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The M&A Advisor Winner 2017The M&A Advisor announced the winners of the 16th Annual M&A Advisor Awards on Monday, November 13 at the 2017 M&A Advisor Awards. Bass, Berry & Sims was named a winner in the two categories related to the following deals:

M&A Deal of the Year (from $1B-$5B) – Acquisition of CLARCOR Inc. by Parker Hannifin Corporation

Corporate/Strategic Deal of the Year (over $1B) – Acquisition of BNC Bancorp by Pinnacle Financial Partners

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Regulation A+

It seems that lately there has been a noticeable uptick in Regulation A+ activity, including several recent Reg A+ securities offerings where the stock now successfully trades on national exchanges. In light of this activity, we have published a set of FAQs about Regulation A+ securities offerings to help companies better understand this "mini-IPO" offering process, as well as pros and cons compared to a traditional underwritten IPO.

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Chris Lazarini Analyzes Daubert in Securities Fraud Case

Securities Litigation Commentator

Publications

June 20, 2016

Bass, Berry & Sims attorney Chris Lazarini analyzed a case in which the court applied Daubert to strike the testimony of an expert witness because the expert was not qualified as an expert in that specific area and her testimony would only confuse jurors.

Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.

Puda Coal Securities Inc. Litigation, In Re: Querub vs. Moore Stephens Hong Kong, No. 15-2100 (2nd Cir., 5/20/16) 

Under the Daubert standard, an expert must be qualified to testify as to a certain issue and her opinion on that issue must be informed by reliable information and methodology and must not be substantially outweighed by the danger of confusing the issues or misleading the jury. 

Plaintiffs are shareholders of Puda Coal, Inc. ("Puda"), a China-based company once traded on the New York Stock Exchange. Puda held, as its sole asset, a 90% stake in Shanxi Coal ("Shanxi"), a China-based coal supplier. In 2009, Puda's chairman transferred Puda's entire stake in Shanxi to himself, leaving Puda a shell company. Puda's 2009 and 2010 financial statements continued to reflect Shanxi's revenue, net income, and other financial information. Defendant, a Hong Kong-based audit firm, issued "clean" audit opinions for Puda's 2009 and 2010 financial statements, purportedly pursuant to Public Company Accounting Oversight Board ("PCAOB") standards. After the Shanxi transfer became public in 2012, Puda's shares collapsed and the company was delisted. At the same time, Defendant resigned as Puda's auditor and announced that its 2009 and 2010 audit opinions could no longer be relied upon. 

Plaintiffs sued, alleging that Defendant violated Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. Opposing Defendant's motion for summary judgment, Plaintiffs relied on their expert, who testified that Defendant failed to comply with the auditing standards of Hong Kong and the People's Republic of China ("PRC"). Plaintiffs' expert admitted, however, that she was not an expert on PCAOB and could not opine on whether the audits complied with PCAOB standards. Defendant offered a contra-expert who was qualified to discuss PCAOB standards and opined that the audits fully complied with them. The district court found that Plaintiff's expert did not have expertise in PCAOB audits, struck her testimony, and awarded summary judgment to Defendant. 

The Court reviews the exclusion of expert testimony under the abuse of discretion standard. Applying the Supreme Court's teachings in Daubert v. Merrell Dow Pharmaceuticals, the Court finds that the district court appropriately struck the testimony of Plaintiffs' expert, because she was not qualified on PCAOB, the sole relevant auditing standard, and because allowing her opinions on Hong Kong and PRC audit standards would not aid the jury and risked confusing the issues. The Court also finds that Plaintiffs did not raise triable issues of fact under §10(b) or §11. As to §10(b), the core of the complaint alleges "fraud by hindsight," which is inadequate to support the claim. Similarly, Plaintiffs cannot support their §11 claims, due to a lack of evidence that Defendant did not believe its "clean" audit opinion and that Defendant omitted material facts about the basis for its opinions. The Court affirms summary judgment for Defendant. 

Among the defendants still in the case are two underwriters of a 2010 public stock offering by Puda.


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