Olshan Client Raging Capital Obtains Victory in EDNY Establishing New Standard for Section 16 Short Swing Profit Claims

Law360 (subscription required) reported on the recent U.S. District Court, Eastern District of New York, ruling that dismissed a case to recover “short swing profits” under the Securities Exchange Act Section 16(b), on the ground that the plaintiff failed to show concrete injury and therefore lacked standing under Article III of the Constitution. The decision may change the landscape across the board for 16(b) litigation by requiring plaintiffs to plead and prove more than the elements of the statute, which plaintiffs in many cases may be unable to do. The Decision is the first to hold that the Supreme Court’s 2021 ruling in TransUnion LLC v. Ramirez applies to Section 16(b) claims. Plaintiff filed an appeal the next day. If upheld, the opinion will change the landscape of 16(b) claims against investors who are not officers, directors or otherwise privy to inside information. Olshan Litigation partner Thomas Fleming represented the defendant Raging Capital Management LLC in this matter.