Broker-Dealer Litigation - Greenberg Traurig LLP

in various contracts of the company with the FDIC, which placed it in default and severely
limited the income stream to the company. The plaintiff’s main purchase was the income stream
of the company. The court held that plaintiff’s allegation failed to satisfy the heightened pleading
requirements for scienter under the PSLRA and that none of the facts asserted by plaintiff, read
alone or read together, supported an inference that the individual was insolvent at the time in
question. Specifically, that defendant went bankrupt two years later, that his bankruptcy occurred
one day before trial in a civil action to which he was a defendant and that the action was filed
before the Participation Agreement was signed was found insufficient.
Szymborski v. Ormat Technologies, Inc., 776 F.Supp.2d 1191 (D. Nev. 2011).
Shareholders brought class action suit against corporation engaged in the geothermal and
recovered energy power business and its corporate officers, 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 claimed that defendants made
misleading disclosures about corporation’s accounting method and about the completion and
capacity of a geothermal power plant. The court denied defendants’ motion with respect to the
accounting method claims, finding that shareholders pled with sufficient particularity their claim
based on allegedly deceptive and improper accounting methods. Further, the court found that the
allegations were sufficient to give rise to strong inference of scienter. Nonetheless, the court
granted defendants’ motion with respect to the geothermal power plant because that
corporation’s allegedly misleading statements about projected completion date were insufficient
to give rise to inference defendants acted with scienter.
Int’l Brotherhood of Elec. Workers Local 697 Pension Fund v. Int’l Game Tech., 2011 WL
915115 (D. Nev. Mar. 15, 2011).
Plaintiff brought class action suit against defendant gaming company and several of its
officers 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.
Plaintiff claimed defendants made false and misleading statements concerning optimistic
disclosures and projections about the company and failed to disclose material facts about low
sales levels during class period. As a result, plaintiff purchased the defendant’s stock at an
inflated price. The court denied defendants’ motion to dismiss, finding that plaintiff sufficiently
alleged inferences that defendants intentionally misled investors. These allegations supported a
strong inference of scienter with regard to statements concerning play levels and certain
agreements, while other claims relating to a technology schedule forecast, operating expense
forecast and stock sales were insufficiently pled to allege fraud.
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