Broker-Dealer Litigation - Greenberg Traurig LLP

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Dronsejko v. Thornton, 632 F.3d 658 (10th Cir. 2011).
Shareholders brought securities fraud class action against corporation’s independent
auditor, alleging that auditor’s expression of unqualified opinions on corporation’s financial
statements artificially inflated the market price of the corporation’s stock. The court granted the
defendant’s motion to dismiss for failure to properly plead scienter under the heightened
pleading requirements of the PSLRA. Specifically, the court found that plaintiffs’ allegations
failed to raise strong inference that defendant acted recklessly in certifying corporation’s
financial statements.
Findwhat Investor Group v. Findwhat.com, 658 F.3d 1282 (11th Cir. 2011).
The court granted defendant’s motion for summary judgment reasoning that plaintiffs
failed to plead scienter adequately with respect to statements in a Form 10-K annual report filed
by an internet commerce company providing “pay-per-click” advertising services. A review of
the allegations relating to scienter lacked sufficient particularity to create a strong inference of
scienter relating to whether it was “commonly known” within the company that two of the
company’s top revenue-generating distribution partners relied on “click fraud.”
Durgin v. Mon, 2011 WL 573483 (11th Cir. Feb. 18, 2011).
Plaintiff, a union pension fund purchased shares in a residential building corporation and
brought suit against defendant for securities fraud. The court granted defendants’ motion to
dismiss. On appeal, the court held that the amended complaint did not satisfy the heightened
pleading requirements for scienter under the PSLRA. Specifically, the statements made by
defendants in SEC filings, press releases and analysts’ conference calls stating that certain joint
venture loans were not “non-recourse” was not significant because plaintiff failed to allege that
defendants knew that certain loans made to joint ventures were made without recourse.
Kadel v. Flood, 2011 WL 2015379 (11th Cir. May 24, 2011).
Investors brought putative class action against a mortgage and lending company, alleging
violations of federal securities laws. The court granted defendants’ motion to dismiss and the
investors appealed. On appeal, the court held that the investors’ allegations were insufficient to
demonstrate the necessary scienter to commit securities violations under the PSLRA. The court
found that while plaintiffs alleged that defendants expressed mistaken confidence in the
corporation’s well-being and engaged in business practices that contributed to the corporation’s
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