Broker-Dealer Litigation - Greenberg Traurig LLP

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Dixon v. Ladish Company, Inc., 785 F.Supp.2d 746 (E.D.Wis. 2011)
The U.S. District Court for the Eastern District of Wisconsin granted defendants’ motion
to dismiss claims alleged by plaintiff, Dixon, for violations of Sections 14(a) and 20(a) of the
Securities Exchange Act. The plaintiff also asserts a claim for breach of fiduciary duty, arising
under Wisconsin law. Defendants contend that the plaintiff’s claims arising under Section 14(a)
must fail because the claims are not plead with the particularity required under the Private
Securities Litigation Reform Act (“PSLRA”).
The claims arise from a merger agreement between Ladish Company Inc. (“Ladish”) and
Allegheny Technologies, Inc. (“Allegheny”), in which Allegheny agreed to acquire Ladish. The
court found that while the amended compliant alleged that the registration statement misstated
and omitted material information; the complaint did not allege any specific facts to support the
general allegations. The complaint also contained general allegations regarding the lack on
information regarding Ladish’s decision to enter into, and subsequently approve of, the merger
agreement with Allegheny. However, the court found that, without specific facts relating to how
such an omission lead to misstatements, the claim failed under the requirements of the PSLRA.
The court found this to be true regardless of whether the misstatements were material.
SEC v. Mercury Interactive, LLC, 2011 U.S. Dist. LEXIS 134580 (N.D. Cal. Nov. 22, 2011).
On a motion to reconsider the denial of defendant’s motion to dismiss plaintiff’s Section
14(a) claim, the court held that Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct.
2296 (2011), did not apply to Section 14(a) claims. The Supreme Court in Janus decided that
“[f]or purposes of Rule 10b-5, the maker of a statement is the person or entity with ultimate
authority over the statement, including its content and whether and how to communicate it.” Id.
at 2302. The court noted that Section 14(a), however, “proscribe[s] the solicitation of proxies
‘by means of’ false or misleading statements.” Mercury Interactive, 2011 U.S. Dist. LEXIS
134580, at *8 (quoting Section 14(a)). Because Section 14(a) is not limited to those situations in
which someone “makes a statement,” that is, the language that the Janus Court construed, Janus
does not apply to Section 14(a) claims.
SEC v. Zhenyu Ni, Case No. CV-11-0708 DMR, SEC Litig. Rel. No. 21859 (N.D.Cal. Feb. 16,
2011).
The Commission brought suit alleging, inter alia, that defendant had violated Section
14(e) of the Exchange Act and Rule 14e-3 thereunder by trading in shares of Bare Escentuals,
Inc., after overhearing confidential communications suggesting upcoming merger while sitting in
the office of his sister, who was then Director of Tax at Bare. The Commission also alleged
violations of Sections 10(b) of the Exchange Act and Rule 10b-5 thereunder. Defendant
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