Broker-Dealer Litigation - Greenberg Traurig LLP

the complaint, asserting the statute of limitations as a defense. The SEC argued that the statute
of limitations, including the five year statute of repose, was tolled based on the fraudulent
concealment by the defendants of the facts necessary to discover the fraudulent accounting
practices. In particular, the SEC alleged that defendants falsely responded to a checklist
provided by the SEC to defendants relating to their accounting practices. Defendants argued that
they simply were silent as to certain requests, thus they did not actively conceal any facts. The
court, in denying defendants’ motion to dismiss, held that the complaint adequately alleged that
the defendants engaged in active concealment. The court found that defendants engaged in
active concealment by both giving affirmatively false statements and remaining silent as to the
checklist provided by the SEC. The court reasoned that while silence is generally not enough to
allege active concealment, plaintiffs were under a duty to disclose facts requested by the
checklist.
C.1.f
Int’l Brotherhood of Electrical Workers v. Limited Brands, Inc., 788 F. Supp.2d 609 (S.D. Ohio
2011).
Plaintiff brought suit against defendants alleging a series of false or misleading
statements concerning two initiatives at defendants’ company in violation of Section 10(b) and
Rule 10b-5 of the Securities Exchange Act of 1934. On motion to dismiss, defendants asserted
the affirmative defense that any allegedly false or misleading statements were puffery or
otherwise protected by the safe-harbor provision of the Private Securities Litigation Reform Act
of 1995 (“PSLRA”). The court agreed, finding that the safe-harbor protection is only overcome
if the statements are material, the defendants had actual knowledge of the false or misleading
nature of the statement and if the statement was not identified as forward-looking or lacking
meaningful cautionary statements. All of the statements made by defendants were either puffery,
as they were simply loosely optimistic statements that were so vague and lacking in specificity
that they clearly constituted the opinions of the speaker, or protected as forward-looking
statements.
Antelis v. Freeman, 799 F.Supp.2d 854 (N.D. Ill. 2011).
C.1.f
Investor filed suit against his former business partner alleging violations of Rule 10b-5 of
the Securities Exchange Act of 1934 based on investments in promissory notes sold by a
company allegedly recommended by defendant. Plaintiff contended that defendant used the
company as a shell corporation designed to allow defendant to defraud investors. On a motion to
dismiss, defendant argued that the two year statute of limitations period had run because plaintiff
should have discovered the facts that constituted the violation more than two years before filing
his claim. As a preliminary matter, the court noted that the statute of limitations, as an
affirmative defense, is not typically a part of a Rule 12(b)(6) motion because complaints are not
required to anticipate such affirmative defenses to survive a motion to dismiss. Accordingly, the
court limited the statute of limitation analysis strictly to whether the facts plaintiff pleaded in his
complaint showed the Rule 10b-5 violation was filed after the statute of limitations. The court
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