Broker-Dealer Litigation - Greenberg Traurig LLP

exert control over the content of communications. In addition, the court concluded that plaintiff
alleged with the particularity required that the defendant was a culpable participant in the alleged
underlying primary violations. The motion to dismiss was denied.
STMicroelectronics v. Credit Suisse Group, 775 F. Supp. 2d 525 (E.D.N.Y. 2011)
Plaintiff invested in auction-rate securities backed by federally guaranteed student loans
sold by a subsidiary of defendant, a multinational banking institution. On several occasions, the
securities were touted as virtually risk-free and highly liquid. Following plaintiff’s discovery of
the fraud, it brought suit against defendant under Section 20(a) of the Securities Exchange Act of
1934. First, the court held that an investor’s successful arbitration against a financial institution
does not bar a claim for control person liability against it. Second, the court held that plaintiff
sufficiently pleaded control on the part of the defendant to survive defendant’s motion to dismiss
by pleading a mix of substantial stock ownership, shared officers and principals, and at least
some direct involvement by the individuals to survive a motion to dismiss.
Maverick Fund L.D.C. v. Comverse Tech. Inc., 801 F. Supp.2d 41 (E.D.N.Y. 2011).
Plaintiffs, a group of seven broker-dealers, filed suit after opting out of a class action
against a defendant corporation, its officers, and its compensation/audit committee for violations
of Sections 10(b), 18, and 20(a) of the Securities Exchange Act of 1934. Defendants moved to
dismiss. The court found that plaintiffs adequately pleaded a primary violation of the federal
securities laws by defendant for some of the alleged misstatements, but not all. The court found
that plaintiffs adequately pleaded that the officer defendants were control persons until they left
the company and that they may be held liable as control persons for the fraudulent disclosures
that occurred while they were officers, including material misrepresentations concerning the
company’s financial statements as well as partial disclosures that continued to conceal the nature
and scope of the fraud. Even if the company did not fully disclose the nature and scope of the
fraud until sometime after the officers’ departure from the company or make additional
fraudulent statements that helped conceal the nature and scope of the fraud, that did not excuse
the officer defendants from control person liability for the fraudulent disclosures or omissions
while they were officers. The motion to dismiss was denied.
Alki Partners, L.P. v. Vatas Holding GmbH, 769 F. Supp. 2d 478 (S.D.N.Y. 2011).
Plaintiff, a limited partnership, alleged that defendant investment advisors and affiliates
carried out a market manipulation scheme to inflate the price of a corporation’s stock causing it
to sustain a large loss. Plaintiff claimed that, through market manipulation, defendants violated
Section 10(b) of the Securities Exchange Act of 1934. Plaintiffs also alleged defendants were
control persons subject to liability under Section 20(a) of the Exchange Act. Defendants moved
to dismiss. Plaintiff’s Section 10(b) claims were dismissed because they failed to allege
manipulative acts with specificity. Further, plaintiff could not show that its damages were
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