Broker-Dealer Litigation - Greenberg Traurig LLP

that the claims were barred by the five year statute of repose. According to defendants, the five
year statute of repose for Section 10(b) and Rule 10b-5 violations began to run from the date the
buyer purchased the securities. Second, defendants argued that plaintiffs’ complaint failed to
contain an allegation that defendants wrote or published the confidential offering memoranda.
The court recognized an exception to the statute of repose because, as the confidential offering
memoranda was sent to plaintiffs every year, the fraudulent statements were ongoing and
continuing. Accordingly, the alleged misrepresentations came from a common group of
defendants in pursuit of a common scheme and were not barred by the statute of repose. The
court also dismissed defendants’ argument that they did not make or publish the confidential
offering document. The court reasoned that plaintiffs sufficiently alleged the defendants made
these statements to survive a motion to dismiss.
Hill v. State Street Corporation, 2011 WL 3420439 (D. Mass. Aug. 3, 2011).
C.1.f
Plaintiffs brought suit alleging, inter alia, violations of the Securities Exchange Act of
1934 related to false and misleading statements about defendants’ practice and its portfolio
valuation. Defendants raised the defense that its statements should be considered honestly held
beliefs that were reasonably based on opinions that are not actionable as a matter of law. The
court differentiated two cases in which defendants relied on. First, in Virginia Bankshares, Inc.
v. Sandberg, 501 U.S. 1083 (1991), the Supreme Court held that a statement couched in
conclusory or qualitative terms purporting to explain an executive’s reasons for recommending
certain action is actionable if it includes knowingly false statements. Defendants wrongly
attempted to read this holding in the inverse: that a conclusory statement cannot be actionable if
it was not knowingly false. The court disagreed. Further, defendants wrongly relied on
Plumbers Union Local No. 12 v. Nomura Asset Acceptance Corp., 632 F.3d 762 (1st Cir. 2011),
which held that defendants will not be liable for their opinions that were honestly held when
formed, but simply turned out later to be inaccurate; nor are they liable because they could have
formed better opinions. The court reasoned that the statements at issue in Nomura were related
to ratings established by Standard & Poor’s and Moody’s, which were more reliable than
defendants’ own, self serving assessments. Accordingly, the court dismissed defendants’ claim
that the statements were not actionable as a matter of law.
Johnson v. Siemens AG, 2011 WL 1304267 (E.D.N.Y. Mar. 31, 2011).
C.1.f
Plaintiff brought a class action against defendants pursuant to the Securities Exchange
Act of 1934 alleging that defendants disseminated false statements about the financial well-being
of the company, which artificially inflated the prices of defendants’ securities. Defendants
moved to dismiss the complaint based on (1) the failure to plead scienter with particularity, (2)
the statements fell within the safe harbor provision of the Private Securities Litigation Reform
Act of 1995 (“PSLRA”) and the “bespeaks caution” doctrine, (3) the claims are barred by the
statute of limitations, and (4) the plaintiff lacks standing. The court ultimately granted the
motion to dismiss solely based on the failure to adequately allege scienter. The court reasoned
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