Broker-Dealer Litigation - Greenberg Traurig LLP

plaintiffs failed to (i) create strong inference of scienter and (ii) adequately allege the CEO and
CFO had knowledge of the complaints. Further, the court found that Plaintiffs allegations failed
to adequately plead the CEO’s and CFO’s involvement in the concealment. Finally, the court
found that the CEO and CFO had actually disclosed certain facts about the product, which
weighed against an inference that their statements were knowingly false.
Dixon v. Ladish Company, Inc., 785 F. Supp. 2d 746 (E.D.Wis. 2011).
Shareholder brought suit against corporation and its directors alleging violations of
federal securities laws based on misleading statements contained in corporation’s registration
statement. Defendant filed a motion to dismiss for failure to state a claim as required under the
heightened pleading standards of the PSLRA. The court granted the motion finding that
shareholder failed to plead a securities fraud claim with requisite particularity where her
complaint (i) contained conclusory allegations and (ii) did not include any specific facts as to
what the corporation omitted from its registration statement to make the statement false or
misleading.
Puskala v. Koss Corporation, 799 F. Supp.2d 941 (E.D. Wisc. July 28, 2011).
Investors brought putative class action against corporation, its former accountant, its
principal accounting officer, and its CEO, alleging violations of federal securities laws.
Defendant moved to dismiss for failure to meet the heightened pleading standards required under
the PSLRA. The court granted defendant’s motion to dismiss on the basis that the investors
failed to adequately plead with the requisite particularity required under the PSLRA. The court
noted that, based on the allegations, plaintiffs only way to have stated a claim would have been
to show that the corporation’s internal controls were completely unreliable. The investors failed
to make such an allegations, which meant that they failed to adequately plead their claim.
Pet Quarters, Inc. v. Ladenburg Thalmann and Company, Inc., 2011 WL 1135902 (E.D.Ark.
Mar. 28, 2011).
Plaintiff brought 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. Plaintiff alleged that defendants continued to underwrite and
earn large commissions on auction rate securities with knowledge that credit markets were
deteriorating. Further, plaintiff alleged that defendants knew of the deteriorating markets
because defendants submitted “support” bids on behalf of itself to artificially prop up the market.
Without these support bids, the defendants knew the market would no longer exist. The court
granted one defendant’s motion to dismiss with leave for plaintiff to amend finding that plaintiff
had not alleged sufficient facts to demonstrate either scienter or justifiable reliance. The court
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