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ARTICLE · 23 AUGUST 2021

Second Circuit Opinion Allows Market Manipulation Claims Based On Hedging Activity

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On April 27, the US Court of Appeals for the Second Circuit released its opinion in Set Capital LLC v. Credit Suisse Group AG, No. 19-3466 (2d Cir. 2021).

United StatesCorporate/Commercial Law
Spencer R. Croat
Spencer R. Croat
J Matthew W. Haws
J Matthew W. Haws
Christian Kemnitz
Christian Kemnitz
Sarah Weber
Sarah Weber
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On April 27, the US Court of Appeals for the Second Circuit released its opinion in Set Capital LLC v. Credit Suisse Group AG, No. 19-3466 (2d Cir. 2021). The decision is noteworthy because the Court permitted market manipulation claims against an issuer arising from its open-market hedging activities, while rejecting the issuer's explicit disclosure of the hedging as insufficient to avoid liability under the Securities Exchange Act of 1934 and the Securities Act of 1933. In particular, the application of Private Securities Litigation Reform Act (PSLRA) pleading standards regarding scienter to the law of manipulation in the context of open market transactions reflected a surprising application of prior guidance.

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