Broker-Dealer Litigation - Greenberg Traurig LLP

alleged scienter, plaintiff had also failed to plead with particularity claims relating to defendants’
knowledge of “churn” data and that other statements were protected as either forward-looking or
mere puffery.
In re Franklin Corp. Securities Litigation, 782 F.Supp.2d 364 (S.D.Tex. 2011).
Purchasers of common and preferred stock brought class action suit against bank and
bank’s officers and directors, its outside auditor, and underwriter alleging violations of federal
securities laws and defendants filed a motion to dismiss for failure to state a claim as required
under the heightened pleading standards of the PSLRA. Plaintiffs claimed damage to preferred
shares purchased from bank were caused by bank’s concealing adverse information concerning
bank’s operations, financial condition, and performance alleged to be caused by concealed highrisk
strategy and lack of risk management protocols. The court granted defendants’ motions to
dismiss finding that purchasers failed to plead with sufficient particularity claim that chairman of
bank’s board of directors made material misrepresentations regarding its capitalization and
reserves; purchasers failed to allege scienter; bank’s CEO had no duty to disclose to investors of
mortgage lender’s default on warehouse line of credit; and registration statement did not contain
any false statements or material omissions.
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Hawaii Ironworkers Annuity Trust Fund v. Cole, 2011 WL 1257756 (N.D.Ohio Mar. 31, 2011).
Institutional investor brought class action suit as lead plaintiff against defendants for
alleged violations of federal securities laws and defendants moved to dismiss for failure to state a
claim as required under the heightened pleading standard of the PSLRA. Plaintiff claims that
defendants contributed to the restatement of earnings of a company plaintiff invested in, which
was the result of a fraudulent scheme and wrongful course of business whereby defendants, highlevel
employees, caused the company to issue false financial statements. The court denied
defendants’ motion finding that plaintiff sufficiently alleged that defendants substantially
participated in making misrepresentations, that if not for the defendants’ misleading statements
the plaintiff and others similarly situated might not have made the investment. The court found
that plaintiff sufficiently pleaded scienter and loss causation.
Hawaii Ironworkers Annuity Trust Fund v. Cole, 2011 WL 1257756 (N.D. Ohio Mar. 31, 2011).
Plaintiff brought class action suit against defendants alleging violations of federal
securities laws and 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
overstated the results of operations at one unit of their business, representing that it was thriving
while the automotive parts manufacturing industry was encountering severely adverse conditions
and once the company was forced to redo its financial statements for those quarters the effects of
the statements on the value of the stock was catastrophic. The court denied defendants’ motion to
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