Broker-Dealer Litigation - Greenberg Traurig LLP

denied another defendant’s motion to dismiss finding that the plaintiff adequately plead that the
complicated structured investments fell outside the scope of the plaintiff’s investment guidelines.
In re Meta Financial Group, Inc., Securities Litigation, 2011 WL 2893625 (N.D. Iowa July 18,
2011).
Plaintiffs brought class action suit against defendants alleging violations of federal
securities laws and defendants filed motion to dismiss for failure to state a claim as required
under the heightened pleading standards of the PSLRA. Plaintiffs alleged that defendants either
knowingly or recklessly published a series of materially false and misleading statements and
omissions about defendant company’s operations and finances. The court denied defendants’
motion finding that plaintiffs adequately pleaded their claims with the requisite particularity.
Yary v. Voight, 2011 WL 6781003 (D. Minn Dec. 27, 2011).
Plaintiffs brought suit against defendant asserting claims under the Securities Exchange
Act of 1934 and defendant moved to dismiss. Plaintiffs claimed various statements made by
defendant in advising them to invest in a real estate financing company and other subsequent,
related investments and transfers of their original investments were fraudulent. The court found
that the complaint contained many of the specific statements made by defendant to plaintiffs
relating to the investments, as well as a subsequent release. The court found that these
statements contained the requisite particularity required for stating misrepresentations or
omissions under the heightened pleading standards of the PSLRA. Further, the court found
sufficient evidence for plaintiffs to assert a conversion claim. Finally, the court noted that the
behavior of defendant in making statements about the safety of the investments and encouraging
elderly, unsophisticated investors of limited means to concentrate on extremely risky investments
gave rise to a strong inference of scienter.
McDonald v. Compellent Technologies, Inc., 805 F. Supp. 2d 725 (D. Minn. Aug. 1, 2011).
Investor brought class action suit against defendant corporation and five of its officers
and directors for violations of federal securities laws. Plaintiffs alleged that defendants
participated in fraudulent scheme to artificially inflate corporation’s stock prices. Defendants
moved to dismiss for failure to state a claim as required under the heightened pleadings standards
of the PSLRA. The court granted defendants’ motion, holding that (i) the investor failed to plead
a securities fraud claim with the requisite particularity required, (ii) that defendants’ general
statements about the business, drop in gross margin, and future revenues were not actionable,
and (iii) that statements forecasting corporation’s revenues were not false or misleading when
made and did not rise to the level of required scienter.
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