Broker-Dealer Litigation - Greenberg Traurig LLP

ased on the failed Section 11 claims had to be dismissed for failure to state a primary violation.
However, the court, finding that there was no culpable participation requirement under
Section 15 because the primary violation under Section 11 contains no intent element, allowed
the remaining Section 15 control person claims to proceed despite the complaint failing to allege
culpable participation.
Roseville Emps. Ret. Sys. v. Nokia Corp., 2011 U.S. Dist. LEXIS 101264 (S.D.N.Y. Sept. 6,
2011).
Plaintiff investors brought a class action against a defendant corporation and related
individuals for allegedly making false and misleading statements about defendant’s market
position which constituted fraud on the market by causing shares of the corporation to be
overvalued. Plaintiffs brought fraud claims under Section 10(b) and Rule 10b-5 of the Securities
Exchange Act of 1934 and a control person liability claim under Section 20(a). Defendants
moved to dismiss. The court found that plaintiffs failed to plead actionable misstatements or
omissions, scienter, or loss causation and thus granted defendants’ motion to dismiss on the
Section 10(b) and Rule 10b-5 claims. The court then found that because plaintiffs failed to
allege an underlying securities violation of Section 10(b) or Rule 10b-5, the claim for control
person liability under Section 20(a) failed as a matter of law and was also dismissed.
In re Sec. Capital Assur. Sec. Litig., 2011 WL 4444206 (S.D.N.Y. Sept. 23, 2011).
Shareholders filed a consolidated, amended class action suit against a corporation and its
officers alleging a claim for securities fraud under Section 10(b) of the Securities Exchange Act
of 1934 and for control person liability under Section 20(a) based on defendants’
misrepresentation and use of their FICO scores. The court held that plaintiffs failed to plead
causation of damages by such misrepresentation and therefore dismissed plaintiffs’
Section 10(b) claims. The court then dismissed the control person claims under Section 20(a)
based on plaintiffs’ failure to plead a primary violation.
Int’l Fund Mgmt. S.A. v. Citigroup Inc., 2011 U.S. Dist. LEXIS 113660 (S.D.N.Y. Sept. 30,
2011).
Plaintiff investors were members of a putative class action and two class action suits
against two corporate defendants and their officers. Plaintiffs filed their own suit which mirrored
the complaints in the class actions. Defendants moved to dismiss. The complaints alleged
defendants made material misrepresentations and omissions of material facts in violation of
Sections 10(b) and 18 of the Securities Exchange Act of 1934. Plaintiffs also brought claims
under the Securities Act of 1933 and the common law of New York. Plaintiffs alleged that the
violations arose from material misrepresentations and omissions concerning defendants’
exposure to collateralized debt obligations, structured investment vehicles, alternative A class
residential mortgage-backed securities, auction-rate securities, mortgage lending practices, and
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