Broker-Dealer Litigation - Greenberg Traurig LLP

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Barnard v. Verizon Communication, Inc., 2011 WL 5517326 (3d Cir. Nov. 14, 2011).
The court, granted defendant’s motion to dismiss reasoning that investors did not satisfy
the PSLRA particularity pleading requirement for common law fraud. Plaintiffs alleged that
defendant’s annual statement and a spin-off corporation’s prospectus omitted information
concerning tax sharing agreements. The court found that plaintiffs failed to show how any
defendants’ alleged misrepresentations impacted Plaintiffs’ decisions to purchase or sell
securities.
Katyle v. Penn National Gaming Inc., 637 F.3d 462 (4th Cir. 2011).
The court granted defendant’s motion to dismiss for failure to adequately allege loss
causation as required under PSLRA. On appeal, court held that purportedly corrective
disclosures of delays in states’ regulatory approval process for a proposed buy-out/merger
agreement, and defendant’s failure to issue press release announcing the regulatory approval
were insufficient to show loss causation. The court further stated that not every announcement
of bad news should be constitute grounds to issue a corrective disclosure.
Frank v. Dana Corporation, 646 F.3d 954 (6th Cir. 2011).
Shareholders brought a securities fraud class action against a corporation’s former CEO
and CFO who allegedly falsified corporation’s financial reports. The court granted defendants’
motion to dismiss, and plaintiffs appealed. On appeal, the court vacated and remanded. On
remand, the court granted defendants’ motion to dismiss and plaintiffs appealed again. On
appeal, the court held that shareholders adequately pleaded scienter. Specifically, plaintiffs
alleged that defendants reported inflated earnings, filed reports, made public statements and
asserted the veracity of their financials to government authorities all while key product line was
operating at 50 percent of earnings, multiple factories were failing to meet budgets and the price
of inputs had risen nearly 60%.
Ashland, Inc. v. Oppenheimer & Co., Inc., 648 F.3d 461 (6th Cir. 2011).
Plaintiff, investor brought action alleging securities fraud claims against defendant, a
broker of auction rate securities (“ARS”). The court granted defendant’s motion and plaintiff
appealed. On appeal, the court held that plaintiff’s allegations failed to give rise to strong
inference that defendant acted with scienter. The court found that plaintiff failed to allege why
or how defendant possessed advance, non-public knowledge that underwriters would jointly exit
the ARS market and cause its collapse. The court reasoned that the allegations suggested that a
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