Broker-Dealer Litigation - Greenberg Traurig LLP

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Valentini v. Citigroup, Inc., 2011 WL 6780915 (S.D.N.Y. Dec. 27, 2011).
Plaintiffs brought suit against defendant alleging violations of Section 10(b) and Rule
10b-5 of the Securities Exchange Act of 1934. The court denied defendants’ motion to dismiss.
The court concluded plaintiff had adequately demonstrated the materiality of at least some of the
misstatements and omissions identified in the complaint. The court found that the failure of
defendants to provide relevant information relating to the extremely risky nature of many of the
instruments underlying their investments departed from ordinary practice enough to justify a
finding of scienter. The court also held that the shaky economic background during which many
of the investments were made complicated the analysis of loss causation but that such
complications were to be resolved at trial.
Saunders v. Morton, 2011 WL 1135132 (D. Vt. Feb. 17, 2011).
Plaintiff brought suit against defendant 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, plaintiff claimed defendant made
misrepresentations as to the use plaintiff’s invested funds, ultimately utilizing them for personal
use and making payments to perpetuate a Ponzi scheme. The court denied defendant’s motion to
dismiss finding that plaintiff’s complaint, as amended, contained sufficient factual matter to state
a claim.
Resnik v. Woertz, 774 F. Supp. 2d 614 (D.Del. 2011).
Shareholders brought separate suits against corporation and individual officers and
members of the board of directors 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 alleged defendant’s proxy statement failed to make required
disclosures. The court granted defendants’ motion in part and denied in part. The court denied
the motion to dismiss, finding that defendants’ failed to disclose eligibility and other aspects of a
compensation plan. The court, however, granted the motion to dismiss with respect to the
shareholder’s direct claim against officers and board members for failure to adequately allege
loss causation requirement of economic harm.
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