Broker-Dealer Litigation - Greenberg Traurig LLP

and securities firms and their representatives, moved for summary judgment on all alleged
violations of the Securities Act. The court denied summary judgment, finding that control
person liability may reach beyond respondeat superior liability, which does away with the
distinction between an independent contractor and an agent. However, it found that the claim for
respondeat superior was improper because: (1) a Section 20(a) claim would only be proper for a
control person claim; (2) the advisor had no actual authority from the broker-dealer; and (3) the
facts as to apparent authority remained in dispute, and therefore proper for determination by the
trier of fact. Because the facts did not preclude a finding of vicarious liability based on apparent
authority, the motion for summary judgment was denied.
Hosier v. Citigroup Global Markets, Inc., 2011 U.S. Dist. LEXIS 1446670 (D. Colo. Dec. 21,
2011).
Petitioners petitioned the court to confirm an arbitration award for entry of judgment and
respondent, a broker-dealer, moved to vacate the arbitration award. The petitioners brought an
arbitration action for breach of fiduciary duty, breach of contract, constructive fraud, violation of
FINRA rules, unsuitability, failure to supervise, and respondeat superior, alleging they lost
money in investments they made through the broker-dealer because the risk involved was
misrepresented. The registered representatives were not named in the action. The broker-dealer
alleged the petitioners received and understood the written risk disclosure. The court confirmed
the award issued in favor of the petitioners and denied the broker-dealer’s motion to vacate the
arbitration award.
Cianci v. Sentaurus Fin., 2011 Cal. App. Unpub. LEXIS 3346 (May 5, 2011).
A broker-dealer appealed from an order denying its petition to compel arbitration with
respect to 12 of the plaintiffs and to stay the civil action as to another 11 plaintiffs. The
underlying claims involved the broker-dealer’s failure to supervise one of its registered
representatives who defrauded the plaintiffs. The broker-dealer argued there was no possibility
for a conflicting ruling in a civil action and arbitration and that the plaintiffs in the case should be
distinguished according to their legal relationship to the broker-dealer. The court found that
allowing the registered representatives to use the broker-dealer’s name for purposes of
misleading people was relevant to many of the causes of action, including respondeat superior.
The fact that use of the broker-dealer’s name on the issue of respondeat superior would not
render different results in an arbitration or civil proceeding was not dispositive, thus, there was
no error in denying the motion to compel arbitration.
H.1
H.1
2. Control Person
H.2
Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296 (2011).
Plaintiff representing a class of shareholders filed suit against a corporation and its
wholly-owned subsidiary for violating Section 10(b) and Rule 10b-5 of the Securities Exchange
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