Broker-Dealer Litigation - Greenberg Traurig LLP

issue, and therefore qualified for safe harbor protection. The court found that other statements
regarding various financial projections, however, were not eligible for safe harbor protection
because plaintiffs adequately alleged that defendants knowingly omitted relevant information
regarding the impact of its new manufacturing model that would have provided meaningful
context for investors. Accordingly, the court granted in part and denied in part defendants’
motion to dismiss.
Maverick Fund, L.D.C. v. Comverse Tech., Inc., 801 F. Supp.2d 41 (E.D.N.Y. 2011).
In a securities fraud action, the district court granted defendants’ motion to dismiss
claims related to allegedly false and misleading statements about when the defendant company
would become current with its regulatory filings in the wake of publicized accounting
irregularities. Defendants argued that the alleged misstatements were forward-looking
statements shielded from liability by the Private Securities Litigation Reform Act of 1995’s safe
harbor provisions. Plaintiffs argued that certain portions of the statements at issue, including that
defendants “continue[d] to make substantial progress towards restatement,” were not forwardlooking
but rather misrepresented present fact and, thus, were not eligible for protection under
the safe harbor. The court found that the present-tense portions of the statements were so vague
as to be inseparable from the forward-looking portions and, thus, the statements qualified for safe
harbor protection. Accordingly, since plaintiffs did not challenge the adequacy of cautionary
language that accompanied the statements at issue, the court granted defendants’ motion to
dismiss.
In re Bear Stearns Co., Inc. Sec., Derivative & ERISA Litig., 763 F. Supp. 2d 423 (S.D.N.Y.
2011).
In a set of consolidated actions arising out of the collapse of Bear Stearns, the district
court denied defendants’ motion to dismiss claims related to alleged misstatements and
omissions concerning valuation of mortgage-backed assets, asset write-downs, GAAP violations
and the company’s liquid assets. The Bear Stearns defendants argued that statements about
models used to value mortgage-backed securities were forward-looking statements shielded from
liability by the Private Securities Litigation Reform Act of 1995’s safe harbor and the bespeaks
caution doctrine. The court found that these statements referred to present risk factors and were
therefore not forward-looking statements. Additionally, to the extent the statements were
forward-looking, they were still not protected by the safe harbor because defendants allegedly
knew at the time the statements were made that their valuation models were fundamentally
flawed but had failed to include meaningful cautionary language to warn investors of the known
risks. Accordingly, the court denied defendants’ motion to dismiss.
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