Broker-Dealer Litigation - Greenberg Traurig LLP

C.1.e
In re Bank of America Corp. Securities, Derivative, and ERISA Litigation, 2011 WL 3211472
(S.D.N.Y. 2011).
Plaintiffs brought a class action suit asserting that defendants were liable for a series of
misstatements and omissions related to Bank of America’s acquisition of Merrill Lynch in
violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Defendants
filed a motion to dismiss based on, inter alia, lack of standing to assert claims on behalf of
certain securities holders. In particular, the court found that the complaint expanded the plaintiff
class to encompass additional categories of securities owners that purchased preferred shares,
options and debt securities. However, defendants successfully argued that these claims should
be dismissed because the class plaintiffs, who only purchased common stock, did not themselves
purchase or sell the other types of securities. In relying on Lujan v. Defenders of Wildlife, 504
U.S. 555 (1992), the court found that a plaintiff must have suffered an injury in fact, one that is
concrete and particularized, to have standing. Plaintiffs could not satisfy this requirement
without actually having purchased or sold the securities subject to the complaint. Accordingly,
plaintiffs’ claims were dismissed to the extent they encompassed non-common stock claims.
McCann v. Hy-Vee, 2011 WL 250262 (N.D. Ill. 2011).
C.1.e
Plaintiff sued her ex-husband alleging violations of Rule 10b-5 of the Securities
Exchange Act of 1934 based on his and defendant’s false statement that defendant’s stock was
non-transferrable. On defendant’s motion to dismiss, defendant claimed that plaintiff was never
a purchaser or seller of the stock at issue. Plaintiff argued that two possible transactions made
her a purchaser or seller. First, a consent decree was entered, which awarded plaintiff the stock
at issue. Second, the court, after entrance of the consent decree, later ordered plaintiff to turn
over the same shares. The defendant argued that both these transactions merely amounted to a
temporary holding of the stock, not actual ownership, purchase or sale. The court disagreed, and
held that for purposes of the motion to dismiss, the consent decree award could have constituted
a sale to plaintiff. Nonetheless, plaintiff’s claims were still dismissed because they were barred
by the five year statute of repose.
Drescher v. Baby It’s You, LLC, 2011 WL 63615 (C.D. Cal 2011).
C.1.e
Defendant approached plaintiff about investing in a Broadway production that defendant
was writing. Defendant allegedly made misrepresentations to plaintiff, which plaintiff claimed
caused him to invest in defendant’s project in violation of Rule 10b-5 of the Securities Exchange
Act of 1934. Defendant filed a motion to dismiss. As an initial matter, the court addressed
whether plaintiff had standing to bring suit. The court found that plaintiff failed to sufficiently
plead a violation of the Exchange Act because plaintiff did not include any allegation in the
complaint that he purchased securities from defendants. Although plaintiff provided defendant
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