Broker-Dealer Litigation - Greenberg Traurig LLP

of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), and that the statements were
either true or not material. The court held that the statements, including the non-forward looking
statements of the assumptions underlying or relating to the forward-looking statements, were
considered forward-looking. However, in agreeing with plaintiffs’ arguments, the court found
that a question of fact existed as to whether the safe harbor provision applied to defendants’
statements based on their failure to provide adequate and meaningful cautionary language in
conjunction with the statements, a requisite of the safe harbor provision. Further, the court held
that a question of fact existed as to whether defendants’ representations were knowingly false in
light of the omitted information relating to the adverse incidents. Accordingly, the court denied
summary judgment.
Hopson v. MetroPCS Communications, Inc., 2011 WL 1119727 (N.D. Tex. Mar. 25, 2011).
C.1.f
Plaintiffs brought a class action suit under Rule 10b-5 and Section 10(b) of the Securities
Exchange Act of 1934 based on losses sustained after purchasing shares of defendants’ common
stock at allegedly artificial prices as a result of defendants’ materially false, misleading and
reckless statements. In particular, plaintiffs alleged that defendants made false statements in
their earnings guidance, their predictions about the economy and future competition from current
competitors. Defendants brought a motion to dismiss the complaint for failure to state a claim
based on, inter alia, the affirmative defense that any statements made were protected by the safeharbor
provision of the Private Securities Litigation Reform Act of 1995(“PSLRA”). The court,
in granting defendants’ motion to dismiss, held that the statements were protected under the
PSLRA, as they explicitly fell into the category of forward-looking statements, because they
simply contained projections of revenues and future economic performance. Moreover, the court
found that each statement carried meaningful cautionary language, including a warning that
certain factors may affect the forward-looking statements and used the terms “expects” in
various statements. Plaintiffs attempted to circumvent the safe harbor provision by arguing that
defendants had actual knowledge that their statements were false when made. However, the
court held that plaintiffs’ allegations did not sufficiently plead the specific information that
defendants’ had actual knowledge of, who reviewed the information or how the information
contradicted the defendants’ forward-looking statements. In addition, the court, in addressing
plaintiffs’ claims that there was a strong inference of scienter based on alleged insider trading,
held that any insider trading was made pursuant to Rule 10b5-1 trading plans. Such plans, which
are pre-determined agreements to purchase or sell stock made before any inside information is
learned, acts as an affirmative defense to insider trading. The court also held that the existence
of such plans rebutted plaintiffs’ claims that the insider trading supported the scienter claim.
SEC v. Geswein, 2011 WL 4541308 (N.D. Ohio Aug. 2, 2011).
C.1.f
The SEC brought a complaint against defendants based on, inter alia, violations of
Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 generally relating to
fraudulent accounting practices during the period of 2002 to 2007. Defendants moved to dismiss
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