Broker-Dealer Litigation - Greenberg Traurig LLP

that the complaint failed to allege facts that gave rise to an inference of fraudulent intent
regarding the statements made by defendants because, at most, plaintiff’s allegations merely
amounted to allegations that the company was mismanaged.
C.1.f
Prime Mover Capital Partners L.P. v. Elixir Gaming Technologies, 793 F.Supp. 2d 651 (S.D.
N.Y. 2011).
Hedge fund operators brought class action against issuer and related individuals seeking
damages in connection with funds’ purchases of shares in issuer. Specifically, plaintiffs claimed
that the defendants intentionally made misrepresentations related to press releases concerning
false future prospects that inflated defendant’s share price in violation of Section 10(b) of the
Securities Exchange Act of 1934. Defendants brought a motion to dismiss, alleging, inter alia,
the affirmative defense that the statements were sufficiently forward-looking that they fell within
the safe harbor provision of the Private Securities Litigation Reform Act of 1995 (“PSLRA”).
The court held that under the PSLRA, a defendant is not liable if the forward-looking statement
is identified and accompanied by meaningful, cautionary language, is immaterial or the plaintiff
fails to prove that it was made with actual knowledge that it was false or misleading. The court
found that the plaintiffs failed to allege facts sufficient to make the requisite showing, other than
blanket assertions of knowledge, that defendants actually knew the statements were false when
made. Accordingly, the court granted defendants’ motion.
In re Smith Barney Transfer Agent Litigation, 765 F. Supp. 2d 391 (S.D.N.Y. 2011).
C.1.f
Investor in mutual funds brought class action against funds’ investment advisors and their
affiliates, alleging securities fraud in violation of the Securities Exchange Act of 1934.
Defendants moved to dismiss plaintiff’s claims, inter alia, as barred by the statute of limitations.
Defendants contended that a reasonably diligent plaintiff would have discovered the alleged
scheme more than two years prior to filing the complaint. However, the court disagreed. The
court reasoned that investigators in a related investigation had yet to determine whether there
were violations of the disclosure rules. Accordingly, the court found that if the investigators
could not discover the scheme while the instant case was ongoing, even a reasonably diligent
plaintiff could not have discovered the alleged scheme more than two years ago.
C.1.f
In re Merrill Lynch Auction Rate Securities Litigation, 2011 WL 1330847 (S.D.N.Y. Mar. 30,
2011).
Plaintiffs brought suit alleging Section 10(b) and Rule 10b-5 Securities Exchange Act of
1934 violations related to misrepresentations concerning auction rate securities (“ARS”).
Plaintiffs alleged that defendants made misstatements related to the reasoning behind the rates of
ARS increasing during 2007 and the bid supporting procedures used by defendants. On motion
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