Broker-Dealer Litigation - Greenberg Traurig LLP

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Kuriakose v. Federal Home Loan Mortgage Corp., 2011 WL 1158028 (S.D.N.Y. Mar. 30,
2011).
Plaintiffs, brought class action suit against defendants alleging violations of federal
securities laws. Defendants then filed a motion to dismiss for failure to state a claim as required
under the heightened pleading standards of the PSLRA. Plaintiffs claimed that defendant
corporation and its officers materially misrepresented the corporation’s exposure to risky
mortgage products, the sufficiency of its capital, and the accuracy of its financial reporting
resulting in inflated share prices. The court granted defendants’ motion to dismiss but gave
plaintiffs leave to amend finding that plaintiffs failed to adequately plead the existence of
actionable misstatements or omissions relating to exposure to non-prime mortgage loans, or
capital adequacy. The court also found that plaintiffs failed to plead loss causation with respect
to alleged claims relating to internal controls and financial statements.
In re Merrill Lynch Auction Rate Securities Litigation, 2011 WL 1330847 (S.D.N.Y. Mar. 30,
2011).
Plaintiffs 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. Specifically, plaintiffs claimed that
defendants made misstatements and omissions about the safety and liquidity of the Auction Rate
Securities market in which plaintiffs had invested. The court denied defendants’ motion to
dismiss finding that the two allegations made by plaintiff, taken together, supported that the facts
that defendants’ continued to sell an illiquid product to investors with a need for liquidity and
withdrawing support from the products while continuing to tout them as safe adequately alleged
a strong inference of scienter. The court also found that plaintiffs reasonably alleged reliance
because defendants’ represented and plaintiffs relied on the fact that auction rate securities were
liquid instruments.
Plumbers and Pipefitters Local Union No. 719 Pension Trust Fund v. Conseco Inc., 2011 WL
1198712 (S.D.N.Y. Mar. 30, 2011).
Plaintiffs brought a 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. Plaintiffs claimed that defendants, an
insurance company and its officers, failed to properly disclose potential liabilities relating to its
inability to integrate nineteen separate computer systems of recently acquired insurance
companies. The complaint went on to allege that this lack of integration often resulted in
accidental payments over policy maximums and payments for uncovered incidents. The court
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