Broker-Dealer Litigation - Greenberg Traurig LLP

lending practices; and its solvencies. Because the allegations did not sound in fraud, plaintiffs’
complaint was analyzed under the pleading standards of Fed. R. Civ. P. 8. Under this standard,
defendants sought only dismissal of the structured investment vehicles (“SIVs”) and the auction
rate securities (“ARSs”). As to the structured investment vehicles, plaintiffs alleged that
defendants had implicitly guaranteed to assume the SIVs’ debts to prevent the SIVs from
defaulting. Further, the plaintiffs allege that the rating agencies relied on defendants’ reputation
when rating the securities, and that defendant played multiple managerial roles for the SIVs.
However, the court ruled that none of these facts plausibly supported the inference that defendant
had guaranteed anything. As to the ARSs, plaintiffs alleged the defendants had violated the
Securities Act by failing to disclose its ARS holdings and liquidity problems in two separate
SEC filings. The court ruled that defendants had no duty under Item 303 because no known
trend in the collapse of defendants’ ARS business was apparent before the filing dates of the
disputed disclosures. Finally, the court ruled that plaintiffs’ claims were not barred by either the
statute of limitations or statute of repose because the time for filing was tolled as plaintiffs were
members of a class which had asserted the same claims within the applicable period.
Brecher v. Citigroup Inc., 2011 WL 5525353 (S.D.N.Y. Nov. 14, 2011).
The court denied plaintiffs’ rule 59(e) motion to amend the court’s dismissal of plaintiffs’
claims alleging a violation of Section 12(a)(2) of the Securities Act of 1933 and also denied
plaintiffs’ motion for leave to amend their complaint under rule 15(a) as futile. Plaintiffs argued
that their Section 12 claim against the corporate entity defendants should not have been
dismissed as untimely because new alleged facts would show that plaintiffs could not have
discovered the claims prior to one-year limitations period. The court found that the proposed
amended complaint and referenced documents did not support this assertion and upheld its
original dismissal of the claim. As to individual defendants and the board of director’s personnel
and compensation committee defendants, plaintiffs argued that the proposed amended complaint
alleged that they were control persons and that should suffice to meet the pleading requirement
that defendants be statutory sellers. The court held that liability as a control person under
Section 15 is distinguishable as a separate cause of action than the Section 12 statutory seller
requirement and that allowing leave to amend as to individual defendants and the board of
director’s personnel and compensation committee would be futile because plaintiffs failed to
allege that they were statutory sellers.
In re Merck & Co., Inc. Sec., Derivative, & ERISA Litig., 2011WL 3444199 (D.N.J. Aug. 8,
2011).
The court denied defendant’s motion to dismiss plaintiff’s claims arising under Section
12(a) of the Securities Act of 1933 because plaintiffs had validly plead a prima facie claim.
Plaintiffs brought a claim pursuant to Section 12(a) maintaining that defendant overstated the
commercial viability of its drug by deliberately downplaying the possible link between the drug
and an increased risk of heart attack or other cardiovascular events. Plaintiffs also contended
that defendant’s misstatements of fact and belief regarding the drug artificially inflated the stock
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