Broker-Dealer Litigation - Greenberg Traurig LLP

specifically cautioned that the deals were subject to approval. Accordingly, these two categories
of alleged misstatements were shielded from liability by the safe harbor. On the other hand, the
court rejected defendants’ argument that risk factors it had identified for investors that might
affect revenue were also clearly applicable to projected operating expenses stated as a percentage
of revenue. Nevertheless, the court found that plaintiffs failed to allege facts creating a strong
inference that defendants knew their operating expense forecasts were false. Accordingly, the
court granted defendants’ motion to dismiss.
Fosbre v. Las Vegas Sands Corp., 2011 WL 3705023 (D. Nev. Aug. 24, 2011).
In a putative securities fraud class action, the district court granted in part defendants’
motion to dismiss claims premised on allegedly false and misleading statements about the
company’s development plans and financial condition. Defendants argued that statements
concerning construction costs in Macao, predictions of future Macao market conditions and the
company’s financing plans, cash flows and future liquidity were forward-looking statements
entitled to protection under the Private Securities Litigation Reform Act of 1995’s safe harbor
provision. Plaintiffs argued that these statements were not entitled to protection because when
they were made defendants merely referenced cautionary language in other documents, such as
SEC filings, that was boilerplate and insufficient. The court rejected plaintiffs’ argument
because there was meaningful cautionary language referenced by defendants that described
“what kind of misfortunes could befall the company” and legal authority supported crossreferenced
cautionary statements for purposes of the safe harbor. Accordingly, the court granted
defendants’ motion to dismiss to the extent it relied on the safe harbor.
In re Cell Therapeutics, Inc. Class Action Litig., 2011 WL 444676 (W.D. Wash. Feb. 4, 2011).
The district court denied defendants’ motion to dismiss plaintiffs’ federal securities fraud
class action stemming from the defendant pharmaceutical company’s decision to modify drug
evaluation trials and, thus, forfeit eligibility for fast-tracked FDA approval. Defendants claimed
that plaintiffs’ entire complaint should be dismissed because most of the allegedly false and
misleading statements at issue were forward-looking statements accompanied by “cautionary
language concerning the perils of new drug approval” and, thus, were shielded from liability by
the Private Securities Litigation Reform Act of 1995’s safe harbor provision. The court rejected
this argument because plaintiffs’ allegations centered on statements of present or historical fact
related to the defendant company’s ongoing evaluation trials and the trials’ current qualification
for fast-track approval. Accordingly, the court found that the safe harbor did not apply and
denied defendants’ motion to dismiss.
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