Broker-Dealer Litigation - Greenberg Traurig LLP

In re Merrill Lynch Auction Rate Securities Litigation, 765 F. Supp. 2d 375 (S.D.N.Y. 2011).
C.1.d
Purchasers of auction rate securities (ARS) brought securities fraud class action against
auction dealer. The court held that purchasers failed to state misrepresentation or market
manipulation claim, failed to reasonably rely on dealer’s internal research reports and conclusory
allegations of “fraudulent” or “intentional” misrepresentations and omissions failed to give rise
to “strong” inference of scienter. Auction rate securities (ARS) dealer disclosed its bidding
practices, including its ability to submit support bids or affect the clearing rate for securities to
ensure auction is successful, and that its choice to support auctions was made entirely in its
discretion. Auction rate securities (ARS) dealer disclosed liquidity risks in market to purchasers
of ARS. Securities Exchange Act of 1934 § 10(b), 15 U.S.C.A § 78j(b); 17 C.F.R. § 240.10b-5.
In re Sanofi-Aventis Securities Litigation, 774 F. Supp. 2d 549 (S.D.N.Y. 2011).
C.1.d
Investors brought putative class action against foreign pharmaceutical company over
alleged failure to disclose, inter alia, safety and other data about one of the company’s drugs.
The court held that even if the company arguably had no independent duty to disclose, once the
company chose to speak, it had a duty to do so truthfully and accurately. However, the statement
by a company executive that “You know everything concerning [the drug]” was mere puffery.
Furthermore, the investors cannot base a fraud claim on a disagreement over how to interpret
drug testing results.
In re Vivendi Universal, S.A. Sec. Litig., 765 F. Supp. 2d 52 (S.D.N.Y. 2011).
C.1.d
Domestic and foreign shareholders filed class action asserting derivative claims against
foreign global media corporation and officers for securities fraud in violation of § 10(b) and Rule
10b-5 as well as control person liability, under Securities Exchange Act, for selling ordinary
shares, or American depository receipts (ADRs) representing those shares, by allegedly material
misrepresentations and omissions that artificially inflated stock price. The court held that foreign
media corporation’s ordinary shares purchased by foreign shareholders and underlying
corporation’s American depository receipt (ADR) offering with foreign bank, registered with the
Securities and Exchange Commission (SEC), and also listed on the New York Stock Exchange
(NYSE), but not for trading, were not “listed on domestic exchange,” within meaning of
transaction rule providing § 10(b) securities fraud claims reached only transactions in securities
listed on domestic exchanges, and domestic transactions in other securities. Securities Exchange
Act of 1934 § 10(b), 15 U.S.C.A § 78j(b); 17 C.F.R. § § 240.10b-5, 240.12d1-1(a).
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