Broker-Dealer Litigation - Greenberg Traurig LLP

City of Roseville Employees’ Retirement System v. Energysolutions, Inc., WL 4527328
(S.D.N.Y. Sept. 30, 2011).
A pension fund brought suit against company, officers and directors, company’s sole
stockholder prior to public offerings, and three underwriters alleging violations of federal
securities laws. The court granted defendants’ motion with respect to violations of the Securities
Exchange Act of 1934 and plaintiffs’ failure to meet the heightened pleading requirements of the
PSLRA. The court held that plaintiffs’ allegations contained sufficient particularity and were
sufficient to scienter with regard to certain defendants. The court held, however, that the
complaint failed to sufficiently allege that the defendants’ statements were false or that
defendants omitted facts necessary to make disclosures materially misleading.
International Fund Management S.A. v. Citigroup, Inc., 2011 WL 4529640 (S.D.N.Y. Sept. 30,
2011).
Foreign investors brought suit against corporation and its affiliates alleging violations of
federal securities laws. The court granted and denied defendants’ motion to dismiss in part.
The court held that certain claims under the Securities Exchange Act of 1934 were not subject to
the heightened pleading requirements under the PSLRA but other claims were. In reference to
those claims that the PSLRA covered, the court held that the investors failed to state claims
based on misstatements or omissions regarding structured investment vehicles. Plaintiffs also
failed to properly allege that the corporation’s failure to disclose its auction rate securities
holdings, raised a strong inference of scienter in connection with write-downs of corporation’s
collateralized debt obligations. Plaintiffs failed to sufficiently allege actual reliance based on
corporation’s alleged misstatements in filings with the Securities and Exchange Commission.
The court did hold that certain of the investors’ allegations were sufficient to raise strong
inference of recklessness with respect to corporate officer’s collateralized debt obligation related
statements.
Wilamowsky v. Take-Two Interactive Software, Inc., 2011 WL 4542754 (S.D.N.Y. Sept. 30,
2011).
Short-seller of corporation’s stock opted out of class action and brought private action
against corporation, its former CEO and former directors, alleging violations of federal
securities laws. Plaintiff’s complaint pertained to defendants’ misrepresentations and omissions
regarding a corporation’s stock option plans. The court granted defendants’ motion holding that
plaintiff had failed to sufficiently allege loss causation. The court found that seller’s transactions
in corporation’s stock began after the price was already allegedly inflated and ended 14 months
prior to the relevant curative disclosures.
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