Broker-Dealer Litigation - Greenberg Traurig LLP

particularized as materially misleading. The court also found that defendants’ motives in
delaying bad news to personally benefit themselves by selling their own shares gave rise to a
strong inference of scienter.
Maverick Fund, L.D.C. v. Comverse Technology, Inc., 801 F. Supp.2d 41 (E.D.N.Y. 2011).
Hedge funds that purchased shares of a corporation’s stock brought action against
corporation, its officers, and members of the corporation’s compensation and audit committees,
alleging violations of federal securities laws. Defendants moved to dismiss for failure to state a
claim as required under the heightened pleading standards of the PSLRA. The court granted the
defendants’ motion in part and denied it in part holding that hedge funds were not required to
plead the specific details of each purchase and sale of stock to satisfy heightened pleading
requirements but adequately alleged loss causation.
Johnson v. Siemens AG, 2011 WL 1304267 (E.D.N.Y. Mar. 31, 2011).
Lead plaintiff brought class action suit against defendants alleging violations of federal
securities laws. Defendants moved to dismiss in accordance with the heightened pleading
standards of the PSLRA. Plaintiff alleged that defendants knowingly or recklessly disseminated
or approved false statements about the financial well-being of its company, resulting in an
inflated price of defendant company’s securities. The court granted defendants’ motion to
dismiss finding that plaintiff’s claim failed to allege facts giving rise to a strong inference of
scienter.
In re Wachovia Equity Sec. Litig., 753 F. Supp. 2d 326 (S.D.N.Y. 2011).
Shareholders brought suit against bank holding company and others 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. Plaintiffs’ claims related to the
company’s financial disintegration. The court granted defendants’ motion to dismiss finding that
the alleged misstatements of company officials, consisting of repeated public declarations of
their conservative underwriting standards and credit risk management, were not actionable as
securities fraud. The court also held that the complaints, considered collectively, failed to plead
facts giving rise to strong inference of scienter that company and its officials acted with intent to
deceive, manipulate, or defraud the shareholders.
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