Broker-Dealer Litigation - Greenberg Traurig LLP

to correct erroneous accounting procedures, did not adequately support a strong inference of
scienter. Further, the court reasoned that the allegations regarding subsequent corrective
disclosures did not adequately allege loss causation.
Plichta v. Sunpower Corporation, 790 F.Supp.2d 1012 (N.D. Cal. 2011).
Shareholders brought class action suit against company and its executives 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. Shareholders alleged
that defendants unsubstantiated accounting entries rendered the company’s filings with the
Securities and Exchange Commission false and misleading. The court granted defendants motion
to dismiss finding that the shareholders failed to plead scienter sufficiently. Further, the court
found that plaintiffs allegations did not support a strong inference that management could have
known that the underlying data entered into the accounting entries were false. Plaintiffs
allegations that executives had made acknowledgements and admissions regarding a lapse in
internal control mechanisms was not sufficient to survive the motion to dismiss.
Lapiner v. Camtek, Ltd., 2011 WL 445849 (N.D. Cal. Feb. 2, 2011).
Plaintiffs brought suit against defendants alleging violations of federal securities laws and
defendants moved to dismiss for failure to state a claim as required under the heightened
pleading requirements of the PSLRA. Plaintiffs were stockholders claiming defendants engaged
in a scheme to inflate the price of stock by making material misrepresentations regarding its cash
flow and revenue. Allegedly, defendants cashed in letters of credit on orders for products before
the orders were accepted. The court granted defendants’ motion to dismiss, finding that plaintiffs
did not identify the basis of their belief that the letters of credit were used in this manner. The
court also found plaintiffs’ grounds for scienter based on stack sales and positions held in the
company to be deficient and an additional ground for dismissal.
In re Bank of America Corp. Auction Rate Securities (ARS) Marketing Litigation, 2011 WL
740902 (N.D. Cal. Feb. 24, 2011).
Investors brought suit against bank 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 bank earned lucrative fees in
connection with its role in a securities market and that it took advantage of the opportunity to
manipulate the market. The court granted defendants’ motion to dismiss, finding that plaintiffs
failed to sufficiently allege the manipulative acts on which the alleged scheme was based.
Further, the court found that the mere allegation that defendants desired to earn a commission
was too common a motive and not adequately particularized.
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