Broker-Dealer Litigation - Greenberg Traurig LLP

mere suspicion that the broker-dealer knew of the specific transaction with the purchaser. The
court concluded that because the purchaser presented no more than a scintilla of evidence as to
the general awareness element of the aider and abettor test, the trial court did not err in granting
summary judgment in favor of the broker-dealer on this claim.
Narnia Investments, Ltd. v. Harvestons Sec., Inc., 2011 Tex. App. LEXIS 6182 (Tex. App.
Aug. 9, 2011).
Investment company sued registered representatives and their broker-dealer for violations
of the Texas Securities Act. Specifically, the company alleged that the broker-dealer was the
control person for the registered representatives who had allegedly defrauded the investment
company through numerous securities transactions and, thus, were liable under aider and abettor
liability. The broker-dealer moved for summary judgment which was granted by the trial court.
The investment company appealed. In reversing the trial court’s decision, the appellate court
held that proof that the registered representatives acted outside the course and scope of their
employment did not eliminate a cause of action for aiding and abetting. The broker-dealer’s
motion for summary judgment neither conclusively disproved any element of the investment
company’s causes of action for aider and abettor liability nor challenged the existence of
evidence of any element supporting the investment company’s aider and abettor liability claim.
Murphy v. Reynolds, 2011 WL 4502523 (Tex. App. Sept. 29, 2011).
An investor sued a technology sector stock analyst and author of a newsletter, book, and
telephone hotline for losses incurred from investments made based on the stock analyst’s
newsletter. The investor claimed, among other things, that the analyst violated Texas Business
and Commerce Code Section 27.01, Articles 581-33 and 581-33-1 of the Texas Securities Act,
and FINRA Rules. The stock analyst moved for summary judgment, which was denied. The
analyst appealed, arguing that the trial court erred because he was not an investment advisor, a
primary violator, or aider and abettor in the purchase or sale of a security, thus, he did not violate
the relevant statutes or FINRA Rules. In overturning the trial court’s decision on aider and
abettor liability, the appellate court noted that appellee provided no evidence that appellant or
another party “offered or sold” appellee the stock in question by means of an untrue statement or
omission of a material fact, as required to invoke the protection of the Texas Securities Act.
Howard Family Charitable Found., Inc. v. Trimble, 259 P.3d 850 (Okla. Ct. App. 2011).
Investors in a hedge fund sued defendants, a commodities pool operator, its manager, the
distributor, and the distributor of a Web-based software application for fund managers. Plaintiffs
sought damages against defendants pursuant to Oklahoma statute Title 71, § 1-509(G) as aiders
and abettors of a fraudulent commodities transaction. The trial court held that the various
allegations were preempted under federal law. The investors appealed. The futures commission
merchant and the Web-based software application distributor claimed that preemption applies to
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