Broker-Dealer Litigation - Greenberg Traurig LLP

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In re Smith Barney Transfer Agent Litig., 765 F. Supp. 2d 391 (S.D.N.Y. 2011).
The district court granted in part and denied in part the defendants’ motion to dismiss
plaintiffs’ claims under Section 10(b) of the Securities Exchange Act of 1934. The defendants
asserted that a reasonably diligent plaintiff would have discovered the alleged scheme related to
charging excessive fees for transfer agent services more than two years before the complaint was
filed because it was reported in news articles and disclosed in public filings. The court, however,
found that a reasonably diligent investor would not necessarily have discovered facts showing
that the defendants acted intentionally or with reckless disregard. The plaintiffs’ claims were
therefore not time barred.
In re Wachovia Equity Sec. Litig., 753 F. Supp.2d 326 (S.D.N.Y. 2011).
The court denied the defendants’ motion to dismiss plaintiffs claims under Sections 11
and 12(a)(2) of the Securities Act of 1933. The court held that the tolling doctrine of American
Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), in which the Supreme Court held that the
filing of a class-action lawsuit tolls the statute of limitations for putative class members, applied
even when the class-action complaint on which the tolling is based had been dismissed because
the putative class representatives lacked standing. The court held that the failure to apply
American Pipe tolling to this case would undermine the policies of efficiency and economy of
litigation that underlie Federal Rule of Civil Procedure 23.
Footbridge Ltd. Trust v. Countrywide Fin. Corp., 770 F. Supp. 2d 618 (S.D.N.Y. 2011).
The court granted defendants’ motion for summary judgment on the basis that plaintiffs’
claims were barred by the statute of repose. Plaintiffs originally filed a class action in California
state court in 2007 and filed this federal action on January 15, 2010, alleging violations of
Sections 11 and 12(a)(2) of the Securities Act of 1933 for registration statements filed and
securities purchased in 2006. Because plaintiffs’ claim was filed more than three years after
defendants filed the registration statements and plaintiffs purchased the securities, the claims
were barred by Section 13 of the Securities Act’s three-year statute of repose. The court also
held that the tolling doctrine of American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974),
under which commencement of a class action suspends the applicable statute of limitations as to
all asserted members of the class who would have been parties had the suit been allowed to
continue, did not apply to Section 13’s statute of repose.
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