Ninth Circuit Revives Amyris Shareholder Suit

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Amyris Shareholder Suit

In a dramatic turn, the Ninth Circuit delivered a published opinion on Monday that breathes new life into a derivative shareholder suit against biotech giant Amyris. The suit, spearheaded by Andrew Roth, accuses Amyris board director John Doerr and his investment entity, Foris Ventures LLC, of reaping short-swing profits without necessary approvals.

Unanimous Decision on Short-Swing Profits

The three-judge panel unanimously resurrected portions of Roth’s suit, challenging the lower court’s decision that demanded Amyris’ board approval for transactions aimed at shielding it from liability. The revived suit seeks disgorgement of alleged short-swing gains, particularly spotlighting Doerr and Foris Ventures, a substantial 10% owner of Amyris.

Amyris Shareholder Suit : Remand on SEC’s Rule

However, the panel remanded a crucial element back to the lower court. It instructed the court to determine whether Foris qualifies for an exemption under the U.S. Securities and Exchange Commission’s (SEC) short-swing profits rule, adding a layer of perplexity to the legal proceedings.

Short-Swing Profits and SEC’s Role

Short-swing profits, a contentious practice, involve insiders trading company stock within a six-month period. The 1934 Securities Exchange Act, in Section 16(b), deems such trading inappropriate due to the presumed possession of material, nonpublic information by company insiders.