Broker-Dealer Litigation - Greenberg Traurig LLP

with an sum of money in the form of an investment, it does not follow that such investment,
absent further allegations, is a purchase of securities.
Bello v. Chase Home Finance, 2011 WL 133351 (S.D. Cal. 2011).
C.1.e
Plaintiff brought suit against defendant alleging that it committed securities fraud under
the Securities Exchange Act of 1934 by securitizing plaintiff’s mortgage. On defendant’s motion
to dismiss, the court found that plaintiff lacked standing to sue for securities fraud because he
was not a purchaser of any securities resulting from the securitization of his and other loans.
Accordingly, the court granted defendant’s motion to dismiss.
Gehron v. Best Reward Credit Union, 2011 WL 976624 (S.D. Cal. 2011).
C.1.e
Plaintiffs asserted several claims against defendants relating to the securitization and sale
of plaintiff’s mortgage loans. Defendants brought a motion to dismiss plaintiff’s claims,
including defendants’ alleged violation of Section 10(b) of the Securities Exchange Act of 1934.
The court, in granting defendants’ motion, found that plaintiff’s mere allegation that defendants
securitized and sold plaintiff’s mortgage did not make plaintiffs purchasers of securities, a
required element to have standing to sue for securities fraud. Accordingly, the court dismissed
plaintiff’s claims with prejudice.
Slaughter v. Laboratory Medicine Consultants, Ltd., 2011 WL 1486228 (D. Nev. 2011).
C.1.e
Plaintiff, a prior employee of defendant, brought suit alleging violations of Rule 10b-5 of
the Securities Exchange Act of 1934 based on defendant’s conversion of stock it was allegedly
supposed to place in escrow. As an initial matter, the court addressed Plaintiff’s standing to
bring a claim under the Exchange Act. The court found that plaintiff did not state any facts in his
complaint that amounted to him either selling or purchasing defendant’s stock. Plaintiff
attempted to argue that he did not need to have purchased or sold the security because it was
“fraudulently redeemed.” However, the court ruled that plaintiff was not forced to sell his stock
or even that it was sold. Rather, defendant’s alleged actions were solely based on failing to place
the stock in escrow and then converting it. Accordingly, the court held that the claim did not fall
under the Exchange Act because it did not involve a transaction in securities within the meaning
of Rule 10b-5 or Section 10(b) of the Exchange Act.
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