Broker-Dealer Litigation - Greenberg Traurig LLP

“associated with,” or “acted as the agent for” the entity that offered and sold the shares. Instead,
the counterclaims merely alleged that plaintiff “aided and abetted” and “promoted and assisted”
in the activities. The court found that this alone was not sufficient to convert plaintiff into a
“seller” under Section 12.
In re Oppenheimer Rochester Funds Group Sec. Litig., 2011 WL 5042066 (D. Colo. Oct. 24,
2011).
The court denied defendants’ motions to dismiss various alleged securities violations.
Plaintiffs were shareholders in various municipal bond funds alleging that defendant funds,
managers, and trustees had violated Sections 12 of the 1933 Act based on alleged
misrepresentations and omissions made in marketing the funds. According to plaintiffs, the
funds’ prospectuses were materially misleading because their stated investment objectives and
disclosures misrepresented the nature of a high-risk, high-return investment strategy employed
by the fund. Plaintiffs claimed that the fund represented that it was for the purpose of
“preservation of capital,” with various statements supporting this goal, when in fact it had a very
aggressive “high-risk, high-return” objective that employed highly leveraged financial
instruments causing significant potentials for loss in certain market environments. The court
ruled that, taken together and in context, the alleged misstatements did not constitute mere
puffery. Further, the court ruled that plaintiffs had alleged facts tending to demonstrate that
defendants’ stated investment strategies were materially different from the strategies they
actually pursued, and that the stated risks of the investment strategies were materially
misleading. The court acknowledged that the plaintiffs faced significant issues in showing loss
causation, but noted that the factual issues this presented need not be addressed on a motion to
dismiss. The court noted that plaintiffs need not assert in detail factual allegations beyond basic
statements noting that defendants “actively solicited the funds’ shares through the Prospectus . . .
to serve its own financial interests” in order to establish the certain defendants were sellers for
purposes of Section12(a)(2).
In re Thornburg Mortg., Inc. Sec. Litig., 2011 WL 2429189 (D.N.M. June 2, 2011).
The court denied plaintiffs’ motion to reconsider the court’s previous dismissal of claims
arising under Section 12(a)(2) of the Securities Act of 1933. Investors brought putative class
action against a mortgage corporation, underwriters, and officers alleging various violations of
federal security laws. Plaintiffs moved for reconsideration of orders granting in part and denying
in part defendants’ previous motions to dismiss as to alleged Section 12(a)(2) violations. The
plaintiffs argued that defendants made a misstatement of material fact when they failed to
disclose that an accounting firm had, prior to writing an opinion agreeing with certain financial
statements made by the issuer, found problems with the financial statements. The court
reconsidered the motions but upheld dismissal of the Section 12 claims and found the Form 10-K
was not actionable merely because the accounting firm had, prior to the time it accepted the
financial statements as true, stated certain reservations that were never disclosed in offerings
documents.
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