Broker-Dealer Litigation - Greenberg Traurig LLP

The court also found that if Ohio state law recognized churning and unsuitability as common-law
claims, then the state court has jurisdiction to either dismiss or hear the action.
Self v. Chase Bank, N.A., 2011 WL 3813106 (E.D. Cal. Aug. 25, 2011).
C.1.a
The court granted defendant’s motion to dismiss. Plaintiffs alleged that defendants
committed fraud by excessively trading their accounts by entering sell and buy orders in a
“manner disproportionate to the size, character, and objectives of the instructions of Plaintiff[s],
bought and sold securities from one to another without any investment justification other than to
generate brokerage commissions…” Plaintiffs’ claimed that the purchases made in their
accounts were not suitable for their investment objectives, financial situation and needs.
Plaintiffs’ complaint, however, did not specify what their objectives and needs were. The court
held that plaintiffs could not sustain a private right of action under 10(b) because the lines of
credit that plaintiffs obtained from defendants did not constitute a security. The court noted
plaintiffs’ complaints were factually and legally frivolous and warranted sanctions, however,
defendant failed to submit declarations calculating reasonable attorney’s fees and costs.
b. Suitability
In re Bear Stearns Companies, Inc. Sec., Derivative, and ERISA Lit., 763 F. Supp. 2d. 423
(S.D.N.Y. 2011).
C.1.b
The court denied defendants’ motion to dismiss plaintiffs’ securities complaint, but
granted defendants’ motion to dismiss the derivative and ERISA complaints. Plaintiffs’ ERISA
complaint alleged that Bear Stearns and the ESOP Committee failed to take substantial
precautions to protect the plan participants from sustaining losses in their retirement savings plan
by failing to divest the plan of Bear Stearns stock when they knew or should have known that it
was not a suitable and appropriate investment plan. The court held that Bear Stearns was not a
fiduciary of the plan, solely based on their ability to make contributions to the plan. The court
reasoned that the plan agreement did not give any authority to Bear Stearns or the ESOP
Committee members to diversify or divest plan assets.
Owens v. Gaffken & Barringer Fund, LLC, 2011 WL 1795310 (S.D.N.Y. May 5, 2011).
C.1.b
The court granted defendants’ motion for summary judgment as to plaintiff’s claims
against Bridgeville Mangement, G & B and Barringer Capital and denied the motion pertaining
to the remainder of the defendants. Plaintiff alleged that he relied entirely on defendants’ oral
representations pertaining to an investment fund. Plaintiff alleged that defendants’
misrepresented the risks involved with his investment and never provided him with offering
materials that contained the appropriate risk disclosures of that fund. The court held that a
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