Broker-Dealer Litigation - Greenberg Traurig LLP

B.2
Rafton v. Rydex Series Funds, No. C 10–04523 JSW, 2011 WL 1642588 (N.D. Cal. May 2,
2011).
The court denied defendants’ request for leave to file a motion for reconsideration of the
court’s prior order refusing to dismiss plaintiff’s claims under Section 12 of the Securities
Exchange Act of 1933. Defendants sought reconsideration based on In re State Street Bank &
Trust Co. Fixed Income Funds Invs. Litig., 2011 U.S. Dist. LEXIS 35857 (S.D.N.Y. Mar. 31,
2011), where the court dismissed the defendants’ Section 12 claims due to the plaintiffs’ failure
to establish loss causation. In denying the motion for leave, the court stated that loss causation is
an affirmative defense in the Ninth Circuit, not an affirmative element of a Section 12 claim.
Thus, the New York decision was not a change in law necessitating reconsideration of the court’s
prior decision.
Salameh v. Tarsadia Hotels, 2011 WL 1044129 (S.D. Cal. Mar. 22, 2011).
The court granted defendants’ motion to dismiss plaintiffs’ claim under Section 12 of the
Securities Act of 1933. Plaintiffs purchased condominiums at the Hard Rock Hotel San Diego
and entered into a “Rental Management Agreement” with defendants to rent out their units. The
court noted that the alleged “security” consisted of two contracts, the original purchase contract
and Rental Management Agreements entered into months after the original purchase contracts.
Not all purchasers elected to enter into the Rental Management Agreement. The court concluded
that since plaintiffs could not sufficiently allege that the purchase contracts and the Rental
Management Agreements formed a single economic reality, they could not plausibly show a
“security” consisting of an investment of money with an expectation of profits produced by the
efforts of others. Therefore, the transaction was not subject to the protection of Section 12, and
the court granted defendants’ motion to dismiss.
Taddeo v. Am. Invsco Corp., 2011 WL 4346380 (D. Nev. Sept. 15, 2011).
The court granted defendants’ motion to dismiss plaintiff’s claims arising under Section
12(a)(1) of the Securities Exchange Act of 1933. The court held that plaintiff’s claims were time
barred under Section 13.
KeyBank, N.A. v. Bingo, Coast Guard Official No. 1121913, No. C09-849RSM, 2011 WL
1559829 (W.D. Wash. Apr. 22, 2011).
The court granted plaintiff’s motion to dismiss defendants’ counterclaims brought under
Section 12(a) of the Securities Exchange Act of 1933, finding that defendants failed to
adequately allege that plaintiff was the one who solicited, offered, or sold the unregistered
securities at issue in the suit. Defendants failed to allege that the plaintiff was “affiliated with,”
B.2
B.2
B.2
46