Broker-Dealer Litigation - Greenberg Traurig LLP

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Litwin v. Oceanfreight, Inc., 2011 WL 5223022 (S.D.N.Y., Nov. 2, 2011)
Plaintiff, on behalf of a putative class of shareholders of OceanFreight, Inc. common
stock, moved to enjoin a special shareholder meeting scheduled to vote on a proposed transaction
in which OceanFreight would be acquired by a subsidiary of DryShips, Inc. Both companies
were incorporated under the law of the Marshall Islands. Plaintiff alleged that the 17-day
solicitation period used was inadequate, and that the disclosures in the proxy failed to comply
with the federal securities laws. The court found that because OceanFreight was a foreign
private issuer of securities, they were exempt from Section 14(a) of the Exchange Act, and
further that NASDAQ, on which the shares were listed, permits foreign private issuers to utilize
their home country practice with respect to proxy timing, and that a 17-day notice period was
permissible under the laws of the Marshall Islands. The court also held with respect to the
alleged misstatements or omissions in the proxy disclosures, that OceanFreight was except from
Section 14(a) and Rule 14a-9 thereunder, as a foreign private issuer, but that even if it had been
subject to those provisions of the securities laws, plaintiff would have been unable to establish
loss causation, because DryShips already owned and controlled 50.5% of OceanFreight’s shares.
The court also rejected plaintiff’s other arguments, and accordingly found that plaintiff had failed
to demonstrate a likelihood of success on the merits and denied the motion.
Resnik v. Woertz, 774 F.Supp.2d 614 (D.Del. 2011).
Plaintiff, a shareholder of Archer-Daniels-Midland Co. (ADM), sued ADM and
individual defendants in connection with alleged violations of Section 14(a) of the Exchange Act
and derivative state law claims. Plaintiff’s Section 14(a) claims against ADM centered around
proxy disclosures regarding a proposed incentive plan, approved by shareholders in the annual
meeting in November 2009. The court found that the risk a bonus might not be tax deductible
and the information necessary to determine whether it is deductable are material to the average
investor at the time of the Proxy Statement. In that connection, the court found that plaintiff had
adequately pled that the number of individuals in a particular class who are eligible to participate
in an incentive plan, whether an incentive plan was designed to comply with Section 162(m) of
the Internal Revenue Code, and the omission of information on whether improved performance
would be required to achieve a bonus, how difficult it would be to achieve target levels, or how
target levels would be calculated would be material to investors. However, the court found that
plaintiff had failed to meet the heightened pleading standards because it did not allege economic
injury. Accordingly the court granted in part ADM’s motion to dismiss.
Seinfeld v. Connor, 774 F.Supp.2d 660 (D. Del. 2011)
The U.S. District Court for the District of Delaware granted defendants’ motion to
dismiss claims asserted by plaintiff Frank David Seinfeld for violations of Section 14(a) of the
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