Broker-Dealer Litigation - Greenberg Traurig LLP

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SEC v. Tecumseh Holdings Corp., 765 F. Supp. 2d 340 (S.D.N.Y. 2011).
In a securities fraud enforcement action, the district court granted in part the SEC’s
motion for summary judgment. The SEC alleged that the defendant corporation and its officer
made false and misleading statements regarding the company’s anticipated profits, returns on
investments, and NASD approval of an acquisition. Although allegedly misleading profit
projections were forward-looking, the court held that they were not entitled to safe harbor
protection because the corporate officer who made the projections knew the company was
operating at a loss and that fact should have been disclosed. With respect to allegedly
misleading statements referencing “dividends” to be paid to investors, such statements were not
entitled to protection under the bespeaks caution doctrine because the term “dividend”
misleadingly indicated that the company was profitable. Accordingly, the court granted the
SEC’s motion with respect to defendants’ liability for these statements.
In re Vivendi Universal, S.A. Sec. Litig., 765 F. Supp. 2d 512 (S.D.N.Y 2011).
In a securities fraud class action, the district court denied defendants’ motion for
judgment notwithstanding a jury verdict because, inter alia, certain alleged misstatements and
omissions were not entitled to protection under the Private Securities Litigation Reform Act of
1995’s safe harbor for forward-looking statements. Defendants argued that certain projections
primarily related to Vivendi’s expected EBITDA and cash flow figures were forward-looking
statements as to which the jury could not have found liability under the PSLRA because: (1) they
were accompanied by meaningful cautionary language, or (2) the jury found that Vivendi acted
recklessly, and PSLRA shields forward-looking statements from liability if they are not made
with actual knowledge of their falsity. The court found that the safe harbor did not apply
because plaintiffs had not challenged the forward-looking portions of these statements. Rather,
plaintiffs alleged that defendants had knowingly failed to disclose that a huge one-time purchase
accounting benefit was built into the projections and rendered them misleading. Accordingly,
the court found that the safe harbor did not apply and denied defendants’ motion with respect to
these statements.
In re Barclays Bank PLC Sec. Litig., 2011 WL 31548 (S.D.N.Y. Jan. 5, 2011).
In a putative securities fraud class action, the district court denied in part defendants’
motion to dismiss claims related to defendants’ alleged failure to timely disclose exposure to
risky assets and comply with accounting standards and SEC requirements, as well as allegedly
false and misleading assurances concerning the defendant company’s risk management practices.
Defendants argued that certain statements related to valuation of risky assets were shielded from
liability under the Private Securities Litigation Reform Act of 1995’s safe harbor provision and
the bespeaks caution doctrine. The court rejected defendants’ argument because the statements at
issue were made in connection with an initial public offering and, thus, safe harbor protection
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