Developments in securities litigation move fast, and not all of them matter equally. Each month, Alto Litigation curates and summarizes the cases, rulings, and regulatory actions most likely to shape risk and strategy in the months ahead.
SEC Appoints New Enforcement Director
On April 8, the Securities and Exchange Commission appointed David Woodstock as the new director of the SEC’s Division of Enforcement. Woodstock was chair of the Securities Enforcement Practice Group at Gibson, Dunn & Crutcher and previously had been head of the SEC’s Fort Worth Regional Office.
Woodstock replaces Judge Margaret Ryan, who resigned as the Enforcement Director after only seven months amid reports that she feuded with SEC Chair Paul Atkins about enforcement practices.
Why It Matters: It remains to be seen whether Woodstock changes the Division’s enforcement orientation. On April 7, the SEC announced its enforcement results for Fiscal Year 2025 (ended September 30, 2025), revealing a sharp reduction in enforcement actions. The SEC filed 456 enforcement actions in FY 2025, representing a 22% decrease from FY 2024. The SEC characterized the fewer enforcement actions as a positive development, declaring that it was moving away from the alleged “regulation by enforcement” by the SEC in the Biden Administration.
In particular, the SEC has voluntarily dismissed or settled actions alleging that the offer and sale of crypto assets constituted violations of the federal securities laws because they were unregistered securities. The SEC has also stated that it will not bring enforcement actions based on so-called technical violations but will focus on combating fraud.
Federal Jury Returns Defense Verdict in Vaxart Class Action
On April 28, 2026, a federal jury in San Francisco found that hedge fund Armistice Capital and two of its executives were not liable on securities claims that the firm engaged in market manipulation of the shares of Vaxart, Inc., by inflating its stock price through materially false and misleading press releases in order to sell $250 million in Vaxart stock.
The plaintiffs also alleged in the class action that the defendants engaged in insider trading by selling Vaxart stock while in possession of material, nonpublic information. Defendants had told the jury that they had no involvement in Vaxart’s press releases, which they also contended were accurate. (Vaxart Inc. Securities Litigation, Case No. 3:20-cv-05949, U.S. District Court for the Northern District of California)
Why It Matters: Very few securities class action lawsuits ever reach trial, so the few that manage to get to a verdict provide test cases concerning how juries view these cases. A defense verdict likely will persuade defense counsel and their clients that it is worth risking taking a case to trial or demanding a low settlement amount.
Ninth Circuit Refuses to Vacate FINRA Arbitration Award Because Proceedings Were Not Recorded
The Ninth Circuit Court of Appeals refused to vacate an arbitration award even though the proceedings were not recorded. In Uddin v. TD Ameritrade, Inc., 2026 WL 982854 (9th Cir. Apr. 13, 2026) (Not for Publication), the appellant appealed an award by the Financial Industry Regulatory Authority (“FINRA”) to TD Ameritrade, asserting that the apparently inadvertent failure of the FINRA panel to record or transcribe the proceedings, as required by the arbitration agreement, deprived him of a fundamentally fair hearing.
But the panel ruled that under the Federal Arbitration Act, a court may vacate an arbitration award where the award was procured by corruption, fraud or undue means; where there was evident partiality or corruption in the arbitrators; where a party was “prejudiced” by the arbitrators’ misconduct or misbehavior; or where the arbitrators exceeded their powers.
The court ruled that even if the inadvertent failure to record the proceedings amounted to “misbehavior,” Uddin failed to show how his rights were prejudiced by an absence of a transcript or recording. The Ninth Circuit therefore affirmed the district court’s decision to confirm the FINRA award.
Why It Matters: This decision demonstrates the difficulty in convincing the federal courts to overturn an arbitration award. Here, even a significant failure by the arbitration panel to adhere to the terms of the arbitration agreement was not deemed sufficient grounds for vacating the award.
Ninth Circuit Reverses Insider Trading Conviction Because of Juror Doubt
The Ninth Court of Appeals reversed a conviction for insider trading because a juror expressed doubts about his ability to be fair to both sides even though defense did not object to the juror’s continued service.
In U.S. v. Bolandian, 2026 WL 1076834 (9th Cir. Apr. 21, 2026), the defendant and his relatives allegedly traded in stocks based on tips about potential mergers from a former college classmate working as a banking analyst at J.P. Morgan. During the trial, a juror sent the trial judge a note stating that his uncle owned a private investment firm that had conducted business with J.P. Morgan and might have a relationship with a witness.
In a colloquy with the judge, the juror was asked if he could be fair to both sides and responded that he “was not sure.” Nonetheless, defense counsel did not object to the continued service by the juror, who became the foreman of the jury.
The Ninth Circuit held that the trial judge had a duty to investigate possible jury bias that could not be waived by defense counsel. The court held that there was plain error because the trial judge impermissibly delegated the responsibility to investigate potential juror bias to the juror himself. The court vacated the judgment and remanded the case for a new trial.
Why It Matters: The court held that the Sixth Amendment guarantees a defendant the right to trial by an impartial jury. Here, the juror volunteered his potential bias, and the trial judge merely instructed the juror to advise the Court if he still believed he could not be fair after he had heard all the evidence.