Broker-Dealer Litigation - Greenberg Traurig LLP

Rule 10b-5 claims were pleaded with sufficient particularity to survive a motion to dismiss.
Defendants alleged that the Section 20(a) control person claims should be dismissed for two
reasons: (1) failure to adequately plead an underlying violation; and (2) failure to offer more
than conclusory allegations of the individual defendants’ control over the broker-dealer. The
court found that the underlying Section 10(b) and Rule 10b-5 claim was adequately pleaded. In
addition, the court held that the plaintiffs properly pleaded that the particular positions that the
individual defendants held and the specific Securities and Exchange Commission disclosures
signed and certified by them substantiated a Section 20(a) claim. As such, the court denied the
motion to dismiss the Section 20(a) control person claims.
In re St. Jude Med., Inc. Sec. Litig., 2011 WL 6755008 (D. Minn. Dec. 23, 2011
Plaintiff pension trust fund filed a class action suit against a medical center and four of its
officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The
Section 10(b) claim was based on the allegedly misleading forecasted revenues and earnings of
defendant medical center. When the actual revenue and earnings were disclosed, stock values
declined 12.7% in one day. Plaintiff also brought a Section 20(a) claim for control person
liability against four named officers and directors. Defendants moved to dismiss all claims. The
court granted the motion to dismiss the Section 10(b) claim against two individual defendants
and denied the motion to dismiss against the other defendants. The court then turned to the
Section 20(a) claim. Because the remaining defendants’ only defense to the Section 20(a) claim
was that plaintiff failed to adequately plead a primary violation, and because the court found the
plaintiff did adequately plead a primary violation under Section 10(b) as to certain defendants,
the court denied the motion to dismiss the Section 20(a) claim for control person liability.
Yary v. Voight, 2011 WL 6781003 (D. Minn. Dec. 27, 2011).
Asserting claims under the Securities Exchange Act of 1934 and the Minnesota Securities
Act, Minn. Stat. § 80A.01 et seq., plaintiff investors brought suit against an individual. Plaintiffs
specifically asserted claims under Sections 10(b) and 20(a) of the Exchange Act and the
equivalent provisions under the Minnesota Securities Act. Defendant moved to dismiss. The
court granted the motion to dismiss the Section 10(b) claims for which the statute of limitations
had lapsed, but found that the remainder of the claims were sufficiently pleaded. Turning to the
control person claim, the court ruled that because plaintiffs did not respond to defendant’s
argument that plaintiffs failed to properly plead Section 20(a) control person liability, those
claims must be dismissed. The court further ruled that because the exact same arguments were
made by both parties under the Minnesota Securities Act as under federal law, the motion to
dismiss the state securities claims was granted and denied to the same extent as it was for the
claims under federal law.
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