Broker-Dealer Litigation - Greenberg Traurig LLP

fiduciary duty, conversion, accounting, unjust enrichment, negligence, federal and Utah state
securities violations, and control person liability, Utah Code Ann. § 61-1-22(4)(a). The matter
before the court was a motion for summary judgment by all defendants, a cross-motion for
summary judgment by plaintiff, and a motion to strike. The court found that there was no
evidence that the corporation made any misrepresentations or omissions to plaintiff, or that
plaintiff suffered any damages as a result of those alleged misrepresentations. The court further
found that there was insufficient evidence that the corporation had control over the individual
who made false representations to plaintiff for the purposes of either federal securities law or
Utah securities law. As such, the court granted the corporation’s motion for summary judgment
in full. The court found that the evidence of primary securities violations against the firm was
not supported by evidence, and therefore granted summary judgment on that claim. However,
the court found that the evidence against the firm for control person liability was largely in
dispute, because there were issues of material fact regarding the sub-advisor’s actions.
Therefore, summary judgment was not appropriate on the control person liability claim.
Phila. Fin. Mgmt. of S.F., LLC v. DJSP Enters., 2011 WL 4591541 (S.D. Fla. Sept. 30, 2011).
Plaintiff shareholders filed suit against a corporation and its officers alleging that
defendants made material misrepresentations and omissions in Securities and Exchange
Commission filings, press releases, and other public statements violating Section 10(b) and
Rule 10b-5 of the Securities Exchange Act of 1934. Plaintiffs also alleged that two individuals
were liable as control persons under Section 20(a). The court found that plaintiffs failed to
adequately allege that defendants made false or misleading material statements or plead facts that
presented a strong inference that defendants made statements they knew were false. As such, the
Section 10(b) and Rule 10b-5 claims failed. The court further held that because plaintiffs had
not adequately pleaded a primary securities fraud claim under Section 10(b) or Rule 10b-5, the
control person claim under Section 20(a) also failed.
Darocy v. Abildtrup, 345 S.W.3d 129 (Tex. App. 2011).
Plaintiff shareholders brought suit against an officer and director of a corporation for
control person liability under the Texas Security Act. Tex. Rev. Civ. Stat. art. 581-33. The trial
court ruled against defendant. Defendant appealed, alleging that the evidence did not support the
trial court’s finding. The court of appeals held that defendant’s role as an officer and director
combined with the evidence that defendant had general control over the corporation was
sufficient to subject defendant to control person liability and thus affirmed the lower court’s
judgment.
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