securities, they will be able to pursue their Section 11 claims. However, if plaintiffs are unsuccessful in tracing the securities, their claims will be dismissed.

Bottomline

Posner and Mitts have had a clear interest of being able to show the court, putting forward evidence, that tracing of the actual passage of purchased securities IS POSSIBLE. Obviously they believe they ARE capable of putting that evidence forward in this case, which I believe will be where we should direct our eyes, as this could lay the precedent for broadening the scope of Cohen and Milsteins lawsuit against the 7 Market Makers.

With the supreme courts order NOT to dismiss the case, but remanding it to Ninth Court, Posner and Mitts now seem to be getting the opportunity to do just that.