Broker-Dealer Litigation - Greenberg Traurig LLP

performance life of a customer relationship -- effectively front-loading these revenues. The court
granted the defendant’s motion finding that there was nothing about the change in accounting
procedures that suggested a prior intent to defraud. The court also found a lack of requisite
scienter given the small portion of the company’s revenues to which the allegations related.
Ambert v. Caribe Equity Group, Inc., 2011 WL 4626012 (D. Puerto Rico Sept. 30, 2011).
Plaintiffs brought suit against defendants alleging violations of federal securities laws.
Defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted.
Plaintiffs alleged that defendants knowingly and willfully omitted material facts and made false
representations in their dealings with plaintiffs relating to an investment in a company
purportedly for the purpose of creating a new HMO plan when the company, in fact, purchased a
previously existing, troubled HMO plan. The court denied defendants’ motion finding that
plaintiffs’ allegations properly particularized sufficient detail relating to defendants access to
information on the company’s finances. Plaintiff also adequately alleged a reasonable and strong
inference of scienter, reliance and loss causation given the likelihood that plaintiffs may have
changed their investment decision had they known of the alternative plans of the fund.
City of Roseville Empls.’ Ret. Sys. v. Textron, Inc., 2011 WL 3740768 (D.R.I. Aug. 24, 2011).
Investors filed securities fraud class action alleging that company and several of its senior
officers made series of statements about its financial condition that were misleading because they
omitted important qualifying information. Defendants moved to dismiss for failure to state a
claim as required under the heightened pleading standards of the PSLRA. The court granted the
motion finding that defendant’s failure to disclose it had recently relaxed its underwriting
standards and its decision to finance deposits of aircraft sold by its subsidiary, did not render
these public statements materially misleading. The court found that plaintiff failed to establish
that the company concealed a weakness in the backlog of orders and that executive’s statement
that company was “not involved in sub-prime or other misunderstood or high-risk” products was
not false when made.
In re Sturm, Ruger & Company, Inc. Securities Litigation, 2011 WL 494753 (D. Conn. Feb. 7,
2011).
Lead plaintiff brought class action suit against defendants alleging violations of federal
securities laws. Defendants filed a motion to dismiss for failure to state a claim as required under
the heightened pleading standards of the PSLRA. Plaintiff alleged that defendants failed to
disclose problems with their transition to a “lean manufacturing” model and thereby misled
plaintiffs into purchasing the company’s stock at an artificially inflated value. The court denied
defendants’ motion finding that some of the statements alleged by plaintiff were properly
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