Broker-Dealer Litigation - Greenberg Traurig LLP

easonable juror could conclude that plaintiff reasonably relied on defendants’ oral
representations that the fund was a “conservative investment vehicle that functioned like a
money market fund.”
Pipino v. Onuska, 2011 WL 1630134 (N.D. Ohio Apr. 29, 2011).
C.1.b
The court granted plaintiffs’ motion to remand their complaint to state court. First, the
defendants removed the action to federal court on the grounds that the defendants had indirectly
invoked the protections of the federal securities laws to support their churning claim (as well as
their unsuitability claim). The plaintiffs alleged that despite their conservative risk tolerance,
defendants recommended unsuitable, risky investments and charged them excessive and
unreasonable fees. The court held that the plaintiffs’ complaint should be remanded to state
court because it did not contain a federal claim or give any other basis for federal jurisdiction.
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.
La. Pac. Corp. v. Money Mkt. 1 Inst. Inv. Dealer, 2011 WL 1152568 (N.D. Cal. Mar. 28, 2011).
C.1.b
The court denied defendant, Money Market 1 Institutional’s (“MM1”) motion to dismiss,
stating that plaintiffs properly set forth a suitability claim under 10(b). The plaintiffs alleged the
Auction Rate Securities (“ARS”) that they purchased pursuant to MM1’s recommendation were
unsuitable. The plaintiff’s further accused MM1 of failing to disclose that the complicated
structured investments fell outside the scope of investment guidelines. The court found that
MM1 failed to sustain its burden to demonstrate that the complaint failed to state a claim upon
which relief could be granted under Federal Rule of Civil Procedure 12(b)(6). The court also
held that to the extent which the plaintiff was a sophisticated institutional investor and
responsible for understanding the risks associated with the ARS investment, were questions of
fact and not appropriate for resolution at the procedural stage.
C.1.b
Keybank N.A. v. Bingo, Coast Guard Official No. 1121913, No. C09-849RSM, 2011 WL
1559829 (W.D. Wash. Apr. 22, 2010).
The court granted plaintiffs’ motion to dismiss defendants’ counterclaims with leave to
amend regarding the suitability, breach of fiduciary duty, breach of contract and securities law
violation claims. Defendants’ counterclaim alleged that KeyBank failed to comply with the
suitability rule set forth in RCW 21.20.702, by failing to recommend conservative investments.
The court held that defendants could not sustain a suitability claim under Washington law as
defendants’ failed to prove that KeyBank acted as a broker within the meaning of Ives v.
Ramsden, 142 Wash.App. 391 (Wash.App.2008). The court found that the suitability portion of
Defendants’ counterclaim failed as a common law duty of care claim.
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