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Service: Get by LEXSTAT® TOC: United States Code Service; Code, Const, Rules, Conventions & Public Laws > TITLE 15. COMMERCE AND TRADE > CHAPTER 2B. SECURITIES EXCHANGES > § 78j. Manipulative and deceptive devices [Caution: See prospective amendment note below.] [Part 1 of 3] Citation: 15 U.S.C. 78J
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15 USCS § 78j
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UNITED STATES CODE SERVICE Copyright © 2011 Matthew Bender & Company, Inc. a member of the LexisNexis Group (TM) All rights reserved. *** CURRENT THROUGH PL 111-383, APPROVED 1/7/2011 *** TITLE 15. COMMERCE AND TRADE CHAPTER 2B. SECURITIES EXCHANGES

History Interpretive Notes and Decisions History; Ancillary Laws and Directives Code of Federal Regulations

Resources & Practice Tools

Go to the United States Code Service Archive Directory 15 USCS § 78j

NITA Commentary Related Statutes & Rules Research Guide
Federal Procedure:

> 2 Moore's Federal Practice

NITA Commentary: Review expert commentary from The National Institute for Trial Advocacy THE CASE NOTES SEGMENT OF THIS DOCUMENT HAS BEEN SPLIT INTO 3 DOCUMENTS. THIS IS PART 1. USE THE BROWSE FEATURE TO REVIEW THE OTHER PART(S). § 78j. Manipulative and deceptive devices [Caution: See prospective amendment note below.] It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange-(a) (1) To effect a short sale, or to use or employ any stop-loss order in connection with the purchase or sale, of any security other than a government security, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. (2) Paragraph (1) of this subsection shall not apply to security futures products. (b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act [15 USCS § 78c note]), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(Matthew Bender 3d ed.), ch 9, Pleading Special Matters § 9.03. (Matthew Bender 3d ed.), ch 20, Permissive Joinder of Parties § 20.04. (Matthew Bender 3d ed.), ch 23, Class Actions §§ 23.45, 23.190.

> 4 Moore's Federal Practice

> 5 Moore's Federal Practice

Forms:

> 3 Bender's Federal Practice Forms,
Forms 8(VII):1, 8(VII):21, 8(VII):23, 8(VII):31, 8(VII):32, 8(VII):50, Federal Rules of Civil Procedure.

> 4 Bender's Federal Practice Forms,
Form 15:8, Federal Rules of Civil Procedure.

> 5 Bender's Federal Practice Forms,

Forms 23:22, 23:210, Federal Rules of Civil Procedure.

Intellectual Property:

> 3 Milgrim on Trade Secrets

Rules promulgated under subsection (b) that prohibit fraud, manipulation, or insider trading (but not rules imposing or specifying More... reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading), and judicial precedents decided under subsection (b) and rules promulgated thereunder that prohibit fraud, manipulation, or insider trading, shall apply to security-based swap agreements (as defined in section 206B of the Gramm-Leach-Bliley Act [15 USCS § 78c note]) to the same extent as they apply to securities. Judicial precedents decided under section 17(a) of the Securities Act of 1933 [15 USCS § 77q(a)] and sections 9, 15, 16, 20, and 21A of this title [15 USCS §§ 78i, 78o, 78p, 78t, and 78u-1], and judicial precedents decided under applicable rules promulgated under such sections, shall apply to security-based swap agreements (as defined in section 206B of the Gramm-Leach-Bliley Act [15 USCS § 78c note]) to the same extent as they apply to securities. (c) (1) To effect, accept, or facilitate a transaction involving the loan or borrowing of securities in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. (2) Nothing in paragraph (1) may be construed to limit the authority of the appropriate Federal banking agency (as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), the National Credit Union Administration, or any other Federal department or agency having a responsibility under Federal law to prescribe rules or regulations restricting transactions involving the loan or borrowing of securities in order to protect the safety and soundness of a financial institution or to protect the financial system from systemic risk.

(Matthew Bender), ch 12, Public Law Aspects of Trade Secrets: Regulatory Agencies; Criminal Prosecution § 12.02.

History: (June 6, 1934, ch 404, Title I, § 10, 48 Stat. 891.) (As amended Dec. 21, 2000, P.L. 106-554, § 1(a)(5), 114 Stat. 2763; July 21, 2010, P.L. 111-203, Title VII, Subtitle B, § 762(d)(3), Title IX, Subtitle B, § 929L(2), Subtitle I, § 984(a), 124 Stat. 1761, 1861, 1932.)

History; Ancillary Laws and Directives: 1. 2. 3. 4. Explanatory notes Prospective amendment Effective date of section Amendments

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5. Transfer of functions 6. Other provisions

1. Explanatory notes: The amendments made by § 1(a)(5) of Act Dec. 21, 2000, P.L. 106-554, are based on § 206(g) of Title II and § 303(d) of Title III of H.R. 5660 (114 Stat. 2763A-432, 454), as introduced on Dec. 14, 2000, which was enacted into law by such § 1(a)(5). 2. Prospective amendment: Amendment of section, effective on the later of 360 days after enactment or not less than 60 days after publication of final rules. Act July 21, 2010, P.L. 111-203, Title VII, Subtitle B, § 762(d)(3), 124 Stat. 1761 (effective on the later of 360 days after enactment or not less than 60 days after publication of final rules implementing these provisions, as provided by § 774 of such Act, which appears as 15 USCS § 77b note), provides that this section is amended: "(A) in subsection (b), by striking '(as defined in section 206B of the Gramm-Leach-Bliley Act),' each place that term appears; and "(B) in the matter following subsection (b), by striking '(as defined in section 206B of the Gramm-Leach-Bliley Act), in each place that such terms appear';". 3. Effective date of section: This section became effective on October 1, 1934, pursuant to § 34 of Act June 6, 1934, ch 404, which appears as 15 USCS § 78hh. 4. Amendments:

2000. Act Dec. 21, 2000, in subsec. (a), designated the existing provisions as para. (1), and added para. (2); in subsec. (b), inserted "or any securities-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act),"; and added the concluding matter.

2010. Act July 21, 2010 (effective 1 day after enactment, as provided by § 4 of such Act, which appears as 12 USCS § 5301 note), in subsec. (a)(1), substituted "other than a government security" for "registered on a national securities exchange"; and added subsec. (c). 5. Transfer of functions: For transfer of executive and administrative functions of Securities and Exchange Commission to Chairman of that Commission with authority vested in Chairman to delegate performance of functions, by Reorg. Plan No. 10 of 1950, see Transfer of functions note to 15 USCS § 78d. 6. Other provisions: Rulemaking required. Act July 21, 2010, P.L. 111-203, Title IX, Subtitle I, § 984(b), 124 Stat. 1933, provides: "Not later than 2 years after the date of enactment of this Act, the Commission shall promulgate rules that are designed to increase the transparency of information available to brokers, dealers, and investors, with respect to the loan or borrowing of securities.".

Notes: Code of Federal Regulations: Securities and Exchange Commission--Form and content of and requirements for financial statements, Securities Act of 1933, etc., 17 CFR 210.1-01 et seq. Securities and Exchange Commission--Standard instructions for filing forms under Securities Act of 1933, Securities Exchange Act of 1934, and Energy Policy and Conservation Act of 1975-Regulation S-K, 17 CFR 229.10 et seq. Securities and Exchange Commission--General rules and regulations, Securities Exchange Act of 1934, 17 CFR 240.0-1 et seq. Securities and Exchange Commission--Regulations M, SHO, ATS, and AC and customer margin requirements for security futures, 17 CFR 242.100 et seq. Securities and Exchange Commission--Regulation FD, 17 CFR 243.100 et seq. Securities and Exchange Commission--Regulation G, 17 CFR 244.100 et seq.

Related Statutes & Rules: Short sales by directors, officers, and principal stockholders, 15 USCS § 78p. Rules and regulations, power of Commission and Board of Governors of Federal Reserve System to make, 15 USCS § 78w. Effective date, 15 USCS § 78hh. Sentencing Guidelines for the United States Courts, 18 USCS Appx §§ 2B1.1, 2B1.4. This section is referred to in 15 USCS §§ 78k, 78u, 78aa-1, 78hh, 3904.

Research Guide:

Federal Procedure: 2 Moore's Federal Practice (Matthew Bender 3d ed.), ch 9, Pleading Special Matters § 9.03. 4 Moore's Federal Practice (Matthew Bender 3d ed.), ch 20, Permissive Joinder of Parties § 20.04. 5 Moore's Federal Practice (Matthew Bender 3d ed.), ch 23, Class Actions §§ 23.45, 23.190. 6 Moore's Federal Practice (Matthew Bender 3d ed.), ch 26, Duty to Disclose; General Provisions Governing Discovery § 26.46. 10 Moore's Federal Practice (Matthew Bender 3d ed.), ch 54, Judgment; Costs § 54.171. 15 Moore's Federal Practice (Matthew Bender 3d ed.), ch 100, The Structure of the Federal Judicial System § 100.22. 16 Moore's Federal Practice (Matthew Bender 3d ed.), ch 107, Removal § 107.14. 17 Moore's Federal Practice (Matthew Bender 3d ed.), ch 111, Change of Venue § 111.20. 17A Moore's Federal Practice (Matthew Bender 3d ed.), ch 124, The Erie Doctrine and Applicable Law § 124.41. 18 Moore's Federal Practice (Matthew Bender 3d ed.), ch 132, Issue Preclusion and Collateral Estoppel § 132.03. 5 Administrative Law (Matthew Bender), ch 42, Attorney Admission and Discipline in Administrative Practice § 42.02. 3 Fed Proc L Ed, Arbitration § 4:18. 5B Fed Proc L Ed, Bonds, Civil Fines, and Forfeitures § 10:151. 6A Fed Proc L Ed, Class Actions § 12:226. 8 Fed Proc L Ed, Creditors' Provisional Remedies § 21:5. 10 Fed Proc L Ed, Derivative Actions by Shareholders §§ 25:3, 180, 205, 206, 212. 29A Fed Proc L Ed, Securities Regulation §§ 70:258, 268, 290, 291, 304, 310-312, 352, 359, 405-407, 411, 413, 419, 423, 429, 430, 442, 446, 451, 452, 454.

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Am Jur: 9C Am Jur 2d, Bankruptcy § 2909. 18A Am Jur 2d, Corporations § 671. 19 Am Jur 2d, Corporations § 2147. 32B Am Jur 2d, Federal Courts § 1731. 60A Am Jur 2d, Pensions and Retirement Funds § 82. 61A Am Jur 2d, Pleading § 204. 69 Am Jur 2d, Securities Regulation--Federal §§ 18, 271, 277, 283, 375, 397-399, 405, 406, 414, 538, 585, 696, 719. 69A Am Jur 2d, Securities Regulation--Federal §§ 863, 872, 878, 917-920, 924, 928, 932, 1003, 1005, 1006, 1008-1011, 1014-1016, 1018, 1023, 1024, 1028, 1030, 1036, 1037, 1042, 1050, 1052, 1068, 1070, 1072, 1084, 1095, 1106, 1107, 1109, 1112, 1118, 1121, 1136, 1138-1140, 1142, 1152, 1153, 1158, 1160, 1161, 1163, 1165, 1166, 1167, 1169, 1177, 1187, 1188, 1190, 1205, 1215, 1216, 1219, 1222, 1334, 1386, 1388, 1390, 1394, 1395, 1402, 1403, 1411, 1414, 1416, 1418-1420, 1429, 1435, 1439, 1455, 1466, 1468, 1470, 1473, 1474, 1476, 1498, 1504-1506, 1613, 1619, 1635, 1641, 1650.

Am Jur Trials: 4 Am Jur Trials, Solving Statutes of Limitation Problems, p. 441. 45 Am Jur Trials, Third-Party Accountant Liability-Prospective Financial Statements Used in Securities Offerings, p. 113. 88 Am Jur Trials, Stockbroker Liability Litigation, p. 1. 89 Am Jur Trials, Arbitrating Securities Industry Disputes, p. 55. 108 Am Jur Trials, Arbitrating and Mediating Customer Securities Disputes at FINRA, p. 313.

Am Jur Proof of Facts: 28 Am Jur Proof of Facts 3d, Proof of Unsuitable and Unauthorized Trading by Securities Brokers, p. 87. 92 Am Jur Proof of Facts 3d, Arbitrability Disputes: Proving What Facts to Whom, p. 1. 109 Am Jur Proof of Facts 3d, Primary and Secondary Liability of Investment Promoters, p. 319. 5 Am Jur Proof of Facts 2d, Stockbroker's Churning of Customer's Account, p. 1.

Forms: 3 Bender's Federal Practice Forms, Forms 8(VII):1, 8(VII):21, 8(VII):23, 8(VII):31, 8(VII):32, 8(VII):50, Federal Rules of Civil Procedure. 4 Bender's Federal Practice Forms, Form 15:8, Federal Rules of Civil Procedure. 5 Bender's Federal Practice Forms, Forms 23:22, 23:210, Federal Rules of Civil Procedure. 9 Bender's Federal Practice Forms, Forms 51:120, 51:121, Federal Rules of Civil Procedure. 9 Bender's Federal Practice Forms, Form 52:41, Federal Rules of Civil Procedure. 10 Bender's Federal Practice Forms, Form 54:171, Federal Rules of Civil Procedure. 10 Bender's Federal Practice Forms, Form 56:211, Federal Rules of Civil Procedure. 10 Bender's Federal Practice Forms, Form 57:20, Federal Rules of Civil Procedure. 11 Bender's Federal Practice Forms, Form 65:26, Federal Rules of Civil Procedure. 19 Bender's Federal Practice Forms, Form 37:1, Rules of the Supreme Court. 7 Rabkin & Johnson, Current Legal Forms, § 5.39, Sales of Stock and Business Assets. 28 Rabkin & Johnson, Current Legal Forms, Form 22A.02, Real Estate Securities. 5 Fed Procedural Forms L Ed, Class Actions (2006) § 11:63. 14A Fed Procedural Forms L Ed, Securities Regulation (2004) §§ 59:264, 396-399, 401, 402, 404, 405, 408, 414. 7B Am Jur Pl & Pr Forms (2002), Corporations, § 127. 15 Am Jur Pl & Pr Forms (2005), Investment Companies and Advisers, § 3. 22 Am Jur Pl & Pr Forms (2001), Securities Regulation, §§ 6, 23-28, 30, 31, 33, 35, 47. 22A Am Jur Pl & Pr Forms (2001), Securities Regulation, §§ 54, 55, 57, 60, 61, 64, 65, 69, 71, 74, 84. 23 Am Jur Pl & Pr Forms (2001), Stock and Commodity Exchanges, § 53.

Intellectual Property: 3 Milgrim on Trade Secrets (Matthew Bender), ch 12, Public Law Aspects of Trade Secrets: Regulatory Agencies; Criminal Prosecution § 12.02.

Criminal Law and Practice: 3 Criminal Defense Techniques (Matthew Bender), ch 56, Defense of a Securities Case § 56.03. 4 Criminal Defense Techniques (Matthew Bender), ch 79A, Cross-Examination in Business Crime Cases § 79A.05. 1 Business Crime (Matthew Bender), ch 2, Parallel Civil and Criminal Proceedings PP 2.03, 2.04. 4 Business Crime (Matthew Bender), ch 15, Appellate Practice P 15.05. 4 Business Crime (Matthew Bender), ch 17, Securities Fraud P 17.11.

Bankruptcy: 1 Collier Bankruptcy Practice Guide, ch 4, Issues for Consideration Prior to Filing P 4.03. 5 Collier Bankruptcy Practice Guide, ch 90, The Chapter 11 Plan P 90.08.

Corporate and Business Law: 1 Liability of Corporate Officers 1 Liability of Corporate Officers 1 Liability of Corporate Officers 1 Liability of Corporate Officers 1 Liability of Corporate Officers 1 Liability of Corporate Officers 1 Liability of Corporate Officers 1 Liability of Corporate Officers

and and and and and and and and

Directors Directors Directors Directors Directors Directors Directors Directors

(Matthew (Matthew (Matthew (Matthew (Matthew (Matthew (Matthew (Matthew

Bender), Bender), Bender), Bender), Bender), Bender), Bender), Bender),

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1, Basic Duties §§ 1.04, 1.17. 3, Duty of Diligence § 3.02. 4, Duty of Loyalty § 4.08. 5, Duty of Obedience § 5.12. 9, Liability Under ERISA § 9.14. 11, Depository Institutions: Directors and Officers §§ 11.04, 11.08. 13, Federal Securities Laws §§ 13.02, 13.03, 13.06, 13.07, 13.09, 13.10, 13.14. 15, Disclosure and Misuse of Business Information §§ 15.03, 15.08.

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27 ALR Fed 407. Acquisition by corporate insider of corporation's stock as manipulative or deceptive device prohibited by § 10(b) of the Securities Exchange Act of 1934 (15 USCS § 78j(b)).01.07. 90. 3 ALR Fed 819. Williams Act--An Overview § 70. Section 3(a)(9): Recapitalizations § 5.13.04. ch 107.07.01. 2 Liability of Corporate Officers and Directors (Matthew Bender).S.02. ch 86. ch 6. 1 Securities Law Techniques (Matthew Bender). 2 Liability of Corporate Officers and Directors (Matthew Bender). ch 5. 30. 1 Securities Law Techniques (Matthew Bender). ch 30. 2 Liability of Corporate Officers and Directors (Matthew Bender). Statutory Standards for Deferral Under IRC Section 409A § 14.15 USCS § 78j https://www. ch 80.02. 35-36 § 9. Accountants. Who is an "insider" within § 10(b) of the Securities Exchange Act of 1934 (15 USCS § 78j(b))--and SEC Rule 10b-5 promulgated thereunder--making unlawful corporate insider's nondisclosure of information to seller or purchaser of corporation's stock. 130 ALR Fed 119. § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240. Quarterly Reports on Form 10-Q or 10-QSB §§ 55. 3 Securities Law Techniques (Matthew Bender).03. Federal Rules of Civil Procedure. Allocation § 21.Get a Document . § 10(b). 2 Securities Law Techniques (Matthew Bender). that circumstances constituting fraud or mistake be stated with particularity. 3 Securities Law Techniques (Matthew Bender).01. Fraud or deceit as "in connection with" purchase or sale of securities within meaning of Securities Exchange Act of 1934 § 10(b) (15 USCS § 78j(b)) and SEC Rule 10b-5. Problems in Trading § 48. ch 4.01. Attorneys.12. 1 Regulation of Investment Companies (Matthew Bender).. ch 21.03. Who is "forced seller" for purposes of maintenance of civil action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5. 1 Securities Law Techniques (Matthew Bender). 146 ALR Fed 643. 7 Securities Law Techniques (Matthew Bender). Preparing the Business Combination Registration Statement § 65. ch 55.04. Registration of Investment Companies and Their Securities: Sections 8 and 24 § 5.C. Attorney's liability for nondisclosure or misrepresentation to third-party nonclients in private civil actions under federal securities laws. ch 51.03.07. 1 Securities Law Techniques (Matthew Bender). 93 ALR Fed 444. Securities Regulation of Sales of Oil and Gas Interests § 4. Liability Under Federal Securities Laws of Sellers of Subprime Mortgage Loans. ch 26.A. 30. Secondary Offerings § 37.13. 4 Securities Law Techniques (Matthew Bender). 2 Liability of Corporate Officers and Directors (Matthew Bender).12.A.07.S. 112 ALR Fed 141. 4 ALR Fed 1048. Preparation of Proxy Statements and Annual Reports to Shareholders § 51.10. 7 Securities Law Techniques (Matthew Bender).02-91.A. § 80b-6 [15 USCS § 80b-6]).com/research/retrieve?cc=&pushme=1&tmp.03. What is a "purchase or sale" of securities within the antifraud provisions of § 10(b) of the Securities Exchange Act of 1934 (15 USCS § 78j(b)) and of SEC Rule 10b-5 promulgated thereunder.05.lexis. ch 37. ch 92.03-30. Class Actions §§ 92.07.10b-5). Trials (Matthew Bender). The Process of Becoming "Effective" § 22. Construction and application of § 14 of Securities Act of 1933 (15 USCS § 77n) and § 29(a) of Securities Exchange Act of 1934 (15 USCS § 78cc(a)).S. 90. Investigations. 80. 55. 92. 1 Tax Controversies: Audits. 92. ch 91. Section 3(a)(10): Officially Sanctioned Exchanges § 6. ch 48. Annotations: Liability for Backdating of Stock Options Under Securities Exchange Act of 1934. 3 Securities Law Techniques (Matthew Bender). Who may be liable under "misappropriation theory" of imposing duty to disclose or abstain from trading under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240. ch 19.C. ch 18.02. § 240. 6 Securities Law Techniques (Matthew Bender). Insurance: Insuring Clauses and Major Provisions § 24..03. ch 3. Responsibilities for Registered Offerings §§ 30. ch 82.06. Litigation--An Overview §§ 91. ch 56. Blue Sky Litigation § 93.C. Valuation. 2 ALR Fed 274.13. ch 23.03. SEC Proceedings--An Overview § 87. Federal Taxation: 2 Federal Income Taxation of Retirement Plans (Matthew Bender).09. 7 Securities Law Techniques (Matthew Bender). The Uses and Functions of Experts in Securities Litigation § 107.04. SEC Injunctive Proceedings §§ 90. 2 Liability of Corporate Officers and Directors (Matthew Bender).15. 59 ALR Fed 10. 80. 2 Liability of Corporate Officers and Directors (Matthew Bender). of the Like As "Insiders" Within § 10(b) of the Securities Exchange Act of 1934 (15 U. 1 Regulation of Investment Companies (Matthew Bender). 92. 6 Securities Law Techniques (Matthew Bender).05. 4 Securities Law Techniques (Matthew Bender). ch 65. and 17 C. "Purchase or sale" requirement as to defendant or victim in criminal prosecutions for violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5.by Citation . § 78j(b) [15 USCS § 78j(b)].C.01.03.04. What constitutes recklessness sufficient to show necessary element of scienter in civil action for damages under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b) and Rule 10b-5 of the Securities and Exchange Commission. Scienter requirement in actions under antifraud provision of Investment Advisers Act (15 U. ch 70. Complying with the Foreign Corrupt Practices Act § 82. ch 24.A. 6 Securities Law Techniques (Matthew Bender). Defense and Settlement of Litigation § 19. 15 U. 43 ALR Fed 2d 47. Insider Trading Under Section 10(b) of the Securities Exchange Act §§ 80. 6 Securities Law Techniques (Matthew Bender).10. Current Reports on Form 8-K §§ 56. 66 ALR Fed 848. 2 Liability of Corporate Officers and Directors (Matthew Bender). Insurance: Exclusions § 25. ch 90. In pari delicto as defense in private action for violation of Securities Act or Securities Exchange Act. "Bespeaks caution" doctrine under federal securities law. Regulation M § 26. 1 Securities Law Techniques (Matthew Bender). ch 93.17. Overview of Federal Private Placement Exemptions § 1. Actions § 18. § 78j(b) [15 USCS § 78j(b)]--and SEC Rule 10b-5 Promulgated Thereunder--Making Unlawful Corporate Insider's Use of Manipulative or Deceptive Device in Connection With Purchase or 4 of 158 3/8/11 4:25 PM . Civil liability of employer for violation by employee of § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) or of Rule 10b-5 of Securities and Exchange Commission (17 CFR § 240. ch 22.04. 26 ALR Fed 495. 80. Indemnification § 22. 4 Securities Law Techniques (Matthew Bender).03.02. When is it unnecessary to show direct reliance on misrepresentation or omission in civil securities fraud action under § 10(b) of Security Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240. 4 Securities Law Techniques (Matthew Bender). Arbitration § 86. Insurance: Directors and Officers Liability § 23. Application of Equitable Estoppel by Nonsignatory to Compel Arbitration--Federal Cases.10b-5).05. 56. 6 Securities Law Techniques (Matthew Bender). ch 25. 133 ALR Fed 549. Tax Preparers and Practitioners § 4.09. 5 Securities Law Techniques (Matthew Bender).07.F. 5 Securities Law Techniques (Matthew Bender). ch 4. ch 40.10b-5. 90.10b-5). 26 ALR Fed 682. voiding waiver of compliance with statutory provisions or rules or regulations. ch 1.06.03. Sales Activities and UITs: Sections 21-27. ch 5.04.R. ch 87. Construction and application of provision of Rule 9(b). 114 ALR Fed 323.02.22. 3 ALR Fed 294.10b-5).10. 7 Securities Law Techniques (Matthew Bender). 49 ALR Fed 392. NLRB Deferral to Arbitration § 40. 92.01-80.02. ch 9. ch 22. ch 14. 32 ALR Fed 714. 32 ALR Fed 2d 85. Labor and Employment: 5 National Labor Relations Act: Law and Practice (Matthew Bender). Limitation of Actions With Respect to Actions For Contribution Under § 10(b) of Securities Exchange Act of 1934 (15 U. Offerings of Securities Pursuant to Regulation A § 3. Consultants. 39 ALR Fed 2d 17.09-80.S.

22 Am Bus L J 569. 138 L Ed 2d 724]: Agency Law and Justice Powell's Legacy for the Law of Insider Trading. Financial Statement Fraud: The Boundaries of Liability Under the Federal Securities Laws. ch 52. An Examination of Investment Analyst Liability Under Rule 10b-5. Vashista. 3 The Law of Advertising (Matthew Bender). ch 97. Liabilities of Advertising Agencies § 44. Sale of Securities. Nonpublic Information. 51 Cath U L Rev 467.07. Summer 2005. Winter 1987. Riesenberg. 7 ALR3d 500. Cuevas. 32 ALR3d 635.02-100. Corporate insider's nondisclosure of information to seller or purchaser of corporation's stock as manipulative or deceptive device prohibited by § 10(b) of the Securities Exchange Act of 1934 (15 USCS § 78j(b)).04. The Evolving Controversy Over Insider Trading. 36 Am Bus LJ 531. ch 80. Advertising by Financial Institutions § 52. Winter 2004. 14 ALR Fed 2d 401. Right of a Beneficial Shareholder to Bring a 10b-5 Action. Insider Trading. 78 BU L Rev 13. May 2001.05. Cohen's Handbook of Federal Indian Law (Matthew Bender). ch 100. Securities Fraud. May 2004. Winter 1998. Bank Services § 96.. Application of Fraud Provisions of the Federal Securities Laws §§ 102. 191 ALR Fed 623. 39 Am Crim L Rev 1037. Winter 1998. Materiality Guidance in the Context of Insider Trading: A Call for Action. 54 Boston U L Rev 637. Securities Fraud. Should the Supreme Court Recognize General Market Reliance in Private Actions Under Rule 10b-5? 36 Baylor L Rev 335. Summer 2001. Good. October 2003. 26 Cardozo L Rev 2023. Cronin.03. 3 Energy Law & Transactions (Matthew Bender). Sweepstakes. 103. 4 Banking Law (Matthew Bender). An Attorney's Responsibilities Under Federal and State Securities Laws: Private Counselor or Public Servant? 61 Cal L Rev 1189. Symposium: Insider Trading: Law. 37 Ariz St LJ 535.06. Joe Six-Pack.05. bonus. Cheng. Control.. Schroeder. The Interplay Between the Implied Remedy Under Section 10(b) and the Express Causes of Action of the Federal Securities Law. Walker. and Private Securities Litigation Reform: A Line Must Be Drawn. Secondary Liability Under Section 10(b) of the Securities Act of 1934. April 2005. 58 Cal L Rev 1149. 36 Am Crim L Rev 1095. 37 Am Crim L Rev 941. Duty and liability of closely held corporation. Bank Trading Obligations § 98. 38 Am Crim L Rev 1277. O'Hagan [(1997) 521 US 642. Reassessing the Scope of Conduct Prohibited by Section 10(b) and the Elements of Rule 10b-5: Reflections on Securities Fraud and Secondary Actors. Bagby. 3 The Law of Advertising (Matthew Bender). 4 Computer Law (Matthew Bender). Sauer. or majority stockholders. 35 Am Crim L Rev 1167. and Theory after O'Hagan. Epstein et al. Summer 1999. ch 55. Ivanova.lexis. Windfall Awards Under PSLRA. Economic Development § 21. ch 98. An Outsider's Guide To Insider Trading Liability Under Rule 10b-5. Ruder. 59 Bus Law 1043. September 1998.04. 22 ALR3d 793. Evansburg. 26 Bus Law 1289. ch 7. Officers. Securities Fraud. ch 44. 40 Ariz L Rev 1137. 102. Seymour. February 1999. Suitability Claims and Purchases of Unrecommended Securities: An Agency Theory of Broker-Dealer Liability. Spring 2000. 53 Cath U L Rev 667. Winter 1985. Anthony et al. Heminway.C. ch 96. received on sale of stock to outsiders. ch 21. Dessent. Poser.07. Securities Fraud. ch 59. Substantial Shareholders. Examination and Supervision of State Member Banks § 80. 1983. Friends. Spring 2005. Choudhury. 138 L Ed 2d 724]. Amchen. Spring 2004. Grzebielski. Schoeberlein.Get a Document . § 78j(b) [15 USCS § 78j(b)])--and SEC Rule 10b-5 Promulgated Thereunder--Making Unlawful Corporate Insider's Nondisclosure or Manipulation of Information to Seller or Purchaser of Corporation's Stock.02. Gedicks. 12 Cap U L Rev 495. January 1981. Contribution Between Joint Tortfeasors as Affected by Settlement with Injured Party by One or More Tortfeasors. Dominant shareholder's accountability to minority for profits. Stockbroker's liability for allegedly "churning" or engaging customer's account in excessive activity. ch 7. Is It a Securities Fraud Claim? 56 Ala L Rev 325. Rule 10b-5 and the "Unfitness" Question. 56 Bus Law 1417. Family. 20 Cardozo L Rev 7. Pritchard. Rule 10b-5: The In Pari Delicto and Unclean Hands Defenses. and Similar Promotional Marketing Schemes § 55. in acquiring stock of minority shareholder. Fraudulent Activities: Bases of Liability §§ 103. Registration and Regulatory Requirements of the Securities Exchange Act of 1934 and Other Securities Statutes §§ 100. Policy. Privileges § 7. 17 ALR6th 1. or the like. In Pari Delicto as Bar to Tippee's Recovery Under Rule 10b-5: Concept of "Public Interest" in Trade Regulation Compared. 11 Boston College Indus & Comm L Rev 257. Wang. Spring 1984. 42 Am Crim L Rev 877. 4 Banking Law (Matthew Bender). Envy and Outsider Trading: The Case of Martha Stewart. Nolette. 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Statutory Findings and Insider Trading Regulation. Harmonizing Civil and Criminal Enforcement of Federal Regulatory Statutes: The Case of the Securities Exchange Act of 1934. 54 Tex L Rev 861. Insider Trading.lexis. on the Liability Faced by Financial Institutions from Their Exposure to Subprime Mortgage Related Investments Several publicly-traded financial institutions have disclosed write downs in the billions of dollars to reflect the decline in the value of their mortgage-related investments and. and Plaintiff's Reasonable Conduct Requirement. A Federal Vision of the Securities Laws. Krawiec. Solving a Profound Flaw in Fraud-On-The-Market Theory: Utilizing a Derivative of Arbitrage Pricing Theory to Measure Rule 10b-5 Damages. Fischel. "The Private Securities Litigation Reform Act of 1995--27 Months Later": Securities Class Action Litigation Under the Private Securities Litigation Reform Act's Brave New World. Section 10(b) and the Vagaries of Federal Common Law: The Merits of Codifying the Private Cause of Action Under a Structuralist Approach. 4 U Tol L Rev 183. Contract-Based Defenses in Securities Fraud Litigation: A Behavioral Analysis. Painter. 28 SW L J 381. 50 SMU L Rev 225. Hazen. 22 U Pa J Int'l Econ L 635. Spring 2001. March 1984. Bayne. Werner. Bahlman. Tender Offers. Rule 10b-5 and Santa Fe--Herein of Sue Facts. May 1984. 11 Vt L Rev 1. Bainbridge. Insider Liability Under Securities Exchange Act Rule 10b-5. Winter 1997. January-February 1996. The Continuing Development of Rule 10b-5 as a Means of Enforcing the Fiduciary Duties of Directors and Controlling Shareholders. A New Look At 10b-5: The Sale of Business Doctrine. Sale. James M. September/October 1996. Morrissey. 56 Vand L Rev 859. 37 U Cin L Rev 727. The Class Action as a Mechanism for Enforcing the Federal Securities Laws: An Empirical Study of the Burdens Imposed. 26 SC L Rev 653. Summer 1984. 16 U Miami L Rev 474. Securities Law--Consideration of Tax Benefits in Private Damage Actions Under Rule 10b-5--Salcer v Envicon Equities. April 2003. and Other Matters. Rule 10b-5: The Case for Its Full Acceptance as Federal Corporation Law. 32 Wake Forest L Rev 1157. McDermett. Trust Beneficiary's Standing to Sue under Rule 10b-5. 64 Virginia L Rev 305. Brodsky. Sachs. Ayres. Proxies and the Modern Corporation: Scienter Under Sections 14a and 10b of the Securities Exchange Act. November 1984. Spring 1986. Hazen. Standing to Sue Under SEC Rule 10b-5. March 1998. Insider Trading Regulation: The Path Dependent Choice Between Property Rights and Securities Fraud. McGowan. Use" Debate in the Context of Securities Trading by Traditional Insiders: Why Silence Can Never be Golden. 125 U Pa L Rev 1023.by Citation . and Prompt Disclosure: A Comparative Analysis. Lerach. 19 Tulsa L J 491. Painter. 26 SW L J 653. 50 SMU L Rev 337. 67 U Cin L Rev 1129. Langevoort. O'Hagan's Problems. DuVal. Brudney. 1997 Sup Ct Rev 249. The Economics of Outside Information and Rule 10b-5. Selective Disclosure. Summer 1984. Nowicki. Swanson. Williams. Runkle. 2003. 38 U Chi L Rev 372. Reliance. 31 Wayne L Rev 1.. Insider Trading: The Misappropriation Theory Ignored: Ginsburg's O'Hagan. Carlton. Investors have filed class actions under the anti-fraud rule of the federal securities laws against some of the companies. Shame Facts. 20 Wayne L Rev 1401. James M. SEC Rule 10b-13: A Reconsideration. Winter 1997. Adams. 49 SMU L Rev 159. The Regulation of Insider Trading.. Corporate Insider Trading: Reawakening the Common Law. 2001. Harrison. The Muddled Duty to Disclose Under Rule 10b-5. Liability of "Outside" Directors as Aiders and Abettors under Rule 10b-5. Birnbaum Rule Rejected: Will Analysis of Right to Bring Private Action under § 10(b) be Simplified? 31 Wash & Lee L Rev 757. 34 U Pitt L Rev 201. Gulati. Commentary--The Insider Trading Sanctions Act of 1984 and Its Effect on Existing Law. Thompson. 1972 U Ill L F 651. Summer 2004. in some cases. 138 L Ed 2d 724].2d 935 (2d Cir. 1997. Stan L Rev 857. Don't Ask. November 2001. May 1984. Insider Trading and the Insider Trading Sanctions Act of 1984: New Wine Into New Bottles? 41 Wash & Lee L Rev 921. 87 W Va L Rev 189. February 1999. Kitch. The "Possession vs.Get a Document . Summer 1998. Telly. October 1999. 13 Washburn L J 534. 13 Wm & Mary L Rev 860. 62 Tex L Rev 1087. Limitations on Defenses Under 10(b): In Pari Delicto and Unclean Hands. Moye. 68 Tenn L Rev 427. Elements of Recovery Under Rule 10b-5: Scienter. 33 Syracuse L Rev 999. 8 of 158 3/8/11 4:25 PM . Fall 2001. Winter 2004. Prentice. Kaufman. The Sale of Business Doctrine: Landreth Adds New Life to the Anti-Fraud Provisions of the Securities Acts. Thomas. 5 U Richmond L Rev 251.

This Emerging Issues Analysis.. & Fournier on Stoneridge Investment v.--Full disclosure 4. Inc. written by James Stengel.com/research/retrieve?cc=&pushme=1&tmp. This commentary. Miscellaneous II." it leaves a narrow opening for plaintiffs to argue that "secondary actors" who do not themselves make actionable misrepresentations or omissions may still be liable in some circumstances. Constitutionality 6.. The Supreme Court may not have shut the door on so-called "scheme liability" as decisively as it might have in Stoneridge Investment Partners. and Nancy I. Generally 23. Generally 2. but the stringent test the opinion fashions for proving reliance in a §10(b) claim makes it difficult to imagine how a private suit could ever prevail against "secondary actors" in an alleged securities fraud. Interpretive Notes and Decisions: I. LLC v. 15 USCS § 78m 10. Applicability 29. Lowenthal.INTERSTATE COMMERCE 22. Inc. But the Court's opinion may also raise the bar for proving the reliance element in a §10(b) claim in a way that was not anticipated by the Court. What is "short sale" 30. Requirement that orders be marked "long" or "short" 9 of 158 3/8/11 4:25 PM . LLC v. This commentary. have posed for the enforcement of the federal securities laws prohibiting trading on insider information. 4. Although the Supreme Court's closely watched decision in Stoneridge Investment Partners. Davis. the Supreme Court's closely watched decision in Stoneridge Investment Partners. 5. Inc.15 USCS § 78j https://www. explores those ambiguities and their potential impact on future §10(b) and Rule 10b-5 litigation.In General 1. Mail 24. Construction 7. written by Professor Eli Wald.Other Laws 19. Travel III. 15 USCS § 78i 9. Scientific Atlanta. traces the Court's determination to constrain the limits of judicially implied private §10(b) claims.--To arrange meeting in furtherance of scheme 26.Other Securities and Exchange Act Provisions 8. Professor James Fanto on Insider Trading and the Misappropriation Theory In his Emerging Issues Analysis. Lowenthal. Scientific-Atlanta. Prohibited short sales 31. Applicability to exempt securities B. Herrington & Sutcliffe.--Protecting market integrity 5. 15 USCS § 77k 16. Professor James Fanto of Brooklyn Law School examines the special problem family members who are not employed by a corporation. State law 21. LLC v. ScientificAtlanta. Scientific-Atlanta. 6. Ruskin of Cleary Gottlieb Steen & Hamilton LLP. LLP. a legal ethics expert. ERISA 20. 2. Stengel. written by David Wiltenburg. due to their personal relationship with the insider." But in basing its holding on the plaintiff's inability to prove it relied on defendants' alleged deceptive conduct.the district court for the Southern District of New York held that secondary actors are not liable for aiding and abetting violations of the federal securities statutes. explores how the Court's attempt to draw a bright line between the "realm of financing" and the "realm of ordinary business" may be challenged by future plaintiffs in § 10(b) private actions. Wald on Aiding and Abetting Liability under the Federal Securities Law In In re Refco.Get a Document . Davis. Inc. but. Steven Fink. and Kristen Fournier of Orrick. appears to proclaim the demise of so-called "scheme liability. Miscellaneous 3. Miscellaneous 2. summarizes the pertinent legal issues decided by the court and provides important insights for practitioners. Telephone 25. 3. would appear to toll the death knell for so-called "scheme liability. Purpose 3.lexis.Relation to Other Laws 1. written by Evan A. 15 USCS § 78n 11. SEC Rule 10b-5 13. Inc. This commentary. 15 USCS § 78o 12. Inc.SHORT SALES OR STOP LOSS ORDERS [15 USCS § 78j(a)] 28. & Ruskin on Stoneridge Investment v.IN GENERAL A..by Citation . 15 USCS § 77q 18. Scientific Atlanta. Fink. Generally 15.Securities Act 14. 15 USCS § 77l 17.--Intrastate calls 27. Mitchell A. the Court actually left the door ajar for colorable claims against a secondary actor. Wiltenburg on Court's "Reliance" Test for ' 10(b) Private Causes of Action At first blush.

Actual knowledge or reckless disregard. Accountant's opinions and advise 92.--Balancing of probability and magnitude 64. Generally B.15 USCS § 78j https://www.Materiality 60. Contributions to capital 96. Fraud noncoterminous with sale or purchase 98. GENERALLY [15 USCS § 78j(b)] A. IV. omission 66.Get a Document .----In particular circumstances 51.In General 78.--Intervening causes 83. Audit reports 93. manipulate or defraud.--New products 70.--Purchase prior to disclosure of material information 100. Intent to deceive.--Failure to disclose.--Non-stock connected to stock exchanges 2. Effect of investment sophistication of other party 76.--Uncompleted agreements 90. Broker's activities.--In particular circumstances 48. "Aiding and abetting" 59.--Intent required 41.Fraud in Connection With Purchase or Sale of Securities 1.--In particular cases 85. Specific intent to defraud 45.--Merger discussions or plans 69.In General 32.--Standard of duty for various parties 53.----"Aborted" sales or purchases 91.--Purchase prior to issuance of prospectus 101. Generally 79.lexis.--Pleading 47. Materiality as distinct from duty to disclose 62.--Pleading 37.Scienter 33.--Sale of corporation 71. Acts incidentally inducing sale or purchase 86. Effect of good faith 58.--Superseding causes 84. generally 49.--In particular circumstances 103. Negligence 52. Necessity of causal reliance 80. Duty to investigate 55. Generally 34.--In "market fraud" cases 81. Effect of availability of information 75.--In particular circumstances 54. Effect of other party's knowledge 74.--Not an indispensable element 42.--Showing of scienter not necessary 35. Strict liability 57.--Inside information 68..by Citation .--Fraud in connection with other event 99. Reliance on advice or expertise of others 56.--Purchase prior to misrepresentation 102. Question of fact 73. generally 94.--Jury Instructions 38. Agreements to sell or purchase 89.com/research/retrieve?cc=&pushme=1&tmp.--Miscellaneous 39.--Misstatement or misrepresentation 67. Generally 88. Financing of securities purchases 97.----Acting on reasonable belief not reckless 50..FRAUD PROVISIONS."In Connection With" 87.--Showing of scienter necessary 36.--Test as objective 65.--Tender offers 72. Generally 61.--What constitutes recklessness.--Brokerage fees 95. Miscellaneous D. Test of materiality 63. SEC disciplinary cases C. generally 40. Misappropriation of information 10 of 158 3/8/11 4:25 PM . generally 46.--Requirements in particular circumstances 43.--Timing of fraud 82.--What constitutes "intent to deceive" 44. Relation to reliance 77.

109. 106. Imminent loss of business 156. Issuer's identity 173. Conversion options 116. Availability of financial statement 163. Earnings and profits 165.Issuer's Financial Condition 160. Ability to pay dividends 162.--Corporate reports and proxies 143.--In liquidation 126.--Speeches 142. Duty to disclose 137. Miscellaneous B. Increases in overhead 157. Earnings and profits predictions 150.Get a Document . Acquisition of treasury stock 114.--Supplemental indentures 117.--In merger 125. Violations of law 2. Misrepresentations of SEC actions Payment for securities ordered Publicly disseminated information Refusal to deal in stock matters Retention or non-purchase of securities due to fraud Schemes to increase value of stock Transfer of custodial control Miscellaneous 3. Loan and pledge transactions 127. Deceptive conduct 136. Corporate acquisition of own stock 118.--Prospectus statements 145. 104. Parent-subsidiary exchanges 130. Knowledge assumed of reasonable investors 138. Bonus agreements 171.In General 133. Generally 113.15 USCS § 78j https://www. Investment history 11 of 158 3/8/11 4:25 PM . Control group plans 172. Affirmative misrepresentation not necessary 135. Pension plan contributions 131. 111. Recapitalization transactions 132.FALSE OR MISLEADING STATEMENTS OR OMISSIONS A. Generally 134. 107. Outstanding obligations 166. Issuance of stock 123. 105.--Redemptions of corporate issues 119. Opinions or predictions 147. Reduction in minimum capital 167.--Forfeiture of partnership rights 129. Custodial transfer of stock 121. Effectiveness of disclosure 140.--Statements made without basis or knowledge 151.--As indicia of ownership 124.. Financing 154.--Press statements 144. Corporate takeover transactions 120. Issuance of bills of exchange 122. Value of contributions to capital 3. Agreements affecting prior sales 115.--"Silent" owners 174. Modification of partnership 128.Others 170.com/research/retrieve?cc=&pushme=1&tmp.. Corporation's credit rating 164.Issuer's Potential 148. 108.--In particular circumstances 153. Imminent business expansion 155.--Cautionary language used 152. Transactions outside stock exchange channels V. Value of contracts held by corporation 169.lexis. Generally 149."Purchase or Sale" 112.Particular Misstatements or Omissions As to Issuer 1.by Citation . Value of assets 168. Materiality 139. Generally 161. 110. Statements not controlled by issuer 146. Product information 159. Nature and size of operation 158. Effect of means of publication or omission 141.

Duty as extending to contemporaneous traders 248. Securing purchase price with purchased stock 236. 179. Duty as dependent on relationship 247.Particular Misstatements or Omissions As to Security or Transaction 181. Other investors 200. Selling stock at favored price 237.lexis. Generally 182.--Rights granted other investors 201. Generally 222. Dividend and interest payments 187. 175.--Purchaser's plans 193. Registration of stock 207. Effect of fairness of transaction 12 of 158 3/8/11 4:25 PM . Duty as owed to public 249. Conversion rights 186. Failure to use or improper use of prospectus 225. Broker's fees 185.. 177. Loan transactions 227. Market manipulation 199.--Financial statement or condition 212. Short tendering 239.. Use of confidential information VII. Broker's qualifications 184. Identity of purchaser 191. Obtaining stock for inadequate or no consideration 230. Obtaining stock redemption agreements 231. Selling trust assets 238. Safety of investment 208.--Tender offers 215. 176. Necessity of insider trading 244. Inducing stock agreement with no intent to perform 198.--Insiders 192. Factors affecting underlying capitalization 189.com/research/retrieve?cc=&pushme=1&tmp. Possible legal problems 202. Effectiveness of disclosure 250. Legality of corporate restructuring Maintenance of funds Management interest in investments Modification of bylaws Resignation of directors Use of corporate funds C. Sale of unregistered stock 235.INSIDER DUTIES AND VIOLATIONS A. Protecting control position 232. Inducing shareholder to retain stock 197. Auditor's negligence 223. Quantity of stock 205. Duty as applicable to incomplete information 246.--Merger discussions or plans 213. Generally 243. 178.Special Duty of Disclosure 242. Existence of options 188. Market manipulation 228. Identity of seller 194.--Other particular circumstances 218.Get a Document .--Seller in short position 195. Value and price of stock 219. Suspension of trading 209. High pressure sales 226. Effect of prior disclosures 251.15 USCS § 78j https://www. Non-exempt distributions 229. Ability to redeem notes 183.--Value of stock or corporation 216. Breach of securities-related contracts 224.--Anticipated changes 220. 180.--Appraisal alternatives 217. Stock restrictions 240.--Special rights given target's officers 214. Takeovers and mergers 210. Theft 241. Inability to timely pay for stock redemption 196.--Conflict of interest 211. Purchase of securities during distribution period 233. Disclosure to officers 245. Redemption rights 206. Others VI.CONDUCT NOT INVOLVING FALSE OR MISLEADING STATEMENTS OR OMISSIONS 221. Possible tax consequences 203.by Citation . Quality of stock 204. Financing of purchase 190. Restricting dividends 234.

Employees 273. Selective disclosure 257.--Effect of shareholder ratification 307.False or Misleading Statements or Omissions Pertaining to Inside Information 1.com/research/retrieve?cc=&pushme=1&tmp. Breach of fiduciary duty 303..--Mishandling funds 305. When information is readily available 262. Shareholders 277. Auditors 268. Brokers. Failure to disclose interest in transactions 13 of 158 3/8/11 4:25 PM . Printers 276. Corporate mismanagement 304. Effect of insider's diligence and good faith 253.Get a Document . Time between disclosure and use 260.--Omitting minority shareholders from deals VIII. Mergers or consolidations 293.lexis. Broker's qualifications and status 315. Generally B.--Fairness of merger terms 295.--Preliminary discussions 294. Failure to disclose account transactions 316. "Tippees" 278. When disclosure would be detrimental to corporation 261. Timeliness of disclosure 258.Business Status or Activities 289. Consultants 271. Insider's analysis and predictions 300. Dissatisfaction with management 291. 252. Dividends 284. When dealing with non-shareholders 264.Duty of Fair Dealing 311. Generally 313. Generally 267. Effect of trading forum used 256. Projected earnings 288. Executives and directors 274. Declining business 283. Sale of securities to corporation for excessive price 308. Corporations 272.--Relatives and friends 275.. When dealing with sophisticated investors B.Others 299. Intent to go public 292.--Timing of release as discretionary 259. Generally 281. dealers. Acquisition of assets 290.15 USCS § 78j https://www. When dealing with minority shareholders 263. Product demand 287.--Of subsidiary 298. When dealing with other insiders 265.In General 279. Mineral discoveries 296. Violation of industry standards 4.BROKER-DEALER DUTIES AND VIOLATIONS A. Outstanding obligations 286.False or Misleading Statements or Omissions 312. Purpose of corporate transactions D. Squeezing out minority shareholders 310.Who Are Insiders 266. Effect of other insider trading 254. Stock's value and quality 3. Sale or liquidation of business 297. and underwriters 270. Manipulation of stock price 309. Change in accounting method 282. Generally 2. "Boiler room" operations 314.by Citation . Insider's interest in transaction 301. Banks 269. Others C. Effect of passivity 255. Issuance of shares to insiders for less than fair value 306.Insider Violations Not Involving False or Misleading Statements or Omissions 302.Financial Status of Corporation 280. Employee bonus program 285.

Failure to disclose market manipulation 320. Failure to disclose market value of securities 321. Concealment of unsound financial condition 336. Non-purchasers due to fraud 369. Failure to provide statement of required collateral 326. Failure to investigate issuer 324.by Citation .--Elements 332.--State law remedies 360. Banks 376. Right of action implied 351. Generally 350.Violations Not Involving False or Misleading Statements or Omissions 330. Corporations 379. Effect of availability of other remedies 359. Failure to obtain margin agreement 340. Conservators 378. Corporate issuers 372. Investors. Excessive or unfair profits or commissions 339. Under exchange rules 358. Giving preference to transactions on own behalf 343. Rules violations 347. Shareholders 388.Standing 1. Funds mismanagement 342. Against whom action may be brought 354. Recommendations contrary to customers' best interests 345. Failure to disclose investment advisor's fraud 318. Derivative standing 371. Failure to disclose market making activities 319. Conversion 338. Miscellaneous 2.--Issuers for no or inadequate consideration 373. "Finders" 380. Failure to disclose risk involved in transactions 322. Unauthorized customer account transactions IX. Brokers 377..lexis. Relation to other provisions 355. 317. Options traders 385.--Customer's failure to object 335.Get a Document . Others C. Churning 331. Quality and quantity of stock 329. To whom action accrues 353.com/research/retrieve?cc=&pushme=1&tmp. Opinions and predictions 328. Policy underlying right 352. Pledgors and pledgees 387.--Reliance on brochures or information provided by others 325. "Switching" 348. generally 375. Purchasers and sellers 364. Recommendations without reasonable basis 346. Failure to implement customer's orders 341. Generally 363. Failure to disclose SEC sanctions 323.In General 362. Option recipients 383. Partners 386.Private Right of Action 349. Under SEC Rule 10b-13 357.--Recipient's nominees 384.--Security not connected with fraudulent scheme 366.Particular Classes of Persons 374. Issuer's financial condition 327.----Broker's control over account 334.. Non-contemporaneous purchasers and sellers 367. Exempt securities 361. Continuation of operations while insolvent 337.CIVIL ACTIONS FOR DAMAGES UNDER 15 USCS § 78j(b) A. Trustees 14 of 158 3/8/11 4:25 PM . Market manipulation 344. Parties to sell or purchase agreements 368. Miscellaneous B. Tender offerors 389. Non-sellers due to fraud 370.--Forced sale 365.--Factors considered 333. Lenders and borrowers 382. Guarantors 381.15 USCS § 78j https://www.--SEC Rule 10b-16 356.

Forced Seller Doctrine 394.--Under "fraud on the market" theory 418. Relation to reliance 417. Effect of sophistication 411. Others C. Mergers and tender offers 426.--Other particular circumstances 4. Effect of sophistication 442. Prospectus 445. Corporations 396.Transaction Causation 430.--"Fraud created the market" doctrine 439. Pledgees 402. Persons whose interests may be affected by lawsuits 401. Miscellaneous b. Trust beneficiaries 392. Generally 414..Actual Loss 453.Due Care 408. Profit as eliminating injury 455. Other particular circumstances c. Effect of intentional fraud 412. Investors in bankrupt business 397. Stock restrictions 427. Unauthorized trading 428.. Nature of connection 415. Minority stockholder freeze-outs 444. Partnerships 399. Relation to due care 433. Shareholders of merging corporations 404.--Arising from materiality of misstatement or omission 448. Investigation required 410. Use of inside information 429. Generally 395. Generally 432. Shareholders whose equities in stock are diluted 406.Prerequisites to Relief 1. Reliance on sources other than defendant 443.--Limited partnerships 440.Loss Causation 419. Intervening or superseding causation 423. Generally 420.--Bankruptcy trustees 391. False representation cases 435.--Voting trust 393.by Citation .Reliance 431. Presumption of reliance 447.lexis.--Particular circumstances 441. 390.--Presumption of reliance 438.--"Reasonable investor" test 437. Forced sellers 424. Limited partnerships 425. Insider's duty 2. Required elements 416.Get a Document . Losses not contemporaneous to fraud 422. Joint venturers 398.--Rebutting presumption 449.com/research/retrieve?cc=&pushme=1&tmp. Generally 454.--Open market transactions 452.15 USCS § 78j https://www. Receivers 403. Tender offerors 407. Nondisclosure cases 436. Shareholders who dissent from corporate action 405. Others 3. Relation to causation 434. Derivative shareholder injury 15 of 158 3/8/11 4:25 PM .--"Fraud on the market" cases 451.--Effect of presumption on causation 450.Causation a. Proxy statements 446. Injury to corporation 421. Generally 409. Generally 3.In General 413. Persons prevented from bidding at sheriff's sale 400.

Stock exchange 485.--Auditing or certification activity 488.Particular Parties 472. Securities clearing houses 484. dealers.--Controlling shareholders 505. Governments 501. Arbitration as prerequisite 511. Investors. Attorneys 491.In General 456.lexis. Financial journalists 500.--Connection with prospectus preparation 477.. Corporate advisors 496. Documents 523. Applicability of privity 459.--State law claims 516. Disqualification of attorney 16 of 158 3/8/11 4:25 PM . Miscellaneous b. Creditors 498. Trustees E.Practice and Procedure 1. Tender offerors 507.by Citation .--Auditing or certification activity 475. Timing of fraud 471.Aiders and Abettors a. Brokers and dealers 480.--Failure to expose fraud 474. Co-conspirators 494.--Opinion letters 489. Attorneys 478. Corporations 481. Shareholders 504. Generally 467. D.In General 466.Principals 486.Jurisdiction 509. Applicability of agency 458. Particularity requirement 522.----Scope and construction 514. and underwriters 493.----Waiver 515. Others 3. generally 503. Investment advisors 502.--Preparation of statements or reports 490.Pleading 518. "Tippees" 508.--Preclusive effect of arbitration 517. Accountants 487.--Effect of settlement 464.----Attorneys 463.--Other particular circumstances 465.----Validity 513. Level of participation 469. Liability based on silence or inaction 470.com/research/retrieve?cc=&pushme=1&tmp.Get a Document . Extraterritorial transactions 2. Investment advisors 482.--Who may be liable 462. Stock exchange 506. Knowledge 468. Generally 519. Generally 510. Banks 492. Timing of events 521. Contribution 461.. Brokers.Persons Liable 1. Applicability of respondent superior 460. Elements to be plead 520. Banks 479.15 USCS § 78j https://www.--Misleading statements 476. Indemnification 2. Generally 457. Corporate officers and directors 497.--Agreement to arbitrate 512. Security analysts 483. Corporations 495. Employees 499. Accountants 473.

Nondisclosure 557.--Device.----Particularity requirement 539.--Limited partnership investments 543.----Negligence 537. Limitations under federal securities laws 587. Effect of change of venue 586.Defenses 573. Estoppel 576.--Unclean hands 580.--Statements as to corporate earnings 547.. Interstate commerce 556.--Suitability of investments by broker 549.----Aiding and abetting 538. Deception 529.--Adequacy of class representatives 567.--Scienter 534. Purchases for inadequate consideration 559.com/research/retrieve?cc=&pushme=1&tmp.------Time of discovery 591.--"Fraud on the market" cases 554.--Statements as to corporation's financial condition 548.----Reliance 565.--Quality or success of product 546.--Settlement 571.Get a Document . Failure of due care and diligence 577. Waiver or release 582. Conspiracy 528. Churning 527. State blue-sky laws applied 593. Others 5.--Mergers or takeovers 544.--Insider trading 542.--Miscellaneous 4..--Based on similarity of language 595.--Membership of class 569. Laches 578. Causation 526.----Retroactive application 589.--Sufficiency of factual allegations 552. churning 550.--Time of violation or transaction 17 of 158 3/8/11 4:25 PM . Breach of fiduciary duty 525. Amendments to pleading 3. Fraud 532.----Other particular circumstances 541.lexis. Tolling of statute of limitations 561. Collateral estoppel 575.by Citation . When statute begins to run 602. Reliance 560.--Notice and opportunity to opt out 570. Duty of disclosure 530.--Based on similarity to federal claim 599.--Common questions of law and fact predominate 564.----Other particular matters 566.----Recklessness 536. State fraud laws applied 598. Pari delicto 579. State borrowing statutes 592.Limitation of Actions 584.Class Actions 562.--Identity of actors 553.--Unauthorized trading by broker.--Attorneys' fees and costs 572. 524.----Timeliness of particular actions 590.--Based on common purpose 594.----Knowledge or intent 535.--Other particular circumstances 555.--Other particular circumstances 597.----Typicality 568. Purchase or sale 558. Generally 563.15 USCS § 78j https://www.------Facts supporting inference of fraud 540.--Particularity requirement 551.--1-year/3-year limitations period 588.--Over-valuation of corporate assets 545. Unintentional waiver 583. Statute of frauds 581. Exchange's breach of rules 531. State general statutes applied 601.--Remedies most appropriate 600. Generally 574.----Scienter 596. scheme or artifice 533. Generally 585.

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603.--Actual or constructive discovery or knowledge 604.----Publicly available information 605.----Investor exercising reasonable diligence 606.----Warnings received 607.----Presence of litigation 608.----Abrupt decline in stock price 609.----Churning of securities account 610.----Limited partnership investment 611.--Tolling 612.----Relation to state limitations statutes 613.----Class actions 614.----Pendency of administrative proceedings 615.----Fraudulent concealment 616.----Lack of due diligence 617.----Insanity 6.Summary Judgment 618. Generally 619. Materiality and failure to disclose 620. Scienter 621. Reliance 622. Statute of limitations 623. Churning 624. Other particular cases 7.Evidence 625. Burden of proof, generally 626. Evidentiary standards 627. Aiding and abetting 628. Causation 629.--Reliance 630. Churning 631. Scienter 632. Statute of limitations 633. Questions of fact 634. Instructions 8.Damages 635. Generally 636. Measure 637.--"Out of pocket" rule 638.--Rescissory damages 639. Churning 640. Forced sales 641. Mergers and takeovers 642. Computation 643.--Time as factor 644. Actual damages 645. Consequential damages 646.--Lost profits 647. Punitive damages 648. Unjust enrichment 649. Disgorgement of profits, generally 650.--Policy considerations 651.--Amount not due to special efforts of buyer 652.--As punitive relief 653.--Broker's profits 654.--Other particular circumstances 655. Mitigation 656. Interest 657. Attorney's fees 658.--Lack of statutory authorization 659.--Bad faith or frivolous defense 660.--Rule of proportionality 661.--Lodestar and upward adjustments 662.----Paralegal time 663.--Other particular circumstances X.OTHER REMEDIES UNDER 15 USCS § 78j(b) A.Equitable Relief 664. Generally 665. Injunctions, generally 666. Prerequisites to injunctive relief 667.--Likelihood of recurrence 668.--Scienter 669.--Purchase or sale 670.--Causation 671. Preliminary injunction 672. Ancillary relief 673. Rescission 674.--Necessity of due diligence 675. Declaratory judgment B.Criminal Prosecution

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676. Generally C.SEC Sanctions 677. Generally

I.IN GENERAL A.In General 1. Generally There is no affirmative indication in Securities and Exchange Act of 1934 that § 10(b) (15 USCS § 78j(b)) of Exchange Act applies extraterritorially, and therefore it does not. Morrison v Nat'l Austl. Bank Ltd. (2010, US) 130 S Ct 2869, 177 L Ed 2d 535, CCH Fed Secur L Rep P 95776, 22 FLW Fed S 575. It is only transactions in securities listed on domestic exchanges, and domestic transactions in other securities, to which § 10(b) (15 USCS § 78j(b)) of Securities and Exchange Act of 1934 applies. Section 10(b) reaches use of manipulative or deceptive device or contrivance only in connection with purchase or sale of security listed on American stock exchange, and purchase or sale of any other security in United States. Morrison v Nat'l Austl. Bank Ltd. (2010, US) 130 S Ct 2869, 177 L Ed 2d 535, CCH Fed Secur L Rep P 95776, 22 FLW Fed S 575. Antifraud provisions of federal securities laws apply to many transactions which are neither within registration requirements nor on organized American markets. Bersch v Drexel Firestone, Inc. (1975, CA2 NY) 519 F2d 974, CCH Fed Secur L Rep P 95080, 20 FR Serv 2d 340, cert den (1975) 423 US 1018, 46 L Ed 2d 389, 96 S Ct 453. Applicability of fraud provisions of SEC Rule 10b-5 is not limited to insiders; precedence established in civil cases interpreting SEC Rule 10b-5 are applicable in criminal prosecutions under Rule. United States v Charnay (1976, CA9 Nev) 537 F2d 341, CCH Fed Secur L Rep P 95560, cert den (1976) 429 US 1000, 50 L Ed 2d 610, 97 S Ct 527, 97 S Ct 528. Language of SEC Rule 10b-5 is broad enough to include fraud which relates not to particular securities transaction but to course of dealing in securities regardless of their identity. Arthur Lipper Corp. v SEC (1976, CA2) 547 F2d 171, CCH Fed Secur L Rep P 95796, reh den (1976, CA2) 551 F2d 915, CCH Fed Secur L Rep P 96001 and cert den (1978) 434 US 1009, 54 L Ed 2d 752, 98 S Ct 719. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) applies to transactions in securities of closely held or family-owned corporations. Schine v Schine (1966, SD NY) 250 F Supp 822. Where transaction involves purchase of securities in addition to nonsecurities, purchase of nonsecurities are not covered by fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Hirsch v Du Pont (1975, SD NY) 396 F Supp 1214, CCH Fed Secur L Rep P 95210, affd (1977, CA2 NY) 553 F2d 750, CCH Fed Secur L Rep P 96011. Section 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j) applies to transactions in municipal securities. In re Washington Public Power Supply System Sec. Litigation (1985, WD Wash) 623 F Supp 1466, CCH Fed Secur L Rep P 92465. Face-to-face agreement to transfer promissory notes as part of assets and liabilities from sole limited partner to limited partnership created to develop, finance and sell condominium units is commercial transaction and neither promissory notes themselves nor agreement to and subsequent transfer of promissory notes involves transaction in securities under 1934 Act. Roark v Belvedere, Ltd. (1985, SD Ohio) 633 F Supp 765, CCH Fed Secur L Rep P 92538.

2. Purpose Purpose of SEC Rule 10b-6, prohibiting issuers of stock in process of distribution from market tampering by purchasing stock in market during distribution, is to prevent stimulative trading by issuer in its own securities in order to create unnatural and unwarranted appearance of market activity. Piper v Chris-Craft Indus. (1977) 430 US 1, 51 L Ed 2d 124, 97 S Ct 926, CCH Fed Secur L Rep P 95864, reh den (1977) 430 US 976, 52 L Ed 2d 371, 97 S Ct 1668 and reh den (1977) 430 US 976, 52 L Ed 2d 371, 97 S Ct 1668 and reh den (1977) 430 US 976, 52 L Ed 2d 371, 97 S Ct 1668 and (criticized in Lerro v Quaker Oats Co. (1996, CA7 Ill) 84 F3d 239, CCH Fed Secur L Rep P 99239, 34 FR Serv 3d 974). Section 10(b)of Securities Exchange Act of 1934 (15 USCS § 78j(b) covers oral sales contracts as there is no convincing reason to interpret the Act (15 USCS §§ 78a et seq.) to exclude oral contracts as a class, and any exception for oral sales of securities would significantly limit the Act's coverage, thereby undermining its basic purpose. Wharf (Holdings) Ltd. v United Int'l Holdings, Inc. (2001) 532 US 588, 149 L Ed 2d 845, 121 S Ct 1776, 2001 CDOS 4046, 2001 Daily Journal DAR 4983, CCH Fed Secur L Rep P 91425, 2001 Colo J C A R 2505, 44 UCCRS2d 569, 14 FLW Fed S 245. Purpose of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5, is to protect investors from fraud. Travis v Anthes Imperial, Ltd. (1973, CA8 Mo) 473 F2d 515, CCH Fed Secur L Rep P 93718. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is meant to bar deceptive devices and contrivances in purchase or sale of securities whether conducted in organized markets or face to face. Spilker v Shayne Laboratories, Inc. (1975, CA9 Cal) 520 F2d 523, CCH Fed Secur L Rep P 95244. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) was intended to operate, after rule making by SEC, as broad prohibition against deceptive devices. United States v Charnay (1976, CA9 Nev) 537 F2d 341, CCH Fed Secur L Rep P 95560, cert den (1976) 429 US 1000, 50 L Ed 2d 610, 97 S Ct 527, 97 S Ct 528. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 were not intended to bring within their ambit simple corporate mismanagement or every imaginable breach of fiduciary duty in connection with securities transaction. St. Louis Union Trust Co. v Merrill Lynch, Pierce, Fenner & Smith, Inc. (1977, CA8 Mo) 562 F2d 1040, CCH Fed Secur L Rep P 96151, cert den (1978) 435 US 925, 55 L Ed 2d 519, 98 S Ct 1490. § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 were promulgated to prevent fraudulent practices in securities trading and trading on inside information, and were not intended to require, under normal circumstances, disclosure of individual's motives or subjective beliefs, or his deductions reached from publicly available information. Alabama Farm Bureau Mut. Casualty Co. v American Fidelity Life Ins. Co. (1979, CA5 Fla) 606 F2d 602, CCH Fed Secur L Rep P 97192, reh den (1980, CA5 Fla) 610 F2d 818 and cert den (1980) 449 US 820, 66 L Ed 2d 22, 101 S Ct 77. 15 USCS § 78j(b) was not designed to regulate corporate mismanagement. Acito v IMCERA Group (1995, CA2 NY) 47 F3d 47, CCH Fed Secur L Rep P 98667, 31 FR Serv 3d 581 (criticized in In re Sirrom Capital Corp. Secs. Litig. (1999, MD Tenn) 84 F Supp 2d 933). Principal concern of 15 USCS § 78j(b) is protection of purchasers and sellers of securities. United States v Bryan (1995, CA4 W Va) 58 F3d 933, CCH Fed Secur L Rep P 98787 (criticized in United States v Brumley (1996, CA5 Tex) 79 F3d 1430). Purpose of SEC Rule 10a-1(a)(2), regulating prices at which short sales may be made, is to prevent speculation in falling market. United States v Mandel (1969, SD

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Get a Document - by Citation - 15 USCS § 78j

https://www.lexis.com/research/retrieve?cc=&pushme=1&tmp...

NY) 296 F Supp 1038. SEC Rule 10b-5 was formulated for protection of sellers; SEC, in promulgating rule, was not trying to protect buyers, whom it regarded as already adequately sheltered. Stewart v Bennett (1973, DC Mass) 359 F Supp 878, CCH Fed Secur L Rep P 94140. General antifraud provisions of 15 USCS § 78j(b), and SEC Rule 10b-5 are designed to protect public from deceitful or misleading statements or omissions in connection with purchase or sale of securities. SEC v M. A. Lundy Associates (1973, DC RI) 362 F Supp 226. Purpose of Securities Exchange Act is protect innocent investor, not one who loses his innocence and then waits to see how his investment turns out before he decides to invoke provisions of Act. Chelsea Associates v Rapanos (1974, ED Mich) 376 F Supp 929, affd (1975, CA6 Mich) 527 F2d 1266, CCH Fed Secur L Rep P 95374; Black v Riker-Maxson Corp. (1975, SD NY) 401 F Supp 693. Congress did not intend § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) to be remedy for all investors injured by any fraudulent practices. Ingenito v Bermec Corp. (1974, SD NY) 376 F Supp 1154, CCH Fed Secur L Rep P 94548. Basic purpose of SEC Rule 10b-5 is to safeguard investors by policing devices inimical to climate of fair dealing. Fox v Prudent Resources Trust (1974, ED Pa) 382 F Supp 81, CCH Fed Secur L Rep P 94826, 19 FR Serv 2d 447. Principal objective of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is protection of American purchasers who are exposed to fraudulent offers of sales of securities in interstate commerce. SEC v Kasser (1975, DC NJ) 391 F Supp 1167, CCH Fed Secur L Rep P 95062. Federal Securities Laws were not created to recompense shareholders who claim merely that they have received inadequate consideration for shares they have traded in merger, nor do securities laws address any injuries that can fairly be said to result from corporate mismanagement rather than from transactional fraud. Dixon v Ladish Co. (1984, ED Wis) 597 F Supp 20, CCH Fed Secur L Rep P 91804, affd (1986, CA7 Wis) 792 F2d 614, CCH Fed Secur L Rep P 92764.

3.--Full disclosure Fundamental purpose of Securities Exchange Act of 1934 (15 USCS §§ 78a et seq.), which was designed to protect investors against manipulation of stock prices, is to implement philosophy of full disclosure, on theory that there cannot be honest markets without honest publicity. Basic Inc. v Levinson (1988) 485 US 224, 99 L Ed 2d 194, 108 S Ct 978, CCH Fed Secur L Rep P 93645, 24 Fed Rules Evid Serv 961, 10 FR Serv 3d 308. One of primary purposes of antifraud provisions of Securities Exchange Act was to outlaw use of inside information by corporate officers and principal stockholders for their own financial advantage to detriment of uninformed public securities holders. Kohler v Kohler Co. (1963, CA7 Wis) 319 F2d 634, 7 ALR3d 486. By passage of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)), Congress meant to prevent manipulation and control of prices at which securities are bought and sold, fundamental purpose of statute being to substitute philosophy of full disclosure for philosophy of caveat emptor. Herpich v Wallace (1970, CA5 La) 430 F2d 792, CCH Fed Secur L Rep P 92714, 14 FR Serv 2d 833. Major congressional policy behind securities laws in general, and antifraud provisions in particular, is protection of investors who rely on completeness and accuracy of information made available to them. Chris-Craft Indus. v Piper Aircraft Corp. (1973, CA2 NY) 480 F2d 341, 25 ALR Fed 534, cert den (1973) 414 US 910, 38 L Ed 2d 148, 94 S Ct 231, 94 S Ct 232 and cert den (1973) 414 US 924, 38 L Ed 2d 158, 94 S Ct 234. Underlying antifraud provisions of 15 USCS § 78j(b) is congressional judgment that full disclosure will help insure fair dealing in insider transactions. Arber v Essex Wire Corp. (1974, CA6 Ohio) 490 F2d 414, CCH Fed Secur L Rep P 94357, 18 FR Serv 2d 847, cert den (1974) 419 US 830, 42 L Ed 2d 56, 95 S Ct 53. Purpose of antifraud provisions of 15 USCS § 78j(b) and SEC Rule 10b-5 is to protect investing public and secure fair dealing in securities markets by promoting full disclosure of inside information so that informed judgments can be made by all investors trading in such markets, and to prevent corporate insiders and their "tippees" from taking unfair advantage of uninformed outsiders. Shapiro v Merrill Lynch, Pierce, Fenner & Smith, Inc. (1974, CA2 NY) 495 F2d 228, CCH Fed Secur L Rep P 94473. Section 10(b) of Securities Exchange Act (15 USCS § 78j) and SEC Rule 10b-5 thereunder, were designed by Congress to protect purity of process of buying and selling securities and to insure that investors will receive full disclosure of information they need if they are intelligently to make significant investment decisions. In re Penn Cent. Sec. Litig. (1973, ED Pa) 357 F Supp 869, CCH Fed Secur L Rep P 93980. Major congressional policy underlying antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) was protection of investors who rely on accuracy and completeness of information made available to them in connection with purchase or sale of securities. Herzfeld v Laventhol, Krekstein, Horwath & Horwath (1974, SD NY) 378 F Supp 112, CCH Fed Secur L Rep P 94574, affd in part and revd in part on other grounds (1976, CA2 NY) 540 F2d 27, CCH Fed Secur L Rep P 95660. Intent of Congress in passing antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) was to provide equal access to material information; provisions are intended to prevent inherent unfairness involved when party takes advantage of information intended to be available only for corporate purpose, knowing that it is unavailable to those with whom he is dealing. Jackson v Oppenheim (1974, SD NY) 411 F Supp 659, CCH Fed Secur L Rep P 94894, affd in part and revd in part on other grounds (1976, CA2) 533 F2d 826, CCH Fed Secur L Rep P 95497. SEC Rule 10b-5 does not provide remedy for every claim of improper corporate conduct, but is designed in line with essential scheme of most federal securities regulations to foster disclosure of material information to purchasers and sellers of securities in order to permit informed investment decision by investor, and disclosure is mandated for this reason, not for its own sake in abstract. Kerrigan v Merrill Lynch, Pierce, Fenner & Smith, Inc. (1978, SD NY) 450 F Supp 639, CCH Fed Secur L Rep P 96446. It is fundamental that securities laws do not penalize traders merely for failing or refusing to confess their "true" motives or characterize fairness of transaction. Dixon v Ladish Co. (1984, ED Wis) 597 F Supp 20, CCH Fed Secur L Rep P 91804, affd (1986, CA7 Wis) 792 F2d 614, CCH Fed Secur L Rep P 92764. Bank customers have standing to bring suit against bank and bank's vice-president under 15 USCS § 78j, where, at vice-president's suggestion, customers authorized bank to transfer their savings into higher yield interest accounts or certificates of deposit, but vice-president invested their money in short-term notes of fly-by-night oil company of which he was director, since customers' "lack of intention" to purchase securities is irrelevant to fact that bank's deceptive use of customers' funds clearly contravenes Securities Act's fundamental purpose of full disclosure. Bachmeier v Bank of Ravenswood (1987, ND Ill) 663 F Supp 1207, CCH Fed Secur L Rep P 93744.

4.--Protecting market integrity Although § 10(b) of Securities Exchange Act (15 USC § 78j(b)), is not intended to regulate transactions which comprise no more than internal corporate mismanagement, nevertheless § 10(b) is intended to bar use of deceptive devices and contrivances by stockholder with regard to purchase or sale of securities by corporation; preservation of integrity of securities markets is included among purposes of § 10(b). Superintendent of Ins. v Bankers Life & Casualty Co. (1971) 404

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by Citation . Speed v Transamerica Corp. the First Amendment' free speech protections did not apply because fraud was unprotected speech. 1997 Colo J C A R 2137. Inc. Litig. 51 L Ed 2d 480. 17 FR Serv 2d 1114. "purchase". Rochelle v Marine Midland Grace Trust Co. § 10(b) contains adequate standards for governing SEC's rule-making powers which have been delegated to it. Sec. therefore. or capricious in character. Musick. Re Penn Cent. were designed by Congress to protect purity of process of buying and selling securities and to insure that investors receive full disclosure of information they need if they are intelligently to make significant investment decisions. as well as phrase "in connection with"--are infused with special meaning. v North American Rockwell Corp. thus. Litig. CA4 Md) 580 F3d 233. court should not construe remedies provided by Act technically and restrictively. as matter of federal law. to be violative of section. CCH Blue Sky L Rep P 74161. reconsideration den.lexis. and there is little actual face to face fraud. DC Del) 99 F Supp 808. 6. does not change commercial nature of transaction. and SEC Rule 10b-5 thereunder.Get a Document . and fact that SEC has been given some power to regulate criminal activity is not by itself sufficient to render securities laws unconstitutional.15 USCS § 78j https://www. CCH Fed Secur L Rep P 93980. CA2 NY) 520 F2d 283. Cant v A. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) does not violate due process clause of Fifth Amendment since language used is not unreasonable. on reconsideration. Due process clause does not establish in securities fraud prosecutions same kind of scienter requirement that 15 USCS § 78j(b) and Rule 10b-5 contain. to seek contribution from other parties who have joint responsibility for violation. CCH Fed Secur L Rep P 93980. (1951. Inc. (1973. there is no room for doctrine of caveat emptor. Litig. SEC Rule 10b-5 must be interpreted flexibly so as to prevent fraud. Inc. CCH Fed Secur L Rep P 95209. SD NY) 296 F Supp 1038. (4) transaction only lasted 6 months. Sec. (1971) 404 US 6. Allen Organ Co. 30 L Ed 2d 128. WD Pa) 209 F Supp 2d 493. United States v Persky (1975. Requirement of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) that conduct.. In re Penn Cent. United States v Mandel (1969. CA5 La) 511 F2d 641. CCH Fed Secur L Rep P 93262. claim dismissed (1994. must be in connection with purchase or sale of security must be construed liberally to further purpose of Act. Spirit of disclosure as required by antifraud provisions of 15 USCS § 78j(b) and SEC Rule 10b-5. Becker & Co. 113 S Ct 2085. Secur. MD Pa) 452 F Supp 788. (1986. United States SEC v Pirate Investor LLC (2009. and private claims for relief thereunder are means to that end. Corp. Resort Car Rental System. their construction must be broad and flexible so that remedial purposes of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and Rule will be effectuated. Spilker v Shayne Laboratories. Loan participation agreement between banks is commercial transaction rather than investment and. 1973-2 CCH Trade Cases P 74713. ED Pa) 357 F Supp 869. Section 10(b) of Securities Exchange Act (15 USCS § 78j) and SEC Rule 10b-5 thereunder. not technically and restrictively. v Chuck Ruwart Chevrolet. Superintendent of Ins. ND Ill) 374 F Supp 36. "deceit". Santa Fe Industries. even though the parties did not enjoy a trading relationship. Section 10(b) of Securities Exchange Act. (1974. in such cases there are usually numerous misrepresentations and omissions to investors generally. 15 USCS § 78j.com/research/retrieve?cc=&pushme=1&tmp. United States v Pray (1978. and (5) atmosphere in which loan participation was made. (3) loan was collateralized. was made in "connection with" a sale of securities. 7 FLW Fed S 343. 92 S Ct 165. G. 118 S Ct 1375. Constitutionality Fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 are not unconstitutionally vague. Sargent v Genesco. and "security". in part. CA7 Wis) 141 F3d 1232. (2002. CCH Fed Secur L Rep P 95914. 15 USCS § 78j does not apply to "pigeon drop" game in which victims are persuaded to withdraw money from their bank accounts and give it to confidence man who 21 of 158 3/8/11 4:25 PM . Settling defendants in original suit based on implied private right of action under 15 USCS § 78j(b) and Rule 10b-5 have right. United States v Kunzman (1997. CCH Fed Secur L Rep P 95079. CCH Fed Secur L Rep P 91946). (1975. cert den (1998) 523 US 1053. amd. v Bankers Life & Casualty Co. Construction Section 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) must be read flexibly. when confronted with such occurrence in action alleging violation of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). arbitrary. which induced investors to buy a report divulging the details of a proposed Russian uranium sale. ED Pa) 363 F Supp 1117. CCH Blue Sky L Rep P 74161. SD Cal) 871 F Supp 381. v Green (1977) 430 US 462. Citizens State Bank v Federal Deposit Ins. CA10 Colo) 519 F2d 317. but flexibly to effectuate remedial purpose of Act of achieving high standard of integrity in securities industry. Overriding purpose of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 was to protect purity of securities market. CCH Fed Secur L Rep P 95562. Operative terms of SEC Rule 10b-5--"fraud". 5. CCH Fed Secur L Rep P 94747. CCH Fed Secur L Rep P 96463. CCH Fed Secur L Rep P 94156. Requirement that fraudulent act use instrumentality of interstate commerce in order to be violative of § 10 of Securities Exchange Act (15 USCS § 78j) and SEC Rule 10b-5 should not be construed in narrow and highly technical fashion so as to narrowly circumscribe scope of its operations. and sections are remedial in nature. Dupuy v Dupuy (1975. request gr. (1976. in part. CCH Fed Secur L Rep P 92891. CA9 Cal) 535 F2d 523. neither § 10(b) nor Rule 10b-5 are unconstitutionally vague. Peeler & Garrett v Employers Ins. (1973. not technically and restrictively. SD Cal) 948 F Supp 942. 124 L Ed 2d 194. CCH Fed Secur L Rep P 95244. motion to strike den. 93 CDOS 3923. and this is especially true with respect to requirement that to have standing under section plaintiff must have purchased or sold securities. 25 FR Serv 2d 956. in applying rule. (1993) 508 US 286. and should be liberally construed to encompass devices that are alien to climate of fair dealing and full and adequate disclosure. Inc. (1977. MD Fla) 75 FRD 79. US 6. is flexible. Impersonal business methods employed in securities investment industry result in actions for securities fraud which do not fit neatly into categories of misrepresentation or nondisclosure. CA10 Colo) 125 F3d 1363. 30 L Ed 2d 128. Investment newsletter editor was properly found to have violated 15 USCS § 78j(b) because his mass solicitation e-mails falsely touting insider information.. claim dismissed (1995. WD Okla) 639 F Supp 758. (2) investor was not unsophisticated. ED Pa) 357 F Supp 869. is not subject to regulation by federal securities laws in fraud action where (1) transaction was negotiated one-on-one between parties rather than publicly offered and was subject to federal banking regulations. In re Penn Cent. Mueller v Sullivan (1998. 97 S Ct 1292. CCH Fed Secur L Rep P 96119. (1975. Congress did not exceed its Commerce Clause authority when it enacted 15 USCS § 78j(b). "sale". 92 S Ct 165. must be read flexibly. 140 L Ed 2d 523. CA9 Cal) 520 F2d 523. despite involving investment hysteria in oil and gas exploration. Inc. CCH Fed Secur L Rep P 97456. prophylactic in scope. CCH Fed Secur L Rep P 99464 and (criticized in In re Rent-Way Secs. Language of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and Rule 10b-5 are sufficient to apprise any person of ordinary intelligence that obtaining of money from customers of securities dealer purportedly for purposes of investment followed by conversion of all or portion of funds to dealer's own use operates as deceit upon customer in connection with purchase or sale of security so that it constitutes criminal act. CCH Fed Secur L Rep P 93262. (1973.

CA4 Md) 353 F3d 338. Inc (2000. Asdar Group v Pillsbury. 15 USCS §§ 77l . CCH Fed Secur L Rep P 91015) and on remand.Other Securities and Exchange Act Provisions 8. SD NY) 304 F Supp 2d 520. as note was not offered to any other party. were foreclosed against persons whose actions in scheme to defraud did not directly impact securities market.F. DC Mass) 236 F Supp 2d 161. Inc. (2004.R.. (2001. Liability of drug marketer and two corporate officers under 15 USCS § 78j(b) was based solely on statements directly attributable to them. and its implementing regulation. Litig. thus nullifying express remedy provided by § 78i.10b-5. Civil actions such as those brought under § 10(b). Transactions in government securities are subject to antifraud provisions of § 78j and Rule 10b-5.com/research/retrieve?cc=&pushme=1&tmp. ED Mich) 684 F Supp 478. In re Lake Securities. B. CA11 Ga) 187 F3d 1271. 14 FLW Fed C 707 and (criticized in In re CDNOW. In re Immune Response Secs. Defendants are granted summary judgment on plaintiff's allegations that sale of "art master" to plaintiff's decedent violated 15 USCS §§ 77q and 78j(b) where sale of "art master" was not "security. Trustee's § 10(b) claim under Securities Exchange Act failed since trading in commodity options was not subject to private action under securities laws. Filler v Lernout (In re Lernout & Hauspie Sec.E. 96 CDOS 7680. since stricter limitations of express statutory remedy controlled over requirements of implied remedy under Rule 10b-5. and (2) statement that "all accounts do the same thing" does not give rise to inference of pooling or contractual tying to support plaintiffs' assertion that discretionary commodities accounts were "securities. remanded sub nom United States v Blackmon (1988. there was no common trading. CCH Fed Secur L Rep P 93902. affd in part and revd in part (1991. even if material misstatement by another person created nexus between scheme and securities market. Pierce. v Eagle-Picher Indus. does not extend to anti-fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Inc. Inc. S. did not give rise to substantial risk of forfeiture under 26 USCS § 83 and could not be considered as grounds for consideration of appropriate valuation date under § 83. Statute of limitations applicable to Rule 10b-5 action for contribution is one-year/three-year period provided in 15 USCS §§ 78i(e) and 78r(c). ND Ill) CCH Fed Secur L Rep P 92217. SEC v C. which contravened Private Securities Litigation Reform Act's pleading requirements. (2001. 22 of 158 3/8/11 4:25 PM . (1974. 12 FLW Fed C 1245 (criticized in Branca v Paymentech. CCH Fed Secur L Rep P 91525. CCH Fed Secur L Rep P 99333.). purportedly would invest in securities for victim. Litig) (2003. complaint dismd. Presence of Treasury Bills in discretionary commodities account does not constitute securities transaction bringing broker's commodity program within purview of securities laws where incidental trading of Treasury Bills to finance discretionary account does not convert account into "security. MD Ga) 100 F Supp 2d 1368. 104 AFTR 2d 7093. Madison & Sutro (1996. (2002. CCH Fed Secur L Rep P 90945) and (criticized in Coates v Heartland Wireless Communs. (2003. v Jones (1973. CCH Fed Secur L Rep P 94086.F. CCH Fed Secur L Rep P 91463) and (criticized in In re Party City Secs.15 USCS § 78j https://www. 45 FR Serv 3d 420. Pierce.10b-5. 96 Daily Journal DAR 12657. CCH Fed Secur L Rep P 91440. (1988. Inc.Relation to Other Laws 1. Nor-Tex Agencies. CA11 Ga) 252 F3d 1161. CA4 SC) 938 F2d 513. WD NY) 665 F Supp 2d 227. (2005. (1979. CCH Fed Secur L Rep P 92645). 17 C.. CA2 NY) 839 F2d 900. 75 L Ed 2d 476. (1999. Fenner & Smith (1988. 146 ALR Fed 811. Exemption of Government National Mortgage Association certificates and municipal bonds from requirements of Securities Act (15 USCS §§ 77a et seq. but flexibly to effectuate its remedial purposes. because no actual securities existed and no genuine transactions in securities occurred or were contemplated. Mortgage note issued to secure financing of purchase of business was not security. (2001. Welch Foods. (2000. did not immunize transactions in those securities from operation of antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. not technically and restrictively. Fact that short term notes of railroad were exempt from registration requirements of Securities Act pursuant to § 3(a)(6) of that Act (15 USCS § 77c(a)(6)). Litig. 2002-2 CCH Trade Cases P 73888) and (criticized in Ottmann v Hanger Orthopedic Group. Litig. § 240. court concluded that § 10(b) and Rule 10b-5 imposed primary liability on any person who substantially participated in manipulative or deceptive scheme by directly or indirectly employing manipulative or deceptive device. reh den (1982. 75 L Ed 2d 483. 2009-2 USTC P 50722. ED Mich) 205 F Supp 2d 746. ND Tex) 1920 CCH Fed Secur L Rep P 90911) and (criticized in In re Eng'g Animation Sec. Davidson v Dean Witter Reynolds." where (1) reference to "units" refers to minimum investment figure rather than limited number of units that form whole. Eagle Trim. Inc. Inc. 11 Fed Rules Evid Serv 781. SD NY) 648 F Supp 225.C. Lesavoy v Lane (2004. SD Iowa) 110 F Supp 2d 1183. Bryant v Avado Brands. CCH Fed Secur L Rep P 94806. CCH Fed Secur L Rep P 93902. CA6 Ky) 251 F3d 540. SD NY) 398 F Supp 1393. CCH Fed Secur L Rep P 91487) and (criticized in Helwig v Vencor... Inc. as group pleading doctrine permitted inference of wrongdoing not based on their conduct. 103 S Ct 1254. CCH Fed Secur L Rep P 91445. provided by § 3(a)(2) of that Act (15 USCS § 77c(a)(2)). SD Cal) 375 F Supp 2d 983. 77j in defendants management of discretionary commodity futures trading accounts even though defendants' newsletter mentioned term "units" and made statement that "all accounts do the same thing. (2001. 7. 49 FR Serv 3d 1113. Sachs & Co. Gudmundsson v United States (2009. Chemetron Corp. involving alleged misrepresentation or nondisclosure of fraudulent stock scheme and manipulation of stock prices. DC NJ) 147 F Supp 2d 282. Faircloth v Jackie Fine Arts. Inc. Defendants are granted summary judgment in securities fraud action under 17 C. Fenner & Smith (1988. (1992) 51 SEC 19. motion to strike den (2000. exemption provisions in one Act refer to securities exempted under that Act and not those exempted under other Act. ED Mich) 684 F Supp 478. United States v Jones (1986. 46 OGR 484. cause of action accrues when defendant has satisfied judgment against it. 2001 Colo J C A R 4635) and (criticized in Kundrat v Chicago Bd. Rule 10b-5. v Business Funds (1982. CA5 Tex) 682 F2d 1149. 2001 FED App 179P) and (criticized in City of Philadelphia v Fleming Cos. in part. ND Tex) 100 F Supp 2d 417. et al. 17 FR Serv 2d 970.lexis. DC Colo) 312 F Supp 2d 1375. Complaint under 15 USCS § 78u-4(b)(2) alleging with particularity that defendant acted with severely reckless state of mind suffices to state claim for civil liability under 15 USCS § 78j(b) and Rule 10b-5. Section 10(b) (15 USCS § 78j(b)) of Securities Act should be construed. rather than statements attributable to group. contrary to Congressional intent. but based solely on their status. Inc." Poindexter v Merrill Lynch. DC Colo) 478 F Supp 494. CA5 Tex) 482 F2d 1093. CCH Fed Secur L Rep P 98777. Inc. 39 L Ed 2d 873. 15 USCS § 78j. 24 Fed Rules Evid Serv 1123. Jones & Co. CCH Fed Secur L Rep P 91014. CA10 Okla) 264 F3d 1245. DC SC) 682 F Supp 837.. Applicability to exempt securities Antifraud provisions of SEC Rule 10b-5 are applicable to fraudulent sales of securities even though such securities may fall within intrastate exemption of 15 USCS § 77c(a)(11). ED Pa) 138 F Supp 2d 624. v Goldman. vacated. While participants in strategic partnership claimed that all private actions under Securities Exchange Act of 1934 § 10(b). CA5 Tex) 689 F2d 190 and vacated on other grounds. 94 S Ct 1563." Poindexter v Merrill Lynch. Litig. Inc. CA9 Cal) 99 F3d 289. (2000.Get a Document . CCH Fed Secur L Rep P 97215. intended to mislead investors. (2002. CCH Blue Sky L Rep P 90636. Inc. Sec. 15 USCS § 78j. and note was not exchanged for investment purposes. remanded (1983) 460 US 1007.R. 103 S Ct 1245 and cert den (1983) 460 US 1013. § 240. CCH Fed Secur L Rep P 93781.by Citation . remanded (2001. affd in part and revd in part. such as creation or financing of sham entity. Options Exch. 15 USCS § 78i Trial court erred in permitting judgment for plaintiff under SEC Rule 10b-5 in action addressing activities prohibited under 15 USCS § 78i." because decedent could have marketed "art master" himself but chose not to do so. revd. cert den (1974) 415 US 977.

S. since individual appealed his criminal convictions on ground that his misrepresentations and omissions were not material. et al. jury had concluded that misstatements and omissions were material. because complaint adequately pleads material omission. v Baytree Investors. Re Carole L. (1988. cert den (1995) 514 US 1011. Asdar Group v Pillsbury. Wolgin v Magic Marker Corp. Statute of limitations applicable to Rule 10b-5 action for contribution is one-year/three-year period provided in 15 USCS §§ 78i(e) and 78r(c). CA2 NY) 340 F3d 94. 15 USCS § 78n Existence or nonexistence of regulation of proxy solicitations under § 14 of Securities Exchange Act (15 USCS § 78n) does not affect scope of § 10(b) of Act (15 USC § 78j(b)) and Rule 10b-5. Haynes (1995) 1995 SEC LEXIS 3134. SD NY) 705 F Supp 918. Levitt v Bear Stearns & Co. Golub v PPD Corp. CCH Fed Secur L Rep P 96830. pleading requirements were satisfied and some of proxy's alleged misrepresentations or omissions were materially false or misleading. Inc. 131 L Ed 2d 210. (1995) 1995 SEC LEXIS 3457. since individual appealed his criminal convictions on ground that his misrepresentations and omissions were not material. Stockholder states claim under 15 USCS § 78j(b) against corporation and investment group. One-year/three-year uniform limitations period for actions brought under 15 USCS § 78j(b) applies to cause of action under 15 USCS § 78n(a). 96 CDOS 7680. and that corporation and group failed to disclose ongoing discussions concerning stock buy-back plan which enabled group to sell stock back to corporation at artificially inflated price.. 112 L Ed 2d 37. Havill (1995) 1995 SEC LEXIS 2255. 96 Daily Journal DAR 12657. Porter Co. (15 USCS § 78n(e)). App DC) 308 US App DC 43. 10. because it is clear that shareholders will benefit by obtaining necessary information that should have been made public and there is no evidence that company is suing for injunction solely to prevent legitimate takeover attempt by group. CCH Fed Secur L Rep P 97455. 21 L Ed 2d 668. manipulative. CCH Fed Secur L Rep P 94552. at least for those who are not purchasers or sellers of securities. DC NM) 581 F Supp 2d 1094. where investment group almost certainly violated § 78n(d) and (e) disclosure provisions by making public announcement of offer to purchase company's stock which identified bidder. 23 of 158 3/8/11 4:25 PM . Re Adrian C. dismissal was not warranted as to several allegations. Inc. Inc. DC Kan) 685 F Supp 800. In re F.N. CCH Fed Secur L Rep P 94154. Enactment of § 14(e) of Securities Exchange Act § 14(e). Individual's convictions under 15 USCS § 78j(b) estopped him from challenging his civil liability under 15 USCS § 78n(d) and (e). Manipulative activities expressly prohibited by 15 USCS § 78i(a)(1) and (2) with respect to listed security constitute violations of 15 USCS § 78j(b) and Rule 10b-5 when such activities involve trading in over-the-counter market. (1996) 1996 SEC LEXIS 8. scienter. 15 USCS § 78m Individual's convictions under 15 USCS § 78j(b) estopped him from challenging his civil liability under 15 USCS § 78m(d). target. and in this case tender offer which was basis of suit was part of merger agreement approved by ICC. 131 L Ed 2d 210. where stockholder alleges group filed false and misleading 15 USCS § 78m(d) statement and amendments. v Texaco... and appellate court rejected his argument. amount and class of securities sought and for what price without making appropriate SEC filings. manipulation of prices of over-the-counter market is proscribed by § 10(b) of Securities Act (15 USCS § 78j(b)) and SEC Rule 10b-5. are in pari materia. Lane v Page (2008. 115 S Ct 1350. Because U. Wolf & Co. whether or not in connection with purchase or sale. SEC § 10(b) applies to all proscribed conduct in connection with purchase or sale of any security. CA8 Mo) 576 F2d 759. Westinghouse Elec. CA9 Cal) 99 F3d 289. and appellate court rejected his argument. or insufficient proxy statements prohibited by Rule 14a-9. v Nicholson File Co. once merger had been approved by ICC. or deceptive devices that may be used in connection with purchase or sale of securities in violation of Rule 10b-5 may be deceptive. 29 F3d 689. Madison & Sutro (1996. CCH Fed Secur L Rep P 94306.lexis. CCH Fed Secur L Rep P 92334.Get a Document . and § 14 applies to all proxy solicitations. Manipulative activities of type prohibited by 15 USCS § 78i(a)(2) are also violations of 15 USCS §§ 77q(a). management. Re Richard D. K. Manipulative activities expressly prohibited by 15 USCS § 78i(a)(1) and (2) with respect to listed security constitute violations of 15 USCS § 78j(b) and Rule 10b-5 when such activities involve trading in over-the-counter market. to provide comprehensive and sure remedy in cases involving misstatements or omissions in tender offers. cert den (1995) 514 US 1011. CA3 NJ) 993 F2d 349. Implied right of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and Rule 10b-5 is not restricted to those claims that could not be brought under one of express remedies contained in federal securities laws. because. reliance and loss causation. 78j(b) and 78o(c) are deemed to prohibit manipulative activities with respect to over-the-counter securities. Plaintiff could not bring action under 15 USCS §§ 78j(b) and 78n(e) and SEC Rule 10b-5 on grounds that 2 railroads had designed and executed scheme to allow 1 railroad to acquire other at dishonestly low price where ICC had approved merger of railroads as required by 49 USCS § 11341(a). plaintiffs were not required to restrict their relief to that offered by § 9(e). 111 S Ct 62. Mawod & Co. Supreme Court abolished private civil liability for aiding and abetting under § 10(b) of Securities Exchange Act of 1934. (1969) 393 US 453. 115 S Ct 1350. 78j(b) and 78o(c). Kulak (1995) 1995 SEC LEXIS 2481. especially § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 thereunder.com/research/retrieve?cc=&pushme=1&tmp. et al. Graham. 9. (2003. (1973. and should be similarly construed. Inc. ED Pa) 82 FRD 168. 29 F3d 689. despite his contention that jury in criminal case did not necessarily find that his misrepresentations were material. 27 FR Serv 2d 351. investors who sought to bring federal securities fraud claims against clearing agency as secondary wrongdoer were required to exercise reasonable diligence in discovering facts establishing agency's knowing participation in brokerage firm's market manipulation scheme before filing suit. provisions tend to overlap because fraudulent. 146 ALR Fed 811. cert den (1990) 498 US 818. prohibiting use of misstatements or omissions in tender offers. explaining that after hearing evidence. (1989. explaining that after hearing evidence. Deutsch v Flannery (1989. including federal securities laws. Re Richard M. may be interpreted as recognition of inadequacy of other provisions of securities laws. v Franklin (1993. CCH Fed Secur L Rep P 99333.. CA1) 482 F2d 421. CA9 Cal) 883 F2d 60. (1977) 46 SEC 865. (1979. CCH Fed Secur L Rep P 98325. inaccurate. In re Sharon M. inter alia. 89 S Ct 564. Carrier company has standing to raise claims regarding illegal tender offers for its stock under 15 USCS § 78n and possibly under 15 USCS § 78j. §§ 77q(a). decision which is rendered in context of Rule 10b-5 suit may well be applicable in case involving § 14(a) in Rule 14a-9. jury had concluded that misstatements and omissions were material.by Citation . since § 11341(a) exempted transaction from attack under all other laws. SEC v Bilzerian (1994. SEC v Bilzerian (1994. so that where private civil action expressly authorized by § 9(e) of Act (15 USCS § 78i(e)) would afford plaintiffs civil remedy for wrongs alleged. CCH Fed Secur L Rep P 94083.. Inc. (1978. App DC) 308 US App DC 43. cause of action accrues when defendant has satisfied judgment against it. In re Edward J. accordingly. Corp. CCH Fed Secur L Rep P 96450. Where shareholder alleged that proxy statement issued in connection with merger contained numerous material misrepresentations and omissions. H. Chema (1995) 1995 SEC LEXIS 2184.15 USCS § 78j https://www. and finance. Seagoing Uniform Corp. despite his contention that jury in criminal case did not necessarily find that his misrepresentations were material. American Carriers. Although price manipulation provisions of § 9(a) of Securities Exchange Act (15 USCS § 78i(a)) apply only to securities registered on national securities exchanges. CCH Fed Secur L Rep P 98325. SEC v National Sec. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 and § 14(a) and (e) of Act (15 USCS § 78n(a) and (e)) are aimed at same general evils in field of corporate ownership.

cert den (1980) 446 US 946.. Congress. RICO Bus Disp Guide (CCH) P 9642) and (criticized in Grubaugh v DeCosta (1999. individual. Sec. DC Mass) 33 F Supp 2d 66. and bank against trader. 96 L Ed 2d 373. whether by jury verdict or guilty plea. CD Cal) 252 F Supp 2d 1018. Miscellaneous Aider and abettor of criminal violation of any provision of Securities Exchange Act of 1934 (15 USCS §§ 78a et seq. 96 CDOS 7516. 103 Cal Rptr 2d 320. where there are many participants in "scheme. on remand. while providing for review in United States Court of Appeals of final action of Federal Home Loan Bank Board or Corporation concerning such conversion. H. Plaintiffs could rely on implied right of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) even as to conduct for which they may have had express private cause of action under § 18 of Securities Exchange Act (15 USCS § 78r). moreover. projects. those who actually "employ" scheme to defraud investors are primary violators. because plaintiffs properly allege primary securities law violations committed by broker-defendants substantially assisted in violations. DC Colo) 764 F Supp 612. Commodities Futures Trading Commission (CFTC). In securities fraud suit brought by Securities and Exchange Commission (SEC). who pled guilty to conspiracy to commit securities fraud in violation of 18 USCS § 371. and CFTC sufficiently set forth allegations of fraud based on scheme to satisfy heightened pleading requirements necessary for such claims. Peters v Egnor (1989. whether actually possessed or receivable. R.F.) violates 18 USCS § 2. (1979. requirements of causation and of connection to purchase and sale of securities were satisfied for purposes of relevant allegations against partner. to SEC Rule 10b-5. under any reasonable definition of such terms. § 240. as independent or derived from market. in SEC proceedings instituted pursuant to 15 USCS §§ 78o(b) and 78s(h). 2006.A. Messer v E. Bank (1986. Snyder v Newhard. SEC Rule 10b-5 Liability under Securities and Exchange Commission Rule 10b-5. there were allegations that firm and partner used or employed transactions that were inventions. Vernon v Resolution Trust Corp. since to allow such action would defeat fundamental congressional design in revamping Commodity Exchange Act and granting exclusive jurisdiction to new Commodities Futures Trading Commission. In re Parmalat Sec. SD NY) 720 F Supp 2d 305. 1997 Colo J C A R 1354.10b-5 makes it unlawful for any person to employ any scheme to defraud in connection with any security. 2003. validity of his criminal conviction based upon his guilty plea in other proceedings. that involved trader sending pipeline volatility reports and price quotations that were inflated by millions of dollars to third party brokerages designed to circumvent bank's fraud prevention mechanisms. Action regarding T-bond futures traded on "board of trade" raised no claim under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) or SEC Rule 10b-5 promulgated thereunder. while those who merely participate in or facilitate scheme are secondary violators. CCH Fed Secur L Rep P 99482. 97 Daily Journal DAR 7991. (1994. 12. N. ND Ill) 1999 US Dist LEXIS 19391). to avoid duplicative or contradictory regulatory structure. (1999. v ASM Communs. 28 FR Serv 2d 25. Litig. 17 CFR § 240. SEC v Lee (2010. 107 S Ct 2480. CA9 Nev) 97 F3d 1276. 78 L Ed 2d 97. 15 USCS § 78j(b). 114 S Ct 1439. Hutton & Co. reh den (1980) 448 US 911. cert den (1987) 482 US 905. while 17 CFR § 240. purchasers of stock of now failed S & L would not be permitted to sue newly created association to which FSLIC. 117 S Ct 2199. Central Bank requires plaintiff to allege that each and every defendant committed its own independent primary violation of securities laws in order to state claim. liability under Rule 10b-5 does not extend beyond conduct encompassed under § 78j(b). SEC's complaint sufficiently set forth allegations that defendants colluded to deceive bank's market risk division into believing that quotes originating with trader and u-turned by one of third party brokerages were independent quotes. save those claims clearly supported by records of insolvent bank.. (1998. 128 L Ed 2d 119. Inc. does not extend beyond conduct encompassed by prohibition of § 78j(b). 15 P3d 1071. Ross v A. Strevel (1995) 1995 SEC LEXIS 3030.by Citation . Rembold v Pacific First Federal Sav. Central Bank. v First Interstate Bank. (2005. and September 28.com/research/retrieve?cc=&pushme=1&tmp. and negligence. United States v O'Hagan (1997) 521 US 642. Inc. 2001 Daily Journal DAR 925). 11. 94 CDOS 2687. and violations of state securities laws. and other statutes. RICO. CCH Fed Secur L Rep P 97115. CA10 Colo) 888 F2d 713. Scope of SEC Rule 10b-5 is coextensive with coverage of § 10(b) of Securities Exchange Act of 1934. Inc. (1994) 511 US 164. 100 S Ct 3057. Criminal conviction. 11 FLW Fed S 154. In enacting provisions of National Housing Act allowing mutual savings banks owned by depositors to convert from mutual to stock form of organization (12 USCS §§ 1725(j) and 1730a(k)). Application of 15 USCS § 78j(b) to bank directors does not burden them with duties or responsibilities which conflict with directives of Bank Act (12 USCS § 93).. United States v Knueppel (2003. CA8 Minn) 139 F3d 641." there may be primary violators and secondary violators. his supervisor. remanded (1998. CCH Fed Secur L Rep P 98178. as what parties bargained for. CA9 Or) 798 F2d 1307.. 15 USCS § 78o Amended complaint states aiding and abetting securities fraud claims against brokerage house managers under 15 USCS § 78j(b). 65 L Ed 2d 1140. CCH Fed Secur L Rep P 90178. (1990. even though aider and abettor liability is not statutory private action under 15 USCS § 78o(b)(4)(E). Ariz App) 1999 Ariz App LEXIS 35) and (superseded by statute as stated in Scachitti v Prudential Sec. 94 Daily Journal DAR 5160. and structuring financial transactions to avoid reporting requirements in violation of 18 USCS § 2 and 31 USCS §§ 5322 and 5324(3).Get a Document . 15 USCS § 78u-4(b)(1). Litig. did not deprive United States District Court of jurisdiction to hear complaint alleging violations of §§ 12(2) and 17(a) of Securities Act of 1933 (15 USCS §§ 77l(2) and 77q(a)). New York State mercantile. remanded sub nom First Interstate Bank v DBLKM. 9. (2003. thus. or state statutes. securities fraud in violation of 15 USCS § 78j(b) and Rule 10b-5. which provides that person shall not be extradited unless offense with which he is charged is punishable as serious crime in both requesting and requested states. and that creation and use of shell entities was evidence of conscious misbehavior. was collaterally estopped from refuting.com. had transferred some of assets and liabilities of failed association. CCH Fed Secur L Rep P 93813. 13. Cook & Co. so as to satisfy "dual criminality" doctrine. In re Victor H. and certain third-party brokerages (defendants). Robins Co. CA7 Ill) 149 F3d 565) and (superseded by statute as stated in Trustees of Boston Univ. CA10 Colo) 1994 US App LEXIS 16507 and (superseded by statute as stated in United States SEC v Fehn (1996.lexis. or schemes with tendency to deceive because they created appearance of conventional sale and loan when reality was quite different. Harmsen v Smith (1982. 2001 CDOS 712. N. ED NY) 293 F Supp 2d 199. (c) (17 C. cert den (1983) 464 US 822. acquired by federal insurer or its successor in interest. Civ. 8 FLW Fed S 33. CA11 24 of 158 3/8/11 4:25 PM . Inc. 100 S Ct 2175. 97 CDOS 4931. violations of § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)).F. common-law fraud. Violation of Rule 10b-5(a). 104 S Ct 89 and (criticized in Washington Mutual Bank v Superior Court (2001) 24 Cal 4th 906.15 USCS § 78j https://www. CCH Fed Secur L Rep P 96047. court denied respective motions to dismiss filed by defendants because complaint sufficiently set forth allegations that defendants engaged in fraudulent scheme to overvalue oil and natural gas derivative options at bank. in pertinent part.R.10b-5(a). In re Homestore. CA2 NY) 607 F2d 545. SD NY) 383 F Supp 2d 616. that is. CCH Fed Secur L Rep P 99330) and (superseded by statute as stated in United States v Irwin (1998. 64 L Ed 2d 802. (c)). 96 Daily Journal DAR 12375. P.10b-5. resulting in extensive losses to meet heightened pleading requirements of Fed. CA11 Fla) 847 F2d 673. 138 L Ed 2d 724. on remand. (1991. Regardless of whether "D'Oench doctrine" should be expanded to preserve all assets of failed savings institution. making it unlawful to use fraud or deceit in sales of securities. as receiver for failed S & L. from all claims tending to diminish those assets.A. United Kingdom's Theft Act of 1968 was analogous. CA9 Cal) 693 F2d 932. for alleged violations of Securities and Exchange Act. CCH Fed Secur L Rep P 99010. was stated against Italian law firm because complaint sufficiently alleged that firm and one of its partners were primary violators of § 10(b) (15 USCS § 78j). constitutes estoppel in favor of United States in subsequent civil or administrative proceeding as to those matters determined by judgment in criminal case. bank's complaint detailed 61 e-mail and instant message communications between October 21. including bank's claims under State of New York law. CCH Fed Secur L Rep P 92903. (1988. complaints presented sufficient factual allegations that aiding and abetting fraud and breach of fiduciary duties occurred by showing that quotes provided were not.

thus. 15 USCS § 78j(b) does not provide independent jurisdictional basis for petition to vacate arbitration award filed under Federal Arbitration Act (9 USCS § 10).10b-5) and simultaneously vacating dismissal of "controlling persons" claims against individuals under § 20(a) of Act. Plaintiff's motion in Rule 10b-5 securities fraud action to amend complaint to add 15 USCS § 78t(a) claim was denied. not maintenance of private suit thereunder.) (1993. Pierce.lexis. CA11 Fla) 166 F3d 355 and subsequent app (2000. 93 Daily Journal DAR 14496. which excepts from discharge in bankruptcy debts for money obtained by fraud. Garrett v Merrill Lynch. as opposed to purchase or sale. where they erroneously contend that potential "control person" liability of 2 officers creates direct liability for offeror under 15 USCS § 78j(b).by Citation . Sec. 93 CDOS 7725. Marion v TDI. 12 FLW Fed C 58. (2005. 122 S Ct 2588. Individual's previous criminal conviction for securities fraud. CA11) 213 F3d 650. § 3-13b(c).. dismissed Rule 10b-5 claims were not predicates for § 20(a) claims. finding that investment units sold by defendants were investment contracts within meaning of 15 USCS § 78c(a)(10) was supported by evidence showing that investors' managerial rights did not accrue until LLCs were fully organized. In determining whether consideration flowing to acquiring corporation in its acquisition of investment company. Inc. CA3 Pa) 591 F3d 137. (1975. Du Pont de Nemours & Co. investment advisor. CCH Fed Secur L Rep P 96171. Fenner & Smith. CA11 Fla) 208 F3d 1011. DC NJ) 161 F Supp 2d 349. thus. CCH Fed Secur L Rep P 97384. 2 ALR Fed 190. satisfies requirements for application of 11 USCS § 523(a)(2)(A).. that investors had no experience in film or entertainment. Where corporation's founder engaged in Ponzi scheme and receiver sued defendants. not to corporation through which securities were sold. and SEC Rule 10b-5. rather than market value of stock of investment company. and thus were not preempted by SLUSA. and law firm were entitled to dismissal under Fed. To avoid preclusion under 15 USCS § 78bb(f)(1) claim for relief should clearly state ground on which it is based. I. en banc. 15 USCS § 78t(a). den (1998. DC Del) 411 F Supp 133. because his claims related solely to retention of securities. CCH Fed Secur L Rep P 92251. individual violates 15 USCS § 78j(b). Stat.C. principal assets of which were stock in acquiring corporation. cert den (2002) 536 US 923. CA7 Wis) 141 F3d 1232. (In re VeriFone Sec. Instituto de Prevision Militar v Merrill Lynch (2008. 15 USCS § 78j(b) and SEC Rule 10b-5 (17 CFR § 240. CA9 Cal) 7 F3d 882. Mueller v Sullivan (1998. CCH Fed Secur L Rep P 91634. FIRREA is not violated by permitting stockholder of bank (currently under RTC's receivership) to recover on direct fraud claim under 15 USCS § 78j(b) against bank's officers and directors. there was no reasonable expectation of investor control. SEC practice in dealing with transactions between affiliates under Investment Company Act must be taken into consideration. P. reh. Court denied motion for rehearing of its decision affirming dismissal of claims asserted against two individuals under § 10(b) of Securities Exchange Act of 1934. CCH Fed Secur L Rep P 95386. Where defendants were convicted under 15 USCS §§ 78j(b) and 78ff(a) for committing securities fraud by failing to disclose commissions they received for selling investment interests in limited liability companies (LLCs) that were formed to finance production and distribution of motion pictures. 17 CFR § 240. there is no justification for imposing liability under § 10(b) of Act (15 USCS § 78j(b)) and Rule 10b-5 which cannot be asserted § 6. and S. 153 L Ed 2d 778. he was fiduciary for purposes of Conn. Although maintaining private right of action under 15 USCS § 78j(b) requires plaintiff to prove reliance and damages.Get a Document . when he employs manipulative or deceptive devices in connection with purchase or sale of securities. violation of exchange rules governing disclosure may not be imported as surrogate for straight materiality analysis under 15 USCS § 78j(b) and Rule 10b-5. firm owner could not be liable.. Brody v Stone & Webster. In enacting FIRREA. including firm owner and bank vice-president. ND Ill) 165 FRD 79. it would have been more than little strange if Supreme Court's decision in Blue Chip Stamps to block private litigation by non-traders became opening by which that very litigation could be pursued under state law.. R. because even if firm owner did breach duty to supervise founder's activities.) (2005. and that investors were particularly dependent on centralized management. in view of fact that SEC consistently utilized net asset value as controlling factor in proceedings under § 17 of Investment Company Act (15 USCS § 80a-17(b)). despite judgment of Congress (reflected in SLUSA) that securities class actions were required to proceed under federal securities law or not at all. Ltd. Fujisawa Pharm. because investors have it backwards since it is underlying § 78j(b) liability which must be present in order for there to be control person liability under § 78t(a). GFL Advantage Fund. CA7 Ill) 419 F3d 649. Rule 10-5 as principal was adequate basis for finding former state senator liable for violating Act as aider and abettor. CCH Fed Secur L Rep P 94888. Fla) 907 F2d 1101. 15 USCS § 78j(b). thus. 93 Daily Journal DAR 13181. 93 CDOS 8485. SEC v DiBella (2009. if single claim premises liability on multiple factual theories. 15 USCS § 78j. reh. CCH Fed Secur L Rep P 97820. CA3 Pa) 272 F3d 189. Accounting firm.15 USCS § 78j https://www. Inc. Violation of stock exchange or NASD (National Association of Securities Dealers) rule will not support private claim. den (2000. for corporation's losses. CA2 NY) 529 F3d 83. claims were not cognizable under § 10(b) of Securities Exchange Act of 1934.10b-5. although LLCs' organizational documents suggested otherwise. his violation of § 10(B) of Securities Exchange Act of 1934. Stat. thus. Inc. thus. CA9 Cal) 11 F3d 865. Congress did not impliedly amend Securities Exchange Act so as to subordinate latter to former. Potential liability of New York Stock Exchange to public investors is limit of exchange's duties under § 6 of Securities Exchange Act (15 USCS § 78f). CA11 Fla) 546 F3d 1340. SEC v Bilzerian (In re Bilzerian) (1998. Aldrich v New York Stock Exchange. CCH Fed Secur L Rep P 95565. which contended that firms fraudulently advised client to participate in tax-avoidance strategies that 25 of 158 3/8/11 4:25 PM . v Kapoor (1996. CA11 Fla) 153 F3d 1278. Halkin v VeriFone Inc. CCH Fed Secur L Rep P 90308.E. Harriman v E. v Texas Gulf Sulphur Co. § 10(b) of Act and Rule 10b-5 were not violated through use of asset value of investment company in determination of exchange ratio.. Litig. en banc. CA3 Pa) 982 F2d 104. 8 BNA IER Cas 1645. since amendment would be futile. 15 USCS § 78cc(b) only requires violation of 15 USCS § 78j(b). P. then that claim would be precluded if at least one of those theories hinges on representations made in connection with purchase or sale of security. that investors did not negotiate any terms of LLC agreements. § 20(a) claims were based on alleged fraud by corporation. 40 CBC2d 1312. Inc. and that ground cannot be one that is "in connection with purchase or sale" of security under § 10(b) of Securities Exchange Act of 1934. CA2) 587 F3d 553. Schoenfeld Asset Mgmt. as § 78t(a) has no relationship to any of many other types of claims that can be maintained under 15 USCS § 78j(b). Numerous differences between § 16 of Securities Exchange Act (15 USCS § 78p) and § 10(b) of Act (15 USCS § 78j(b)) clearly indicate that provisions of former impose no limitation on enforcement of latter.com/research/retrieve?cc=&pushme=1&tmp. Civ. were so inadequate as to constitute violation of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 89 S Ct 1454. Due process clause does not establish in securities fraud prosecutions same kind of scienter requirement that 15 USCS § 78j(b) and Rule 10b-5 contain. Securities & Exchange Com. Investor could not avoid federal preemption under Securities Litigation Uniform Standards Act (SLUSA) by claiming that. 18 USCS § 1961 et seq. Litig. Gen. and therefore triggers 15 USCS § 78cc(b). CA1 Mass) 424 F3d 24. CCH Fed Secur L Rep P 94746. so 15 USCS § 78u-4(b)(2) did not require appellants to plead facts showing strong inference of scienter on part of individuals. 22 L Ed 2d 756. 33 BCD 226. further. (1993. collateral estoppel bars such individual from challenging action by SEC to except disgorgement award from discharge in individual's bankruptcy proceeding. Investors are denied reconsideration of decision limiting their claims against tender offeror to period ending April 15. CCH Blue Sky L Rep P 74161. LLC v Cendant Corp. CCH Fed Secur L Rep P 93351. it was duty owed to investors. cert den (1969) 394 US 976. affd in part and revd in part on other grounds (1968. § 45a-199. (2010. 1998. (In re Stone & Webster. Co. combined with civil judgment in favor of SEC requiring individual to disgorge fraudulently obtained profits. (1977. (2001. and Securities Litigation Uniform Standards Act of 1998. Because former state treasurer had fiduciary duty with regard to investing state retirement trust funds subject only to authority of Governor under Conn. SD NY) 258 F Supp 262. CCH Bankr L Rptr P 77842. Disher v Citigroup Global Mkts. Hayes v Gross (1992. v Colkitt (2001. United States v Leonard (2008. (1966. SD NY) 446 F Supp 348. 12(b)(6) of client's action alleging violation of Racketeer Influenced and Corrupt Organizations Act (RICO). Gen. CCH Fed Secur L Rep P 93335. Inc. CCH Blue Sky L Rep P 74161. 15 USCS § 78j(B). CA2 NY) 401 F2d 833. Inc.

one need only refer to § 10(b) of Securities Exchange Act to realize that it also applies to more than just sellers when it refers to any person in connection with purchase or sale of any security. was dismissed because shareholders failed to state claim for primary violation of § 10(b) of Securities Exchange Act of 1934. SD NY) 299 F Supp 2d 249.Securities Act 14. business sellers could not assert actionable claims under § 10b of Securities Exchange Act 1934. CA7 Ill) 2005 US App LEXIS 7914. CCH Fed Secur L Rep P 94179. v Aspen Tech. Unpublished Opinions Unpublished: Since summary judgment in favor of appellees on appellant's 15 USCS § 78j(b) and 17 C. 15 USCS § 78j(b). they are blocked by SLUSA. 26 of 158 3/8/11 4:25 PM . Steed Fin. Although short-term commercial paper is subject to anti-fraud provisions of Securities Act. SD NY) 357 F Supp 2d 712. Frank v Dana Corp. CA7 Ill) 403 F3d 478. Inc. Ltd. Kirkpatrick v J. while. claim. 15 USCS §§ 77p. CCH Fed Secur L Rep P 93940. Co. 15 USCS § 77k Availability of express remedy under 15 USCS § 77k does not preclude defrauded purchasers of registered securities from maintaining action under 15 USCS § 78j(b).C. In re Comverse Tech. and § 11 proscribe type of disclosure or lack of it. reh den. en banc (1987.. CA11 Ga) 832 F2d 1267 and reh den. CCH Fed Secur L Rep P 93352. en banc (1987. 380544 Can. Bradford & Co. distinction appears obscure. MD Pa) 418 F Supp 332.by Citation . Gould v American-Hawaiian S. CCH Fed Secur L Rep P 99217. Section 12 of Securities Act makes clear that "offers or sells security" directly modifies "any person". Litig. CCH Fed Secur L Rep P 94967. ND Ill) 359 F Supp 109. (1999. plaintiffs' 15 USCS § 78t(a) claim against them also failed. 17 CFR § 240. 15 USCS § 78t(a). (1987. motion gr.F. and upon application for certification of class action in suit under all 3 provisions. because there was no underlying violation of § 10(b) of Securities and Exchange Act of 1934. prospectus. 78bb.15 USCS § 78j https://www. Rotstein v Reynolds & Co. arising out of sale. Remedies afforded by Securities Act of 1933 and by Securities Exchange Act of 1934 are not mutually exclusive but are cumulative.lexis. and where given act or activity gives rise to civil action by person wronged thereby under more than one provision of Acts and where one potential action is subject to limitation period which is shorter than that of other potential action.S.. 96 S Ct 1682. CCH Fed Secur L Rep P 93204. (1996. 15. In action filed by liquidating trustee for alleged violations committed by former brokers and traders under Securities Investor Protection Act of 1970. Private Securities Litigation Reform Act. § 17(a) of Securities Act. 48 L Ed 2d 186. because promissory note did not constitute "security. Because primary securities claims under § 10(b) of Securities and Exchange Act of 1934. As plaintiffs failed to establish primary violation of 15 USCS § 78j(b) and S. CA11 Ga) 832 F2d 1267 and cert den (1988) 485 US 959. In re IAC/InterActiveCorp Secs. including violations of 15 USCS § 78j(b). each involves specific documents which are of primary importance in fundamental areas of securities regulation. Sec. to create liability for false or misleading statements or omissions of material fact in connection with trading in secondary market. 15 USCS § 78j(b). Litig. CA11 Ga) 832 F2d 1267 and reh den. 15 USCS § 78t(a). Rule 10b-5. SD NY) 544 F Supp 2d 199. cert den (1976) 425 US 943. v Shaar Fund. Promissory note that was issued as part of consideration for sale and purchase of business did not constitute "security" for purposes of § 3(a)(10) of Securities Exchange Act 1934. as implemented by Rule 14a-9(a).. Kircher v Putnam Funds Trust (2005.10b-5(b).E. Shaw v Digital Equip. en banc (1987. to base claim under 15 USCS § 78t(a). false or misleading statements or omissions of material facts.. Mishkin v Ageloff (2004. LDC v Nomura Sec. Because plaintiffs had adequately alleged that defendant board of directors possessed scienter. control person claims under § 20(a) of Securities and Exchange Act of 1934. CA1 Mass) 194 F3d 185. or violations of S. CCH Fed Secur L Rep P 95772. Corp. § 240. § 14(a) of Securities Exchange Act (15 USCS § 78n(a)) and SEC Rule 14a-9(a) may be more closely analogized to § 11 of Securities Act (15 USCS § 77k) than with § 10(b) of Securities Exchange Act (15 USCS § 78j).E. 1975-1 CCH Trade Cases P 60137. § 240. Inc. (1973. reh den. provisions involve distinct causes of action and are intended to address different types of wrongdoing. Schaefer v First Nat'l Bank (1975. CCH Fed Secur L Rep P 99058. 15 USCS § 78j(b). CA11 Ga) 827 F2d 718. reh. CCH Fed Secur L Rep P 90658). DC NJ) 440 F Supp 2d 378. CA3 Del) 535 F2d 761. CCH Fed Secur L Rep P 94608.com/research/retrieve?cc=&pushme=1&tmp. or in connection with initial distribution of securities. (1976. exempts such paper from all provisions of latter Act. were dismissed. SD Fla) 16 FLW Fed D 712. as well as other sections of securities acts. 2. judgment entered (2004. CA1 Mass) 82 F3d 1194. Rule 10b-5 against founder and chief financial officer due to inadequate pleading of scienter. (2007. In determining whether to apply scienter or negligence standard of liability. 74 L Ed 2d 548. DC Mass) 477 F Supp 2d 342.C. SEC v Durgarian (2007. Inc. Inc. 15 USCS § 78t(a).10b-5 claims was proper. CA7 Ill) 509 F2d 1287. Inc. are cumulative and not mutually exclusive. Int'l.F. CCH Fed Secur L Rep P 95512. Claim that shareholders filed under § 20(a) of Securities Exchange Act of 1934. ND Ohio) 525 F Supp 2d 922. separate consideration should have been given to each statutory provision. ATSI Communs. it covers both good and bad securities claims--especially bad ones. Inc. in contrast. 9 FR Serv 3d 276. den (2005. (2008. en banc. 17 C. where plaintiffs' claims are connected to their own purchases of securities. since § 14(a). (2008. SD NY) 478 F Supp 2d 574. Herman & MacLean v Huddleston (1983) 459 US 375. v Levy (2006. Inc. CA2 NY) 148 Fed Appx 66. (2005. 99 L Ed 2d 421.Get a Document . Loftin v KPMG LLP (2002. Generally Remedies provided by § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). barred client's RICO claim because conduct on which client relied was conduct that would be actionable under 15 USCS § 78j(b).R. do not open door to litigation about securities transactions under state law. SD NY) 314 F Supp 2d 354. district court's summary judgment in favor of appellees on appellant's 15 USCS § 78t(a) claim was affirmed because it depended on primary violation by controlled person. (2005. CCH Fed Secur L Rep P 93383. 108 S Ct 1220. 103 S Ct 683. summary judgment was granted in favor of trustee on issue of liability of brokers and traders because their liability had been clearly established in earlier bankruptcy proceeding and in criminal proceedings for violations of federal and state law. Implied right of private action under 15 USCS § 78j(b) and Rule 10b-5 complements civil enforcement function provided by 15 USCS §§ 77k and 77l (2) by reaching beyond statements and omissions made in registration statement. Current and former high-level officers of company were not liable as controlling persons under § 20(a) of Securities and Exchange Act of 1934. whose preemptive effect is not confined to knocking out state-law claims by investors who have winning federal claims. is as broad as 15 USCS § 78j(b) itself and that limitations on private rights of action to enforce § 78j(b) and Rule 10b-5. Although there is some overlap between § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and §§ 11 and 12(2) of Securities Act of 1933 (15 USCS §§ 77k and 77l (2)). were questioned by IRS. which were predicated on those claims had to be dismissed as well. moreover. Robyn Meredith. definition of "security". 35 FR Serv 3d 55 (criticized in Greebel v FTP Software. ED NY) 543 F Supp 2d 134. Court of Appeals for Seventh Circuit holds that Securities Litigation Uniform Standards Act of 1998 (SLUSA). Tri-County State Bank v Hertz (1976.R. 15 USCS § 78aaa-111." and no other securities were issued or exchanged as part of sale..C.10b-5. fact that shorter limitation period has expired does not preclude injured party from bringing action which is subject to longer limitation period. is not as limited--it imposes liability on "any person" who commits particular actions "in offer or sale" of securities. (2007. and since each enumerates specific classes of individuals who bear responsibility to meet required standard of disclosure.. on its face. it had also adequately pleaded culpable participation required by their § 20(a) of Securities Exchange Act of 1934. as contained in Securities Exchange Act. 15 USCS § 78u-4. CCH Fed Secur L Rep P 93121.

Get a Document . Corp. CCH Fed Secur L Rep P 98470. ND Ill) 681 F Supp 530. where recovery is sought under both provisions. Securities buyers' 15 USCS § 77q(a) count will be ignored as duplicative of 15 USCS § 78j(b) claim. which would require allegation of fraud. Inc. because Seventh Circuit has noted that claims under both sections have same elements and therefore should be tried together as § 78j claim. (1999. and § 11 contains certain procedural restrictions not applicable to Rule 10b-5 actions. or in connection with initial distribution of securities. Bradford & Co. consequently § 77l (2) claim need not contain averments of fraud and may not be subject to pleading requirements of FRCP 9(b). (1973. CCH Fed Secur L Rep P 96104. complaint did not rely upon unified course of conduct where appellants did not allege claim under § 10(b) of Securities Exchange Act. Jackson v Oppenheim (1974. CD Cal) 364 F Supp 352. CCH Fed Secur L Rep P 93954 (criticized in Berson v Hardiman (1999. separate consideration should have been given to each statutory provision. Safron Capital Corp. made in connection with purchase or sale of security. SD NY) 411 F Supp 659. Although there is some overlap between § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and §§ 11 and 12(2) of Securities Act of 1933 (15 USCS §§ 77k and 77l (2)). fact that plaintiffs alleged wrongdoing by defendants which entitled them to recovery under both causes of action does not nullify more stringent requirements of § 11 since requirements of that section still apply to portion of suit brought thereunder.by Citation . reh den. SD NY) 158 FRD 281. SD Ill) 685 F Supp 688. CCH Fed Secur L Rep P 93383. he is privileged to maintain action under Rule 10b-5(2) to right same wrong as is dealt with by § 17(a)(2) if he undertakes to bear greater burden of proof imposed upon him in action under § 10(b). Action is not precluded under 15 USCS § 78j(b) merely because remedy exists under 15 USCS § 77 l. CA11 Ga) 832 F2d 1267 and reh den. provisions involve distinct causes of action and are intended to address different types of wrongdoing. Union Sec. and (2) there is no implied private right of action under § 77q(a).. CCH Fed Secur L Rep P 94189. Gilbert v Nixon (1970. en banc (1987. CCH Fed Secur L Rep P 94189. SEC adequately pled connection between misrepresentations and purchase or sale of security because false allegations enabling stock to be publicly traded were reasonably calculated to influence investing public and were. except that § 10(b) and Rule 10b-5 are broader in that they apply to purchase as well as sale of securities. Inc. Bastian v Petren Resources Corp. but § 11 of Securities Act is available only to buyers in connection with registered public offering or alleged omissions or misstatements in prospectus distributed under Securities Act while Rule 10b-5 is not subject to such limitations. Section 17(a) (15 USCS § 77q(a)) of Securities Act is essentially same as § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. and § 11 contains certain procedural restrictions not applicable to Rule 10b-5 actions. (1964. to create liability for false or misleading statements or omissions of material fact in connection with trading in secondary market. v Leadis Tech. Beecher v Able (1975. Civ. False allegations that enable stock to be publicly traded are reasonably calculated to influence investing public and. than in action alleging violation of § 17(a)(2) of Securities Act (15 USCS § 77q(a)(2)). en banc (1987. whereas under Rule 10b-5 fraud need only be in connection with purchase or sale. 108 S Ct 1220.15 USCS § 78j https://www. Kogan v National Bank of North America (1975. inter alia.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 90658). § 10 still provides only right of recovery for fraud. whereas Rule 10b-5 requires scienter. (1973. and not involving allegations of fraud. 35 FR Serv 3d 55 (criticized in Greebel v FTP Software. Neubauer v Eva-Health USA (1994. but § 11 of Securities Act is available only to buyers in connection with registered public offering or alleged omissions or misstatements in prospectus distributed under Securities Act while Rule 10b-5 is not subject to such limitations. such that fraud is substantively alleged. (1987. 15 USCS §§ 77k. DC Colo) 228 F Supp 757. 8 FR Serv 2d 9B. 15 USCS § 77k in connection with corporation's initial public offering of common stock. P. CD Cal) 310 F Supp 2d 1080. Secs. 27 of 158 3/8/11 4:25 PM . SEC Rule 10b-5 is general anti-fraud rule which covers broad range of conduct and by its terms covers conduct specifically proscribed by other provisions of federal securities statutes. SD NY) 435 F Supp 397. DC Colo) 312 F Supp 2d 1375. en banc (1987. & Co. which alleged violations of. CA11 Ga) 827 F2d 718. CA11 Ga) 832 F2d 1267 and reh den.. CCH Fed Secur L Rep P 95497. Implied right of private action under 15 USCS § 78j(b) and Rule 10b-5 complements civil enforcement function provided by 15 USCS §§ 77k and 77l (2) by reaching beyond statements and omissions made in registration statement. Unpublished Opinions Unpublished: Appellants' complaint. Fact that stock purchasers' claims under §§ 11 and 12 of Securities Act of 1933.S. (2003. 77l. Oil and gas venture investors' 15 USCS § 77q(a) claim is dismissed with prejudice. R. Elements of claim under 15 USCS § 77l (2) differ from those under Rule 10b-5 in at least one important respect. because (1) when allegations under § 78j(b) and § 77q(a) overlap. including §§ 11 and 12 of Securities Act of 1933 (15 USCS §§ 77k and 77 l). CD Cal) 364 F Supp 352. Section 11 of Securities Act (15 USCS § 77k) and § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) are different causes of action directed at remedying different types of wrongdoings. Litig. Trussell v United Underwriters. SD Fla) 571 F Supp 380. where claim is based on same allegations as 15 USCS § 78j(b) claim. Shaw v Digital Equip. (1996. ED NY) 402 F Supp 359. CA10 Kan) 429 F2d 348. conflicts between them are resolved in favor of § 12(a). 15 USCS § 77l Although civil action for damages may be available for violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 independent of relief provided for in § 12(a) of Securities Act (15 USCS § 77 l (2)). regardless of whether § 11 provides remedy for other types of misrepresentations. prospectus.1. Kirkpatrick v J. alleging violation of SEC Rule 10b-5(2). 16. Orn v Eastman Dillon. Summer v Land & Leisure (1983. In re Infonet Servs. Case 1. 9(b)'s heightened pleading requirements because allegations in complaint did not "sound in fraud".. 15 USCS § 77q Since plaintiff purchaser must allege and prove more in action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA9 Cal) CCH Fed Secur L Rep P 94647. and appellants did not allege facts in complaint that necessarily constituted fraud. are made "in connection with" purchase or sale of security. SEC v C. CA2) 533 F2d 826. CCH Fed Secur L Rep P 94894.. affd in part and revd in part on other grounds (1976. Corp. § 77q(a) claim adds nothing to plaintiffs' arsenal. 17. 9 FR Serv 3d 276.C. and upon application for certification of class action in suit under all 3 provisions. but plaintiffs are entitled to bring suit under § 10(b) as well where fraud is alleged. (2004. & Co. CCH Fed Secur L Rep P 93721. (1988. (1988. ND Ill) CCH Fed Secur L Rep P 90650). where company owner hid fact that he controlled company in connection with having company stock publicly traded. Section 17(a) of Securities Act (15 USCS § 77q(a)) is narrower than SEC Rule 10b-5 in that fraud must actually be in offer or sale itself in order to violate § 17(a).lexis. subject to statutory defenses. hence. CA11 Ga) 832 F2d 1267 and cert den (1988) 485 US 959. Sharp v I. Orn v Eastman Dillon. private right of action under § 10(b) was created to provide right of recovery for fraudulent misrepresentations in connection with purchase or sale of securities and. Ltd. SEC Rule 10b-5 is general anti-fraud rule which covers broad range of conduct and by its terms covers conduct specifically proscribed by other provisions of federal securities statutes. where statutory remedy is explicit. claims were dismissed for failure to plead material misstatements or omissions compelled conclusion that purchasers also failed to state claim under § 10(b) of Securities and Exchange Act of 1934 because pleading requirements for § 10(b) claim significantly exceeded those for §§ 11 and 12. therefore. Jones & Co. (2008. Inc. CCH Fed Secur L Rep P 99489. but if § 77l (2) claim in complaint alleges scienter on defendants' part. then FRCP 9(b) applies and such claim is assessed by same standard as Rule 10b-5 claim. CA1 Mass) 82 F3d 1194. CA1 Mass) 194 F3d 185. CCH Fed Secur L Rep P 99217. namely § 77l (2) imposes strict liability for material false statements or omissions. Union Sec. 37 OGR 20. including §§ 11 and 12 of Securities Act of 1933 (15 USCS §§ 77k and 77 l). 99 L Ed 2d 421. was not subject to Fed.

100 BNA LRRM 2260. CCH Fed Secur L Rep P 99088. In re Longhorn Sec. Stipulation in SEC administrative proceeding by SEC and respondent manager of branch office of firm that registered representative in branch office misappropriated money from client accounts at branch office is tantamount to stipulation that there was willful violation of 15 USCS §§ 77q(a) and 78j(b) and Rule 10b-5. Inc. Inc. Fox v Prudent Resources Trust (1974. ERISA (29 USCS § 1001 et seq. revd on other grounds (1979) 439 US 551. 40 FR Serv 3d 134). (1969) 393 US 453. in addition to several common law counts. Woods v Homes & Structures. CCH Fed Secur L Rep P 90159. at least where there was no reason to believe that any distribution would take place prior to adjudication of legal rights of all parties with claims against bank. CCH Fed Secur L Rep P 94125. CCH Fed Secur L Rep P 99013.com/research/retrieve?cc=&pushme=1&tmp. 15 USCS §§ 77a and 78j. 1 EBC 1871. Schlansky v United Merchants & Mfrs.by Citation . such act and rule being intended to prohibit all fraudulent schemes in connection with purchase and sale of securities and novel or atypical transactions are not to be excluded from its ambit. and. 19 FR Serv 2d 447. CCH Fed Secur L Rep P 92334. § 240. Sohns v Dahl (1975. 1 EBC 1620. Medema v Medema Builders. where remedies sought were injunction forbidding further violations of Rule 10b-5. In re Patricia A. and where gravamen of complaint was misrepresentation. CA8 Mo) 695 F2d 302. (1982. reh. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 89 S Ct 564. SLUSA blocked investors' class action litigation in state court. 96 BNA LRRM 2057. and not asking trial court to pass directly upon merger which state director of insurance had approved. SEC Rule 10b-5 will be applied regardless of any cause of action that may exist under state law. sale of such securities is nonetheless subject to fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA7 Ill) 561 F2d 1223. den (2005. State law Fact that applicable state statute. despite contention that such enforcement authority was delegated to Federal Home Loan Bank Board (FHLBB) by 15 USCS § 78 l (i).. SD Ohio) 551 F Supp 580. SEC v Warner (1987. CCH Fed Secur L Rep P 97616. Tittle v Enron Corp. Kircher v Putnam Funds Trust (2005. SD Tex) 284 F Supp 2d 511. CA7 Ill) 2005 US App LEXIS 7914. clearly relates to "business of insurance".Other Laws 19. CA7 Ill) 866 F2d 935. CCH Fed Secur L Rep P 93962. CA6 Mich) 483 F2d 944. SEC may properly enforce antifraud provisions of federal securities laws. "In the offer or sale of securities" standard of 15 USCS § 77q(a) is at least as high as "in connection with the purchase or sale of any security" standard of 15 USCS § 78j(b) and Rule 10b-5. Fenner & Smith. CCH Fed Secur L Rep P 96353. Inc. reh den.. and court order unwinding merger.Get a Document . In re Orlando Joseph Jett (1998) 1998 SEC LEXIS 1501. over-valued company stock to free up cash for insiders' personal enrichment were actionable. Although ERISA plan participants argued that alleged misstatements made by defendant company insiders to company employees as part of conspiracy to fraudulently induce them to retain and acquire company stock were not actionable under securities laws because they were not public statements intended to artificially inflate stock's price under fraud on market theory.) (2003. Daniel v International Brotherhood of Teamsters. Litigation (1983. (1977. WD Va) 392 F Supp 1208. District court erred in remanding to state court claims by investors in putative class actions seeking damages that resulted from mutual funds' practice of setting prices in manner that could be exploited by arbitrageurs.lexis. because § 78 l (i) grant limits FHLBB's jurisdiction to administration and enforcement of reporting and proxy provisions of Securities and Exchange Act of 1934. ERISA Antifraud provisions of federal securities laws have not been preempted by Employee Retirement Income Security Act of 1974 (29 USCS §§ 1001 et seq. 21 L Ed 2d 668. are designed to reach wide scope of deceptive activities in securities transactions without regard to limitations of common law action for fraud. 106 OGR 446) and (ovrld as stated in Maldonado v Dominguez (1998. 17 C. was as broad as 15 USCS § 78j(b) and Rule 10b-5. CCH Fed Secur L Rep P 96141. 99 S Ct 790. Profit Sharing Trust v Northern Ohio Bank (1976. (In re Enron Corp. § 2(b) of McCarran-Ferguson Act (15 USCS § 1012(b))--which provides that no act of Congress shall be construed to invalidate any state law enacted for purpose of regulating business of insurance unless such act specifically relates to business of insurance--furnishes no reason for refusing remedies sought by Securities and Exchange Commission in action by it alleging violations of § 10(b) of the Securities Exchange Act (15 USC § 78j(b)). Existence of express liability under 15 USCS § 77t(a) does not preclude liability under 15 USCS § 78j(b). DC Kan) 489 F Supp 1270.15 USCS § 78j https://www. (1988.10b-5. or to accept compensation in form of. District Court should not have stayed action which. CCH Fed Secur L Rep P 96714.). (1982. CCH Fed Secur L Rep P 94826. Existence of proceeding under state law for liquidation of bank did not preclude prosecution in federal court of action against bank and officers alleging violation of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5.. 18. requiring state director of insurance to find that proposed merger of insurance companies would not substantially reduce security of and service to be rendered to policyholders. CCH Fed Secur L Rep P 99630. Miscellaneous Existence of express remedy under 15 USCS § 77l (2) does not preclude resort to implied remedy under 15 USCS § 78j(b). Johnson (1994) 1994 SEC LEXIS 1137. Inc. James v Gerber Products Co. since deference of federal courts to state proceedings does not extend to staying federal action over which federal courts have exclusive jurisdiction. Even though securities may be exempt from registration under § 4 of Securities Act (15 USCS § 77d). SD NY) 443 F Supp 1054. 78bb. 58 L Ed 2d 808. investors' attempt to frame their complaints in manner that avoided any allegations of purchase or sale failed because their claims were "connected" to their own purchases of securities. pending outcome of state court action in which some of defendants in federal suit were suing federal plaintiffs for alleged contract breaches and interference with prospective economic advantage based on same matters which gave rise to federal suit. CCH Fed Secur L Rep P 94174. WD Okla) 573 F Supp 255. etc. (1977. and conspicuous absence of antifraud provision enforcement powers in grant leads to conclusion that SEC must maintain authority to regulate savings and loan associations in event of fraud. Commission alleging that approval of merger was obtained through use of various fraudulent misrepresentations.) and securities acts should be construed as complimentary to each other. 20. and of SEC Rule 10b-5 in that defendants made fraudulent misrepresentations to stockholders of insurance company in seeking their approval of merger of such company with another insurance company controlled by defendants. Corp. Pierce. CCH Fed Secur L Rep P 93169. ND 28 of 158 3/8/11 4:25 PM . which had been approved by stockholders and state director of insurance. 3. 15 USCS §§ 77p. (1980. 85 CCH LC P 11004 and (criticized in Schlifke v Seafirst Corp. en banc. federal courts have exclusive jurisdiction of affirmative 1934 Act claims. SD Fla) 652 F Supp 647. CA1 Puerto Rico) 137 F3d 1. such arbitrary division between "non-public" statements made only to employees and statements of virtually identical import to public at large constituted kind of manipulative pleading designed to circumvent Private Securities Litigation Reform Act and Securities Litigation Uniform Standards Act that was not permitted by most courts. (1973. Inc.F. but that statements made within in-house publications or at employee meetings as part of fraudulent scheme to convince employees to keep their retirement assets in.R. Imperial Supply Co. Sec. CCH Fed Secur L Rep P 93204. 82 CCH LC P 10094. also included allegations of violations of § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5. not merger. SEC v National Sec. (1989. Derivative & ERISA Litig. because Securities Litigation Uniform Standards Act of 1998 (SLUSA). and ERISA does not preempt anti-fraud provisions of securities acts in field of pensions.. Basile v Merrill Lynch. CA7 Ill) 403 F3d 478. CA7 Ill) 854 F2d 210. ED Pa) 382 F Supp 81. 31 EBC 2281.. Berger v Bishop Inv. pursuant to § 27 of 1934 Act (15 USCS § 78aa).

where case was brought under state partnership law. Court dismissed plaintiffs' complaint. Bixler v Foster (2010. Pub. ED La) 24 F Supp 2d 641. 737 (1995). nor to inhibit exercise of freedom of press. Fenner & Smith. 104-67.. it is state corporate law that governs fairness of transaction. liquidity and pricing benefits created by short sales placed transactions within heartland of federal securities regulation. because it is not "in connection with purchase or sale of covered security.R. but no federal regulatory scheme afforded sufficient protection from risk. and therefore are not pre-empted by federal securities laws. 15 USCS § 77 et seq. or other enforcement or interpretive responsibility. CCH Fed Secur L Rep P 97848. L. Rule 10b-5. (2005. (2004. defrauded them when they lost value of their investment in corporation due to transaction. purchasers provided no basis for equitable tolling. application of that jurisprudence to language as repeated in SLUSA comports with Congress's stated goal in enacting SLUSA of closing "federal flight loophole" by stemming migration of claims from federal to state court.C. Employee's complaints about employer's inability to timely implement good manufacturing practices training program as required by Food and Drug Administration was not protected under 18 USCS § 1514A because there was no objectively reasonable basis for employee to have believed that employer was violating § 10(b) of Securities Exchange Act of 1934. and subsequent allegedly fraudulent merger. Pierce. RICO Bus Disp Guide (CCH) P 10372. SD NY) 237 F Supp 2d 458. Miscellaneous 15 USCS § 78j(b) does not provide independent jurisdictional basis for petition to vacate arbitration award filed under Federal Arbitration Act (9 USCS § 10). 29 of 158 3/8/11 4:25 PM . United States v Rigas (2003.. as well as borrowing fees charged by prime brokers. Federal securities laws.F. Bozeman v Lucent Techs. adjudicative. Ohio) 430 F Supp 339. Inc. in that plaintiffs failed to plead with requisite particularity factual allegations of wrongdoing and factual allegations necessary to establish that defendants acted with required state of mind. Rule 10b-5 was dismissed as untimely because claim was filed almost two months after one year statute of limitations expired. Dismissal of short seller's Sherman Act claim against financial institutions that served as "prime brokers" in short sales was properly dismissed because all four Billing considerations weigh in favor of implied preclusion. court concluded that securities fraud charges were not multiplicitous. where gist of claim is that holder attempted to exercise right 3 days prior to expiration. Section 10(b) Securities Exchange Act of 1934. Partner cannot remove case to federal court. CCH Fed Secur L Rep P 93068. court did not apply Chevron deference but applied lesser degree of deference to SEC's views concerning meaning of SLUSA. 17 C. Inc. but received fax 2 days after expiration date stating that right had been canceled in 1992..E. thus. which had begun to run anew when purchasers opted out of prior class action. DC NJ) 614 F Supp 1465. 109 Stat. because holder has not identified any action it took.. government could elect to charge separate fraudulent transactions in separate counts by showing connection between prohibited activity pursuant to 15 USCS § 78j. or refrained from taking. LLC (2009. LLC v Banc of Am. there was no evidence indicating that employer intended to make false or misleading statements in any report to shareholders or that deficiencies in training documentation procedures at one of more than 24 pharmaceutical manufacturing facilities would have had material impact on employer's finances. therefore. Where indictment listed different classes of securities that likely involved different buyers who were defrauded by various misrepresentations. If claim is not cognizable under § 10(b)(5) of Securities and Exchange Act of 1934. v Sulcus Computer Corp. 93 CDOS 7725. 15 USCS § 78a et seq. Gintowt v TL Ventures (2002. 3 Media L R 1033. Inc. 18 USCS §§ 1961-1968. In re ICN Pharms. Dismissal of § 20(a) of Securities Exchange Act claim was warranted where plaintiff's § 10(b) had been dismissed. McNeill & Libby (1981. Elec. CA9 Cal) 7 F3d 882. (1985. (2002." it similarly is not claim "in connection with purchase or sale of covered security" for purposes of Securities Litigation Uniform Standards Act. Reliance Ins. § 240. 10 USCS § 78j. Absence of another regulatory scheme weighed in favor of finding. SD NY) 510 F Supp 366. pursuant to 15 USCS § 78j(a). where creditors could seek state-law relief for breach of promissory notes.10b-5. CA4 NC) 520 F3d 344. (1995. because 15 USCS § 78j(b) does not preempt state partnership law and partner's assertion that claim arose under "forced seller doctrine" is counterclaim or defense. that promissory notes were securities under 15 USCS § 78j(b). Private Securities Litigation Reform Act exception to Racketeer Influenced and Corrupt Organizations Act (RICO). (2005. 21. 15 USCS § 78j(b). barred minority shareholders' civil RICO action because their allegations that defendants defrauded them from receiving purchasing company's stock as provided in transaction. 15 USCS § 78j(b). and S. 2009-2 CCH Trade Cases P 76822. Preemptive provisions of Securities Litigation Uniform Standards Act of 1998 (SLUSA). 17 CFR § 240. (2004.E. 93 Daily Journal DAR 13181. Inc. Corp. and dismissal of previous nearly identical action without prejudice did not permit purchasers to file another complaint outside of limitations period. 8 BNA IER Cas 1645. No.15 USCS § 78j https://www. CCH Fed Secur L Rep P 94614.lexis. § 240. Pierce. (1993.com/research/retrieve?cc=&pushme=1&tmp. MD Ala) 378 F Supp 2d 1348. SD NY) 442 F Supp 1341. unlike parallel provisions of § 10(b) of Securities Exchange Act of 1934. Garrett v Merrill Lynch. CA2 NY) 395 F3d 25. CA2 NY) 588 F3d 128. Inc. defendants' Private Securities Litigation Reform Act. CCH Fed Secur L Rep P 98712. ED NY) 876 F Supp 25.F.. and that resulted in legally cognizable harm to holder. (2008. Common stock purchasers' federal securities claim under § 10(b) of Securities Exchange Act of 1934. therefore. Trading Group. Antifraud provisions of federal securities laws are ancillary to 1934 Act's "fundamental purpose" of "full and fair disclosure". argument failed. do not create powers in Securities and Exchange Commission (SEC) or vest SEC with any rule-making. ED Pa) 226 F Supp 2d 672. Owner of company failed to allege that owner purchased or sold any securities. Sec. and defendants failed to identify any tangible relationship between alleged predicate acts of fraud and any sale or purchase of securities by owner. holder has recast in tort mold what is straightforward breach-of-contract claim. Where minority shareholders alleged that defendants.R. Reed v Cohen (1995. complaint against proprietor of financial magazines alleging violation of Rule 10b-5 for publishing article defamatory of plaintiff is properly dismissed where allegation was pleaded as method of circumventing higher evidentiary threshold developed to limit state actions for libel.Get a Document . Funke v Life Fin.10b-5. 15 USCS § 78j(b). CCH Fed Secur L Rep P 93068. where complaint did not comply with heightened pleading requirements of Private Securities Litigation Reform Act of 1995 (PSLRA). Bradfisch v Templeton Funds. and once disclosure has been made. Fenner & Smith. SD NY) 281 F Supp 2d 660. under Reves test. Merrit v Libby. Doumani v Casino Control Com. Co. 27 BNA IER Cas 613. and S. 15 USCS § 78j(b). LeBrun v Kuswa (1998.C.by Citation . v Barron's (1977. Pierce. as result of its acceptance of alleged misrepresentation by fax. jurisprudence concerning "in connection with" language applies to Securities Litigation Uniform Standards Act of 1998 (SLUSA). Dabit v Merrill Lynch. CCH Fed Secur L Rep P 95539. Securities fraud claim of holder of right to purchase shares in computer corporation must fail. First Hanover Sec. brought on behalf of class of investors and alleging violations of 15 USCS §§ 78j(b) and 78t(a) of Securities Exchange Act of 1934 and 17 C. Dabit v Merrill Lynch. and antitrust liability would have created actual and potential conflicts with securities regime. Securities Exchange Commission (SEC) had authority to regulate role of prime brokers in short selling. were not developed with intention of overlapping or reenforcing law of libel. CA2 NY) 395 F3d 25. described "purchase" and "sale" of securities. Livingston v Wyeth. and particularly SEC Rule 10b-5. SD Ill) 319 F Supp 2d 897. and 15 USCS §§ 78o(c)(2)(D) and 78j(b) applied with equal force to role of prime brokers in short selling and borrowing fees they charged. (2005.10b-5. Inc. Inc. SD NY) 871 F Supp 700. CD Cal) 299 F Supp 2d 1055. further. and Rule 10b-5. State gambling casino control commission's attempt to regulate qualifications of persons to maintain ownership of stock in gambling casino have only incidental effects on interstate trade in securities and involve internal corporate regulation. Fenner & Smith. CCH Fed Secur L Rep P 95908. CA10 NM) 596 F3d 751. directors and lawyers.

alleged against defendant were not multiplicitous because each contained element that was not contained in other because securities fraud required showing of fraud in connection with purchase or sale of any security--element not required to prove wire fraud. 15 USCS §§ 78j(b). 15 USCS § 77v(a). § 22(a) of Securities Act of 1933. Antifraud provisions of Securities Exchange Act prohibit fraud in sale of securities when significant conduct occurs in United States or conduct occurs anywhere and has substantial effects on investors in United States.C. however. 66. Civ. for purpose of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 19 UCCRS 653. (2006. 2001 Daily Journal DAR 4983. 149 L Ed 2d 845. because corporate appointment was made pursuant to § 10(b) of Securities Exchange Act of 1934. thus. WD Mich) 435 F Supp 281. mailed information on filing of financing statement. (2008. R. Heller v Deutsche Bank AG (2005. CCH Fed Secur L Rep P 95712. in violation of 18 USCS § 1343. shareholders' scienter allegations did not meet Private Securities Litigation Reform Act of 1995 requirements. Private right of action arises under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) once facilities of mail or interstate communications are used in connection with sale or purchase of securities. Adams v Marwil (In re Bayou Group. and does not require that misrepresentations or omissions be made through instrumentalities of commerce or through use of mails. CCH Fed Secur L Rep P 91425. 15 USCS § 78j(b). receiver was not custodian within meaning of 11 USCS §§ 101(11) and 543(b). United States CFTC v Amaranth Advisors. 42 L Ed 2d 640. SD NY) 604 F Supp 2d 625.INTERSTATE COMMERCE 22. ED Pa) 95 AFTR 2d 1372. CA10 Colo) 210 F3d 1207. Defendant's deposition claim that defendant only met with people in person and hand delivered promotional materials to brokerage customers was not credible where defendant's claim was contradicted by every witness.15 USCS § 78j https://www. v Essaness Theatres Corp. CCH Fed Secur L Rep P 91977. ED Pa) 348 F Supp 900. as well as defendant. CA10 Utah) 491 F2d 616. 121 S Ct 1776.10b-5. and wire fraud required showing of use of interstate wires--element not required to prove securities fraud. Trustee's 11 USCS § 1104 motion to appoint Chapter 11 trustee was denied because receiver was authorized to act as debtor-in-possession within meaning of 11 USCS § 1101(1). receiver's corporate governor role did not end when debtors filed Chapter 11 petitions. WD Wash) 432 F Supp 2d 1129. Fratt v Robinson (1953. Reube v Pharmacodynamics. v Wharf (Holdings) Ltd. Inc. CCH Fed Secur L Rep P 93295. against taxpayers due to their exercise of ISOs before expiration of lock-up period. CD Ill) 222 F Supp 2d 1124. and securities fraud counts. CCH Fed Secur L Rep P 93563. 15 USCS § 7241. 41 UCCRS2d 645. Inc. WD Pa) 343 F Supp 1050. CD Ill) 222 F Supp 2d 1112. through their attorney. 40 L Ed 2d 560. it being sufficient if he causes fraudulent scheme to be carried out by setting forces in motion which foreseeably result in use of mails. 2001 CDOS 4046. judgment entered. Mail Jurisdictional basis of criminal action based upon violation of antifraud provisions of 15 USCS § 78j(b) is use of mails or instrumentality of commerce but accused need not carry out mailing or use of instrumentality of commerce.. SEC v Gorsek (2002.C. (1972." where incorporators selling business and stock of business admit to having used telephone to change prescheduled meeting and. SEC Rule 10b-5. Where receiver was appointed as non-bankruptcy federal equity receiver and exclusive managing member for debtors prior to debtors' filing for bankruptcy. fraud itself need not be transmitted through interstate commerce. DC Ill) 103 F Supp 954. 15(a) because viable case could be presented. and 11 USCS § 105(b) did not prohibit receiver from continuing as manager. (1977. accordingly. CCH Fed Secur L Rep P 94326. Where preparation of draft of contract was in furtherance of alleged fraudulent scheme violating SEC Rule 10b-5. Taxpayers were not entitled to refund because incentive stock options (ISOs) were not subject to substantial risk of forfeiture under 26 USCS § 83 because employer who issued ISOs could not assert successful securities action under either §§ 10b or 16(b) of Securities Exchange Act of 1934. CCH Fed Secur L Rep P 93875. P. 15 USCS § 78j(b). court's inherent authority. motion den (2002. Use of instrumentality of interstate commerce. Limantour v Cray Inc. In action by U. 14 FLW Fed S 245. CCH Fed Secur L Rep P 93704. promulgated under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). SD NY) 554 F Supp 2d 523. specifically includes indirect use of instrumentality of interstate commerce in connection with manipulative or deceptive device or contrivance. 78p(b).by Citation . Levin v Marder (1972. Ford v Cannon (1976.Get a Document . II. 15 USCS § 78j(b). and debtors' creditors found loophole that permitted them to control appointment of person who would administer bankruptcy estate.lexis. Entire scheme to defraud may include mailing of so-called "lulling" letters which conceal fraudulent device from person against whom it is utilized. it being sufficient if instrumentality of interstate commerce plays material role in transactions. Blockburger test established that wire fraud counts. Civ.S. Private Securities Litigation Reform Act's exclusion of securities fraud as RICO Act predicate act applies regardless of whether particular plaintiff has standing to bring civil action under § 10b of Securities Exchange Act of 1934. heightened pleading requirements of § 10(b) of Securities Exchange Act of 1934 did not apply because commission's complaint only alleged that traders violated Commodity Exchange Act of 1936.S. U. although complaint adequately pled falsity as to certifications of § 302 of Sarbanes-Oxley Act of 2002.10b-5. United States v Mackay (1973. (1952. Shareholders' securities fraud action under § 10(b) of Securities Exchange Act of 1934 (1934 Act). 98 AFTR 2d 6098. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is not limited to interstate transactions.L. CD Cal) 450 F Supp 2d 1112. cert den (1974) 416 US 972. was dismissed because. CA9 Wash) 203 F2d 627. CA9 Wash) 522 F2d 588. United States v Regensberg (2009. 44 UCCRS2d 569. and all that need be shown is that mails have been used in furtherance of alleged fraud and there is no requirement that any fraudulent representation inducing sale or purchase of 30 of 158 3/8/11 4:25 PM . L. 2001 Colo J C A R 2505. Harrison v Equitable Life Assurance Soc.) (2007. even though buyer and seller transact directly and not through securities exchange or organized over-the-counter market. 2000 Colo J C A R 2427. (2000. 23. affd (2001) 532 US 588. document prepared in connection with sale of securities. requirement is satisfied even if use of mails is not itself fraudulent act. must have some connection with transaction complained of and with defendant's role in transaction. DC Utah) 655 F Supp 725. 95 S Ct 619. L. as well as receivership statutes 28 USCS §§ 754 and 959 and Fed. Securities purchaser meets jurisdictional prerequisite of "interstate commerce. Generally Section 10 of Securities Exchange Act (15 USCS § 78j) covers transactions entirely outside any established securities-transfer business. which terminated pursuant to 11 USCS § 543 when debtors filed for bankruptcy. when mail or any instrumentality of interstate commerce has been used. MD Fla) 413 F Supp 1393. mailing of draft by defendant's attorney to defendant satisfied jurisdictional requirements of rule. SD NY) 363 BR 674.com/research/retrieve?cc=&pushme=1&tmp.. United Int'l Holdings. 15 USCS § 78aa. 37 ALR2d 636. Commodity Futures Trading Commission (commission) against futures traders.L. § 27 of Securities Exchange Act of 1934. shareholders were granted leave to file amended complaint under Fed. and Rule 10b-5. In action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. in violation of 15 USCS §§ 78j(b). R. 94 S Ct 1996 and cert den (1974) 419 US 1047. Hernandez v United States (2006. injunction den. receiver's corporate governance powers were not derived from his receivership. fraudulent misrepresentation need not be communicated over telephone or through mails for there to be violation of statute or rule. Leiter v Kuntz (1987. Hilton v Mumaw (1975. 78ff and 17 CFR § 240. 17 CFR § 240. Northern Trust Co. P.

CA10 Utah) 502 F2d 731. CCH Fed Secur L Rep P 95421. Starck v Dewane (1973. there must be some connection between interstate communication and fraud. Inc. Inc. CCH Fed Secur L Rep P 90266). Intrastate use of telephone confers federal jurisdiction under § 10 of Securities Exchange Act (15 USCS § 78j) and SEC Rule 10b-5 where telephone call in question is connected to transaction with respect to which there is complaint. CCH Fed Secur L Rep P 92949. affd (1985. moreover. and scienter was sufficiently alleged.. jurisdictional requirement is met. revd on other grounds (1976. interstate commerce element was satisfied because defendants used telephone to communicate many fraudulent representations and it was necessary for investor to open credit card account on behalf of defendants by using channels of interstate commerce. CCH Fed Secur L Rep P 92021. Harrison v Equitable Life Assurance Soc. Reube v Pharmacodynamics. CCH Fed Secur L Rep P 94340. directly or indirectly from using any instrumentality of interstate commerce in connection with purchase of securities by manipulative or deceptive device is violated if telephone is used "indirectly" to cause meeting to be held for purpose of effectuating fraud. satisfied jurisdictional requirements of statute. it is not required that manipulative or deceptive device or contrivance be part of or actually transmitted in mails or instrumentality of interstate commerce. SD NY) 436 F Supp 895.15 USCS § 78j https://www. ND Ill) 701 F Supp 2d 1014. ND Ill) 364 F Supp 466. and plaintiff.--Intrastate calls Complaint of transaction involving only 2 local telephone calls (prior to 1975 amendment to 15 USCS § 78c(a)(17)) failed to state cause of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) since neither mails nor instrumentality of interstate commerce was used. CA2 NY) 538 F2d 953. (1976. Use of telephones as sole interstate means of solicitation of purchase of stock is sufficient to give federal court jurisdiction over action for violation of 15 USCS § 78j. (1971. ED Pa) 348 F Supp 900. Matheson v Armbrust (1960. Investor's motion to confirm arbitration award was granted because arbitrator rationally held that defendants violated § 10(b) of Securities and Exchange Act of 1934. also resident of Oregon. CA9 Cal) 520 F2d 523. since 31 of 158 3/8/11 4:25 PM . Jones v Corus Bankshares. 5 L Ed 2d 860. control. CCH Fed Secur L Rep P 95244. as material part of sales transaction. as CFO's position. albeit for intrastate calls. it being sufficient that such device or contrivance be employed in connection with use of instruments of interstate commerce or mails. Even though misrepresentation or words of fraud are not uttered over telephone. CCH Fed Secur L Rep P 95079. (1972. Gower v Cohn (1981. then selling them off at huge profits. CCH Fed Secur L Rep P 95709. (1977. based on defendants' untrue statements of material fact as to ownership. without more. United States v Pray (1978. (2003. Spilker v Shayne Laboratories.Get a Document . v Interway Corp. CA5 Ga) 643 F2d 1146. REA Express. CA2 NY) 152 F3d 169. Glazer v AA Premier Realty. cert den (1961) 365 US 870. statements by CEO were more than mere puffery. requirement was met where telephone communication was to set up meeting to complete transaction where alleged fraud took place. Ltd. and owner of all stock of corporation. SD NY) 410 F Supp 192. CCH Fed Secur L Rep P 96159. 26. in violation of 15 USCS § 78j(b). requesting that latter return to Oregon and resume negotiations. whether or not actual fraudulent statements or misrepresentations were communicated in call. Nemitz v Cunny (1963. Nelson v Hench (1977. recommending them in newsletter. and failure to advise readers of his conflict of interest was violation of 15 USCS §§ 78j(b) and 80b-6. was carried out. however. REA Express. MD Pa) 452 F Supp 788. Publisher of investment advisement newsletter does not fall within publisher exception of 15 USCS § 80b-2(a)(11) where he pursued practice of purchasing stocks. Telephone Interstate commerce was involved where defendant. revd on other grounds (1976. DC Minn) 428 F Supp 411. and in purchase of stock was defrauded. Stock purchaser stated claim under 15 USCS § 78j(b) based on alleged statements by corporation and its chief executive officer (CEO). CCH Fed Secur L Rep P 96463. CCH Fed Secur L Rep P 94340. Intrastate use of telephone might confer federal jurisdiction (even prior to 1975 amendment to 15 USCS § 78c(a)(17)) over private action alleging violation of § 10 of Securities Exchange Act (15 USCS § 78j) and SEC Rule 10b-5. CCH Fed Secur L Rep P 97979. Inc. 15 USCS § 78j(b). Use of telephone in connection with sale of securities constitutes use of instrumentality of interstate commerce. negotiated in that state for sale of stock to plaintiff. Even though misrepresentations or words of fraud are not uttered over telephone. 81 S Ct 904. was insufficient to support strong inference of scienter. Inc.lexis.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 94788 (criticized in Wright v Ernst & Young LLP (1998.by Citation . CA9 Or) 284 F2d 670. CA6 Mich) 760 F2d 706. which negotiations were broken off. (1975. Burke v Triple A Machine Shop. ND Ill) 364 F Supp 466. Fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 were applicable to fraudulent activities of investment advisor where advisor used telephone to set up meetings with persons upon whom fraud was perpetrated. Dupuy v Dupuy (1975. Phrase of § 10(b) of Securities Exchange Act referring to "instrumentalities of interstate commerce" does not require that misrepresentation occur in interstate commerce. resident of Oregon. 24. Numerous interstate telephone calls relating to fraudulent scheme to sell securities placed between plaintiff and each defendant constituted use of interstate commerce in furtherance of scheme and action could be brought based on § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. and where telephone call clearly furthers defendant's overall scheme. Inc. ED NY) 294 F Supp 2d 296. WD Mich) 435 F Supp 281. provisions of 15 USCS § 78j prohibiting any person. CA9 Cal) 438 F2d 978. it is sufficient if telephone is used indirectly to cause meeting to be held for purpose of effectuating fraud in order for provisions of 15 USCS § 78j(b) to come into play. which he did. CCH Fed Secur L Rep P 95421. CCH Fed Secur L Rep P 96085. Inc. SD NY) 410 F Supp 192. and jurisdiction thereunder may be predicated upon defendant's use of telephone. Starck v Dewane (1973. CCH Fed Secur L Rep P 93704. For jurisdictional purposes in action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Interstate commerce was involved where meetings between management personnel of 2 corporations involved in securities transaction were arranged by intrastate telephone calls. allegations that corporation misrepresented adequacy of its loan loss reserves were stated with sufficient particularity. (1974. claim against corporation's chief financial officer (CFO) failed. and later defendant telephoned from Oregon to plaintiff in Washington. but subsequent use of interstate facilities in furthering scheme is sufficient to establish federal jurisdiction. SEC v Blavin (1983. v Interway Corp. Weitzman v Stein (1977. (2010. in that it is of material importance to consummation of scheme. 25.. (1976. Use of interstate commerce facilities totally unrelated to defendant and transaction will not support jurisdiction. ED Mich) 557 F Supp 1304. and shares of realty company.--To arrange meeting in furtherance of scheme Use of telephone to arrange meeting at which scheme to defraud. securities be by way of mails so long as requisite connection between scheme to defraud and use of mails is made out. Secretary of corporation with office in one state who spoke on telephone with top management of corporation in second state in furtherance of offer to purchase securities used instrumentality of interstate commerce so as to satisfy jurisdictional requirements for action alleging violation of SEC Rule 10b-5. CA5 La) 511 F2d 641. ND Ill) 221 F Supp 571. CCH Fed Secur L Rep P 99126. CA2 NY) 538 F2d 953. Kerbs v Fall River Indus.

Inc. may constitute scienter. SD Tex) 247 F Supp 373. Options Exch. CA2 NY) 433 F2d 48. 15 USCS § 78t(a) controlling person claims necessarily also failed. ED Pa) 138 F Supp 2d 624. v Interway Corp. In re Vicuron Pharms. (3). ED Pa) 138 F Supp 2d 624. Pac. In action alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Litig. even if actual use by defendant was only intrastate. Securities Exchange Act of 1934. ED La) 319 F Supp 537. motion to strike den (2000. (1977. Defendants.10b-5. 1965. P. Complaint under 15 USCS § 78u-4(b)(2) alleging with particularity that defendant acted with severely reckless state of mind suffices to state claim for civil liability under 15 USCS § 78j(b) and Rule 10b-5. Litig. Litig. CCH Fed Secur L Rep P 91463) and (criticized in In re Party City Secs. Civ. revd on other grounds (1976. CA4 Md) 353 F3d 338. (1976. such as telephone. CCH Fed Secur L Rep P 95421. WD Mich) 435 F Supp 281. 23(a)(1). ND Tex) 100 F Supp 2d 417. Inc. 23. LLC v Mayer Brown LLP (2010. CA5 Ga) 447 F2d 1407. plaintiff investors' claims under 15 USCS § 78j(b). ED Pa) 348 F Supp 900. Mgmt. Sec. (1970. SD NY) 296 F Supp 1038. 91 S Ct 974. 17 CFR § 240. CCH Fed Secur L Rep P 90513. customer who explicitly instructs broker to make short sale in contravention of rule is just as subject to liability as broker who carries out instruction. CCH Fed Secur L Rep P 92896. v Bocock (1965. (1999. REA Express. Broker-dealer who used facilities of national securities exchange to effect short sales at prices below prices at which last sales thereof. CA11 Ga) 187 F3d 1271. 45 FR Serv 3d 420. Inc. (2001. 32 of 158 3/8/11 4:25 PM . has been used.lexis. investors asserted claims pursuant to 15 USCS § 78j(b). and mere fact that investors relied upon professional money managers to help them in making investment decisions did not render them inadequate as class representatives under R. SD NY) 410 F Supp 192. (2001. What is "short sale" Recklessness. 23(a)(4). and SEC Rule 10b-5. CCH Fed Secur L Rep P 91440. Litig. R. apply to all persons and not just brokers and dealers. CCH Fed Secur L Rep P 91445. Prohibited short sales Import of SEC Rule 10a-1(a)(2) is that short sales may be made only at price higher than next preceding different price. Inc. R. DC NJ) 147 F Supp 2d 282. Class was certified in consolidated action that was brought by institutional investors against pharmaceutical company and various of its officers and directors where. Inc.. (2). Inc. United States v Peltz (1970. CCH Fed Secur L Rep P 91487). (2001. CCH Fed Secur L Rep P 95722. Short sales provisions of § 10(a) of Securities Exchange Act (15 USCS § 78j(a)) and SEC Rule 10a-1 are applicable to all persons. (In re Comshare Inc.. CCH Fed Secur L Rep P 91014. SD NY) 296 F Supp 1038.) (1999. complaint dismd. and since primary claims failed. Litig. ED Pa) 233 FRD 421. attribution was necessary to satisfy reliance element of private damages action. Inc. Pierce. CA2 NY) 538 F2d 953. revd. 2001 FED App 179P) and (criticized in City of Philadelphia v Fleming Cos. (b)(3). 30. Litig. Reube v Pharmacodynamics. 20 ALR Fed 216.. SD Iowa) 110 F Supp 2d 1183. even intrastate telephone call will satisfy jurisdictional requirement. CCH Fed Secur L Rep P 91525. defendants conceded that investors met Fed. (2001.F. 27. ND Ga) 331 F Supp 1078. 14 FLW Fed C 707 and (criticized in In re CDNOW. v Interway Corp. CA4 Va) 190 F3d 609. Inc (2000. Litig. 15 USCS § 78t. United States v Mandel (1969. as secondary actors. CA6 Ky) 251 F3d 540. seller hoping to profit by buying equivalent number of shares later at lower price and returning them to lender. is any sale of security which seller does not own or any sale which is consummated by delivery of security borrowed by or for account of seller. arising out of alleged public misrepresentations that defendants made concerning efficacy of one of company's new drugs. CCH Fed Secur L Rep P 91487) and (criticized in Helwig v Vencor. Since SEC Rule 10b-5 concerns use of any instrumentality of interstate commerce. CCH Fed Secur L Rep P 90610. 17 C. Childs v RIC Group.R.. (2002. (2001. affd (1971. 99 CDOS 5322. Short sale. CCH Fed Secur L Rep P 92645). Inc. 49 FR Serv 3d 1113. CCH Fed Secur L Rep P 90945) and (criticized in Coates v Heartland Wireless Communs. Inc. SD NY) 296 F Supp 1038. CA10 Okla) 264 F3d 1245. SD NY) 410 F Supp 192.by Citation . Sec. as all telephone lines are integral parts of interstate network. (2000. Hoffman v Comshare. Release No. Sec. Sec. and SEC Rule 10a-1(a).) (1999. Inc. Inc. (1999. it is sufficient for jurisdictional purposes if instrument of interstate commerce. revd on other grounds (1976. Inc. were made on exchange violated § 10(a) of Securities Exchange Act (15 USCS § 78j(a)) and SEC Rule 10a-1. were not liable for merely assisting in drafting and filing company's allegedly false statements. CA6 Mich) 183 F3d 542. 44 FR Serv 3d 1311) and (criticized in Phillips v LCI Int'l. ND Ill) CCH Fed Secur L Rep P 92217. telephone is interstate communication facility. CCH Fed Secur L Rep P 91015) and on remand. United States v Mandel (1969. 99 Daily Journal DAR 6829. CA9) 183 F3d 970. ND Tex) 100 F Supp 2d 417. thus. 2001 Colo J C A R 4635) and (criticized in Kundrat v Chicago Bd.15 USCS § 78j https://www. Use of telephone constitutes interstate communication. because none of statements were attributed to them when disseminated. for purposes of jurisdiction in action brought under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). 2002-2 CCH Trade Cases P 73888) and (criticized in Ottmann v Hanger Orthopedic Group. "lead plaintiff" restrictions imposed under 15 USCS § 78u-4(a)(3)(B)(vi) did not disqualify investors from seeking class certification under Fed. CCH Blue Sky L Rep P 90636. Inc (2000. understood as mental state apart from negligence and akin to conscious disregard. Use of telephone in connection with sale of security constitutes use of instrumentality of interstate commerce under SEC Rule 10b-5 whether call is intrastate or interstate. CA11 Ga) 252 F3d 1161. P. (1970. Inc. since nature of telephone remains as interstate instrumentality.SHORT SALES OR STOP LOSS ORDERS [15 USCS § 78j(a)] 28. 28 L Ed 2d 238. Inc. (2006. CCH Fed Secur L Rep P 93333. not only to exchanges and brokers. Litig. § 240.com/research/retrieve?cc=&pushme=1&tmp. (2000. (2003. In re Duval Secur. law firm and one of its attorneys. 12 FLW Fed C 1245 (criticized in Branca v Paymentech. CCH Fed Secur L Rep P 90645) and (criticized in Branca v Paymentech. Merrill Lynch. CCH Fed Secur L Rep P 92836. Inc. 1999 FED App 247P (criticized in Janas v McCracken (In re Silicon Graphics Sec. failed. Civ.10b-5. ND Tex) 1920 CCH Fed Secur L Rep P 90911) and (criticized in In re Eng'g Animation Sec. Inv. Ingraffia v Belle Meade Hospital. remanded (2001. Inc. inter alia. Co. Fenner & Smith. CCH Fed Secur L Rep P 91463) and (criticized in In re Party City Secs. III. 1965 SEC LEXIS 225. Short sale is accomplished by borrowing stock from owner and selling it. requirements. REA Express. (2000. cert den (1971) 401 US 955. United States v Mandel (1969. Applicability Section 10(a) of Securities Exchange Act (15 USCS § 78j(a)). even though call is intrastate. (1972. 7655. Inc. July 23. as defined in SEC Rule 3b-3. (1976.. MD Ga) 100 F Supp 2d 1368. DC NJ) 147 F Supp 2d 282. CCH Fed Secur L Rep P 91015) and (criticized in In re CDNOW. Travel Secretary of corporation who traveled in interstate commerce in order to work on draft of offer letter relating to securities transaction alleged to have been in violation of SEC Rule 10b-5 satisfied jurisdictional requirement of use of instrumentality of interstate commerce. regular way. ND Tex) 1920 CCH Fed Secur L Rep P 90911) and (criticized in Coates v Heartland Wireless Communs. Inc. CCH Fed Secur L Rep P 93704. Bryant v Avado Brands. (2001. CA2 NY) 538 F2d 953.Get a Document . CCH Fed Secur L Rep P 95421. CA2) 603 F3d 144.. Harrison v Equitable Life Assurance Soc. 29.

Inc. CA10 Colo) 1994 US App LEXIS 16507 and (superseded by statute as stated in United States SEC v Fehn (1996.lexis. 8480. CCH Fed Secur L Rep P 93540. 2000 Colo J C A R 2427. if promise is part of consideration for sale of securities. affd (2001) 532 US 588. 1964.A.F. 7655. failed to sufficiently plead.. Inc. CCH Fed Secur L Rep P 77264. was affirmed because substantial evidence showed that accountant had violated anti-fraud provisions by over-valuing license designs company had purchased and had improperly characterized tooling and prototype expenses as inventory in company's financial statements and had aided and abetted company's violation of reporting and record keeping requirements. on reh (1988. furthermore. nonpublic information. (2000. 51 L Ed 2d 480. Inc. In re Delafield & Delafield. on remand. (1999. CA9 Cal) 345 F3d 722. trader's cash-settled over-the-counter and "synthetic" options were "securities" under Securities Exchange Act of 1934 Act. 15 USCS § 78j(b) was not designed to regulate corporate mismanagement. In re Larry A. 97 S Ct 1598. It was violation of § 10(a) of Securities Exchange Act (15 USCS § 78j(a)) and SEC Rule 10a-1 for broker-dealer to execute. Generally Scope of antifraud provisions of SEC Rule 10b-5 cannot exceed power granted Commission by Congress under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). reh den (1976) 425 US 986. 128 L Ed 2d 119. Release No. In re Guss & Stad Co. 121 S Ct 1776. (1999. IV. 1968 SEC LEXIS 270. was properly dismissed because investors' action. application of duty to disclose prior to trading guarantees that corporate insiders.. and to permanently bar him from practicing before SEC. since he gave executing broker correct instructions to execute short sales in accordance with his trading strategy and cannot be held responsible for that broker's errors in executing his orders. Ariz App) 1999 Ariz App LEXIS 35) and (superseded by statute as stated in Scachitti v Prudential Sec. 96 Daily Journal DAR 12375. such liability is premised upon duty to disclose arising from relationship of trust and confidence between parties to transaction. 2001 Daily Journal DAR 4983. v First Interstate Bank. 96 S Ct 1375. GENERALLY [15 USCS § 78j(b)] A. Acito v IMCERA Group (1995. July 23. CA11 Fla) 847 F2d 673. orders marked "long" when in fact such orders were "short". CA7 Ill) 149 F3d 565) and (superseded by statute as stated in Trustees of Boston Univ. 1965. It was violation of § 10(a) of Securities Exchange Act (15 USCS § 78j(a)).Get a Document . In civil enforcement action. and SEC Rule 10a-1. 97 S Ct 1292. Broker-dealer who used facilities of national securities exchange to execute sell orders without marking them either "long" or "short" violated § 10(a) of Securities Exchange Act (15 USCS § 78j(a)). N. Release No. Trader sufficiently pleaded fraud in connection with purchase or sale of securities under Rule 10b-5 where. that were intended to mislead investors by artificially affecting market activity. CA9 Cal) CCH Fed Secur L Rep P 91242. Investors' action against corporation and its officers. CA2 NY) 295 F3d 312. Inc. 2003 CDOS 8727. N. Inc.. amd. CCH Fed Secur L Rep P 93342. CA2 NY) 47 F3d 47. Secs. CA11 Fla) 833 F2d 909. which alleged violations of 15 USCS § 78j(b) and 78t(a). December 26. Broker-dealer violated § 10(a) of Securities Exchange Act (15 USCS § 78j(a)) and SEC Rule 10a-1(b) by effecting short sales of national exchange without marking orders "short". 15 USCS §§ 78j(b) and 78m. 63 L Ed 2d 348. 1968. for broker to effect short sales of securities on national exchange for accounts of customers below price at which last previous sale thereof. (2002. was effected on exchange. CCH Fed Secur L Rep P 93813. CCH Fed Secur L Rep P 91942. CCH Fed Secur L Rep P 95914. but upon whether activity constitutes misleading or deceptive practice within meaning of SEC Rule 10b-5. Securities Exchange Act of 1934. Word "manipulative" is virtually term of art when used in connection with securities market. CA10 Colo) 210 F3d 1207. Duban (1981) 47 SEC 658. Decision of SEC that accountant had violated §§ 10(b). 1968.by Citation . even though it will not serve as basis of fraud action under state law. Securities Exchange Act of 1934. who have obligation to place welfare of shareholders before their own. Inc.com/research/retrieve?cc=&pushme=1&tmp. defendants never used investors' money to finance or trade in any security instrument. 13(a) and 13(b)(2) of Securities and Exchange Act of 1934. Release No. Lawrence v Zilog. Requirement that orders be marked "long" or "short" Although order tickets for 2 short sales were not properly marked as such. under SEC Rule 10b-5. Securities Exchange Act of 1934. cert den (1977) 430 US 954. Inc. Santa Fe Industries. CA6 Mich) 533 F2d 978. Hutton & Co. (1998.15 USCS § 78j https://www. v Wharf (Holdings) Ltd. inter alia. 94 Daily Journal DAR 5160. Messer v E. 2001 CDOS 4046. 96 S Ct 2194. matched orders. December 26. on national securities exchange. and false promise to perform act in future can constitute misleading and deceptive practice under Act..A.A.. 114 S Ct 1439. or at such previous price where that price was not higher than next preceding different price at which sale of such stock was effected. Caiola v Citibank. 2005 FED App 415P. or rigged prices. Liability under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) does not depend on whether activity in question would support common-law fraud action.. will not benefit personally through fraudulent use of material. CCH Fed Secur L Rep P 91425. Ponce v SEC (2003. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) does not flatly prohibit use of manipulative device in purchase or sale of security. In re Delafield & Delafield. CA6 Ohio) 426 F3d 786. United Int'l Holdings. CCH Fed Secur L Rep P 97309. Release No. Securities Exchange Act of 1934. DC Mass) 33 F Supp 2d 66. CCH Fed Secur L Rep P 77213. Silence in connection with purchase or sale of securities may operate as fraud actionable under 15 USCS § 78j(b). 2001 Colo J C A R 2505. (1987.the SEC produced sufficient evidence to establish as matter of law each defendant's liability. 1968 SEC LEXIS 270. ND Ill) 1999 US Dist LEXIS 19391). (1994.. but instead used money to pay purported profits to other investors or to make extravagant personal purchases.FRAUD PROVISIONS. facts that constituted strong circumstantial evidence that corporation and its officers actually knew or were deliberately reckless in failing to know that alleged forward-looking misrepresentation was false or misleading as required under 15 USCS § 78u-4(b)(2). (1994) 511 US 164. 48 L Ed 2d 811. CCH Fed Secur L Rep P 99330) and (superseded by statute as stated in United States v Irwin (1998. SEC v George (2005. Chiarella v United States (1980) 445 US 222. CCH Fed Secur L Rep P 92508. which alleged securities violations arising out of corporations' announcement of definitive merger that ensured that shareholders would receive $ 25 per share. 44 UCCRS2d 569. in great detail. CCH Fed Secur L Rep P 98178. (1976. CA9 Nev) 97 F3d 1276. term refers generally to practices. Marsh v Armada Corp. 8 FLW Fed S 33. CCH Fed Secur L Rep P 95479. CCH Fed Secur L Rep P 93545. 96 CDOS 7516. 149 L Ed 2d 845. remanded sub nom First Interstate Bank v DBLKM. broker-dealer is not responsible. 100 S Ct 1108. 31 FR Serv 3d 581 (criticized in In re Sirrom Capital Corp. SEC had authority to order accountant to cease and desist his fraudulent activities. RICO Bus Disp Guide (CCH) P 9642) and (criticized in Grubaugh v DeCosta (1999. 51 L Ed 2d 803. 31. and SEC Rule 10a-1. regular way. 7555. CCH Fed Secur L Rep P 95496. 14 FLW Fed S 245. March 12. Central Bank. Litig. 33 of 158 3/8/11 4:25 PM . 47 L Ed 2d 668. N.In General 32. 41 UCCRS2d 645. Supreme Court cannot amend § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) to create liability for acts that are not in themselves manipulative or deceptive within meaning of statute. MD Tenn) 84 F Supp 2d 933). v Green (1977) 430 US 462. CCH Fed Secur L Rep P 98667. (2000. Antifraud provisions of Securities Exchange Act prohibit fraud in sale of securities when significant conduct occurs in United States or conduct occurs anywhere and has substantial effects on investors in United States. 8480. such as wash sales. In re Duval Secur. v ASM Communs. 94 CDOS 2687. Ernst & Ernst v Hochfelder (1976) 425 US 185. but prohibits such devices or contrivances in contravention of rules and regulations of SEC.

(1975. or Rule 14e-3 promulgated thereunder. in part (2002. and (5) proximately causing them injury. (3) made with scienter. WD Wis) 291 F Supp 2d 845 and (criticized in Newby v Enron Corp. While it was true that neither party had found case in which trust was held liable for insider trading under circumstances similar to action. 15 USCS § 78j(b). request gr (2002. but did not sufficiently plead that each defendant made allegedly false statements or that defendants knew or recklessly disregarded possibility that statements were false or misleading. allegations in amended complaint were sufficient to survive trust defendants' motion to dismiss pursuant to Fed. (4) justifiably relied on by plaintiffs. dismd. P. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 are not vehicles through which to litigate fairness of securities transactions. 15 USCS § 78j(b). ED Pa) 2004 US Dist LEXIS 17845). reh. (2002. In order to prevail on claim of securities fraud. ED Mo) 382 F Supp 2d 1112. In re Capstead Mortg.. rather than dismiss claims. Alcina v pcOrder. 15 USCS § 78j(b). Arroyo v Wheat (1984. Corp. P. Ltd. v Infocure Corp. Sec. Litig. (2004.14e-3. but failed to identify reports that contained such allegedly false and misleading information. Civ. SD NY) 411 F Supp 1094. Tittle v Enron Corp. (2005. SD Tex) 2004 US Dist LEXIS 8158) and (criticized in L-3 Communs. WD Tex) 230 F Supp 2d 732. CCH Fed Secur L Rep P 91931. DC Mass) 286 BR 33. R. Derivative & "ERISA" Litig. Class of investors alleged sufficient facts to show that that two participants. and allegation of nondisclosure is central focus of claims thereunder. Under § 10(b) of the Securities Exchange Act (15 USCS § 78j) elements of common law fraud need not be allege. both participants substantially participated by owning and funding multiple strategic partners. (1975. dismd.com. Litig. den (2004. en banc. ND Tex) 258 F Supp 2d 533. (2003. stay den. investors alleged with sufficient particularity statements they claimed were false and misleading. plaintiff must establish following elements:(1) misrepresentation or omission. Jones & Co. Gorman Municipals. In re Lernout & Hauspie Sec. DC Minn) 260 F Supp 2d 780. DC Mass) 214 F Supp 2d 100. (3) scienter. Plaintiff's securities fraud allegations were explicitly based on information and belief. (In re Enron Corp. in part (2002. or defraud that gave rise to strong inference of recklessness. 15 USCS § 78m(e). 29 USCS §§ 1000-1461. Because plaintiff former employees' claims against defendant. but not other. CCH Fed Secur L Rep P 95398. Where stock purchasers failed to provide any particulars about allegedly false and misleading information insofar as they not only failed to identify such information. jury could have reasonably concluded from magnitude of losses and pattern of transactions that offering circulars did not reflect honest judgments about values of properties. DC Colo) 312 F Supp 2d 1375.Get a Document . Securities & Exchange Com. CCH Fed Secur L Rep P 92717. CCH Fed Secur L Rep P 91870. CA8) 2004 US App LEXIS 22035. claim dismissed. Inc.) (2004. dismd. ND Ga) 210 F Supp 2d 1331. reh den. SEC must prove (1) material misrepresentation. 15 USCS § 77q(a). court could not conclude beyond doubt that purchasers could prove no set of facts in support of their securities fraud claim that entitled them to relief and purchasers satisfied necessary pleading standard required by 15 USCS § 78j(b) and FRCP 9(b). reasons statements were false and misleading. SEC v C. Flora v Firepond. CCH Fed Secur L Rep P 95387. (2) of material fact. Reding v Goldman Sachs & Co. Secs. Litig) (2003. CCH Fed Secur L Rep P 92026. CA8 Minn) 383 F3d 745. Where ERISA plan participants' RICO claims against ERISA fiduciaries were based on securities fraud Ponzi scheme that concealed defendant corporation's financial condition and defrauded current and future shareholders. To establish violation of § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act and Rule 10b-5. and (4) use of jurisdictional means. (2004. Sufficient evidence supported jury's finding of fraudulent and/or negligent misrepresentations and omissions regarding accounting for bargain sale transactions. Ltd. Derivative & ERISA Litig. DC Mass) 236 F Supp 2d 161. plan trustee surrounding their severance plan fit within rubric of 15 USCS § 78j(b) claim. thereby artificially inflating market and issuance prices of company's securities. manipulate. § 240. in violation of § 17(a) of Securities Act of 1933. 10b-5 were dismissed as untimely because shareholders did not file their claims within one year of discovery of facts that not all investors had signed lock-up agreements and that others may have been released from such agreements before they expired. In re Global Crossing. (2002. Employee Retirement Income Security Act of 1974. in part (2003. conduct that was actionable as securities fraud. were dismissed. affd (2004. (2003. (2) in connection with purchase or sale of security. and § 10(b) of Securities Exchange Act of 1934. due to allegations that employer's president's stock sales to plan were "fraudulent" and accomplished 34 of 158 3/8/11 4:25 PM .lexis. even if he or she is not identified as speaker. dismd. DC Mass) 208 F Supp 2d 74. SD Ind) 429 F Supp 2d 1045. DC Mass) 230 F Supp 2d 152. Sec. SD NY) 407 F Supp 1383. in part sub nom Bamberg v SG Cowen (2002. Shareholders had adequately pled 15 USCS § 78j securities fraud claim against senior officers of foreign software company where complaint alleged that each senior officer had signed company's financial statements and had information that conflicted with press releases and financial statements for which he was responsible. SD Ohio) 211 F Supp 2d 985. Securities fraud claims brought by purchasers of company stock against law firm that represented company in acquisition were barred by recent U. Fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) prohibits all fraudulent schemes whether artifices employed involve garden-type variety of fraud or present unique form of deception.F. and that alleged conduct created false. however. motion gr. Bovee v Coopers & Lybrand (2002. purchasers' claims also failed to meet particularity requirements in Fed. plaintiffs need merely allege misstatement or omission of material fact made with intent to defraud on which plaintiff relied to his injury. In their securities fraud action.15 USCS § 78j https://www. § 14(e). SD NY) 253 F Supp 2d 720. Civ. 31 EBC 2281. v Clevenger (2004.F. IIT v Vencap. shareholders adequately stated claim for relief. (In re Enron Corp.com/research/retrieve?cc=&pushme=1&tmp. R. Sec. SD Ohio) 216 FRD 596. Rule 10b-5 promulgated thereunder. defendant may be held liable for fraudulent statements under § 10(b) of Securities Exchange Act of 1934. and unjustifiable positive impressions of financial condition and performance of company. In re Infocure Secs. Litig.R. 15 USCS § 78j(b). (2003. DC Mass) 236 F Supp 2d 79. so complaint was subject to heightened pleadings requirements under Private Securities Litigation Reform Act. In Second Circuit. SD NY) 322 F Supp 2d 319. so conclusory allegations were insufficient to support securities fraud claim and court granted summary judgment.10b-5. their claims under § 10-b. Friedman v Rayovac Corp. misleading. 9(b). Filler v Lernout (In re Lernout & Hauspie Sec. Litig. v Scott. SEC v Franco (2003. Inc. Motion to dismiss securities fraud action was granted because investors' complaint lacked requisite specificity and investors failed to plead sufficient.by Citation . United States SEC v Church Extension of Church of God (2005. however. where shareholders maintained that company's executive officers released false and misleading information about company to public. substantially participated in strategic-partner scheme that acted to artificially inflate software firm's profits. as required by PSLRA. CCH Fed Secur L Rep P 92029. Supreme Court and Eleventh Circuit precedent restricting liability of law firms participating in securities transactions. 12(b)(6) Securities and Exchange Commission's action that alleged violations of § 10(b) of Securities Exchange Act of 1934. CCH Fed Secur L Rep P 92222. and that cumulative effect was to inflate dishonestly financial condition of corporation so as to continue to induce purchasers to buy notes from entity that was insolvent. complaint failed to state underlying facts with any degree of specificity. 17 C. both were motivated by money. where plaintiff alleges sufficient facts that demonstrate that defendant was personally responsible for making those statements. SD Tex) 284 F Supp 2d 511. and factual basis for their belief.. § 240.) (2003. court granted leave to amend.R. As stock purchasers' amended complaint indicated that accountants possessed mental state embracing intent to deceive. and one's knowledge of how scheme worked permitted inference of scienter. (2002. Bovee v Coopers & Lybrand (2003. Shareholders claims under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC R. Inc.. particular factual allegations to support scienter pleading requirement. WD Wis) 295 F Supp 2d 957. DC Nev) 591 F Supp 141. 17 C. Corp.S.

defendant need not have knowledge that such actions are illegal. With respect to scienter element.P. incorporates scienter requirement. codified at 15 USCS § 78j(b). (2004. 118 S Ct 48. Civ. and comes within meaning of statute. (1977. Inc. SEC v Falstaff Brewing Corp. S.lexis. Inc. Litigation (1974. Inc. CCH Fed Secur L Rep P 96080. In re U. v Ernst & Young. cert den (1980) 449 US 1012. Riordan (2008) 93 CCH SEC Doc 2569. MD Ala) 482 F Supp 2d 1341. 94 S Ct 231. L. Drasner v Thomson McKinnon Secur. 38 L Ed 2d 148. to raise inference of scienter under Private Securities Litigation Reform Act. Lee Equity Fund V. SEC v C. or defraud. withdrawn by publisher and amd (1996. Term "scienter" is defined as mental state embracing intent to deceive. 27 L Ed 2d 90. Financial Secur. v Piper Aircraft Corp.15 USCS § 78j https://www. Sec. CA8 Minn) 395 F3d 851. Sec. this allegation was insufficient to raise requisite strong inference of scienter. claims failed for lack of standing under 18 USCS § 1964(c). 96 CDOS 9137. LLP (2003. Wechsler v Steinberg (1984. CCH Blue Sky L Rep P 74161. is protection of investors who rely on completeness and accuracy of information made available to them. 15 USCS § 78u-4(b)(2). Chris-Craft Indus. 91 S Ct 47. reh den (1977.by Citation . Thomas H. III. DC Colo) 209 F Supp 2d 1106. v Mayer Brown. Undisclosed purchases by insiders and other devices used by underwriters to make it appear that unsuccessful "all or none" or "part or none" offering has been successfully completed are fraudulent. CCH Fed Secur L Rep P 91475. 98 S Ct 1580. DC NJ) 334 F Supp 2d 637. 96 Daily Journal DAR 11109. court rejected plaintiffs' request that court infer scienter from individuals' positions as CEO and CFO. v Cocciola (In re Suprema Specialties. plaintiff must demonstrate knowing or intentional misconduct on part of defendant. 1343.) (2004. CCH Fed Secur L Rep P 96189. (2004. (2002. court should bear in mind that major congressional policy behind securities laws in general. CCH Fed Secur L Rep P 97505. 55 L Ed 2d 802. 34. (1973. Re U. 96 CDOS 6780. B. Ellis v Carter (1961. through telephone calls and through U. Generally Function of what has been called scienter requirement in civil action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is to confine imposition of liability to those whose conduct has been sufficiently culpable to justify penalty sought to be exacted. whereby plaintiffs may establish "strong inference" of scienter by alleging specific facts that either (a) showed that defendants had both motive and opportunity to commit fraud or (b) constituted strong circumstantial evidence of conscious or reckless misbehavior. In re Gallagher & Co.Get a Document . Re Guy P. Ferris. 139 L Ed 2d 14. affd (2005. Court applied more lenient standard of Court of Appeals for Second Circuit. Baker Watts. Post Office in violation of 18 USCS §§ 1341. CCH Fed Secur L Rep P 91921.. Due process clause does not establish in securities fraud prosecutions same kind of scienter requirement that 15 USCS § 78j(b) and Rule 10b-5 contain. including that criminal actions were known and authorized by management. 12(b)(6) motion to dismiss federal securities claims under § 10(b) of Securities Exchange Act of 1934 Act. Secs.Scienter 33. (1991) 50 SEC 557. or defraud investors. LTD. Litig. does not establish scienter. S. R. 15 USCS § 78j(b). Provenz v Miller (1996. manipulate. Litig.. CCH Fed Secur L Rep P 99311.P. 94 S Ct 232 and cert den (1973) 414 US 924. mental state of corporation is established through mental states of its officers. Antifraud provisions of 15 USCS § 78j(b) are applicable. SD NY) 308 F Supp 2d 249. Violations of rules of securities exchanges do not take place of scienter requirements for recovery under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. (1980. relevant inquiry is as to existence of broad course of fraudulent conduct. 40 EBC 2308. In re Jay Houston Meadows (1996) 52 SEC 778. SD Cal) 64 FRD 443. in sense of knowledge of falseness of impression produced by statements or omissions made.. First Virginia Bankshares v Benson (1977.S. Cook v Campbell (2007. was granted where allegations of generally accepted accounting principles violations were insufficient. is not required under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). SEC Rule 10b-5. CPA (2001) 2001 SEC LEXIS 978. CA5 Ala) 559 F2d 1307. CA2 NY) 480 F2d 341. CCH Fed Secur L Rep P 93004. CCH Blue Sky L Rep P 74161. Racketeer Influenced and Corrupt Organizations Act. Inc. CA5 Ala) 564 F2d 416 and cert den (1978) 435 US 952. SD NY) 612 F Supp 2d 267. Special Situations Fund. CA9 Cal) 291 F2d 270. Scienter element requires only that defendant have knowledge of what he is doing and consequences of those actions. Jones & Co. 18 USCS § 1961-1968. manipulate. Vanderboom v Sexton (1970. CCH Fed Secur L Rep P 93078. admissions of former company employees. 1962. 38 L Ed 2d 158. Accounting firm's Fed.--Showing of scienter not necessary Showing of scienter is not necessary to establish cause of action for damages for violation of antifraud provisions of Securities Exchange Act. In re Ribozyme Pharms. and antifraud provisions in particular. Summary judgment was denied to either party in purchasers' class action for defendants' misleading statements under § 10(b) of Securities Exchange Act of 1934. In re Flag Telecom Holdings. even though customers are experienced or sophisticated. identity of speaker is not ipso facto dispositive of that issue. promulgated under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). In civil action alleging violation of SEC Rule 10b-5. CA7 Wis) 141 F3d 1232. WD Va) 212 F Supp 2d 596. CA2 NY) 733 F2d 1054. or intent to deceive..com/research/retrieve?cc=&pushme=1&tmp. 25 ALR Fed 534. although shareholder had adequately pled generally accepted accounting principles violation. 13 FR Serv 2d 370. cert den (1997) 522 US 808. App DC) 203 US App DC 28. CCH Fed Secur L Rep P 94844. Proof of scienter. initial inquiry in each case being what duty of disclosure law should impose upon person being sued. (2002. Addressing plaintiffs' claims that company's CEO and CFO were presumed to have had pertinent knowledge about certain fraudulent transactions. SD NY) 433 F Supp 485. Issue is not who made misstatement. in making such determination. Giving kickbacks in purchase or sale of securities is by definition fraudulent act. Litig. CCH Fed Secur L Rep P 91960. as to results of their work on developing new drug for cancer treatment as there were fact issues as to defendants' scienter and whether purchasers detrimentally relied on misrepresentations. CCH Fed Secur L Rep P 92590. Failure to follow generally accepted accounting principles. CA9 Cal) 95 F3d 1376. 35 of 158 3/8/11 4:25 PM . standing alone. To prove scienter in 15 USCS § 78j case. without more. 96 Daily Journal DAR 15131. as well as senior management defendants' signing of hundreds of thousands of dollars in checks to entities that admitted that they did not provide goods or services to company. In § 10(b) of Securities Exchange Act case. In re Trex Co. P. CA8 Ark) 422 F2d 1233. Mueller v Sullivan (1998. L. suppliers. cert den (1970) 400 US 852. DC Colo) 312 F Supp 2d 1375. DC Minn) 293 F Supp 2d 1003. cert den (1973) 414 US 910. In re Albert Glenn Yesner. CA9 Cal) 102 F3d 1478. Rowe & Maw LLP (2009. CCH Fed Secur L Rep P 95100. and customers in criminal informations. 629 F2d 62. 66 L Ed 2d 471. 101 S Ct 569. Financial Sec. 94 S Ct 234. but to whom misstatement is attributed at time of its dissemination.

CCH Fed Secur L Rep P 91788. fact that terminated employees were asked to sign confidentiality agreements and agreements precluding assistance in future litigation. CA2 NY) 604 F3d 758. SD NY) 237 F Supp 2d 458. reduction in purchases by large customers. en banc. SEC v Texas Gulf Sulphur Co. Hickman v Groesbeck (1974. 17 FLW Fed C 689. facts did not support inference that defendants were trying to hide anything from its investors. SD NY) 374 F Supp 904. Fox v Kane-Miller Corp. SD Fla) 238 F Supp 2d 1315. and SEC Rule 10b-5 scienter is essential element. To establish 15 USCS § 78j(b) liability for insider trading. Parker v Baltimore Paint & Chemical Corp. and individual defendants' approval of public filings. Funke v Life Fin. it was dismissed without prejudice. in connection with misrepresentation or omission. cert den (1975) 423 US 841. 15 USCS § 78u-4. In rescission action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA9 Cal) 35 F3d 1407. Inc. scienter on part of defendant need not be shown. 17 FR Serv 2d 975. in their complaint alleging violations of 15 USCS §§ 78j(b) and 78t(a). court denied chartered accountant's summary judgment motion because scienter was not element of allegation brought under § 10A of Securities Exchange Act of 1934. In re Noven Pharms. (2010. and related entities (defendants). In securities fraud suit brought pursuant to §§ 10(b) and 20(a) of Securities Exchange Act of 1934. Even if defaulting borrower had right of first refusal to redeem or obtain purchaser for pledged stock. (1965. In re Sci. 56 FR Serv 3d 94. Jackson v Bache & Co. affd (2004. CCH Fed Secur L Rep P 98393.15 USCS § 78j https://www. CA9 Wash) 914 F2d 1564. 46 L Ed 2d 60. CA9 Cal) 495 F2d 724. CCH Fed Secur L Rep P 94029. ND Cal) 61 FRD 88. White v Abrams (1974. SD NY) 411 F Supp 659. among factors to be considered in application of duty standard are: (a) relationship of defendant to plaintiff.. CA4 Md) 542 F2d 915. ED Pa) 415 F Supp 248. CCH Fed Secur L Rep P 95500) and (ovrld in part as stated in Drnek v Variable Annuity Life Ins. 18 FR Serv 2d 1408 (ovrld in part by Hollinger v Titan Capital Corp. plaintiff must prove that inside traders acted with scienter. Dopp v Franklin Nat'l Bank (1974. existence of internal sales and bookings reports and other performance reports reportedly reviewed by individual defendants. Elements to be proved in an action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 include scienter. CA2) 533 F2d 826. proper standard to be applied is extent of duty that Rule imposes on defendant. (1997. Kramer v Loewi & Co. he must prove scienter by showing either intent to defraud or recklessness. Cases (1973. Inc. CCH Fed Secur L Rep P 92245. district court properly dismissed investors' second amended complaint because defendants' allegedly misleading statement in Securities and Exchange Commission filing was protected by actual knowledge prong of safe harbor because investors did not plead facts demonstrating that statement was made with actual knowledge that statement was false or misleading. party who voluntarily discloses material facts in connection with securities transactions assumes duty to speak fully and truthfully on those subjects. CCH Fed Secur L Rep P 92846. When Canadian chartered accountant argued that Securities and Exchange Commission's allegation failed because it had not argued scienter. where shareholders did not plead facts giving rise to strong inference pharmaceutical company knew their forward-looking statements were false with sufficient particularity required. Corp. ED Wis) 357 F Supp 83. Pleading that lacked motive for deliberate misrepresentation alleged was fatal to § 10(b) of Securities Exchange Act claim. 133 L Ed 2d 123. (2002. cert den (1969) 394 US 976. 3 FR Serv 3d 881. Litig. availability of internal system that forecasted future demand. unusual stock sales by CEO and CFO. findings of fact/conclusions of law. Even absent duty to speak. where plaintiffs alleged. Atlanta. Secs. must be shown in civil action alleging violation of antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Scienter. Slayton v Am.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 99507. Gert v Elgin Nat'l Industries. 94 CDOS 7125. affd in part and revd in part on other grounds (1976. (1975. plaintiff must make showing of something resembling traditional scienter by defendant before he can recover. Showing of scienter or any other state of mind is not necessary as separate element of SEC Rule 10b-5 action. shareholders' allegations were conclusory and failed to adequately indicate that company officials knew falsity of their statements at time they were made. reh den. (2002. (1968. (1973. Jackson v Oppenheim (1974. by investors against financial institution.. (2002. CA10 Utah) 120 F3d 1112.Get a Document . CA9 Wash) 513 F2d 994. ND Cal) 1999 US Dist LEXIS 20978). ND Cal) 381 F Supp 71. CCH Fed Secur L Rep P 93970. Safe-harbor provision of PSLRA applied and class-action complaint was consequently dismissed. 1997 Colo J C A R 1616) and (criticized in Copperstone v TCSI Corp. DC Ariz) 2004 US Dist LEXIS 9490). CA5 Miss) 340 F3d 238. 19 FR Serv 2d 1496. CCH Fed Secur L Rep P 95497. CA11 Ga) 374 F3d 1015. CA7 Ill) 773 F2d 154. Scienter is not necessary element of violation of SEC Rule 10b-5. rather. CCH Fed Secur L Rep P 94484. Miller v Pezzani (In re Worlds of Wonder Sec. 96 S Ct 72. (2002. (1974. 116 S Ct 185 and (criticized in Grossman v Novell.. SEC v Solucorp Indus. CA2 NY) 401 F2d 833. Inc. ND Ga) 239 F Supp 2d 1351. claim dismissed (2003.. CCH Fed Secur L Rep P 94894. 35. CCH Fed Secur L Rep P 92259. 15 USCS § 78a et seq. CA8) 2003 US App LEXIS 3630. CA8 Ark) 317 F3d 820. Scienter or any other state of mind is not necessary and separate element of action alleging violation of SEC Rule 10b-5. DC Utah) 389 F Supp 769. they suggest that defendants had disclosed its losses in 2000 and in first quarter of 2001. 22 L Ed 2d 756. Scienter or any other state of mind is not necessary or separate element of civil action alleging violation of SEC Rule 10b-5. Vacca v Intra Management Corp.--Showing of scienter necessary Some form of traditional scienter is required for finding of violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 92308. could not be liable under SEC Rule 10b-5 since. (1976. CCH Fed Secur L Rep P 95746. While material misrepresentations must be proved to support claim in civil action alleging violation of SEC Rule 10b-5. SD NY) 274 F Supp 2d 379. (b) defendant's access to information as compared to plaintiff's access. (1990. When private plaintiff rather than SEC brings suit under 15 USCS § 78j and Rule 10b-5. 89 S Ct 1454. Goldstein v MCI Worldcom (2003. 14 UCCRS 866. Express Co. judgment entered. scaling back of production. (1985. and (e) defendant's activity in initiating securities transactions in question. Stockholders' motive allegations that corporate officers were failing to write-off uncollectible accounts in order to inflate stock prices were insufficient to satisfy strong inference of scienter required by Private Securities Litigation Reform Act (PSLRA). defendants who. (d) defendant's awareness of whether plaintiff was relying upon their relationship in making his investment decision. proper standard to be applied is extent of duty Rule imposed upon particular defendant.lexis. Litig. DC Md) 398 F Supp 609. (1999. CCH Fed Secur L Rep P 92251. SD NY) 197 F Supp 2d 4. CCH Fed Secur L Rep P 94457. (c) benefit defendant derived from relationship. In civil action based on alleged violation of SEC Rule 10b-5. cert den (1995) 516 US 868. DC Colo) 244 F Supp 267. various officers and directors. assisted in arranging for sale to third person. Combination of facts included in complaint satisfied shareholders' burden to plead scienter with respect to alleged misrepresentations and omissions of material fact. Inc. 36 of 158 3/8/11 4:25 PM . there can be no wrong without scienter. (2003. inter alia.by Citation . den (2003. Kushner v Beverly Enters. In re Memorex Sec. 2 ALR Fed 190. in such situation. that knowledge was demonstrated by reported declines in demand and sales for competitors. and that it was endeavoring in good faith to ascertain and disclose future losses. Clark v Watchie (1975. affd (1976. reh. (2004.) (1994. without knowing of right.

(2002. 15 USCS § 78j(b). (2005. Sec. statements made with regard to earnings guidance were forward looking statements which fell under safe harbor provision of PSLRA. and investors showed that investment fund audits themselves bore name and logo of foreign parent. with respect to their claims under § 10(b) of Exchange Act and S. assessing substance of foreign parent's agent's involvement in foreign parent's Global Financial Services Industries (GFSI) practice. investors presented sufficient evidence to support finding that agent's work with GFSI. ND Cal) 294 F Supp 2d 1102. or defraud them. Inc. CEO was not entitled to summary judgment under Fed. WD Wash) 432 F Supp 2d 1129. Litig. 12(b)(6) and 9(b). CCH Fed Secur L Rep P 92878. CA9 Cal) 31 Fed Appx 359. raising at least issue of fact as to investors' reliance on foreign parent's involvement with audits. Unpublished: SEC's scienter determinations with respect to § 10(b) of Securities and Exchange Act of 1934. and did not violate corporation's internal policies. (2003. (2006. Inc. were reversed because SEC failed to find that securities professionals had to have known that their actions presented danger of misleading their clients. CCH Fed Secur L Rep P 92299. CCH Fed Secur L Rep P 91714.E. Shareholders' complaint for securities fraud satisfied neither Fed. Corporation and its officers were granted summary judgment on claims that they underfunded reserve accounts and made material optimistic misstatements with scienter that reserves were understated. statements regarding alleged overcapitalization of interest on debt were not false or misleading and plaintiff investors failed to sufficiently plead scienter for any defendant. DC Dist Col) 326 F Supp 2d 68. 15 USCS §§ 78j(b). motion gr. could find that it was within scope of his agency to acquire knowledge of existence and quality of investment fund's audits. § 240. was on account of foreign parent. foreign parent was denied summary judgment where investors raised sufficient factual issues regarding foreign parent's scienter by pointing to sufficient facts in record such that reasonable jury. (4) claimed knowledge of accounting errors by two officers did not establish more than negligence.10b-5. Gebhart v SEC (2007. Litig. 15 USCS § 78j(b).com. development and performance of product. SD Fla) 2009 US Dist LEXIS 86382. because (1) allegations of violations of generally accepted accounting principles alone were insufficient and they were minor. Litig. (2004. Limantour v Cray Inc. 56(c) on issue of whether he had sufficient scienter to be liable under § 10(b) of Securities and Exchange Act of 1934. In re Homestore. SD NY) 245 F Supp 2d 552. Plaintiff shareholders' failure to plead scienter with particularity. additionally.. alleging. Litig. where evidence showed understated reserves were part of industry-wide trend in medical insurance industry. R. issued public releases. § 240. (3) there was no connection between resignation of two key employees and accounting errors. with regard to their allegations regarding company's earning guidance. and with regard to company's allegedly false Securities Exchange Commission filings. were insufficient to establish scienter required by Private Securities Litigation Reform Act of 1995. Litig. (2003.Get a Document . shareholders in order to deceive.com/research/retrieve?cc=&pushme=1&tmp.. investment fund manager. Motion to dismiss second consolidated amended class action complaint was granted as to claims under § 10(b) of Securities Exchange Act of 1934. signed inaccurate statements that were sent to SEC without investigating them to determine their accuracy. Inc. SD Fla) 249 F Supp 2d 1273.F. 737 (1995) (codified in various sections of 15 USCS §§ 77a et seq. SEC Rule 10b-5. Cromer Fin. Securities fraud complaint was dismissed for failure to present sufficient evidence of scienter or deliberate recklessness by corporate insiders or to identify fraudulent acts with specificity. Inc. violations of 15 USCS §§ 78j(b) and 78t(a). and NASD Conduct Rule 2120. manipulate.--Pleading In individual's securities class action lawsuit. WD Ky) 2004 US Dist LEXIS 775). Wietschner v Monterey Pasta Co. Corp. CD Cal) 347 F Supp 2d 769. Secs. 2002 Daily Journal DAR 9216. SD Fla) 366 F Supp 2d 1159.C. P. where. and knowledge he acquired about off-shore investment funds during that agency. 15 USCS § 78j(b). knew of pooling method of accounting. No. and on claims under Securities Act of 1933. Civ. (2004. (2003. CCH Fed Secur L Rep P 93875. In re Calpine Corp. Colin v Onyx Acceptance Corp. district court did not err in dismissing action because individual's complaint failed to meet required heightened pleading requirements when he relied upon violation of Generally Accepted Accounting Principles to establish required element of scienter. Securities fraud class plaintiffs were allowed to proceed on claims under Securities Exchange Act of 1934 that sufficiently alleged scienter. In action involving securities fraud of corporation and its chief executive officer (CEO). 36. Gompper v VISX. in violation of Securities Exchange Act of 1934. (2002. inter alia. Sec. 2002 CDOS 7011. nor heightened pleading requirements of Private Securities Litigation Reform Act of 1995. § 240. restated earlier financial information. 15 USCS § 78u-5(c)(1)(A)(i). Civ. inter alia. Shareholders' securities fraud action under § 10(b) of Securities Exchange Act of 1934.lexis.R. Unpublished Opinions Unpublished: Shareholders' allegations did not elaborate regarding when or how CEO learned about his successor's checkered past or that CEO intentionally withheld successor's past from. unrelated to corporation's core business activity. ND Ohio) 268 F Supp 2d 887.R. for involvement in public offering from which plaintiff acquired shares. Secs. participated in questionable financial transactions that inflated corporation's earnings. ND Ga) 385 F Supp 2d 1345. In re Keithley Instruments. (2009. Litig. denied any change at company. Civ. In re Friedman's. with regard to certain cheese distributions or to failure to disclose that milk would not be protected by milk producer's trust fund.10b-5 against stock-issuing company and its former CEO was dismissed Pursuant to 15 USCS § 78u-4(b)(2) where fact that company and CEO had to restate earnings pursuant to Securities and Exchange Commission accounting rule. SD Fla) CCH Fed Secur L Rep P 95352. investment fund auditor. Rule 10b-5.) (2004. 109 Stat. 17 C. and foreign parent of investment fund auditor..R. Semon v Ledecky (In re United States Office Prods.by Citation . shareholders failed to meet Private Securities Litigation Reform Act's requirement that his complaint under 15 USCS § 78j state with particularity facts giving rise to strong inference that each separate defendant acts with scienter with respect to each act or omission alleged. 37 of 158 3/8/11 4:25 PM . did not respond to another company's inquiries regarding possible strategic partnership. In re Sportsline.). and 78a et seq. Secs. was dismissed because they failed to adequately plead falsity and scienter under Private Securities Litigation Reform Act of 1995 (PSLRA). (2003. complaint dismd. ND Cal) 288 F Supp 2d 1054. request den (2009. In action by investors against. (2) bald allegations of intended acquisition of another company and use of stock to pay off debt did not establish motive to inflate stock price. L. (2002. Stock purchasers' allegations of false and misleading statements. In re Pegasus Wireless Corp. Shareholders' claim under 15 USCS § 78j(b) and 17 C. CA9 Cal) 298 F3d 893. Sec. unaccompanied by insider trading claims. 15 USCS § 78u-4.15 USCS § 78j https://www. CA10 Utah) 339 F3d 1182. where inference of legitimate conduct was as likely under facts and plaintiffs' allegation that fraudulent false statements had been made. Litig. and disclosed restructuring costs immediately following consummation of restructuring were insufficient to give rise to inference of scienter. Ltd.F. CCH Fed Secur L Rep P 91952 (criticized in Pirraglia v Novell. R. where evidence showed that CEO set financial goals of corporation. heightened pleading standards of Fed. and 17 C. R. Inc. P. ED Cal) 543 F Supp 2d 1149. Litig. In re John Alden Fin. Owners and operators of dairy farms in California had not plead scienter required for § 10(b)(5) of Securities Exchange Act of 1934. Pub. v Berger (2003. Inc. 104-67. and had motive to commit fraud because he was co-founder of corporation and sold stock in corporation.10b-5(b). 17 CFR § 240. and (5) insider stock sales were done solely for tax withholding purposes. Lopes v Vieira (2008. and for controlling person liability. Secs. or recklessly disregarded importance of successor's past to. thus. shareholders did not allege facts with particularity that gave rise to strong inference of scienter. rendered complaint dismissible for failure to state claim for which relief could be granted under Private Securities Litigation Reform Act of 1995. CCH Fed Secur L Rep P 92478) and (criticized in In re Kindred Healthcare. 15 USCS § 78j(b).com Sec. inter alia. 9(b) were not met and therefore his claim that 15 USCS § 78t(a) was violated also failed. CA9 Cal) CCH Fed Secur L Rep P 94524.F. (2004. failure to comply with GAAP. 15 USCS § 78u-4 et seq.10b-5.

and in proposed class action under 15 USCS § 78j. (2004. 127 S. 15 USCS § 78j(b) and 78t(a). P. and impact on financial statements during class period consisted of increase in non-cash expenses that was only 0. Roth Revocable Trust v UBS Painewebber Inc. in action against brokers. In re Suprema Specialties. and RF adequately pleaded scienter with respect to corporation's representations in its annual report that (1) no impairment of its corporate assets was substantially certain to occur through problems arising from customers or regulators' actions and (2) there were no actual.10b-5.15 USCS § 78j https://www. complaint contained factual allegations amply linking each defendant to their alleged violations of statute and attributing required scienter to each defendant with respect thereto. CCH Fed Secur L Rep P 91955. Pub. (2006. reh. Investors do not adequately plead scienter under 15 USCS § 78j(b). complaint contained no allegation that CEO had any knowledge of accounting principles relating to stock options. & J L. by pointing to an isolated inquiry from a single executive and insinuating there from an improbable and highly improper motive for the entire corporation. Ferris. Litig. Rosenzweig v Azurix Corp. 21 FLW Fed C 1369. CA3 NJ) 438 F3d 256.P. 2003 CDOS 6976. and scienter must be found with respect to each defendant and with respect to each alleged violation of statute. (In re K-Tel Int'l Sec. CA6 Tenn) 387 F3d 468. Court affirmed dismissal for failure to state claim of investor's securities fraud claim against auditing firm. 8 FR Serv 3d 980. it will conduct "holistic" review of same allegations to determine whether insufficient allegations combine to create strong inference of intentional conduct or deliberate recklessness. (2006. complaint alleged that defendant chief executive officer who had granted backdated options in 2000 and 2001 later signed security filings and made other statements that minimally overstated earnings between 2004 and 2006..lexis. and successive resignations of key officials was more likely probative only of fact that company was failing.S. Rosenberg v Gould (2009. Inc. CCH Fed Secur L Rep P 92474 (criticized in D. US) 161 L Ed 2d 577. 17 C.. complaint did not satisfy heightened standard for pleading scienter. temporal proximity between chief operating officer's statements that problem with coronary stent had been "fixed "and third recall week later. Sys. den (2002. Inc. key factor was divergence between internal reports and external statements on same subject. was reversed because.E. § 10(b) of Securities Exchange Act. Miss. P. Ct. 9(b). CA11 Ga) 554 F3d 962. In action under. Sys. Inc. Investors pled sufficient facts to avoid dismissal of their 15 USCS § 78j(b) claims against two corporate officers for failing to satisfy heightened pleading requirements of 15 USCS § 78u-4(b)(2) by attributing to each officer specific knowledge and conduct. where shareholders failed to provide any basis for fraud allegations or sources for amounts.. Rule 10b-5. fund had pled enough to give rise to inferences that were at least as strong as any competing inferences regarding scienter. if no individual allegations are sufficient. v Ernst & Young. because mere allegations of motive and opportunity were insufficient and there were no allegations that officers and directors sold their shares. reh den. SD NY) 189 F Supp 2d 161. plaintiff must state claim common to all proposed class members.. (2004.R. under circumstances of case. reviewing. (2005.. as matter of practice or by job description. Shareholders' securities fraud claim under 15 USCS § 78j(b) was dismissed for failure to allege accounting violations with requisite particularity under FRCP 9(b) and for failure to plead facts giving rise to strong inference that company acted with required state of mind under 15 USCS § 78u-4(b)(2). Baker Watts. CCH Fed Secur L Rep P 93364. CA8 Minn) 395 F3d 851.5 percent of revenue in 2004 and 0. or approving "objective data" representation or annual reports and did not allege that he was. CCH Fed Secur L Rep P 94645. Inc. (2003. v Boston Sci. Inc. material losses connected to lawsuits and responses to regulatory scrutiny of corporation's tires.C. CA8 Minn) 300 F3d 881. 18 FLW Fed S 233. LLP (2005. Inc. Inc. (2000. SD NY) 651 F Supp 160. 125 S Ct 1627. it will determine whether any of plaintiff's allegations. even though shareholders of target company have adequately pleaded that 1996 financial statements contained false statements. which gave rise to requisite strong inference that they knew that statements they made in connection with two public offerings were materially false and misleading. Faulkner v Verizon Communs. standing alone. Stockholders' complaint alleging securities fraud was properly dismissed under 15 USCS § 78u-4(b)(3)(A) for failure to plead with particularity under Fed. Dismissal of pension fund's complaint claiming violations of §§ 10(b) and 20(a) of Securities Exchange Act of 1934. Corp. 9(b). 15 USCS § 78j(b). 17 FLW Fed C 689. CCH Fed Secur L Rep P 91276. but merely required sufficient identification of cause and pleading that price at time of purchase was overstated. Ltd. Inc. Emples. CCH Fed Secur L Rep P 92848. (2008. at least five of nine non-exclusive Helwig factors were apparent in complaint's alleged facts. Newman v Rothschild (1986. typically involved in creation of such documents. 15 USCS § 78u-4(b)(2). and alleged insider trading. affd (1987. Litig.by Citation . v K-Tel Int'l. SD Ohio) 124 F Supp 2d 487. R. and investors did not need to rely upon group pleading doctrine. furthermore. City of Monroe Emples. Zucco Partners.F. (2004. Broudo v Dura Pharms. CCH Fed Secur L Rep P 95038. In reviewing allegations of scienter for purposes of 15 USCS § 78j(b) claim. conclusory allegations of fraudulent intent and allegations of violations of generally accepted accounting principles were insufficient to plead scienter with particularity. which alleged violations of § 10(b) of Securities Act of 1934. where no insider trading occurred until August 1997 and majority of insiders did not sell off their stock until 1998. § 240. given pension fund's specific factual allegations. v Bridgestone Corp. SD Fla) 323 F Supp 2d 1279. CCH Fed Secur L Rep P 92426. CA9 Cal) 339 F3d 933. LLC v Digimarc Corp. CCH Fed Secur L Rep P 93078. CA9 Or) 552 F3d 981. 17 FLW Fed D 720). CA8) 2002 US App LEXIS 21772 and (criticized in In re Kindred Healthcare. Ninth Circuit will conduct dual inquiry: first. Ret. CCH Fed Secur L Rep P 93218. allegations of scienter had to be collectively considered. where fund did not allege by direct allegation or even upon information and belief that officer played any role in drafting. CA11 Ga) 374 F3d 1015. SD Miss) 107 FRD 313. Federal securities fraud claim against officers and directors of acquiring corporation is dismissed. 38 of 158 3/8/11 4:25 PM . Litig.E. v Bridgestone Corp. v Conaway (2003. In re SmarTalk Teleservices. CA6 Tenn) 387 F3d 468.. In re Suprema Specialties. CCH Fed Secur L Rep P 92846. Private Securities Litigation Reform Act permits aggregation of facts to infer scienter. second. Ret. Sec. Phillips v ScientificAtlanta. ND Tex) CCH Fed Secur L Rep P 93215) and revd. R. Inc. calling into question alleged motive to artificially inflate stock price. dismd (1986. K-Tel Int'l Sec. as was required by Private Securities Litigation Reform Act and Fed. Sys. Inc. CA5 Miss) 825 F2d 885. CCH Fed Secur L Rep P 91748. (2004.com/research/retrieve?cc=&pushme=1&tmp. en banc. Investors could not establish a securities fraud action under § 10b of the Securities and Exchange Act of 1934. Dismissal of investors' securities fraud action under § 10(b) of Securities and Exchange Act of 1934. Civ. Makor Issues & Rights.Get a Document . 2499 (2007) reversed higher standard for scienter imposed by prior First Circuit law.17 percent of revenue in 2005. remanded (2005. are sufficient to create strong inference of scienter. City of Monroe Emples. Ret. Retirement fund did not adequately plead scienter with respect to corporate officer. Investors pled sufficient facts to avoid dismissal of their 15 USCS § 78j(b) claims against two corporate officers for failing to satisfy heightened pleading requirements of 15 USCS § 78u-4(b)(2) by alleging that each officer's insider sales of over 30 percent of his holdings was not normal or routine for these officers and that profits from trades were substantial in comparison to officers' overall compensation. CA3 NJ) 438 F3d 256. (2004. (1985. CCH Fed Secur L Rep P 93035. 15 USCS § 78j(b). Litig. Secs. Civ. 2003 Daily Journal DAR 8748. v. Secs. including clear divergence between internal reports and external statements on same subject. (2002. CA5 Tex) 332 F3d 854.) (2002. Supreme Court in Tellabs. rather than knowledge of alleged material misstatements and omissions. WD Ky) 2004 US Dist LEXIS 775). (2009. CCH Fed Secur L Rep P 95033. and S. Shivangi v Dean Witter Reynolds. Litig. (2003. where complaint's allegations of scienter deal with excessive trading and commissions and supervising unsuitability of trades. following district court's decision. because they have not adequately pleaded that these statements were made with scienter. SD Miss) 637 F Supp 1001. Inc. ED Mich) 284 F Supp 2d 719) and (criticized in In re Alamosa Holdings. was reversed because loss causation did not require pleading stock price drop after corrective disclosure. which is found at 15 USCS § 78j(b). U. CA1 Mass) 523 F3d 75. CCH Fed Secur L Rep P 93142. plaintiff must not only allege that misrepresentation or omission was accompanied by requisite scienter with regard to transaction involving him. Retirement fund (RF) adequately pleaded scienter with respect to corporation's representation that objective date reinforced its belief that its tires were safe. CCH Fed Secur L Rep P 92434 (criticized in Faye L. For purposes of class certification. Inc. but must also allege scienter with regard to all members of proposed class.

DC Dist Col) 329 F Supp 2d 84. balance sheet. SD NY) 322 F Supp 2d 319. Litig.10b-5. (2004. § 240. Roebuck & Co. company. Johnson v Tellabs. that statements were materially false or misleading. 17 C. (2004. Although certain statements about availability of. Civ. R.R. (2004. 39 of 158 3/8/11 4:25 PM . (2). Where investors alleged that corporate officers made various statements to its investors with respect to falling delinquencies and adequate reserves. Although outside auditor argued that plaintiffs had failed to allege. ND Ill) 291 F Supp 2d 722. where plaintiffs had not indicated any information that was not available when they submitted previous complaint. Litig. Inc. Litig. and its chief executive and financial officers. access to reports. Litig. and to adequately plead their claims under 15 USCS § 78j(b). 9(b) and Private Securities Litigation Reform Act. violations of generally accepted accounting principles. Investors failed to adequately plead scienter under Private Securities Litigation Reform Act. together with channel stuffing claims. were actionable as securities fraud. Plaintiff investors' allegations that management hid ownership in related company on date of license agreement and that management later disgorged shares and then denied that management had ownership or financial interests in company suggested scienter under 15 USCS § 78u-4(b)(1). In re Syncor Int'l Corp. Inc. SD Tex) 258 F Supp 2d 576.10b-5(b). In re Fritz Cos. § 240. Court denied accounting firm's motion to dismiss shareholders' amended securities fraud complaint as to its claim that shareholders failed to adequately plead scienter because. (2004. brought on behalf of class of investors and alleging violations of 15 USCS §§ 78j(b) and 78t(a) of Securities Exchange Act of 1934 and 17 C. where and how" with respect to specific statements to satisfy Fed. investors still had to allege facts supporting inference that statement was attributable to individual defendant officers and directors of defendant company. when. and allegations of insider trading. Civ. established scienter. and out-of-context alleged "admission" of corporation's chief financial officer. of Securities Exchange Act of 1934. and investors missed distinction between misrepresentations punishable as breaches of conscience by public regulators and those punishable at law by courts. and 17 C. it did not appear that accounting firm conducted any type of audit whatsoever. that outside directors of corporation violated § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 (Exchange Act). In re Global Crossing. (2004. Court dismissed plaintiffs' complaint. DC Dist Col) 329 F Supp 2d 84. 9(b). In re Interbank Funding Corp.R. ND Cal) 282 F Supp 2d 1105. CA10 Colo) 340 F3d 1083.F. its chairman. and § 20(a) of 1934 Act. (2004. whether those individuals actually acted with requisite scienter remained issue of fact to be decided at later stage of litigation. Lead plaintiff's allegations. Litig. (2) individuals had not alleged any specific facts that defendants were aware of accounting error nor did they cite any red flags that suggested deliberate ignorance on part of defendants. DC Mass) CCH Fed Secur L Rep P 92924). and contents of corporate minutes supporting complaint were insufficient to establish scienter with respect to any outside director. Sec. Litig. and (3) purchasers could not prevail under § 20(a) of 1934 Act where court found no violation of § 10(b) of Act or Rule 10b-5. it therefore failed to state claim under § 10(b). what.R. when grave overstatements and understatements in income statement. (2003. Civ. motions to dismiss investors' claims under § 10(b) of Securities Exchange Act of 1934. Inc. SD Ohio) 311 F Supp 2d 674.. no cognizable facts were pleaded to show that defendant investment companies intended to cause loss to investors by intentionally deceiving them. brought under Private Securities Litigation Reform Act (PSLRA). Litig. Litig. complaint also failed to adequately plead insider trading as primary violation of Exchange Act. P. Secs. R. complaint did not sufficiently allege scienter under Private Securities Litigation Reform Act of 1995 (PSLRA). CCH Fed Secur L Rep P 92296. Secs. Securities Exchange Commission Rule 10-b. were dismissed because individuals' complaint failed to create strong inference of scienter on part of defendants with regard to misstatement of corporation's earning over six year period. Secs.. P. defendants' alleged motive and opportunity for misstating income. SD NY) 289 F Supp 2d 416 (criticized in In re Cree. In re Eagle Bldg. (2) although scienter was sufficiently alleged with respect to three individual defendants. ND Ill) 262 F Supp 2d 937. CCH Fed Secur L Rep P 92869. individuals' complaint contained insufficient allegations of scienter because: (1) inference of scienter could not be based solely on magnitude of accounting error. in that plaintiffs failed to plead with requisite particularity factual allegations of wrongdoing and factual allegations necessary to establish that defendants acted with required state of mind. was dismissed under Fed. Securities and Exchange Commission Rule 10b-5. 15 USCS § 78j(b). purchasers failed to allege scienter with particularity because there was no evidence that they had knowledge of illegal payments and there was nothing unusual about their stock sales to support finding of insider trading.. Litig. part of Private Securities Litigation Reform Act. 17 C. such drastic overstatement. investors had adequately pled "who. ND Ill) 303 F Supp 2d 941. but as matter of pleading. R. § 240. and individual defendants' positions in corporation did not establish strong inference of scienter. Individuals' allegations of securities fraud under § 10(b) and Rule 10b-5 of Securities and Exchange Act of 1934. and (3) individuals' attempt to show scienter was insufficient because it was based merely upon patching together of magnitude of accounting error. Inc. In re ICN Pharms.by Citation . MD NC) 333 F Supp 2d 461. Alternative reason to dismiss investors' complaints alleging securities fraud was complaints failed to allege scienter. Sec. merely stating which office individual defendant held was insufficient and thus complaint alleging securities fraud under 15 USCS § 78j(b) was dismissed under Fed. group pleading could not be used under PSLRA for allegations of scienter. Secs. (2003. Litig. complaint suggested defendants had actual knowledge of skewed finances sufficient to support claims based on misleading forward-looking statements under 15 USCS § 78u-5(c)(1). Inc. thus. § 240. In re Interbank Funding Corp. and statement of cash flows were taken into consideration with relatively small number of transactions during class period and fact that one fabricated transaction constituted 74 percent of corporation's business. CCH Fed Secur L Rep P 92717. ND Ill) 303 F Supp 2d 941.Get a Document .10b-5. (2003. 15 USCS § 78j(b).com/research/retrieve?cc=&pushme=1&tmp. by defendants.F. (2003. Johnson v Tellabs. and reasons why statement is misleading" as required under 15 USCS § 78u-4(b)(1). Sec. in securities litigation case filed under §§ 10(b). CD Cal) 299 F Supp 2d 1055. purchasers failed to sufficiently plead that any of statements were false or misleading. In re Stellent. or recklessly ignored. (2004.F. plaintiffs sufficiently alleged scienter on part of auditor's individual employees to sustain claim under § 10(b) of Securities and Exchange Act of 1934. Complaint alleging violations of § 10b of Securities Exchange Act of 1934. and had to allege facts establishing that each individual defendant knew. where complaint did not comply with heightened pleading requirements of Private Securities Litigation Reform Act of 1995 (PSLRA). Secs. individually and together. CCH Fed Secur L Rep P 92423 (criticized in Adams v Kinder-Morgan.. 78t. Investor's failed to state securities fraud claim under 15 USCS §§ 78j(b) and 78u-4 where investors failed to establish loss causation because they failed to spell out logical steps between subject corporation's insolvency and liability of defendant brokerage firm and accounting firm for investors' loss. CCH Fed Secur L Rep P 92905) and (criticized in Swack v Credit Suisse First Boston (2004. (2004.15 USCS § 78j https://www. Sec. Research Reports Sec. Inc. CCH Fed Secur L Rep P 92882. reconsideration den. scienter on part of any individual employee named as defendant. 15 USCS § 78t(a). Newby v Lay (In re Enron Corp. Even if group pleading doctrine survived 15 USCS § 78u-4(b). CCH Fed Secur L Rep P 92479) and motion gr. 15 USCS § 78j(b). and where plaintiffs consistently failed to plead their allegations with sufficient particularity and therefore failed to establish strong inference of deliberate recklessness required under Private Securities Litigation Reform Act standard. 20(a). were denied. 15 USCS §§ 78a et seq. In re Merrill Lynch & Co.F. dismd (2004.lexis.R. Inc. CCH Fed Secur L Rep P 92882. Amendment of securities fraud claim was denied where motion to amend was filed three years after dismissal of prior complaint. and acceptance of corporation's product. SD Fla) 319 F Supp 2d 1318.. but did not identify specific transactions that underwriter or accounting firm elected not to investigate or otherwise overlooked and did not provide requisite specification of "each statement alleged to have been misleading. Secs. Group Inc. 15 USCS § 78u-4. (2004. In re Sears. Techs. (2004. even in conclusory fashion.) (2003. P. CCH Fed Secur L Rep P 92605. 15 USCS §§ 78j(b). plaintiffs devoted over thirty paragraphs to pleading auditor's scienter and complaint specifically alleged that auditor acted with scienter and did so through specific allegations as to individual defendants' roles in perpetrating fraud. Ltd. demand for. CCH Fed Secur L Rep P 92897. where investors made only very general allegations as to scope and content of defendant underwriter's due diligence and defendant accounting firm's audits.10b-5. Merzin v Provident Fin. 12(b)(6). DC Minn) 326 F Supp 2d 970. CD Cal) 327 F Supp 2d 1149. 15 USCS § 78u-4(b). (2003. 12(b)(6) and under 15 USCS § 78u-4 where (1) with respect to most of individual defendants. combined with alleged Generally Accepted Accounting Principles and Standards violations and fact that numerous documents should have led accounting firm to investigate.

while one defendant was alleged to have been president of bank's commercial group and its chief administrative officer. Inc. Investors' claims under § 10(b) of Securities Exchange Act of 1934.com/research/retrieve?cc=&pushme=1&tmp. individuals who advised him to do so. therefore. § 240. Civ. and limited and sparse nature of third defendant's trading history did not permit inference from amount traded.15 USCS § 78j https://www. ED Tenn) 2005 US Dist LEXIS 31853. and where there was no dispute that defendants had opportunity to commit fraud through various representations and warranties they made in purchase agreement. Job titles and responsibilities could not. DC Mass) 357 F Supp 2d 343. in part (2005. P. WD Wash) 399 F Supp 2d 1121. made materially false and misleading statements representing that bank had successfully integrated certain mortgage origination and servicing acquisitions and was well positioned to withstand interest rate changes but that bank had. Complaint alleging violations of 15 USCS § 78j(b) was not dismissed for failing to meet requirements of Fed. or that misstatements were accompanied by scienter. certificates they purchased were issued by unaffiliated entity. Zelman v JDS Uniphase Corp. Marcus v Frome (2004. Secs.F. SD Tex) 339 F Supp 2d 804. (2005. (2005.by Citation . WD Wash) 399 F Supp 2d 1121. in part. Inc. some of executives were allegedly involved in inflating circulation numbers but were not alleged to have taken steps to mislead investing public. Where plaintiffs had adequately alleged defendants' motive and opportunity to commit fraud. ED Tenn) 396 F Supp 2d 858. securities purchasers did not sufficiently allege scienter because purchasers did not allege that they ever purchased or owned any securities issued by or reflecting obligations of corporation.R. his job titles and responsibilities would support inference of knowledge only if there were other circumstantial evidence regarding his possession of knowledge. Litig.Get a Document . 15 USCS §§ 78u-4 et seq. Inc. (3) even if investors had alleged former administrator's scienter based on motive and opportunity. ED Tenn) 396 F Supp 2d 858.Y. purchasers clearly and specifically alleged knowing and deliberate scheme to deny legitimate disability claims for express purpose of enabling corporation to convert claim reserves into income. are subject to pleading requirements of Fed. Allegations of accounting fraud. ND Cal) 376 F Supp 2d 956. not integrated its acquisitions. in part. SD NY) 390 F Supp 2d 344. CCH Fed Secur L Rep P 93324. Court determined that purchaser of certain securities called GOALs. Sec. 15 USCS § 78j(b). ED Tenn) 2005 US Dist LEXIS 31853. who alleged that corporation had practice of fraudulently recognizing revenue in violation of generally accepted accounting principles. and allegations against other executives did not support inference that they knew that circulation was overstated. in part.) (2004. In securities fraud case in which investors claimed that defendants. Civ. with respect to allegations that corporation and three executives violated § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 by engaging in accounting fraud and misrepresenting source of sales increase. Corp. resulting in artificial inflation of corporation's stock price. Inc. In re Cardinal Health. SD NY) 2005 US Dist LEXIS 4805).. R. plaintiffs had not sufficiently addressed independent grounds for rejecting their motive and opportunity allegations. P. Stockholder failed to state securities fraud claim under 15 USCS § 78j(b) against corporation and executives based on allegations that paid circulation numbers for newspapers owned by corporation had been overstated. plaintiffs failed to provide trading history for second defendant and did not allege that his sale was somehow suspicious. securities purchasers sufficiently alleged scienter as to their claims concerning corporation's alleged claims handling misrepresentations where they claimed that corporation's misstatements and/or omissions were taken for purpose of maintaining its standing with various rating agencies. DC NJ) 380 F Supp 2d 574. motion gr. R. In re Vertex Pharms. plaintiffs attempted to impute requisite knowledge on basis of individual defendants' job titles and responsibilities.lexis. 15 USCS §§ 78u-4 et seq. P. in part. in fact. Hill v Tribune Co. in part. v Ebbers (In re WorldCom. and that lack of integrated information technology system made it impossible for company to be well positioned. and steps he took to conceal action. CCH Fed Secur L Rep P 93123. In re Unumprovident Corp. Pirelli Armstrong Tire Corp. Inc. had to sufficiently allege that any misstatements were in connection with GOALS. ND Ill) 39 EBC 1845. SEC v Penthouse Int'l. Ferry LP # 2 v Killinger (2005. knowledge of corporation's financial reporting could not be attributed to defendants generally. Litig. (2) but complaint contained no allegations with respect to former administrator's fees. In re Bio-Technology Gen. fostering consumer confidence in corporation. (2006. personal. (2006. opinion. Johnson v NYFIX. plaintiffs failed to plead contextual facts that allowed court to draw strong inference of scienter from several individual defendants' insider trading where one defendant appeared to have some sort of routine trading plan. In securities fraud action. S. were dismissed because investors failed to plead scienter under either theory of motive and opportunity or theory of recklessness because (1) investors argued that former administrator's only possible motive to affect funds' net asset values was illicit one--to inflate its own fees. City Emples. SD NY) 411 F Supp 2d 434. motion den. and therefore defeated defendants' claims that plaintiffs failed to sufficiently allege violations under those provisions. court found that plaintiffs had sufficiently alleged violations of 15 USCS § 78j(b) and 17 C. and opportunity were sufficient to state claim under 15 USCS § 78j(b) against corporation and various individual defendants (directors and executives) except for one.F. court denied defendants' motion to dismiss pursuant to Fed. Actions for securities fraud filed pursuant to § 10(b). or business motivation on part of corporation in attempting to defraud investors in certificates made any inference of scienter marginally weaker. DC Conn) 399 F Supp 2d 105. motive. motion gr. and thus investors failed to plead scienter based on motive and opportunity. (2005. (2005. Ferry LP # 2 v Killinger (2005. made materially false and misleading statements representing that bank had successfully integrated certain mortgage origination and servicing acquisitions and was well positioned to withstand interest rate changes but that bank had. in part. Inc. (2005. allegations of incentive compensation and stock ownership were insufficient basis for establishing motive.10b-5. (In re Dynegy. Sys. 15 USCS § 78j(b). in part. Civ.. 9(b) and Private Securities Litigation Reform Act of 1995. and personally enriching its directors through both those elements of their compensation packages that were tied to performance of corporation's stock and their own substantial personal holdings of corporation's securities. Litigs. SD NY) 329 F Supp 2d 464. mortgage bank and certain of its senior officers. S. motion den. part of Private Securities Litigation Reform Act (PSLRA). insider trading. CCH Fed Secur L Rep P 92890 (criticized in N. enabling corporation to access capital markets on favorable terms. create strong inference of scienter. mortgage bank and certain of its senior officers. and claims that officers reviewed or should have reviewed contents of sales reports did not adequately allege scienter. court had determined that purchaser had sufficiently alleged action for securities fraud. 17 C. 9 since it specified where and when individual filed misleading information. dismd. Ret. In re GeoPharma. Secs. and had not integrated different information technology systems used by each. Retiree Med. group pleading doctrine did not allow investors to automatically impute scienter of former administrator to directors.10-b(5). motion den. Inc. 12(b)(6). in fact. and Rule 10b-5. Sec. Security holders' 15 USCS § 78j(b) claim against drug company and certain officers and directors was dismissed where allegations of financial motive and likely timing of animal testing did not create strong inference of scienter as none of confidential witnesses had personal knowledge of most important facts and they failed to provide sufficient detail and there was no evidence that level of toxicity present in drug violated clear-cut Food and Drug Administration policy. In securities fraud action.. that purchaser relied on any misstatements. (2006. and had not integrated different information technology systems used by each. and (4) investors' allegations were too conclusory to support inference 40 of 158 3/8/11 4:25 PM . in part (2005. Investors failed to adequately plead scienter as required by 15 USCS § 78u-4(b)(2). Litig. under Private Securities Litigation Reform Act of 1995. and therefore it could be reasonably inferred that corporation's failure to disclose these activities or otherwise account for resulting liability exposure was also knowing and intentional. responsible for overseeing various lending businesses and acquisition integration. absent allegations that defendants benefited from inflated stock price immediately in more direct and less common manner. (2005. (2005. Benefits Trust v Dynegy... In re Unumprovident Corp. Secs. motion den. § 240. Sec. as scienter was not adequately alleged under 15 USCS § 78u-4(b) of Private Securities Litigation Reform Act of 1995. not integrated its acquisitions. motion gr. without more. R. as PSLRA abolished group pleading doctrine. motion gr. Shareholder's 15 USCS § 78j claim was dismissed because it failed to adequately plead scienter. and that lack of integrated information technology system made it impossible for company to be well positioned. In securities fraud case in which investors claimed that defendants.R. dismd. defendants failed to show they were entitled to protection of statutory safe harbor for certain allegedly fraudulent forward-looking statements.) (2005. Inc. Litig. SD Ohio) 426 F Supp 2d 688. in part. absence of any obvious pecuniary. CCH Fed Secur L Rep P 93565. Plaintiffs' securities claims failed for failing to allege requisite scienter because even assuming arguendo that alleged scheme to inflate five-day average closing price of corporation's stock could have succeeded. Litig. and certificate.

when restatement of corporation's revenue and expenses later proved to be inaccurate.com/research/retrieve?cc=&pushme=1&tmp. further. and their parent company for alleged violations of 15 USCS §§ 78j. MD Fla) 595 F Supp 2d 1253.. Sarbanes-Oxley certifications did not add much to inference of scienter. that named defendants made knowingly false statements about any material matter either directly or by violating GAAP (§ 10(b). based on statements regarding new drug to treat cardiovascular disorders.. but firm continued to hide fact that company based its revenue recognition policies on accounting standards directly applicable to movie industry. and restatement for 2001 resulted in net loss of $ 11. and 78t-1(a). Schultz v Applica. DC Dist Col) 662 F Supp 2d 105. Inc. when statements about corporation's revenue later proved to be inaccurate. while these facts would have tended to favor inferring scienter. had not been met. Goodman Life Income Trust v Jabil Circuit.400. Scienter was not adequately alleged (15 USCS § 78u-4(b)(2).E. that they controlled someone who violated these provisions (§ 20(a). complaint was dismissed because scienter was not adequately alleged where complaint did not allege that defendant company officers generally knew that their statements were false or misleading and did not identify any instances in which officers evidenced knowledge of alleged conduct or were present for specifically identified meetings or communications in which channel-stuffing was specifically alleged to have been discussed. 17 CFR § 240. alleged nature of defendant accounting firm's Generally Accepted Accounting Principles violations constituted evidence contributing to strong inference of scienter. investors failed to adequately allege scienter under 15 USCS § 78j(b) because neither alleged insider trading nor secondary placement of securities established motive and opportunity showing requisite intent.800. Investors' class action complaint met requirements of Fed. LLC (2006. as shareholders offered only vague allegation that chief executive officer knew restatement was misleading due to "access to material non-public information." Stevens v InPhonic. 15 USCS § 78t-1(a)).10b-5.000 rather net income of $ 2. 78g. plaintiff failed to set forth specific allegations of scienter. and assertions that entities were motivated by profit were insufficient. In putative class suit against pharmaceutical company and its officers and directors (defendants). claims under 15 USCS §§ 78j(b). 15 USCS § 78t(a)). (2009. fact executives based their compensation on company performance (as measured partly by revenue-related numbers). and (2) specific type of corporate accounting errors. (2007. WD Tex) 591 F Supp 2d 877.by Citation . CCH Fed Secur L Rep P 94891. (2009.C. and 17 CFR § 240. based on officers' motive and opportunity to commit fraud and officers' sale of part of officers' shares in corporation. Investors failed to state securities fraud claim under 15 USCS § 78j(b) and 17 CFR § 240. CCH Fed Secur L Rep P 95377.500. and complaint adequately alleged scienter because it alleged that corporation filed Form 8-K disclosing accounting improprieties by vice-president. magnitude of restatement significantly contributed to finding of scienter. all of which amounted to extreme departure from ordinary care. 9(b) and 15 USCS § 78u-4(b) in alleging violations of 15 USCS § 78j(b) by corporation. that directors should have discovered manager's scheme to manipulate stock prices.10b-5. Civ. were insufficient to support scienter element of claims. court declined to adopt "collective corporate scienter" doctrine. (2009.10b-5. Shareholders' claims that corporation's chief executive officer and chief financial officer violated 15 USCS § 78j(b) and 17 CFR § 240. SD NY) 446 F Supp 2d 163.. CCH Fed Secur L Rep P 94473. SD Tex) 447 F Supp 2d 693. Where plaintiff investors alleged "suspiciously timed" option grants by defendant corporation to defendant officers and directors. Inc. (2007. Stevens v InPhonic. (2006. SD NY) 654 F Supp 2d 204. Inc. Securities Litig. Litig. on which shareholders relied. of Univ. 15 USCS § 78j(b). Shareholders' claims that corporation's chief executive officer and chief financial officer violated 15 USCS § 78j(b) and 17 CFR § 240. CCH Fed Secur L Rep P 95049. (2009. Inc. and revelation that agreement was later terminated did not establish that there was never any agreement at all. Inc. complaint failed to allege adequate basis for claim that corporation was required to record compensation expense for options. much less that officers knowingly or with extreme recklessness 41 of 158 3/8/11 4:25 PM . plaintiff failed to adequately allege fraud against company. Shareholders' claims that corporation's chief executive officer and chief financial officer violated 15 USCS § 78j(b) and 17 CFR § 240. ND Ga) 461 F Supp 2d 1297. plaintiffs put forth no allegations of specific "glaring" accounting irregularities or other red flags. In re Dell Inc. action arose from decline in corporation's stock price following restatement of previously reported earnings. Inc. DC Dist Col) 662 F Supp 2d 105. because plaintiff failed to provide particularized allegations of misrepresentations that could be attributable to one entity and whether or not other two entities even knew about misrepresentations. Amended complaint failed to plead. In re Spectrum Brands. 9(b)) in action under § 10(b) of Securities Exchange Act of 1934 and S. DC Dist Col) 662 F Supp 2d 105. because shareholders alleged no facts from which strong inference of scienter could be inferred with respect to restatement claims. one statement suggested firm recognized importance of Staff Accounting Bulletin 101 to defendant company's revenue recognition policies and recognized significant possibility that company's revenue recognition policies would come under close scrutiny.lexis.C. Inc. with requisite particularity. P. R. when officers issued press release announcing corporation's definitive agreement with another company. CCH Fed Secur L Rep P 95377. its former vice-president of finance. failed. finding instead that it was necessary to allege that manufacturer's officers had scienter.000. Civ.. (2008.10b-5. therefore pleading requirements for Private Securities Litigation Reform Act. In re AstraZeneca Sec. Inc. CCH Fed Secur L Rep P 95377. inter alia. In securities class action under § 10(b) of Securities Exchange Act of 1934. P. Rule 10-5 as to corporation and its chief executive officer (CEO) because. but failed to allege that any specific grant to any specific defendant was backdated. allegations did not satisfy heightened pleading requirements of 15 USCS § 78u-4(b) as to scienter.10b-5. Secs. and. Investors adequately pleaded scienter under 15 USCS § 78u-4(b)(2) for violations of § 10(b) of Securities Exchange Act of 1934. SD Fla) 488 F Supp 2d 1219. SD NY) 559 F Supp 2d 453. DC Minn) 618 F Supp 2d 1016. Fed. additionally.. and failure to write down inventory mere months prior to actual write down of inventory was at most claim of negligence or corporate mismanagement and not evidence of scienter for fraud. (2006. Litig. further. when statements about corporation's revenue later proved to be inaccurate. (2007. Secs. CCH Fed Secur L Rep P 94751.. Edward J. were dismissed because shareholders' allegations regarding officers' profit motive and sale of stocks were not enough to cause reasonable person to find them as compelling as officers' nonfraudulent explanations and thus did not support strong inference of scienter. Litig. Stevens v InPhonic. and its senior executive officers. Sec. In re Medtronic Inc. and Rule 10b-5. 78t. CCH Fed Secur L Rep P 94510.Get a Document . 15 USCS § 78j(b). which was later terminated. there was no evidence that other top officers were severely reckless or that they were told of product defects. Shareholders' claims that corporation's chief executive officer and chief financial officer violated 15 USCS § 78j(b) and 17 CFR § 240. did not lead to inference of fraudulent intent. CEO was directly confronted about defects with new product.10b-5 based on allegations of false statements and omissions regarding manufacturer's medical device. were dismissed because shareholders only identified statements which declared that agreement between companies had been signed and that this agreement had subsequently been terminated. and fact that officers' executive positions within corporation made officers privy to confidential proprietary information concerning corporation. were dismissed because (1) shareholders' complaint made no reference to any documents that would support strong inference that officers had any knowledge as to inadequacy of corporation's internal controls or flaws in corporation's revenue calculations that led to inflation of price of corporation's stock. Pension Comm. Inc.E. Litig. and it brought to light numerous accounting irregularities. net income was restated downward by less than one percent of total net income for period.15 USCS § 78j https://www. lack of internal controls to prevent accounting malfeasance. ED Mich) 527 F Supp 2d 728. besides accounting violations. Sec. however.10b-5).600. and there was no evidence of conscious misbehavior or recklessness on part of entities.000 instead of net income of $ 20. CCH Fed Secur L Rep P 95090. Rule 10b-5: defendant company's restatement of financials covered four year period. R. related underwriting company. Sec. 15 USCS § 78u-4(b). CD Cal) 518 F Supp 2d 1148. and S. In re Wet Seal. and high level of recklessness by executive officers who knew or should have known of accounting irregularities in exercise of reasonable care. In re Seitel. In claim in which plaintiff lost money after investing in auction rate securities sold by broker in financial services company. In re ProQuest Secs. or that shareholder defendants traded on material nonpublic information (§ 20A. (2009. Section 10(b) of Securities Exchange Act of 1934. (2008. not on accounting literature specific to seismic data industry. as complaint alleged that restatement resulted in net loss for year 2000 of $ 2. information provided by confidential sources was so general and ambiguous as to be useless and did not contribute to inference of scienter. Litig. (2009. officers' Sarbanes-Oxley certifications as to accuracy of earlier revenue statements. of Montreal Pension Plan v Banc of Am. 15 USCS § 78j(b). 78n(a).000. Defer LP v Raymond James Fin. Litig.

(1980. nor were there sufficient allegations of recklessness based on alleged violations of generally accepted accounting principles. One who deliberately tips information which he knows to be material and non-public to outsider who may reasonably be expected to use it to his advantage has requisite scienter to establish liability under 15 USCS § 78j(b). misrepresented existence of agreement when in fact none existed. Cavalier Carpets.10b-5.R. elements of which are same as those for statutory fraud claim. included statement that churning only occurs when broker willfully abuses his customer's confidence for personal gain. where some special duty of disclosure exists. system failed to sufficiently allege that statements regarding control rights and payment obligations for CDOs were materially misleading at time they were made. CA3 NJ) 2007 US App LEXIS 21392. Caiafa v Sea Containers.Get a Document . General partner which sent limited partners letter concerning offer by corporation to exchange its shares for limited partners' interests could not be held liable under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder. (2009. and when any of defendants knew of or implemented such fraudulent devices. 78u-4(b)(1). would be expected to operate as fraud or deceit upon some person. as to individual claims against chairman and vice president. Inc. Unpublished: Securities fraud complaint under 15 USCS § 78j(b) and 17 C. taken as whole.--Miscellaneous Where no duty of disclosure on part of person charged with aiding and abetting violation of SEC Rule 10b-5 can be found. liability is possible with lesser degree of scienter. P. they believed that there would be no ultimate harm to investors because movies would be produced as promised. establishing strong inference of scienter. DC NJ) CCH Fed Secur L Rep P 93508. Litig. CCH Fed Secur L Rep P 94746. In re Fossil. including acquisition of company. its chairman. sufficient facts were pled to question whether defendants provided truth-on-the-market with degree of intensity and credibility sufficient to counter-balance allegedly misleading statements." standing alone. 15 USCS § 78j(b). CA2 NY) 2009 US App LEXIS 10569. 9(b) and Private Securities Litigation Reform Act of 1995. was that "defendant engaged in act. CA2 NY) 635 F2d 156. Inc. CA11 Ga) 746 F2d 749. and breach of that duty could constitute reckless disregard. SEC v Shainberg (2008. were not dismissed because statement clearly conveyed impression that other company had already made investment. Elkind v Liggett & Myers. Shareholders' claims that corporation's chief executive officer and chief financial officer violated 15 USCS § 78j(b) and 17 CFR § 240. 9(b) by specifically alleging participation of individual directors and officers in backdated options scheme and repurchase of shares at artificially low prices. R.--Jury Instructions Although instruction that plaintiff in securities fraud case must prove by clear and convincing evidence that defendants acted with scienter was erroneous.com/research/retrieve?cc=&pushme=1&tmp. defendant can be found liable only if scienter of high "conscious intent" variety can be proved. Davis v Merrill Lynch. in part. including scienter and reliance. CCH Fed Secur L Rep P 95377. as brokers and salesmen were under duty to investigate. CCH Fed Secur L Rep P 95311. P. when chief executive officer issued statement that another company had made investment in corporation which was not made. District Court in action under § 78j(b) based on churning of client's account with brokerage firm did not abuse its discretion in instructing jury on essential element of scienter where instructions. 15 USCS § 78u-4. Sec. ND Tex) 713 F Supp 2d 644. CCH Fed Secur L Rep P 95377. Key Equity Investors Inc. Unpublished Opinions Unpublished: Appellant's complaint failed to satisfy heightened pleading requirements of Fed. 15 USCS § 78j(b). because plaintiffs' cursory allegations that defendants failed to record accurately on company's balance sheet value of certain assets and other alleged departures from Generally Accepted Accounting Principals established neither defendants' motive and opportunity nor strong circumstantial evidence of conscious behavior or recklessness. however. Unpublished: Plaintiffs failed to state claim under § 10(b) of Securities and Exchange Act of 1934. 37. but claim was dismissed as to chief financial officer because chief financial officer had resigned months before statement was made. and jury found against plaintiffs on common law fraud claim. Unpublished Opinions Unpublished: There was no error in jury instructions. Litig. Stevens v InPhonic. (2009. securing credit facilities. South Ferry LP # 2 v Killinger (2009.. R. but its complaint was bereft of facts or details supporting that conclusion. and its vice president (defendants). even if they represented small fraction of corporation's overall insured portfolio. could be said to inject incorrect negligence standard. appellant alleged company falsified its earnings to maintain its credit line. In re MBIA. did not establish strong inference of scienter. Civ. Woodward v Metro Bank of Dallas (1975. under 15 USCS §§ 78j(b). as to allegations asserting that defendants made misstatements and omissions with regard to corporation's total exposure with regard to collateralized debt obligations (CDOs) as system adequately alleged that CDOs were material. (2009. evidence at trial established that defendant knew. or. In re Interpool. WD Wash) 687 F Supp 2d 1248. that stock he was recommending was unsound investment. and chief executive officer did not clarify this erroneously conveyed impression in subsequent conference call on same date. Inc. Although court's instruction to jury that element of § 10(b) of Securities Act of 1934. further.lexis. or was reckless in not knowing. Civ. Sec. SEC v Happ (2004. Pierce.15 USCS § 78j https://www. or under § 12(2) of Securities Act of 1933 (15 USCS § 42 of 158 3/8/11 4:25 PM . jury's special finding that defendant acted with intent and with knowledge further demonstrated that there was no prejudice. CCH Fed Secur L Rep P 97716. CA2 NY) 529 F3d 83. CA2) 2008 US App LEXIS 5935. defendants' motion to dismiss was denied. (2005. CCH Fed Secur L Rep P 95351. or expressions of general optimism about financial health. first. DC Dist Col) 662 F Supp 2d 105. Inc.F. practice. district court plainly instructed jury that it must find intentional or knowing conduct in order to find requisite scienter. Inc.10b-5. or course of business that operated. made public representations about state of lender's risk management. Ltd. second. DC Dist Col) 662 F Supp 2d 105.. CCH Fed Secur L Rep P 95705. what financial figures were manipulated. United States v Leonard (2008. Investor sufficiently stated scienter under 15 USCS § 78u-4(b)(2) for SEC violation under 15 USCS § 78j(b) against three officers of lender because it alleged that officers were members of executive management team. Inc. "no ultimate harm" jury charge was warranted because defendants argued that even if they intended to deny investors information. CA1 Mass) 392 F3d 12. § 240.by Citation . Complaint sufficiently pleaded elements of securities fraud. by ordinarily prudent person in his position at time he acted. Where defendants were tried under 15 USCS §§ 78j(b) and 78ff(a) for committing securities fraud by failing to disclose commissions they received for selling investment interests in limited liability companies that were formed to finance production and distribution of motion pictures. 38. court held that system failed to allege that they acted with requisite scienter to sustain counts against them for control person liability. CA8 SD) 906 F2d 1206. thus suggesting motive and opportunity. SD NY) 700 F Supp 2d 566. thus indicating that proof would have failed even if correct instruction had been given. and completing offerings. so shareholders failed to adequately plead scienter. so court was left to speculate about what particular information was hidden. 17 CFR § 240. (2010. (2007. v Caylor (1984. Fenner & Smith (1990. CCH Fed Secur L Rep P 91844. alleged motives for fraud. CA5 Tex) 522 F2d 84. no prejudice is shown when action also included claim for common law fraud. (2010.10b-5(b) failed to adequately plead scienter as required under 15 USCS § 78u-4(b)(2) of Private Securities Litigation Reform Act of 1995. almost all statements identified by appellant were projections about defendant company's financial growth. Stevens v InPhonic. Inc. and Fed. In teachers' retirement system's securities fraud suit against corporation. Inc. v Sel-Leb Mktg. and had actual knowledge or acted with deliberate recklessness in making soothing statements about risk.

CCH Fed Secur L Rep P 95008. with result that transaction was rescinded. In establishing scienter with respect to allegedly fraudulent financial projections and opinions.. or must act in reckless disregard of its falsity. Forkin v Rooney Pace. (1986. Inc. ND Cal) 853 F Supp 1170. including: (1) defendants could not be held liable under conspiracy theory absent individual liability by alleged conspirators. Sarbanes-Oxley Act of 2002. either publicly or privately. CA5 Ala) 564 F2d 416 and cert den (1978) 435 US 952. Investors' scienter theory--that defendants conspired to pump price of company's stock--failed for several reasons. would have to be disclosed in accordance with 15 USCS § 78p. CA3 Pa) 766 F2d 770. Element of deception is requirement in claim under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Pub. Hutton Group. Forkin v Rooney Pace. it was compelling evidence that was relevant to motive that record established that none of individual defendants sold stock on open market during class period. CCH Fed Secur L Rep P 96162. of Am. Glazer Capital Mgmt. timing of sales.lexis. (1998. v Federal Ins. CCH Fed Secur L Rep P 97420 (superseded by statute as stated in Louros v Kreicas (2005. Sec. SEC v Fox (1986. Motives that were common to all corporations and their executives were legally insufficient to demonstrate scienter. reckless. CCH Fed Secur L Rep P 92953. where there was no evidence of knowing or intentional misconduct by general partner.com/research/retrieve?cc=&pushme=1&tmp.. Intent to deceive. where section bars insurer liability for loss caused by willful. for alleged misrepresentation in letter to effect that according to conventional wisdom price of corporation's shares would "zestily rebound" after initial depressed opening. (3) investors' allegations that insiders benefitted from alleged sales and transfers of stock were not pled with requisite specificity. CCH Fed Secur L Rep P 92982. therefore. Inc. or deceit necessary to state claim under § 10(b) of Securities Exchange Act of 1934 or SEC Rule 10b-5 where they alleged that they were defrauded by failure of sellers of stock to disclose that securities were not registered for sale in Illinois. CCH Fed Secur L Rep P 93033. 88 L Ed 2d 290. (1986. CCH Fed Secur L Rep P 90141) and (ovrld as stated in Krieger v Gast (1998. with sole exception of actions challenging "going private" merger.Get a Document . underlying premise of enhancement program. cert den (1985) 474 US 946. since whatever representations may be implicated in broker-investor relationship. Eisenberg v Gagnon (1985. allegedly part of defendants' second "pump and dump" scheme. was irrelevant as to scienter because parties did not carry out agreement and because insider sale. if made knowingly or recklessly. 123 S Ct 2073. In re Acceptance Ins. cert den (2003) 538 US 1031. cert den (1978) 434 US 1069. manipulate or defraud. First Virginia Bankshares v Benson (1977. Investment company's owners made material representations. (1993.. Raychem Corp. court must consider viability of alleged scheme to defraud. v Rite Aid Corp. defendant's response to any market confusion resulting from alleged misstatement. Corporate employees did not act with scienter where Securities and Exchange Commission brought 15 USCS § 78j action alleging that employees used material information to purchase puts or option contracts for sale of common stock of corporation for which they worked prior to public corporate announcement of forthcoming loss due to decreased home computer production. Purchasers of stock failed to sufficiently allege fraud. DC NH) 191 FRD 25). and prior trading history of each defendant. certification is only probative of scienter if person signing certification was severely reckless in certifying accuracy of financial statements. public's access to additional information. CCH Fed Secur L Rep P 98223. context in which statement was made. they and corporation acquired stock during class period. in fact. because § 78j(b) requires only showing of recklessness to fulfill scienter element. as opposed to negligent. CA5 Ala) 559 F2d 1307. CA2 NY) 991 F2d 1020. remanded (2005. 94 Daily Journal DAR 8189. manipulation. however. In determining whether alleged failure to disclose additional information is intentional. LP v Magistri (2008.. and both purchases were for treasury bills. ND Tex) 654 F Supp 781. CA8 Mo) 804 F2d 1047. either recklessly or with scienter. 2 FR Serv 3d 980. entire alleged misstatement (not just certain phrases). unsuitability of securities. In re GeoPharma. LP v Magistri (2008. and any other indicia that defendant acted with fraudulent intent.. DC Neb) 352 F Supp 2d 940. could not base their claim on alleged breach of representation of fair dealing implied in every broker-investor relationship where purchasers failed to sufficiently allege fraud or deception in connection with purchase or sale of securities. Co. 94 Daily Journal DAR 8442. ED Va) 303 F Supp 2d 724 (criticized in Argent Classic Convertible Arbitrage Fund L. Inc. CCH Fed Secur L Rep P 92818) and (criticized in Swack v Credit Suisse First Boston (2004. Evidence of personal profit motive on part of officers and directors contemplating merger is insufficient to raise strong inference of scienter. Brown v E. Glaser v Enzo Biochem. DC Mass) CCH Fed Secur L Rep P 92924) and affd in part and revd in part. L. 77l(2)). CA9 Cal) 549 F3d 736. or with lack of genuine belief that information disclosed is accurate and complete in all material respects.15 USCS § 78j https://www. where internal data of consumer group division for which employees worked estimated profit for year and division was in process of increasing rather than decreasing production of home computer during months preceding announcement.P. No. or negligent. failure to live up to those representations does not automatically give rise to action under antifraud provisions of securities laws. Given large number and percentages of stocks traded.7 million in one of these treasury bill purchases. since unilateral rescission by itself does not violate § 10(b) or Rule 10b-5 where it does not involve any fraud or deception as those terms are used in antifraud provisions of federal securities laws. scienter may be inferred by finding that defendant knew or reasonably believed that securities were unsuited to investor's needs. or failed to disclose. revd on other grounds (1977. resulting in rescission of transaction. one of owners lost approximately $ 1. (4) private placement agreement. 39. where purchasers were residents. CCH Fed Secur L Rep P 92982. Inc. SD NY) CCH Fed Secur L Rep P 93233). CCH Fed Secur L Rep P 96189. with regard to sale and offer of securities and made misleading and false statements to investors. With respect to unsuitability claim under 15 USCS § 78j(b). and did not use investor funds to participate in third world projects. in addition. misrepresented. 98 S Ct 1580. it is insufficient to show mere negligent conduct or that forecast has turned out to be inaccurate. (2004. SEC v Fife (2002. (1994. reh den (1977. CA1 RI) 311 F3d 1. Because Congress expressed no intent to alter pleading requirements of Private Securities Litigation Reform Act of 1995. (1986. is culpable conduct actionable under 15 USCS § 78j. he made only two purchases in investment company's balance sheet enhancement program. 106 S Ct 343 and (criticized in Rothwell v Chubb Life Ins. California insurance code provision does not per se bar insurance coverage for alleged violations of 15 USCS § 78j(b). 106 S Ct 342. CCH Fed Secur L Rep P 95008. during two and half years that one of owners controlled trading account. (2004. Litig. SD NY) 426 F Supp 1059. 55 L Ed 2d 771. CA7 Ill) 136 F3d 531. (2003. Goldberg v Meridor (1977. acts of insured. CA4 Va) CCH Fed Secur L Rep P 93134. (2006. CCH Fed Secur L Rep P 95872. stock sales that occurred were clearly calculated 43 of 158 3/8/11 4:25 PM . opinion that has been issued without genuine belief or reasonable basis is untrue statement which. and that. or must intend to deceive. generally § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 incorporate scienter requirement: defendant must know of falsity of information. Mayer v Oil Field Systems Corp. SD NY) 411 F Supp 2d 434. opinion must not be made with reckless disregard for its truth or falsity. 155 L Ed 2d 1060. ND Ill) 1998 US Dist LEXIS 15422). CA2 NY) 803 F2d 749. 98 S Ct 1249 and (criticized in Isquith v Caremark Int'l (1998. 18 Fed Rules Evid Serv 783. Cos. 55 L Ed 2d 802. CA8 Mo) 804 F2d 1047. 107-204. Glazer Capital Mgmt. Purchasers of securities who brought suit against sellers under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 on grounds that sellers had failed to disclose that securities were not registered for sale in Illinois where purchasers were residents. therefore. when alleged misleading statement is literally true. ED Pa) 315 F Supp 2d 666. CA9 Cal) 549 F3d 736. were under no duty to disclose such before company announcement. and proceeded to recommend or purchase securities anyway. CA2 NY) 567 F2d 209.by Citation .F. CCH Fed Secur L Rep P 92202. because employees did not have material inside information and. (2) alleged misrepresentations by company officials were either immaterial or supported by fact at time they were made. but it was not alleged that sellers intended to defraud purchasers by representing that shares were registered for sale in Illinois with intention of rescinding transaction if shares later increased in value. Co. Inc.

SD NY) 600 F Supp 2d 510. In re WorldCom. complaint described strong circumstantial evidence that president knew that corporation was manipulating its books. West Holding Corp. CCH Fed Secur L Rep P 92627. In re PXRE Group. 2003 CDOS 1328. (2003. Corporate president's motion to dismiss claim under § 10(b) of Securities Exchange Act of 1934. (1996) 1996 SEC LEXIS 3545. Desire to maximize corporation's profits does not strengthen inference of intent to defraud because earning "excessive" fees in competitive marketplace (for as long as it lasts)--far from defrauding shareholders--actually benefits shareholders. CA2 NY) 549 F3d 187. Secs.. en banc. notwithstanding carte blanche provisions of standard margin agreement entered into between parties. reh. stock sales by individual defendants were unusual and suspicious and gave rise to strong inference of scienter. SD NY) 294 F Supp 2d 392. Litig. reh den. cert den (1977) 434 US 875. Litig. In re WorldCom. SEC v Prater (2003.F. Sec. (2009. Sec. Alleged motivation of corporation to raise money to prevent negative ramifications of resultant drop of credit rating or stock price--even if such drop would allegedly threaten survival of company--is far too generalized (and generalizable) to allege proper concrete and personal benefit required by Second Circuit. or defraud. DC Conn) 289 F Supp 2d 39. Alleged false statements regarding income and future outlook of company were opinions or general statements of optimism that could not be construed as anything but mere puffery. is necessary element of private cause of action for damages under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 40. was actively monitoring its financial condition. Plaintiff's theory of recovery based upon allegation that it suffered losses as result of defendant stockbroker's selling securities in its margin account in excess of minimum requirements of New York Stock Exchange. Ltd. (1977. ND Cal) 2005 US Dist LEXIS 9234). of Cal. but asserted only general claims about past and future successes of business and. What is required when endeavoring to plead facts supporting strong inference of scienter by showing motive and opportunity is not bare invocation of magic words such as motive and opportunity but allegation of facts showing type of particular circumstances that case law has recognized will render motive and opportunity probative of strong inference of scienter. v JP Morgan Chase Co. (1977. Corp. such allegations did not reach threshold of actionable fraud. CA5 Tex) 482 F3d 372. CA5 Tex) 482 F3d 372.15 USCS § 78j https://www. DC NJ) 189 F Supp 2d 214. even if precise figure of $ 265. CCH Fed Secur L Rep P 94173. Mittman v Rally's Hamburgers. Litig. Sundstrand Corp. Holmes v Bateson (1977. Eca & Local 134 IBEW Joint Pension Trust of Chi. Sec. is not "deceptive" unless it involves breach of some duty of candid disclosure. CCH Fed Secur L Rep P 91726..by Citation . CCH Fed Secur L Rep P 96532. but extreme departure from standards of ordinary care. 98 S Ct 225. (In re NUI Sec. Scienter in form of intent to deceive.lexis. (2) investors did not respond to assertions by network and agency in their summary judgment motion that investors had not shown fraudulent or deceptive conduct on their part. Inc. thus. is rejected since there is no indication that 44 of 158 3/8/11 4:25 PM . CCH Fed Secur L Rep P 92278. evidence was adequate for jury to award damages.R. Litig. request den (2003. et al. Inc. v Credit Suisse First Boston (2007. when stockbroker entered into oral agreement that it would not require margin in excess of minimum requirements.) (2004. Transcontinental Oil Corp. 2003 Daily Journal DAR 1721. § 240. as used in connection with securities fraud statutes. DC RI) 434 F Supp 1365. in order to prevail. In re PXRE Group. Activity can not take place outside market for relevant security and retain title of manipulation. among others. and defraud and it seemed obvious that individual at very least knew about his criminal record and knowingly did not include it on website or in other materials. was denied where allegations in complaint were sufficient to create strong inference that he acted with requisite scienter. SD NY) 294 F Supp 2d 392. CCH Fed Secur L Rep P 96228. required plaintiff to show that defendant acted with intent to deceive. CCH Fed Secur L Rep P 95887. and was directly involved in decisions central to accounting fraud.com Sec. manipulate. (2002. There was no reason to believe that defendants lacked scienter as to misrepresentations. and (3) investors' federal securities law claim against network and agency were dismissed due to absence of any evidence that they had committed fraudulent or deceptive act.. SD NY) 600 F Supp 2d 510. as to whether plaintiff alleges scheme that has any chance of achieving its putative ends. CA7 Ill) 553 F2d 1033. where their forecasts and statements of puffery did not establish evidence of scienter necessary to support claims of purchasers of securities. 157 L Ed 2d 311. Inc. CCH Fed Secur L Rep P 92425) and cert den (2003) 540 US 966. accordingly. den. or defraud. In re PXRE Group. as element of scienter. No. Corporate defendants were granted summary judgment on securities fraud claims pursuant to 15 USCS § 78j(b). Inc. (2003. 15 USCS § 78j(b). (2009. manipulate. financial network and one of its agencies. (2005. Sec. Litig. conduct that affects marketplace indirectly can violate § 10(b) of Securities Act of 1934. Inc. or at least knowing misconduct. CD Cal) 266 F Supp 2d 1150. Wortley v Camplin (2003.10b-5) promulgated thereunder. v Trenton Products Co. When evaluating motive and opportunity allegations. (2003.Get a Document . device. v Credit Suisse First Boston (2007.000 was not neatly traced to particular claim of liability. DC Kan) 316 F Supp 2d 1086. Litig. Ltd. CCH Fed Secur L Rep P 94173. and (1) investors had not alleged that network or agency had made any intentionally deceptive statements or had engaged in any deceptive actions. and therefore it would be unusual case where accomplishment of this objective constitutes requisite motive to defraud shareholders. even at motion to dismiss stage. Inc. (2004. 84 Employer-Teamster Joint Council Pension Trust Fund v Am. Klebanow v NUI Corp. CA9 Ariz) 2003 US App LEXIS 10783 and (criticized in In re Seebeyond Techs. Regents of Univ. manipulate or defraud in violation of § 10(b) of Securities and Exchange Act of 1934. 15 USCS § 78j(b). such as scheme. CA9 Ariz) 320 F3d 920. 15 USCS § 78j(b). WD Ky) 278 F Supp 2d 831. (2009. Sec. CA1 RI) 583 F2d 542. was granted where one corporate office's manipulative scheme was too far removed from fraud underlying false statements in SEC filings to put audit committee on notice of fraud. only if it constitutes deception.com/research/retrieve?cc=&pushme=1&tmp. There was enough evidence for jury to find that investors intended to deceive. of Cal. 54 L Ed 2d 155. 124 S Ct 433 and (criticized in In re Nextcard. District court granted summary judgment against two investors who had filed action and asserted § 10(b) of Securities Exchange Act of 1934 claim against. (2009. 15 USCS § 78j(b). complaint also pled with particularity information from wealth of sources that supported inference that president was fully familiar with corporation's true financial state. to maximize personal benefit from undisclosed inside information. investors had to demonstrate that network and agency had engaged in fraud or deception. Defendant corporation's statements to its shareholders made no specific representations about corporation's earnings or debt. Munjak v Signator Investors. and Securities and Exchange Commission made prima facie case that defendants acted with intent to deceive. 98 S Ct 224. In context of § 10(b) of Securities Act of 1934. manipulate. Sec. Litig. Litig. 15 USCS § 78j(b). v Sun Chemical Corp. recklessness is defined as highly unreasonable conduct involving not merely simple or excusable negligence. were mere puffery and would not have significantly altered mix of information deemed important to reasonable investor in making its investment decision. furthermore. SD NY) 600 F Supp 2d 510. CA1 Me) 333 F3d 284. Regents of Univ. Corporate auditing committee's motion to dismiss claim under § 10(b) of Securities Exchange Act of 1934. Scienter is established by showing that defendant acted intentionally or with severe recklessness. earning profits for shareholders is essence of duty of loyalty. (2003. In re Graystone Nash. 23 UCCRS 156. § 17(a) (15 USCS § 77q(a)) of Securities Act of 1933 and § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 Act along with Rule 10b-5 (17 C. and that businessman had shown reasonable reliance on investors' misleading statements. CA2 NY) 560 F2d 94. Ltd. affd in part and revd in part on other grounds (1978. inquiry is authorized. (2003. Litig. DC NJ) 314 F Supp 2d 388. 50 UCCRS2d 1178.--Intent required Private cause of action for damages will not lie under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 in absence of intent to deceive or manipulate on defendant's part. In re Cybershop.

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defendant was motivated by fraudulent intent or scienter in not enforcing margin maintenance requirements. Golob v Nauman Vandervoort, Inc. (1972, ND Ohio) 353 F Supp 1264, CCH Fed Secur L Rep P 93979. Facts amounting to scienter, intent to defraud, reckless disregard for truth, or knowing use of device, scheme or artifice to defraud are essential to imposition of civil liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Rich v Touche Ross & Co. (1976, SD NY) 415 F Supp 95. Facts amounting to scienter--intent to defraud, reckless disregard for truth, or knowing use of device, scheme or artifice to defraud--are essential to finding of liability under § 10(b) of Securities Exchange Act and SEC Rule 10b-5. Gross v Diversified Mortg. Investors (1977, SD NY) 431 F Supp 1080, CCH Fed Secur L Rep P 96137, affd without op (1980, CA2 NY) 636 F2d 1201 and affd without op (1980, CA2 NY) 636 F2d 1201 and affd without op (1980, CA2 NY) 636 F2d 1203 and affd without op (1980, CA2 NY) 636 F2d 1206; Osadchy v Gans (1977, DC NJ) 436 F Supp 677, CCH Fed Secur L Rep P 96250; Weitzman v Stein (1977, SD NY) 436 F Supp 895, CCH Fed Secur L Rep P 96159. Even in absence of insider trading or prior inaccurate disclosures, violation of SEC Rule 10b-5(c) may arise from failure to disclose where rumors are rampant, price of stock is shooting upward and defendants are in possession of all material facts but refrain from disclosing them, but liability may be imposed only upon showing that failure to disclose was motivated by defendants' intent to deceive investors for their own gain, since wrongful purpose is required to establish liability in private action under SEC Rule 10b-5. State Teachers Retirement Bd. v Fluor Corp. (1980, SD NY) 500 F Supp 278, CCH Fed Secur L Rep P 97340, affd in part and revd in part on other grounds, remanded (1981, CA2 NY) 654 F2d 843, CCH Fed Secur L Rep P 98005. In action by investors against corporation and its officers, alleging securities fraud in violation of, inter alia, 15 USCS §§ 78j(b), motion to dismiss filed by corporation and officers was granted where (1) investors' complaint failed to show how information allegedly omitted from corporation's Securities and Exchange Commission (SEC) filings would have significantly altered total mix of information available to analysts as they formulated their projections, and investors' complaint failed to allege that corporation or its officers acted with culpable scienter in omitting any material information from SEC filings; (2) corporation's press release and conference call involving officers contained meaningful cautionary statements that were forward-looking and were sufficient to invoke safe harbor protection; (3) statements by one officer at technology conference, three separate announcements of significant sales by corporation, and statement by corporate manager in newspaper article were not actionable as matter of law; and (4) investors failed to support inference that it was highly probable that one officer's interview statements were made with required intent to deceive, manipulate, or defraud. In re Parametric Tech. Corp. Sec. Litig. (2001, DC Mass) 300 F Supp 2d 206. Individual's claim under § 10(b) of Securities Exchange Act, 15 USCS § 78j(b), alleging companies misled him into believing he would be made head of division of one company failed where individual alleged no facts probative of companies' intent at time alleged promises were made; however, fact that one company appointed someone else to position allegedly promised to individual as part of consideration for sale of his business within only two months of consummation of that sale could be found to support strong inference of fraudulent intent not to perform at time alleged promise was made, so individual was given opportunity to amend this element of his complaint, which did not currently include any allegations regarding timing of hire. Dujardin v Liberty Media Corp. (2005, SD NY) 359 F Supp 2d 337, CCH Fed Secur L Rep P 93207. Court dismissed stock buyers' claim that investment advisors violated § 10(b) of Securities and Exchange Act of 1934, 15 USCS § 78j(b), and S.E.C. Rule 10b-5, 17 CFR 240.10b-5, by making misrepresentations and material omissions in association with securities that were to be transferred to buyers pursuant to consulting agreement because buyers failed to plead facts supporting cogent and compelling inference of scienter under 15 USCS § 78u-4(b)(2). Greer v Advanced Equities, Inc. (2010, ND Ill) 683 F Supp 2d 761, CCH Fed Secur L Rep P 95578. Court dismissed stock buyers' claim that defendants, investment advisors and investment corporation, violated § 10(b) of Securities and Exchange Act of 1934, 15 USCS § 78j(b), and S.E.C. Rule 10b-5, 17 CFR 240.10b-5, by making fraudulent statements and omissions of material fact in connection with sale of company's stock to buyers because buyers failed to establish strong inference that defendants acted recklessly or intentionally defrauded buyers; specifically, court found that (1) although defendants might have had some financial motive to sell company's stock, second amended complaint did not sufficiently support that motive with factual allegations that gave rise to inference of scienter; (2) buyers' allegations regarding timing of misrepresentations and their purportedly extreme nature fell short of supporting inference that was cogent and at least as compelling as any of defendants' non-culpable inferences; and (3) second amended complaint also failed to create strong inference of scienter for each individual defendant. Greer v Advanced Equities, Inc. (2010, ND Ill) 683 F Supp 2d 761, CCH Fed Secur L Rep P 95578.

41.--Not an indispensable element Antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) was meant to cover more than deliberately and dishonestly misrepresenting or omitting material facts which ordinarily are badges of fraud and deceit; bad faith intent to mislead or misrepresent are not required to prove violation upon which civil remedy for damages will lie. Kohler v Kohler Co. (1963, CA7 Wis) 319 F2d 634, 7 ALR3d 486. So long as statement or omission made in connection with purchase or sale of any security has effect or tendency to mislead or deceive investing public, it violates antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) notwithstanding that purpose is not to so defraud or deceive. SEC v Texas Gulf Sulphur Co. (1968, CA2 NY) 401 F2d 833, CCH Fed Secur L Rep P 92251, 2 ALR Fed 190, cert den (1969) 394 US 976, 22 L Ed 2d 756, 89 S Ct 1454. Under antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)), in making misleading statement of material fact, or omitting to state material fact necessary to understanding of attractiveness of securities being offered for sale, it does not matter whether purpose of such statement or omission is to deceive prospective securities buyers. Heit v Weitzen (1968, CA2 NY) 402 F2d 909, CCH Fed Secur L Rep P 92279, 3 ALR Fed 803, cert den (1969) 395 US 903, 23 L Ed 2d 217, 89 S Ct 1740. In determining whether securities broker has violated SEC Rule 10b-6, prohibiting purchases of securities by broker while broker is in process of distributing those securities to public, it is unimportant that it is not shown that broker intended to defraud market place or his purchasers; where rule applies, its prohibition is absolute. Jaffee & Co. v SEC (1971, CA2) 446 F2d 387, CCH Fed Secur L Rep P 93092. Intent to defraud is not indispensable element in private action for damages under antifraud provisions of federal securities laws. Chris-Craft Indus. v Piper Aircraft Corp. (1973, CA2 NY) 480 F2d 341, 25 ALR Fed 534, cert den (1973) 414 US 910, 38 L Ed 2d 148, 94 S Ct 231, 94 S Ct 232 and cert den (1973) 414 US 924, 38 L Ed 2d 158, 94 S Ct 234. Corporate insider, who purchased corporation shares shortly after obtaining information indicating that corporation had made significant mineral discoveries, violated § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5; it is immaterial whether insider intended to deceive or defraud anyone or whether he knew at time that his purchase would violate Act or Rule. Securities & Exchange Com. v Texas Gulf Sulphur Co. (1966, SD NY) 258 F Supp 262, affd in part and revd in part on other grounds (1968, CA2 NY) 401 F2d 833, CCH Fed Secur L Rep P 92251, 2 ALR Fed 190, cert den (1969) 394 US 976, 22 L Ed 2d 756, 89 S Ct 1454. Intent to defraud is not necessary element of civil action brought on basis of alleged violation of SEC Rule 10b-5. Kramer v Loewi & Co. (1973, ED Wis) 357 F Supp 83, CCH Fed Secur L Rep P 93970. Defendants are not liable under § 78j(b) for obtaining financing in smaller amount and at higher interest rate than that specified in partnership agreement, where plaintiff limited partners make no showing that defendants harbored intent contrary to stated objectives when statement was made. Zaro v Mason (1987, SD NY) 658 F Supp 222, CCH Fed Secur L Rep P 93222.

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42.--Requirements in particular circumstances Defendant rebuts allegation of scienter where plaintiff relies solely on legal arguments without submitting probative evidence and where defendant states that there was no misrepresentation, that allegation of scienter was result of confusion, and that all statements in prospectus were made in good faith. Bryson v Royal Business Group (1985, CA1 Mass) 763 F2d 491, CCH Fed Secur L Rep P 92410. Although § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)), and SEC Rule 10b-5 establish liability for aiders, abettors, and conspirators, without any requirement that these individuals be "control persons" within meaning of 15 USCS §§ 78t or 770, such persons may be liable only if they have same mental state required for primary liability, including scienter, and law firm and accounting firm which gave advice to foundation selling bonds in order to raise money to finance construction of retirement village could not be held liable under § 10(b) or Rule 10b-5 where there was no direct evidence that either firm acted with intent to deceive any purchaser of the foundation's securities or even that they saw the foundation's selling documents during the period in question until after the documents had been placed in use. Barker v Henderson, Franklin, Starnes & Holt (1986, CA7 Ill) 797 F2d 490, CCH Fed Secur L Rep P 92864. Action for securities fraud pursuant to 15 USCS § 78j(b)against company, its officers, and its auditors was properly dismissed for failure to allege adequate scienter under 15 USCS § 78u-4(b); there was nothing to support inference that officers knew that certain transactions were bogus or that challenged statements were false when made; key motivation alleged was officers' desperation to save company from bankruptcy, but facts did not support inference of imminent bankruptcy; claims against company failed as solely derivative of officers' actions; further, with regard to claims against auditors, shareholders presumed that it was obvious that challenged accounting entries were bogus, but facts did not support presumption; also, fact accounting, which was ultimately restated, conclusory "laundry list" of alleged violations that lacked specific ties to alleged fraud, and alleged financial motivation to continue business relationship did not support inference of scienter. Ezra Charitable Trust v Tyco Int'l, LTD (2006, CA1 NH) 466 F3d 1, CCH Fed Secur L Rep P 93964. Individual defendants in securities actions, who were controlling persons of corporate defendant which offered investors opportunity to invest in pool of United States Treasury Bills and to purchase short term commercial paper issued in small denominations by company providing it administrative services, were in full possession of material information regarding previous injunction against company's investment program and directed preparation of communications which failed to fully disclose said information and thus they possess the requisite scienter in failing to disclose material information and thus violated the antifog provisions of both § 17(a) of Securities Act and § 10(b) of Exchange Act. SEC v American Bd. of Trade, Inc. (1984, SD NY) 593 F Supp 335, CCH Fed Secur L Rep P 91651, revd on other grounds (1984, CA2 NY) 751 F2d 529, CCH Fed Secur L Rep P 91894. Plaintiff is not entitled to recover damages against general partners on individual causes of action predicated on common law fraud and violation of securities laws, where general partner, although misguided concerning his authority to consummate exchange of property without knowledge and consent of limited partners, did not have intent to defraud plaintiff under 15 USCS § 78j(b). Shlomchik v Richmond 103 Equities Co. (1986, SD NY) 662 F Supp 365, amd, in part, adhered to, in part (1991, SD NY) 763 F Supp 732, CCH Fed Secur L Rep P 96124. News wire service and worldwide republisher of business and financial news are entitled to summary dismissal of securities fraud claim, where they picked up and published purported news release that was work of fraudster seeking to drive down price of stock he had bought "short" positions on, because complaint is devoid of any suggestion that defendants were aware of fraudulent nature of release and there is no allegation that defendants issued their releases with intent to defraud. Hart v Internet Wire, Inc. (2001, SD NY) 145 F Supp 2d 360, CCH Fed Secur L Rep P 91473. As plaintiffs alleged facts sufficient to establish scienter, even under heightened standards of Reform Act, plaintiffs' market manipulation claims survived defendant's motions to dismiss; allegations of detailed, complicated scheme gave rise to strong inference that defendants acted with intent to deceive, manipulate, or defraud, and that defendants engaged in deliberately illegal behavior that did not happen accidentally, negligently, or even recklessly; further, plaintiffs identified with precision opportunities defendants had to engage in scheme, their pecuniary motive, and how scheme was carried out. Stephenson v Deutsche Bank AG (2003, DC Minn) 282 F Supp 2d 1032, 51 UCCRS2d 613. Even assuming that corporate officer knowingly failed to disclose financial losses related to potential bankruptcy, resulting in artificial inflation of stock price, there was no showing that officer acted with requisite scienter to support shareholder's claim of securities fraud; there was no evidence of any transaction involving stock that provided motive for officer to omit information or benefited officer in any way, and there was no showing that officer recklessly disregarded danger of misleading shareholder. Keeney v Larkin (2003, DC Md) 306 F Supp 2d 522, affd (2004, CA4 Md) 102 Fed Appx 787, CCH Fed Secur L Rep P 92868. In § 10(b) of Securities Exchange Act, shareholder failed to allege that any of individual defendants, who were officers and directors of defendant bankrupt company, sold single share during class period; instead, shareholder claimed that that company and individual defendants possessed requisite motive and opportunity because: (1) company needed cash badly; (2) company had to inflate revenues to remain eligible for extensions of credit by bank; and (3) individual defendants received performance-based bonuses; however, those allegations were insufficient to establish strong inference of scienter based solely on showing of motive and opportunity. In re Flag Telecom Holdings, LTD. (2004, SD NY) 308 F Supp 2d 249. In suit under 78 USCS § 78j(b) where shareholders alleged that corporation used improper method of accounting for its investment in another company, which led it to report inflated financial results in numerous SEC filings and press releases, shareholders' claims were subject to dismissal because shareholders' allegations of incentive compensation and stock ownership were insufficient to establish inference of fraudulent intent through motive and opportunity. Johnson v NYFIX, Inc. (2005, DC Conn) CCH Fed Secur L Rep 93531, amd, complaint dismd (2005, DC Conn) 399 F Supp 2d 105. Corporation's motion to dismiss was granted as to securities purchasers' claims concerning alleged investment misrepresentations because purchasers failed to sufficiently allege scienter as required under 15 USCS § 78u-4(b)(2) and Fed. R. Civ. P. 9(b), as they did not make any specific or detailed allegations of underlying scheme designed to misrepresent quality of corporation's investment portfolio or conceal its methods of accounting for investments; rather, purchasers alleged only that certain investment disclosures were not made and certain investments were not properly accounted for, such actions violated generally accepted accounting principles, and they had material impact on financial picture of corporation provided to investing public; nowhere did purchasers allege exactly how it was defendants were or should have been aware of accounting errors or insufficiency of investment disclosures. In re Unumprovident Corp. Secs. Litig. (2005, ED Tenn) 396 F Supp 2d 858, motion gr, in part, motion den, in part, dismd, in part, motion gr, in part, motion den, in part (2005, ED Tenn) 2005 US Dist LEXIS 31853. Plaintiff investors' complaint for violations of §§ 10(b), 20(a) of Securities Exchange Act of 1934, 15 USCS §§ 78j(b), 78t(a), and S.E.C. Rule 10b-5, 17 CFR § 240.10b-5, that arose when defendants, company and its officers, reported company's financial results in S.E.C. filings and press releases did not meet heightened pleading requirements of Private Securities Litigation Reform Act of 1995, 15 USCS § 78u-4(b)(1), (2) because investors' claims that defendants had overstated revenues by failing to write off or properly reserve for uncollectible receivables were deficient and suggested mismanagement rather than fraud and investors' scienter allegations were merely based on their theory that company's problems were well known and discussed and reflected in various internal reports that investors did not describe in detail; additionally, only one purported insider traded stock during relevant time period, and investors had failed to provide any information indicating that any of confidential witnesses would have been in position to know what defendants knew during relevant time period. Alaska Elec. Pension Fund v Adecco S.A. (2006, SD Cal) 434 F Supp 2d 815. Where investors' suit against company and others (defendants) under §§ 10(b) of Exchange Act, 15 USCS § 78j(b), and Rule 10b-5, 17 CFR § 240.10b-5, based on disclosures in company's registration statement for secondary offering with respect to "swap" of company's brokerage unit for another entity's asset management division, failed to plead alleged fraud with required particularity, investors also failed to allege required scienter in that there were no facts supporting claim that defendants had motive and opportunity to commit fraud or that they acted with self-interest. Garber v Legg Mason, Inc. (2008, SD NY) 537 F Supp 2d 597. Plaintiff failed to allege concrete and personal benefit resulting from fraud, as required by Second Circuit to plead requisite strong inference of scienter; plaintiff also did not allege motive that was at least as compelling as any opposing inference one could draw from facts alleged; merely alleging facts suggesting that defendants knew that river flooding was causing extensive damage in New Orleans did not raise inference that defendants knew, or were reckless in not knowing, that

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Get a Document - by Citation - 15 USCS § 78j

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defendants' internal methods and proprietary software all failed to adequately account for river flooding. In re PXRE Group, Ltd. Sec. Litig. (2009, SD NY) 600 F Supp 2d 510. Chapter 11 trustee sufficiently alleged facts under Fed. R. Bankr. P. 7009(b), 7012(b), to survive dismissal of action against securities broker to avoid, under 11 USCS §§ 546(e), 548(a)(1)(A), transfers of margin payments made by debtor who was operating Ponzi scheme, by averring that debtor's principal had pled guilty to securities fraud under 15 USCS §§ 78j(b) and 78f(F) and that margin payments were made in connection with massive Ponzi scheme. Manhattan Inv. Fund, Ltd. v Bear (In re Manhattan Inv. Fund Ltd.) (2002, BC SD NY) 310 BR 500. Unpublished Opinions Unpublished: Defendant's attempt to use pleading standard laid out by Private Securities Litigation Reform Act, 15 USCS § 78u-4(b)(2), to argue that individual pieces of evidence were insufficient to show scienter was unconvincing in civil enforcement action in which district court found that he violated § 17(a) of Securities Act of 1933, 15 USCS § 77q(a), and §§ 10(b), 13(a), and 13(b)(2)(A) of Securities and Exchange Act of 1934, 15 USCS §§ 78j(b), 78m(a), and 78m(b)(2)(A); weight of evidence was well beyond amount needed to support district court's findings and conclusions that defendant intended to manipulate entity's accounting and thereby defraud market. SEC v Yuen (2008, CA9 Cal) 2008 US App LEXIS 7606. Unpublished: General counsel's motion to dismiss shareholders' claims for violation of § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 and Rule 10b-5, 17 CFR § 240.10b-5(b) was denied because shareholders alleged that general counsel exhibited deceptive conduct, and shareholders alleged sufficiently that general counsel acted with scienter since amended complaint alleged that general counsel assisted in backdating scheme by directing widespread and intentional backdating of stock option grants, colluding with other defendants to carry out policy of backdating options, and receiving backdated options; moreover, amended complaint also alleged that in order to conceal this misconduct, general counsel caused corporation to disseminate false financial statements and false proxy statements. In re Atmel Corp. Derivative Litig. (2008, ND Cal) 2008 US Dist LEXIS 91909.

43.--What constitutes "intent to deceive" As to criminal charge that law firm partner used, for partner's trading purposes, material nonpublic information regarding tender offer by client of firm for corporation's common stock, partner's failure to disclose partner's personal trading to client and firm, in breach of duty to do so, makes partner's conduct deceptive, within meaning of § 78j(b). United States v O'Hagan (1997) 521 US 642, 138 L Ed 2d 724, 117 S Ct 2199, 97 CDOS 4931, 97 Daily Journal DAR 7991, CCH Fed Secur L Rep P 99482, 1997 Colo J C A R 1354, 11 FLW Fed S 154, on remand, remanded (1998, CA8 Minn) 139 F3d 641, CCH Fed Secur L Rep P 90178. Intent to deceive, within scienter requirement of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) means intent to say something that is expected to be relied upon, that is not believed to be true, or, if strictly true, is hoped will be understood in untruthful sense. SEC v World Radio Mission, Inc. (1976, CA1 NH) 544 F2d 535, CCH Fed Secur L Rep P 95751. Complaint under SEC Rule 10b-5 for brokerage firm's failure to reveal that account executives receive higher compensation for principal trades of over-the-counter stocks in which firm is market maker than for other sales was subject to summary judgment on grounds that plaintiff purchasers had failed to prove scienter since there was no evidence that defendants actually intended to deceive, they did not know nor should they have known of danger of misleading customers since materiality of compensation information remains open question, and there was no proof of intent to manipulate stock since fact that compensation system gave account executive incentive to sell particular stock did not by itself define manipulative device. Shivangi v Dean Witter Reynolds, Inc. (1987, CA5 Miss) 825 F2d 885, CCH Fed Secur L Rep P 93364, 8 FR Serv 3d 980. Purchasers' allegations of resignation of several members of company's financial department were insufficient to allege scienter with particularity required by Fed. R. Civ. P. 9(b) and Private Securities Litigation Reform Act where resignation of independent accounting firm month after restatement of earning was issued was not surprising given its partial responsibility for company's failure to adequately control its accounting procedures, and complaint did not include enough facts about other retirements and resignations during relevant time period to create compelling inference of scienter. Zucco Partners, LLC v Digimarc Corp. (2009, CA9 Or) 552 F3d 981, CCH Fed Secur L Rep P 95038. Securities and Exchange Commission (SEC) prevailed on its 15 USCS § 78j(b) claim; SEC's chief evidence of plaintiff's intent to deceive was his use of numerous account and registration numbers that actually represented his work for certain customer, and SEC's characterization of use of multiple registration and account numbers was ample evidence of intent to mislead. SEC v Gann (2009, CA5 Tex) 565 F3d 932, CCH Fed Secur L Rep P 95210. Employer's knowing withholding of material information when discussing departure with employee who must sell stock to company did not constitute intent to deceive where employer's focus was on employee's moonlighting activities, and employer had secrecy obligation to company involved in merger negotiations until company could go public on agreement in principle. Guy v Duff & Phelps, Inc. (1985, ND Ill) 628 F Supp 252, CCH Fed Secur L Rep P 92828. Securities fraud claim of transportation services company founder, his wife, and 3 other shareholders is denied, where shareholders agreed to sell shares sufficient to give company's chief financier majority control of company in return for financier's agreement to grant founder renewed support and employment contract and to extend funding to assure continued growth of company, because court is persuaded by financier's testimony that he intended at time of stock transaction to continue to support founder's dream and management, but 4 months later was forced by continued unprofitability to enforce performance standards in employment contract and terminate founder. Taylor v Door to Door Transp. Services, Inc. (1988, SD Ohio) 691 F Supp 27, CCH Fed Secur L Rep P 94002. Summary judgment is precluded in securities fraud action under 15 USCS § 78j(b), where (1) government claims investor intentionally failed to reveal source of funds used to purchase controlling interest in company's stock, (2) government's evidence on intent is limited to depositions of investor's former attorney, and (3) investor refutes intent allegation, because material issue of fact exists as to scienter. SEC v Levy (1989, DC Dist Col) 706 F Supp 61, CCH Fed Secur L Rep P 94773. Federal securities claim is not alleged under 15 USCS § 78j(b), where complaint alleges only that fiduciaries failed to act in shareholders' interest and failed to disclose this breach of duty, because neither manipulative or deceptive conduct nor misrepresentation or nondisclosure are alleged. In re United States Shoe Corp. Litigation (1989, SD Ohio) 718 F Supp 643, CCH Fed Secur L Rep P 95844.

44. Specific intent to defraud Specific intent to defraud is irrelevant with respect to insider violations of SEC Rule 10b-5. Hanly v Securities & Exchange Com. (1969, CA2) 415 F2d 589, CCH Fed Secur L Rep P 92453. In private suit for damages under 15 USCS § 78j(b) and SEC rule 10b-5, it is unnecessary to prove specific fraudulent intent essential to claim of common-law fraud. Stier v Smith (1973, CA5 Tex) 473 F2d 1205, CCH Fed Secur L Rep P 93768; Cohen v Franchard Corp. (1973, CA2 NY) 478 F2d 115, CCH Fed Secur L Rep P 93937, 17 FR Serv 2d 912, cert den (1973) 414 US 857, 38 L Ed 2d 106, 94 S Ct 161; Mooney v Tallant (1975, ND Ga) 397 F Supp 680, 20 FR Serv 2d 1161. In action based upon antifraud provisions of federal securities acts, with regard to requirement of scienter, something short of specific intent to defraud is required; knowledge of fact that figures created false picture is enough. Republic Technology Fund, Inc. v Lionel Corp. (1973, CA2 NY) 483 F2d 540, CCH Fed Secur L Rep P 94069, cert den (1974) 415 US 918, 39 L Ed 2d 472, 94 S Ct 1416. In civil action alleging violation of SEC Rule 10b-5 proof of scienter is sufficient where requisite knowledge of falsity is adequately evidenced, intent in odious or

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Sec. Andrews v Blue (1973. Salt Pond Assocs. gr. SD NY) 2000 US Dist LEXIS 3941). State v Cox (1977) 17 Wash App 896. vacated. In private suit for damages under Rule 10b-5. CCH Fed Secur L Rep P 94316. CA3 NJ) 540 F2d 591. In re Flag Telecom Holdings. 15 USCS §§ 78j(b) and 78t(a). Discharges that occur during course of clearing or excavation activities are subject to Army Corps of Engineers permit jurisdiction. and something more than mere negligence. CCH Fed Secur L Rep P 93336. Pittsburgh Terminal Corp. and 17 CFR § 240. as opposed to strict common law test. (2000. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 have eliminated need to prove common law intent to defraud. (1976. notwithstanding their connection with otherwise unregulated removal activities. since decision to withhold information to bondholders was knowing and intentional as to consequences. reh den. CA4 NC) 516 F2d 251. it is unnecessary to prove specific fraudulent intent. and would inure to benefit of controlling stockholder. fulfills scienter requirement. Co.lexis. would deprive them of right to exercise conversion privilege. Investors in real estate partnership state claim under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) where they allege that general partners' offering memorandum represented that general partners would make initial capital contribution of $ 385. but that these promises were not kept and that promises were known by defendants to be false when made. Although complaint did not link factual allegations against defendant company for securities fraud and defendant chief executive officer for controlling persons liability. (2003.5 million construction loan. Defendant corporate directors possessed scienter required by 15 USCS § 78j(b) where they fixed certain date as both date of declaration of. Carras v Burns (1975. CA10 Colo) 489 F2d 367. under "intentional" or "knowing" aspect of this test. cert den (1982) 459 US 1056. complaint did not contain allegations sufficient to state PSLRA claim because many of accused statements were forward-looking and accompanied by meaningful cautionary language. intentional or knowing approach does not impose absolute liability on defendants. CCH Fed Secur L Rep P 95907. (1982. and in falsifying his order tickets in violation of 15 USCS § 78q to indicate that orders were unsolicited. 566 P2d 935. DC Md) 398 F Supp 609. but it is necessary that there be more than showing of mere negligence. jury properly inferred that defendant sought to capitalize on his nonpublic information and anticipated he could profit by purchasing call options that could later be sold at higher price. CCH Fed Secur L Rep P 98706. were supported by sufficient evidence that defendant used inside information that was material when he exercised employee stock options to purchase stock in his own company after negotiations with rival had begun and when he purchased call options for his company's stock as soon as he returned home from due diligence meetings. Straub v Vaisman & Co. Vohs v Dickson (1974. v Baltimore & O. promulgated pursuant to § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). 2003 FED App 359P. United States v Mooney (2005. scheme or artifice intended to defraud. 6 FR Serv 3d 117. CA4 Md) 542 F2d 915. In re Novak (1983) 47 SEC 892. Where plaintiff shareholder pointed to bonus compensation for individual defendants as evidence of § 10(b) of Security Exchange Act violation. Miller v Champion Enters. and that no assignment or transfer of general partners' interest in partnership could occur without notice to and consent of limited partners. defendant himself was selling his shares. it was not so inadequate in this aspect as to merit dismissal. and record date for participation in. CA2 NY) 802 F2d 49. CA5 Ga) 495 F2d 607. Specific intent to defraud satisfies scienter requirement for civil action based upon violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 15b-5. Securities fraud convictions under 15 USCS §§ 78j(b). CCH Fed Secur L Rep P 95623. and 17 C. United States v Faulhaber (1991. Scienter requirement of SEC Rule 10b-5 is something short of specific intent to defraud. this attempt to plead scienter failed because: (1) no mention of individual bonuses was made in complaint. does not require proof of specific or invidious intent to defraud. that general partners would collect management fees from partnership for only 1 year.com/research/retrieve?cc=&pushme=1&tmp. malicious sense not being required. affd (1976. 21 FR Serv 2d 1247. (1975. Cos. 116 S Ct 956 and (criticized in United States v Lopez (1995. Inc. with scienter in particularly cogent manner. CCH Fed Secur L Rep P 92932.10b-5. CA6 Mich) 346 F3d 660. CA6) 2003 US App LEXIS 26622. reported in full (1995. Litigation (1978.. nonpublic information would have been of interest to reasonable investor. SD NY) 308 F Supp 2d 249. CA1 Mass) 1995 US App LEXIS 27270 and cert den (1996) 516 US 1133. Litig. v Credit Suisse First Boston Corp. CA10 Utah) 427 F3d 840. CCH Fed Secur L Rep P 93542. and (2) allegations were not sufficiently particular to allow determination whether alleged misstatements resulted in bonuses. as being violative of SEC Rule 10b-5. 133 L Ed 2d 879. CA3 Pa) 680 F2d 933. 74 L Ed 2d 621.. Fox v Kane-Miller Corp. 103 S Ct 476 and (criticized in Page Mill Asset Mgmt. fraud.000 and guarantee $ 4. that at least one of general partners had maintained and would continue to maintain its net worth at levels sufficient to ensure partnership's profitability. 78ff(a). generally 48 of 158 3/8/11 4:25 PM .10b-5 were properly dismissed on summary judgment because shareholders were unable to meet scienter requirements under those sections or to satisfy pleading requirements of Private Securities Litigation Reform Act. thus. only issue is whether there is plan. In criminal. 99 S Ct 90. however. (In re Acceptance Ins. in part (2005. CCH Fed Secur L Rep P 94589. v United States Army Corps of Eng'rs (1993. and jury could have found substantial likelihood that it would have been considered important in making investment decisions. post-conviction relief dismd (1995.R.) (2005. CCH Fed Secur L Rep P 93143. 56 FR Serv 3d 1177. Cos. In re Transocean Tender Offer Sec. unlike tortious. cert den (1978) 439 US 823. CCH Fed Secur L Rep P 95698. SD NY) 401 F Supp 651. irrespective of intent. R. (2004. CA1 Puerto Rico) 71 F3d 954). Civil liability under SEC Rule 10b-5 can be found even in absence of one or more elements of common law fraud. CA8 Minn) 401 F3d 940. intentional or knowing test was met where defendants failed to disclose fully to plaintiff material facts in tender offer and these failures were made knowingly. while other accused statements held no strong inference of recklessness or of highly unreasonable conduct which was extreme departure from standards of ordinary care. den (2003. "Intentional or reckless" test. 103 S Ct 475. dividend of stock in spin-off corporation to holders of common stock in defendant company. jury is not required to be instructed that it must find that defendant's scheme would have to defraud person of ordinary prudence and comprehension. United States v Wenger (2005. CA1 Mass) 66 F3d 306.by Citation . en banc. Marshak v Blyth Eastman Dillon & Co. In order for criminal fraud to have occurred in violation of SEC Rule 10b-5. DC Del) 38 Envt Rep Cas 2098 . 58 L Ed 2d 115. Proof of churning. notwithstanding lack of specific intent to violate law. Government presented sufficient evidence to convince reasonable jury beyond reasonable doubt that defendant had necessary intent to defraud. CA1 Mass) 929 F2d 16. knowing that such action would be material to holders of convertible bonds of defendant company. CA8) 2005 US App LEXIS 7404. reh. reh. record showed that at same time he had been advising his newsletter readers to buy certain stock. 45. ND Okla) 413 F Supp 377. LTD. ND Ill) 455 F Supp 999.Get a Document . Shareholder's securities fraud claims under §§ 10(b) and 20(a) of Securities Exchange Act of 1934. and were therefore not actionable. en banc. Luce v Edelstein (1986. Oleck v Fischer (1975. specific intent to defraud is unnecessary. actual knowledge of misstatement.. (1975. Actual knowledge or reckless disregard. § 240.15 USCS § 78j https://www. 15 USCS § 78u-4(b)(2).F. CA8 Neb) 423 F3d 899. Kinder v Acceptance Ins. may be used to determine whether scienter requirement of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is met. Necessary fraudulent intent for violation of 15 USCS § 78j(b) was present where salesman for broker-dealer enthusiastically recommended investment in stock of corporation which he knew was object of tender offer under investigation for antitrust violations by FTC without disclosing existence of investigation. CCH Fed Secur L Rep P 95332.

CA3 NJ) 524 F2d 577. Thompson & Co.7 million in one of these treasury bill purchases. (1975. cert den (2003) 538 US 1031. WD Okla) 428 F Supp 719. Recklessness is sufficiently culpable state of mind for liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and Rule 10b-5. v Miles & Stockbridge (1989. CCH Fed Secur L Rep P 96189. CCH Fed Secur L Rep P 93937.Get a Document . Standard for determining liability under SEC Rule 10b-5 essentially is whether one seeking relief has established that person who allegedly violated such rule either knew material facts that were misstated or omitted and should have realized their significance. 38 L Ed 2d 106. reh den (1977. CA4 Md) 542 F2d 1235 (ovrld in part by Baker. (1989. CCH Fed Secur L Rep P 95322. 58 L Ed 2d 671. Recklessness satisfies scienter requirement for primary violation of 15 USCS § 78j(b). in practice. Offense of securities fraud calls for proof of scheme or design to defraud incident to purchase or sale of security. Co. In order to show criminal intent necessary for conviction of violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. during two and half years that one of owners controlled trading account. either recklessly or with scienter. cert den (1978) 434 US 1066. When non-employee consultant causes misstatements or omissions within periodic financial reports submitted to Securities and Exchange Commission. CCH Fed Secur L Rep P 94404. CA7 Ill) 554 F2d 790. affd (1976. CA2 NY) 478 F2d 115. including knowing or reckless conduct. ND Ill) 1998 US Dist LEXIS 15422). 98 S Ct 1243 and (ovrld as stated in Krieger v Gast (1998. (2002. Ball & Turben (1979. 99 S Ct 601. Wassel v Eglowsky (1975. he made only two purchases in investment company's balance sheet enhancement program. Authority (1976. CCH Fed Secur L Rep P 97862. (1977. 98 S Ct 1580. Nelson v Serwold (1978. 99 S Ct 464. McLean v Alexander (1976. SD NY) 287 F Supp 188. CCH Fed Secur L Rep P 94326. CA4 NC) 516 F2d 251. CCH Fed Secur L Rep P 92474. CCH Fed Secur L Rep P 96253. 40 L Ed 2d 560. United States v Kaiser (2010. CA1 RI) 311 F3d 1. and both purchases were for treasury bills.com/research/retrieve?cc=&pushme=1&tmp. Schlifke v Seafirst Corp. 33 FR Serv 3d 1389 (criticized in In re Enron Corp. Watts & Co. 94 S Ct 161. SD NY) 388 F Supp 670. 17 FR Serv 2d 912. CA3 Pa) 567 F2d 569. In non-disclosure situation. (1973. Derivative & ERISA Litig. CCH Fed Secur L Rep P 95725. knowing that those misstatements or omissions will reach investors. CCH Fed Secur L Rep P 49 of 158 3/8/11 4:25 PM . 94 S Ct 231. CCH Fed Secur L Rep P 92226. one who recklessly makes statement inherently possesses some knowledge of its falsity. one of owners lost approximately $ 1. Wright v Heizer Corp. CCH Fed Secur L Rep P 94825. it is not enough for one seeking relief to show that person charged failed to detect material facts when he had no reason to suspect their existence. CA10 Utah) 539 F3d 1249. but rather. If defendant knew statement was misleading or knew of existence of facts which. Fenstermacher v Philadelphia Nat'l Bank (1974. any required element of scienter is satisfied where defendant has actual knowledge of material information. ND Ohio) 116 F Supp 2d 917). CA5 Ala) 564 F2d 416 and cert den (1978) 435 US 952. United States v Mackay (1973. CA7 Ill) 866 F2d 935. Reckless behavior can be sufficient to constitute requisite scienter in civil action alleging violations of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 1 ALR Fed 988. SD Tex) 235 F Supp 2d 549. CA5 Ga) 636 F2d 945.. CCH Fed Secur L Rep P 99056. CA2 NY) 609 F3d 556. 38 L Ed 2d 158. CCH Fed Secur L Rep P 96101. or must intend to deceive. affd in part and revd in part on other grounds (1969. 58 L Ed 2d 124. (1973. CCH Fed Secur L Rep P 96861 (superseded by statute as stated in Burns v Prudential Sec. 25 L Ed 2d 93. CA4 Md) 876 F2d 1101. In private damage action alleging violation of SEC Rule 10b-5. 110 ALR Fed 83). CCH Fed Secur L Rep P 94174. but with respect to alleged misrepresentations constituting such fraudulent activity. Inc. 25 ALR Fed 534. he can be held primarily liable under antifraud provisions of federal securities laws. question is not merely whether defendant had knowledge of undisclosed acts. or (b) not knowing that facts represented were false but acting with wilful or reckless disregard for truth. (1968. United States v Koenig (1974. CA2 NY) 418 F2d 1276. DC Md) 399 F Supp 1330. 30 FR Serv 2d 1605. 38 L Ed 2d 148. would have shown it to be misleading. 106 OGR 446. CCH Fed Secur L Rep P 92239).. G. or failed or refused to ascertain and disclose such facts when they were reasonably available to him and he had reasonable grounds to believe they existed. cert den (1978) 439 US 970. Knowledge of material facts and failure of disclosure provide adequate basis for culpability sufficient to establish liability for violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. There is little reason to distinguish between knowing misbehavior and reckless misbehavior under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. cert den (1974) 416 US 972. Globus v Law Research Service. A. 94 S Ct 234. It was plain error to issue conscious avoidance instruction that contained neither "high probability" nor "actual belief" language. v Piper Aircraft Corp. CA7 Ill) 560 F2d 236. which would require that defendant have actual knowledge of matters complained of. CCH Fed Secur L Rep P 94454. 90 S Ct 913. (1996. 24 FR Serv 2d 516. 55 L Ed 2d 802. so defendant's securities fraud conviction under 15 USCS §§ 78j(b) & 78ff was reversed and remanded.by Citation . CCH Fed Secur L Rep P 94765. It is sufficient to prove violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 if it is shown that defendant knew statement was misleading or knew of existence of facts which.15 USCS § 78j https://www. Coleco Industries. or must act in reckless disregard of its falsity. CA10 Okla) 77 F3d 1215. it is danger of misleading buyers that must be actually known to defendant or so obvious that any reasonable man would be legally bound as knowing. 95 S Ct 619. Congress intended ambit of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) to reach broad category of behavior. it must be shown that defendant misrepresented or failed to disclose material facts (a) knowing that facts represented were false. 58 L Ed 2d 431. CCH Fed Secur L Rep P 96030. CCH Fed Secur L Rep P 96399. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 incorporate scienter requirement: defendant must know of falsity of information. 18 FR Serv 2d 372. 94 S Ct 1996 and cert den (1974) 419 US 1047. with regard to sale and offer of securities and made misleading and false statements to investors.lexis. Thomas v Duralite Co. (2000. CA9 Wash) 576 F2d 1332. SEC v Wolfson (2008.. 123 S Ct 2073. cert den (1973) 414 US 910. Franke v Midwestern Oklahoma Dev. CA10 Utah) 491 F2d 616. DC Del) 420 F Supp 1057. 42 L Ed 2d 640. if disclosed. if disclosed. CA5 Ala) 559 F2d 1307. Cohen v Franchard Corp. Investment company's owners made material representations. 94 S Ct 232 and cert den (1973) 414 US 924. reh den (1978) 439 US 998. and did not use investor funds to participate in third world projects. Anixter v Home-Stake Prod. Sanders v John Nuveen & Co. SEC v Fife (2002. Plaintiff in action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) must prove that defendant was guilty of conscious fraud. Severe recklessness is sufficient for scienter in SEC Rule 10b-5 action. Secs. Mansbach v Prescott. 55 L Ed 2d 767. would have shown it to be misleading. cert den (1973) 414 US 857. satisfaction of scienter requirement requires only showing of knowledge of falsity or reckless disregard for truth. v Partridge (1981. CA3 Pa) 493 F2d 333. Chris-Craft Indus. Plaintiff may recover under SEC Rule 10b-5 for misrepresentations that are recklessly made as well as those made with conscious fraudulent intent. CA6 Ky) 598 F2d 1017. cert den (1978) 439 US 830. statement made which is either patently false or made with reckless indifference to its truth or falsity can be equivalent to intent to defraud. cert den (1970) 397 US 913. Inc. In order to establish requisite element of scienter in action under SEC Rule 10b-5 based on alleged failure to disclose material information. Carras v Burns (1975. (1977. underlying premise of enhancement program. CA2 NY) 480 F2d 341. sufficient scienter was present to permit recovery under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CCH Fed Secur L Rep P 95789. 99 S Ct 106. v Berman (1977. First Virginia Bankshares v Benson (1977. 155 L Ed 2d 1060.

In re Suprema Specialties. where purchasers failed to make single allegation regarding relevant defendant's particularized knowledge regarding forward-looking statements. as well as that individual defendants were aware of market manipulation by controlling person and financial position of controlling person.com/research/retrieve?cc=&pushme=1&tmp. Mendell v Amgen.by Citation . ND Ohio) 430 F Supp 382. Purchaser's 15 USCS § 78j(b) claim against auditor of company it acquired under stock purchase agreement must fail under Rule 9(b). Sys. Litig. LLP (1999. Finding of recklessness satisfies scienter requirement of 15 USCS § 78j(b). DC NJ) 1999 US Dist LEXIS 17703). highly suspicious facts and circumstances available to auditor at time of audit and allege that these facts were ignored either deliberately or recklessly. Secs. (In re Amgen Inc. Deane v Thomson McKinnon Secur. Inc. CA3 NJ) 438 F3d 256. Inc. Secs. and instead alleged generally that defendants--without specifying among 21 named defendants in case--knew various alleged facts. Inc. Because investors alleged accounting violations by corporation's auditor which surpassed inference of ordinary negligence. Litig. in order to allege that independent accountant or auditor acted with scienter. Litig. SD NY) 683 F Supp 387. affd without op (1985. Investors blanket allegations of recklessness on part of corporation's outside directors based on their position. (2004. In re Infonet Servs. Local 144 v Oracle Corp. thus. (2004. 88 L Ed 2d 231. ND Cal) 311 F Supp 2d 857. allegations were sufficient to withstand dismissal of investors' claim against auditor under 15 USCS § 78j(b). CD Cal) 527 F Supp 2d 1164. Peltz v Northern Ohio Bank (1976. when considered together. Secs. 50 of 158 3/8/11 4:25 PM .F. Civ. CCH Fed Secur L Rep P 93217 (criticized in Silverman v Ernst & Young. Secs. part of Private Securities Litigation Reform Act. ND Cal) 201 F Supp 2d 1051. court must consider all reasonable inferences and determine whether. where purchaser alleges in conclusory terms that auditor "knew or should have known and was reckless in not ascertaining" that company's inventory was materially overvalued. Middlesex Ret. 46. 95786. et al. CCH Fed Secur L Rep P 91753. 175 & 505 Pension Trust Fund v Clorox Co. Recklessness satisfies scienter requirements of antifraud provisions of 15 USCS § 78j(b). essential element in civil action alleging violation of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Corporate officers should never be presumed to know plans of another company. (2003. CCH Fed Secur L Rep P 95905. CA10 Okla) 619 F2d 856. plaintiff's allegations are sufficient to create strong inference that defendant acted with deliberate or conscious recklessness. PSLRA requires that complaint state with particularity facts giving rise to strong inference that defendant acted with scienter--that is with deliberate recklessness with regard to truth of manipulative or deceptive device or contrivance that was used. Secs. (1984. Private Securities Litigation Reform Act (PSLRA) applies heightened pleading standard to private suits alleging violations of federal security law.. R. Federal securities claims under 15 USCS § 78j(b) adequately alleged scienter by identifying circumstances indicating conscious or reckless behavior by defendants.Get a Document . Inc. where complaint details numerous alleged misrepresentations and omissions that give rise to inference that brokers had knowledge of facts or recklessly disregarded their existence. Sec. 106 S Ct 232.10b-5. Stock purchaser's claims under § 10(b) of Securities and Exchange Act of 1934 claims were dismissed. 762 F2d 137. both of which represented very substantial portion of company's revenues. accordingly.15 USCS § 78j https://www. in assessing whether scienter has been sufficiently pleaded. (2006. CD Cal) 310 F Supp 2d 1080. made actionable misstatements and omissions and either knew or recklessly disregarded fact that their actions.lexis. knew that forward-looking statements were actually false. Degulis v LXR Biotechnology (1996. either knowingly or in reckless disregard of truth. but that information had not been disclosed. In re Ramp Networks. Re Orlando Joseph Jett (1998) 1998 SEC LEXIS 1501. v Quest Software Inc. CD Cal) 544 F Supp 2d 1009. In re Martin Herer Engelman. Inc. In re Copper Mt. In re Jay Houston Meadows (1996) 52 SEC 778. Allegation that accountant should have know of or recklessly disregarded evidence of managerial and accounting difficulties of issuer fails to satisfy particularity requirements of alleging scienter. ED NY) 642 F Supp 718. Inc.. Scienter. (2002.. CA9 Cal) 353 F3d 1125. CA9 Cal) 380 F3d 1226. Limited. and granted judgment on pleadings where declarations attached to complaint failed to set forth facts implying that officer made statement in deliberate or conscious disregard of information that transaction would not immediately add earnings per share to company's results and where no facts were alleged that supported inference that officer or anyone at company knew extent of trade promotions work-out problem when acquisition was announced. allowing investors to amend their complaint to show that these transactions violated generally accepted accounting principles would support strong inference of deliberate recklessness on part of company and its officers when considered in light of other facts investors asserted they would be able to allege or that they had already alleged in their complaint. because Rule 9(b) requires that general averments of scienter be accompanied by detailed factual allegations capable of supporting inference of fraud. analyses. v McCrory Corp. App DC) 246 US App DC 43. because complaint offers enough information for brokers to frame response. In re Energy Systems Equipment Leasing Sec. Corp. Litig. Where study that involved off-label use of drug manufactured by corporation during curative radiotherapy to test whether outcomes of patients suffering from head and neck cancer improved had been halted. complaint must identify specific. (1988. CA3 NJ) 438 F3d 256. Litig.) (2008. DC Dist Col) 586 F Supp 44. Inc. Securities fraud plaintiffs have not satisfied scienter pleading requirement. and therefore. because plaintiffs have alleged nothing more than failure to follow generally accepted accounting principles and auditing standards which is. Litigation (1986. In re Suprema Specialties. Litigation (1987. Litig. (2004. violations reasonably suggested that auditor either knew of or willfully turned blind eye to fraud at corporation. P. court held that class member's complaint sufficiently plead violation of 15 USCS § 78j(b).R. In re Gas Reclamation. Magnitude of two transactions. CCH Fed Secur L Rep P 97347. Emplrs. where each individual defendant occupied position with or had relationship with his or her company. SD NY) 928 F Supp 1301. CCH Fed Secur L Rep P 93913. where. 15 USCS § 78j(b). vacated on other grounds (1980. Nursing Home Pension Fund. and it could thus be inferred that each was privy to confidential. requires proof of either actual knowledge of misrepresentations or wilful or reckless disregard for truth. Recklessness can satisfy scienter requirement under 15 USCS § 78j(b) and Rule 10b-5. Complaint of investors in device for converting natural gas into liquid natural gas adequately alleges brokers' scienter under 15 USCS § 78j(b). proprietary information concerning company. Secs. with regard to suits alleging violations of § 10(b) of Securities Exchange Act of 1934. were so important that knowledge of them could be attributed to company and its key officers. court denied corporation's motion to dismiss claim of securities fraud in violation of 15 USCS § 78j(b) and 17 C. CCH Fed Secur L Rep P 92909. 9(b) and Private Securities Litigation Reform Act. cert den (1985) 474 US 903. SD NY) 659 F Supp 493. (2006. (2007. CCH Fed Secur L Rep P 99260. § 240. (1995) 52 SEC 271. Teamsters Local Nos.--Pleading District court did not err when it held that scienter was inadequately pled under 15 USCS § 78u-4(b)(1)(B). Investors in lease and service agreements regarding energy devices adequately allege scienter for securities fraud under 15 USCS § 78j(b) where detailed complaints allege experts. and therefore were disregarded on review of motion to dismiss investors' 15 USCS § 78j(b) claims against outside directors. CCH Fed Secur L Rep P 91480. Where court found that backdated stock options and concurrent practices of option-granting employees were highly suspicious and concluded that both leaned heavily toward finding of scienter. without any attempt to link specific individuals to specific instances of reckless conduct did not satisfy particularity requirements of Fed. CCH Fed Secur L Rep P 92920. and opinions would be used by promoters and reasonably relied upon by investors.

Inc. R. P. Shareholders' claims under § 10b of Securities Exchange Act of 1934. that officers knew accounts and statements were false and. In re Apple Computer. In re Empyrean Bioscience. Pursuant to claims under 15 USCS § 78j. In securities fraud action against current and former officer. v Cucuz (In re Hayes Lemmerz Int'l. Investors sufficiently pleaded scienter under 15 USCS § 78j(b) and S. motion den. SD Cal) 556 F Supp 2d 1142. Inc. In re SmarTalk Teleservices. and such allegations were insufficient to state claim for primary violation against PSG members. 9(b) and § 101(b) of Private Securities Litigation Reform Act of 1995. Sec. CCH Fed Secur L Rep P 92407. earnings restatement alone did not establish scienter. & ERISA Litig. In securities fraud case. Mut. and thus qualified as forward looking. Pursuant to claims under 15 USCS § 78j.lexis. (2000.. Inc. but did not allege facts showing that company and officers had knowledge of or recklessly disregarded information about alleged problems and intentionally concealed those problems.. Litig. SD NY) 2003 US Dist LEXIS 12837. (2002. Litig. company.. ND Ohio) 219 FRD 408. SD NY) 247 F Supp 2d 425.) (2003. 15 USCS § 78u-4 et seq. CCH Fed Secur L Rep P 92460. P. shareholders failed to satisfy particularity standard set forth in 15 USCS § 78u-4(b)(1) and Fed. Inc. Atlas v Accredited Home Lenders Holding Co. or even that they should have known about them. US) 160 L Ed 2d 499. Civ. SD NY) 693 F Supp 2d 241. Secs. In Private Securities Litigation Reform Act securities fraud claim against officers and directors of corporation that had announced certain accounting errors and filed restated annual financials that dramatically reduced reported net income. Rule 10b-5 by showing that officer of Internet marketing company was directly confronted several times with traffic quality problems and directly lied to analysts during conference call. In re Empyrean Bioscience. motion gr (2003. P. affd (2004. while failing to disclose that company had lowered its standards. Secs. motion to strike den. Group. Litig. In securities fraud class action suit brought by group of investors. namely: that false statements were made by defendants by continuing to portray their underwriting procedures as cautious and conservative. Inference of scienter was sufficiently supported by complaint's allegations regarding frequency with which defendants caused certain underwriters' decisions that rejected risky loans and degree to which company's reserves were decreased compared to historic levels. Inc. and internal controls. Inc. motion to strike den. Where complaint alleged various accounting and financial reporting problems within company. but did not set forth sufficient particular facts supporting reasons why shareholders believed statements to be false. 15 USCS § 78u-4. In re Wash. shareholder plaintiffs failed to adequately plead scienter under 15 USCS § 78u-4(b)(2) in claims against drug company where shareholders failed to properly allege that company knew (or were reckless in not knowing) that National Institute of Health rejected its application to conduct clinical trials for company's contraceptive gel. and." this statement was tantamount to admission that management knew or should have known that proper accounting was not taking place. at time when according to generally accepted accounting principles such reserves should have been increased..E. its officers and directors. Inc. 9(b) where their complaint identified alleged false statements contained in drug company's Securities Exchange Commission filings and press releases. P.C. these allegations satisfied Fed. R. financial statements. thus. Litig. Civ. Secs. Litig. motion den. Frank v Dana Corp. Shareholder's 15 USCS § 78j claim was dismissed because it failed to adequately plead scienter. (2007. officers' high-level position with company alone was not sufficient to establish scienter. investors sufficiently pled scienter on part of officers and directors and. Securities Litigation (2005. CCH Fed Secur L Rep P 94584. and auditors (defendants). defendants conceded all of elements of securities fraud claim except scienter. CCH Fed Secur L Rep P 91274. SD NY) 322 F Supp 2d 319. WD Wash) 694 F Supp 2d 1192. CCH Fed Secur L Rep P 93555. Plaintiff's Securities Exchange Act claim was dismissed because their complaint did not allege with particularity that defendants made any statements that proximately caused plaintiffs' injuries or were made in connection with complained of transaction. In re Global Crossing. plaintiff failed adequately to plead scienter. so officers and directors' motions to dismiss for failure to state claim was denied. by alleging their approval of lower standards and still representing that company was maintaining same conservative standards. Inc. against company. by misrepresenting its performance. intentionally deceived public into believing company's numbers were accurate. SD NY) 2003 US Dist LEXIS 12836. ND Ohio) 255 F Supp 2d 751. at least. as these management defendants were responsible for day-to-day operations at company and complaint alleged that. appraisals. motion gr (2003. 9(b) and 15 USCS § 78u-4(b)(1). ND Ohio) 219 FRD 408.by Citation . Civ. motion den. SD NY) 693 F Supp 2d 241. and because court determined that no primary violation occurred under § 10(b). motion to dismiss filed by bank and four of its officers was granted as suing pension fund's allegations imputing dishonest motives based on press releases forecasting and speculating about looming subprime mortgage crisis were insufficient to establish liability under § 10(b) of Securities Exchange Act of 1934. Pursuant to claims under § 10(b) of Securities Exchange Act. Johnson v NYFIX. MD Fla) 544 F Supp 2d 1310. they were reckless not to know "financial shenanigans" leading to $ 259 million restatements.com/research/retrieve?cc=&pushme=1&tmp. 15 USCS § 78j. P. cert den (2004. Civ. ND Ohio) 255 F Supp 2d 751. In re Stonepath Group. Inc. Civ. SD Ohio) 124 F Supp 2d 505. Sec. CA9 Cal) CCH Fed Secur L Rep P 93203. Sec. motion to dismiss was granted as to pension fund's § 51 of 158 3/8/11 4:25 PM . shareholders claims under 15 USCS § 78j(b) failed to allege requisite scienter and meet heightened pleading requirements of Fed. Sec. CCH Fed Secur L Rep P 92717.V. truth of which could not be tested as of time statement was made. underwriters. DC Conn) 399 F Supp 2d 105. investors sufficiently alleged that defendants had made misleading statements and omissions by failing to disclose lowering of company's underwriting standards. Complaint alleged only that auditor's professional standards group (PSG) was aware of misleading accounting schemes auditor espoused and that it stifled dissent of junior auditor working on another account who questioned their propriety. that defendants made false statements that company was outperforming market when it was not. In re Ambac Fin. as required by 15 USCS § 78u-4(b)(2) and Fed. Pacholder High Yield Fund. thus. failed to state claim pursuant to Fed. but admitted that view was not "properly reflected in attitudes and actions of certain former managers. In re Miva. ED Pa) 397 F Supp 2d 575. (2003. shareholders' claims concerning allegedly false press releases and Securities Exchange Commission (SEC) filings related to drug company's contraceptive gel failed to qualify for safe harbor protection under 15 USCS § 78u-5(i)(1) where each of statements indicated future objective or plan with respect to gel. subsequent app (2003. (2010. when company stated that its Board of Directors had always expected and required proper financial reporting. 15 USCS § 78j(b). affd (2005. motion to strike den. vacated (2003. where it was not enough for shareholders to allege that computer manufacturer and its chief executive officer (CEO) who spoke publicly at computer conference could have known about manufacturing difficulties with company's new "Cube" computer. 15 USCS § 78u-4. In re Royal Ahold N. R. P. shareholders were required to allege "something approaching actual knowledge" on part of CEO or other officers of company who actually made challenged statements.. R. Inc. insufficient to state securities fraud claim. CA2 NY) 378 F3d 213. ND Ohio) 219 FRD 408. In re Empyrean Bioscience. Ltd. Equity Secs. CCH Fed Secur L Rep P 92629. 9(b). (2005. and misstating its financial information. defendants' motion to dismiss was denied as to most counts of complaint because investors sufficiently pled following allegations that satisfied heightened pleading requirements for fraud case. plaintiffs had pleaded with as much specificity as possible in absence of discovery as to these defendants. magnitude of financial fraud was not factor in determining officers' scienter. 125 S Ct 677. Inc. CCH Fed Secur L Rep P 93061. complaint did not comply with pleading standards of Private Securities Litigation Reform Act of 1995. Certificate of appealability denied (2010. Filler v Hanvit Bank (2003. CCH Fed Secur L Rep P 95503. 12(b)(6) and failed to adequately plead scienter under Private Securities Litigation Reform Act. because it did not state facts suggesting that defendants knew or should have known corporation was using inappropriate accounting method. by itself. Securities fraud claims under 15 USCS § 78j(b) and 17 CFR § 240. R. CCH Fed Secur L Rep P 92629. (2003. ND Cal) 243 F Supp 2d 1012.Get a Document . Inc.10b-5 were sufficiently pleaded with particularity under Fed. (2004. DC Md) 351 F Supp 2d 334. (2008. (2008. (2009. 9(b) and gave rise to strong inference of scienter under 15 USCS § 78u-4(b) as to all but two allegedly false statements made by officers about risk management. CCH Fed Secur L Rep P 92629. ND Ohio) 525 F Supp 2d 922. (2003. Civ. underwriting. Plaintiff shareholders' allegations did not support strong inference that accountant defendants knew or recklessly disregarded that defendant company's financial statements were materially misstated due to overstated promotional allowances and improper consolidation of joint venture revenue. motion gr (2003. anonymous sources were not sufficient to establish scienter. despite that knowledge. and that defendants creating false financial statements. R. (2004. i.15 USCS § 78j https://www.e. ED Mich) 271 F Supp 2d 1007. ND Ohio) 255 F Supp 2d 751. 15 USCS § 78j(b). Litig. CCH Fed Secur L Rep P 92286.

Litig. does not establish scienter. SEC v Rubera (2003. Securities and Exchange Commission's (SEC) findings of violations of § 10(b) of Securities and Exchange Act of 1934 and S. Plumbers & Steamfitters Local 773 Pension Fund v Canadian Imperial Bank of Commerce (2010. (2005. therefore. CCH Fed Secur L Rep P 95576. have specifically disclaimed brokerage partner's knowledge in order to proceed with § 11 of Securities Act of 1933. 2003 CDOS 10450. 15 USCS § 77k." which had been "long rejected" by Third Circuit. CCH Fed Secur L Rep P 91547. particularized facts demonstrating contemporaneous knowledge. 22 FLW Fed C 463. Inc.C. (2005. which were forward-looking within meaning of 15 USCS § 78u-5(i)(1)(A). although they allege that one brokerage partner sat on defendant company's board of directors.lexis. 52 of 158 3/8/11 4:25 PM . CA11 Fla) 594 F3d 783." and "anticipated" pertaining to earning and revenue prospects. claims under § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 and Rule 10b-5 claims based on financial restatements failed because of they lacked sufficient allegations of scienter. (1990. Fine v American Solar King Corp. CA10 Utah) 539 F3d 1249." "would likely earn. substantial evidence supported conclusion that underwriter's cautionary statements were so deficient petitioner must have known investors would be misled by offering documents. CCH Fed Secur L Rep P 98680. CA10 Utah) 678 F2d 870. on their § 10(b) of Securities Exchange Act of 1934. 17 CFR § 240. purchaser sufficiently alleged scienter. 22 FLW Fed C 463. and District Court properly instructed jury that scienter was present if manner in which account was handled reflected disregard for client's investment concerns. and SEC Rule 10b-5. CA2 NY) 666 F2d 5. CA5 Tex) 919 F2d 290. Inc. Trial court did not have to make specific finding of scienter on part of defendant. App DC) 428 F3d 1088. additionally. kickback allegations underlying defendants' alleged misstatements did not meet level of particularity required by Private Securities Litigation Reform Act. 20(a)..Get a Document . CA9 Wash) 416 F3d 940. where court found that he violated SEC Rule 10b-5 by knowingly misrepresenting (1) facts concerning debentures he sold to plaintiffs and use of proceeds from sales. R. it failed to make any particularized allegation as required under 15 USCS § 78u-4(b)(2) that any individual officer or director knew about accounting errors at time of trading. 15 USCS § 77q(a). Civ. CCH Fed Secur L Rep P 95576. 15 USCS § 78j(b). Loveridge v Dreagoux (1982. CCH Fed Secur L Rep P 97851. they failed to allege facts indicating that outside directors had access to allegedly arbitrary financial model. 15 USCS § 78u-4 et seq.E. district court could have reasonably found that individual had not acted intentionally or recklessly with regard to false representations made to investors and did not know that program's buyback options were uninsured. party must know that it is publishing materially false information. District court erred in dismissing 15 USCS § 78j(b) and 17 CFR § 240. where bonds were issued to finance purchase of office building. mere fact that misstatements and omissions were not publicly attributable to member did not mean that member and limited liability company (LLC) could not have been held primarily liable. since implicit in court's finding is that defendant had knowledge of falsity of statements he made or acted in reckless disregard of their truth or falsity and intended to deceive or mislead plaintiffs so they would purchase debentures. which were not actionable claims. as it claimed defendants knew that most obvious interpretation of statement in memorandum was false when made and that they had motive to misrepresent status of stock sale. Reckless conduct falls within ambit of 15 USCS § 78j. which was only alleged basis for brokerage's knowledge. (2010. Litig. In re Tellium . it was not clear that cited cautionary language rendered these statements immaterial as matter of law. company represented between 10 and 40 percent of fund's holdings.. although company used broad terms such as "expected. allegation that brokerage partner sat on company's board of directors was insufficient to establish "strong inference" of scienter as to brokerage under Private Securities Litigation Reform Act. Edward J. (2010. negligence claim.10b-5. 39 FR Serv 2d 924. Harris Upham & Co. or approximate dates that events that they allege transpired occurred.10b-5 claims brought by purchaser of stock in corporation where purchaser alleged that offering memorandum misleadingly implied corporation had received proceeds of private stock offering. namely that none of officers or directors knew of accounting errors until investigation began in 2006. Inc. 15 USCS § 78j(b). In re Tellium . Inc. 52(a) where Securities and Exchange Commission failed to challenge admissibility of evidence showing that individual was inept businessman who did not know of his business's dire financial situation and was not responsible for statements contained in sales brochure for pay telephone investment program and. as such. CA11 Fla) 594 F3d 783. although information gleaned from Securities and Exchange Commission proceedings could potentially be used to support first hand accounts. allegations regarding bank's write-downs on mortgage-backed holdings amounted to fundamental disagreements with business judgments of banks and its officers. claim as well. Mere publication of inaccurate accounting figures or failure to follow generally accepted accounting principles (GAAP). Unpublished: Pharmaceutical service provider's motion to dismiss securities fraud claims based on safe harbor grounds was denied where company was not entitled to safe harbor protection under 15 USCS § 78u-5(c)(1)(A) for certain forward looking statements. Goodman Life Income Trust v Jabil Circuit. CA9 Or) 350 F3d 1084. District court's factual finding that individual lacked scienter necessary to establish securities fraud in violation of 15 USCS § 77q(a) & 78j(b) was affirmed under Fed. or party must be severely reckless in publishing such information. (1984. and knew that statements were calculated to reach investors. P. v Salomon Smith Barney. 15 USCS § 78j(b). District court did not err when it dismissed shareholders claims under § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 and Rule 10b-5 claims against officers and directors for insider trading because although complaint contained numerous allegations of trades made by officers and directors during class period. claims. In re PDI Sec. Given that Securities and Exchange Commission need not establish attribution in enforcement action under either § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 or § 17(a) (15 USCS § 77q(a)) of Securities Act of 1933.10b-5. 116 L Ed 2d 601..by Citation . CCH Fed Secur L Rep P 94825. among other things. Edward J. and (2) that corporation whose debentures he sold was formally incorporated at time of sale. Inc. 112 S Ct 576. claims. Goodman Life Income Trust v Jabil Circuit. and SEC Rule 10b-5. Sec. or other information indicating that guidances were false or misleading. SEC v Wolfson (2008. 47.15 USCS § 78j https://www. 15 USCS § 78u-4 et seq. such allegations amounted solely to "fraud by hindsight. cautionary language only disclosed risk that tenants might leave--not underwriter's knowledge that Pennsylvania Department of Transportation's actually planned to do so in near future. Inc. CA9 Cal) 736 F2d 1283. cert dismd (1991) 502 US 976. Substantial evidence supported finding that municipal bond underwriter violated § 17(a) of Securities Act of 1933. (2005. Rockies Fund. Sec. 17 CFR § 240. 15 USCS § 78t(a). v SEC (2005. DC NJ) 2005 US Dist LEXIS 19467. Rule 10b-5 for improper securities disclosures were supported by substantial evidence. because member caused misstatements and omissions to be made. in absence of independent.--In particular circumstances Required element of scienter in civil enforcement action to enjoin violations of 15 USCS §§ 77q and 78j and SEC Rule 10b-5 was present where defendant had actual knowledge of fraudulent misrepresentations being made by his subordinate sales representatives but intentionally did nothing to stop them. Appellate court held that allegations contained in complaint did not create inference of scienter that was at least as probable as non-fraudulent explanation. Unpublished Opinions Unpublished: Security fraud plaintiffs failed to plead scienter as to one investment broker where they did not sufficiently allege facts indicating that broker had access to model for misleading revenue guidances. CCH Fed Secur L Rep P 92631. member and LLC could have properly been held liable under §§ 10(b) and 17(a) for those misstatements and omissions. where confidential sources cited by plaintiff investors in support of kickback allegations did not provide enough detail with respect to.com/research/retrieve?cc=&pushme=1&tmp. from that evidence. Kehr v Smith Barney. and § 10(b) of Securities Exchange Act of 1934. Unpublished: On plaintiff investors' § 10(b) of Securities Exchange Act of 1934. CCH Fed Secur L Rep P 93573. DC NJ) CCH Fed Secur L Rep P 93504. Livid Holdings Ltd. what former employees' positions entailed and how those positions provided basis for statements made. and attentive director would have rectified error absent extreme abdication of ordinary care. SD NY) 694 F Supp 2d 287. (2005. as SEC's opinion had ample support of reckless indifference and extreme recklessness as to misclassification of stock of certain company. DC NJ) 2005 US Dist LEXIS 19467. 2003 Daily Journal DAR 13169. SEC v Aaron (1981. Litig. without more. mover.

rate of growth. because allegations do not amount to knowing or reckless participation in fraud.. In civil action under SEC Rule 10b-5 against public accounting firm based upon alleged misrepresentations and omissions in financial statement. DC Colo) 300 F Supp 2d 1081. motion to dismiss was granted to accounting firm.R. CA2 NY) 112 Fed Appx 97. recognition of revenues. CCH Fed Secur L Rep P 95660. R. Krekstein. CCH Fed Secur L Rep P 93616. CCH Fed Secur L Rep P 94574. Horwath & Horwath (1974. WD Wash) 298 F Supp 2d 1056. affd (2004. and. Inc. buyer's president and law firm. 1921 CCH Fed Secur L Rep P 90933. under-reserved for doubtful accounts. (2003. was granted where alleged fraudulent statements made by corporation and corporate officers were accompanied by sufficient meaningful cautionary language such that application of safe harbor under 15 USCS § 78u-5(c)(1)(A) was appropriate. In re Nortel Networks Corp. In re Rhythms Secs. causing plaintiff and other class members to sell their shares at deflated price. 9(b) and 15 USCS § 78u-4(b). Litigation (1987. Inc. (1993. were aware of. 53 of 158 3/8/11 4:25 PM . SD NY) 238 F Supp 2d 613. Gibson v Cannon (1971. (2004. Actual knowledge of misstatement of fact is sufficient alone for civil action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA3 Pa) 993 F2d 875. as SEC's assertions that advisor and corporation made promises of exorbitant returns on investment that they either knew or were reckless in not knowing were impossible legitimately to fulfill were more than sufficient to satisfy requirements for scienter. Civ. Investors alleged in essence that defendant corporation fraudulently recognized revenue it knew it could not collect. App DC) 512 F3d 634.F. ND Ill) 266 F Supp 2d 833. 17 C. because allegations that defendants had access to facts and documents that allowed them to know that representations were false were insufficient to plead conscious misbehavior or recklessness. Litig. Abbad v Amman (2003. in turn. stock purchasers failed to adequately plead bases of most of confidential witnesses' personal knowledge and individual defendants' knowledge of falsity of statements. and 15 USCS § 78t(a). Inc. 17 FLW Fed D 224. SD NY) 99 F Supp 2d 327. Secs. Civ.lexis. DC NJ) 711 F Supp 1264. against defendants. and that their public statements were made with actual knowledge or with reckless disregard that they were false or misleading. Stavros v Exelon Corp. R.com/research/retrieve?cc=&pushme=1&tmp. Where stock purchasers alleged that defendants made material misrepresentations regarding product's quality. problem was that there was significant lack of indicia of fraud. affd (2001. CCH Fed Secur L Rep P 92283. SD NY) 378 F Supp 112. Directors of corporation who caused its assets to be sold for inadequate consideration were in violation of SEC Rule 10b-5 because they failed to disclose unfairness of transaction to minority shareholders.. plaintiffs were required to prove that firm had actual knowledge of misrepresentations and omissions or that its failure to discover misrepresentations and omissions amounted to wilful. Herzfeld v Laventhol. second corporation did not violate § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) where it was unaware of shareholder's sale of stock. and summary judgment will not be granted on issue of scienter unless no reasonable inference supports plaintiffs' claim.. 15 USCS § 78j(b). Sec. ND Cal) 672 F Supp 1552. deliberate. SD Fla) 299 F Supp 2d 1307. 12(b)(6) and for failure to plead securities fraud with particularity under Fed. ED Pa) 325 F Supp 706. Complaint satisfied pleading requirements of Private Securities Litigation Reform Act of 1995 regarding scienter because complaint raised strong inference that. because plaintiffs also demonstrate sufficient facts contradicting defendants' public statements that defendants either knew. § 240. CCH Fed Secur L Rep P 92663. SD NY) 275 F Supp 2d 496. In re Metawave Communs. refuted any inference that each defendant acted with requisite intent to deceive. CCH Fed Secur L Rep P 95543. SEC was not required to allege or prove that investors relied on advisor and corporation's misrepresentations or that specific investors suffered actual harm as result of advisor and corporation's misrepresentations. especially with particularity required by Fed. was dismissed for failure adequately to plead scienter. or were recklessly indifferent to. § 240. where complaint alleges that defendant was director and outside attorney for corporation sold stock during relevant period. CA2 NY) 540 F2d 27. because stockholders failed to plead primary cause of action under 15 USCS § 78j(b) and 17 C. CCH Fed Secur L Rep P 93011. as matter of law. SD NY) 285 F Supp 2d 411. allegations that officers were motivated by desire to maintain or increase executive compensation was insufficient when such desire can be imputed to all corporate officers. their 15 USCS § 78t(a) claims against corporate officers as controlling persons also failed. or reckless disregard for truth that was equivalent of knowledge. P. R. CCH Fed Secur L Rep P 94837. and 2) stockholders' allegations that announcement of restructuring and sale of business unit meant that officers must have known that corporation would have to be sold was wholly insufficient to plead conscious misbehavior or recklessness. Defendants' motion for summary judgment on issue of scienter is denied. where shareholder sold stock to insiders of corporation without being advised of impending merger wherein corporation was acquired by second corporation. R. part of Private Securities Litigation Reform Act. and engaged in fictitious transactions with related-parties while its officers and directors realized substantial profits. P. In suit by investors in fraudulent real estate venture. ND Ill) 378 F Supp 869. stockholders' Generally Acceptable Accounting Principles allegations lacked particularity and did not give rise to strong inference of scienter. Litig. In action by stockholders against corporation and corporate officers alleging securities fraud in violation of 15 USCS § 78j(b). which. motion to dismiss filed by corporation and corporate officers for failure to state claim under Fed. Civ. Civ. and had knowledge of allegedly fraudulent practices. actual knowledge of unfairness of transaction was not necessary where they knew of factors bearing upon limited worth of consideration received by corporation and were grossly negligent in failing to determine unfairness. In re Apple Computer Sec. Kalnit v Eichler (2000. CCH Fed Secur L Rep P 92674. corporate officers were consciously reckless in making representations to public that grossly inflated corporation's subscriber line count. firms knowledge of fact that figures created false picture was enough to constitute scienter. even though amended complaint adequately alleges theory that defendants' failure to disclose large shareholder's authorization to seek superior merger proposals artificially depressed market for company's shares. where 15 USCS § 78j(b) plaintiff investors argue that computer corporation officials made 2 positive statements to public about new computer system even while knowing certain negative facts about new computer and its prospects for success. In action by plaintiff sellers under purchase agreement alleging fraud under § 10b (15 USCS § 78j(b)) and § 20 (15 USCS § 78t) of Securities Exchange Act of 1934. since scienter is required by 15 USCS § 78j(b). Stockholders' claim under § 10(b) of Securities Exchange Act of 1934.10b-5. P. Corp. as statement did nothing more than announce end of publicly disclosed restructuring process. (1973. Court denied advisor and corporation's motion to dismiss Securities and Exchange Commission's (SEC) claims that they violated sections of Securities Exchange Act of 1934. Bailey v Meister Brau. CCH Fed Secur L Rep P 94552. and because securities laws applied differently to SEC than they did to private plaintiff. where evidence did not show firm had knowledge of or was reckless regarding falsity of information that went into reports. CA7 Ill) 535 F2d 982. Abrams & Wofsy v Renaissance Inv. Marcus v Frome (2003.F. (2004. DC Conn) 296 F Supp 2d 210. 9(b) and 15 USCS 78u-4(b)(2). affd (1976. 9(b). where they alleged that defendant executives failed to disclose negative consequences from specific risks that had either already come to pass or were known to be imminent. claims were insufficient under Fed. Purchasers of stock in defendant corporation stated sufficient claim for relief under 15 USCS § 78j. including serious accounting irregularities.R. SEC v Prater (2003. product's demand. ND Ga) 820 F Supp 1519. Dolphin & Bradbury. CCH Fed Secur L Rep P 92482. Druskin v Answerthink. Corp. Uncertified securities fraud class action arising out of machinations surrounding merger of media company is dismissed. and has not sufficiently alleged scienter. v SEC (2008. (2003. as 1) stockholders' argument that restructuring bonuses offered to corporate officers were sufficient basis from which to infer motive to defraud was without merit because. CA2 NY) 264 F3d 131. at minimum.10b-5. because plaintiff has again failed to plead either (1) motive and opportunity or (2) circumstantial evidence of recklessness. and revenues. stockholders failed to plead facts showing strong inference that corporation and corporate officers actually knew that their forward-looking statements reaffirming earnings projections were false or misleading such that application of safe harbor under 15 USCS § 78u-5(c)(1)(B) was appropriate. affd in part and revd in part on other grounds (1976.Get a Document . 15 USCS §§ 78a et seq. app dismd (1993. and accounting for inventory. Claim for securities fraud secondary liability is not stated by stockholders under 15 USCS § 78j(b). Cammer v Bloom (1989.15 USCS § 78j https://www. Litig. prohibiting fraudulent or deceptive conduct in offer and sale of securities. CCH Fed Secur L Rep P 95211. (2003.by Citation . P.

LLC (2005. limited liability company and its principals. and (2) there were insufficient facts to demonstrate that parent knew. SD NY) 312 F Supp 2d 549. 15 USCS § 77q(a). (2005. DC Md) 378 F Supp 2d 561. Litig. (2004. Sec.com/research/retrieve?cc=&pushme=1&tmp. (2004. that subsidiary's financial results were false. alleged facts supported strong inference of scienter as to officers.lexis.15 USCS § 78j https://www. Inc. SD NY) 382 F Supp 2d 549. Sec. he did not have scienter necessary to aid and abet corporation's CEO in committing securities fraud. DC Md) 378 F Supp 2d 561. City Emples. it would have discovered.000 fine. (2004. Securities purchasers clearly pled scienter as to defendant accounting firm. Scienter was established in Securities and Exchange Commission's action against company president under § 17(a) of Securities Act of 1933. SD NY) 406 F Supp 2d 433. and corporation would need to take charge against earnings) was dismissed. (2005.. Plaintiff established genuine issues of fact as to scienter as to claims against his broker where jury could find that broker's use of strategy staking virtually all available assets in one taxable account on his belief that market would not dip precipitously. massive goodwill overvaluation. L. Sys. DC Conn) 392 F Supp 2d 267. purchasers alleged that these defendants failed to cooperate with SEC investigation. and in support of that allegation. (2005. investors sufficiently pled scienter as to subsidiary but not as to parent. certain defendants lacked any knowledge of trade secrets. and admitted he did not know who owned patent despite representations to investors that company had patent rights. (2005. Where shareholder alleged that several corporate officers were aware of certain accounting manipulations. LTD. entrepreneur was entitled to judgment in his favor on SEC's claims that he aided and abetted securities fraud in violation of § 10(b) (15 USCS § 78j(b)) and § 13(b)(2)(A) (15 USCS § 78m(b)(2)(A)) of Securities Exchange Act of 1934. CCH Fed Secur L Rep P 92727. Carlson v Xerox Corp. and § 10(b) of Securities Exchange Act. DC Colo) 387 F Supp 2d 1130. Where investors alleged that company failed to disclose that it had extended loan guarantees to customers to purchase ships. he continued to tell clients that their money would be invested according to master financial plan. Litig. Promoter aced with scienter when he made misrepresentations and omission that caused clients to invest in Ponzi scheme where he knew that investor funds were not being used as represented. v Athanassiades (2005. Litig. taxes. when. as purchaser's allegations did not meet scienter pleading requirement as to officers. as purchaser's allegations did not meet scienter pleading requirement as to individual corporate officers. Litig. (2005. Conscious misbehavior or recklessness could not be inferred where it was alleged that 1) management set aggressive targets. purchasers alleged that on numerous occasions these defendants represented that they were fully cooperating with SEC. despite that knowledge. ND Ill) 404 F Supp 2d 1083. they made note of statement from SEC concerning $ 10. In re Acterna Corp. but plaintiff shareholder failed to allege (1) that company or individual defendants acted with conscious intent to defraud or even that company entered into any specific transaction merely to boost revenues and earnings before interest. that is. based on defendant company's and defendant officers' knowledge of facts and access to information contradicting their public statements. Litig. In re Acterna Corp. DC Conn) 392 F Supp 2d 267. and which. N. because: (1) complaint failed to allege that parent had sufficient motive to orchestrate accounting improprieties at subsidiary. while he may have been negligent in not checking dummy shipment. In re Alstom SA Secs. inter alia. constituted conscious misbehavior or at least recklessness. including defendant company. Litig.Y. but distributed brochures touting approval. which at minimum went along with accounting practices it knew to be clear violations of Generally Accepted Accounting Principles.. 15 USCS § 78j(b). 15 USCS § 78j(b). committee members' conduct did not tend to show that danger of fraud was known to either man or obvious to him. including number of legal opinion letters that opined that RLLPs were not securities. CCH Fed Secur L Rep P 93233. Inc. factual allegations in complaint portrayed firm as "virtual pushover" in its dealings with company whose securities plaintiffs purchased. and knowingly participated in scheme to defraud that supported allegedly false statements. (2005.by Citation . DC Mass) 317 F Supp 2d 58. where president admitted he knew company's alleged medical device was not approved by Food and Drug Administration. CCH Fed Secur L Rep P 92875.) (2005. SD NY) 308 F Supp 2d 249. first. Sec. Inc. and two officers' signing filings containing misrepresentations. In re Qwest Communs. court granted defendants' motions to dismiss. were involved in questionable swap transactions. Stock purchaser's securities fraud complaint was dismissed as to corporation's outside auditor. depreciation and amortization and (2) facts demonstrating recklessness or showing that company or individual defendants knew facts or had access to information suggesting that swap transactions at issue were improper. CCH Fed Secur L Rep P 93514. CCH Fed Secur L Rep P 93630. 15 USCS § 77q(a). they were not. these allegations may have given rise to inference that many telecom companies. and he 54 of 158 3/8/11 4:25 PM . and they knew that at least two of leading companies in relevant industry used RLLP structure. SEC v Global Telecom Servs. motion den. allegations did not support strong inference that auditor knew or recklessly disregarded that corporation's financial statements were materially false or misleading due to purported overvaluation of goodwill.Get a Document . investors alleged facts giving rise to strong inference of fraudulent intent based upon company's access to information about vendor financing arrangements. SD NY) 406 F Supp 2d 433. disclosure of loan was delayed for period of weeks. however. and that alleged manipulations and statements were part of pervasive and long-standing series of accounting machinations and resulting misstatements. SEC v Peretz (2004. (2005.C. In re Flag Telecom Holdings.000. In re Alstom SA Secs. was intimidated into signing off on minimal restatement of company's financial statements that accounted for only small portion of company's overstatements of revenues and pre-tax earnings. 3) in order to meet earnings estimates. and 5) real products were shipped to real customers who paid real money. Sec. In re Bristol-Myers Squibb Sec. even after it was clear early in 2001 that there were very serious concerns about company's accounting practices and it was apparent that it was questionable--at best--whether company took seriously its obligation to comply with applicable accounting rules. they relied in good faith upon information they had received. ND Ga) 400 F Supp 2d 1336. While accused statements indicated that some telecom companies were involved in fraudulent swaps and that defendant company was on other side of allegedly improper swap. they also did not support conclusory allegation that had auditor conducted its audit in accordance with Generally Accepted Auditing Standards. had committed violations of § 17(a)(1) of Securities Act. therefore. DC Conn) 325 F Supp 2d 94. Ret. Securities purchasers clearly pled scienter. Louros v Kreicas (2005. that officers made statements or were sufficiently connected to group statements that they knew to be false. § 10(b) of Securities Exchange Act of 1934. investor sufficiently stated claim based on allegation that certain defendants used investor's secret trading techniques to manipulate method by which values were calculated with knowledge that there was protective order regarding secrets. 2) incentives were given to wholesalers to buy product before they actually needed it. CCH Fed Secur L Rep P 93303. especially after significant losses were realized from options spread just one month earlier. injunction gr (2005. Stock purchaser's securities fraud complaint (alleging that corporate officers knew or were reckless in not knowing value of goodwill that was acquired from two entities that corporation purchased was severely impaired. Litig. SEC v Merchant Capital. v Ebbers (In re WorldCom. defendants did not act with scienter. Securities and Exchange Commission failed to present prima facie case that defendants. in fact. second. factual allegations made clear that this was not case of client's innocent reliance on advice from accountants. Int'l. Carlson v Xerox Corp. Section 10(b) of Securities Exchange Act of 1934 claim was dismissed as to defendant compensation committee members where plaintiff actuarial pension funds alleged that committee members approved improper loan to chief executive officer and sought to conceal loan from board and public.L. or was reckless in not knowing. 4) it was known that wholesaler inventories were higher than usual. Securities and Exchange Commission (SEC) failed to prove that entrepreneur had knowledge of security fraud committed by chief executive officer (CEO) of corporation because entrepreneur did not know that cards ordered from corporation were dummies or that cards shipped were incompatible with his product and. inter alia. therefore. SD NY) 2005 US Dist LEXIS 7958. CCH Fed Secur L Rep P 93303. SD NY) 367 F Supp 2d 572. DH2. in connection with sale of general partnership interests in registered limited liability partnerships (RLLPs). purchasers' confidential witness did not provide information about how officers were involved in alleged schemes to misrepresent value of goodwill or how each officer knew of alleged fraud. Where investor alleged that defendants engaged in price manipulation and made misrepresentations regarding mutual fund pricing. inter alia. Where investors alleged that subsidiary intentionally underbid contract which resulted in overstatement of income in parent's accounting statements. already strong inference of fraudulent intent was made stronger by two sets of allegations concerning SEC investigation.

DC Utah) 505 F Supp 2d 1193. lender and others. 9(b) and Private Securities Litigation Reform Act of 1995. and (2) as to 1998 audit report. that they reasonably believed that plaintiff was in contact with competent SEC counsel to assist her in this transaction..15 USCS § 78j https://www. because director and two former directors were alleged to have signed allegedly fraudulent financial statements. and (4) there was no evidence that he was involved in. district court's conclusion was proper that one defendant was personally responsible for making misleading statements by conveying information to potential investors and SEC. determining if revenue would be recognized. and S. DC NM) 695 F Supp 2d 1165. request gr (2010. and (3) there were more than sufficient allegations that partnership either knew or was reckless in not knowing that most of sales allegedly made by corporation in 2004 were fictitious. Unpublished: Misstatements and omissions created false impression that company was profitable. SEC v Espuelas (2008. and promissory fraud. R. and S. Securities and Exchange Commission Act's claims that senior vice president had violated 15 USCS §§ 77q(a) and 78j(b) with respect to accounting for contingent transactions survived where accounting for contingent transactions was not complex. and partnership because (1) fact that director was not trained as accountant was not sufficient to negate scienter as to alleged booking of nonexistent sales and subsequent execution of SEC filings. CCH Fed Secur L Rep P 93585. and complaint sufficiently alleged scienter as to director. founder and CEO of biopharmaceutical company. former directors." and that Consolidated Tape Association was deceived into paying money to NASA that it would not have paid had it known true nature of officer's trades. P. considering allegations as whole and public filings. were proper exercise of SEC's discretion given fact that officer's violation was serious and capable of repetition. violation of state Consumer Fraud Act (NJCFA).C. CCH Fed Secur L Rep P 94336..10b-5 because substantial evidence supported SEC's finding that officer designed and operated his automatic trading program for sole purpose of capturing rebate revenue. CCH Fed Secur L Rep P 95593. (2007.E. (2) he could not be held liable because he signed earlier version of SOW before it was later fraudulently altered. knew that company operated at loss. Litig. Fund (2008. Stock purchasers' claims under § 10(b) of Securities Exchange Act of 1934. Civ. Inc. and documents that they had signed contained no statements or omissions that established strong inference of scienter. and complaint contained no specific reference to any accounting principle or standard that was violated by Internet portal's recognition of revenue from base book or incremental revenue transactions. SD NY) 579 F Supp 2d 461. Litig. Amanat v SEC (2008. violation of § 10(b) of Securities Exchange Act of 1934.10b-5. Secs.. relationship between plaintiff and certain defendants was subject of conflicting testimony that could not be resolved on motion for summary judgment. and 17 CFR § 240. CCH Fed Secur L Rep P 94864. CA9 Nev) 156 Fed Appx 917. In proposed second amended complaint. CCH Fed Secur L Rep P 95593. however. SD NY) 579 F Supp 2d 461. inference of scienter was at least as likely as any other inference with respect to officer's statements concerning lender and subprime mortgages. with broad 55 of 158 3/8/11 4:25 PM . (3) company's president did not rely on SOW when he decided to recognize earnings. 15 USCS § 78j(b). denial of leave to amend was abuse of discretion because district court did not provide any reasoned explanation as to why leave to amend would be futile. violation of state Loan Broker Statute (NJLBS). SEC v Espuelas (2008. further. (2007. signed for unreported loans and unreported interest payment checks. In re Thornburg Mortg. he knowingly engaged in thousands of wash sales. Unpublished: Shareholders based their claim that director participated in alleged backdating scheme on allegation that. or otherwise had responsibility for. as vice-president of corporation. then their conduct could not have been reckless. inter alia.R. allegations that they knew or were reckless in not knowing that base book transactions were to be accounted for as barter transactions or that income from those transactions was improperly recorded as revenue were conclusory and did not support strong inference of fraudulent intent. SD NY) 579 F Supp 2d 461. CTO argued unsuccessfully that (1) SEC could not prove that Statement of Work (SOW) was not completed in first quarter. DC Dist Col) 530 F Supp 2d 307. (2008.10b-5. Ltd. satisfied pleading requirements of Fed. Shareholders' 15 USCS § 78j(b) claim against residential mortgage lender's chief operating officers survived where. CTO motion for summary judgment was denied because each of CTO's four arguments owed that genuine issue of material fact existed in case. Defendant could be found liable to Securities and Exchange Commission for violations of 15 USCS §§ 77q. sanctions imposed. Rule 10b-5 claims.E. Secs. SEC v Aragon Capital Mgmt. SEC v Global Express Capital Real Estate Inv. there was sufficient pleading of scienter based on strong circumstantial evidence of at least recklessness. Unpublished: In action in which plaintiff. Unpublished: Court affirmed SEC's finding that officer for securities and technology company willfully violated § 10(b) of Securities Exchange Act of 1934. SEC v Merrill Scott & Assocs. impression that would have assumed significance in deliberations of any reasonable investor. against bank for securities sold over American stock exchange because plaintiffs had stated that officials of bank misstated impact of mortgage crisis on bank's financial health and on securities sold by bank. CCH Fed Secur L Rep P 94864. CCH Fed Secur L Rep P 94864. In re Saxton Sec. DC NM) 695 F Supp 2d 1165. Rule 10b-5. Litig. CA9 Nev) 2008 US App LEXIS 16992. Shareholders' 15 USCS § 78j(b) claim against former officers and directors of residential mortgage lender did not survive where shareholders had not attributed any wrongful conduct or statements to them. filed suit against defendants.Get a Document . while harsh. Ltd.by Citation .10b-5 based on admitted findings that defendant acted recklessly in disclosing confidential insider trading information to others. and complaint contained no specific reference to any accounting principle or standard that was violated by Internet portal's recognition of revenue from base book or incremental revenue transactions. complaint was properly dismissed because (1) stock purchasers lacked standing with respect to 1999 audit report. In re Thornburg Mortg. SD NY) 2010 US Dist LEXIS 5203. that he contacted National Association of Securities Dealers to request payment despite having been told that his trades were "wrong. (2010. DC NJ) 2007 US Dist LEXIS 31093. Cornwell v Credit Suisse Group (2010. allegations that auditor should have been aware of Generally Accepted Accounting Principles violations and should have perceived red flags indicating errors in financial statements did not satisfy Private Securities Litigation Reform Act of 1995 pleading requirement for scienter. SEC v Johnson (2008.10b-5. alleging common law fraud. defendants were denied summary judgment on Securities Exchange Act of 1934 and S. § 240. 78j. stock purchasers' complaint alleging that corporate officers were deliberately reckless or had actual knowledge that financial statements were materially misleading was properly dismissed because it failed to meet pleading requirement for scienter based upon allegations that officers. that he matched orders at end of financial quarter to meet eligibility threshold. 109 Stat. lead plaintiffs had adequately alleged violations of 15 USCS § 78j and 17 CFR § 240. v Deloitte & Touche LLP (2005. (2009. breach of contract. allegations that they knew or were reckless in not knowing that base book transactions were to be accounted for as barter transactions or that income from those transactions was improperly recorded as revenue were conclusory and did not support strong inference of fraudulent intent. SD NY) 689 F Supp 2d 629.com/research/retrieve?cc=&pushme=1&tmp.F. claims against director and former directors alleged misstatements that were disseminated to public as part of corporation's SEC filings. SD NY) 672 F Supp 2d 421. Unpublished Opinions Unpublished: Where stock purchasers alleged that auditor made material misstatements in connection with its audit reports on corporation's financial statements. (2) as to former directors.C. common law breach of fiduciary duty. allegations that she was aware of sales department's policy on insertion orders suggested importance of disclosing side agreements. 17 CFR § 240. CA3) 2008 US App LEXIS 5716. SEC v Espuelas (2008. and Rule 10b-5. Rule 10b-5. Securities and Exchange Commission Act's claims that CEO and president violated 15 USCS §§ 77q(a) and 78j(b) were dismissed where even though complaint alleged material misrepresentations with sufficient particularity under group pleading doctrine as to one transaction. Katz v Image Innovations Holdings.lexis. 737. Securities and Exchange Commission Act's claims that CEO and president violated 15 USCS §§ 77q(a) and 78j(b) were dismissed where even though complaint alleged material misrepresentations with sufficient particularity under group pleading doctrine as to one transaction. Shogen v Global Aggressive Growth Fund. 17 CFR § 240. SD NY) 542 F Supp 2d 269. which alleged that corporation's financial results reflected revenues that were artificially enhanced through booking of fictitious sales. (2010. 15 USCS § 78j(b). and act of concealing information or failing to document agreements gave rise to strong inference of fraudulent scienter. In case in which Securities and Exchange Commission (SEC) alleged that company's Chief Technology Officer (CTO) violated 15 USCS § 78j(b) and 17 C. if factfinder accepted defendants' version of facts.E.C.

Pegasus Fund. knowledge of company. different results reached on reh (1981. as well as and recipient of backdated stock options. en banc.15 USCS § 78j https://www. it was logical to conclude that promoter knew that failing to disclose compensation would mislead readers by making promoter's opinions appear objective. CA9) 1990 US App LEXIS 19892 and cert den (1991) 499 US 976. CA3 Pa) 616 F2d 641. ND Ohio) 116 F Supp 2d 917). which danger is either known to defendant or is so obvious that actor must have been aware of it. Inc. it is lesser form of intent. Arnlund v Deloitte & Touche LLP (2002. den (1980. SD Tex) 235 F Supp 2d 549. Where shareholders amended complaint did not articulate scienter element in terms of motive and opportunity. but extreme departure from standards of ordinary care. ND Cal) 2008 US Dist LEXIS 91909. which will satisfy scienter requirement for primary violation of 15 USCS § 78j(b). CA3 Del) 599 F2d 1190. affd in part and revd in part on other grounds. (2008. States Bank Nat'l Ass'n v U. and reckless disregard of auditor's narrow duty of disclosure as to firm it audits is conduct of extreme sort to be found only sparingly. omission caused because defendant genuinely forgot about facts would not be actionable. Secs. ND Cal) 970 F Supp 746. (1997. CCH Fed Secur L Rep P 97919. is not merely heightened form of ordinary negligence. cert den (1981) 454 US 965. which discussed results of clinical trials of corporation's drug without mentioning corporation's serious concerns about side effect. involving not merely simple or even inexcusable negligence. injunction den. CA7 Ill) 553 F2d 1033. 98 S Ct 225. what constitutes recklessness is not to be answered by simple reference to tort doctrines. 98 S Ct 224. 48. CA5 Tex) 640 F2d 534. generally Recklessness is sometimes considered form of intentional conduct for purposes of imposing liability. Inc. those allegations were insufficient to establish that director knowingly received backdated options or that he played active role in alleged scheme. SEC v Gorsek (2002. district court instructing jury on scienter requirement should not have defined recklessness by use of phrase "indifference to the consequences" instead of definition of recklessness as extreme departure from standards of ordinary care. (2002. Recklessness. (1980. is defined as conduct that is extreme departure from standards of ordinary care and that presents danger of misleading buyers or sellers. In context of both omissions and misstatements under 15 USCS § 78j(b). which satisfies scienter requirement. v Laraneta (1980. Healey v Catalyst Recovery of Pennsylvania. requiring extreme departure from standards of ordinary care. remanded (1983) 459 US 375. Litig. findings of fact/conclusions of law (2002. recklessness is sufficient to establish scienter for purposes of cause of action under SEC Rule 10b-5. is defined as highly unreasonable omission. CCH Fed Secur L Rep P 95887. CA9 Cal) 1980 US App LEXIS 17417. Ball & Turben (1979.. (1980. reckless omission of material facts upon which plaintiff put justifiable reliance in connection with sale or purchase of securities is actionable under § 10(b) and Rule 10b-5. McLean v Alexander (1979. reckless conduct may be defined as highly unreasonable conduct involving not merely simple. reh. Mansbach v Prescott. 33 FR Serv 3d 1389 (criticized in In re Enron Corp. shareholders' claim under § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 against director was dismissed with leave to amend. 113 L Ed 2d 719. Under certain circumstances. objective obviousness of danger is sufficient for liability even absent actual appreciation of significance of omitted material. jury could reasonably have found that corporation adopted statements of consultants with whom it had two-way communications and that it knew or should have known that statements contained material and misleading omissions. CCH Fed Secur L Rep P 96843. Derivative & ERISA Litig. App DC) 296 US App DC 269. rather. SEC v C. which presents danger of misleading that is either known to defendant or is so obvious that actor must have been aware of it. CA10 Okla) 77 F3d 1215. amd.Get a Document . DC NJ) CCH Fed Secur L Rep P 93507. is defined as conduct that is extreme departure from standards of ordinary care. which defined recklessness under § 10(b) of the Securities Exchange Act of 1934 (15 USCS § 78j(b)) as an act so highly unreasonable and such an extreme departure from standard of ordinary care as to have presented danger of misleading plaintiff to the extent that the danger was either known to defendant or so obvious that defendant must have been aware of it. Hollinger v Titan Capital Corp. CCH Fed Secur L Rep P 91914. CCH Fed Secur L Rep P 99056. In re Bristol-Myers Squibb Sec.com/research/retrieve?cc=&pushme=1&tmp. court applied recklessness standard. he must have known of scheme and permitted it to occur. In action under SEC Rule 10b-5. CA5 Tex) 614 F2d 418. CA6 Ky) 598 F2d 1017. 70 L Ed 2d 380. CD Ill) 222 F Supp 2d 1124. (2005.. CCH Fed Secur L Rep P 97956. Sundstrand Corp. CCH Fed Secur L Rep P 99468). Recklessness required for liability under SEC Rule 10b-5 must come close to being lesser form of intent to deceive rather than merely being greater degree of ordinary negligence. and while danger need not be known.S. requirement is that plaintiff establish that defendant lacked genuine belief that information disclosed was accurate and complete in all material respects. CCH Fed Secur L Rep P 91977. Huddleston v Herman & MacLean (1981. (1977. even if such omission was derived from inexcusable neglect.S.--What constitutes recklessness. CA9 Cal) 617 F2d 1335. CCH Fed Secur L Rep P 91979. SEC v Curshen (2010. which presents danger of misleading buyers or sellers that is either known to defendant or so obvious that actor must have been aware of it. but conduct must involve more than simple or even inexcusable negligence. 133 ALR Fed 737. 102 S Ct 506 and (ovrld as stated in U. Derivative Litig. 103 S Ct 683. Anixter v Home-Stake Prod.lexis. based on its paid consultants' statements at medical conference. CCH Fed Secur L Rep P 96879. CA10 Colo) CCH Fed Secur L Rep P 95718. CCH Fed Secur L Rep P 97326. Unpublished: Corporation was not entitled to summary judgment on representative's claims that corporation violated § 10(b) of Securities Exchange Act of 1934. motion den (2002. and use of reckless alternative in assessing liability under 15 USCS § 78j(b) is proper. Reckless conduct sufficient to meet scienter requirement of 15 USCS § 78j is extreme departure from standards of ordinary care presenting danger of misleading buyers or sellers that is either known to defendant or is so obvious that actor must have been aware of it. Del Ch Ct) 2004 Del Ch LEXIS 106). CCH Fed Secur L Rep P 96861 (superseded by statute as stated in Burns v Prudential Sec. CA9 Wash) 914 F2d 1564. DC 56 of 158 3/8/11 4:25 PM . it must be at least so obvious that any reasonable man would have known of it. CCH Fed Secur L Rep P 97281. Unpublished: District court did not clearly err in finding that promoter acted with requisite scienter for purposes of 15 USCS §§ 78j(b) and 77q(a)(1) in failing to disclose in anonymous Internet postings about company that promoter was compensated for promoting company. CCH Fed Secur L Rep P 92239). CD Ill) 222 F Supp 2d 1112. CCH Fed Secur L Rep P 95500. (2004. CA5 Tex) 642 F2d 929. SEC v Steadman (1992. (1990. Recklessness. 111 S Ct 1621 and (superseded by statute as stated in In re Silicon Graphics Sec. and which presents danger of misleading buyers or sellers that is either known to defendant or is so obvious that actor must have been aware of it. 15 USCS § 78j(b). CCH Fed Secur L Rep P 99058. with reference to accountant. and "reckless behavior" must not be so liberally construed as to obliterate distinction between scienter and negligence. reh den. 49 ALR Fed 373. but danger of misleading buyers must be actually known or so obvious that any reasonable man would be legally bound as knowing. CD Ill) 225 F Supp 2d 921. Extreme recklessness.by Citation . Timberlands Klamath Falls (2004. and thus. Defendant's scienter was shown through defendant's reckless conduct in posting on Internet statements that falsely implied defendant was analyst following certain stocks and that defendant's opinions were based on analysis. Recklessness which may satisfy element of scienter in civil action for damages under § 78j(b) and Rule 10b-5. and which presents danger of misleading buyers or sellers that is either known to defendant or is so obvious that actor must have been aware of it. (1996. which can satisfy scienter requirement. and which presents danger of misleading buyers or sellers that is either known to defendant or is so obvious that actor must have been aware of it. reh den (1990. ED Va) 199 F Supp 2d 461. but extreme departure from standards of ordinary care. 967 F2d 636. judgment entered. Jones & Co. Litig. v Sun Chemical Corp. cert den (1977) 434 US 875. 8 Fed Rules Evid Serv 61. In re Atmel Corp. 74 L Ed 2d 548. or even inexcusable negligence. CCH Fed Secur L Rep P 97268. (2000. Broad v Rockwell International Corp. Recklessness is highly unreasonable conduct which is extreme departure from standards of ordinary care.. Co. it is extreme departure from standards of ordinary care which presents danger of misleading buyers or sellers that is either known to defendant or is so obvious that actor must have been aware of it. 54 L Ed 2d 155.

9(b) and Private Securities Litigation Reform Act where alleged misrepresentations were largely definitional and as such. Cozzarelli v Inspire Pharms. 15 USCS § 78j(b). CCH Fed Secur L Rep P 99505) and (criticized in In re MicroStrategy Inc. SD Fla) 17 F Supp 2d 1345). complaint was sufficient on element of scienter where it alleged that these defendants participated in making statements which they knew (or were reckless in not knowing) were false when made. on reh (1988. (2) while representative did receive draft of memorandum for review. Brown v Earthboard Sports USA. Complaint alleging violation of § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder. but later. and defendant failed to ensure that plaintiff understood he would not share in growth of company unless and until defendant permitted plaintiff to convert his shares to common stock. Scienter requirement of action under § 78j(b). (1987.. CCH Fed Secur L Rep P 94182.lexis. CCH Fed Secur L Rep P 98639. CA9 Cal) 886 F2d 1109. cert den (1990) 496 US 943. (1996. (2007. including payroll costs of software engineers and other personnel. Inc. and that present danger of misleading buyers or sellers which is either known to defendant or so obvious that defendant must have been aware of it. McDonald v Alan Bush Brokerage Co. 24 FR Serv 2d 516.. but extreme departure from standards of ordinary care. CA11 Fla) 863 F2d 809. CA9 Or) 552 F3d 981. but rather.----In particular circumstances District court's definition of recklessness as "carelessness approaching indifference" was not legally incorrect. (2009. 110 S Ct 3229. Litig. 9(b) and Private Securities Litigation Reform Act where allegations that company's management had access to purportedly manipulated quarterly accounting numbers. Hutton & Co. they were in incomplete form when he got them. since firm had acted to protect account. finding that underwriter's representative in charge of company's debenture offering did not act recklessly in approving confidential memorandum prepared for potential investors was not in error where (1) representative relied upon company for information. amd. CCH Fed Secur L Rep P 95038. 2007 FED App 102P.. In re Graystone Nash." but such is limited to those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusable negligence. Purchasers' allegations with respect to company's issuance of restatement of earnings were insufficient to allege scienter with particularity required by Fed. Inc. 17 CFR § 240. R. In re Apple Computer Sec. because allegedly fraudulent statements did not create required strong inference of scienter.com/research/retrieve?cc=&pushme=1&tmp. but extreme departure from standards of ordinary care. Purchasers' allegations with respect to company's issuance of restatement of earnings were insufficient to allege scienter with particularity required by Fed. or that management analyzed inventory numbers closely. Civ. cert den (1978) 439 US 830. et al. and SEC Rule 10b-5 can be met by showing of "severe recklessness. CA11 Fla) 847 F2d 673. CCH Fed Secur L Rep P 93813. (2009. since showing of recklessness can satisfy scienter requirement. SD NY) CCH Fed Secur L Rep P 99324) and (criticized in In re Health Mgmt. Hackbart v Holmes (1982. CA2 NY) 479 F2d 1277. statements about company's experimental drug raised inference indicating intent to protect company's competitive advantage. so that plaintiff was not issued common stock but nonparticipating preferred stock. and Ky. 58 L Ed 2d 124. fact that advisor was also victim of scheme did not relieve him from liability. Civ. District court properly found defendant in securities fraud case acted with sufficient recklessness to satisfy scienter requirement of 15 USCS § 78j(b) and SEC Rule 10b-5. and since these defendants were insiders or affiliates participating in offer of securities in question. P. even if action did not ultimately serve client's interest. reh den (1978) 439 US 998.----Acting on reasonable belief not reckless Recklessness cannot be established where defendant entertains reasonable belief that all facts have been disclosed. CA4 NC) 549 F3d 618. CCH Fed Secur L Rep P 93959. P.Get a Document . Coleco Industries. (1987. Zucco Partners. 292.F. 58 L Ed 2d 671. Scienter is established by showing that defendant acted intentionally or with severe recklessness. CCH Fed Secur L Rep P 93635. Secs. no specific connection between fraudulent representations and particular defendant was necessary. Brokerage firm which sold short 55 Treasury Bond futures in client's account without client's authorization (client having been away and out of contact) to offset declining value of 55 Treasury Bond futures which client held in long position could not be said to have been made with scienter necessary for client to bring action against firm under § 10(b) Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder. where he encouraged plaintiff to invest in tire business on 50 percent-50 percent basis. and (4) there were no facts that would compel finding that acts of commission or omission were reckless in that they were so highly unreasonable and such extreme departure from standards of ordinary care as to present danger of misleading plaintiff to extent that danger was either known to representative or so obvious that representative must have been aware of it. 9(b) and Private Securities Litigation Reform Act where complaint failed to allege with particularity facts supporting its assumptions that confidential witnesses were in position to be personally knowledgeable of information alleged. (2000. Investors' lawsuit against pharmaceutical company and three of its directors failed to adequate allege scienter under Securities Act of 1934. Inc. Actions of defendants were not reckless where trial court specifically determined that defendants represented to plaintiff condition of corporation as they believed it to be and that they were forthright in their dealings with plaintiff and did not deliberately misrepresent any aspect of corporation's status or operation and where only information suggested which could have alerted corporation to inaccuracies was equally available to plaintiff. there was material issue of fact on essential element of scienter with respect to specific statement praising capabilities of new products and research that went into them. were insufficient to allege scienter with particularity required by Fed. CCH Fed Secur L Rep P 93545.320(1) in favor of financial advisor was reversed because investor sufficiently alleged scienter because advisor was fully cognizant of prohibitions against trading on non-public insider information. then on 51 percent-49 percent basis when defendant insisted on maintaining control. CCH Fed Secur L Rep P 94714. Civ. 17 FR Serv 2d 365 (criticized in Sloane Overseas Fund v Sapiens Int'l Corp. or wrongful intent. 99 S Ct 106. In action under SEC Rule 10b-5. Stat. Zucco Partners. CCH Fed Secur L Rep P 91213). falsity of representations would not have 57 of 158 3/8/11 4:25 PM .10-5 (Rule 10b-5). ED NY) 970 F Supp 192. R. LLC v Digimarc Corp. 99 S Ct 601. have reasonable basis for achieving plaintiff client's expressed investment goals. Purchasers' allegations that company improperly capitalized internal software development costs. Rev. Auslender v Energy Management Corp. Messer v E. (1996) 1996 SEC LEXIS 3545. (3) representative invested money of his own in company. (1978. v Berman (1977. (1997. CA3 Pa) 567 F2d 569. P. CA1 Mass) 587 F2d 509. (2008. Summary judgment on securities fraud claim brought under § 10b of Securities Exchange Act of 1934. (1989. on advise of counsel.by Citation . CA11 Fla) 833 F2d 909. 49. Litig. R.. CCH Fed Secur L Rep P 94177 (criticized in Malin v IVAX Corp. CA6 Ky) 481 F3d 901. and were thus allegedly liable as aiders and abettors. plaintiff failed to meet this standard where his expert testified merely that three securities recommended by account executive at defendant brokerage firm did not.15 USCS § 78j https://www. decision was within bounds of accepted industry practice. CCH Fed Secur L Rep P 96253. recklessness is defined as highly unreasonable conduct involving not merely simple or excusable negligence. CA6 Ky) 832 F2d 354. Inc. Hoffman v Estabrook & Co. and few allegations that had requisite level of particularity failed to demonstrate deliberate recklessness. 9 FR Serv 3d 732. CCH Fed Secur L Rep P 95038. Colo) 312 F Supp 2d 1375. CA10 Colo) 675 F2d 1114. Litigation (1989. and was not involved in wording or composition of memo. changed terms of deal without telling plaintiff. 15 USCS § 78j(b). and fact that firm also acted in its own interest did not render its decision reckless since interests of client and firm were aligned rather than antagonistical. CCH Fed Secur L Rep P 96587. did not support inference that management was in position to know that such data was being manipulated. ED Va) 115 F Supp 2d 620. Lanza v Drexel & Co. 50. at time transactions were effected in them. Sec. (1998. as to other defendants who were alleged to have provided information which they knew would be included in registration statement and prospectus on which they knew potential investors would rely. LLC v Digimarc Corp. 110 L Ed 2d 676. CA9 Or) 552 F3d 981. based on computer company's alleged failure to disclose material risks in making statements about newly developed products. (1973. was adequate to satisfy scienter requirement of Rule 10b-5 with respect to broker where at least one allegation indicated broker's failure to investigate verifiable fact. Inc.

rather. CA9 Or) 552 F3d 981. where complaint alleges sellers knew (1) of certain material facts and (2) that statements made to investors about securities were misleading absent disclosure of material facts.P. inter alia. Cos.Get a Document . LLC v Digimarc Corp." like gross misrepresentation of corporation's 1984 finances alleged here. MD Tenn) 200 F Supp 2d 853 and subsequent app (2002. CCH Fed Secur L Rep P 95204. Record was replete with information about procedures that were in place before Montrose Chem. Brokerage firm does not act recklessly in describing oil drilling partnership as low risk investment when representation is made in context of comparing partnership to exploratory oil and gas tax shelter program of even more highly speculative nature. (1977. CCH Fed Secur L Rep P 92895. they pointed to conclusion that company was simply overwhelmed with integrating large new division into its existing business. ND Cal) 441 F Supp 1056. (2009. additionally. including following: (1) failure to disclose corporation's $ 750 million guarantee of another entity on prospectuses used for two offerings. because sellers told buyer of loss of account. Civ. Investment funds' suit alleging that corporation and its chief executive officer fraudulently misrepresented timing and magnitude of planned stock repurchase program and dividend increase to induce them to participate in tender offer failed to state claims under §§ 10(b) and 14(e) of Securities Exchange Act. Civ. were insufficient to allege scienter with particularity required by Fed. LLC v Digimarc Corp. (1988. R. P. Zucco Partners. (2009. because they failed to meet Tellabs requirement with regard to pleading scienter. CCH Fed Secur L Rep P 93222. and (4) manipulation of valuation of contracts. Litig. In re Initial Pub. LLC v Digimarc Corp. (2009. CCH Fed Secur L Rep P 93572. adopted. Zucco Partners. all incentives by corporate management to increase revenue at any company could be construed as reckless and could implicate management in violation of SEC Rule 10b-5. because reckless conduct under § 78j(b) includes conduct which is "highly unreasonable" and which represents "extreme departure from standards of ordinary care. In re Williams Sec. said sales dropped. and loans extended to corporate defendants during class period and to include these figures in calculating earnings. SD NY) 439 F Supp 1233. Litig. Court denied motion to dismiss. R. Civ. P. Arnlund v Deloitte & Touche LLP (2002. (2004. v Conaway (2003. therefore.4 billion guarantee whereby corporation's credit rating served as trigger on its obligations under this guarantee. ND Okla) 339 F Supp 2d 1206. without more.com/research/retrieve?cc=&pushme=1&tmp. Zucco Partners. CA9 Or) 552 F3d 981. v. Civ. bonuses. Purchasers' allegations concerning two company officers' stock sales during class period were insufficient to allege scienter with particularity required by Fed. where complaint provides adequate factual foundation for its allegation that firms acted recklessly in preparing and certifying financial statements concerning corporation. Complaint alleging that auditing firm was intimately familiar with financial workings of company. could have been viewed as conscious misbehavior. but this evidence was not sufficient to create genuine issue that they acted recklessly. CCH Fed Secur L Rep P 95038. SD NY) 308 F Supp 2d 249. Where salespersons sold promissory notes used to finance conversion of mobile home parks to resident ownership. (2009. been immediately obvious to corporate management. and provided buyer with complete access to all financial records. they represented that notes were secured by recorded trust deeds. CA9 Or) 552 F3d 981. Partnership v Lynott (1987. 2002 FED App 176P (criticized in D. and which were followed. Zaro v Mason (1987. Securities and Exchange Commission properly found that they violated Securities Exchange Act of 1934 because. LLC v Digimarc Corp. Inc. (2009. ED Mich) 284 F Supp 2d 719). as well as their failure to correct misstatement concerning manger's degree. dismd (2000.E. CA6 Tenn) 290 F3d 795. 4th 645. (2009. (3) failure to disclose size of compensation. SD NY) 358 F 58 of 158 3/8/11 4:25 PM . MD Tenn) 200 F Supp 2d 853. Stock sellers did not act with willful or reckless disregard for truth where buyer claimed sellers failed to disclose exact percentage of lost sales when major account was lost. CA9 Or) 552 F3d 981. (2004. R. CCH Fed Secur L Rep P 95038. Offering Sec. and directors were in position to know this information. Steinberg v Carey (1977. and they had some knowledge of claims numbers rising and falling. Flaherty & Crumrine Preferred Income Fund Inc. 15 USCS §§ 78j(b) and 78n(e). R. this did not constitute strong inference of recklessness. Carter v Signode Industries. CA2 NY) 814 F2d 654. CCH Fed Secur L Rep P 95038. 913 P. were insufficient to allege scienter with particularity required by Fed. ED Va) 199 F Supp 2d 461. 10 EBC 1103. recklessness standard was met because corporation. Zucco Partners. even when considered holistically.. (2004. Admiral Ins. Purchasers' allegations concerning two company officers' executive compensation packages. P. since issue of whether defendants' conduct rose to level of recklessness necessary to fulfill scienter requirement for § 78j(b) claim is factual one for trial. even after Montrose. CCH Fed Secur L Rep P 95038. affd (1987. and knowledge that company was positioning itself for bankruptcy raised strong inference of requisite state of mind based on conscious reckless behavior. its senior management. P. Sec. Shareholder's securities fraud allegations failed because shareholder had not pleaded facts that indicated any of transactions company entered into with its competitors were improper and. P. v TXU Corp. CCH Fed Secur L Rep P 95038. Gebhart v SEC (2010. Bozsi Ltd. shareholder had failed to plead facts that demonstrate that company or individual officers and directors knew facts or had access to information suggesting that their public statements were not accurate. CCH Fed Secur L Rep P 95038. CA5 Tex) 565 F3d 200.. SD NY) 676 F Supp 505. Purchasers' allegations concerning company's private placement of stock during class period were insufficient to allege scienter with particularity required by Fed.by Citation . CA9 Or) 552 F3d 981. Investors' 15 USCS § 78j(b) claims against accounting firms that performed work for corporation invested in are sufficiently pled. SD NY) 658 F Supp 222. understand its materiality. (2) omission of material term of $ 1. Co. 15 USCS § 78j. Wollins v Antman (1986. Zucco Partners. CCH Fed Secur L Rep P 91914. Purchasers' allegations concerning boilerplate Sarbanes-Oxley certifications signed by company's officers were insufficient. 9(b) and Private Securities Litigation Reform Act where they failed to show any specific intent to fabricate accounting misstatements at issue. Limited partners state 15 USCS § 78j(b) claim against general partners where final partnership agreement failed to include guarantee of percentage of annual profits which general partners had included in negotiations prior to limited partners' investment. knew of serious liquidity and credit issues of company.lexis. mod. Corp. Given management's knowledge. but conducted no meaningful independent investigation to confirm truth of their representations. to ensure satisfactory reserves and profitability in business. DC Neb) 352 F Supp 2d 940. 9(b) and Private Securities Litigation Reform Act. CCH Fed Secur L Rep P 94076. CA9 Or) 552 F3d 981. Zucco Partners. Morse v McWhorter (1998. Purchasers' voluminous allegations. 10 Cal. Meier v Texas International Drilling Funds. CCH Fed Secur L Rep P 96215. Fact that trustees approved prospectus which was fraudulent for failure to disclose facts is not sufficient to establish recklessness since trustees were entitled to rely on those who prepared statement to insure adequate disclosure. and realize that failure to provide complete and accurate information with regard to these subjects would likely mislead investors. Investors properly allege scienter under 15 USCS § 78j(b) in securites fraud action. 1995). CA9) 595 F3d 1034. 9(b) and Private Securities Litigation Reform Act where complaint did not provide any information on officers' trading history to compare to stock sales at issue. LLC v Digimarc Corp. ND Ill) 694 F Supp 493. Inc. R. (2009. ND Okla) 339 F Supp 2d 1242.2d 878 (Cal. certainly there was undisputed evidence that insurance company defendants had some awareness of risks that were posed by Montrose. 9(b) and Private Securities Litigation Reform Act where there was only one stock placement and there was no allegation that it was in any way inconsistent with company's traditional business practices. In re Flag Telecom Holdings. 9(b) and Private Securities Litigation Reform Act where there was no allegation indicating how intimately bonuses were tied to company's financial performance. to allege scienter with particularity required by Fed. motions ruled upon (2003. finding plaintiffs alleged sufficient facts under Fleming standard to state claim for violation of Section 10(b) of Exchange Act. which included significant bonuses tied to company's financial performance. & J L.15 USCS § 78j https://www.. ED NY) 638 F Supp 989. Litig. Even if defendant corporate officers and board members aggressively pushed employees to increase company revenues. otherwise. CCH Fed Secur L Rep P 96132. In re Acceptance Ins. their failure to disclose expiration date of majority of advertising contracts and company's e-mail problems. LTD. Civ. LLC v Digimarc Corp.. (2003. because reckless conduct is alleged.

and any failure to verify values which were provided by manager was at most negligence. DeCicco v United Rentals. Inc. of Securities Exchange Act of 1934. nothing alleged indicated that management was promoting fraud. 15 USCS § 78j(b).500 payment he received from his investment firm. amd. DeCicco v United Rentals.) (2007. SD NY) 600 F Supp 2d 510. Investor's allegation that investment advisor and its principals (defendants) violated § 10(b) of Securities Exchange Act of 1934." for purposes of securities fraud claim against outside auditor. 20(a). and (3) shareholders had not pled strong inference of conscious misbehavior or recklessness based upon failure to disclose suggestion of renegotiations because shareholders had not alleged occurrence of significant renegotiation efforts or other significant changes constituting sharp break from prior public positions.E. which themselves conveyed to careful reader that agreement was fundamentally ambiguous on question of whether right to specific performance existed. Inc.. DC Minn) 579 F Supp 2d 1228. without disclosing substance of negotiations. 15 USCS § 78j(b). defendants brought forward no evidence demonstrating that transfers in question were for legitimate investment purposes. Litig. Ltd. SD Fla) 18 FLW Fed D 401.com/research/retrieve?cc=&pushme=1&tmp. Litig. fact that partnership suggested that corporation revise its preliminary proxy to note partnership's efforts at renegotiation supported conclusion that partnership did not act with scienter in failing to amend its Schedule 13D. partnership and others. given that financial statements in question were approved by accounting firm that was not involved in any wrongdoing. but rather medical device. S. Where investors alleged that administrator of hedge funds recklessly failed to investigate and discover scheme of manager of funds in which net asset values of funds were artificially inflated. Although defendant's statement about company's revenue goals may have proved incorrect. because shareholders failed to adequately allege scienter as required by Private Securities Litigation Reform Act of 1995 on part of defendants. 15 USCS § 78j(b). did not establish required strong inference of conscious recklessness because there were no allegations that defendants knew that fund was engaged in fraudulent Ponzi scheme and knowingly acted with intent of deceiving investor. (2009. Litig. Inc.10b-5(b). In re GeoPharma. or conscious misbehavior or recklessness because (1) shareholders did not adequately allege motive to commit fraud because it was apparent from reading of merger agreement that under some.by Citation . inter alia: (1) registered investment advisor's president attempted to conceal many transfers by (1) converting funds to cash by writing checks directly to banks. 78t(a). and (5) even if partnership had been obligated to amend its Schedule 13D. DC Conn) 602 F Supp 2d 325. because shareholders had not pled motive and opportunity. While plaintiff suggested that defendants should have been more alert and more skeptical. where shareholders alleged that corporation used improper method of accounting for its investment in another company. corporation and others. (3) he did not dispute that he overstated value of his investment firm's shares to its investors after those shares dropped significantly in value. SD NY) 235 FRD 220. 15 USCS § 78j(b). Plaintiff failed to allege that defendants had knowledge of specific contradictory information. 15 USCS § 78j(b). and (3) falsely characterizing contributions from his investment firm to another investment advisor firm as capital contribution from him. SD NY) 592 F Supp 2d 608. (2009. 17 CFR § 240. LLC (2009. 17 CFR § 240. CCH Fed Secur L Rep P 94751. there was no showing of requisite scienter based on recklessness to support claim for securities fraud under 15 USCS § 78j(b) until independent auditor of funds began questioning manager's valuation methodology and expressed concern to administrator. (2007. DC Conn) 602 F Supp 2d 325. Although shareholders had shown that another accountant would have handled matter differently and reached different audit conclusions. that information was available at same time that defendants made challenged statements. SD NY) 600 F Supp 2d 510. Inc.lexis.10b-5. Ltd..Get a Document . of Univ. or conscious misbehavior or recklessness because (1) shareholders had not alleged any concrete and personal benefit. 15 USCS § 78j(b). In suit under 78 USCS § 78j(b). (2) accounts where these funds were deposited were later used for personal expenditures. shareholders' claims were subject to dismissal because. by failing to conduct promised comprehensive due diligence of particular fund. and Rule 10b-5. through allegations that defendants. and Securities and Exchange Commission Rule 10b-5 promulgated thereunder. rather than fraudulent. since there was no duty to disclose. (2006. from press release regarding developmental company's first major sale of its product to major entity. In re Veeco Instruments. Cherry St. partnership could have abandoned acquisition of corporation upon paying $ 100 million fee. prior memorandum from internal auditor of administrator only indicated that valuation methodology was imprudent. Sec. company and its officers. In putative class suit against pharmaceutical company and its officers and directors (defendants). knew of or recklessly ignored series of accounting improprieties. Supp 2d 189. hindsight did not establish fraud. as required to prove "recklessness. SEC v Gane (2005. Rule 10b-5. Litig. DC Conn) 399 F Supp 2d 105. based on statements regarding new drug to treat cardiovascular disorders. (3) shareholders had not adequately pled scienter with regard to partnership's failure to disclose terms of limited guarantee because guarantee was not clearly material and defendants had no duty to disclose it.10b-5. and every prediction of success that failed to materialize could not create on that account action for securities fraud. (2) asking person to lie about purpose of $ 22. which was brought under § 10(b) of Securities Exchange Act of 1934. Pension Comm. they had not shown that firm's accounting practices were so deficient that audit amounted to no audit at all or that accounting judgments made were such that no reasonable accountant would have made same decision if confronted with same facts. Medis Investor Group v Medis Techs.. Defendants' recklessness was ably summarized by magistrate and included. SD NY) 559 F Supp 2d 453. CCH Fed Secur L Rep P 94868. SEC v Brown (2008." use of former term in disputed release suggested that defendants were forthright in disclosing that they had not obtained approval for drug.10b-5. thus. 17 CFR § 240. In re AstraZeneca Sec. investors failed to adequately allege scienter under 15 USCS § 78j(b) because defendants statements about new drug were not reckless. and (4) most significantly. (2005. LLC v Hennessee Group LLC (In re Bayou Hedge Fund Litig. Scienter requirement under 15 USCS § 78u-4(b)(2) was satisfied in plaintiff investors' securities fraud class action under §§ 10(b). SD NY) 534 F Supp 2d 405. Johnson v NYFIX. In re Williams Sec. In re PXRE Group. stated honest belief about drug. Litig. 17 CFR § 240.. they failed to establish scienter element of their claim under § 10(b) of Securities Exchange Act of 1934. (4) shareholders had not pled strong inference of conscious misbehavior or recklessness based upon failure to disclose suggestion of renegotiations because shareholders had not alleged occurrence of significant renegotiation efforts or other significant changes constituting sharp break from prior public positions. ND Okla) 496 F Supp 2d 1195. complaint dismd (2005. most that could have been inferred from defendants omission was that defendants were negligent in failing to anticipate how market would respond to "prescription product" statement. 59 of 158 3/8/11 4:25 PM . Shareholders failed to show recklessness. in several instances. in violation of § 10(b) of Securities Exchange Act of 1934. Ltd. (2) shareholders had not adequately alleged that defendants acted with scienter in not further disclosing what they believed was apparent from disclosure of agreement itself--that corporation's remedy in event that partnership walked away from deal was $ 100 million termination fee. and true nature of FDA approval was reasonably available to public on date of release. and possibly all circumstances. DC Conn) CCH Fed Secur L Rep 93531.. thus plaintiff's allegations failed to adequately plead scienter to commit securities fraud under Second Circuit's conscious misbehavior and recklessness prong. by identifying specific facts constituting strong circumstantial evidence of recklessness. (2) even if defendants knew or should have known that specific performance was likely to be unavailable. shareholders failed to sufficiently allege that corporations' officers knew or should have known that corporation was using inappropriate accounting method. (2008. Sec. CCH Fed Secur L Rep P 93739. but rather. because press release was not misleading by failing to disclose details about sale. 15 USCS §§ 78j(b). Sec. Inc. and there was nothing in undisclosed information showing that press release was false or misleading.15 USCS § 78j https://www. which it recommended as investment. Court could not conclude that defendants exhibited extreme departure from standards of ordinary care characteristic of recklessness because given apparently clear distinction between "manage" and "treat. Sec. it was not misrepresentation for defendants to disclose merger agreement and proxy summarizing its terms. SD NY) 586 F Supp 2d 136. Shareholders failed to state claim under § 10(b) of Securities Exchange Act. CCH Fed Secur L Rep P 93001. (2008.C. and Rule 10b-5. Securities fraud action. (2009. In re PXRE Group. and S. (2006. SD NY) 411 F Supp 2d 434. or. (2009. of Montreal Pension Plan v Banc of Am. which led it to report inflated financial results in numerous SEC filings and press releases. because shareholders failed to adequately allege scienter as required by Private Securities Litigation Reform Act of 1995 on part of defendants. Shareholders failed to state claim under § 10(b) of Securities Exchange Act. because shareholders had not pled motive and opportunity.

Corey v Bache & Co. (2005.com/research/retrieve?cc=&pushme=1&tmp. reh den (1977. and it engaged in extensive efforts to warn and restrict accounts it had identified as market timers. CCH Fed Secur L Rep P 95355. (1973. accordingly. Sec. CCH Fed Secur L Rep P 94904. CCH Fed Secur L Rep P 95500) and (ovrld in part as stated in Drnek v Variable Annuity Life Ins. In private civil action scienter is not essential to establishing violation of 15 USCS § 78j(b). Rule incorporates scienter requirement. White v Abrams (1974. DC NJ) CCH Fed Secur L Rep P 93504. Inc. or must intend to deceive. apply to negligent as well as intentional representations. (1971. CCH Fed Secur L Rep P 94140. Mere negligent misstatement of fact in connection with sale of security is insufficient to warrant recovery in action for damages based on alleged violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). something additional by way of scienter or conscious fault. accordingly. it monitored trades below certain thresholds. v Stonepath Group. (1973. 98 S Ct 1580. CCH Fed Secur L Rep P 93119. ED NY) 302 F Supp 439. something short of specific intent to defraud is required and something more than "mere" negligence. R.by Citation . or unreasonable or negligent conduct. without § 10(b) claim there could be no control personal liability under § 20(a). CA9 Cal) 507 F2d 485. First Virginia Bankshares v Benson (1977. and 17 CFR § 240. and thus goes beyond unintentional or negligent misrepresentation. or must act in reckless disregard of falsity.15 USCS § 78j https://www. beyond mere negligence. CA5 Ga) 495 F2d 607. 96 S Ct 2194. Only form of scienter required. Marx v Computer Sciences Corp. Unpublished Opinions Unpublished: While viewed in retrospect it may have been poor decision for company to rely on its subsidiary's accounting which caused company to restate its earnings three times. Globis Capital Partners. shareholders' claims based on these statements were dismissed under 15 USCS § 78u-4(b)(3)(A). § 20(a) claims also failed because they rested upon violations of § 10(b). CA3 Pa) 2007 US App LEXIS 16353. affd (1970. cert den (1974) 415 US 918. Negligence Liability under 15 USCS § 78j(b) may not be imposed for negligent conduct alone. 55 L Ed 2d 802. corporate objectives held to be insufficient to establish securities fraud scienter. it also told investors that when such terminations were for default they were materially adverse events. CA10 Utah) 507 F2d 1351. v Lionel Corp. Motion to dismiss was granted because statements did not rise to level of severe recklessness required to establish scienter and other statements contained meaningful cautionary language. CCH Fed Secur L Rep P 95231. Stewart v Bennett (1973. recklessness was not intended to encompass claims essentially grounded on corporate mismanagement. Inc. to control non-arranged market timing because fund did not delay imposing redemption fees. CA5 Ala) 559 F2d 1307. Investors' claims under §§ 10(b) and 20(a) of Securities Exchange Act of 1934. 15 USCS §§ 78j(b). while purchasers failed to state motive and opportunity to defraud because alleged motives fell within category of shared. In civil action alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Republic Technology Fund. 78t(a) were dismissed because severe recklessness had not been properly pled because it was stretch to say that defendants' "guaranteed" rentals and profitability. CCH Fed Secur L Rep P 94192. In re PDI Sec. need to show merely lack of due diligence or unreasonable or negligent conduct on part of defendant.Get a Document . Litig. 20 FR Serv 2d 1161. with regard to requirement of scienter. Clegg v Conk (1974. CCH Fed Secur L Rep P 94589. SEC Rule 10b-5 does not impose liability without fault nor require anyone to be an insurer against false or misleading statements made nonnegligently and in good faith. Investors failed to show that mutual fund acted recklessly under 15 USCS § 78j(b) in attempting. (1969. v Janus Inv. CCH Fed Secur L Rep P 94457. 95 S Ct 2628. DC Mass) 362 F Supp 605. In re Mut. 45 L Ed 2d 669. Stewart v Bennett (1973. company and three of its officers. (1974. In re Van Wagoner Funds. In action based upon antifraud provisions of federal securities acts. Batchelor v Legg & Co. CCH Fed Secur L Rep P 95479. DC Ariz) 2004 US Dist LEXIS 9490). Inc. 96 S Ct 1375. ND Cal) 382 F Supp 2d 1173. Civ. DC Mass) 359 F Supp 878. DC Md) 52 FRD 545. 9(b) and 15 USCS § 78u-4(b) where they failed to allege facts sufficient to constitute strong inference that accounting firm knew that open-end investment company was not valuing restricted securities at fair value and deliberately disregarded those red flags when it certified company's financial statements. SD Fla) 659 F Supp 2d 1240. in addition to proving other requisite elements. L. Present trend is that antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 thereunder. that company was saddled with termination for default that would have damaged its capacity to compete for new business.. CCH Fed Secur L Rep P 94069. (1) purchasers stated actionable claim of securities fraud as cogent as any competing theory defendants. DC Md) 626 F Supp 2d 530.P. is required to prevail. and (2) purchasers established requisite state of mind through strong circumstantial showing of recklessness because defendants knew. CCH Fed Secur L Rep P 94012.. (2004. 48 L Ed 2d 811. 15 USCS § 78j(b) claims suffered from pleading deficiencies.lexis. Unpublished: Stockholders' 15 USCS § 78j(b) claim against accounting firm was dismissed pursuant to Fed. but failing. Ernst & Ernst v Hochfelder (1976) 425 US 185. district court did not err in dismissing investors' claims under 15 USCS § 78j(b). 51. Moerman v Zipco. reh den (1976) 425 US 986. and defendants did not offer compelling explanation for glaring omission. Inc. proffered to explain sequence of financial events and public disclosures concerning subsidiary and company because inescapable fact was that in same document in which company told investors that newly acquired subsidiary suffered termination of government contract. Sewell v D'Alessandro & Woodyard (2009. 18 FR Serv 2d 1408 (ovrld in part by Hollinger v Titan Capital Corp. (1990. Allegations of mere failure to discover and disclose material facts that were omitted or distorted would be nothing more than assertion of negligence and would not constitute violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) or SEC Rule 10b-5. SEC v 60 of 158 3/8/11 4:25 PM . Funds Inv. in order for one to violate SEC Rule 10b-5. Negligence in failing to discover falsity of information is not actionable under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. (2004. but plaintiffs. 39 L Ed 2d 472. CA2 NY) 483 F2d 540. 94 S Ct 1416. CA2 NY) 422 F2d 871. Buyer of securities is permitted to sue under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 if conduct complained of rises to level of fraud.10b-5. it is not enough for plaintiff to show that defendant failed to detect certain material facts when he had no reason to suspect their existence. CCH Fed Secur L Rep P 96189. ED NY) 608 F Supp 2d 372. but it withheld fact that disclosed termination was of this materially adverse type. Litig. Party cannot be held liable in private suit for damages under SEC Rule 10b-5 for mere negligent conduct. MD Fla) 655 F Supp 2d 1228. (2007. (2009. CA9 Cal) 495 F2d 724. Mooney v Tallant (1975. CA9 Wash) 914 F2d 1564. and affirmatively optimistic information about subsidiary. 47 L Ed 2d 668. CCH Fed Secur L Rep P 92478. Akerman v Arotech Corp. constructive fraud. Vohs v Dickson (1974. sufficiently alleged scienter because. Fund (2009. SD W Va) 355 F Supp 1123. P. cert den (1975) 422 US 1007. and defendant must know of falsity of information. Unpublished: Pharmaceutical service company's disclosure of projected revenues without disclosing baseline failed to provide strong circumstantial evidence of either conscious or reckless misconduct giving rise to requisite strong inference of fraudulent intent with respect to shareholder's allegations of falsity as to projections and. at time they released non-adverse. CA5 Ala) 564 F2d 416 and cert den (1978) 435 US 952. Durgin v Mon (2009. is lack of diligence. CCH Fed Secur L Rep P 94897. Litig. because § 10(b) of Securities Exchange Act of 1934. ND Ga) 397 F Supp 680.

and there was serious exposure of corporation to loan guaranty to another corporation. mere negligence by corporate officer or director is not sufficient to impose civil liability based on violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 93995.. scheme. LLC v Hennessee Group LLC (2009.com/research/retrieve?cc=&pushme=1&tmp. he cannot plead lack of knowledge while acting with wilful or reckless disregard for truth.--Standard of duty for various parties Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) does not extend to negligent conduct. White v Abrams (1974. Black v Riker-Maxson Corp. (1983. CA9 Cal) 563 F2d 1304. CCH Fed Secur L Rep P 99505) and (criticized in In re MicroStrategy Inc. SD NY) 401 F Supp 693. Flexible duty standard is desirable in area as complex as securities fraud litigation and. Action under SEC Rule 10b-5 requires facts amounting to scienter. (1990. CCH Fed Secur L Rep P 95332. as having received substantial sum for financial advisory services. Alleged misstatements regarding future earnings of corporation and salary received by chairman of board of directors of corporation were not actionable under SEC Rule 10b-5 where there was no evidence of scienter. closer relationship of person charged to corporation and greater his participation in transactions attacked. Vohs v Dickson (1974. South Cherry St. (1972. where defendant derives great benefit from relationship of extreme trust and confidence with plaintiff. 52. ND Ind) 591 F Supp 40. but mere negligence will not suffice to establish violation. SD NY) 401 F Supp 651.--In particular circumstances Seller's omission to disclose existence of liability not contained in balance sheet constituted violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) regardless of whether failure to do so was intentional or merely negligent. who accepted stock as security for loan. 566 P2d 935. facts allegedly not disclosed were: (1) transaction which had caused substantial loss for year covered by statement. CCH Fed Secur L Rep P 95712. in exercise of reasonable diligence. 58 L Ed 2d 115. Sec. 10 UCCRS 1114. Person whose name appears in prospectus. SD NY) CCH Fed Secur L Rep P 99324) and (criticized in In re Health Mgmt. except in case of SEC civil enforcement suit seeking injunctive relief.Get a Document . Crook v Shearson Loeb Rhoades. (2) reason given for sale of subsidiary was false. and damages are established. With respect to violations of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Litig. and there is no exception for direct participants. but where defendant's relationship with plaintiff is so casual that reasonably prudent person would not rely upon it in making investment decisions. State v Cox (1977) 17 Wash App 896. but that state of affairs provides no justification for any inference that direct participants have any greater or different duty to buyers or sellers of securities than those whose connections with transactions may be more remote. DC Del) 596 F Supp 1391. but to which plaintiff has no access. preparation of tax analysis based upon depreciation figures presented to him is not "extreme departure from the standards of ordinary care. he is under duty to investigate each such transaction and to inquire as to what representations had been made. Under § 10(b)of Securities Exchange Act (15 USCS § 78j(b)) and Rule 10b-5 promulgated thereunder. but individual may be liable for reckless conduct where conduct presents obvious danger of misleading buyers of which individual should have been aware. although director does not conduct negotiations. CCH Fed Secur L Rep P 91213). Negligence cannot serve as substitute for scienter. Scienter requirement of SEC Rule 10b-5 was met in complaint which charged that accounting firm had prepared annual statement for corporation which failed to disclose material information when it knew or. (1997. SD NY) 362 F Supp 964. ED Va) 115 F Supp 2d 620. CCH Fed Secur L Rep P 94457. (3) fact that certain debts solicited were without full collectibility. CA2 NY) 573 F3d 98. (2004. Robinson v Heilman (1977. CCH Fed Secur L Rep P 94765.15 USCS § 78j https://www. (15 USCS § 78j(b)) or SEC Rule 10b-5 will justify holding that. CCH Fed Secur L Rep P 93466. or knowing use of device. 54. CA9 Wash) 914 F2d 1564. participate therein. SD NY) 388 F Supp 670. and it certainly is not sufficient to impose criminal liability. under such standard. 99 S Ct 90. or artifice to defraud. CCH Fed Secur L Rep P 95500) and (ovrld in part as stated in Drnek v Variable Annuity Life Ins. could not recover against person who transferred stock to borrower on ground that transferor had negligently failed to affix legend to stock showing that stock was restricted. 17 FR Serv 2d 365 (criticized in Sloane Overseas Fund v Sapiens Int'l Corp. DC Ariz) 2004 US Dist LEXIS 9490). and then independently check on truth or falsity of every statement made and document presented. Inc. Inc.by Citation . mere negligence is not enough. CCH Fed Secur L Rep P 94589.. Scienter of CPA attorney who recommends investment is not shown where he makes no material misrepresentations or omissions and could not have discovered existence of such through exercise of reasonable care despite fact that he makes no investigation of investment. Architectural League of New York v Bartos (1975. some sort of scienter is required. 15 USCS § 78j(b). CCH Fed Secur L Rep P 91878. (2000. at his request. easier it will be to prove requisite scienter. or have knowledge thereof. ED Ark) 337 F Supp 1200. since one who is presented in prospectus as financial advisor who has been paid substantial sum owes duty to at least make minimal investigation into 61 of 158 3/8/11 4:25 PM . Mere negligence is not sufficient to entail liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. United States v Koenig (1974. Ford v Cannon (1976.lexis. but it is necessary that there be more than showing of mere negligence. CCH Fed Secur L Rep P 95329. promulgated pursuant to § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). liability must be based on something more than negligence. cert den (1978) 439 US 823. causation. 19 UCCRS 653. 21 FR Serv 2d 1247. Wise v Kidder Peabody & Co. (1973.. CA5 Tex) 624 F2d 709. 53. CA5 Ga) 495 F2d 607. MD Fla) 413 F Supp 1393. (1984. Lane v Midwest Bancshares Corp. lawyer has no special status. (1975. ED NY) 970 F Supp 192. Lanza v Drexel & Co. and even though he actually did nothing other than give issuer or officer of issuer some general information about public offerings and refer such issuer or officer to lawyer experienced in public offerings." Croy v Campbell (1980. reckless disregard for truth. specific intent to defraud is unnecessary. Litig. defendant knowing that plaintiff completely relies upon him for information to which he has ready access. Duty to investigate Neither language nor intent of antifraud provisions of § 10(b) of Securities Exchange Act. intent to defraud. at least in criminal case. CCH Fed Secur L Rep P 96233. In order for criminal fraud to have occurred in violation of SEC Rule 10b-5. and (4) potential loss on certain transaction was great enough to wipe out corporation's net equity. and his duty is no different from that of nonlawyer. lender. law imposes duty upon defendant to use extreme care in assuring that all material information is accurate and disclosed and if defendant has breached such duty he is liable under SEC Rule 10b-5 provided other elements of materiality. CA9 Cal) 495 F2d 724. (1996. CCH Fed Secur L Rep P 97615. (1973. Investor failed to allege strong inference of fraudulent intent or conscious recklessness under § 10(b) of Securities Act of 1934. SD NY) 404 F Supp 304. CCH Fed Secur L Rep P 93959. Merely because seller of securities is employee of issuer does not charge him with constructive knowledge of financial matters he might have discovered by expert review of company books and he is under no duty to discover such information and disclose it to purchaser. Secs. from failure of investment advisor and its two principals to conduct promised due diligence for recommended hedge fund investment because complaint did not show that advisor and its principals knew that hedge fund was involved in Ponzi scheme. Resch--Cassin & Co. defendant's only duty is not intentionally to misrepresent material facts. Oleck v Fischer (1975. by whom and to whom. 24 FR Serv 2d 724. is liable to one who relies upon untrue statements or omissions contained in such prospectus even though he did not verify or attempt to verify any statements in prospectus. should have known of such facts. duty to investigate and disclose material facts will vary according to fact situation. mere negligence is not enough. CA2 NY) 479 F2d 1277. 18 FR Serv 2d 1408 (ovrld in part by Hollinger v Titan Capital Corp.

and 78o(b)(4). under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) for inaccuracies contained in their reports even where corporation express opinions as to attractiveness of investment in certain securities. was wilful and reckless disregard for truth which amounted to knowing and intentional act. he is not charged with information of which he was unaware or which would have been disclosed only by full audit.15 USCS § 78j https://www. United States SEC v Kelly (2008. ED Ky) 399 F Supp 497. 77q(a)(1). CCH Fed Secur L Rep P 94642. (1975. accountant is under duty to undertake at least minimal investigation into figures supplied to him. (1974. Co. reh den (1976. (2002. Blakely v Lisac (1972. Blakely v Lisac (1972. 54 L Ed 2d 752.) (2003. his acquiescence to subsequent report. Plaintiffs' § 10(b) of Securities Exchange Act of 1934. inter alia. thus. Jackson v Bache & Co. DC Mass) 362 F Supp 605. although SEC held that "awareness of wrongdoing" was necessary element of aiding and abetting.by Citation . in face of notification as to possible existence of such errors. Companies' motion for summary judgment on sophisticated investor's claims alleging common law fraud and violations of §§ 10 and 20 of Securities and Exchange Act of 1934 was denied because companies did not show investor's reliance was unreasonable under circumstances. Blakely v Lisac (1973. CCH Fed Secur L Rep P 92621. (6). ND Ill) 545 F Supp 2d 808. but showed only that vice-president had relied on competent and experienced inside and outside counsel and that there had been no danger signals or red flags so obvious that vice-president should have noticed them. but evidence suggested that investor had no reason to doubt truthfulness of information that companies transmitted and established that companies might have engaged in fraudulent scheme. DC Or) 357 F Supp 255. accuracy of prospectus. selling broker's failure to investigate constituted fraud. even though at time he purchased corporation's American Depository Receipts (ADRs) he knew that private antitrust lawsuit had been filed against corporation based on alleged price fixing. Reliance on advice or expertise of others Broker-dealer could not avoid responsibility for violation of SEC Rule 10b-5. Inc. CCH Fed Secur L Rep P 95796. fundamental requirement is that all relevant information is disclosed to counsel and opinion followed. Investor adequately pleaded reliance element of securities fraud claim against Swiss corporation.. SD NY) 387 F Supp 902. and such corporation will not be liable. through assertion of reliance upon advice of counsel where counsel informed broker-dealer that advice ran counter to position as to illegality of give-ups on over-the-counter transactions taken by SEC staff. directors acted recklessly by failing to undertake minimal inquiry required to uncover backdating scheme. ED NY) 543 F Supp 2d 134. Although reliance upon advice of counsel may constitute defense in action alleging violation of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). and as unregistered broker he could not offer investments simply by relying on promoter. ND Cal) 381 F Supp 71. even though the parties did not enjoy a trading relationship. Sec. coupled with directors' likely experience and knowledge.F. which effectively conceals deteriorating business condition of company. SEC applied incorrect scienter standard. v DaimlerChrysler AG (In re DaimlerChrysler AG Sec. particularly if knowledgeable and experienced in securities law and public offerings. Arthur Lipper Corp. claims against three members of corporations board of directors survived because although mere desire to increase compensation or stock prices did not give rise to strong inference. Corporation directors who caused corporation to enter into inequitable transaction violated SEC Rule 10b-5 because they failed to disclose unfairness of transaction to minority shareholders. was denied. there was no evidence to show that vice-president had any awareness that broker-dealer and hotel corporation counted non-bona fide purchases made in part-or-none offering. CCH Fed Secur L Rep P 94192. Tracinda Corp. CA5 La) 512 F2d 484.. DC Or) 357 F Supp 267. ND Ill) 378 F Supp 869. where investor alleged that corporation pleaded guilty to criminal antitrust charges after he purchased ADRs. DC Del) 294 F Supp 2d 616. §§ 240.C. red flags evident on face of unanimous consent forms. CA2) 547 F2d 171. with respect to improper "give-ups". may be expected to know more than any other person involved in preparation of prospectus and importance of carefully investigating validity of statements contained in prospectus or in reports which may be expected to influence investment activities of potential buyers or sellers of issuer's stock. 240. affd (1975. CCH Fed Secur L Rep P 93788. Investors failed to state 15 USCS § 78j(b) claim where complaint did not state defendants made representation investors relied on and complaint did not show that 62 of 158 3/8/11 4:25 PM . 98 S Ct 719. affd (1976. Director who relies upon expertise of others in evaluating accuracy of prospectus with respect to areas in which he has no experience or knowledge is not liable for losses incurred by reason of reliance upon misinformation or omissions in prospectus since he may reasonably rely upon portions of prospectus which are outside his field and which are based upon expertise of other persons. CCH Fed Secur L Rep P 95543. 78u-3(a). Attorney who drafts prospectus can avoid liability for injury sustained through reliance upon misleading statements or omissions in or from such prospectus only through exercise of due diligence in his preparation thereof. S. Pinker v Roche Holdings. which induced investors to buy a report divulging the details of a proposed Russian uranium sale. DC Or) 357 F Supp 255. SEC's complaint adequately alleged scienter. Canizaro v Kohlmeyer & Co. CCH Fed Secur L Rep P 94837. under the Texas Gulf standard. was made in "connection with" a sale of securities. Inc. makes him liable to those who purchase in reliance upon such subsequent report.10b-5.. In re Comverse Tech. ED La) 370 F Supp 282. Failure or refusal of corporate officers to discover and disclose misstatements and omissions in registration statement and prospectus prepared by others. mass solicitation e-mails from a purveyor of Internet investment advice were the types of communications upon which investors would reasonably rely. In imposing sanctions against vice-president of broker-dealer under 15 USCS §§ 78u-2(a). and selling broker's motion to dismiss SEC's claims against him brought pursuant to 15 USCS §§ 78j. and he cannot escape liability for fraud by closing his eyes to what he saw and readily could understand since attorney. Corporation engaged in providing services involving statistical reporting with regard to issuers of securities is under no duty to investigate or verify statistics of companies which they collect and publish as submitted to them where they summarize facts and ascribe them to sources deemed reliable without vouching for them as their own or adding any factual matter. affd (1976. CA7 Ill) 535 F2d 982. Investment newsletter editor was properly found to have violated 15 USCS § 78j(b) because his mass solicitation e-mails falsely touting insider information. (2008. Litig. CA2) 551 F2d 915. (1973. but where director admits that he was aware of increasing losses. 17 FR Serv 2d 153. and he is not free to disregard suspicious circumstances. CCH Fed Secur L Rep P 93788.E. strong likelihood of wrongdoing when they signed unanimous consent forms (the danger that they were committing fraud by signing unanimous consent forms was so obvious that they must have been aware of it).Get a Document . CCH Fed Secur L Rep P 96001 and cert den (1978) 434 US 1009. Ltd. Bailey v Meister Brau.10b-9. 17 CFR § 240. made it at least as plausible that they were aware of. Howard v SEC (2004. CCH Fed Secur L Rep P 91918. Registered representative of securities brokerage who dealt with customer in personal capacity rather than as representative of brokerage was not in violation of SEC Rule 10b-5 because of failure to conduct investigation with respect to recommended stock of magnitude which might be expected had he been acting on behalf of brokerage. (1974. Stewart v Bennett (1973.R. 78j(b) and of 17 C. CCH Fed Secur L Rep P 94515. CCH Fed Secur L Rep P 94951.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 95001. Complaint alleged that selling broker took certain actions without disclosing excessive commissions that he and his co-defendant brokers were receiving. v SEC (1976. and was violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. but ignored. (1975. actual knowledge of unfairness of transaction was not necessary where they knew of factors bearing upon limited worth of shares of buyer and were grossly negligent in failing to determine unfairness. CA3 NJ) 292 F3d 361. United States SEC v Pirate Investor LLC (2009. CA6 Ky) 534 F2d 1240.lexis. and where attorney was not in position to give wholly disinterested advice. In re Republic Nat'l Life Ins. but even when performing unaudited writeup. 55. 15 USCS § 78j(b). investor did not have fiduciary relationship or business relationship directly with companies. Rule 10b-5(b). CA4 Md) 580 F3d 233. and substantial evidence did not show violations of 15 USCS §§ 77q(a). App DC) 376 F3d 1136. where errors in prospectus result from accountant's unaudited writeup.10b-5(b). Litig. SEC v Senex Corp.

SEC v Yuen (2008. CCH Fed Secur L Rep P 93599. Re Martin Herer Engelman. RICO Bus Disp Guide (CCH) P 9642) and (criticized in Grubaugh v DeCosta (1999. CCH Fed Secur L Rep P 98207. Filler v Hanvit Bank (2005. Inc. In re Cardinal Health. Strict liability Neither language nor intent of antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) or SEC Rule 10b-5 will justify holding that director is insurer of honesty of individual officers of corporation in their negotiations involving purchase or sale of corporation's stock. CA9 Cal) 513 F2d 1274. Litig. affd (1970. Fact that corporate president may have acted in good faith in making misleading statements as to corporate earnings was immaterial insofar as violation of SEC Rule 10b-5 was concerned.G. 17 C. but if civil action is to be based upon aiding and abetting solely by inaction. 94 Daily Journal DAR 5160. Louros v Kreicas (2005. 8 FLW Fed S 33. Antifraud provisions of Securities Exchange Act (l5 USCS § 78j(b)) are inapplicable to transaction involving sale of defendant's European photocopy business to plaintiff. University Hill Foundation v Goldman. 17 FR Serv 2d 365 (criticized in Sloane Overseas Fund v Sapiens Int'l Corp. CCH Fed Secur L Rep P 98178. Effect of good faith Neither scienter nor reckless disregard for truth is shown where corporation's accounting firm thoroughly investigates acquired company prior to purchase and determines in good faith that company's reserve is sufficient to cover outstanding debts and purchase note. Lanza v Drexel & Co. Inc. and full disclosure is only required where law imports duty to speak.. Butler Aviation International. 96 CDOS 7516. they do not impose absolute liability standard. and variety of other factors relating to context of representation in question and. Litigs. CCH Fed Secur L Rep P 92543. (1990.. Ariz App) 1999 Ariz App LEXIS 35) and (superseded by statute as stated in Scachitti v Prudential Sec. 57. SD NY) 422 F Supp 879.A. 56.10b-5.R. CA7 Ill) 149 F3d 565) and (superseded by statute as stated in Trustees of Boston Univ. Sec. CA9 Cal) 495 F2d 724. SD Ohio) 426 F Supp 2d 688. (1976. (1997. 94 CDOS 2687. remanded sub nom First Interstate Bank v DBLKM. corporate defendants could not be held liable for allegedly false and misleading statements of various analysts and reporters. district court properly rejected defendant's good faith reliance defense because there was ample evidence that he did not make full disclosure to auditors.lexis. notwithstanding that transfer of ownership as evidenced by stock was to have occurred. B. v Comprehensive Designers. CCH Fed Secur L Rep P 91213). party charged with aiding and abetting must be shown to have had knowledge of or. 15 USCS § 77q(a). CCH Fed Secur L Rep P 99330) and (superseded by statute as stated in United States v Irwin (1998. who testified that they did not learn of material facts until after creation of documents that were submitted to Securities and Exchange Commission. (2004. Edwards & Sons Inc. on remand. Inc. or knowledge. Litig. ED NY) 970 F Supp 192. Inc. Finding that dealer in commercial paper acted at all times in good faith foreclosed recovery by customer under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) or SEC Rule 10b-5. 128 L Ed 2d 119. SD NY) 367 F Supp 2d 572. v ASM Communs. based on stock-for stock merger where investors averred that banks' sham transactions enabled transferee company to falsely inflate its stock failed because they did not show reliance on banks' allegedly false loan confirmations to auditors. consequently. that duty exists only in circumstances which indicate investment or fiduciary relationship between seller and buyer. SD NY) 522 F Supp 1257. (1973. 78m(a). Sec. et al. v First Interstate Bank. and Rule 10b-5. there is flexible standard of duty based on relationship between parties. and 13(b)(2)(A) of Securities and Exchange Act of 1934. SD NY) 307 F Supp 910. availability of information to them.Get a Document .F. CCH Fed Secur L Rep P 99505) and (criticized in In re MicroStrategy Inc. Person may aid and abet violation of antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) through inaction in combination with affirmative action. (1969. (2004. CCH Fed Secur L Rep P 97525. 15 USCS § 78j(b). White v Abrams (1974. CA2 NY) 425 F2d 842. CCH Fed Secur L Rep P 93988. Unpublished Opinions Unpublished: Investors' claim against banks for violations of § 10(b) of Securities and Exchange Act of 1934. Unpublished Opinions Unpublished: In determining that defendant violated § 17(a) of Securities Act of 1933. CCH Fed Secur L Rep P 95500) and (ovrld in part as stated in Drnek v Variable Annuity Life Ins. (1999. 96 Daily Journal DAR 12375. CA2 NY) 479 F2d 1277. CCH Fed Secur L Rep P 92557.com/research/retrieve?cc=&pushme=1&tmp. (1981. DC Mass) 33 F Supp 2d 66. (1998. but were made in good faith. While antifraud provisions of federal securities statutes have substituted full disclosure approach for that of caveat emptor. Branham v Material Systems Corp. Secs. 58. and 78m(b)(2)(A). CA2 NY) 623 F2d 791. (1973. CA9 Cal) 2008 US App LEXIS 7606. Hochfelder v 63 of 158 3/8/11 4:25 PM .15 USCS § 78j https://www. 114 S Ct 1439. (1996. ED Va) 115 F Supp 2d 620. (1975.by Citation . CA9 Wash) 914 F2d 1564. N. since proof of specific intent to defraud is unnecessary. Inc. 15 USCS §§ 78j(b). Robinson v Cupples Container Co. § 240. Though plaintiff investors set forth each statement in detail. v A. CCH Fed Secur L Rep P 93233. (1995) 52 SEC 271. "Aiding and abetting" Section 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) prohibits only making of material misstatement or omission or commission of manipulative act in connection with purchase or sale of securities. SD NY) CCH Fed Secur L Rep P 99324) and (criticized in In re Health Mgmt. CCH Fed Secur L Rep P 95749. Central Bank. Oleck v Fischer (1980. any defendant intended to deceive investors or depress stock price or knowingly or recklessly made any material misrepresentation to investors.A. ND Ill) 1999 US Dist LEXIS 19391). they failed to provide specific evidence of "entanglement" and did not plead facts showing that analysts and reporters were aware of corporation's inaccurate reporting. actual or implied. since claimed frauds of overstated assets on part of plaintiff and inflated income on part of defendant were not made with scienter. CA10 Colo) 1994 US App LEXIS 16507 and (superseded by statute as stated in United States SEC v Fehn (1996. (1994. should have had knowledge of fraud. and §§ 10(b). v SCM Corp. person failed to act due to improper motive.. Sachs & Co. Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). SEC Rule 10b-5 does not impose liability without fault nor require anyone to be insurer against false or misleading statements made nonnegligently and in good faith. CA2 NY) 156 Fed Appx 413. under that standard. but for breach of duty of inquiry. Inc. on part of seller that unless he speaks buyer may act to his detriment. (2000. SD Tex) 387 F Supp 2d 691. Reprosystem. 18 FR Serv 2d 1408 (ovrld in part by Hollinger v Titan Capital Corp. CCH Fed Secur L Rep P 94457. proscription does not include giving aid to person who commits manipulative or deceptive act.. Inc. Misrepresentations which amounted to assurance that plaintiff could make money with no risk did not constitute actionable securities fraud under § 10(b) of Securities Exchange Act of 1934 because defendant was under no obligation to disclose information (namely that there are risks inherent in stock market investment) so basic that any investor could be expected to know it. SD Fla) 354 F Supp 1048. (2006. and possessing such knowledge. DC Ariz) 2004 US Dist LEXIS 9490). § 10(b) does not impose duty of strict liability to insure truth and reliability of material representations. V. Jag Media Holdings Inc. (1994) 511 US 164. N. CCH Fed Secur L Rep P 93959. 13(a). CA9 Nev) 97 F3d 1276. Reliance need not be demonstrated in SEC proceedings to enforce statutory antifraud provisions.

for Relief & Dev. because aiding and abetting primary violations does not support damages in private actions. but one must either know that organization engages in such acts or is deliberately indifferent to whether it does or not. essential elements to such liability being scienter and substantial assistance by defendants to primary wrongful conduct. Account executive who helped former administrator embezzle funds from estate was not liable to executor of estate for fraud under § 10(b) of Securities Exchange Act of 1934.. which contemplated merger with another member firm. In action charging accountant with aiding and abetting securities broker's violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). 3. to 18 USCS § 2332. as required by SEC form X-17A-5 under SEC Rule 17a-5. IIT. because securities fraud complaint must contain allegation that seller made knowing misrepresentation upon which buyer relied. Kaliski v Hunt International Resources Corp. as where defendants become involved with defrauding company subsequent to fraudulent activities. CA7 Ill) 503 F2d 1100. Zuckerman v Harnischfeger Corp. CCH Fed Secur L Rep P 97622. SD NY) 439 F Supp 1233. Inc. CCH Fed Secur L Rep P 95479. CCH Fed Secur L Rep P 99223. 106 S Ct 798 and cert den (1986) 474 US 1072. 88 L Ed 2d 774. reh den (1976) 425 US 986. (1984. ND Miss) 469 F Supp 54.15 USCS § 78j https://www. SD Iowa) 577 F Supp 810. CCH Fed Secur L Rep P 91495). there are special considerations in applying this general principle to aiders and abettors. CCH Fed Secur L Rep P 94499. CCH Fed Secur L Rep P 99665. Stearns & Co.E. Ass'n (1978. Felts v National Account Sys. Foss v Bear. 96 S Ct 2194. cert den (1974) 419 US 875. DC Colo) 147 FRD 232. CCH Fed Secur L Rep P 96929. CA7 Ill) 394 F3d 540. knowledge of fraud. his firm could not have been held vicariously liable under § 20(a) of Securities Exchange Act of 1934. and not merely undisclosed material facts. in which context defendants' participation is arguably more attenuated. CCH Fed Secur L Rep P 96011. Former state senator who was not registered lobbyist was properly found liable for violating 15 USCS § 78j(B) and S. 1998 Colo J C A R 2478) and (criticized in Rieger v Drabinsky (In re Livent. Scienter necessary to support liability as aider and abettor of violations of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 includes recklessness. CCH Fed Secur L Rep P 92282. 88 L Ed 2d 804. CCH Fed Secur L Rep P 92037. CA7 Ill) 503 F2d 364. and allegations of failure by brokerage house to make reasonable investigation into broker's actions adequately pleads recklessness. and concept of aider and abettor liability cannot be stretched to encompass situation where there is in fact no active participation. 18 USCS § 2333(a) to 18 USCS § 2331(1). donation to terrorist group that targets Americans abroad can violate § 2333. CCH Fed Secur L Rep P 94781. 47 L Ed 2d 668. is indispensable to liability. CA7 Ill) 549 F3d 685. but there was no evidence in record that she provided substantial assistance or that she had actual knowledge of alleged illegal activities. scienter requirement for finding of aider-abettor liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 is not present where defendant entertains reasonable belief that all facts have been fully disclosed. Midwest Stock Exchange (1974. but requisite scienter is not present where defendant entertains reasonable belief that all facts have been disclosed. CA8 Iowa) 762 F2d 621. revd on other grounds (1976) 425 US 185. 7 FR Serv 3d 102. but if there is no such fiduciary duty scienter requirement scales upward so that assistance rendered by alleged aider and abettor should be both substantial and knowing. 99 S Ct 642 and amd (1978. Summary judgment was properly entered in favor of woman who was corporate secretary and director of corporation and wife of president of corporation where woman was alleged to be liable as aider and abettor under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) for fraud allegedly committed by her husband in connection with offer and sale of securities.Get a Document . affd in part and revd in part (1985. where purchasers of tax shelters claim that accountants for sellers received sales commissions on allegedly fraudulent securities sales. individual may not be held liable as aider and abettor when acts constituting alleged aiding and abetting occur after fraudulent transaction is completed. Steinberg v Carey (1977. fully advised of those facts. and it is contribution itself. Although reckless conduct generally satisfies scienter requirement for action under SEC Rule 10b-5. CCH Fed Secur L Rep P 96275. Lewis v Marine Midland Grace Trust Co. CCH Fed Secur L Rep P 96860. Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) liability for recklessness requires fiduciary relationship only in aiding and abetting context. 58 L Ed 2d 698. Aquino v Trupin (1993. CCH Fed Secur L Rep P 90214. Metge v Baehler (1984. to 18 USCS § 2339A. CCH Fed Secur L Rep P 94206. Eastman Dillon & Co. SD NY) 591 F Supp 112. Hirsch v Du Pont (1977. and accountants had employee who allegedly knew that tax benefits of similar deals by sellers had been disallowed by IRS. because executive was not liable. CA2) CCH Fed Secur L Rep P 96525.com/research/retrieve?cc=&pushme=1&tmp. (1985. Liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 can be extended to aiders and abettors. 95 S Ct 137. Aider and abettor liability based on recklessness satisfies requirement of scienter in action under 15 USCS § 78j(b) only when defendant has special duty of disclosure. Securities fraud complaint is dismissed for failure to state claim. cert den (1978) 439 US 1039. 17 FR Serv 2d 1517. executive did not deceive executor or estate and § 10(b) of Act did not turn all transactions using proceeds of crime into species of fraud and. Rule 10-5. (2008. CCH Fed Secur L Rep P 91470. and SEC Rule 10b-5. that is key to liability. ND Ill) 609 F Supp 649. that other member firm had cured net capital deficiencies by liquidating certain "long" security count differences not traced to specific errors where principals had made extensive investigation into position and status of other firm and exchange was entitled to conclude that principals had fully informed themselves concerning all facts relating to firm and had decided to go forward with merger. Sec. Troyer v Karcagi (1979. Durham v Kelly (1987. and allegations about commissions and employment of accountant do not support inference of scienter or reliance. Boim v Holy Land Found. CA2 NY) 619 F2d 909. (1978. 42 L Ed 2d 114. Fraud is essential element of claim for aiding and abetting violation of 15 USCS § 78j(b). complaint satisfies scienter requirement where it alleges that each defendant knew or should have known of alleged fraud. created. not amount of contribution. CA10 Colo) 144 F3d 1302.C. cert den (1986) 474 US 1057. by chain of incorporations by reference. 15 USCS § 78t(a). similarly. Litig. (1993. if alleged aider and abettor owes fiduciary duty to defrauded party. Knowing assistance of or participation in fraudulent scheme gives rise to liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) as aider and abettor. Inc. In re Storage Tech. 15 USCS § 78j(b). as aider and abettor because he served as go-between who solicited former state treasurer to invest state retirement trust fund assets with private brokerage firm in exchange for finder's fee. SD NY) 833 F 64 of 158 3/8/11 4:25 PM . since it would be absurd to hold her responsible as aider and abettor without proof of scienter merely because she was director of corporation and married to person who may have been guilty of violations of Act. CCH Fed Secur L Rep P 93069. extent of statutory duty of inquiry imposed upon accountant in auditing broker was duty to audit in accordance with generally accepted auditing standards.by Citation . Corp. Litig. CA9 Cal) 810 F2d 1500. Recklessness satisfies scienter requirement of cause of action under SEC Rule 10b-5 for aiding and abetting fraud where alleged aider and abettor owes fiduciary duty to defrauded party. Hudson v Capital Management International. recklessness satisfies scienter requirement.lexis.) (2001. CA2) 587 F3d 553. SD NY) 476 F Supp 1142. Reckless conduct is sufficient to satisfy "knowing or intentional" requirement for aiding and abetting liability. 106 S Ct 832 and (criticized in Maher v Durango Metals (1998. Registered securities exchange had no obligation to disclose to principals of member firm. Hochfelder v Ernst & Ernst (1974. 96 S Ct 1375. CCH Fed Secur L Rep P 96215. Noteholders Sec. SEC v DiBella (2009.. CCH Fed Secur L Rep P 97320. Individual may not be held liable as control person for acts occurring before that individual took control and. Trust v Cornfeld (1980. Lender did not aid and abet securities fraud where evidence shows absence of actual knowledge of principal's fraud or conscious and intentional assistance in fraud. (2005. (1973. While statutory silence on subject of secondary liability generally meant there was none. CA2 NY) 553 F2d 750. in that it had been held that § 10(b) of Securities and Exchange Act of 1934 did not reach aiding and abetting for failing to reference to secondary liability of kind that statutes such as 18 USCS §§ 2. SD NY) 151 F Supp 2d 371. SD NY) 63 FRD 39. (1983. 48 L Ed 2d 811. CA2 NY) 570 F2d 38. CCH Fed Secur L Rep P 93149. Substantial evidence proved his knowing participation in fraud. ND Cal) 565 F Supp 615. and because of which buyer was injured. International Inv. Rolf v Blyth.

CCH Fed Secur L Rep P 97511. LLC (2004. who are not liable. plaintiffs sought to substitute firm's deceitful conduct for plaintiffs' reliance on that conduct. 15 USCS § 78j. was established by SEC in disciplinary proceedings against corporate broker-dealer and individual who was registered broker and president of corporate broker-dealer for their part in activities in closing offering of common stock for which corporate-dealer was underwriter. Innocent agent who conveys on behalf of another message he believes in good faith to be true does nothing wrong. Similarly. (2006. Because conduct of secondary actor must satisfy each of elements or preconditions for liability. Rowe & Maw LLP (2009.P. Civ. (2003.E. CCH Fed Secur L Rep P 95336. it is not enough to trigger primary liability under § 10(b). Rowe & Maw LLP (2009. C. CA2 NY) 156 Fed Appx 413. where there are many participants in "scheme. 12(c). he could not have been said to have caused misstatements to be made by devising model that generated expected number of claims. v Mayer Brown. Claims of aiding and abetting violation of Securities Exchange Act § 10b were dismissed against three employees of mutual fund services company because SEC's allegations did not demonstrate that alleged aiders and abetters provided substantial assistance and acted with requisite scienter. SEC v PIMCO Advisors Fund Mgmt. 64 L Ed 2d 611.10b-5. (2) executive was not responsible for drafting Form 20-F. claims amounted only to aiding and abetting and did not as matter of law constitute primary violations of § 10(b) and § 20(a) of Securities Exchange Act of 1934. Inc. No reasonable fact-finder could determine that executive was primary violator of Antifraud Provisions.10b-5. L. part-or-none" basis. SD Tex) 439 F Supp 2d 692.C. Inc.10b-5 makes it unlawful for any person to employ any scheme to defraud in connection with any security. Unpublished Opinions Unpublished: Investors' claim against banks for violations of § 10(b) of Securities and Exchange Act of 1934. aids and abets fraud. 78t(a). not primary violator. reasonable fact-finder could have determined that he was primary violator of Antifraud Provisions. violation of Antifraud Provisions. CCH Fed Secur L Rep P 93800. yet. Rowe & Maw LLP (2009. v Mayer Brown. no matter how substantial that aid may be. and Rule 10b-5. Thomas H. CCH Fed Secur L Rep P 95100. where SEC had introduced substantial evidence to establish that parties were aware of provision in offering prospectus which stated that offering was to be made on "best efforts. Plaintiffs did not know that law firm helped facilitate fraudulent transactions. and S. 15 USCS §§ 78j(b).10b-5. while those who merely participate in or facilitate scheme are secondary violators.R. L. SEC v PIMCO Advisors Fund Mgmt.. v Enron Corp. CCH Fed Secur L Rep P 93599. one executive who signed disclosures and was responsible for company's market timing police procedures could reasonably be held primarily liable for disclosures and. SD NY) 341 F Supp 2d 454. Thomas H. aider and abettor under § 10(b) of Securities Exchange Act of 1934.Get a Document . anything short of such conduct is merely aiding and abetting and. v SEC (1988. DC Dist Col) 648 F Supp 2d 70.E. where purchasers alleged that attorneys knew of material omissions in offering memorandum. investors' 15 USCS § 78j(b) claim against insurer was dismissed. and Rule 10b-5. SD NY) 612 F Supp 2d 267. aided and abetted. In re Homestore. Evergreen Equity Trust v Fannie Mae (In re Fannie Mae Sec.P. parties had arranged for non-public sales to close offering and then retained funds. mere allegation of scheme liability does not answer objection that petitioner did not in fact rely upon defendant's own deceptive conduct. at same time that fund company assured investors that it would act to stop market timing activities and limit number of "round trip" exchanges investor may make. DC Mass) 477 F Supp 2d 342. 42 USCS § 78j(b). they were not. and alleged that attorneys drafted offering memorandum.P. CCH Fed Secur L Rep P 95100. CCH Fed Secur L Rep P 95100. while 17 CFR § 240. LLC (2004.F. Lee Equity Fund V. based on stock-for stock merger where investors averred that banks' sham transactions enabled transferee company to falsely inflate its stock failed because none of alleged false statements relied upon by investors were attributed to banks. and (3) executive did not have ultimate authority over it. to that end. Lee Equity Fund V. 17 C. Sec.) (2007. alleged specific facts in support of knowledge allegation. § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934.15 USCS § 78j https://www. reh den (1988. Thus. DC Vt) 835 F Supp 762. Because bank and its affiliates purportedly substantially assisted fraud with culpable knowledge.lexis. 78u for violations of §§ 77q(a)(1). Thomas H. 100 S Ct 1945.by Citation . fact-finder could have also determined that executive substantially assisted. SD NY) 612 F Supp 2d 267. Litig. Purchasers of securities stated claim for aiding and abetting violation of securities laws against attorneys for sellers. DC Dist Col) 503 F Supp 2d 25. 17 CFR § 240.F. CCH Fed Secur L Rep P 95336.com. SEC v Durgarian (2007. rather than wait for additional public sales or return funds of subscribers when sales fell short of stipulated number. company was negotiating preferred market timing arrangement with another firm. firm's mere association with statements made by others--by relaying statement that was attributed to authority of another--was insufficient to make secondary actor liable under 15 USCS § 78j(b). SEC disciplinary cases SEC must establish scienter as element of its civil enforcement in seeking injunctive relief under 15 USCS §§ 77t. although reasonable fact-finder could have determined that he aided and abetted violations because: (1) although fact-finder could have reasonably concluded that executive provided substantial assistance in compiling Form 20-F. 59. 78j but not for violations of §§ 77q(a)(2) or 77q(a)(3). CCH Fed Secur L Rep P 98209.. Element of scienter required to establish violation of § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)). Lee Equity Fund V. Filler v Hanvit Bank (2005. § 240. rather than mere clerical work. CA10) 859 F2d 1429. Partnership (1993. CCH Fed Secur L Rep P 95100. SD NY) 341 F Supp 2d 454. Carlson. similarly. SEC v May (2009. Second Circuit has clearly stated that defendant must actually make false or misleading statement in order to be held primarily liable under § 10(b) of Securities Exchange Act of 1934. they were entitled to judgment on pleadings under Fed. according to which proceeds from offering were to be held in escrow and returned to investors if requisite number of shares were not sold within offering period. so no liability could attach where plaintiffs could not have relied on firm's conduct. Secs. Thomas H. 65 of 158 3/8/11 4:25 PM . SD NY) 612 F Supp 2d 267. SEC v May (2009. Mutual fund executives' motion to dismiss Securities Exchange Commission deceptive devices claim was denied where. SEC failed to allege sufficiently that employees provided knowing and substantial assistance regarding either fraudulent scheme or material omissions. R. DC Dist Col) 648 F Supp 2d 70..com/research/retrieve?cc=&pushme=1&tmp. CD Cal) 252 F Supp 2d 1018. Because defendant insurer to defendant Federal National Mortgage Association (FNMA) was merely third party alleged to have provided FNMA with means to misrepresent its finances by entering into transaction that FNMA may have mischaracterized to plaintiff investors. agent who understands that his employer's statement is lie. those who actually "employ" scheme to defraud investors are primary violators. L. and Rule 10b-5. CCH Fed Secur L Rep P 97771." there may be primary violators and secondary violators. L. Aaron v SEC (1980) 446 US 680. 17 CFR § 240. however. with requisite number of shares to be sold in manner not inconsistent with public distribution. for his role regarding Report on Form 20-F. CCH Fed Secur L Rep P 94100.E. there was no private aiding and abetting liability under § 78j(b). Powell v H. Central Bank requires plaintiff to allege that each and every defendant committed its own independent primary violation of securities laws in order to state claim. another non-signatory executive could be found liable on aiding and abetting claim for his failure to correct his own funds' market timing-related disclosures when they were rendered materially misleading. § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934. 15 USCS § 78j(b). Lee Equity Fund V. Rule 10b-5(a) and (c). he remains. and drafting of offering memorandum is substantial assistance of fraud. v Mayer Brown. Supp 336. CA10) 859 F2d 1429. Rowe & Maw LLP (2009. P. SD NY) 612 F Supp 2d 267. Decisive question was whether allegations against law firm were sufficient to show that misstatements and omissions made by firm could be attributed to them such that statements on which plaintiff relied were statements of firm.P. but only reliance mattered. Enron Corp. v Mayer Brown. because allegation of actual knowledge is sufficient to meet pleading requirement of scienter. Because executive signed representation letter to auditors.

while reliance on erroneous advice of counsel might be evidence of good faith in defending against charge of actual fraud. 51 L Ed 2d 805. Corp. In order to state claim under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. In re Bernhardt (1981) 1981 SEC LEXIS 1867. 222. Secs. In securities fraud litigation brought by United States Security Exchange Commission (SEC) against various named corporate officers. CA2 NY) 938 F2d 1529. Moerman v Zipco. under § 15 of Securities Exchange Act (15 USCS § 78o) based upon broker's violation of fraud provisions of Securities Exchange Act. § 10(b). Adoption of bright-line rule assuming that stock price will instantly react would fail to address realities of market. SEC v Espuelas (2010. CCH Fed Secur L Rep P 96131. based upon untrue statement or omission. cert den (1977) 430 US 955. (In re VeriFone Sec. Inc. CCH Fed Secur L Rep P 96186. only that respondent's actions were voluntarily performed in sense that respondent was aware of his actions. ND Cal) 2005 US Dist LEXIS 9234). CCH Fed Secur L Rep P 92278. Violation of stock exchange or NASD (National Association of Securities Dealers) rule will not support private claim. although generally more factual question. affd in part and revd in part on other grounds (1974. (1976. CA3 NJ) 540 F2d 591. Proof of intent to defraud is unnecessary in administrative proceedings by Securities and Exchange Commission with respect to imposition of sanctions against registered broker-dealer or investment advisor. CCH Fed Secur L Rep P 99242) and (criticized in In re Health Mgmt. CCH Fed Secur L Rep P 95722. 18 FR Serv 2d 1112. CCH Fed Secur L Rep P 94874 (criticized in In re Leslie Fay Cos. In civil action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 112 S Ct 587. Straub v Vaisman & Co. at minimum. however. In action alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 93512. 224 (1988). thus.e. SD NY) 918 F Supp 749. CCH Fed Secur L Rep P 95656. and materiality. reh. 134 L Ed 2d 98. CCH Fed Secur L Rep P 95744. 485 U. CA9 Cal) 11 F3d 865. and SEC Rule 10b-5 thereunder. Holdsworth v Strong (1976. Banc One Capital Partners Corp. that reasonable minds cannot differ on question of materiality.S. 124 S Ct 433 and (criticized in In re Nextcard. 33 FR Serv 3d 949. information need only be important enough that it would have assumed actual significance in deliberations of reasonable shareholder.. (2009. Inc. cert den (1991) 502 US 983. CCH Fed Secur L Rep P 95623. court declines to adopt bright-line rule. finding of scienter is unnecessary to establish violations of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and Rule 10b-5. Sec. scienter has no bearing on willful violation issues in them but goes only to sanction question. is to be resolved as matter of law when information is so obviously important (or unimportant) to investor. Gordon v Burr (1973. In remedial proceeding instituted by SEC for prophylactic purpose of protecting public interest. district court granted motion for summary judgment filed by corporation's vice president for strategic development because none of evidence collected attributed any misstatement to her and did not prove that she acted with scienter. DC Neb) 395 F Supp 2d 835. CA10 Utah) 545 F2d 687. No. Release No. CD Cal) 266 F Supp 2d 1150. CCH Fed Secur L Rep P 92425) and cert den (2003) 540 US 966. 84 Employer-Teamster Joint Council Pension Trust Fund v Am. 2003 CDOS 1328.lexis. When dealing with disclosure requirements of federal securities laws.. In re Nasser & Co. Generally Corporate insider's nondisclosure in connection with purchase or sale of corporation's stock is prohibited under SEC Rule 10b-5 only if it concerns material fact. Litig. Dec.com/research/retrieve?cc=&pushme=1&tmp. Inc. it is insufficient in Rule 10b-5 action where defendant was in possession of all relevant facts necessary to support finding of negligence. request den (2003. Litig. CA2 NY) 549 F3d 187. Inc.Get a Document . CA2 NY) 422 F2d 871. and senior vice president of global sales (defendants). instead. and Rule 10b-5 claims against executive vice president of strategic development with respect to her role in incremental revenue transactions only. Fact that bank's reputation is undeniably important. further. v JP Morgan Chase Co. CA10 Kan) 68 F3d 382. Sec. Issue of whether omitted fact is material as matter of law turns on whether defendant has duty to disclose. cert den (1996) 516 US 1147. SD NY) 366 F Supp 156. CCH Fed Secur L Rep P 97820. (1995. 157 L Ed 2d 311. 1978 SEC LEXIS 265. 116 L Ed 2d 612. material fact need not be outcome-determinative (i. 93 CDOS 8485. motion to dismiss filed by defendants was denied as to all claims against corporation's chief executive officer and its president. 93 Daily Journal DAR 14496. SD NY) 698 F Supp 2d 415. rather. CA2 NY) 506 F2d 1080. Securities and Exchange Commission failed to prove allegations of material misstatements concerning value of corporate stock by defendant officers under 15 USCS § 78j(b). (1997. Litig. its president. 5. C. SEC v Espuelas (2010. en banc. Entin v Barg (1976. executive vice president of strategic development. (1963. Corp. SEC Dkt Vol 16. Securities & Exchange Com. plaintiff must show materiality of information misrepresented or not disclosed. Kohler v Kohler Co. Litig. CA2) 565 F2d 8. affd (1977. claim survived summary judgment because scienter was not required. SD NY) 365 F Supp 1046. ED Pa) 412 F Supp 508. negligence is sufficient basis for liability and. does not render particular statement by bank regarding its integrity per se material. v PMI Industries. Litig. In action to enjoin violations of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5.. 17 CFR § 240. and liability depended on standards of reasonableness. CA7 Wis) 319 F2d 634. CA9 Ariz) 2003 US App LEXIS 10783 and (criticized in In re Seebeyond Techs. In securities fraud litigation brought by United States Security Exchange Commission (SEC) against corporation's chief executive officer. CCH Fed Secur L Rep P 95657. Question of materiality of omitted information. CA5 Tex) 67 F3d 1187. reh den. CCH Fed Secur L Rep P 94221. CCH Fed Secur L Rep P 99505) and 66 of 158 3/8/11 4:25 PM . (2003. CA9 Ariz) 320 F3d 920. v Bausch & Lomb. In re Steadman Secur. DC NY) 420 F Supp 1226. Levinson. engages in "fact-specific inquiry" set forth in Basic. 116 S Ct 1018. In administrative proceeding for willful violation of 15 USCS § 78j(b). SEC v Lum's.by Citation . and. (2005. ED NY) 970 F Supp 192. ED NY) 302 F Supp 439. 1978. Securities Exchange Act of 1934. CCH Fed Secur L Rep P 92478. court found that SEC's Rule 13b2-1. Sec. Eca & Local 134 IBEW Joint Pension Trust of Chi. and aiding and abetting claims against executive vice president of strategic development since amended complaint set forth sufficient allegations that material misstatements were made in filings to SEC and that corporation's chief executive officer and its president had motive and opportunity to commit fraud because they used inflated stock as collateral for lines of credit and were either aware or recklessly unaware that corporation's disclosures misstated amount of company's barter revenue and thus misstated percentage of revenue attributable to barter transactions. omissions. motion to dismiss was granted as to amended complaint's § 17(a). (1973. Connett v Justus Enters. Folger Adam Co. CCH Fed Secur L Rep P 94134. 2003 Daily Journal DAR 1721. it need not be important enough that it would have caused reasonable investor to change his vote). SEC v Guenthner (2005. v Kneipper (1995. where there was no evidence of violation of Generally Accepted Accounting Principles or scienter on part of corporate officers. CCH Fed Secur L Rep P 98935. Inc. (1991. 97 S Ct 1600. West Holding Corp.13b2-1. (1969. Inc. plaintiff must prove misrepresentations. affd (1970. or employment of some deceptive scheme.Materiality 60. p. all claims against senior vice president of global sales. den.) (1993. v. No. (2003. Halkin v VeriFone Inc. CCH Fed Secur L Rep P 98919. scienter requirements established by United States Supreme Court are inapplicable to administrative proceedings initiated by Commission. 15347. materiality must be shown. 4. (1976. scienter must be pleaded and proved whether suit is brought by SEC or by private litigant. Inc. violation of exchange rules governing disclosure may not be imported as surrogate for straight materiality analysis under 15 USCS § 78j(b) and Rule 10b-5. In action seeking equitable prophylactic relief based upon violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). SD NY) 699 F Supp 2d 655.. term "willful" requires. (1996. though relevant to administrative proceedings initiated by Commission.15 USCS § 78j https://www. (1977) 46 SEC 896. 7 ALR3d 486.

CCH Fed Secur L Rep P 95764. CA3 Pa) 556 F2d 699. 21 FR Serv 3d 468. CA3 Pa) 557 F2d 1022. In re Bristol Myers Squibb Co. Lewis v Chrysler Corp. v Sun Chemical Corp. Ketchum v Green (1976. I. 22 FR Serv 2d 928. Gelman v Westinghouse Electric Corp. ED Va) 115 F Supp 2d 620. Polak v Continental Hosts. Pallet Leasing Inc. (1990. Nelson v Serwold (1978. CCH Fed Secur L Rep P 94765. Liability for misstatement or omission can only be found if non-disclosure is material one. Chelsea Associates v Rapanos (1974. IIT v Vencap. Litig. app dismd (1977. (1977. 22 FR Serv 2d 928. CCH Fed Secur L Rep P 96228. 98 S Ct 225. CCH Fed Secur L Rep P 95374. CA9 Cal) 777 F2d 465. under all circumstances. since both materiality and reliance depends upon specific facts of case. SD NY) 586 F Supp 2d 148. and SEC Rule 10b-5. ED Mich) 376 F Supp 929. United States v Margala (1981.lexis. (criticized in In re MicroStrategy Inc. Little v First California Co. even most material information imaginable may be withheld from public. CCH Fed Secur L Rep P 95398. To prevail on nondisclosure claim under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). DC RI) 434 F Supp 1365. term "material" limits information covered to those matters as to which average prudent investor ought reasonably to be informed before purchasing securities. inter alia. Coleco Industries. cert den (1979) 440 US 913. 62. app dismd (1977. Litig. Antifraud provisions of federal securities acts prohibit not mere inaccuracies but only material misrepresentations or omissions. 98 S Ct 431. It is essential to recovery in action under SEC Rule 10b-5 that there be finding of nondisclosure or misrepresentation of material fact. CCH Fed Secur L Rep P 96107. (1976. Statement or omission is material within meaning of Rule 10b-5 if it reasonably could have been expected to influence decision to sell. (1975. affd in part and revd in part on other grounds (1978. 58 L Ed 2d 671. statements made or facts omitted must be materially misleading if violation is to be shown. CCH Fed Secur L Rep P 95389. CCH Fed Secur L Rep P 91213). Armstrong v Am. Wheat v Hall (1976. Information is "material" if there is substantial likelihood that. Vohs v Dickson (1974. and 78t is misstatement or omission of material fact in connection with offer or sale of security. CA6 Mich) 527 F2d 1266. CCH Fed Secur L Rep P 95725. SEC v Zimmerman (1976. Backman v Polaroid Corp. CCH Fed Secur L Rep P 92394. plaintiff must establish that there devolved upon defendant legal duty to disclose information concerned and that such information would have been material to potential purchaser of securities. United States v Koenig (1974. affd in part and remanded in part on other grounds (1977. Sec. CCH Fed Secur L Rep P 96605. substituted op (1990. Test of materiality Material fact within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is one which would cause reasonable investor to have acted differently in respect to securities transaction. 61. mod (1976. failure to state oral representation in written agreement would preclude later contention by party drafting agreement that oral representation was material or that drafter could justifiably rely on it. CA3 Pa) 567 F2d 569. CA9 Ariz) 532 F2d 1302. 78j. CCH Fed Secur L Rep P 96295. Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)).by Citation . ND Iowa) 678 F Supp 2d 827. 21 FR Serv 2d 20. 99 S Ct 1227. WD Pa) 73 FRD 60.. ED Pa) 423 F Supp 275. Ltd. Proper test for materiality in securities fraud case is not whether investor could have used withheld or misstated information to obtain state injunction against transaction but whether there is substantial likelihood that reasonable investor would view disclosure of withheld or misstated information as having significantly altered total mix of information made available and use it to protect himself from possible financial loss. cert den (1978) 439 US 970. In action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 there is no "put-it-in-writing" rule. revd on other grounds (1978. For purposes of § 10(b) claim. 99 S Ct 601.com/research/retrieve?cc=&pushme=1&tmp. Du Pont de Nemours & Co. 99 S Ct 464. WD Pa) 73 FRD 60. 98 S Ct 224. CA1 RI) 583 F2d 542. contravened accepted principle that materiality and duty to disclose are distinct elements of any allegation of securities fraud under § 78j(b) and Rule 10b-5. CA7 Ill) 850 F2d 1226. misrepresentation or omission is material if there is substantial likelihood that reasonable investor would have acted differently if misrepresentation had not been made or truth had been disclosed. CA3 Pa) 949 F2d 644. and do not attempt to create violations for misstatements or omissions of trivial nature. 24 FR Serv 2d 516. 54 L Ed 2d 155. CA7 Ill) 553 F2d 1033. SD NY) 66 FRD 36.Get a Document . and fact is considered "material" if its existence or nonexistence is matter to which reasonable person would attach importance in determining choice of action in transaction. CCH Fed Secur L Rep P 96399. CCH Fed Secur L Rep P 92206. affd (1975. CCH Fed Secur L Rep P 95725. Required element of proof to be pled in suits brought under 15 USCS §§ 77l. Toombs v Leone (1985. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 are designed to protect investing public by promoting disclosure and free flow of information. ED Pa) 412 F Supp 508. DC Del) 420 F Supp 1057. CCH Fed Secur L Rep P 96532. op withdrawn. (1976. (2009. 58 L Ed 2d 124. 67 of 158 3/8/11 4:25 PM . To establish cause of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. misstatement or omission must be material. Gelman v Westinghouse Electric Corp. or materially affects another disclosure made. 59 L Ed 2d 462. Rowe v Maremont Corp.. Sundstrand Corp. In case alleging violation of 15 USCS § 78j(b). CCH Fed Secur L Rep P 96497. 99 S Ct 106. (1988. information would have assumed actual significance in deliberations of reasonable shareholder. 77q. SEC v American Realty Trust (1977. ED Va) 429 F Supp 1148.15 USCS § 78j https://www. Mere possession of inside information does not create duty to disclose and. SD NY) 388 F Supp 670. when there is negotiated contract pertaining to sale of securities. plaintiff must prove. McLean v Alexander (1976. Holmes v Bateson (1977. 23 FR Serv 2d 546. affd (1977. according to which asserted rule. DC Del) 411 F Supp 133. WD Pa) 415 F Supp 1367. CA5 Tex) 535 F2d 874. 23 FR Serv 2d 546. CCH Fed Secur L Rep P 96084. that defendant made material misrepresentation either through affirmation or omission. CCH Fed Secur L Rep P 98363. 587 F2d 1149. Smith v Manausa (1974. CCH Fed Secur L Rep P 95661. 54 L Ed 2d 300. (1991. CCH Fed Secur L Rep P 95425. Elkind v Liggett & Myers. CA1 Mass) 910 F2d 10. CCH Fed Secur L Rep P 95887. CCH Fed Secur L Rep P 95545. reh den (1978) 439 US 998. CA3 Pa) 556 F2d 699. v Berman (1976. cert den (1977) 434 US 940. cert den (1977) 434 US 875. McLean v Alexander (1976. in order to be actionable. CCH Fed Secur L Rep P 94589. 58 L Ed 2d 431. material fact is one which reasonable investor might consider important in making decision. CCH Fed Secur L Rep P 95556. Harriman v E. (1975. Inc. (1976. (1975. DC Del) 420 F Supp 1057. DC Dist Col) 407 F Supp 623. CCH Fed Secur L Rep P 96253. (2008. (2000. affd in part and vacated in part (1978. CCH Fed Secur L Rep P 95386. Secs. CA6 Ky) 535 F2d 353. which equated materiality of information not disclosed with duty to disclose. CA4 Va) 586 F2d 1001. SD NY) 411 F Supp 1094. Entin v Barg (1976. cert den (1978) 439 US 830. ED Ky) 385 F Supp 443. CCH Fed Secur L Rep P 94899. Ltd. SD NY) 613 F Supp 153. plaintiff must prove not only that there was false representation or omission of information by defendant but also that alleged items of information were material to plaintiff's decision to participate in transaction. Inc. In action charging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 based upon failure of press release to describe facts accurately and failure to disclose sufficient information. CCH Fed Secur L Rep P 95913. CA1 Mass) 893 F2d 1405. (1985. CCH Fed Secur L Rep P 94984. CA9 Cal) 662 F2d 622. CCH Fed Secur L Rep P 96084. Materiality as distinct from duty to disclose Jury instructions given by trial court in action under § 78j(b) and SEC Rule 10b-5. App DC) 190 US App DC 252. CA9 Wash) 576 F2d 1332. absent specific duty to disclose. CCH Fed Secur L Rep P 93906. CA5 Ga) 495 F2d 607.

DC Kan) 232 F Supp 2d 1193. Litigation (2007. Statement is only material if reasonable investor would consider it important in determining whether to buy or sell stock. CA2) 565 F2d 8. Test of materiality. v Texas Gulf Sulphur Co. Securities & Exchange Com. where each statement expressed "confidence" about or "expectation" of outcome regarding uncertain proceeding. materiality centers about significance of misstatement or omission of fact to reasonable investors' deciding to buy or sell and can be determined only by considering all circumstances surrounding transaction. it is appropriate that management's duty of disclosure under Rule 10b-5 be limited to those situations which are essentially extraordinary in nature and which are reasonably certain to have substantial effect on market price of security if disclosed. 23 FR Serv 3d 24.F.. materiality of statement is measured in terms of its market impact. (2002. 23 L Ed 2d 237. (1992. Information is deemed material upon showing that there is substantial likelihood that omitted facts would have assumed actual significance in investment deliberations of reasonable investor. Sec. v Bausch & Lomb. 17 C. or hold company's securities. Information is material if there is substantial likelihood that reasonable investor would consider it important in making investment decisions. P. SD NY) 349 F Supp 46. CCH Fed Secur L Rep P 95008. (1980. CCH Fed Secur L Rep P 94494. affd in part and revd in part (1976. CD Cal) 527 F Supp 2d 1142. In re Graystone Nash. CCH Fed Secur L Rep P 92251. is determination which cannot be made in vacuum. CCH Fed Secur L Rep P 93061). Spielman v General Host Corp. Litig. (2004. CA2 NY) 494 F2d 1301.. under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Material defect. Inc. thus. CA3 NJ) 964 F2d 272. CCH Fed Secur L Rep P 97835. § 240. and SEC Rule 10b-5 promulgated thereunder. DC NY) 420 F Supp 1226. "Materiality" is relative concept. 89 S Ct 1454. SEC v C. which reasonable investor might consider important in making decision. In re Donald J. 121 L Ed 2d 278. 89 S Ct 1770. 130 ALR Fed 633. 63. SD NY) 259 F Supp 99. remanded on other grounds (1968. CCH Fed Secur L Rep P 95497. Since fact misrepresented or omitted must be material in sense that reasonable man would attach importance to it in determining choice of action. 2 ALR Fed 190.. Material information consists of those acts that reasonable investor might have considered important in making decision to buy or sell securities. CCH Fed Secur L Rep P 92422. Shapiro v UJB Fin. (2004. 114 S Ct 1219. en banc. must relate to facts. Ash v G. Sec. Jones & Co. Material information. simply consists of facts which may affect desire of reasonable investors to buy. In re Hansen Natural Corp. SD NY) 89 FRD 87. 127 L Ed 2d 565. sell. Material fact. (1996) 1996 SEC LEXIS 3545. Omitted or misstated fact is material under SEC Rule 10b-5 if there is substantial likelihood that reasonable investor would consider it important in deciding whether to purchase securities. must necessarily be conservative one. cert den (1969) 394 US 976. and delicate assessments of inferences reasonable shareholder would draw from given set of facts are peculiarly for trier of fact. under 15 USCS § 78j(b) is fact which. 31 FR Serv 2d 1083. & ERISA Litig. CCH Fed Secur L Rep P 92002. CCH Fed Secur L Rep P 94894. v Chase Manhattan Corp. 113 S Ct 365 and (criticized in In re Royal Ahold N. i. CCH Fed Secur L Rep P 96186. DC Md) 351 F Supp 2d 334. Dura-Bilt Corp. Inc. v Great American Industries. and Rule 10b-5. CCH Fed Secur L Rep P 95267. Inc. affd (1977. material fact is one that has significant propensity to affect voting process. Rosen v Textron. CA2 NY) 401 F2d 833. Companies' statements of optimism regarding regulators' approval were predictive in nature and appeared to fall outside normal spectrum of material statements under § 10(b) of Securities Exchange Act of 1934. ED Pa) 410 F Supp 1129. Grenader v Spitz (1975. CA2 NY) 494 F2d 1301. alleging that corporation which was subsidiary of larger corporation should have revealed in prospectus that parent corporation had engaged firm to study possibility of parent corporation's termination of relationship with subsidiary since test of materiality of omission required balancing of likelihood of event's occurrence with its anticipated magnitude if it occurred.V. CA2 NY) 407 F2d 453. CCH Fed Secur L Rep P 97352. (1975. CCH Fed Secur L Rep P 94494. or would under circumstances influence buyer in market. affd in part and revd in part on other grounds (1968. 15 USCS § 78j(b).R.15 USCS § 78j https://www. CA2) 533 F2d 826. Whether misrepresentation or omission in prospectus is material. particular misrepresentation or omission significant to reasonable investor in one document or circumstance may not influence reasonable investor in another. CCH Fed Secur L Rep P 92325. concealed or omitted. (1992) 50 SEC 866. Inc. (2004. WD Pa) 620 F Supp 638. Jackson v Oppenheim (1974. (1966. et al. 15 USCS § 78j(b). depends on whether it is something about which average prudent investor ought reasonably to be informed before purchasing security. Secs. (1981. In re Amre. CA3 NJ) 7 F3d 357. Plaintiff failed to plead materiality adequately under § 10(b) of Securities and Exchange of 1934. whether facts relating to future event are material depends upon balancing of indicated probability that event will occur and anticipated magnitude of event in light of totality of company activity. defendant is not required to search out details that presumably would not influence judgment of person with whom he is dealing.--Balancing of probability and magnitude In action alleging violation of 15 USCS § 78j(b).. Paul v Berkman (1985. or whether they constituted widespread and significant inflation of revenue. (1993. (1976. SD NY) 402 F Supp 190. within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CA3) 1992 US App LEXIS 15567 and cert den (1992) 506 US 934. Litig. Inc. Seiffer v Topsy's International. within meaning of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). DC RI) 321 F Supp 2d 308. Language that company is "very confident" about "long term growth" is precisely type of expression of corporate optimism that courts have found to be immaterial. Whether any particular fact is material. each case must be viewed as discrete set of circumstances and judged on its own facts. SD NY) 258 F Supp 262. CA2 NY) 538 F2d 39. CCH Fed Secur L Rep P 97789. 22 L Ed 2d 756. et al. den (1992. affd (1976. Securities & Exchange Com.lexis.Get a Document . Inc. Securities & Exchange Com. under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). SD NY) 390 F Supp 1112. CCH Fed Secur L Rep P 95656. In re Sprint Corp. Securities & Exchange Com. affd (1974. (1966. Provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) prohibit making any untrue statement of material fact or omitting to state material fact necessary to avoid making statements misleading in light of circumstances. in light of totality of 68 of 158 3/8/11 4:25 PM . with regard to information misrepresented or omitted within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5.. Summary judgment under Rule 56 should not have been granted against plaintiff in action under § 11 of Securities Act of 1933 (15 USCS § 77k) and § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)). misrepresented or withheld. CCH Fed Secur L Rep P 95722. In action under 15 USCS § 78j(b). v Shapiro (1972. so that court must appraise misrepresentation or omission in complete context in which author conveys it. reh.e. DC Kan) 487 F Supp 653. Materiality is mixed question of law and fact. since many actions under statute are brought on basis of hindsight. Putnam's Sons (1976. DC Colo) 312 F Supp 2d 1375. CCH Fed Secur L Rep P 93623. SD NY) 411 F Supp 659. cert den (1969) 395 US 920.by Citation . SEC v Shapiro (1974. because in absence of any allegations that quantified financial impact. plaintiff had failed to allege enough to allow court to discern whether alleged accounting violations were minor or technical in nature. cert den (1994) 510 US 1178.10b-5. CCH Fed Secur L Rep P 96651. and does not vary among similarly situated investors. influenced or should have influenced issuer in its decision to issue stock in question. Trump Casino Sec.com/research/retrieve?cc=&pushme=1&tmp. Corp. if it would have assumed actual significance in investor's deliberation or would have been viewed by investor as having significantly altered total mix of information made available.

CA2 NY) 832 F2d 726. Chief executive officer of investment management firm was properly disciplined when firm failed to inform its customers fully about way it was conducting trades as principal. CA10) 334 F3d 1183. withdrawn by publisher and amd (1996. In re Merck & Co. Milton v Van Dorn Co. Sec. (1995. Starkman v Marathon Oil Co. if reasonable minds could not differ as to materiality of undisclosed information. those substantially likely to affect deliberations of reasonable shareholder. Only material facts. 2004. 96 CDOS 9137. that is. 10 FR Serv 3d 308. In action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). In re Home-Stake Prod. it is necessary that facts withheld be material in the sense that reasonable investor might have considered them important in making his decision. Sys. nature of transaction and nature of omitted fact. (2005. 32 L Ed 2d 692. Corp. cert den (1997) 522 US 808. CA1 RI) 583 F2d 542. 92 S Ct 1456. Lewelling v First California Co. Materiality is objective rather than subjective standard and surrounding circumstances must be examined to determine whether reasonable investor. Taylor v Smith. SD NY) 297 F Supp 470. CCH Fed Secur L Rep P 99089). under 15 USCS § 78j(b). 15 USCS § 78j(b). 118 S Ct 48.14a-9). v Levinson (1988) 485 US 224. Co. 96 Daily Journal DAR 15131. (1985. SD NY) 85 F 69 of 158 3/8/11 4:25 PM . experience of investor. CCH Fed Secur L Rep P 93466.--Failure to disclose. CCH Fed Secur L Rep P 94386. and then only if nondisclosure of particular material facts would make misleading any affirmative statement otherwise required by federal securities laws and SEC regulations. 10 UCCRS 1114. 64.--Test as objective Test of materiality of alleged undisclosed or misrepresented facts in action alleging violation of 15 USCS § 78j(b) is objective one: whether reasonable man would attach importance to facts in determining his course of action in transaction in question. 96 Daily Journal DAR 11109. ED Ark) 337 F Supp 1200. CCH Fed Secur L Rep P 93510. Co. and this information was material. CA1 Mass) 961 F2d 965. CCH Fed Secur L Rep P 92290. 96 CDOS 6780. 99 L Ed 2d 700. whether fact's existence or nonexistence is matter to which reasonable man would attach importance in determining his choice of action in transaction in question. and involving primarily failure to disclose. and defendants wanted to build up inventory before announcing product recalls--raised reasonable inference that this was material omission. where representation is promise of one of parties. (1987. 24 Fed Rules Evid Serv 961. CA6 Ohio) 772 F2d 231. CCH Fed Secur L Rep P 94645. materiality of omitted fact was to be tested by determining whether reasonable investor might have considered it important in making his investment decision. Sec. brought by estate of former president of corporation against corporation and its officers based upon alleged fraud in repurchase of deceased president's stock by corporation. Tucker v Arthur Andersen & Co. CCH Fed Secur L Rep P 93606. CCH Fed Secur L Rep P 95107. Material information. reh den (1972) 407 US 916. experience and bargaining position of investor and nature of transaction as well as character of underlying fact. SD NY) 388 F Supp 670. material facts are those facts about corporation's business which in reasonable and objective contemplation might affect value of its stock. CA9 Cal) 102 F3d 1478. 92 S Ct 2430 and reh den (1972) 408 US 931. v Rhoades (1973. as nondisclosure was not material. Inc. SD NY) 67 FRD 468. SD Tex) 202 FRD 484. CCH Fed Secur L Rep P 96532. Investors failed to state 15 USCS § 78j(b) claim arising from pharmaceutical company's alleged nondisclosure of subsidiary's revenue recognition methods. Litig. Applicable test of materiality of false or misleading statements or omissions under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is essentially objective: Whether reasonable man would attach importance to fact misrepresented in determining his choice of action in transaction in question. CCH Fed Secur L Rep P 96264. Provenz v Miller (1996. Robinson v Cupples Container Co. context in which statement was made. S. CCH Fed Secur L Rep P 92177. under 15 USCS § 78j(b). and Rule 10(b)(5)--that defendants failed to disclose information about manufacturing change prior to July 2. omission In case alleging violation of SEC Rule 10b-5. Geman v SEC (2003. 100 L Ed 2d 221. cert den (1986) 475 US 1015. affd in part and revd in part on other grounds (1978. (1968. CCH Fed Secur L Rep P 94765. Lane v Midwest Bancshares Corp. 108 S Ct 978. company's stock price continued to rise for five days following initial disclosure of information. constituted material omission. Basic Inc. (2001. reh den (1988) 486 US 1018. RICO Bus Disp Guide (CCH) P 10139). Kronfeld v Trans World Airlines. encompasses those facts which in reasonable and objective contemplation might affect value of corporation's stock or securities. Materiality requirement for securities fraud under 15 USCS § 78j(b) and Rule 10b(5) was satisfied by claim that corporation's failure to disclose that shareholder had been released from standstill agreement prohibited him from soliciting acquisition offers and.. Emples. (1977. ED Mich) 906 F Supp 1145. such assessments are peculiarly ones for trier of fact. must be disclosed. CCH Fed Secur L Rep P 93645. concept of materiality encompasses those facts which in reasonable or objective contemplation might affect value of corporation's stock or securities. and disclosure could be material even though no proposal for termination of subsidiary's status had yet been presented to parent is corporation's board of directors. Materiality of omissions is measured by objective standard. 65.lexis. considering facts of case including relationship of parties. Whether omission is material is determination that requires delicate assessments of inferences reasonable shareholder would draw from given set of facts and significance of those inferences to him. CA9 Cal) 513 F2d 1274. applies in context of antifraud provisions of § 10(b) of Act (15 USCS § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240. thus. company activity. CCH Fed Secur L Rep P 94339. United States v Koenig (1974. Allegations in complaint claiming violations of § 10(b) of Securities Exchange Act of 1934. (1975. 89 L Ed 2d 310. CCH Fed Secur L Rep P 99311. Kalnit v Eichler (1999. CCH Fed Secur L Rep P 93982. would attach importance to alleged misrepresentation or omission. if it concerns something that reasonable man would consider important in deciding what he should do in particular transaction. v Reliance Nat'l Indem. (1992. CA1 Mass) 523 F3d 75. CCH Fed Secur L Rep P 93443. so test for materiality in efficient market was not met. 108 S Ct 1759 and (ovrld in part as stated in Pittiglio v Michigan Nat'l Corp. (1975. CCH Fed Secur L Rep P 96140. Affiliated Ute Citizens v United States (1972) 406 US 128. (1972. Holmes v Bateson (1977. CA3 NJ) 432 F3d 261. Pub. Definition of materiality in the proxy-solicitation context of § 14(a) of Securities Exchange Act of 1934 (15 USCS § 78n(a)) and SEC Rule 14a-9 (17 CFR § 240. 23 FR Serv 2d 1373. 33 L Ed 2d 345. v Boston Sci. Financial Sec. (1973. CCH Fed Secur L Rep P 96601. Rochez Bros.. Ins. Barney & Co. under which omitted fact is material if there is a substantial likelihood that reasonable shareholder would consider it important in deciding how to vote and its disclosure would have been viewed by reasonable investor as having significantly altered total mix of information available. thus depriving its customers of opportunity to obtain for themselves more favorable prices than firm was realizing. Litigation (1975. In civil action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. In re U. cert den (1988) 485 US 1007.com/research/retrieve?cc=&pushme=1&tmp. DC Utah) 358 F Supp 892. 99 L Ed 2d 194. DC RI) 434 F Supp 1365.15 USCS § 78j https://www.Get a Document . Litig.10b-5). Inc. CA3 Pa) 491 F2d 402. SD Cal) 69 FRD 24.by Citation . Although objective determination of materiality requires assessment of inferences reasonable shareholder would draw from given set of undisputed facts and significance of those inferences to him and that assessment is peculiarly one for trier of fact. Misstatement of fact or nondisclosure is considered material. Miss. 20 FR Serv 2d 411. SEC v Shattuck Denn Mining Corp.. 106 S Ct 1195. CCH Fed Secur L Rep P 92452. 108 S Ct 1470. ND Okla) 76 FRD 351. (1977. CA9 Or) 564 F2d 1277. Ret. 31 L Ed 2d 741. representation must be viewed in light of relationship of parties. CCH Fed Secur L Rep P 96228.. 139 L Ed 2d 14. 92 S Ct 2478 and (criticized in Sandwich Chef of Tex. Inc. summary judgment is warranted nonetheless. CA9 Cal) 95 F3d 1376. (2008. not individual investor.

based on disclosures in company's registration statement for secondary offering with respect to "swap" of company's brokerage unit for another entity's asset management division. CCH Fed Secur L Rep P 93052.C.P. ED Mich) 698 F Supp 2d 771. Sec. SEC v Gane (2005. SEC v Saxena (2001. CCH Fed Secur L Rep P 95231.10b-5. deception is alleged to have been practiced on corporation.7 million loss to another fund. plaintiff investors' claims under §§ 10(b). (2005. (In re MarketXT Holdings Corp. DC Mass) 477 F Supp 2d 342. (2009. allegations were pleaded with sufficient particularity under 15 USCS § 78u-4(b)(1) and were material because investor also alleged company was. Test of materiality of misstatement. 62 FR Serv 3d 462. in part. Unpublished: Allegation that surviving party to merger failed to disclose to acquiring party that surviving party had losses of over $ 270 million in first quarter of year in which merger was negotiated. CCH Fed Secur L Rep P 95090. v Lionel Corp. Taubenfeld v Hotels (2004. 15 USCS § 78j(b). Rule 10b-5. ND Ga) 329 F Supp 2d 1328). 20(a). and same filing was also alleged as noting that company was dependent on network and had to maintain good relationship with it or its business might not succeed. can form basis for liability for false and misleading statements under § 10(b) of Securities Exchange Act. 17 CFR § 229. in violation of 15 USCS §§ 77q(a).10b-5 based on allegations of false statements and omissions regarding manufacturer's medical device. those losses were clearly material.--Misstatement or misrepresentation Materiality standard of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is whether reasonable man would attach importance to fact misrepresented in determining choice of action in transaction in question. and S. even though all directors were party to it.com/research/retrieve?cc=&pushme=1&tmp. ND Ill) 1998 US Dist LEXIS 15422). 66. CA2) 2008 US App LEXIS 6392. SD Fla) 18 FLW Fed D 401. ND Tex) 385 F Supp 2d 587.10b-5(b). CA2 NY) 483 F2d 540. Item 303.303. (2009. (1973. 94 S Ct 1416. because failure to disclose loss was not basis of fraud claim. and by sponsoring researchers to publish false and misleading materials. SEC v Conaway (2010. which provided independent basis for dismissing these claims. E*Trade Fin. 15 USCS § 78j(b). Where investors' suit against company and others under §§ 10(b) of Exchange Act. CA1 Mass) 26 Fed Appx 22. Greenhouse v MCG Capital Corp. filed against defendants. Alleged misrepresentations regarding company's merger with other entities. traveling services. as in derivative action. ED NY) 608 F Supp 2d 372. Supp 2d 232. injunction den (2010. CCH Fed Secur L Rep P 90141) and (ovrld as stated in Krieger v Gast (1998.15 USCS § 78j https://www.. and (3) nature of termination was material because occurrence of T4D was fact that reasonable shareholder would have considered important in deciding how to act. BC SD NY) 2006 Bankr LEXIS 2746. CA7 Ill) 136 F3d 531. common issue effecting proposed class was whether insurance company knowingly withheld material facts from prospectus in effort to gain votes in support of demutualization. 55 L Ed 2d 771. v MarketXT Holdings Corp. 17 CFR § 240. In re MetLife Demutualization Litig.. DC Minn) 618 F Supp 2d 1016. cert den (1978) 434 US 1069. Garber v Legg Mason. Lormand v US Unwired. claimed that defendants acted in manner that caused significant losses. and S. omitted information about potential problems with device was not statistically significant and not material. where. In re Medtronic Inc. 15 USCS §§ 78j(b). CCH Fed Secur L Rep P 96162. CA4 Va) 392 F3d 650. Republic Technology Fund. Goldberg v Meridor (1977. already embroiled in bitter dispute with network and network had demanded that company undertake certain actions company was certain would be disastrous. S-K. made in compliance with S.E.by Citation .000 per day in revenue was immaterial as matter of law as it was less than 1. and any investor would have considered that fact in deciding whether to buy or sell stock. CCH Fed Secur L Rep P 90720 (criticized in APA Excelsior III. 17 CFR § 240. motion to strike den. must be whether facts that were not disclosed or were misleadingly disclosed to shareholders would have assumed actual significance in deliberations of reasonable and disinterested directors or created substantial likelihood that such directors would have considered total mix of information available to have been significantly altered. concerning safety and efficacy of Paxil for treatment of children and adolescents because plaintiff's complaint did not explain how results of research trials at issue could be deemed statistically significant in light of test results from another trial that pharmaceutical company did disclose. CCH Fed Secur L Rep P 94069. Litig. omission was not rendered immaterial by company's SEC filings. such materiality test being concerned only with whether prototype reasonable investor would have relied. motion gr. national network. Akerman v Arotech Corp. Where plaintiff investor's complaint alleged that registration statement defendant officers and directors filed with Securities Exchange Commission included statements emphasizing beneficial relationship between company and its affiliated nationwide cellular telephone network. Omissions from Management's Discussion and Analysis on liquidity and financial condition in Form 10-Q for interim quarter. of Securities Exchange Act of 1934. Main source of company's revenues came from three products still in development. investors also failed to allege that any of these alleged omissions were material." that company was 70 of 158 3/8/11 4:25 PM . Reg. 78t.E. and 80b-6(1). 15 USCS § 78j(b). alleged statement or omission that was material because (1) purchasers claimed that defendants. Complaint alleging violations of Securities Exchange Act § 10(b). application for design change did not indicate that omitted information was material. 39 L Ed 2d 472. L. such that merger could make company "dominant force in software. CCH Fed Secur L Rep P 95622. were dismissed with prejudice. CCH Fed Secur L Rep P 95205. was without merit because policyholders maintained that only insurance company had knowledge of omitted facts. Rule 10b-5(b) if omissions are material.Get a Document . 98 S Ct 1249 and (criticized in Isquith v Caremark Int'l (1998. demutualized insurance company's conclusion that individual trials would be necessary to determine extent of each class member's knowledge of omitted facts at time of demutualization vote.E. ED Mich) 695 F Supp 2d 534. 15 USCS § 78j.C. as such. ED NY) 229 FRD 369. handset availability. SD NY) 537 F Supp 2d 597. at time of filing.5 percent of quarter's revenue. In action brought by SEC. (2) company itself chose to characterize terminations for default of government contracts as having material adverse effect on its ability to recompete for future contracts and orders and admitted that such terminations could have exposed company to liability.lexis. company and three of its officers. CA2 NY) 567 F2d 209. findings of fact/conclusions of law. and technology as some of benefits. Masters v GlaxoSmithKline (2008. CCH Fed Secur L Rep P 95580. then. never disclosed termination for default (T4D). SEC v Durgarian (2007. and Rule 10b-5. Whether or not founder and leader of publicly traded venture capital firm had obtained bachelor's degree in economics was not material since reasonable investor would not find that fact material in "total mix" of information. did not survive motion to dismiss fraud claim under § 10(b) of Securities and Exchange Act. account must be taken of all surrounding circumstances to determine whether fact under consideration is of such significance that reasonable investor would weigh it in his decision whether or not to invest. Alleged failure to disclose dispute with another company costing $ 50. allegations did not satisfy heightened pleading requirements of 15 USCS § 78u-4(b) as to materiality. Securities fraud action. evidence established that stockbroker violated bar order where stockbroker supplied false and misleading information as to funds' management and investment strategies. (2009. Inc. As to policyholders' 15 USCS § 771(a)(2) claim. and therefore disclosure of omitted fact would have been viewed by reasonable investor as having significantly altered total mix of information available. was class wide phenomenon and materiality presented issue common to all members of proposed class. and listed its access to marketing. cert den (1974) 415 US 918. 78j(b). (2008. failed to plead alleged fraud with required particularity. v Windley (2004. Corp. 15 USCS § 78j.C. Investors failed to state securities fraud claim under 15 USCS § 78j(b) and 17 CFR § 240. and thus. company and its insiders. Unpublished Opinions Unpublished: Pharmaceutical company did not violate 15 USCS § 78j(b) and Rule 10b-5 by not timely disclosing allegedly adverse results of certain research trials. Inc. CA5 La) 565 F3d 228. the effect on voter.) (2006. (2004. Inc.. including their failure to inform retirement and defined contribution plan of estimated $ 4 million loss and scheme to conduct "as of" trades which caused aggregate $ 2. which was brought under § 10(b) of Securities Exchange Act of 1934. CCH Fed Secur L Rep P 91657.

SD NY) 367 F Supp 2d 572. and misstatements concerning adequacy of corporation's disclosure controls.10b5-1 where. DC NJ) 691 F Supp 2d 601. (2008. Secs. Motion to deny securities fraud action was denied because with respect to financial results.. though defendant pointed out that company's stock price did not fall during time when he released pertinent information. investor adequately alleged false or misleading statements concerning demand for company's products and market share. which alleged that corporation's financial results reflected revenues that were artificially enhanced through booking of fictitious sales. Civ. inaccuracy in publicly disseminated press statement. creating "world's most complete financial portal solutions provider. for example. since it was impossible to tell at dismissal stage whether "capital contribution" qualified as "ownership interest" within meaning of Products Liability Risk Retention Act of 1981 (15 USCS §§ 3901 et seq. (2006. 9(b) and Private Securities Litigation Reform Act of 1995. (1988. so that factual issues remained for determination upon remand to District Court. (2001. 78ff. Inc. SEC v Penthouse Int'l. conversion of loss into profit. failed to satisfy pleading requirements of Fed. ND Tex) 45 F Supp 2d 544. nondisclosure of fact of disparity in price to various shareholders might be argued to be materially misleading. and Rule 10b-5. 67. Corp. 24 Fed Rules Evid Serv 961. and jury instructions that defendant received were legally accurate. 17 CFR § 240. CA2 NY) 531 F2d 39. Investors' allegations under 15 USCS § 78j(b) failed because. because there is also no evidence of sale or purchase since right of first refusal simply expired. 737." United States v Nacchio (2008.10b-5).by Citation . Inc. 109 Stat. CCH Fed Secur L Rep P 94813. reasonable jury could have concluded that undisclosed evidence was material." and that merger positioned company for "executing its long-term global strategy. (1976. On motion to dismiss securities fraud complaint brought in part under 15 USCS § 78j(b). neither investors' confidential witnesses. Resources Group v Rhone-Poulenc. §§ 240.R. Inc. R. Although trading and profit making by insiders can serve as indication of materiality under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240. SEC v Geon Industries. 240. District Court should not have dismissed action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) where action had been brought by homebuilders who were members of mutual corporation which offered program whereby homebuilders could enroll homes they built in program for "capital and contribution" per home in return for which purchasers of homes would be offered limited warranty through program. 15 USCS § 78j(b). In re Huffy Corp. (1999. contrary to Securities and Exchange Commission's (SEC) allegation that information concerning PIPE was materially negative. there is no authority in § 10(b). they could not proceed with 15 USCS § 78t(a) claim. CA10 Colo) 519 F3d 1140. under § 10(b) of Securities Exchange Act of 1934. Fleisher Dev. Stock price movement of stock from time of defendant's trade until closing of market on October 9th. Inc. and if contributions were treated as securities. neither reasonable basis rule concerning forward-looking statements nor bespeaks caution rule applied. CCH Fed Secur L Rep P 93823. Louros v Kreicas (2005. Basic test of materiality is whether reasonable person would attach importance to information given in determining his choice of action in transaction in question. where it is not in hands of general partner. concerning corporation's liquidation.." United States SEC v Kearns (2010. inside information regarding such merger can become material at earlier stage than would be case in lesser transactions. SD Cal) 607 F Supp 2d 1145. and 17 C. CA5 Tex) 247 F3d 574. (2009.F. summary judgment in favor of defendant was appropriate. SD NY) 390 F Supp 2d 344. CCH Fed Secur L Rep P 99497. In context of allegation of securities fraud and insider trading.2 percent revenue shortfall was not immaterial and. CCH Fed Secur L Rep P 93565. because efficient market of reasonable investors did not devalue stock after trade at issue and because SEC failed to otherwise raise genuine issue of fact as to materiality." "disciplined business practice. under this test. market did not devalue stock after trade at issue. even though right of first refusal may be security.Get a Document . its legislative history. In re S1 Corp.10b-5.10b-5. because complaint did not explain how alleged actions of officer and two individuals were relied upon by purchasers of corporation's stock during relevant period." were too general and vague to be actionable and were not material under 15 USCS § 78j(b). was clearly material. but instead was inactionable "puffery. Union Pac. P. and complaint failed to particularize any material misstatements or omissions by officer and individuals. Alleged fraud of defendant arising from stock transfer transaction which induced plaintiffs not to exercise right of first refusal does not give rise to viable securities fraud claim. 15 USCS § 78j(b). Backe v Novatel Wireless. 856 F2d 1529. Inc. Sufficient evidence supported defendant's convictions for insider trading pursuant to 15 USCS §§ 78j. in which event contributions would be treated as securities for purposes of action under § 10(b) of 1934 Act. WD Okla) 565 F Supp 1244. under circumstances of case.15 USCS § 78j https://www. reasonable jury could have believed that such was result of information being "trickled out. investor adequately alleged false and misleading statements and reasons those statements were false and misleading. information takes on added charge merely because it is inside information. 108 S Ct 978. remanded (2001. Secs. Defendant's alleged representation that he was "licensed investment advisor" was not actionable under Section 10(b) because there was insufficient proximity between alleged misrepresentation and plaintiff's decision to invest. App DC) 272 US App DC 367. inter alia. moreover. 10 FR Serv 3d 308. CCH Fed Secur L Rep P 90445. was evidence that reasonable investors did not devalue stock following defendant's trade. SEC v Mangan (2008. Katz v Image Innovations Holdings. CCH Fed Secur L Rep P 95618. ND Ga) 173 F Supp 2d 1334. when experts agreed that information about private investment in public equity (PIPE) was fully impounded into price. ND Ill) 431 F Supp 2d 823. some allegedly misleading statements regarding successful cost containment efforts and solid growth were not material under 15 USCS § 78u-4(b)(1) because they were puffery. Stock purchasers' claims under § 10(b) of Securities Exchange Act of 1934. 10 FR Serv 3d 308. Litig. CCH Fed Secur L Rep P 93645. (2008. SD NY) 542 F Supp 2d 269.--Inside information Under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10(b)-5 (17 CFR § 240. Davis v SPSS.lexis. in determining materiality in specific context of preliminary merger negotiations. materiality was shown through overstatement of quarterly revenues. since merger in which small corporation is bought out is most important event that can occur in small corporation's life. who was also chairman of proposed buyer of corporation. nor circumstances of alleged actions established that company employee's misconduct impacted company's financials such that misstated reports of financials were directly related to employee's actions. WD NC) 598 F Supp 2d 731. CCH Fed Secur L Rep P 94603. for it would effectively collapse materiality requirement into analysis of defendant's disclosure duties to devise 2 different standards of materiality. Litig. information given by director of corporation to be sold. and fact that pamphlet distributed by corporation to members included statement that required contributions would not exceed $ 25 would not reasonably put investor on notice that disparate prices would be charged to members of mutual. or previous decisions of United States Supreme Court. CCH Fed Secur L Rep P 93645. (2005. SEC v Platt (1983.). Complaint alleging violation of 15 USCS § 78j(b) was not dismissed for failure to state claim because it sufficiently pled elements of cause of action. 99 L Ed 2d 194. Statements made during quarterly meetings and in company's Form 8-K attributing company's success to "back to basics management discipline. inter alia. Securities and Exchange Commission (SEC) met its burden of establishing that information in question was both material and nonpublic because industry in general viewed information about 71 of 158 3/8/11 4:25 PM . CCH Fed Secur L Rep P 95441. Basic Inc.com/research/retrieve?cc=&pushme=1&tmp. v Home Owners Warranty Corp. Basic Inc. In cases of disclosure of inside information to favored few.10b-5). v Levinson (1988) 485 US 224. 108 S Ct 978. CCH Fed Secur L Rep P 93233. determination of materiality has different aspect than when issue is. SD Ohio) 577 F Supp 2d 968. for varying standard of materiality depending on who brings action or whether insiders are alleged to have profited. information regarding 4. 99 L Ed 2d 194. affd in part and revd in part." and discipline and experience of company's management team did not violate 15 USCS § 78j(b). 24 Fed Rules Evid Serv 961. as investors failed to plead primary security violation. Inc. v Levinson (1988) 485 US 224.

by weighing potential aid information will give shareholder against potential harm. information does not become material merely by virtue of public statement denying information. CA2 NY) 514 F2d 283. P. which arose from corporation's failure to complete tender offer to repurchase certain previously issued notes. 70.10b. and in particular. where they failed to meet pleading requirements of 15 USCS § 78u-4 and Fed. because it was generally known in industry that computer orders were not firm. and no showing of scienter was made as to this statement. plaintiffs must do more than merely allege that defendants had plan to merge to meet materiality requirement. because there was no underlying violation of § 78j(b). information which would otherwise be considered significant to trading decisions of reasonable investor is not excluded from definition of materiality merely because agreement in principle as to price and structure has not yet been reached. 5 FR Serv 3d 118. Civ. 10 FR Serv 3d 308. as required by Rule 10b-5.10b-5). Rubke v Capitol Bancorp. who was chairman and CEO of company. therefore. Michaels v Michaels (1985. R. if information is released with proper cautionary note. 110 S Ct 3229.--New products Securities fraud complaint against computer manufacturer is dismissed where manufacturer allegedly misrepresented that buyers of new computer were making larger orders than expected. 17 FLW Fed C 311. and statements they made occurred prior to when factual and legal predicates for merger were in place. purpose for which information was originally compiled. In re Apple Computer Sec. cert den (1990) 496 US 943. 12(b)(6) investor's action alleging violations of §§ 10(b) and 20(a) of Securities Exchange Act of 1934. 10 FR Serv 3d 308. where (1) preliminary merger talks could be material well before any agreement was reached. Flynn v Bass Bros. 108 S Ct 978. insider placed calls to family members who purchased stock in these companies. SD NY) 605 F Supp 2d 531. 15 USCS §§ 78j(b). CA7 Ill) 767 F2d 1185. Rule 10b-5 because officers had no duty disclose possibility that corporation would merge with another corporation. ND Ill) 676 F Supp 2d 680. CCH Fed Secur L Rep P 92529.E. 19 Fed Rules Evid Serv 176 and cert den (1986) 474 US 1057. CCH Fed Secur L Rep P 93645. 88 L Ed 2d 774. Company's statement that no merger negotiations were underway. courts should ascertain duty to disclose asset valuations and other soft information on case by case basis. ND Cal) 690 F Supp 872. (2009. Corporate officers' public statements were not materially misleading under 15 USCS § 78j(b). "price and structure" threshold. CCH Fed Secur L Rep P 93678. 106 S Ct 797. 19 Fed Rules Evid Serv 176. CCH Fed Secur L Rep P 92710. qualifications of those who prepared or compiled it. and (3) material was nonpublic because parties involved in possible acquisition testified that these talks were confidential and meetings about possible merger involved confidentiality agreement. R2 Invs. Ltd. and fact that defendants controlled both acquiring company and target company is not sufficient to show agreement in principle. CCH Fed Secur L Rep P 95099. does not preclude finding of materiality where corporation is closely held because reasons for that standard of materiality disappear when there is no public market for shareholder's stock. Levie v Sears Roebuck & Co. (2009. because disclosure of omitted fact would have been viewed by reasonable investor as having significantly altered total mix of information made available. CCH Fed Secur L Rep P 92508.--Sale of corporation For publicly traded stock. or where it might have been considered important to that determination. however. v Levinson (1988) 485 US 224. CCH Fed Secur L Rep P 92203. so that whether merger discussions in any particular case are material depends on facts. and availability to investor of other more reliable sources of information. there was sufficient evidence that tipped information was material and nonpublic. Where insider. P. Levinson v Basic. Enters. 15 USCS §§ 78j(b). generally requiring look at indicia of interest in transaction at highest corporate levels. relevance of information to stockholders' impending decision. affd in part and revd in part.--Merger discussions or plans Under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240. 69. (1986. CA6 Ohio) 786 F2d 741. and SEC adduced evidence from each of four issuers that information regarding its PIPE offering was not generally known and had not been disseminated to investing public generally. remanded (1988) 485 US 224. 24 Fed Rules Evid Serv 961. SD NY) 386 F Supp 12. CCH Fed Secur L Rep P 95042. company knew of no reason for stock's activity. 108 S Ct 978. remanded (1989. officers and directors of bankrupt telecommunications corporation. after these meetings. vacated on other grounds. and management was unaware of present or pending corporate development that would result in abnormally heavy trading activity rendered omission of fact that there were ongoing merger negotiations material by virtue of statement denying existence of such discussions. CCH Fed Secur L Rep P 93127. 99 L Ed 2d 194.14e-3.lexis. §§ 240. such as undue reliance. materiality of fact will depend upon balancing of both indicated probability that event will occur and anticipated magnitude of event in light of totality of company activity. Question of fact 72 of 158 3/8/11 4:25 PM . CA11 Fla) 362 F3d 1292. 68. since under Rule 10b-5 it is not enough that statement is false or incomplete if misrepresented fact is otherwise insignificant. (1984. district court erroneously granted insider's motion for judgment as matter of law in suit by Securities and Exchange Commission (SEC) alleging violations of § 10(b) and § 14e of Securities and Exchange Act.. there was also no liability under 15 USCS § 78t(a). 9(b). District court properly dismissed under Fed.15 USCS § 78j https://www. (1985.--Tender offers Under 15 USCS §§ 78j. shareholders' right to know outweighs need to protect them from potentially misleading disclosures of pending negotiations only when negotiating parties have reached agreement on price and structure. CCH Fed Secur L Rep P 93645. Civ. CCH Fed Secur L Rep P 91674.com/research/retrieve?cc=&pushme=1&tmp. CA9 Cal) 886 F2d 1109. CA3 Pa) 744 F2d 978. United States SEC v Ginsburg (2004. CA7 Ill) 767 F2d 1185. 240. 24 Fed Rules Evid Serv 961.. 17 C. affd (1975. CCH Fed Secur L Rep P 94908. Kaufmann v Lawrence (1974. CCH Fed Secur L Rep P 94714.by Citation . minority shareholders have right to know of developments in negotiations for sale of corporation and there is no offsetting need to protect other shareholders from potentially misleading disclosures. degree of subjectivity or bias reflected in preparation of information. 72. failed to allege scienter with particularity. 78n(e). Litigation (1987. Misrepresentation or omission with respect to tender offer is proscribed by § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 where it is such that reasonable man would consider it important to his decision to tender or not to tender his shares. 78t(a) by appellees. appraisals of assets of corporation that is target of tender offer are not immaterial as matter of law. Inc.C. (2) reasonable investor would view meetings about possible acquisition at specific price as altering total mix of available information. SEC v Lyon (2009. LDC v Phillips (2005. 110 L Ed 2d 676.Get a Document .R. Private Investments in Public Equities (PIPE) offering as likely to significantly effect issuer's stock price and therefore as material. or show why already public information had to be disclosed. 78n(e) and Rules 10b-5 and 14e-3. and thus this statement was not materially misleading. there was no liability under 15 USCS § 78j(b) because there was no actionable misstatement with respect to corporation's Securities and Exchange Commission filings and no strong inference of scienter. Nutis v Penn Merchandising Corp. ED Pa) 615 F Supp 486. 71. R. Basic Inc. and S. 99 L Ed 2d 194. degree to which information is unique. in context of preliminary corporate merger discussions.F. Duty to disclose merger plan arises only when there is agreement in principle to merge. CA9 Cal) 551 F3d 1156. met with officers of two other companies to discuss possible acquisition and merger and where. Minority shareholders' claims concerning tender offer for minority shares under 15 USCS § 77k and 15 USCS §§ 78j(b) and 78n(e) failed. amd (1985. factors court must consider in making this determination are facts upon which information is based. CA5 Tex) 401 F3d 638.

CCH Fed Secur L Rep P 90290) and (criticized in Morse v McWhorter (2000. such omission is not material where plaintiff in fact was aware of price agreed upon between corporation and third person and was willing to pay higher price per share based upon his own investment judgment as to worth of corporation. (2) selection of "independent" investment banker and law firm. ND Cal) 30 F Supp 2d 1209. CCH Fed Secur L Rep P 92827. CA9 Cal) 89 F3d 1399. it is necessary for plaintiff to show not only false representation or omission of information. which judgment was based on full information untainted by any fraudulent misrepresentation or omission. 5 SW3d 423). ED NY) 67 FRD 500. CCH Fed Secur L Rep P 94589. DC Md) 351 F Supp 2d 334. Ingenito v Bermec Corp. 73 of 158 3/8/11 4:25 PM . CCH Fed Secur L Rep P 93061). cert den (1996) 516 US 1147. CA5 Ga) 495 F2d 607. 102 S Ct 136. fairly represented facts claimed to be omitted and if not. (2004.. (1973. Powell v American Bank & Trust Co. where information cited related to (1) selection of "independent" special committee to select investment banker and law firm to assist with merger. CCH Fed Secur L Rep P 99367) and (criticized in SEC v Buntrock (2004. It was not omission of material fact. cert den (1981) 454 US 835. Party to securities transaction who has reasonable belief that other party already has access to facts is excused from new disclosure which reasonably would appear to be repetitive. When stock is traded in efficient market. 96 CDOS 5268. 137 L Ed 2d 308. determination of issue on summary judgment was therefore inappropriate.. because reasonable shareholder might well have considered this information significant. and where allegation of omission of information relates to price at which corporation has agreed to sell securities to third person. Sec. CCH Fed Secur L Rep P 94548. 134 L Ed 2d 98. for person offering to purchase stock to fail to disclose to offerees that purpose of attempted purchases was to reduce number of potential class members and thereby defeat class action against offeror where each offeree had been furnished with copy of plaintiffs' complaint and each was made aware of fact that action was class action and that he or she was potential plaintiff. (2002. Statement or omission is material if there is substantial likelihood that reasonable shareholder would consider it important in determining his or her course of conduct. 117 S Ct 1105 and (criticized in Hockey v Medhekar (1998. SD NY) 376 F Supp 1154. (1975. Inc. SD Fla) 354 F Supp 1048. 70 L Ed 2d 114. cert den (1975) 420 US 908. CCH Fed Secur L Rep P 94961. CCH Fed Secur L Rep P 96495. Given factual disputes regarding information that was communicated at board meeting. materiality presents mixed question of fact and law which requires determination of inferences of reasonable shareholder. within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). finder of fact must determine whether prospectus. both audited and unaudited. Lewis v Spiral Metal Co. therefore. but that what was misrepresented or withheld was material. CCH Fed Secur L Rep P 92916. CA3 NJ) 540 F2d 591. 96 Daily Journal DAR 8535. that reasonable minds could not differ on question of materiality. Nesenoff v Muten (1974. CCH Fed Secur L Rep P 95623. Anderson v Clow (In re Stac Elecs. (1976. it follows that information disclosed was immaterial as matter of law for purposes of antitrust action under 15 USCS § 78j(b). In order to recover in private action under antifraud provisions of Securities Exchange Act. 95 S Ct 826 and (criticized in SEC v First Jersey Sec. Co.) (1996. ND Ill) 185 F Supp 2d 906. Straub v Vaisman & Co. based on material omissions. ED Pa) 452 F Supp 80. Frigitemp Corp. & ERISA Litig.com/research/retrieve?cc=&pushme=1&tmp. that reasonable minds cannot differ on question of materiality. (2004. (1981. Walsh v Butcher & Sherrerd (1978. Inc. CA6 Ohio) 493 F2d 1304. (1986. In re Global Crossing.V. CCH Fed Secur L Rep P 94464. CCH Fed Secur L Rep P 93988.Get a Document . ND Ill) CCH Fed Secur L Rep P 92833). If plaintiff has actual knowledge of material facts. court could not find that information board learned at that meeting would have been so obviously important to investor.. and (5) $ 90 million tax benefit corporate controllers would receive by way of merger. Supreme Court's caution that assessing materiality under § 10(b) and SEC Rule 10b-5 is fact-intensive inquiry peculiarly suited for trier of fact. if company's disclosure of information has no effect on stock prices. TBK Partners v Shaw (1988.by Citation . which third person has in turn agreed to sell portion of such securities to plaintiff. cert den (1997) 520 US 1103. allegation of $ 20 million overstatement of revenue hardly fell into that category. United States SEC v Talbot (2006. Vohs v Dickson (1974. 73. CCH Fed Secur L Rep P 99272. Materiality of omission is fact-specific determination that should ordinarily be assessed by jury. (1970. but where plaintiff was aware of cancellation substantially before entering into transaction. and. there is no duty to disclose information to one who reasonably should already be aware of it. although generally more factual question. CA2 NY) 524 F2d 275. Inc. McGrath v Zenith Radio Corp. within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Effect of other party's knowledge Sale to state official having authority to purchase notes from corporation who was fully aware of terms of sale did not constitute fraud under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) even though such sale may have been unlawful under state law. Litig. ND Ind) 640 F Supp 1568. Materiality is generally mixed question of law and fact and only if no reasonable juror could determine that statement or omission would have assumed actual significance in deliberations of reasonable investor should materiality be determined as matter of law. CA2 NY) 101 F3d 1450. Compromise between competing state banking groups allowing groups to finally support 18th General Assembly attempt to pass cross-county banking legislation is "material fact" under 15 USCS § 78j(b) in offer and sale of state bank stock. CCH Fed Secur L Rep P 98919. materiality of disclosed information may be measured post hoc by looking to movement of company's stock price in period immediately following disclosure. 116 S Ct 1018. Sec. SD NY) 322 F Supp 2d 319. v Financial Dynamics Fund. cancellation could not be material fact regarding decision to enter into transaction. CA7 Ill) 651 F2d 458. SD NY) 317 F Supp 905. (1999) 339 Ark 322. Materiality is mixed question of fact and law which can be decided as matter of law only if reasonable minds cannot differ as to whether omitted or misrepresented facts are significant to reasonable purchaser of securities. Cancellation of proposed public issue of corporation's securities might be material. were also inflated and. CA10 Kan) 68 F3d 382. 35 FR Serv 3d 604. Connett v Justus Enters.lexis. There was no fraud where there was no improper influence or control over corporation's board of directors by broker-dealer which purchased debentures. is to be resolved as matter of law when information is so obviously important (or unimportant) to investor. Sec. is this issue appropriately resolved as matter of law. 19 FR Serv 2d 1099 (criticized in Fraley v Williams Ford Tractor & Equip. WD Ky) 689 F Supp 693. CCH Fed Secur L Rep P 95323. CD Cal) 430 F Supp 2d 1029. In civil action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). plaintiffs had sufficiently alleged that outside auditor made material misstatements regarding swaps in company's audited financial statements. Ltd. CCH Fed Secur L Rep P 97841. (3) prices of stock of 5 subsidiaries to be taken over.S. Shareholders have created question of fact as to materiality of information they say was omitted from prospectus concerning merger in violation of 15 USCS § 78j(b). 42 L Ed 2d 837. (1974. defendant's failure to disclose that information will not create cause of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 since there would be lack of materiality. Grimes v Navigant Consulting. CCH Fed Secur L Rep P 93641. (4) nature of "cap" placed on value of all target companies.15 USCS § 78j https://www. only if materiality of statement is so obvious that reasonable minds could not differ. especially coupled with allegation that entire body of company's financial reports. purchasers of securities did not violate § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) in failing to disclose that they were already securities holders of issuing corporation where that information was readily available to corporation and purchasers had right to assume that volume of their purchases were known to corporation and its principal executives. CCH Fed Secur L Rep P 92717. SEC v Coffey (1974. and where board had full knowledge of all material facts which plaintiffs alleged caused debentures to be worth more than purchase price. Question of materiality of omitted information. whether omitted facts were material. MD Tenn) 200 F Supp 2d 853) and (criticized in In re Royal Ahold N. or other written material. especially given U. (1995. Branham v Material Systems Corp. Litig. (1996.

v Merrill Lynch. Inc. information which otherwise was available to offerees. In re MetLife Demutualization Litig. who induced exchange of stock through misrepresentations as to value of stock owned by him and market therefor. (1974. 100 OGR 472. Louis Union Trust Co. it was not necessary for offeror to point out potential cash flow problems when existence of those possible problems was brought to attention of offerees by management of target corporation through its communications in opposition to offer. bills. individual reliance is irrelevant where plaintiff was damaged only if significant numbers of shareholders might have acted differently if they had known truth. United States Steel & Carnegie Pension Fund.lexis. CA2 NY) 538 F2d 39. purchaser accepted situation as business risk.15 USCS § 78j https://www. CCH Fed Secur L Rep P 96151. cert den (1976) 429 US 1024. Stockholders' securities fraud claim is dismissed. after advising borrower of intent to do so. Hirsch v Du Pont (1977. SEC v Geotek (1976. Public disclosure of material information relieves duty to disclose under 15 USCS § 78j if party should reasonably have been aware of facts as result of disclosure. CCH Fed Secur L Rep P 95656. Inc. however. One party to securities transaction cannot maintain action against other party for violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) on basis of other party's failure to disclose material information where party bringing action had or had access to essentially same material information. In nondisclosure action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA3 Pa) 491 F2d 402. DC NY) 408 F Supp 745. Molever v Levenson (1976. and assignee of pledgee sold stock some 14 months after maturity of loan.. it was further unnecessary for offeror to point out potential obstacles to acquiring effective control of corporation. CCH Fed Secur L Rep P 97928. and exchange was entitled to conclude that principals had fully informed themselves concerning all facts relating to firm and had decided to go forward with merger. v Tenexco. Fenner & Smith. where fact that such advances were made was adequately disclosed in financial statements. combined with company's optimistic statements about future prospects. combined to produce misleading impression of company's real financial position and prospects. Inc. in that issuer's customer contacts and regularly prepared account control documents were available for his inspection. where materiality of omission is at issue. (2005. 55 L Ed 2d 519. St. and statements for expenses incurred in oil and gas exploration program. ED NY) 229 FRD 369. neither could such action be based on failure to reveal state limitations on production since securities laws require disclosure of information that is not otherwise in public domain and sellers need not disclose statutes at large of states in which they operate. Inc. only receive approximately 54 cents on dollar in exchange for their policies and would forgo future dividend rights. CCH Fed Secur L Rep P 95756. revd on other grounds (1977. In group voting context involving securities fraud. damaging information. WD Pa) 353 F Supp 795.. other party's superior expertise and understanding of field in which investment was made are not sufficient to create liability. Acme Propane. other party would not have entered into transaction. CA7 Ill) 844 F2d 1317. was in best position to discover issuer's financial instability. since only material misstatements permit recovery under securities laws. cert den (1978) 435 US 925. McGraw v Matthaei (1972. Spielman v General Host Corp. and information was thus not material to purchaser's investment decision.com/research/retrieve?cc=&pushme=1&tmp. Ltd. CA9 Cal) 590 F2d 785. CCH Fed Secur L Rep P 96766. Duty to disclose inside information to purchaser of corporate stock. SD NY) 402 F Supp 190. (1988. Defendant. Where securities analyst. WD Pa) 372 F Supp 905. CCH Fed Secur L Rep P 95554. retired shareholders and heirs of retired shareholders were not put on notice of fact that brokerage corporation was going public merely by having been aware of general possibility of that eventuality and where they clearly did not know of viable nature of such offering.by Citation . Fact that offering circular stated that money invested was to be used only for purposes of paying invoices. CCH Fed Secur L Rep P 94386. need not be disclosed under 15 USCS § 78j(b). insurance company might then have been motivated to offer more favorable terms in order to secure policyholders' votes in favor of demutualization. ND Ohio) 843 F Supp 1199. 50 L Ed 2d 625. was not misstatement of material fact within meaning of § 10(b) Rule 10b-5. Cione v Gorr (1994. or which other party in fact knows or should have known. it was reasonable to assume that plaintiff policyholders and proposed class members may have voted "no" on issue of demutualizing defendant insurance company had they known that as participating shareholders they would. out-of-state resident selling in-state bank stock would not reasonably have been aware of impending changes in state banking laws that could substantially change 74 of 158 3/8/11 4:25 PM .. or without specifically advising borrower that financial position of bank had improved due to payment of large sum to bank by surety of bank officer who had caused bad loans to be made. sellers' oral statement that well would produce for 30 years could be basis for claim where mistaken interpretation which reasonably sophisticated investor could reasonably have put on statement might not have been corrected by written materials. affd (1976. Civil claim for violation of SEC Rule 10b-5 cannot be based on failure to disclose facts which were publicly available or which plaintiff had access to from other sources. 62 FR Serv 3d 462. since stockholders presumably were aware of their company's cumulative voting requirement and staggered board of directors upon which such assertions of management limitation were based. based on alleged oral misrepresentations as to production which could be expected from well to extent that matters alleged to have been orally misrepresented were accurately revealed in written materials given by sellers to purchasers. ED Mich) 388 F Supp 84. CCH Fed Secur L Rep P 93932. and to be material statement must significantly affect total mix of information available to investor. CCH Fed Secur L Rep P 94339. CA4 W Va) 539 F2d 996. Tender offeror did not violate fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) by failing to include information in tender offer. was not violated by former president and principal shareholder of corporation who sold substantially all outstanding stock of corporation without disclosing to purchaser that corporation was in violation of certain marketing agreements where seller refused to make representations concerning compliance with agreements. may well become immaterial if person alleging fraud subsequently becomes aware of even more negative facts and yet goes ahead with transaction. ED Pa) 502 F Supp 137. Inc. Rorer International Cosmetics. Sophisticated purchasers of 2 percent interest in oil and gas well could not maintain action against sellers under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5. ED Mo) 412 F Supp 45. Marshall Associates. vacated on other grounds (1973. had misstatements not been made. ND Cal) 426 F Supp 715. however. CCH Fed Secur L Rep P 95267. Registered securities exchange had no obligation to disclose to principals of member firm which contemplated merger with another member firm that other member firm had cured net capital deficiencies by liquidating certain "long" security count differences not traced to specific errors where principals had made extensive investigation into position and status of other firm. fully advised of those facts. Rochez Bros. (1976. where part of money so invested was in fact advanced to corporate operator of program. CCH Fed Secur L Rep P 96088. CA2 NY) 553 F2d 750. plainly material in ordinary circumstances. and general predictions of optimism in connection with true statements about past performance are not material. Fischer v New York Stock Exchange (1976. Information equally accessible to both parties.Get a Document . and in prospectus relating to securities proposed to be issued in exchange for securities sought. CCH Fed Secur L Rep P 93713. 97 S Ct 643. 74. CCH Fed Secur L Rep P 98056. because statements made by company about past performance were true. and seller who fully discloses all material information in writing should be secure in knowledge that it has done what law requires. 98 S Ct 1490. CCH Fed Secur L Rep P 96011. and did not alter the general mix of information available about company. CCH Fed Secur L Rep P 95416. even after obtaining majority stockholdings. employed by pension fund. Effect of availability of information There was no violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) or SEC Rule 10b-5 where director of bank pledged bank stock for loan. 21 FR Serv 2d 1145. where borrower had been sent financial statement of bank which showed such payment. for example. CA2 NY) 557 F2d 343. v Lite--Tronics. fund could not recover for alleged violations of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) based upon adviser's short conversation with bank official which reasonably could have been interpreted by bank official as mere credit check and not request for investment information. (1975. v Orenstein (1977. where stockholders claimed that company's true statements about past success. affd (1979. Inc. CA8 Mo) 562 F2d 1040. Pierce. violated antifraud provisions of 15 USCS § 78j(b) notwithstanding that other party to transaction had access to financial information relating to issuer of defendant's stock since. Inc. v Halpern (1980. CCH Fed Secur L Rep P 95538. v Rhoades (1973. purchaser had actual knowledge of situation.

In action for violation of SEC Rule 10b-5. it being immaterial that buyer was knowledgeable investor. (1986. contradictory information must be non-public. WD Pa) 372 F Supp 905. (2005. CA7 Ill) 844 F2d 1317. v Warner & Swasey Co. cause of action is not stated. Harris v Union Electric Co. 93 L Ed 2d 45. and if defendant can prove that plaintiff did not rely. Marshall Associates.com/research/retrieve?cc=&pushme=1&tmp. 75 of 158 3/8/11 4:25 PM . positive proof of reliance is not prerequisite to recovery. (1973. CA7 Ill) 501 F2d 1279. Defendant. CCH Fed Secur L Rep P 92453. but this presumption of reliance in nondisclosure cases is not conclusive. revd on other grounds (1981. Cause of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 cannot be created out of plaintiff's own cunning. CCH Fed Secur L Rep P 92868. Thomas v Duralite Co. (1980. (1974. ND Ill) 666 F Supp 143. Barthe v Rizzo (1974. 110 S Ct 1129. CA3 NJ) 524 F2d 577. (1975. v Tenexco. CA4 Md) 102 Fed Appx 787. Inc. whether reasonable man would attach importance to particular facts in controversy. and reliance could be inferred from materiality where fact that prospectus did not accurately disclose corporation's right to call bonds was material because corporation would have been forced to offer bonds at lower price or at higher yield had that information been disclosed in prospectus. who induced exchange of stock through misrepresentations as to value of stock owned by him and market therefor. likewise. CCH Fed Secur L Rep P 97824. since all that is necessary is that facts withheld are material. Inc. In determining whether plaintiff relied upon alleged misrepresentations or nondisclosures of defendant. 107 L Ed 2d 1035. CCH Fed Secur L Rep P 93768. SEC v Dolnick (1974. CCH Fed Secur L Rep P 97337. CCH Fed Secur L Rep P 93713.Get a Document . Zucker v Sable (1975. CCH Fed Secur L Rep P 92535. Acme Propane. CCH Fed Secur L Rep P 95725. Inc. CA8 Mo) 787 F2d 355. Relation to reliance Test of materiality. Hanly v Securities & Exchange Com. because of their business sophistication or acumen. since even if investor's receipt of regular account documentation were to cure prior unauthorized trade. CCH Fed Secur L Rep P 94741. CCH Fed Secur L Rep P 92808. overly optimistic statements with respect to securities being sold merely because customer may be sophisticated and knowledgeable in area of securities transactions. Investor's allegation of unauthorized trading in violation of Rule 10b-5 survives defendant broker's motion to dismiss where investor alleges material omission or nondisclosure by stating that account he opened with broker was nondiscretionary and that defendant traded securities for account without first obtaining requisite authority. Stier v Smith (1973. investor claims that broker himself acknowledged investor's inability to decipher account statements. that plaintiff's decision would not have been affected even if defendant had disclosed omitted facts. ND Ind) 640 F Supp 1568. violated antifraud provisions of 15 USCS § 78j(b) notwithstanding that other party to transaction was sophisticated investor since. distinction between objective materiality and subjective reliance becomes obscured. Inc. in sense that reasonable investor might have considered them important in making of this decision.15 USCS § 78j https://www. (1987. SD NY) 384 F Supp 1063. SD NY) 72 FRD 1. Inc. McLean v Alexander (1976. (1981. DC Utah) 358 F Supp 892. like all others. revd on other grounds (1988. persons with vast business experience are similarly charged with high degree of knowledge. 22 FR Serv 2d 712. (1986. SD NY) 486 F Supp 101. Inc. expertise and acumen must be considered. Dwoskin v Rollins. even though purchaser is sophisticated in securities matters. where even if defendants made oral misrepresentations with respect to actual historical production levels of 2 wells. 100 OGR 472. DC Del) 420 F Supp 1057. 95 OGR 48. Taylor v Smith. Even if letter of FDA approving publicly traded pharmaceutical company's medical device contradicted company's press release. that is. but where single purchaser is involved who is well known to seller and who actively conceals facts. Sec. materiality of omitted fact may be tested by determining whether reasonable investor might have considered it important in making his investment decision. Credit & Finance Corp. Barnes v Resource Royalties. but whether reasonable investor might consider fact important to his investment decision may depend in part upon his business acumen.lexis. 107 S Ct 94. Although statements in press releases misrepresented that corporation successfully integrated acquired companies. CCH Fed Secur L Rep P 93982. plaintiff's business sophistication. Effect of investment sophistication of other party Securities broker is not justified in making unwarranted. FDA approval was public information. Inc. CCH Fed Secur L Rep 93583. Cruse v Equitable Sec. they assumed that defendant's perfectly truthful statements were designed to convey meaning diametrically opposite to their apparent meaning. where essence of claim appears to be that because plaintiffs were sophisticated investors.. In civil action alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. v Lite--Tronics. sophisticated investors are entitled to truth. In re Geopharma. plaintiff's duty to investigate facts surrounding securities transaction which attaches to sophisticated investor is greater than corresponding duty of novice. Fraudulent statement regarding prospective advances in price of security being sold violated § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). (1969. whether in fact they do or do not and irrespective of whether material information was actually disclosed. CA8 Mo) 795 F2d 1359. Withholding of material information by seller of securities from purchaser violates § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. value of stock where changes were only announced once in in-state newspaper. CA5 Tex) 473 F2d 1205. CCH Fed Secur L Rep P 94762. Powell v American Bank & Trust Co. of New York. Reliance was established when investors showed they were induced to act differently than they otherwise would have in making investment decision. CCH Fed Secur L Rep P 93398. 75. SD NY) 678 F Supp 1023. cert den (1990) 493 US 1077. there is necessity for clearly enunciated objective standard when suit affects large number of shareholders who may have had no direct or continuing contact with corporation. CA2 NY) 638 F2d 563. Failure by sellers of unregistered securities to disclose that money invested was not invested in corporations designated by investor and therefore not used by corporations to develop new products was sufficient to raise rebuttable presumption of investor's reliance where omissions were material. CCH Fed Secur L Rep P 97826. Keeney v Larkin (2003. therefore.by Citation . reasonable investor of substantial business acumen presumably being more inclined diligently to test reliability and completeness of representations made concerning proposed transaction before considering them important than would one of less acumen. then plaintiff's recovery is barred. In SEC Rule 10b-5 actions. Barney & Co. so as to give rise to cause of action under SEC Rule 10b-5. Inc. (1986. could reasonably be expected to exercise higher degree of care and investigation in their dealings. but in order to recover plaintiff must satisfy duty of due care which mandates that he assess information as would person similarly possessed of his degree of business expertise. misrepresentations were not material in view of corporation's series of statements that sufficiently alerted market that corporation might not be able to integrate entities that it had already acquired and that future efforts at integration would pose challenges. CCH Fed Secur L Rep P 93290. is objective but there is interplay between materiality and reliance which tends to blur distinction between them under some circumstances. other party would not have entered into transaction. sophisticated investors who possess either special expertise or resources available to draw upon may be deemed to have knowledge of certain investments and their attendant risks. 76. documents attached to purchasers' complaint reveal that raw data reflecting actual production histories was given to purchasers prior to transaction. plaintiff's investment history is clearly relevant since recovery may be denied to those investors who. test of materiality requires that information be objectively important to reasonable person. cert den (1986) 479 US 823. to adequately plead scienter. CA5 Ga) 634 F2d 285.. affd (2004. CCH Fed Secur L Rep P 92916. SD NY) 399 F Supp 2d 432. had misstatements not been made. Purchasers of working interests in oil and gas wells failed to state 10b-5 claim for material misrepresentation. (1987. CCH Fed Secur L Rep P 95322. DC Md) 306 F Supp 2d 522. CA2) 415 F2d 589. Litig.

alleged overstatement of earnings by 5 to 20 percent is not immaterial as matter of law. Powell v American Bank & Trust Co. CA9 Ariz) 320 F3d 920. In securities fraud case in which investors claimed that defendants. CCH Fed Secur L Rep P 90274. Banking company's failure to inform shareholders of information during negotiation of sale of stock regarding compromise between banking organizations which would greatly improve passage of cross-county banking legislation constituted "material fact" under 15 USCS § 78j(b) sufficient to withstand motion to dismiss in shareholders' action.E.) (2002. ED Pa) 703 F Supp 1175." (2) "I'll make money for you. not what was gleaned through hindsight. 15 FR Serv 3d 948. District court erred in dismissing 15 USCS § 78j(b) and 17 CFR § 240. thus. Litig. (2003. CA2 NY) 964 F2d 149. CA9 Cal) 33 F3d 1477. DC Mass) 675 F Supp 688. CCH Fed Secur L Rep P 94465. as defendants argued. 157 L Ed 2d 311. Inc. Federal Aviation Administration (FAA) investigation. because none of these omissions were legally "material" to informed judgment of nonvoting stockholder regarding adequacy of $ 15 per share price proposed. v Kress Assocs. (In re NUI Sec. Inc. 94 Daily Journal DAR 12687. Glazer v Formica Corp. in fact. Rosen v Textron. Ferry LP # 2 v Killinger (2005. Livid Holdings Ltd. (2001. type of statements that could have been categorized as statements of corporate optimism upon which reasonable investors would not rely or that would have been unimportant to reasonable investor. CCH Fed Secur L Rep P 93807. CCH Fed Secur L Rep P 98433. and (3) bank's failure to integrate its different technology platforms created significant problems. CA9 Wash) 416 F3d 940. regarding its technology problems were material within meaning of § 10(b) of Securities Exchange Act of 1934. Klebanow v NUI Corp.F. proof that alleged nondisclosure was material. can give rise to insider trading liability. and consequently. 17 C. CCH Fed Secur L Rep P 92425) and cert den (2003) 540 US 966. not integrated its acquisitions. not integrated its acquisitions. Litig. S. Pavlidis v New England Patriots Football Club. 2001 Daily Journal DAR 311. Conclusion that proxy statement sent to nonvoting stockholders of professional football team was no model of candor but was not fraudulent is affirmed upon reconsideration. No. (2002. S. reh den. and that lack of integrated information technology system made it impossible for company to be well positioned. and would have considered potential effects of each of these facts on overall economic health of company as significantly altering "total mix" of information made available. 119 S Ct 804 and (superseded by statute as stated in Konop v Hawaiian Airlines. where statement omitted original issue price of voting stock. 2003 CDOS 1328.A. District court's judgment that underwriter's official statement regarding industrial development bonds did not contain any misrepresentations could be upheld on appeal if there were no misrepresentations or if misrepresentations and omissions complained of were not material. CCH Fed Secur L Rep P 93035. bank's statements. that is. ND Ind) 640 F Supp 1568. "Soft. On company's and other defendants' motion to dismiss complaints. in action by investors. CA9 Cal) 155 F3d 1051. mortgage bank and certain of its senior officers. and had not integrated different information technology systems used by each. CA9 Cal) 236 F3d 1035. because alleged omissions are immaterial as matter of law. Shawmut Bank.Get a Document . In re Sci. Litig. and had not integrated different information technology systems used by each. including insufficient and inaccurate reporting of data critical to its hedging operations. 77. standards for determining material fact in merger cases are applicable to leveraged buyouts as well.com/research/retrieve?cc=&pushme=1&tmp. Tracinda Corp. (2004..15 USCS § 78j https://www. (1992. Shareholders sufficiently pleaded materiality of corporation's misrepresentations regarding its maintenance issues. DC NJ) 314 F Supp 2d 388. court could not conclude that written materials provided by company and other defendants expressly contradicted the oral misrepresentations allegedly made to complaining corporations and class members such that written documents would be sufficient to preclude corporations and class members from alleging reliance. CD Cal) 266 F Supp 2d 1150. For purposes of complaint under 15 USCS § 78j(b) and SEC Rule 10b-5. 31 FR Serv 2d 80. (2005. CA3 Pa) 890 F2d 628.lexis. Open-market purchasers claiming they were damaged by fraud on market may substitute for proof of "transaction causation". made materially false and misleading statements representing that bank had successfully integrated certain mortgage origination and servicing acquisitions and was well positioned to withstand interest rate changes but that bank had. CCH Fed Secur L Rep P 92916. and possible sanction. West Holding Corp. ED NY) 88 FRD 604. 17 FLW Fed C 689. CCH Fed Secur L Rep P 91776.C." forward-looking information can constitute material information within meaning of Rule 10b-5. unspecified allegations of accounting irregularities. ND Cal) 2005 US Dist LEXIS 9234). (2003. Sec. 84 Employer-Teamster Joint Council Pension Trust Fund v Am. v DaimlerChrysler AG (In re DaimlerChrysler AG Sec. 2001 CDOS 199. 142 L Ed 2d 664. WD Wash) 399 F Supp 2d 1121. as bespeaks caution that doctrine did not apply to statements of historical fact. CCH Fed Secur L Rep P 97965. (1986. In securities fraud case in which investors claimed that defendants. Rule 10b-5.10b-5 claims brought by purchaser of stock in corporation where purchaser alleged that offering memorandum misleadingly implied that corporation had received proceeds of private stock offering. 94 CDOS 6903. and fact that new controlling stockholder planned to use corporate funds to support personal loans. Corp. Inc. Litig. N." because alleged material misstatements are better characterized as "puffery. 2003 Daily Journal DAR 1721. In re Craftmatic Sec. Inc. purchaser sufficiently alleged materiality. Shareholders adequately pled that failure to make accounting adjustment at earlier date rendered financial statements filed with SEC materially misleading where they alleged more than general. S. en banc.) (2004. (1986. CCH Fed Secur L Rep P 92278. Inc." Newman v Rothschild (1986. WD Wash) 399 F Supp 2d 1121. United States v Smith (1998.R. In context of securities fraud action. CCH Fed Secur L Rep P 94805. den. § 240. affd in part and revd in part. CA9 Ariz) 2003 US App LEXIS 10783 and (criticized in In re Seebeyond Techs. DC RI) 321 F Supp 2d 308. (1994. increased local media income achieved through negotiation. Alleged misstatements of broker are not "material" under 15 USCS § 78j(b). DC Del) 197 F Supp 2d 42. 124 S Ct 433 and (criticized in In re Nextcard. 98 CDOS 6590. along with amount of revenue by which financial statements were in error. even admitted misrepresentation is actionable only if it is material. (2005. Secs. where complaint alleges failure to disclose company's future performance. Atlanta. Inc. Koenig v Smith (1980. remanded (1989. reasonable investor would have found significant information regarding company's deferred maintenance costs. Litigation (1989. where broker allegedly told investors (1) "I'm the best in the business. affd (2004. Miscellaneous Since leveraged buyout will normally have same effect as merger (death of target company's independent public form). request den (2003. 142 CCH LC P 10872).by Citation . 166 BNA LRRM 2195.. unsafe maintenance practices. (2) one integration program was failure and was never completely rolled out. CCH Fed Secur L Rep P 96804. in fact. cert den (1999) 525 US 1071. mortgage bank and certain of its senior officers. because analysts covering bank repeatedly and expressly relied on bank's reassurances to justify their continued positive outlook. Investors fail to state claim for securities fraud under 15 USCS § 78j(b). reh. direct reliance upon specific misrepresentations or omissions in making purchase." and (3) they were going to "make good money on new issues. 76 of 158 3/8/11 4:25 PM . shareholders contended that SEC filings were materially misleading because they failed to account for allegedly required accounting adjustments associated with change in production schedule and set forth in detail facts that they believed required accounting adjustments.10b-5. and FAA settlement agreement. duty to disclose was limited to what was known at time documents were filed. 98 Daily Journal DAR 9127. ND Ga) 239 F Supp 2d 1351. statements shareholders identified as false or misleading were not. statements would have been material to reasonable investor. CA11 Ga) 374 F3d 1015. 15 USCS § 78j(b). or lack thereof. CCH Fed Secur L Rep P 92846. and that lack of integrated information technology system made it impossible for company to be well positioned. Ferry LP # 2 v Killinger (2005. v Salomon Smith Barney. investors pled with sufficient particularity that (1) bank suffered technology problems affecting its ability to timely process and monitor loans after customers had locked in rates. made materially false and misleading statements representing that bank had successfully integrated certain mortgage origination and servicing acquisitions and was well positioned to withstand interest rate changes but that bank had. SD NY) 651 F Supp 160.

Hutton & Co. 17 CFR § 240. 117 S Ct 2199. or present unique form of deception. (2009. but they make unlawful any such act or activity performed "in connection with purchase or sale" of security. Studebaker Corp. and SEC Rule 10b-5. revd without op (1985. (1966. since it was not investment of money in common venture premised on reasonable expectation of profits to be derived from entrepreneurial or managerial efforts of others. under § 78j(b). and if customers got what they expected. Surely investors would consider involvement of officers of company in complex and wide-ranging schemes to inflate company's income to be material even if scheme had not yielded substantial results. whether artifices employed involve garden type variety of fraud. cert den (1986) 479 US 987. CCH Fed Secur L Rep P 94828. SD NY) 524 F Supp 2d 477. 97 Daily Journal DAR 7991. because alleged misrepresentations had no direct pertinence to securities transaction. CCH Fed Secur L Rep P 98787 (criticized in United States v Brumley (1996. SD NY) 309 F Supp 1242. Pallet Leasing Inc. In order to make out claim under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA2 NY) 784 F2d 455. whereby instead of matching pending buy and sell orders. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) prohibits all fraudulent schemes in connection with purchase or sale of securities. SD NY) 474 F Supp 2d 530. CCH Fed Secur L Rep P 92497. Rand v Anaconda-Ericsson. CA11 Fla) 847 F2d 673.15 USCS § 78j https://www. he repeatedly traded for his firm's proprietary account. (1986. amd. Plaintiffs sufficiently pled materiality by raising substantial likelihood that reasonable investor would not have purchased stock in defendant company upon learning that.by Citation . Principal concern of 15 USCS § 78j(b) is protection of purchasers and sellers of securities. CA1 Puerto Rico) 767 F2d 904. Messer v E. 107 S Ct 579. D. Antifraud provisions of Securities Exchange Act afford protection to purchasers or sellers of securities. along with other defendants.Fraud in Connection With Purchase or Sale of Securities 1. plaintiffs had successfully pled materiality of individuals' misrepresentations in their stock subscription agreements. CCH Fed Secur L Rep P 99482. on remand. United States v O'Hagan (1997) 521 US 642. failure to disclose that promoter was being compensated was material omission. Karvelas v Sellas (1974. Client's nondiscretionary account with stock brokerage firm. Blanes v Paine Webber Jackson & Curtis. (1965. (1971) 404 US 6. (1983. WD Mich) 256 F Supp 173. CCH Fed Secur L Rep P 92827. CA8 Minn) 139 F3d 641. 15 USCS §§ 78j(b) and 78ff. CA11 Fla) 833 F2d 909.lexis. Superintendent of Ins. 1986-1 CCH Trade Cases P 67183. on reh (1988. Negligence. SD NY) 238 F Supp 766. T. and if complainant fails to show that there was purchase or sale of security involved and that such purchase or sale was made in connection with alleged act or acts of misconduct. had been issued approximately 80 percent of all free trading stock in company for little or no consideration.. Inc. among other requirements. CCH Fed Secur L Rep P 94546. A. and 18 USCS § 2. CCH Fed Secur L Rep P 93262. there must be.In General 78. ND Iowa) 678 F Supp 2d 827. although some of postings were vague and unverifiable. Ltd. Unpublished Opinions Unpublished: Promoter's anonymous Internet postings regarding company did not all constitute unactionable puffery. Intent to cause conversion of ownership interests at uncertain future time and through uncertain means did not state claim under federal securities law even though that intent was held at time purchase or sale of securities occurred where steps planned to effectuate fraud were not integral to purchase and sale of securities in question and were to occur only well after securities transaction had been completed. it must be in connection with purchase or sale of security. SEC Rule 10b-5 interdicts any act or practice which operates as fraud or deceit upon any person in connection with purchase or sale of security. CA4 W Va) 58 F3d 933. Armstrong v Am. and making profit from price difference. they. CCH Fed Secur L Rep P 94211. thus.10b-5 . 93 L Ed 2d 582. ND Ill) 376 F Supp 1010.F.com/research/retrieve?cc=&pushme=1&tmp. 30 L Ed 2d 128. connection with purchase or sale of securities. Brod & Co. contrary to statements made by defendant individuals in their subscription agreements. v Bankers Life & Casualty Co. CA2 NY) 794 F2d 843. (2007. Independent Investor Protective League v Saunders (1974. CCH Fed Secur L Rep P 92604. account was not converted to "discretionary" one which would be covered by provisions merely because of two isolated and atypical trades without consent of client (who was away and could not be reached) since fact that firm could and did execute trades on client's account in limited situations did not make account investment contract. 1997 Colo J C A R 1354. CA5 Tex) 79 F3d 1430). Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 require that acts complained of be in connection with purchase or sale of security. King v Sharp (1974. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) requires connection with purchase or sale and not merely financial consequence of fraudulent statement. defendant's conduct was neither deceptive nor fraudulent. v Texaco. DC Pa) 64 FRD 564. v Allied Products Corp. CA2 NY) 375 F2d 393. of use of any deceptive device in connection with purchase or sale of securities. breach of contract or breach of stock exchange rule do not establish fraud under 15 USCS § 78j(b). remanded (1998. Pross v Katz (1986. there can be no recovery. in which client made ultimate investment decisions as to account. CCH Fed Secur L Rep P 93545. constituted deceptive act since government did not establish customer expectations. Inc. Raschio v Sinclair (1973. other postings extended beyond mere corporate optimism and suggested that promoter had personal knowledge about company and its plans. 10 FR Serv 2d 101. CA10 Colo) CCH Fed Secur L Rep P 95718. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 do not proscribe all fraudulent stock schemes but only those fraudulent schemes that are employed in connection with purchase or sale of securities. novel or atypical methods should not provide immunity from securities laws. because promoter appeared to be vouching for management. 97 CDOS 4931. v Perlow (1967. Norsul Oil & Mining.. 138 L Ed 2d 724. DC Puerto Rico) 593 F Supp 458. Investor failed to state claim against brokerage firm and its agent under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). where investor claims agent induced 77 of 158 3/8/11 4:25 PM . and this misrepresentation radically altered picture of market for company's stock. Generally Provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 are not applicable exclusively to fraudulent acts or activities directed toward inducing purchase or sale of securities. buying stock from one customer and selling it to another. (1970. but only with respect to transactions relating to purchase or sale of such securities. Inc. CCH Fed Secur L Rep P 93813. ND Tex) 63 FRD 60.Get a Document . SEC v Collins & Aikman Corp. and very core of federal securities laws was that there was deception. In order for misconduct to be actionable as in violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 90178. could not be considered security within meaning of § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder. CA9 Or) 486 F2d 1029. Barnett v Anaconda Co. 92 S Ct 165. United States v Bryan (1995. 11 FLW Fed S 154. in contravention of Securities and Exchange Commission rules. he was entitled to judgment of acquittal because government failed establish that his interpositioning trades. Alleged fraudulent press release was not in connection with purchase or sale of security even though press release allegedly resulted in company's involuntary bankruptcy under which shares were converted into claim for cash. (1987. Where defendant was convicted by jury of securities fraud in violation of Securities Exchange Act. SEC v Curshen (2010. United States v Finnerty (2007. Fraudulent use of confidential information falls within prohibition. CCH Fed Secur L Rep P 94801.

(2001. CA5 Ala) 564 F2d 416 and cert den (1978) 435 US 952. Horwitz v Panhandle Eastern Pipe Line Co. DC Del) 61 FRD 615.--In "market fraud" cases 78 of 158 3/8/11 4:25 PM . SD NY) 658 F Supp 550. evidence having disclosed that defendant had no ownership in or connection with company nor with plaintiffs exchange of their leaseholds with company in return for stock. Fenner & Smith.e. plaintiffs could not have relied on representation that transaction involved "no risk" because every transaction involves some risk. Gottlieb v Sandia American Corp. Ltd. as required by 15 USCS § 78j(b). to establish liability under section. 18 FR Serv 2d 488. 16 FR Serv 2d 6. CCH Fed Secur L Rep P 92738. DC Mass) 342 F Supp 1282. plaintiffs were not required by particularity requirements of Fed. cert den (1969) 395 US 903. to extent that this formulation leads to broader boundaries of liability than some other definitions of "causation" might. Pierce. Investors do not properly plead reliance on alleged affirmative misrepresentations of broker under 15 USCS § 78j(b). and there was no causal connection between alleged misrepresentations and injury to corporation and its shareholders.P. where complaint contains no allegations that investors believed or relied upon misrepresentations at issue.lexis. defendant's failure to disclose material information did not occur in connection with purchase or sale of any security. 89 S Ct 1740. Civ. Collins v Rukin (1972. 22 L Ed 2d 756. in connection therewith. P. (1968. SEC v Penn Cent. CCH Fed Secur L Rep P 92279. (1987. 98 S Ct 1580. and auditors. Purchaser-seller standing requirement (i. since promises were made in connection with agent's efforts to attract investor's business rather than with any trade in particular security. (1978. Deception as alleged in claim did not cause loss incurred and therefore did not state violation of federal securities law where vice-presidents sold stocks because of their frustration at being trapped as minority shareholders in corporation whose majority was systematically undervaluing its holdings. v Minmetals Int'l Non-Ferrous Metals Trading Co.by Citation . (1986. CCH Fed Secur L Rep P 93198. him to invest monies with brokerage firm with alleged unkept promises of conservative investments. 89 S Ct 1454. ED Mich) 583 F Supp 841. v Rite Aid Corp. Unpublished Opinions Unpublished: Defendant individuals were entitled to summary judgment in securities fraud class action under §§ 11 and 12(a)(2) of Securities Act of 1933. Du Pont v Wyly (1973. CCH Fed Secur L Rep P 96461. Reliance is necessary element of private cause of action under 15 USCS § 78j(b) in Rule 10b-5. as unsophisticated investors. (1995) 52 SEC 271.L. Delivery to plaintiffs in 1959 of misleading preliminary engineering report was not fraud as to their 1963 purchase of securities from their own company. Argent Classic Convertible Arbitrage Fund L. SD NY) 311 F Supp 1283.Get a Document . (1971. DC Minn) 612 F Supp 15. reh den (1977. cert den (1971) 404 US 938. element of reliance requires proof that misrepresentation actually induced plaintiff to act differently than he would have acted in his investment decision. CCH Fed Secur L Rep P 93035. Heit v Weitzen (1968. Inc. CA5 Ala) 559 F2d 1307. CCH Fed Secur L Rep P 92971. CCH Fed Secur L Rep P 92616. First Virginia Bankshares v Benson (1977. (1970. not because of deceptive financial reports or alleged market freeze. ED Pa) 450 F Supp 908. it is mandated by liberality with which requirements of § 10(b) must be construed in enforcement action. (2004. Phrase "in connection with" must be broadly and flexibly construed. R.. in connection with purchase or sale of any security requirement) does not apply to SEC-instituted cases. SD NY) 651 F Supp 160. requirement may be expressed in terms of causation. Inc. CA2 NY) 402 F2d 909. and is satisfied by showing nexus between defendant's actions and plaintiff's purchase or sale. Foreign trader's federal securities fraud claims against financial services conglomerate arising out of negotiable certificate of deposit transactions (NCDs) may proceed. CCH Fed Secur L Rep P 94042. this requirement receives broad reading. district court erred in concluding that this was not statistically significant drop in price. 3 ALR Fed 803. CCH Fed Secur L Rep P 91926. (2004. CCH Fed Secur L Rep P 92958. CA3 Pa) 452 F2d 510. 55 L Ed 2d 802. court held that loss causation required disclosure. Nick v Shearson/American Express. SEC v Texas Gulf Sulphur Co. Greenberg v Crossroads Sys. DC Utah) 360 F Supp 490. 30 L Ed 2d 250. CA10 Okla) 438 F2d 53. In re Martin Herer Engelman. CA2 NY) 401 F2d 833. and requirement is satisfied whenever device was employed of sort that would cause reasonable investor to rely thereon and. Purchase or sale requirement of § 10(b) of Securities Exchange Act (15 USCS § 78j(d)) contemplates causal connection between alleged fraud and purchase or sale. Siegel v Tucker. CCH Fed Secur L Rep P 96189. required nexus between fraudulent conduct and issuance of material misrepresentation to invest in public under Rule 10b-5 is most precisely and properly defined with reference to concept of proximate cause. 9 to link particular misrepresentations with particular trades in their allegations of direct reliance because it would impose additional burdens without significantly improving qualify of notice to defendants and without affording much added protection from reputation-endangering and extortionate frivolous suits. in connection therewith. 38 OGR 612. 23 L Ed 2d 217. Necessity of causal reliance Phrase "in connection with the purchase or sale of any security" in § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) means that device employed must be of sort that would cause reasonable investors to rely thereon and. because NCDs are "securities" for purposes of 15 USCS § 78j(b) while others are not. as matter of law. (1971. McKowan Lowe & Co. where plaintiffs. plaintiffs had not been entitled to fraud on market presumption of reliance. even though claims relating to interest-rate swaps and foreign exchange transactions may not. (1973. CCH Fed Secur L Rep P 92818. Schick v Steiger (1984. cause them to purchase or sell corporation's securities. so relying. CCH Fed Secur L Rep P 92764. 79. Young v Seaboard Corp. 80. CA5 Tex) 364 F3d 657. deception was not factual cause of plaintiff's injury and in no way prevented him from selling his shares during period of alleged misrepresentations. Inc. v Jasmine. and court may look to whether plaintiff would have been influenced to act differently than he did act if defendant had disclosed to him undisclosed fact. CCH Fed Secur L Rep P 94381. Where plaintiff shareholder did not sell or purchase shares during period of defendant's alleged misrepresentations. § 10(b) of Securities Exchange Act of 1934 and Rule 10b-5 because record contained inadequate evidence of loss causation. 2 ALR Fed 190. Day. CCH Fed Secur L Rep P 92251. Corp. Misstatement or omission comes within purview of SEC Rule 10b-5.15 USCS § 78j https://www. CA7 Wis) 792 F2d 614. CCH Fed Secur L Rep P 93527. (1984. et al. only if made in connection with purchase or sale of security. ED Pa) 315 F Supp 2d 666..com/research/retrieve?cc=&pushme=1&tmp. 92 S Ct 274. In granting in part and denying in part motion to dismiss claims for securities violations pursuant to § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act filed by defendant company. Hirsh v Merrill Lynch. Court will reject argument that. SD NY) 179 F Supp 2d 159. Newman v Rothschild (1986. DC NJ) 2005 US Dist LEXIS 32164. Kademian v Ladish Co. plaintiff must demonstrate causal relationship between his sale or purchase and fraudulent practices of defendant. Where price of stock fell 63 percent within two days after release of negative information. as defendants had argued. Anthony & R. requisite connection allegedly existed in its most conventional form where plaintiff alleged that defendant made material misrepresentations and omissions which defrauded purchasers and sales of securities of corporation. Actions under SEC Rule 10b-5 must be founded in fraud touching securities transaction and must exhibit direct and causal relationship between that fraud and claimed injury. court held that plaintiffs had pled direct reliance adequately even if. could reasonably be unaware of details and risks of specialized investment transaction. (2005. Co. its former executive. Lehman Bros. Broad antifraud strictures of 15 USCS § 78j(b) and SEC Rule 10b-5 impose liability only for proscribed acts committed in connection with sale or purchase of security. promulgated under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). cert den (1969) 394 US 976. cause investor to purchase or sell corporation's securities. Commer.

SD NY) CCH Fed Secur L Rep P 99514). and fact that investor did not rely directly on market. reh den (1984. class certification was granted because sufficient evidence was presented that market for bonds was informationally efficient even if trading volume was low on some days and nonexistent on others. Investors need not prove actual reliance on deceptive prospectus where they are alleging that prospectus misled market as whole and thereby deceived those investors who merely relied upon market. does not alter allegation that market played substantial part in deceiving investor as to true value of stock. its underwriters. Tie Communications as establishing per se rule that short sellers--or even arbitrageurs--were not entitled to fraud on market presumption of reliance as matter of law. CCH Fed Secur L Rep P 94134. 23 burden to show that stocks that were in question traded on efficient market and that plaintiffs were entitled to rely on fraud-on-the-market theory to show reliance. R. 23(b)(3). 9(b) and 15 USCS § 78u-4(b) where stockholders made only general allegation that they relied on integrity of market and did not particularly allege any other fact to establish fraud on market reliance. Offering Sec. 83 L Ed 2d 807. SD NY) 74 F Supp 2d 352. materiality of misrepresentation and broad scale of fraud on open marketplace were such as to inflate stock prices in impersonal stock exchange context and to therefore sufficiently link causal chain to purchasers and raise presumption of reliance. Inc. Inc.000. and thus cause them to purchase or sell corporation's securities. doctrine of "fraud created market. AAL High Yield Bond Fund v Ruttenberg (2005. Investors' summary judgment motion on 15 USCS § 78j securities violations fails because investors cannot demonstrate causal connection between securities purchase and misrepresentations where alleged misrepresentation occurred about one year after purchase. Record contained several strong indications that market in which defendant corporation's stock traded was efficient: (1) stock was traded on New York Stock Exchange. R. P. Hill v Equitable Bank (1987. 81. knowing that they were causing securities to be overvalued and that stock prices would eventually recede to reflect actual value of securities." allowing for securities fraud suit under 15 USCS § 78j(b). with one exception. charging defendants with disseminating misleading reports to inflate price of securities. Inc. and notes' price reacted immediately to inventory problem disclosure. DC Del) 655 F Supp 631. thereby requiring plaintiffs to sell their shares to corporation pursuant to retirement agreement to which all shareholders were parties because even if supposed misrepresentations of defendants did set into motion chain of events which culminated in securities transaction. Where plaintiff investors filed fraud on market claim under 15 USCS § 78j(b) against defendant investment bank underwriters and moved for class certification under Fed. Sec. v National Med. Ryan v Flowserve Corp. it is permissible to infer that artificial inflation of stock prices will inevitably dissipate because manipulation is discrete act that influences stock price and once manipulation ceases.--Intervening causes Alleged nondisclosures and misrepresentations were not in connection with purchase or sale of security. and only causal nexus required is statutory "connection with purchase or sale of security. 20(a).P. thus. under §§ 10(b). Inc. (1984. (1999. Inc. where defendants. failed to show loss after positive increase. (1985. who controlled majority of shares of corporation. (2003. issuer. R. Civ. retirement agreement operated as independent and intervening cause of transaction and disrupted connection between challenged conduct on part of defendants and relinquishment of plaintiffs' shares. minority block of stockholders. Secs. 79 of 158 3/8/11 4:25 PM . Inc. even though junior mortgage note holders complain that he (1) arranged for loan from his domestic partner that was given priority over holders. and thus. In granting in part and denying in part motion to dismiss claims for securities violations pursuant to §§ 10(b) (15 USCS §§ 78j(b)) of Securities Exchange Act filed by company. notwithstanding that purchasers showed no direct reliance on reports. P. its auditor. Servs..Get a Document . for purposes of motion to dismiss. Rule 23(b)(3)'s predominance requirement was met because common questions of law and fact predominate over any questions affecting only individual members of class. CA3 Pa) 557 F2d 1022. P. affd (1988. (2007. did not adequately show relation between alleged fraud and alleged corrective disclosures. CA11 Fla) 740 F2d 979 and cert den (1985) 469 US 1132. Fin. Corp. cert den (1989) 488 US 1008. where. (1986. CCH Fed Secur L Rep P 96107. failed.G." SEC v Lum's. 102 L Ed 2d 782. Where selective disclosure of information acts as fraud or deceit upon public when information is utilized in market for trading. court declined to read Zlotnick v. SD NY) 365 F Supp 1046. and auditors. Klein v A. is used by plaintiffs unable to allege fraud on market theory of reliance owing to novelty of security or undeveloped nature of market on which securities at issue are traded. Litig. and (2) failed to disclose that corporation's debt to holders had reached $ 5 million. Pirelli Armstrong Tire Corp. Bosio v Norbay Secur. because. CCH Fed Secur L Rep P 92818. CCH Fed Secur L Rep P 93229. SD Tex) 226 FRD 263.15 USCS § 78j https://www. CCH Fed Secur L Rep P 90656. In market manipulation cases brought pursuant to 15 USCS § 78j(b). and (3) stock was subject of numerous analyst reports and extensive media coverage. in order to elect board of directors which thereafter elected slate of officers which excluded plaintiffs. these three facts were sufficient to meet plaintiffs' Fed.by Citation .. CA3 Del) 851 F2d 691. but relied on his broker. personal proceeding based upon such disclosure is not dependent upon proof of reliance. Dismissal of virtually all securities fraud claims against son of bankrupt corporation's founder is warranted. Litig. CCH Fed Secur L Rep P 93919. Offering Sec. ND Ala) 229 FRD 676. 105 S Ct 814. CCH Fed Secur L Rep P 93090. SD NY) 109 FRD 646. Civ. ED Pa) 315 F Supp 2d 666. Arduini/Messina Pshp. (2003. under "fraud on the marketplace" theory. Benefits Trust v Dynegy. (2004. their motion to certify class under Fed. Class plaintiffs. In re Initial Pub. Argent Classic Convertible Arbitrage Fund L. P. (2004. DC Minn) 156 F Supp 2d 1081.. SD NY) 297 F Supp 2d 668.lexis. when there would have been no market absent fraud. ND Tex) 245 FRD 560. Inc.com/research/retrieve?cc=&pushme=1&tmp. 109 S Ct 791. Becker Paribas. court held that. ED NY) 599 F Supp 1563. on non-actionable confirmatory statements. When permitted. 23(b)(3) in securities fraud case against defendants. (In re Dynegy. Civ. CCH Fed Secur L Rep P 92559. Underwriters' renewed motion for judgment on pleadings on shareholders' 15 USCS § 78j(b) claim of market manipulation was denied where shareholders had sufficiently alleged loss causation by asserting that underwriters manipulated initial public offering market to drive up price of securities. Litig. CCH Fed Secur L Rep P 91940 (criticized in Cosmos Import & Export v Merrill Lynch.000 shares day throughout class period. have standing to sue under SEC Rule 10(b). within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)).) (2004. of Securities Exchange Act of 1934. Because plaintiff investors relied. Pierce Fenner & Smith (1997. Retiree Med. ND Cal) 382 F Supp 2d 1173. In re Initial Pub. information available to market is same as before and stock price gradually returns to its true value. thereby injuring innocent investors. its former executive. Lipton v Documation. and its executive officers. fraud practiced must have been prior to or contemporaneous with sale of securities. Litig. (1973. Unpublished Opinions Unpublished: Stockholders' 15 USCS § 78j(b) claim against accounting firm was dismissed pursuant to Fed. CCH Fed Secur L Rep P 91535. In re Van Wagoner Funds. no holders purchased or sold their notes on or after dates upon which son allegedly committed fraud. in part. Civ. purchasers of defendant's securities. and did not show that any related disclosure was significant in precipitating stock price drops. allegedly deceived plaintiffs. 82. CA11 Fla) 734 F2d 740.--Timing of fraud "In connection with" purchase or sale requirement of § 10(b) of Securities Act (15 USCS § 78j(b)) requires using device of sort that would cause reasonable investors to rely thereon. Ketchum v Green (1977. market efficiency was sufficiently shown to invoke rebuttable presumption of reliance under both "fraud on market" and "fraud created market" theories. (2) stock traded actively at volumes over 1. v Rite Aid Corp. and public data rebutted fraud-on-the-market presumption. it compared favorably with efficiency of market under Fixed Income Pricing System. plaintiffs adequately pled that securities were traded in efficient markets and that plaintiffs were entitled to fraud on market presumption of reliance. Meyer v Dygert (2001. which consequently could not have been committed in connection with purchase or sale of notes. SD NY) 297 F Supp 2d 668. R.

com. (2) Food and Drug Administration's warning letter's effect on drug orders. where. failed to link each alleged purchase or sale to misrepresentation. 83. Glaser v Enzo Biochem. DC Mass) CCH Fed Secur L Rep P 92924) and affd in part and revd in part. SD NY) 209 FRD 353). Crummere v Smith Barney.75 percent. Inc. 15 USCS § 78j suit brought against bank and bank vice-president by customers of bank will not be dismissed. investors also failed to allege that any of these alleged omissions caused their losses as disclosures attributing share price drop to failure to meet earnings estimates were insufficient to show loss causation. claiming federal securities law violations against company and its officials. Investors who sued corporation that operated funeral homes and cemeteries. which provided independent basis for dismissal of complaint. affd (2004. Company's motion for summary judgment is denied. (2004. CA9 Cal) 536 F3d 1049. and relationship between investor and investment advisor was not governed by § 10(b) and Rule 10b-5. there must be causal connection between misstatements or omissions and plaintiff's purchases or sale. Cruse v Equitable Sec.Get a Document .10b-5 (Rule 10b-5) sufficiently alleged causal relationship between (1) increase in sales resulting from off-label marketing of defendants' drug. Clare v Gilead Scis.P. Hiduchenko v Minneapolis Medical & Diagnostic Center. (2003. MD NC) 823 F Supp 353. ED Pa) 315 F Supp 2d 666. claiming that broker engaged in unauthorized trading in violation of Rule 10b-5. CA7 Ill) 800 F2d 177.10b-5. CA6 Ohio) 588 F2d 202. since bank's claims that customers lack requisite "reliance" under Securities Act because customers were unaware of investment until after it had taken place. where bonds were cashed by brokerage firm in accordance with plaintiff's instructions and proceeds from sale were deposited in her bank account. subsequent allegedly fraudulent activity of broker in convincing plaintiff to turn over proceeds of prior. alleging that two of its officers violated §§ 10(b) and 20(a) of Securities Exchange Act of 1934. and Rule 10b-5. but vice-president invested their money in short-term notes of fly-by-night oil company of which he was director. and (3) warning letter's effect on stock price. Sec.lexis.. CCH Fed Secur L Rep P 92868. (1985.10b-5. (2002. SD NY) 537 F Supp 2d 597. v Rite Aid Corp. adequately pled loss causation by alleging that they purchased corporation's stock at inflated price and lost money when price fell. survives motion to dismiss for failure to assert reliance on defendant's conduct because proof of reliance is not prerequisite to recovery and investor fulfilled requisite element of causation in fact by alleging specifically that investor suffered net loss of over $ 260. Employment agreement. thus. Inc. failed to set forth in their amended complaint any facts showing that each defendant's act or omission proximately caused loss for which investors sought to recover damages. and company was not entitled to file S-3 registration statement. and therefore they could not have relied on representations of bank. Investors. 3 securities analysts reported on stock.--Superseding causes Nondisclosed information is not material to plaintiff in order to establish liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). and Securities and Exchange Commission Rule 10b-5. CCH Fed Secur L Rep P 93744. Inc. DC Minn) 467 F Supp 103. DC Md) 306 F Supp 2d 522. CCH Fed Secur L Rep P 92818) and (criticized in Swack v Credit Suisse First Boston (2004. Litig. CCH Fed Secur L Rep P 93290. DC Mass) CCH Fed Secur L Rep P 92924) and affd in part and revd in part. Ltd. CA4 Va) CCH Fed Secur L Rep P 93134. 19 BNA FEP Cas 460. CA4 Md) 102 Fed Appx 787. SD NY) 624 F Supp 751. of New York. Harris Upham & Co. Lucas v Florida Power & Light Co. A. this authority related to its relationship with advisor. 6 firms acted as market makers for stock. CCH Fed Secur L Rep P 91417. failed to plead alleged fraud with required particularity. Where investors' suit against company and others under §§ 10(b) of Exchange Act. Garber v Legg Mason. Bachmeier v Bank of Ravenswood (1987. shareholder failed to show that allegedly fraudulent conduct of officer in failing to timely disclose overvaluation was proximate cause of subsequent drop in price of corporation's stock. 17 CFR § 240. operated as independent and intervening cause of forced sale of plaintiff's stock. did not relate to specific securities and cannot meet in "in connection with" requirement of § 78j. when they failed to properly account for imputed interest on zero interest finance plans they offered. SD Fla) 575 F Supp 552.) (2008.15 USCS § 78j https://www.S. as result of which. CCH Fed Secur L Rep P 94799. at vice-president's suggestion. and district court denied corporation and individuals' motion for partial summary judgment on investors' claim.by Citation . 15 USCS §§ 78j(b) and 78t(a). because jury could find that market in company's stock was efficient. (2003. which contained stock repurchase provisions.R.000 due to defendant's unauthorized trading. Simpson v Specialty Retail Concepts. Litig. Inc.. 17 C. Plaintiffs fail to establish reliance in securities frauds case where they did not read documents claimed to be false. Litig. Congregation of the Passion. and fraud alleged involves evil at which Act is aimed. (1993. but evidence shows that average weekly trading volume of company's shares was . Glaser v Enzo Biochem. where plaintiff trust was contractually bound by enforceable stock option to sell shares of deceased shareholder to company at established price as of certain date long before nondisclosed information existed. Sec. 15 USCS § 78j(b).P. v Rite Aid Corp. remanded (2005. v Nye (1978. In re Loewen Group Inc.. cert den (1977) 434 US 940. Inc. (2005. furthermore. ND Ill) 663 F Supp 1207. (1987. Keeney v Larkin (2003. SD NY) 678 F Supp 1023. Complaint alleging claims under §§ 10b and 20(a) of Securities Exchange Act of 1934. and 17 CFR § 240. Secs. ED Va) 303 F Supp 2d 724 (criticized in Argent Classic Convertible Arbitrage Fund L.--In particular cases Implied cause of action for fraud in purchase or sale of security under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 does not create cause of action against securities dealers on part of investor where investor has given full authority to make investment decisions to investment advisor who in turn conducted securities transactions with dealers and where. not to any particular decision to purchase or sell security. (2005. although investor did retain authority to increase or decrease investment fund and ultimately to dismiss advisor. Plaintiffs' reliance on statements that were made before signing of merger agreement was unreasonable as matter of law because integration clause that was within merger agreement was not waiver of claims that were precluded under 15 USCS § 77cc. remanded (2005. nonfraudulent sale. 54 L Ed 2d 300. affd (1985. CCH Fed Secur L Rep P 92901 (criticized in In re Turkcell Iletisim Hizmetler. customers authorized bank to transfer their savings into higher yield interest accounts or certificates of deposit. CCH Fed Secur L Rep P 92361. 84. claiming federal securities law violations against company and its officials. but rather limited waver of reliance on certain representations. Holy Cross Province v Kidder Peabody & Co. Toledo Trust Co. 98 S Ct 431. (1983. and there can be no connection where misstatement occurs after purchase. CA4 Va) CCH Fed Secur L Rep P 93134. 19 CCH EPD P 9192. (In re Gilead Scis. where company argued that investors in securities fraud action failed to establish necessary element of market efficiency in fraud on market theory. Dresner v Utility. SD NY) 371 F Supp 2d 476. based on disclosures in company's registration statement for secondary offering with respect to "swap" of company's brokerage unit for another entity's asset management division. 80 of 158 3/8/11 4:25 PM . Inc. To satisfy purchase and sale requirement of 15 USCS § 78j. CCH Fed Secur L Rep P 96703. ED Va) 303 F Supp 2d 724 (criticized in Argent Classic Convertible Arbitrage Fund L. CA11 Fla) 765 F2d 1039. CCH Fed Secur L Rep P 92235. any alleged fraud or misrepresentations made by corporation when it terminated plaintiff's employment were not in connection with and did not cause sale of stock by plaintiff and plaintiff did not have any remedy under Rule 10b-5. (1979. Where shareholder alleged that corporate officer overvalued stock of acquired subsidiary in order to receive greater amount of corporation's stock in acquisition transaction. 15 USCS §§ 78j(b) and 78t(a). is entirely frivolous since reliance is evident on face of complaint. § 240. ED Pa) 315 F Supp 2d 666.com/research/retrieve?cc=&pushme=1&tmp. investors failed to show how market relied on alleged misrepresentations. St. (2004. (2008. Inc. Investor's complaint. CCH Fed Secur L Rep P 92818) and (criticized in Swack v Credit Suisse First Boston (2004. (1986. ED Pa) 395 F Supp 2d 211.F. Investors.

Krekstein. particularly since broker did not know stockholders were purchasing those shares at time of alleged scheme. since investors were already contractually committed to investment when alleged fraud took place. Inc. CCH Fed Secur L Rep P 92279."In Connection With" 87. MD NC) 427 F Supp 2d 583. 88 L Ed 2d 274. established that defendants violated § 17(a) of Securities Act of 1933. 16 FR Serv 2d 6. CCH Fed Secur L Rep P 91512. judgment entered (2006. In class action securities fraud suit brought by institutional investors (investors) against various corporate entities with regard to losses involving allegedly fraudulently represented value of structured investment vehicle (SIV). 17 C. ND Ill) 720 F Supp 1319. under Rule. There was genuine issue of material fact as to whether defendant insurer's issuance of surety bond as collateral for loan to partnership was "in connection with sale" of securities. fraud was in connection with sale and purchase of securities and plaintiff had action against defendant notwithstanding that direct object of alleged misrepresentations and omissions was to obtain plaintiff's employment with corporation and that sale of security was ancillary to object of employing plaintiff. (1973. CCH Fed Secur L Rep P 91002).10b-5 by shareholders because they had not pleaded facts establishing necessary direct link between particular omissions by defendants and decrease in stock price.10b-5. 40 L Ed 2d 312. Landy v Federal Deposit Ins. promulgated under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)). Meaning of "in connection with" under Securities Litigation Uniform Standards Act of 1998. fact that bank became insolvent as result of president's misuse of its funds did not give rise to civil liability. specifically 15 USCS § 78bb(f). broker's acts were not committed in connection with purchase of bank shares. 23 L Ed 2d 217. Court granted corporation and its officers and directors' motion to dismiss pursuant to Fed. DC Mass) 342 F Supp 1282. and made misrepresentations about expected rates of return. 12(b(6) claim of securities fraud raised under 15 USCS § 78j(b) and 17 CFR § 240. and cumulative effect of transaction should be considered as whole for purpose of action under Rule. It makes no difference what dominant motive of defendant actually is. where defendants falsely represented that sale of certain securities would be 100 percent insured by U. MD NC) 427 F Supp 2d 583. where investor alleged that he had paid for limited partnership with note in connection with which he had executed indemnification and pledge agreement in favor of insurer which was to issue surety bond as collateral for loan to partnership. Corp. Abrams v Oppenheimer Government Secur. as to broker who handled securities transactions engaged in by president with misappropriated money. and other calling for cash payment in return for certain equipment and rights. Inc. Dabit v Merrill Lynch. King County v IKB Deutsche Industriebank AG (2010. since false information was circulated to large segment of investing public. § 10(b) of Securities Exchange Act of 1934. so that summary judgment should not have been entered against investor in his action against insurer under SEC Rule 10b-5. CCH Fed Secur L Rep P 92076. CCH Fed Secur L Rep P 93527. even though purpose of not disclosing malfeasance was to further defraud government. CA2 NY) 516 F2d 811. 17 FR Serv 2d 1114.. Treasury obligations (which certainly misled investors about relative safety of securities). cert den (1969) 395 US 903. notwithstanding stockholders' assertion that their trading in bank's securities was influenced by failure of broker to provide that information. in addition to salary. (1984..Get a Document . taken as true. defendant making stock option attractive through material omissions and misrepresentations. 106 S Ct 267 and (criticized in Miller v Asensio (2000. Handelsman v Gilford Secur. and "in connection with" test is satisfied when proscribed conduct and sale are part of same fraudulent scheme. and its corresponding Rule 10b-5. P. 85. is coterminous with meaning of nearly identical language of § 10(b) of Securities Exchange Act of 1934. facts alleged in complaint indicated: that Top Ratings conveyed to investors that senior notes were as safe and secure as United States Treasury' Bills.F. ND Cal) 525 F Supp 2d 1130. CA7 Ill) 737 F2d 582. CCH Fed Secur L Rep P 93653. that he understood that in event of misrepresentation or fraud inducing investment his only loss would be his partnership interest. where defendant induced plaintiff to leave previous employer and to join defendant's corporation offering him. Inc. and he violates § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) if in fact his misrepresentations cause plaintiff to purchase security of corporation.lexis. 81 of 158 3/8/11 4:25 PM . 15 USCS § 78j(b). CCH Fed Secur L Rep P 97346 (criticized in Miller v Asensio (2000. Horwath & Horwath (1975. 17 FR Serv 2d 769.P. Glenbrook Capital L. "In connection with" requirement of SEC Rule 10b-5 is flexibly applied to require that there be nexus between defendant's fraud and plaintiff's sale of securities. 86. district court denied motion to dismiss filed by two rating agencies because investors adequately pled that misleading ratings and eventual corrective disclosure proximately caused their losses. 89 S Ct 1740. DC SC) 101 F Supp 2d 395. were sole cause of losses complained of and held that no case law imposed on investors heavy burden of pleading facts sufficient to exclude other non-fraud explanations in securities fraud case. that those ratings concealed risk that SIV was comprised of billions of dollars of toxic assets and thus likely to default. When negotiations between 2 corporate parties result in two contracts. all rules stemming from it must also contain this limitation. ED Pa) 363 F Supp 1117. 94 S Ct 1979. and holding by District Court that misrepresentation regarding margin credit terms does not meet "in connection with" requirement would appear to invalidate SEC Rule 10b-16 determinations regarding securities regulations and is therefore in error. CA3 NJ) 764 F2d 939. (1985. Jett v Sunderman (1988. Collins v Rukin (1972. Factual allegations of complaint. Violation of SEC Rule 10b-5 cannot occur unless proscribed activities are present in connection with purchase or sale of securities. that requirement being construed liberally to further purpose of Securities Exchange Act. "in connection with" requirement is broadly interpreted and requires only that plaintiff shall have suffered injury as result of deceptive practices touching on sale of securities...15 USCS § 78j https://www. district court rejected rating agencies' assertion that other factors. Rule 10b-5. Acts incidentally inducing sale or purchase Complaint based on fact that corporation allegedly failed to disclose that substantial amount of its income for particular fiscal year was derived from overcharges on government contracts was sufficient to meet requirements of "in connection with the purchase or sale of any security" clause of SEC Rule 10b-5. and S. Because 15 USCS § 78j contains "in connection with" language. CCH Fed Secur L Rep P 94156. Civ. 15 USCS § 77q(a)(1). Generally In civil action alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. v Kuo (2007.E. CA2 NY) 402 F2d 909. CA3 NJ) 486 F2d 139. bond contained waiver of defenses. SEC Rule 10b-5 may apply to both contracts if it can be shown that corporation which issued stock would not have entered into contract had it not been for misrepresentations made with respect to facts underlying consummation of contract not involving transfer of stock since rule specifically proscribes any person from engaging in any act practice or course of business which operates or would operate as fraud or deceit upon any person "in connection with the purchase or sale of a security". (1973. Alley v Miramon (1980. and that risk materialized when rating agencies abruptly downgraded senior notes to junk status. CCH Fed Secur L Rep P 91002). 15 USCS § 78j(b). CCH Fed Secur L Rep P 94094. cert den (1974) 416 US 960.com/research/retrieve?cc=&pushme=1&tmp. Securities fraud action fails under 15 USCS § 78j(b) because alleged fraud did not affect investors' decision. but unknown to investor. v North American Rockwell Corp. 3 ALR Fed 803. and that disclosure of waiver would have negative effect on sale of securities. § 240..S. CA5 La) 614 F2d 1372. CCH Fed Secur L Rep P 95090. Inc. SD NY) 708 F Supp 2d 334. Angelastro v Prudential-Bache Secur. v Laventhol. notwithstanding that GNMA forward contract is not itself security as defined by securities laws. cert den (1985) 474 US 935. DC SC) 101 F Supp 2d 395. Heit v Weitzen (1968.C. Allen Organ Co. such as credit crisis. Competitive Associates.R. one calling for delivery of corporate stock in return for patent rights. SEC v Marker (2006. CA9 Cal) 840 F2d 1487. 2.--Non-stock connected to stock exchanges Government National Mortgage Association forward contract constitutes purchase and sale of underlying GNMA security and is therefore regulated by antifraud provisions of securities laws. 1973-2 CCH Trade Cases P 74713. plaintiff need not establish close relationship between fraud and sale. (1989. and investor had presented evidence that he would not have invested had he known of waiver.by Citation . but only that transaction involving sale "touched" transaction involving fraud. R. opportunity to purchase shares of defendant's corporation's stock. CCH Fed Secur L Rep P 94470. that bond arrangement was not common.

SD NY) 523 F Supp 533. Allegation of scheme consisting of refusal to honor contracts to purchase plaintiff's shares of securities at contract price. rights to dividends. 93 L Ed 2d 1001. 121 S Ct 1776. SD NY) 242 F Supp 670. CCH Fed Secur L Rep P 95625. which give rise to securities fraud causes of action under 15 USCS § 78j(b). 44 UCCRS2d 569. even if inaccurate. 2001 CDOS 4046. v Arthur Andersen & Co. in so relying. where officer was induced to forego competing offer of employment largely by stock option promise and overstatement of corporation's value and future prospects. Master agreement between British and Irish economic development agencies and DeLorean motor car entities whereby agencies supplied financing for automobile production may have been investment contract "security" and thus summary judgment is precluded. DC VI) 129 F Supp 2d 817. Corp. 71 L Ed 2d 850.e. v United Int'l Holdings. 88. affd (1986. since misstatements and omissions by which plaintiff was induced to sign agreement were in connection with sale of security. Gigliotti v Mathys (2001. In re Investors Funding Corp. in connection with purchase or sale of any security requirement) does not apply to SEC-instituted cases. Manufacturers Hanover Trust Co. Pierce. CCH Fed Secur L Rep P 92902. CCH Fed Secur L Rep P 92846. (1980. Agreement under which individual invested $ 1.com/research/retrieve?cc=&pushme=1&tmp. which prohibits the use of any manipulative or deceptive device in connection with the sale of any security--where the buyer performs the promised services. it was still "in connection with sale" since payment was not made pursuant to contracts and purpose of scheme was to reduce amount of payment. alleged misrepresentation must have direct pertinence to purchase or sale of securities at issue. indicated that corporation was for-profit corporation. but that. Purchaser-seller standing requirement (i. 89. (2005. SD NY) 426 F Supp 658. proper jury instruction would have been that repurchase agreements may or may not themselves constitute securities. Agreements to sell or purchase The refusal by company (seller) to honor its oral promise to sell stock option to another company (buyer) in return for the buyer's promise to perform certain services violates § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b). CCH Fed Secur L Rep P 98349. (2001) 532 US 588. (1986. 2001 Colo J C A R 2505. et al. (2004. Rudinger v Insurance Data Processing.--Uncompleted agreements Cause of action existed under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) where it was alleged that defendant had entered into stock exchange agreement with only limited intention of performing. because by accepting enforceable employment contract officer "purchased" securities. fraud in connection with repurchase agreements satisfies language in § 10(b) and Rule 10b-5 relating to fraud in connection with purchase or sale of securities. In re Martin Herer Engelman. CA5 Ga) 661 F2d 62. Wharf (Holdings) Ltd. "in connection with" language should be given its natural meaning and impose liability on all those whose false assertions are reasonably calculated to influence investing public and misrepresentation need not be made with respect to particular sales transaction but should be applied generally. Actions of employee of broker-dealer are not "in connection with" purchase or sale of security merely because employee defrauded his employer.000 for purchase of shares in corporation was "security" so as to be proper basis of action for alleged fraud in transaction under SEC Rule 10b-5 promulgated under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)). cert den (1982) 455 US 990. Department of Economic Dev. SD NY) 683 F Supp 1463. (1991. ED Mich) 601 F Supp 1106. 2001 Daily Journal DAR 4983. Brown v Ivie (1981. money was invested and loss was risked by agencies. as minority shareholder and employee of corporation. (1965. cannot be basis of federal securities laws claim against accounting firm which audited company's books and certified its financial statements. In re Orlando Joseph Jett (1998) 1998 SEC LEXIS 1501. v Dwyer (1996. CCH Fed Secur L Rep P 93068. amounts to mere harmless error. v Dale (1984. CCH Fed Secur L Rep P 95440. 102 S Ct 1614. and indicated that investor's stock had proportional voting rights. Inc. notwithstanding that stock was never in fact issued. to sign agreement whereby defendants. and fact that agreement envisioned some limitations on stock's negotiability and 82 of 158 3/8/11 4:25 PM . states cause of action for injunctive relief against violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. and that agreement was not completed. (1988. Glickman v Schweickart & Co. Inc. Term "in connection with" in SEC Rule 10b-5 should be construed broadly to include device that would cause investor to purchase or sell corporation's securities. CCH Fed Secur L Rep P 93692. CCH Fed Secur L Rep P 93947. Damages suffered by investment company resulting from mismanagement or looting of proceeds of sales of securities by principal officers. 17 FR Serv 2d 219. 107 S Ct 952. cause them to purchase or sell corporation's securities. Litig.Get a Document . from mere breaches of contract is whether misrepresentations were intended to induce sale or purchase of security at time of sale or purchase. Former operating officer's 15 USCS § 78j(b) claim against data processing corporation survives summary judgment. Inc. M & B Contracting Corp.15 USCS § 78j https://www. Zucker v Sable (1976.. SEC v C.lexis. CA6 Mich) 795 F2d 531. To satisfy "in connection with" requirement for claim under 15 USCS § 78j(b). where parties to agreement had horizontal and narrow vertical commonality. CA2 NY) 395 F3d 25. Jones & Co. CCH Fed Secur L Rep P 97696. AUSA Life Ins. because material issues of fact exist with respect to agencies' expectations of profits and promoters' sole control over efforts to make profits. CCH Fed Secur L Rep P 91893. were assured of obtaining plaintiff's stock at book value upon his connection with corporation being terminated. Words "in connection with" in § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) need not be limited to misrepresentations relating to subject matter of purchase. CCH Fed Secur L Rep P 96533. SD NY) 928 F Supp 1239. as controlling directors and stockholders. as majority shareholders. in either event. within meaning of § 78j(b) and has standing to bring this claim. which defendants had power to do at any time. 14 FLW Fed S 245. (1995) 52 SEC 271. as damages were not incurred in connection with purchase or sale of security. but jury instruction containing additional comment that repurchase agreements themselves are securities. CCH Fed Secur L Rep P 91425. v Drysdale Sec. Fenner & Smith. Davis v Davis (1976. and the seller is found to have secretly intended never to honor the agreement. CA2 NY) 801 F2d 13. Key factor distinguishing manipulation and deception "in connection with" purchase or sale of securities. DC Colo) 312 F Supp 2d 1375. CCH Fed Secur L Rep P 91358. cert den (1987) 479 US 1066. and capacity to appreciate. even though alleged scheme did not arise until after contracts to sell had been entered. "In connection with" requirement is satisfied if device employed be of sort that would cause reasonable investors to rely thereon and. CA9 Cal) 476 F2d 393. In suit under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 involving alleged misrepresentations in connection with repurchase agreements for government securities. ED Pa) 778 F Supp 1334.. and cutting plaintiff off from financial resources in order to force him to sell his shares to defendants for grossly inadequate consideration. 149 L Ed 2d 845. Walling v Beverly Enterprises (1973. To establish fraud by broker-dealer under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) it is necessary that defendant implement deceptive or manipulative practice in connection with purchase or sale of security.by Citation . where agreement referred to "stock shares" to be issued. District court erred in concluding that plaintiff failed to state claim under federal securities laws where alleged fraud was in connection with inducement of plaintiff. Sec. CA5 Tex) 526 F2d 1286. Co.

CCH Fed Secur L Rep P 98158. M. that money was deposited in issuer's account. Accounting firm's amended third-party complaint against chief accountant of target company states claim under 15 USCS § 78j(b). was stated where plaintiff alleged that he had entered into employment contract whereby he was to receive 22 percent of stock in proposed company when company was formed and stock was issued. (1989. because pleading indicates that broker and investor reached agreement on "sale" of stock. Sales transaction need not always be consummated in order for fraud to be in connection therewith so as to constitute violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). leading to bankruptcy of apparel corporation. ND Ill) 265 F Supp 440. but who had secretly agreed to sell same securities to another party. leading apparel corporation to acquire another shop. Lanning v Serwold (1973. second tender offer on terms equally favorable to sellers would be made to sellers. SD NY) 290 F Supp 715. and that alleged misrepresentations made by broker were "in connection with" transaction.000 in preferred stock investor allegedly paid for was never issued. Sulkow v Crosstown Apparel. broker and brokerage firm.----"Aborted" sales or purchases Purchaser of securities. upon false promise that. and defendants contend that they are not bound to perform because there is no connection between 2 promises. (1994. president of corporation made misrepresentations to sellers to attempt to prevent consummation of transaction. but had indicated that it wished corporation expanded. as well as with respect to completed sales. CCH Fed Secur L Rep P 95368. (1967. 17 FR Serv 2d 260. (1967. upon expiration of tender offer. Stores. (1973. even though $ 408. Ltd. so that alleged fraud lay. because there is no merit to claim that chief accountant would not expect auditor and potential buyer of company to rely on its "routine annual financials.lexis. Inc. Hentz & Co. and who alleged that defendant entered into agreement with only limited intention of performing. was sufficient in pleading fraud "in connection with" purchase of securities. and who thereupon effectively forced sellers to sell their securities to purchaser upon terms substantially less favorable to sellers than those received by those who had previously sold to purchaser pursuant to tender offer and at price substantially lower than sellers could have received had they sold during period in which they had been induced not to sell by purchaser. CA4 SC) 852 F2d 786. had perpetrated fraud "in connection with the purchase or sale of a security" within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 thereunder. Kagan v Edison Bros. ED Pa) 36 FRD 27.com/research/retrieve?cc=&pushme=1&tmp.by Citation .. asserted fraud in connection with purchase or sale of security under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) under rationale of "aborted purchaser-seller" theory. Hunt v Robinson (1988. and mere fact that intended compensation was security does not bring fraud within realm of § 78j(b). CCH Fed Secur L Rep P 93483. after plaintiff entered into agreement with corporation's stockholders to purchase their stock. perpetrated fraud in connection with purchase and sale of securities within 83 of 158 3/8/11 4:25 PM . 17 FR Serv 2d 219. CCH Fed Secur L Rep P 97941. notwithstanding that at time of sale sellers were aware of all facts including purchaser's misrepresentations. ND Ill) 508 F Supp 1278. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) prohibits fraud "in connection with purchase or sale" of securities. but also apply where there is purported attempt to sell nonexistent securities. Commerce Reporting Co. 90. Allegation that certain defendants falsely promised to purchase securities when they never intended to do so. (1968. broker was liable under Rule where he represented to customers that purchases and sales were being made on their behalf when no transactions had in fact taken place. CA8 Mo) 473 F2d 515. SD Tex) 726 F Supp 151. (1964. No cause of action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) or SEC Rule 10b-5 promulgated thereunder. v American Cardboard & Packaging Corp. Walling v Beverly Enterprises (1973. but rather upon whether investment decision remains to be made by party from whom disclosure has been withheld. proscriptions are not applicable only where fraud is involved in completed purchase or sale of securities. v Arthur Anderson & Co. CA9 Cal) 476 F2d 393. Where. Words "in connection with" of section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) indicate that Congress intended to protect against fraud in agreements to buy and sell. but rather in defendants' refusal to tender shares as required by terms of contract. 13 UCCRS2d 1245. 10 FR Serv 2d 669. CCH Fed Secur L Rep P 93809. 8 FR Serv 2d 12C. CCH Fed Secur L Rep P 93009. Gurwara v Lyphomed. where employee complains of loss of stock option due to employer's misrepresentations in advising him to accept short-term disability status. Goodman v H. because result of misrepresentations was that employee did not receive promised compensation. (1990. Investor states valid securities fraud claim against issuer. CCH Fed Secur L Rep P 93947. plaintiff informed defendants that he would sell his stock to defendants at agreed price. since even if this contract could be considered to constitute "sale" of securities." Axel Johnson. Inc. L. CCH Fed Secur L Rep P 95691. CCH Fed Secur L Rep P 92252. Feldberg v O'Connell (1972. Inc. Shareholders who made stock exchange agreement with defendant. gravamen of complaint was that defendants had fraudulently refused to convey or tender stock to plaintiff. CA2 NY) 807 F2d 33. allegedly pursuant to fraudulent scheme to promote highest price possible for sale of shares by inducing plaintiffs to enter into agreement without any intention of consummating it if defendant could find other purchasers who would pay more for stock than agreed to under contract with plaintiffs. Disabled employee's 15 USCS § 78j(b) claim against former employer is not cognizable. misrepresentations were in connection with purchase and sale of securities and plaintiff had valid cause of action against president under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Defendant who agreed to sell securities to plaintiff. ND Ill) 265 F Supp 440. SD NY) 592 F Supp 2d 452. Fraudulent acts or devices which abort sales or purchases of securities are in connection with purchase or sale and are unlawful under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. but defendant corporation had then refused to go through with purchase of stock.Get a Document . ND Ill) 739 F Supp 1162. where plaintiff alleges that prior to signing sale agreement. Issen v GSC Enterprises. Sachs & Co. who fraudulently induced sellers to refrain from selling their shares during effective period of tender offer made by purchaser to class of shareholders which excluded sellers. Goodman v H. Violation of SEC Rule 10b-5 is properly alleged where it is asserted that fraud has been perpetrated in connection with contract to purchase or sell securities as well as when it is in connection with actual sale. Case 1. Inc. plaintiff subsequently sold his stock to defendants. not merely in purchase or sale of securities. SD NY) 847 F Supp 317. DC Mass) 338 F Supp 744. Inc. CCH Fed Secur L Rep P 94030. v Puretec. CA7 Ill) 907 F2d 690. and defendants promised to use their best efforts to persuade independent directors of another corporation to sell other stock to him. CA9 Wash) 474 F2d 716. CCH Fed Secur L Rep P 97679. Satisfaction of "in connection with" requirement depends not upon when agreement is executed. 10 FR Serv 2d 669. and who through such tender offer gained ownership of over 90 percent of shares of issuer and thereby controlled market for securities. CCH Fed Secur L Rep P 94916.. Shareholders of corporation operating apparel stores could not recover under § 78j(b) and Rule 10b-5 against another corporation which had allegedly agreed to acquire plaintiffs' stock in apparel corporation.24.15 USCS § 78j https://www. DC Dist Col) 501 F Supp 208. so that causal connection between alleged fraud and purchase or sale of stock required to state federal cause of action under § 10(b) was lacking. Cook v Goldman. (1986. not in actual sale of stock. (1981. provided damages could be shown. pledgeability was insufficient to negate character of stock as security. Nathel v Siegal (2008. Fishman v Estrin (1980. Lee & Co. even though chief argues that alleged falsehoods were in annual financial statement not prepared in connection with sale of company and not to be relied upon in connection with sale. in return for which he agreed to accept employment. Inc. where accounting firm was originally sued by acquiring company for inaccuracies in audit of target and now blames false information provided by chief. thereby acquiring such corporation. Travis v Anthes Imperial. Plaintiff's allegation that he was induced to sell stock well below market value states claim of fraud in connection with sale of securities in violation of 15 USCS § 78j(b) and SEC Rule 10b-5. CCH Fed Secur L Rep P 93718. Hentz & Co. (1990. and misrepresented partnerships' value because they knew that many of oil sites were dry and could not produce oil revenues.

Inc. as matter of law. (1971. (1986. v Puretec. Competitive Associates. broker's promise. CCH Fed Secur L Rep P 93725. since repos differ from collateralized loans in that secured lender in repo can trade. nature. Accounting firm could not be held liable under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder based on alleged fraud in reports prepared by firm concerning partnerships since element of such action that fraud be in connection with purchase or sale of securities was not met where alleged fraud occurred after investors made their subscription agreements with partnerships. ED NY) 687 F Supp 746. Rudolph v Arthur Andersen & Co.by Citation . Metropolitan International. DC Utah) 951 F Supp 978. Sharp v Coopers & Lybrand (1978. CA11 Fla) 806 F2d 1070 and cert den (1987) 480 US 946. to make good any losses sustained by making new issues of common stock available to her so that she might realize immediate appreciation. Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). (1986. Silverman v Bear. Pepsico. because accounting firm. magnifying importance of financial position of company. Presumption of reliance is generally available to plaintiffs alleging violations of 15 USCS § 78j(b) based on omissions of material fact. Golding v Merrill Lynch. CCH Fed Secur L Rep P 96536. CCH Fed Secur L Rep P 93546. v Alco Standard Corp. CA11 Fla) 800 F2d 1040. Pierce. Accounting firm. where. Corporation and shareholders properly alleged fraud in connection with sale or purchase of security where they claimed company fraudulently entered into agreement to purchase corporation's stock with no intention of closing transaction. ED Pa) 331 F Supp 1334. Inc. affd (1992.000 as part of effort to get investor to open account. hired by purchaser in owner-to-owner sale of corporate entity to review third party's audit of corporation. L. allegedly used by seller as "stalking horse" to obtain higher offers for corporation. CCH Fed Secur L Rep P 94069. (1986. CA9 Cal) 857 F2d 646. because. Mitchell & Co. CCH Fed Secur L Rep P 92549. In suit under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and corresponding SEC Rule 10b-5. Investor failed to state claim for fraud under 15 USCS § 78j. and directly affecting transaction in securities. sell. Fenner & Smith. CCH Fed Secur L Rep P 95090. Scott & Co. investor did not allege fraud "in connection with" sale of securities. Accountant's opinion letter was used "in connection with" purchase of partnership interest in limited partnership within meaning of SEC Rule 10b-5. ED Pa) 457 F Supp 879. v Stonebridge Partners Equity Fund.P. CA9 Idaho) 184 F3d 1059. Scheme whereunder owner of securities agreed to sell stock to plaintiff but conspired to find purchaser at better price and thereafter informed plaintiff that it would not complete transaction was fraud in connection with purchase or sale of securities under SEC Rule 10b-5 since fraud was committed after contract was entered into. and investors' injury was thus not connected with purchase or sale of security under § 10(b). Securities fraud claim of potential purchaser of corporation. Marwick.15 USCS § 78j https://www. that alleged fraud be "in connection with" purchase or sale of securities was met where it was alleged that public accountant's fraudulent misrepresentations and concealment of material facts with respect to financial status of investment advisor caused investor to hire advisor and that investor subsequently lost money as a result of advisor's handling of account. L. Accountant's opinions and advise Requirement. reh den. Corp. SEC v Drysdale Sec. 145 L Ed 2d 1070. resulting in inaccurate assessment of corporation's net worth. exercisable day following initial offering when securities might have appreciated. Inc. of America Shareholder Litigation (1986. (1986. Krekstein.C. CCH Fed Secur L Rep P 92968.R. Inc. which advice had nothing to do with intrinsic nature of certificates or with risk related to method of their purchase. CCH Fed Secur L Rep P 92252. is not liable to purchaser for fraud under Securities Exchange Act of 1934 (15 USCS § 78j) for its failure to report overstatement of inventory on corporation's financial statement. In re Financial Corp. must fail. CA2 NY) 516 F2d 811. Unpublished Opinions 84 of 158 3/8/11 4:25 PM .K. (1974.. serving here in advisory capacity. MD Pa) 657 F Supp 627. CCH Fed Secur L Rep P 93065. Accountant's allegedly fraudulent advice concerning accounting treatment of Government National Mortgage certificates was not fraud that touched or was in connection with purchase or sale of security where accountant rendered advice on manner in which corporation could account for its repurchase agreements after purchasing and selling certificates. accountant foresaw and reasonably could foresee that opinion letter would be shown to potential investors in limited partnership. cert den (1989) 493 US 1002. Production Resource Group. in civil action alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. actions require nexus with purchase or sale of securities. meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). (1998. CD Cal) 644 F Supp 1517. CCH Fed Secur L Rep P 96612. where investors allege only that accountant omitted and failed to disclose fraudulent activity of securities salesman in certifying various financial statements of salesman's corporation without qualification.Get a Document . 90 L Ed 2d 981. v Laventhol. in order to induce customer to maintain long position in commodities futures. SD NY) 385 F Supp 1182. broker promising to give options to customer to purchase common shares at issuance price. or investment characteristics of securities at issue. (1969. 99 CDOS 5879. (1987. 120 S Ct 1158. cert den (1986) 476 US 1171. v Brown.com/research/retrieve?cc=&pushme=1&tmp. Inc. en banc (1986. because alleged misrepresentations were not "in connection with" purchase or sale of securities. or pledge collateral. was not fraud connected with purchase or sale of securities. 22 FR Serv 3d 101 (criticized in Seolas v Bilzerian (1997. (1986. SD NY) 290 F Supp 715. CCH Fed Secur L Rep P 90220. notwithstanding that their payments on promissory notes which they had given for part of purchase price of partnership interests were made after accounting reports in question had been prepared and had been read by investors. does not act "in connection with" purchase or sale of securities. Stearns & Co. where he alleged broker fraudulently promised to limit speculative trading to $ 10. 107 S Ct 1604. even if scheme could not have been carried out but for transaction. Where broker delayed in selling plaintiff securities solely for reason that broker was dealing in same stock for his own account and it was in broker's self-interest not to lower market price of stock by placing sale orders. 110 S Ct 561. Grace & Co. framework and remedies available under state contract law are adequate to resolve purchaser's dispute with accounting firm. 94 L Ed 2d 790. Horwath & Horwath (1975. but rather with intent to examine corporation's financial records for purpose of forcing decrease in price of corporation's stock under agreement. CA2 NY) 785 F2d 38. (1968. where seller's fraud did not pertain to value. Binder v Gillespie (1999. Accountant's false and misleading financial statements for company which engaged in sale and repurchase agreements (repos) for government securities were in connection with purchase or sale of security where company was insolvent from inception. SD NY) 307 F Supp 713. (1988. since subsequent payments did not constitute separate purchases of securities. CCH Fed Secur L Rep P 90603. DMI Furniture. CA9 Cal) 796 F2d 1126. Roberts v Peat.lexis. although such posttransaction behavior might be relevant to any ultimate recovery if liability is established on basis of fraud taking place before sale. fraud occurred in connection with sale of security under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Investors' complaint is insufficient to allege primary liability of accounting firm under 15 USCS § 78j(b). 106 S Ct 2894. 107 L Ed 2d 556. CCH Fed Secur L Rep P 94896. since brokerage account is not security. 12 FR Serv 3d 810. Inc. WD Okla) 666 F Supp 1500. Farlow v Peat Marwick Mitchell & Co. Kraft & Co. because investors fail to allege accountant's activity was "in connection with" sale of security. Bischoff v G. CCH Fed Secur L Rep P 92934. cert den (2000) 528 US 1154.. SD NY) 6 F Supp 2d 236. CA10 Okla) 956 F2d 982. accounting firm for limited partnership could not be held liable for fraudulent failure to disclose based on acts of creator of limited partnership in withdrawal or "take down" of funds invested in partnership after investments were made since fraudulent scheme which takes place entirely after securities transaction is complete is not "in connection with" that transaction. v W. CCH Fed Secur L Rep P 94028. Commerce Reporting Co. CCH Fed Secur L Rep P 99432).L. CCH Fed Secur L Rep P 92487. 91.

CCH Fed Secur L Rep P 96275. cert den (1985) 474 US 935. Broker's activities. McCabe v Ernst & Young. ND Ohio) 246 F Supp 2d 808) and (criticized in Raymond James Fin. Ltd. 2002 Daily Journal DAR 6078. within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. (1996. § 240. v Atlantic Financial Management. broker's alleged misrepresentation that it was willing to abide by investor's restrictions on broker's investment decisions during periods of investor's unavailability for consultation. although merger can constitute purchase or sale of securities under federal securities laws. CA7 Ill) 475 F3d 824. CCH Fed Secur L Rep P 99514. 17 C. CA2 NY) 157 F3d 138. WD Tenn) 105 F Supp 2d 848) and (criticized in Uwaydah v Van Wert County Hosp. was too attenuated from any possible securities transaction to be actionable under 15 USCS § 78j. CA3 NJ) 764 F2d 939.lexis. CA2 NY) 779 F2d 885. v Torrid Oven. (2002. officers' expert did not offer testimony to prove that officers would have received $ 5. LLP (2007. alleged acts of accounting firm were not in connection with purchase and sale of securities. CCH Fed Secur L Rep P 91002). since securities transactions and breaches of fiduciary duty coincided.by Citation .F.7 million if shares had been registered on time. SD NY) 937 F Supp 237. Inc. CCH Fed Secur L Rep P 90286. SEC v Zandford (2002) 535 US 813. Rush v Oppenheimer & Co. to investors. Rolf v Blyth Eastman Dillon & Co. on reh (1984. (1977. v PricewaterhouseCoopers. cert den (1999) 525 US 1144. (1984. stock of 2 corporations involved in merger. Warner v Alexander Grant & Co. "In connection with" requirement is not met where alleged fraud occurred in connection with broker's commissions and had no causal connection with any purchase by plaintiffs. 28 FLW D 1863). broker's alleged misrepresentation of individual investment advisor's experience and skill with respect to various investment devices. generally Where Securities and Exchange Commission (SEC) alleged that stockbroker violated both § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and Rule 10b-5 (17 CFR 240. broker's alleged misrepresentation that investor's account was profitable. Fla App D2) 851 So 2d 853. Margaret Hall Foundation. Investor who entered into margin agreement with securities dealer in order to engage in short sales of securities has no viable claim under 15 USCS § 78j(b). 44 UCCRS2d 859. to earn interest and to obtain other financial benefits without notifying customers of this practice or sharing proceeds with them. either by management or auditor. cert den (1978) 439 US 1039. CA2) CCH Fed Secur L Rep P 96525. Audit reports Individual could not bring action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder against auditor of corporation and individuals connected with auditor where "purchase or sale" of securities which was basis of action involved merger of 2 companies other than that as to which misrepresentations were allegedly made since. ND Cal) 426 F Supp 715. his very employment is "in connection with purchase and sale of securities" within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 15 FLW Fed S 328. where assertion is that stock brokerage house uses its customers' assets. remanded (1978. (1996. SEC v Adoni (1999.com/research/retrieve?cc=&pushme=1&tmp. broker's alleged misrepresentations inducing investor's mere retention of funds already in discretionary fund cannot be basis of Rule 10b-5 action. all withdrawals were made payable. Where corporation alleged only that it experienced loss as result of exposure of misrepresentations contained in accounting firm's client's 1998 and 1999 financial statements which were issued after asset sale agreement between corporation and client was signed. Rich v Touche Ross & Co. Servs. thereby incurring losses when brokerage was liquidated under Securities Investor Protection Act.. 58 L Ed 2d 698. vacated on other grounds. (1976.10b-5. that is. Hutton & Co. Broker's alleged misrepresentation of its intent to manage investor's account for investor's best interest and within investor's strict investing guidelines. CCH Fed Secur L Rep P 99268. v Saldukas (2003. 143 L Ed 2d 47. 31 UCCRS2d 889. 122 S Ct 1899. because such surreptitious use of interest is not "in connection with" purchase or sale of securities. MD Pa) 567 F Supp 140. SEC v Geotek (1976. Public accounting firm can not be held civilly liable under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 for allegedly misrepresenting financial status of brokerage firm in its audit of firm's financial condition. (1983. SD NY) 592 F Supp 1108. Stockbroker was not liable under 15 USCS § 78j for fraudulent transactions of investor's friend where account was nondiscretionary. affd (1979. 9 FR Serv 3d 596. alleged misrepresentations were not "in connection with" purchase or sale of securities as to which individual arguably had standing to sue. (2000. Purchaser and sales by broker-dealer satisfied "in connection with" requirement as to investors who gave him "full" discretion but intended to retain independent. and thus alleged fraud is not "in connection with purchase or sale of securities.10b-5) by selling his customer's securities and using proceeds for his own benefit without customer's knowledge or consent. which is required element of 15 USCS § 78j(b) claim. SD NY) 424 F Supp 1021. CA3 Del) 802 F2d 446. SD NY) 415 F Supp 95. 92. 119 S Ct 1039. DC Mass) 572 F Supp 1475. SD NY) 596 F Supp 1529 and revd on other grounds (1985. these allegations were not sufficient to state claim under 15 USCS § 78j(b) and implementing Rule 10b-5. Audit reports used for attachment to annual Form 10K reports filed with Securities and Exchange Commission were issued "in connection with" sale of securities. Ltd.15 USCS § 78j https://www. Since securities broker is person who actually trades securities for investing public. alleging claims for violation of SEC Rule 10b-5. Williamsport Firemen Pension Bds. CCH Fed Secur L Rep P 95756. even though there was no evidence to show that reports were ever sent. Angelastro v Prudential-Bache Secur. in form of cash and stock collateral and proceeds of short sales. affd without op (1986. Alleged misrepresentations by brokerage firms concerning interest rates and charges on margin accounts are not in connection with purchase or sale of securities and hence not actionable under Rule 10b-5. DC SC) 101 F Supp 2d 395. LLP (2006. Unpublished: In action in which former officers and/or principal shareholders of privately owned company filed suit against accounting firm et al. CCH Fed Secur L Rep P 93509. firm was granted summary judgment where there was no evidence to create genuine issue that acquirer's failure to register officers' shares caused officers' loss. CCH Fed Secur L Rep P 91639. 93.F. CCH Fed Secur L Rep P 90653. CCH Fed Secur L Rep P 92406 (criticized in Southern Sys. CCH Fed Secur L Rep P 94144. even though fraud could ultimately have reached financial statements relied on by investors. CCH Fed Secur L Rep P 91795. CCH Fed Secur L Rep P 99298. 153 L Ed 2d 1. Bissell v Merrill Lynch & Co. in part. in form of cash and stock collateral and proceeds of short sales. (1987. and broker's alleged misrepresentation that financial position of suggested issuer was soon to be bolstered are in connection with purchase or sale of securities within meaning of 15 USCS § 78j(b) and SCCN Rule 10b-5. Inc.Get a Document . thereby causing plaintiffs to purchase securities through brokerage and to permit brokerage to retain securities on plaintiff's behalf. 106 S Ct 267 and (criticized in Miller v Asensio (2000. affd (1998. Inc. Corporation's fraudulent prebilling scheme. DC Del) 621 F Supp 335. 85 of 158 3/8/11 4:25 PM . affd. to earn interest and to obtain other financial benefits without notifying customers of this practice or sharing proceeds with them. CA2 NY) 159 F3d 698. Inc. where complaint alleges that dealer uses its customers' assets. and discovered during outside audit prior to appearance of fraudulent information in any financial documents. CA9 Cal) 590 F2d 785.. CCH Fed Secur L Rep P 99270.. CCH Fed Secur L Rep P 92076. conducted in attempt to obtain additional credit from corporation's factor rather than to influence investors. SD NY) 933 F Supp 325. Federal securities fraud claim on behalf of putative class must fail. however. affd (1998. (1985.. Tricontinental Indus. concurrent right to make investment decision. for losses suffered as result of alleged misrepresentations in previous audited 1997 financial statement. CCH Fed Secur L Rep P 96766. CA11 Fla) 828 F2d 1528. (1983. I & II v E. and sent directly to plaintiff investor. and violation of § 10(b) of Securities Exchange Act of 1934. DC NJ) 60 F Supp 2d 401. DC NJ) CCH Fed Secur L Rep P 93649. 88 L Ed 2d 274. "in connection with" requirement is satisfied by initial misrepresentations inducing investor to entrust funds with broker and by broker's later misrepresentations amounting to new decision by investor to invest. SEC's complaint survived dismissal because breaches of fiduciary duty were "in connection with" securities sales." Levitin v PaineWebber. because alleged nondisclosure pertains not to sale of securities or value of securities themselves but rather to terms of relationship between broker and customer. Candelora v Clouser (1985.. 99 S Ct 642 and amd (1978. but rather were in connection merely with bailment of plaintiff's securities subsequent to purchase.R. CCH Fed Secur L Rep P 95843. CA2 NY) 570 F2d 38.

Hoff v Sprayregen (1971. Glickman v Schweickart & Co. Corp. Activity outlawed by § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 is not limited to portion of transaction involving exchange of consideration by purchaser for stock. DC NH) 938 F Supp 98. CCH Fed Secur L Rep P 97584. where inheritor did not allege fraudulent conduct "in connection" with purchase or sale of any securities. v EPA (2003. (1992. uses broker to effect transaction as its agent. CCH Fed Secur L Rep P 96500. in case involving limited partnership shares. RICO Bus Disp Guide (CCH) P 8223. SD NY) 339 F Supp 369. because PBIs. and payments on loan were thereafter made by agent in order to conceal actual identity of real owner of securities. nondisclosure is in connection with purchase of securities. Fenner & Smith.15 USCS § 78j https://www. (2001. v Merrill Lynch. sued second bank for allegedly failing to disclose fact that buyer's assumed loan was secured by third party's time deposit.Get a Document . any material misrepresentations or omissions at that time were in connection with purchase or sale of security as required by § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and Rule 10b-5. essentially brokerage commissions. Franklin Co) 2002 Ohio 4765) and (criticized in Landmark Legal Found.by Citation . Smoky Greenhaw Cotton Co.--Brokerage fees Agreement for payment of broker's or finder's fee for purchase or sale of security is "in connection with" purchase under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Bacon v Smith Barney Shearson (1996. CCH Blue Sky L Rep P 74105. Class action complaint based on farm marketing cooperative's alleged failure to properly retire capital credits held by cooperative members states claim under 15 USCS § 78j(b). Inc.. revd on other grounds (1996. 95. CA10 Colo) 480 F2d 235. CA9 Cal) 651 F2d 615. at direction of investment advisor. employment as "number 2" manager at corporation for at least 2 years. therefore. CCH Fed Secur L Rep P 99259. CCH Fed Secur L Rep P 98160. CA10 Colo) 84 F3d 367. and reimbursement of relocation costs--because (1) plaintiff neither "purchased" nor "sold" promissory notes issued to his father and sister. 38 L Ed 2d 240. CCH Fed Secur L Rep P 92528. CA7 Ill) 582 F2d 388. reh den. (1981. where it demonstrated likelihood that defendants took large fees. SD NY) 226 F Supp 972. must be dismissed where sale of securities occurred prior to date of bank's activities regarding loans alleged to be violations of 15 USCS § 78j(b). en banc (1986. but also covers entire transaction aimed at extracting money from purchaser through loan to finance stock purchase with ultimate intent of converting stock so purchased. of Trs. Bd. CCH Fed Secur L Rep P 99430. since liability under § 78j(b) may be premised only upon misconduct that occurs "in connection with" purchase or sale of securities. CCH Fed Secur L Rep P 93402. CA10 Utah) 451 F2d 35. Richardson v MacArthur (1971. (1965. "In connection with" requirement of SEC Rule 10b-5 is satisfied by showing nexus between defendant's actions and plaintiff's purchase or sale. DC Dist Col) 272 F Supp 2d 70). who signed notes to purchase limited partnership interests in oil and gas tax shelter. Inc. Ohio App. and where it was alleged that if second bank had disclosed third party's deposit. 8 FR Serv 2d 4F. amd. Fenner & Smith. where they allege Internet broker executed their trades after company had previously confirmed orders to cancel those trades. SD NY) 148 F Supp 2d 289. Sufficient connection existed between broker's fraud and sale of securities where broker engaged in fraudulent scheme of making unauthorized commodity trades. DC Dist Col) 670 F Supp 1036. occasionally liquidating portions of investor's securities accounts to finance unauthorized trades and using telephone lines and facilities of national securities exchange to execute its scheme. judgment entered (1993. contributions by each limited partner in response to call constituted separate purchase of security and. 94. Securities violations counterclaims of defendants. CCH Fed Secur L Rep P 93260. SEC's request for asset freeze is granted. Consumers Gas & Oil v Farmland Indus. if they exist. buyer would not have purchased stock from seller. Broker's persuading customer to borrow money to purchase stock. SEC v Bremont (1997. through which seller had refinanced original loan for purchase of stock. for setting up deals for nonexistent securities known as "prime bank instruments" or PBIs. instead of dealing directly with market maker on principal basis. CCH Fed Secur L Rep P 93269. and (2) in gauging likelihood of plaintiff's anticipated profits. CCH Fed Secur L Rep P 93350. 34 FR Serv 3d 1550 (criticized in Prairie Twp. are "securities" and defendants' behavior clearly satisfies "in connection with" requirement. Pierce. and Bowling Green Securities. (1986. DC Colo) 815 F Supp 1403. Inc. CCH Fed Secur L Rep P 98237. plaintiff's efforts were at least as significant and essential as efforts of others and thus plaintiff's undocumented promissory "note" lacked investment indicia of "security" necessary to support 15 USCS § 78j(b) claim. Arrington v Merrill Lynch. In re Edgemont Asset Mgmt. cert den (1973) 414 US 1004. when investment decision remained to be made at time of call for capital contribution by limited partners. because capital credits involved in this case fall within broad definition of "security" as defined in 15 USCS § 77b(1). cert den (1979) 440 US 939. loaned money and personally guaranteed loans to corporation from his father and sister and others-in exchange for allegedly unkept promises of 25 percent of outstanding equity stock in corporation. and to pledge other stock with lender as security for loan was in connection with purchase of security so as to justify application of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA5) CCH Fed Secur L Rep P 92767. and requirement was met where buyer who had bought stock in one bank by assuming seller's existing loan with second bank. 86 of 158 3/8/11 4:25 PM . Investors' federal securities fraud claims are dismissed. 1973-1 CCH Trade Cases P 74514. Marrero v Banco di Roma (Chicago) (1980. Seattle-First Nat'l Bank v Carlstedt (1987. or consideration received in return. (1991) 50 SEC 592. Johnson v Computer Technology Services. where timeliness of action will be assumed at this stage based on class representative's assertion that fraudulent scheme was not accomplished until 1992. (1987. Hoffman v TD Waterhouse Investor Servs. Case 3. Inc. v Hay (2002. WD Okla) 678 F Supp 1543. 96.lexis. 59 L Ed 2d 499. Financing of securities purchases Activities constituted fraud in connection with purchase or sale of securities where agent for purchaser arranged financing for purchaser's acquisition of securities. (1964. 94 S Ct 360. SD NY) 242 F Supp 670. Contributions to capital So long as investment decision remains to be made upon any possible state of facts.22. and representative may be able to prove existence of executory contract sufficient to satisfy "purchase or sale" element of securities fraud action. DC Colo) 840 F Supp 794. Goodman v Epstein (1978. SD NY) 954 F Supp 726. CA5 Tex) 785 F2d 1274. agent eventually converting securities to his own use on ground that purchaser had not paid off note to lender. Former employee's securities fraud claim against corporation is dismissed. Pierce.com/research/retrieve?cc=&pushme=1&tmp. To construe loan negotiations for purpose of purchasing stock to be "in connection with the purchase or sale or of any security" would be overly broad extension of that term.. where plaintiff relocated from California to Maryland. Cooper v North Jersey Trust Co. 99 S Ct 1289. Inheritor of Individual Retirement Account (IRA) established by her late cousin with securities brokerage firm did not state cause of action for securities fraud under 15 USCS § 78j(b) in stating that firm had fraudulently misrepresented tax consequences of immediate transfer of IRA into inheritor's name. because alleged misrepresentations are not "in connection with" purchase or sale of any securities since they do not concern value of securities purchased or sold. to purchase or sell security) violates anti-fraud provisions of securities laws when it results in investment company incurring unnecessary brokerage charges. ED La) 487 F Supp 568. (1973. Misrepresentation as to risk of financing stock investment through margin account which results in scheme to induce plaintiff to borrow money from broker to engage in commission-producing securities purchases through broker constitutes fraud in connection with sale of securities. Clark v United Bank of Denver Nat'l Asso. Interpositioning (practice whereby investment company.

In order to be in connection with purchase or sale of security. because defendants correctly maintain that such representations of conservative 87 of 158 3/8/11 4:25 PM . CA2 NY) 198 F2d 883. Joseph v Farnsworth Radio & Television Corp. SEC action against viatical settlement company will not be revived. (1977. and lifting of those restrictions was delayed by defendant.by Citation . Shamrock Associates v Moraga Corp. reh den (1987. with respect to which violation of SEC Rule 10b-5 was alleged. for purposes of Rule 10b-5 claim. DC NY) 99 F Supp 701. because it is clear that fraud alleged pertains to money lent for finding of stocks which is not "in connection with" purchase or sale of any security. because manufacturer's alleged fraud was not "in connection with" securities transaction and damages claimed by supplier are not of kind which § 78j is intended to compensate. whether claim under § 10(b) and Rule 10b-5 could be maintained depended upon whether defendant's action was failure to perform contractual covenant thereby preventing completion of contract.lexis. Omissions of fact occurred "in connection with" purchase or sale of security as required by SEC Rule 10b-5 where transaction was complete before disclosure of material information even though communications between investor and employee of defendant who handled investor's account by purchasing securities without his knowledge took place after employee had sent confirmation slips to investor. Du Pont v Wyly (1973. CA9 Cal) 536 F2d 849. SD NY) 745 F Supp 899. Shareholders' 15 USCS § 78j securities fraud action is dismissed where shareholders failed to allege any deceptive statements which resulted in corporate defendants' decision to repurchase stock from individual defendant above stock market price. Stock exchange specialist firm states no claim under 15 USCS § 78j(b). remanded (1988. DC Del) 557 F Supp 198. DC Dist Col) 986 F Supp 644. CCH Fed Secur L Rep P 94381.com/research/retrieve?cc=&pushme=1&tmp. affd (1952. SD NY) 551 F Supp 1220. alleged fraud practiced must have been prior to or contemporaneous with sale of securities. CCH Fed Secur L Rep P 95432. Claim against broker for alleged misrepresentations and material omissions with respect to management of investor's stocks will not be dismissed. DC Del) 61 FRD 615. within meaning of SEC Rule 10b-5. Searle & Co. it may fall within proscriptions of section and rule. Forced sale of interest in limited partnership does not meet "in connection with" requirement under 15 USCS § 78j(b) where fraud was in connection with sale of partnership's assets rather than its stock. where firm seeks "rebates" or interest payments owed it by stock "finders" to which it provides cash collateral in exchange for their obtaining stocks to fulfill firm's commitments to its clients. mod. Amino acid supplier fails to state claim against aspartame manufacturer under 15 USCS § 78j(b). (1987. "In connection with" requirement was not satisfied where alleged misrepresentation or omission occurred after last purchase of stock by plaintiff. CCH Fed Secur L Rep P 97793. CCH Fed Secur L Rep P 96130. Redelivery. since all alleged wrongful conduct occurred after repurchase. Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). 50 L Ed 2d 616. Fraud noncoterminous with sale or purchase Fraud which occurs after sale of stock is not in connection with sale within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) or SEC Rule 10b-5. Civil action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 cannot be based on allegation that developments made after buyer of stock made commitment to purchase that stock imposed duty of disclosure. Lewelling v First California Co. recovery can be had only for fraudulent conduct committed before date of purchase of stock. SD NY) 664 F Supp 140. Gaudette v Panos (1986. CCH Fed Secur L Rep P 96264. v C. Investor's claim under 15 USCS § 78j(b) that precious metal marketer's associates' false and misleading statements induced him to take part in "Buy Back. Pittsburgh Coke & Chemical Co. CCH Fed Secur L Rep P 95605. Freschi v Grand Coal Venture (1982. N. CCH Fed Secur L Rep P 99430. (1983. and not on basis of subsequent events. v G. Securities purchases. (1987. CCH Fed Secur L Rep P 92947.. ED NY) 666 F Supp 434. (1990. 11 FR Serv 3d 942. because these claims adequately allege that marketer's fraudulent statements occurred prior to or contemporaneous with or "in connection with" purchase or sale of security as required. CA9 Or) 564 F2d 1277. ED NY) 402 F Supp 359. Rebate Program" survives motion to dismiss. CCH Fed Secur L Rep P 93401.9 percent of supplier's stock. DC Mass) 650 F Supp 912. Lender's federal securities fraud action against stock seller must fail. v K-H Corp. where original agreement provided for substitution. Brokerage Servs. ED NY) 421 F Supp 908. Securities fraud complaint of widow who allegedly suffered substantial losses on her investment of life insurance proceeds is insufficient. CCH Fed Secur L Rep P 93939. revd on other grounds. and (2) that he relied on fraudulent vault receipt and insurance certificate prior to second participation. CA2 NY) 560 F2d 1089. v Bollo (1976. SD NY) 652 F Supp 1066. CCH Fed Secur L Rep P 93384. Kogan v National Bank of North America (1975. frauds occurring subsequent to sale are not actionable under Rule 10b-5. on reconsideration (1987. and do not constitute "efforts of others" or transform interests in policies into "securities.15 USCS § 78j https://www. because alleged misrepresentation did not relate to nature or value of stock and thus was not made "in connection with" purchase or sale of securities. Vigilant Ins. affd (1977. 97. Feinberg Testamentary Trust v Carter (1987. 1987-2 CCH Trade Cases P 67714. where contract calling for exchanges of securities presupposed that plaintiff would not receive full benefit of his bargain until transfer restrictions were lifted.Get a Document . even though they occur prior to formal closing date when delivery and payment are formally completed and cleared. DC Mass) 644 F Supp 826. DC Md) 666 F Supp 755.--Fraud in connection with other event Trustee in securities fraud case may not recover for payments of obligations arising from substitution of coal lease lands. Co. because such post-transaction services are still merely ministerial. (1951.. & F. however. where supplier claims it lost money on capital investment for plant to produce more amino acid for manufacturer due to manufacturer's fraudulent representation of long-term supply relationship which was made to induce execution of 1-year supply contract and issuance of warrants allowing manufacturer to acquire 9. materiality and reliance are to be determined by situation and knowledge of parties at time they committed themselves. trustee's risk was not increased. and only misrepresentation "in connection with" sale or purchase of security occurred at time of original agreement. 97 S Ct 538. Co. even though SEC now asserts that company also advances and collects additional premium payments from investors to maintain in force policies on individuals who live longer than expected. 98. where broker's alleged misrepresentations prior to investor's decision to hire broker to invest money satisfy "in connection" requirement of 15 USCS § 78j(b). where widow points to defendant's representations that his firm was experienced in financial planning and offered personal attention and investment program tailored to her needs which would provide complete safety of principal and reasonable rate of return." SEC v Life Partners (1997. where plaintiff alleges (1) that he relied on insurance coverage representations made prior to any participation in program. cert den (1976) 429 US 1004. made prior to issuance of statements which allegedly omitted material information relating to corporation's business could not be "in connection with" purchase or sale of securities within meaning of rule. Ohashi v Verit Industries (1976. SD NY) 567 F Supp 942. where lender complains that seller misrepresented manner in which stock purchase transaction occurred by accepting $ 7 million promissory note from buyer/borrower in place of cash. SD NY) 751 F Supp 436. Natowitz v Mehlman (1983. 18 FR Serv 2d 488.D.A. (1990. Citibank. events occurring after commitment to purchase stock has been made are irrelevant and issues of nondisclosure. if contract is still executory when fraudulent activities occur. Genex Corp. CA1 Mass) 852 F2d 30. CCH Fed Secur L Rep P 99116. where company purchases life insurance policies from terminally ill and markets fractional interests in policies to investors. CCH Fed Secur L Rep P 95746. Connors v Lexington Ins. CCH Fed Secur L Rep P 90104. misrepresentation. CCH Fed Secur L Rep P 98819.

Sec.) (1996.--Purchase prior to misrepresentation Since recovery under SEC Rule 10b-5 is predicated upon successful showing that misrepresentations occurred in connection with purchase or sale of security. DC Puerto Rico) 778 F Supp 1234.Get a Document . Inc. CCH Fed Secur L Rep P 93290. since plaintiff in § 10(b) action failed to show precisely that he purchased stock after defendant's alleged misrepresentations. (1987. (1986. 99. CA2 NY) 822 F2d 14. Investor's claim of fraudulent misrepresentation cannot serve as basis for Rule 10b-5 violation where claim arises from representations allegedly made by defendant broker to induce investor initially to open account with defendant. SD NY) 328 F Supp 2d 450). SD NY) 624 F Supp 751. CCH Fed Secur L Rep P 94211. affd (1987.--Purchase prior to issuance of prospectus Stockholder's purchase of stock prior to issuance of prospectus alleged to be in violation of 15 USCS § 78j(b) was not in connection with alleged violation and recovery could not be had.. Laub v Faessel (1997. SD NY) 658 F Supp 222. where injury suffered was due to misappropriation of funds of limited partnership interests. CCH Fed Secur L Rep P 92301. because alleged fraud here was not "in connection with" intrinsic investment characteristic or investment quality of purchased securities but only related to advisor's background. CA2 NY) 325 F3d 141. Zuckerman v Harnischfeger Corp.V. Plaintiff in action under § 10(b) must demonstrate that he purchased or sold stock because he was misinformed or uninformed. claim against subsidiary. Plaintiffs who purchased stock prior to issuance of allegedly misleading financial statements certified by defendant accounting firm have no claim under 15 USCS § 78j(b) against accounting firm. "in connection with" requirement because estate's claim was not that they purchased half of limited partner's interest in reliance on another partner's alleged misrepresentations about partnership's future prospects.A. Investor's 15 USCS § 78j(b) claim against bogus advisor must fail. (U.by Citation . To satisfy purchase and sale requirement of 15 USCS § 78j. because losses were not incurred "in connection with" sale. (1980. HMCA (Carolina). CCH Fed Secur L Rep P 93110. since such misrepresentations will be deemed to have been made "in connection with the purchase or sale of a security "only if they precede establishment of "investment contract". did not relate to specific securities and cannot meet in "in connection with" requirement of § 78j. (2005. of New York.lexis. CCH Fed Secur L Rep P 96009. but rather in connection to later misappropriation which had nothing to do with sale. agreement entered into between investor and defendant did not constitute "investment contract" because investor agreed to open account on nondiscretionary basis only. CCH Fed Secur L Rep P 92361. CCH Fed Secur L Rep P 93298 and (superseded by statute as stated in United States Fire Ins. management and general investment advisory services were not "in connection with" any specific securities purchased by plaintiff. SD NY) 924 F Supp 488. Crummere v Smith Barney. In re Investors Funding Corp. SD NY) 591 F Supp 112.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 93115. CCH Fed Secur L Rep P 97721. Misrepresentations by corporation concerning tender offeror were not in connection with purchase or sale of securities where such misrepresentations concern matters postdating all of offeror's purchases of corporation's stock. Co.F. In re Van Der Moolen Holding N. SD NY) 405 F Supp 2d 388. SD NY) 523 F Supp 563.. even though advisor completely lied about his credentials. Securities fraud claim of bank stockholder must be dismissed for failure to meet "in connection with" requirement. he would have succeeded in preventing loss he in fact suffered. where those sections proscribe only fraudulent or manipulative acts or practices "in connection with" purchase or sale of security or tender offer. (1986. Allard v Arthur Andersen & Co. CA9 Or) 486 F2d 1029. Hospital's operator fails to state claim for securities fraud against health officials who allegedly induced it to take over financially troubled hospital with funds generated by amendment to contract for provision of services at other hospital. and that. SD NY) 748 F Supp 146. Cahill v Arthur Andersen & Co. 101. Inc. CCH Fed Secur L Rep P 93222. CCH Fed Secur L Rep P 95512.R.10b-5. Inc. Harris Upham & Co. Gulf Corp. to which certain misstatements were attributed and which knew or should have known investing public would rely upon them. thus. Former director of corporation fails to state claim against accounting firm for securities fraud under 15 USCS §§ 78j(b) and 78n(e). DC Del) 644 F Supp 733. § 240. v Soler-Zapata (1991. then claimed breach of amendment and cut off funding in attempt to take over both hospitals for themselves. 100. DC Del) 582 F Supp 1110. (1984. and. (1985. properly informed. because fraud alleged relates to intent to breach amendment to service contract and was not "in connection with" operator's purchase of shares of troubled hospital for purposes of 15 USCS § 78j(b). Litig. Real estate investors' claims that defendants failed to inform them of corporate activities occurring after investment are not viable claims under 15 USCS § 78j(b) since such acts could not have led plaintiffs to invest in corporation. (1976. 17 C. and there can be no connection where misstatement occurs after purchase. subsequent allegedly fraudulent activity of broker in convincing plaintiff to turn over proceeds of prior. 15 USCS § 78j(b). and § 78j(b) does not cover breach of fiduciary duty. (2004. Wolford v Equity Resources Corp. SD NY) 981 F Supp 870. McCoy v Goldberg (1990. and investor lost almost $ 30 million after seeking his advice. Citron v Rollins Environmental Services. Zaro v Mason (1987. Investors' 15 USCS § 78j(b) claim against parent company that failed to disclose its subsidiary's illegal proprietary trading was adequately stated. 88 of 158 3/8/11 4:25 PM . CCH Fed Secur L Rep P 91470.15 USCS § 78j https://www. so that state fraud action may be warranted but federal securities fraud cause of action is not warranted. CCH Fed Secur L Rep P 90122. SD Ohio) 424 F Supp 670. nonfraudulent sale. plaintiff failed to establish that his purchase of stock was "in connection with" defendants' alleged misstatements. and therefore such statements were not made "in connection with" the purchase or sale of any security. because director's only allegation of misrepresentation or omission involves firm's role in preparing "Preliminary Prospectus" published more than 2 years after sale of his stock in corporation. Cruse v Equitable Sec.--Purchase prior to disclosure of material information Partner's estate's actual purchase of half of additional partnership shares did not satisfy § 10(b) of Security and Exchange Act of 1934's.S. other partner's alleged misrepresentations then did not affect or touch actual purchase made by estate. there must be causal connection between misstatements or omissions and plaintiff's purchases or sale. Lawrence v Cohn (2003. where complaint alleges bank's public statements and periodic reports to shareholders and FDIC contained material misrepresentations and failed to disclose numerous bad lending practices and poor quality loans. Securities fraud claim of trustee for bankrupt automobile manufacturer against manufacturer's former auditors is denied summarily. v Mesa Petroleum Co. Raschio v Sinclair (1973. Class actions charging inflation of stock price through false and misleading statements brought against waste treatment plant and third-party defendant Secretary of Louisiana Department of Environmental Quality are dismissed against Secretary where no sale of stock occurred prior to date of alleged misrepresentations by Secretary. since his other purchases took place considerably after defendants' alleged misstatement. so that only investor would be authorized to purchase or sell securities. complaint did not state cause of action under Rule where only allegations directly involving defendant occurred more than 1 year after purchases forming basis of complaint. but where manufacturer received all proceeds from sale of interests. where bonds were cashed by brokerage firm in accordance with plaintiff's instructions and proceeds from sale were deposited in her bank account. SD NY) 678 F Supp 1023. but rather that it was fraudulently induced to forgo purchasing other half. CCH Fed Secur L Rep P 96546. as was SEC Rule 10b-5. CCH Fed Secur L Rep P 99094. v United Limousine Serv. SD NY) 659 F Supp 1115. CCH Fed Secur L Rep P 91450. since damages plaintiffs may have sustained can have no causal relationship to activities of accounting firm. (1984.

Morse v Weingarten (1991. Grace & Co. Ltd. and therefore no claim under 15 USCS § 78j has been stated. and allegedly fraudulent statements made 3 months later could not be connected with that purchase. SEC v Rocklage (2006. manipulative devices in sale of stock must relate to fraud on plaintiff. CA2 NY) 791 F2d 1024. 103. was committed after contract was entered into. Rich v Touche Ross & Co.. CA2 NY) 745 F2d 197. CCH Fed Secur L Rep P 96294 (criticized in In re Fine Host Corp. CD Cal) 551 F Supp 281. v Marine Midland Bank. Scheme by which. where exact availability date of proceeds was not "integral" to purchase or sale of Treasury bill. Pepsico. CA1 Mass) 470 F3d 1. Buyer of shares in jointly owned company created to develop new biomedical product did not violate its disclose-or-abstain duty under § 10(b) of Securities Exchange Act of 1934. Haft v Eastland Financial Corp. 98 L Ed 2d 275.by Citation . Smith Corp. 108 S Ct 316. 105 S Ct 2112 and (criticized in United States v Bryan (1995. lacks sufficient "connection with" shareholders' purchase of stock. in part (1989. CA5) 883 F2d 357 and reinstated.10B-5.lexis. CA5 Tex) 116 F3d 728). Press v Chemical Inv. CCH Fed Secur L Rep P 92742. mod (1989. CCH Fed Secur L Rep P 92549. are made "in connection with" purchase or sale of security. CCH Fed Secur L Rep P 96832. Jones & Co. and Rule 10b-5.Get a Document . Boyle v Merrimack Bancorp. Inc. 1989. if any. Where wife obtained inside information from wife's husband regarding publicly-traded company and informed brother. Vacold LLC v Cerami (2008. CCH Fed Secur L Rep P 91681. showing that stock was restricted and could not be alienated by transferee. CCH Fed Secur L Rep P 90334). SEC v Materia (1984. SEC adequately pled connection between misrepresentations and purchase or sale of security because false allegations enabling stock to be publicly traded were reasonably calculated to influence investing public and were. Misappropriation of confidential information regarding timing and content of certain newspaper columns was in connection with purchase or sale of securities where use of misappropriated information was for financial benefit of individuals who misappropriated information and to financial detriment of those investors with whom misappropriators traded since those who purchased or sold securities without misappropriated information would not have purchased or sold had they had the benefit of that information. (1969. (1989. CA5 La) 846 F2d 325. cert den (1985) 471 US 1053. Sec. SD NY) 920 F Supp 58. SD NY) 307 F Supp 713. CA2) 545 F3d 114. and because under SEC Rule 10b-5. Smith v Cooper/T. Ernst & Co. (2004. promoter's device was promotional and sales literature. Promoter's actions to defraud investors were in connection with offer and sale of securities where his clients invested money or securities with financial company he represented in order to obtain promised tax advantages. 12 Media L R 2169. notwithstanding that it was entered into subsequent to sale of leaseholds involved. Shareholders' claim against "junk bond chief" for primary violation of 15 USCS § 78j(b) fails. or would be. any fraud in bringing it about would be "in connection with" purchase or sale of securities.. 85 L Ed 2d 477. False allegations that enable stock to be publicly traded are reasonably calculated to influence investing public and. but fails to specify statements purchases were made in connection with while mentioning only statements made in September and October of 1987 and throughout 1988. 17 CFR § 204. 15 USCS § 78j(b). Corp. (1997. and that purchaser subsequently misrepresented that it was on verge of going out of business. Turnkey drilling contract between investors and drilling company was "in connection with" "offer or sale" for purposes of 15 USCS §§ 77q(a) and 78j(b). CCH Fed Secur L Rep P 99072. DC Conn) 25 F Supp 2d 61. whereas company conspired to find purchaser at better price and thereafter informed soft-drink manufacturer it would not accept offer. CCH Fed Secur L Rep P 99235. (2007. and that it could stay in business only through lowering of price of stock. DC Utah) 505 F Supp 2d 1193. to which sellers agreed. made in connection with purchase or sale of security. because alleged misrepresentations took place in 1988 and 1989 so that fraud could not have taken place "in connection with" investor's purchase of company stock as required under 15 USCS § 78j(b). (1988. CCH Fed Secur L Rep P 90150. 102. N. corporation which owned 53 percent of stock in beer-brewing company agreed to sell stock to soft-drink manufacturer. because defendants' omission of information regarding precise date on which investor could obtain his proceeds did not occur "in connection with" his purchase of security. that it could not sell assets to raise cash. (1996. CCH Fed Secur L Rep P 95792. (1976. CCH Fed Secur L Rep P 93423 (superseded by statute as stated in United States v Brumley (1997. Corp. where buyers claimed that agent engaged in scheme to defraud by issuing affirmations that funds were. SEC v C. investors' assets were commingled in common enterprise.A.. CCH Fed Secur L Rep P 98787).risk. (1998. 36 FR Serv 2d 262. DC RI) 772 F Supp 1315. or profits. Inc. DC Mass) 719 F Supp 35. affd (1987) 484 US 19. even if subsequent events and admissions revealed that real estate slowdown was already causing problems with commercial real estate loans when statements were made. hence. CA5) 1989 US App LEXIS 19530. Johnsen v Rogers (1982.com/research/retrieve?cc=&pushme=1&tmp. Misappropriation of information Misappropriation by financial printing firm's employee of information regarding targets of unannounced tender offers. SD NY) 988 F Supp 375.R. asset protection. high-yield junk bonds and cause some entities to invest in junk bonds of his other clients. because named plaintiff purchased corporation's stock on March 27. SEC v Merrill Scott & Assocs. since alleged fraud was "in connection with" purchase or sale of security as required for § 10(b) claim since original stock purchase agreement was clearly securities purchase. SD NY) 777 F Supp 312. because affirmations do not implicate "characteristics" or "attributes" of any particular security. CA5 La) 886 F2d 755. as alleged by soft-drink manufacturer. therefore. DC Colo) 312 F Supp 2d 1375. (1991. 1989 public statements dismissing concern about heavy emphasis on commercial real estate could not give rise to actionable securities fraud. 14 Media L R 1853. v W. DC Mass) 756 F Supp 55. 5 USPQ2d 1059. Securities fraud action by buyers of securities against bank that was seller's paying agent is dismissed.15 USCS § 78j https://www. remanded (1989. and new agreement dealing expressly with terms and price of stock transaction was also stock purchase agreement "in connection with" purchase or sale of securities. wife's deceptive acquisition of material inside information was "in connection with" securities transaction since wife deceptively obtained information as part of preexisting scheme to assist brother in sale of securities. 75 OGR 20. Financial corporation's June 8. Investor's 15 USCS § 78j(b) claim based on delivery of proceeds must fail. SD NY) 415 F Supp 95. Servs. Litig. which employee employs to his advantage by purchasing and reselling at substantial profit stock in targets. CCH Fed Secur L Rep P 93794. promoter's clients had reasonable expectation of profits to be derived solely from efforts of others. was not act which was in connection with alleged fraudulent act of transferee in providing such stock to lender as security for loan. eventually selling stock to cigarette company. creating artificially inflated market for his financial products. available to consummate seller's trades when in fact bank knew that funds were not available. CCH Fed Secur L Rep P 94748. because stockholder alleges purchase of shares at various unspecified dates between June and December 1987. United States v Carpenter (1986. where all representations or misleading omissions upon which shareholders allegedly relied were contained in statements issued by holding corporation. Konstantinakos v Federal Deposit Ins. where complaint ambiguously implies that investor acquired his stock during 1987 trade-in of bank stock. did not become material until after parties entered into their sales agreement. because buyer's failure to disclose its plans to sell stock to another company for substantially more than it paid seller. Bank holding company investor's securities fraud complaint is dismissed. CCH Fed Secur L Rep P 94336.--In particular circumstances Cause of action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 was stated by allegations that family members agreed to sell all stock in family business to purchaser on installment basis. CA4 W Va) 58 F3d 933. and there was direct and intended link between that literature and purchase and sale of securities. was not fraud "in connection with" purchase or sale of securities. because chief's role as mastermind of "Daisy Chain" by which he would both arrange financing for various entities with high. is "in connection with" employee's subsequent purchase of stock within meaning of 15 USCS § 78j(b). since fraud. where company owner hid fact that he controlled company in connection with having company stock publicly traded. (1991. 89 of 158 3/8/11 4:25 PM . Failure of transferor of stock to affix legend to certificate.

in including in magazine masthead that is materially misleading in incorrectly stating that feature articles are based on magazine's own research and first-hand interviews with experts. CCH Fed Secur L Rep P 91575. (1974. trust adequately alleged fraud under Private Securities Litigation Reform Act. (2). and that misrepresentations were material to investor's decision to buy or sell security. misstatements and omissions were also material to reasonable investor's decision to purchase stock. because (1) corporation does not owe duty with respect to debt securities. in connection with offer to issue notes in partial repayment of deposited funds in return for customers' agreement to withhold legal action. Securities and Exchange Commission need only show that documents were reasonably calculated to influence investors.10b-5 (Rule 10b-5) was reversed even though as matter of law board member misappropriated confidential information for securities trading purposes. 15 USCS § 78u-4(b)(1). A. SEC v Continental Commodities Corp. alleged misappropriation did not involve trading of corporation's stock and thus did not support purchasers' securities fraud claims.. CA5 Tex) 497 F2d 516. annual report. 9(b). 106. CA2 NY) 375 F2d 393.) (2009. 93 CDOS 8171. DC NJ) 66 F Supp 2d 593. press releases did not reference them and thus did not trigger presumption of reliance. SEC v Warner (1987. 105. corporate officer was liable for violating Securities Act § 17(a).lexis. SEC v Wall Street Pub. Institute. Where corporate officer learned of confidential information at "roundtable" of other corporate officers. SD NY) 547 F Supp 1286. did not violate 15 USCS § 78j(b) by deceiving seller as to value of securities for which it paid $ 52 million. Inc.. (2006. 90 of 158 3/8/11 4:25 PM . SEC v Talbot (2008. Although brokerage firm's transfer of options into account executive's personal account was not purchase or sale to or from customer. or if it may reasonably be expected that publicly disseminated document will cause reasonable investors to buy or sell securities in reliance thereon. "in connection with" requirement of § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 is generally met by proof of means of dissemination and materiality of misrepresentation or omission. because genuine issue of fact existed as to materiality of information on which board member traded. where complaint alleges savings and loan association's fraudulent failure to disclose material facts and issuance of material statements regarding its dealings with third party affected trading of association's stock on open market. 15 USCS § 78j(b) and 17 CFR § 240. like all periodic financial reports filed with Securities and Exchange Commission. Life insurance company. Grant of summary judgment in favor of board member in Securities and Exchange Commission's action alleging misappropriation in violation of § 10b of Securities Exchange Act of 1934. Salovaara v Jackson Nat'l Life Ins. CA10 Utah) 539 F3d 1249. Moreover. Payment for securities ordered Complaint by stockbroker against investors alleging fraudulent failure to pay for securities they had ordered stated cause of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CA9 Cal) 530 F3d 1085. and that that element of § 17(a) (15 USCS § 77q(a)) of Securities Act of 1933 was satisfied. 15 USCS § 78j(b). 10 FR Serv 2d 101. ND Ill) 429 F Supp 2d 960. it could have fairly been said that misstatements or omissions in case occurred "in offer or sale" of securities. 15 USCS § 77q(a) and Securities Exchange Act § 10(b). P. T. buyer of corporate debt securities. brokerage firm's execution of trades on executive's behalf was integral facet of purchase of options and "in connection" with purchase or sale of security. but § 77q's narrower requirement that fraud be in offer or sale of any securities is not met by SEC's allegations. Misrepresentations of SEC actions "In connection with" requirement was met where commodities broker misrepresented available funds at time customers invested in options. CCH Fed Secur L Rep P 93169. were plainly designed to reach investors. 10 Media L R 2145. CA1 Mass) 470 F3d 1. Takara Trust v Molex Inc. F.Get a Document . Co. because § 78j's requirement that fraud be "in connection with" purchase or sale of security is satisfied since it may reasonably be expected that publicly disseminated document will cause reasonable investors to buy or sell securities in reliance thereon.by Citation . SEC sufficiently states claim for fraud under 15 USCS § 78j. investment prospectus or other such document on which investor would presumably rely. CCH Fed Secur L Rep P 94825. "In connection with" requirement may be satisfied even when act of misappropriation in breach of duty and act of trading do not coincide. and subsequently. CCH Fed Secur L Rep P 98811. SEC v Wolfson (2008. Unpublished Opinions Unpublished: Though oral or written statement was not precondition to liability under 15 USCS § 78j(b). 93 Daily Journal DAR 13903. CA10 Utah) 539 F3d 1249. occurs "in connection with" purchase or sale of security within meaning of 15 USCS § 78j(b)." hus. and (2) buyer did not owe duty to seller under misappropriation theory since seller was not source of information regarding securities and there was no fiduciary relationship. and quickly sold some stock based on that information. CCH Fed Secur L Rep P 94724. SD NY) 423 F Supp 2d 229. since thrust of magazine is to encourage readers to buy securities. ND Ill) 263 F Supp 2d 1144. (1999. annual report. Loran Group v Peregrine Sys. Publicly disseminated information Where fraud alleged involves public dissemination in document such as press release. investment prospectus or other such document on which investor would presumably rely. where options were ordered by executive without necessary funds to cover purchase. SD Fla) 652 F Supp 647. Hutton & Co. and thus. (1984. Alleged misrepresentations and omissions contained within annual commission filing and quarterly filing filed by company were statements made "in connection with" purchase or sale of securities under § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 since those documents. DC Dist Col) 591 F Supp 1070. but not under 15 USCS § 77q. (2006. v Perlow (1967. CA9 Cal) 2009 US App LEXIS 1660. United States SEC v Kirch (2003. (In re Peregrine Sys. 104. E. Where fraud alleged involved public dissemination in document such as press release. in breach of duty he owed to source of information. SEC v Rocklage (2006. his disclosure of nonpublic information under express confidentiality constraints called for application of "misappropriation theory. "in connection with" requirement is generally met by proof of means of dissemination and materiality of misrepresentation or omission. v Penham (1982. Civ. and Fed. SEC v Wolfson (2008. Where trust claimed that company and its officers and directors made false or misleading statements or omissions in conjunction with manipulation of their financial statements by various means in order to make company's earnings appear larger than they actually were.15 USCS § 78j https://www. as constituting fraudulent scheme in connection with purchase or sale of securities. Where purchasers of stock in corporation alleged that controlling stockholder of corporation misappropriated corporation's proprietary technology for Internet access through cable television lines in order to provide its own service. CCH Fed Secur L Rep P 93860. CCH Fed Secur L Rep P 94825. CCH Fed Secur L Rep P 94765. SEC v Rana Research (1993. CA9 Cal) 8 F3d 1358. Brod & Co. parking transactions did not form basis for liability because investors did not have knowledge of deceptive acts. 11 Fed Rules Evid Serv 1345. conduct violates "in connection with" requirement if conduct touches purchase or sale of securities.com/research/retrieve?cc=&pushme=1&tmp. Leykin v AT&T Corp. 15 USCS § 78j(b). CCH Fed Secur L Rep P 97815. Conduct of publisher of monthly magazine offering investment advice. R. fraudulently represented that SEC had frozen large portion of its assets and had approved remuneration plan. as they concerned manner in which funds provided would be distributed.

H. agreed that. and were no more than bailments. Inc. SD NY) 507 F Supp 1225. v Oppenheim. CCH Fed Secur L Rep P 94548. (1973. v Echocath. Misrepresentation or omission that induces "mere retention" of discretionary brokerage account cannot form basis of claim under SEC Rule 10b-5. (In re R. cause of action was not stated where officers of corporation alleged that they retained stock of corporation in reliance on banks' misrepresentations that they would not call loans and that they would lend additional money to corporation. CCH Fed Secur L Rep P 95907. Ingenito v Bermec Corp. CA2 NY) 825 F2d 671. but revealed at year's end that revenue decline and earnings shortfall were due to wafer contamination of 1 Mbit chips. Limited partners of investment partnership who alleged that general partners defrauded them through entering into unlawful transactions on behalf of partnership bringing about insolvency and dissolution of partnership. Inc. Feldman v Hanley (1973. did not state cause of action based on general partners' alleged violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) because although disposition of partnership assets were sales of securities under Act. and thereby could have obtained stock for less money. SD NY) 252 F Supp 215. even if recovery can be had by "frustrated seller" who is fraudulently induced to retain securities and later sells at loss. CCH Fed Secur L Rep P 94739. Stirling v Chemical Bank (1974. Refusal to deal in stock matters Newspaper's refusal to publish tombstone advertisements relating to contemplated public offering of securities is not fraud. EP Medsystems. (2004. SD NY) 173 BR 301) and (superseded by statute as stated in In re Paine Webber Short Term United States Gov't Income Fund Sec. Savino v E. CCH Fed Secur L Rep P 97905. ND Cal) 30 F Supp 2d 1209. 3 EBC 1142. Stockwell v Reynolds & Co. SD NY) 381 F Supp 260. CCH Fed Secur L Rep P 93913. 3 Media L R 1784. through misrepresentations. in selling securities to plaintiff. Hockey v Medhekar (1998. Inc. corporation represented to public that it became aware of problems in its foundries. First Federal Sav. Plan of Crane Co. CCH Fed Secur L Rep P 94810. is conduct in connection with purchase or sale of security under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). & Loan Asso. acts complained of must be in connection with purchase or sale of securities rather than their mere holding or retention. 48 FR Serv 3d 540. (1981. (1965. also director of corporation. Ruskay v Levin (1977. CCH Fed Secur L Rep P 94405. Horwath & Horwath (1974. Travis v Anthes Imperial.) (1994. cause of action under section was stated where it was alleged that stockbroker. as soon as or soon after problems occurred. Transfers of government securities that were merely deposited with dealer did not establish purchase or sale by investors for purposes of standing to bring securities fraud action against dealer's accountant. he does so at loss. mere retention of securities and deferred sales so not satisfy requirement that fraud be in connection with sale or purchase of securities in order to be actionable under § 10(b). Macy & Co. with result that when he finally sells. (1981. but was prevented from doing so by reason of conflict of interest on part of board of directors. upon plaintiff's timely request. (1998. and later told analysts and others that it was not encountering any production problems.com/research/retrieve?cc=&pushme=1&tmp. CA8 Mo) 473 F2d 515. via on-line information system. Dixon & Co. 2 Media L R 1666. plaintiff did not qualify as seller under that theory because at time he requested registration he had decided only to sell at some undetermined future time. Retention or non-purchase of securities due to fraud Considering purposes underlying § 10(b) Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. and retention of securities by dealer did not constitute purchase or sale. (1974. revd. (1974. Express Travel Related Servs. CA5 Tex) 489 F2d 579. for action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 91495). plaintiffs not having purchased or sold securities by reason of alleged fraud. v Charter Co.H. because only exception to rule that mere retention does not amount to purchase or sale is where plaintiff signifies to defendant present intention to sell shares and is specifically induced by defendant's fraudulent scheme to retain shares. but where defendant failed to honor request to include plaintiff's securities in registration "for the shelf" (to be publicly sold at some indefinite future time) with result that plaintiff later sold at price below that at which securities could have been sold had they been registered. CCH Fed Secur L Rep P 93718.) (2001. Securities fraud complaint of major investor in developer of line of health products for women is dismissed. DC NJ) 30 F Supp 2d 726. is not actionable under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Litig. remanded (2000. (1981. persuaded shareholders of corporation not to dispose of shares of corporation's stock through representations that corporation's earning would soon materially increase and prices of shares would rise and where corporation subsequently became insolvent. SD NY) 376 F Supp 1154. Hutton & Co. Inc.15 USCS § 78j https://www. ED Va) 508 F Supp 1303. affd without op (1977. since misrepresentation or omission does not induce purchase or sale of security. through false or misleading representations. general partners having allegedly persuaded limited partners.by Citation .. cert den (1974) 419 US 873. CA3 NJ) 235 F3d 865. even if oral representations made during tour of facility were misleading and unrealistically positive. Shareholders state viable securities fraud class-action claim against semiconductor corporation.Get a Document . CCH Fed Secur L Rep P 97850 (criticized in Rieger v Drabinsky (In re Livent. (1975. alleged fraud was not in connection with such sales. Noteholders Sec.lexis. Person v New York Post Corp. 32 FR Serv 2d 1266) and (superseded by statute as stated in Labuguen v Carlin (1986. SD NY) 382 F Supp 1146. To fall within scope of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 5 FR Serv 3d 174) and (ovrld in part by Campos v Le Fevre (1987. Purchase or sale requirement for civil action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) was not met where defendant. 95 S Ct 134. where they have properly pleaded that statements relating to 1 Mbit SRAM production were false and misleading when made. Allegations that corporation could have purchased stock at earlier date than that of actual purchase. ED NY) 427 F Supp 1297. (1986. because. F. which are to protect investors from fraud. it follows that seller is injured as much when he suffers loss on sale of securities which he has been fraudulently induced to retain as when he is fraudulently induced to sell them. (1977. CA2 NY) 573 F2d 1294. 42 L Ed 2d 113. where warnings and cautionary statements in several corporate documents served to negate any potentially misleading aspect of alleged misrepresentations. Smallwood v Pearl Brewing Co. SD NY) 406 F Supp 749. SD NY) 425 F Supp 1264. Appel. CA2 NY) 511 F2d 1030. CCH Fed Secur L Rep P 95842. that fraud be in connection with sale or purchase of securities. Refusal of employee of broker-dealer to sell plaintiffs' shares of stock upon their direction is not fraud in connection with purchase or sale of security which would be actionable under 15 USCS § 78j(b). CCH Fed Secur L Rep P 95295. 8 FR Serv 3d 642) and (superseded by statute as stated in Sellitti v R. Co. indeed speculative. In order to constitute violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA1 Mass) 663 F2d 348. fraud alleged must be in connection with purchase or sale of security. SD NY) 629 F Supp 427.. investment. Fraudulently inducing investor. 19 FR Serv 2d 1450 (superseded by statute as stated in Wyzik v Employee Ben. SD NY) 59 FRD 299. not engaging in securities transaction due to deceptive conduct does not satisfy statutory requirement that deception occur "in connection with purchase or sale of any security". throughout 1995. Litig. 107. Inc. Macy & Co. Krekstein. not to dispose of their partnership interests at earlier dates. SD NY) 151 F Supp 2d 371. Haynes v Anderson & Strudwick. Allegation that plaintiffs retained stock in corporation because of fraud of defendants did not satisfy requirement. CCH 91 of 158 3/8/11 4:25 PM . WD Wash) 351 F Supp 2d 1077). and fixed intention to sell is critical to recovery under that theory. Ltd. in connection with purchase or sale of securities so as to have refusal fall within scope of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CCH Fed Secur L Rep P 90290. (1995. SD NY) 1995 US Dist LEXIS 12029) and affd (1975. upon issuer. CA2 NY) 516 F2d 1396 and (criticized in Dreiling v Am. Madison Fund. because corporation clearly and precisely cautioned that it represented exceptionally risky. app dismd (1975. CA7 Ill) 792 F2d 708. not to sell securities. Bolger v Laventhol. Violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 was not stated where it was alleged that plaintiffs held securities in reliance upon misrepresentations. defendant would include those securities in any registration subsequently filed by defendant for securities of same class. 108. 1977-1 CCH Trade Cases P 61318. but misrepresentations and omissions which induce investment of additional funds in accounts does constitute purchase of security to extent of amount of funds invested.

Investors' claims that foreign bank was liable for losses they suffered because bank foreign bank acquired. Miscellaneous Link between sale of securities and opening of commodities account was too tenuous to satisfy "in connection with" requirement of Rule 10b-5 where investor alleged broker fraudulently induced him to liquidate stock portfolio in order to invest funds in commodities discretionary account. & Co. DC Conn) 857 F Supp 1011. including particular press release. 98 Cal Rptr 2d 530. 15 USCS §§ 78j(b). (1986. Quaak v Dexia. SEC produced no direct evidence of cherry picking and failed to establish that trends or "patterns" in firm's trading established inference of cherry picking. moreover. Schemes to increase value of stock Individual who allegedly provided misleading information regarding corporation to credit agency whose report was basis of purchase of securities from corporation by state agency is potentially liable under antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 since alleged deceptive practice was in connection with securities sale. 78t(a). Hutton & Co.. (1968. CCH Fed Secur L Rep P 92149. Butler Aviation International. SEC v Coffey (1974. in light of which stockholders' complaint failed to demonstrate how or why contents of executed GSA would have significantly altered "total mix" of information that was made available to reasonable investors. with enough specificity to survive motion to dismiss. (1996. CA2 NY) 101 F3d 1450. and. 1st Dist) 82 Cal App 4th 741. that 92 of 158 3/8/11 4:25 PM . 78t(a). CA6 Ohio) 493 F2d 1304. ED Mo) 438 F Supp 803. where they did not show that alleged concealed "Repayment Agreement" existed and public disclosures. where major shareholders allege they were affirmatively misled as to future prospects of surgical supply corporation. by "cherry picking" profitable securities for itself that were originally intended for clients. S. Federal claims for fraudulent inducement to retain shares shall be dismissed. 17 CFR § 240. Unpublished Opinions Unpublished: Stockholders' complaint alleging violations of Securities and Exchange Act of 1934. CCH Fed Secur L Rep P 95611. CCH Fed Secur L Rep P 98435.10b-5. Gordon. affd without op (1994. 115 S Ct 667 and (criticized in Greenfield v Fritz Companies. relating to software program essential to business contemplated to be conducted by issuer. DC RI) 334 F Supp 2d 144. CA2) 424 F2d 63. CA5 Tex) 569 F2d 1155 and vacated on other grounds (1979) 444 US 959. (2000.F. CA8 Mo) 578 F2d 1273. and securities company that was owned by bank that was acquired. 109. CA2 NY) 789 F2d 105.A. CCH Fed Secur L Rep P 94702. where Filipino investors gave hundreds of thousands of dollars to "off-shore" companies through which tax-free investments in American securities would allegedly be made on their behalf. not purchasers or sellers. Inc. 130 L Ed 2d 601.R.by Citation . and Securities Act of 1933. 42 L Ed 2d 837. (1969. were "in connection with" sale of security. 100 S Ct 442 and (criticized in Bennett v Pippin (1996. CA2 Conn) 33 F3d 50. CCH Fed Secur L Rep P 99367) and (criticized in SEC v Buntrock (2004. DC Mass) 445 F Supp 2d 130. Claims against trustees of profit sharing trust that trustees violated § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 by failing to disclose scheme to support and maintain price of corporate stock at artificially high level fails to state nondisclosure claim where board of trustees had full power and authority to invest in any stock subject to right of holders of 51 percent of outstanding shares to object in writing and where failure to disclose material information was simply not "in connection with" any purchase or sale of security. v North American Research & Development Corp. to increase market price of shares. CCH Fed Secur L Rep P 96311. 110. CCH Fed Secur L Rep P 92706. Wilson v First Houston Inv. CCH Fed Secur L Rep P 92557. court also found that investors alleged violations of 15 USCS §§ 78j(b). 17 C.Get a Document . ND Ill) CCH Fed Secur L Rep P 92833). who were essential participants in distribution of corporation's stock. 95 S Ct 826 and (criticized in SEC v First Jersey Sec. Tex App Houston (14th Dist)) 2004 Tex App LEXIS 182). by preponderance of evidence that investment firm violated § 17(a) (15 USCS § 77q(a)) of Securities Act of 1933. § 240. (1994. 111. Corp. SD NY) 718 F Supp 217. CA2 Conn) 31 F3d 66 and cert den (1994) 513 US 1058. that issuing corporation threatened to terminate officer-director's benefits unless he agreed to sell his stock. Alleged fraud in purchase of stock of issuing corporation from former officer and director of corporation and his wife following his termination from corporation could not be considered "in connection with purchase or sale of stock" as required for cause of action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder where alleged fraud included nondisclosure that issuing corporation had entered into agreement with another corporation that they would merge if their merger was eventually made legal by change in law. Misleading statement related to corporation's earnings released to public through press release for purpose of inflating market price of corporate stock so as to enable corporation successfully to consummate acquisition of another corporation by exchange of stock was fraudulent manipulative device with purpose of causing investors to purchase corporation's securities and therefore was in connection with purchase and sale of securities under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). were not misleading. SEC v Slocum. 62 L Ed 2d 371. revd on other grounds (1978. Transfer of custodial control Any purchase and sale which took place incident to transfer of control over stock portfolio from investor to investment adviser was too remote to satisfy "in connection with the purchase and sale" requirement of SEC Rule 10b-5. CA5 Tex) 566 F2d 1235. 15 USCS §§ 77k.. Inc. 17 C. Crofoot v Sperry Rand Corp. SEC failed to meet burden of proof in establishing..15 USCS § 78j https://www.19b-5.R. § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934. issued "buy" recommendation on stock issued by company that was in financial difficulty to inflate price of stock while they were dealing in stock related back to claims investors made in earlier complaints. SD NY) 280 F Supp 106. § 240. 15 USCS § 78u-4(b)(3)(A). CA2 NY) 425 F2d 842. 2000 CDOS 6342. 24 FR Serv 2d 1026. Inc. cert den (1975) 420 US 908. CA9 Cal) 2006 US App LEXIS 13345. (1978. which was vaguely optimistic. and Rule 10b-5. SD NY) 307 F Supp 910.F. because alleged fraud occurred "in connection with" purchase or sale of security since setting up of securities trading account was at heart of scheme. CCH Fed Secur L Rep P 96232. reported in full (1994.lexis. Chanoff v United States Surgical Corp. reh den (1978. 771(a)(2). affd in part and vacated in part on other grounds (1970. ED Cal) 408 F Supp 1154. because plaintiffs are merely holders of shares. (2006. that issuing corporation lied to officer-director about purpose of meeting at which company sought his resignation. Investors state valid 15 USCS § 78j(b) claim against numerous participants in securities fraud scheme. in connection therewith. Blackmar v Lichtenstein (1977. Securities & Exchange Com. 34 FR Serv 3d 296). and 78t-1(a). Fed Secur L Rep P 92505. 2000 Daily Journal DAR 8353) and (criticized in Shirvanian v Defrates (2004. Saxe v E. CCH Fed Secur L Rep P 94464. CCH Fed Secur L Rep P 92620.10b-5. allegedly containing misrepresentations and omissions of material fact. (2004. Securities and Exchange Commission filings made significant disclosures. "In connection with" requirement was satisfied where defendant computer corporation provided issuer with proposal. Young v Dreisbach (2006. was properly dismissed for failure to state claim under heightened pleadings requirements of Private Securities Litigation Reform Act of 1995. CCH Fed Secur L Rep P 92543. Inc. and are not entitled to private cause of action under 15 USCS § 78j(b). False and misleading statements issued by corporate officers and directors. and they were not barred by five-year statute of limitations contained in 28 USCS § 1658(a)(2).F. v Comprehensive Designers. CA5 Tex) 74 F3d 578. (1976. Perez-Rubio v Wyckoff (1989. which were motivated by intent to effectuate successful distribution. affd (1970. and SEC Rule 10b-5. and where computer corporation knew that compensation for its services would come from money generated by public offering of customer's stock which public offering necessarily would be made in reliance on false information supplied by computer corporation.com/research/retrieve?cc=&pushme=1&tmp.

CCH Fed Secur L Rep 93550. SD Ga) 229 FRD 245. Gurwara v LyphoMed. Secs. to be more consistent with provisions of 15 USCS § 78j(b) and SEC Rule 10b-5.S. that is. which included offsetting gains in loss calculation. unrelated to value of involved security or consideration offered for it. 15 USCS § 78j(b). WD Wash) 631 F Supp 1339. (2007. Life Ins. directly causing financial injury to foreign plaintiffs. if proven.S. ND Okla) 2005 US Dist LEXIS 38754. Protection of Rule 10b-5 could not be invoked. defendant real estate developers did not exercise sufficient control of limited partnership to disqualify their units as securities. corporation's investment in LP would have succeeded or failed based not just on entrepreneurial or managerial efforts of others. company was able to maintain artificially inflated share prices and fund ambitious acquisition campaign in part by improperly recognizing income from vendor allowances in its U. misrepresentations that were made to induce buyer to invest in corporation or to delay his claim for return of his investment. since misrepresentation in case. CCH Fed Secur L Rep P 95328. In re Avista Corp. Generally In view of fact that 15 USCS § 78c(a) prefaces lists of general definitions with phrase "unless context otherwise requires". (2005. did not occur "in connection with" purchase of security. and that issuing corporation knew but did not disclose that member of its board had expressed interest in purchasing stock."Purchase or Sale" 112. DC Mass) 233 FRD 52. Cooper v Pac. to contrary. therefore. but there was no direct connection between alleged misrepresentations and purchase of stock in company to which misrepresentations were made. 3. such general definitions are for most part unhelpful and court must ask whether conduct in question is type of fraudulent 93 of 158 3/8/11 4:25 PM . 103 L Ed 2d 837. Unpublished Opinions Unpublished: Attorney and telephone solicitor were properly granted summary judgment on buyer's Racketeer Influenced and Corrupt Organizations Act claims because they were based on conduct that was alleged to have occurred in connection with purchase or sale of any security.C. court could not say that issuer had no responsibility for suitability determinations as matter of law. SD NY) 48 F Supp 2d 326. DC Md) 351 F Supp 2d 334. because party was not defrauded as result of deceptive practices touching sale of securities. CA7 Ill) 937 F2d 380. based upon statements made by defendants. affd. company share price trading on foreign exchanges lost 63 percent of its value. CCH Fed Secur L Rep P 96169. CCH Fed Secur L Rep P 90458.Get a Document . or were matters that law did not require disclosed. had become aware prior to sale. based subsidiaries substantially contributed to and was material to company's success in attracting shareholders both in U. Sec. CA4 SC) 857 F2d 240.S. (2009. other corporation's broker misrepresented identity of his principal until officer-director committed to particular sales price. SD Ga) 2005 US Dist LEXIS 16465. Former officer's cause of action under 15 USCS §§ 78j and 78t and Rule 10b-5. as he claimed role in everyday management. 17 CFR § 240. Supreme Court decision in Dura Pharmaceuticals required investors to specifically plead that alleged misrepresentations made by defendants directly caused reduced value in stock. CA9 Cal) 2007 US App LEXIS 29896. Keith v Black Diamond Advisors. Inc. and in particular to adequacy and typicality of proposed class representative that it alleged had suffered no economic loss because net effect of representative's convertible arbitrage was that it earned gain on its class period transactions in defendant's securities..S. Corp. (2006. when company made its first restatement of $ 500 million because of U.E. and any alleged misrepresentations were not reasonably calculated to influence investing public. Where investors alleged that sellers of annuities failed to inform them of usefulness of tax shelter aspect of annuities within qualified plan. failed. 17 CFR § 240. thus. it clearly concerned value of security and statements were made "in connection" with sale of variable annuity. CCH Fed Secur L Rep P 92735. which allowed claims for unprofitable transactions without offsetting that recoverable loss with gains from profitable transactions. ND Okla) 415 F Supp 2d 1240. operations. (2005.10b-5. was dismissed when officer alleged that she had decided to postpone exercise of her stock options while predecessor company was merging with successor company. reconsideration den (2005. LLC v KPMG. 109 S Ct 1532." Affco Invs. Unpublished: Investors penalized by IRS for participating in abusive tax shelter failed to plead claim under 15 USCS § 78j(b) against limited liability company for telling them they were not required to report their participation because after-the-fact representations were not made "in connection with purchase or sale of securities. Jabend.S. where company charged with securities violations allegedly made misrepresentations in sale of computer equipment.lexis.by Citation . consequently. (2004. (2008. (1991.S. request den (2005. (1999. ED Wash) 415 F Supp 2d 1214. Plaintiff limited partnership's (LP) sale of limited partnership units to defendant corporation was not sale of securities under federal securities laws. but also on those of its owners. Inc. Life Ins. (1986. Cooper v Pac. In action brought against employer to remedy company's wrongful refusal to sell plaintiff employee its stock as guaranteed by his employment benefits package. Plaintiff shareholders' allegations sufficiently demonstrated that defendant company's conduct within U. Taylor v First Union Corp. in order to state claim under 15 USCS §§ 78j(b) and 78t(a) and Rule 10b-5. & ERISA Litig. SD Ga) 229 FRD 245. based conduct by company defendants to justify asserting subject matter jurisdiction over securities fraud claims of foreign purchasers. cert den (1989) 489 US 1080. and abroad and according to shareholders. Trust v Republic Props. where member had more than investment interest in company.. 17 CFR § 240. shareholders adequately demonstrated sufficient U. request den (2005. In rejecting defendant's challenge to motion for class certification in securities case involving allegedly misleading statements. v Four-Phase Systems.C. Co. and that value of stock options declined dramatically. could show that defendants provided false or misleading information to their auto-trading subscribers upon which reasonable investors would have relied in purchase or sale of securities. and defendants were not entitled to dismissal of claim.E. Inc. Order dismissing plaintiffs' claims Securities Exchange Act of 1934 and S.com/research/retrieve?cc=&pushme=1&tmp. Trust v Republic Props. so LP's claim under § 10(b) of Securities and Exchange Act. Defendants' motion for reconsideration was granted because intervening U. Lowery v Blue Steel Releasing. Rule 10b-5. Republic Prop. who was sophisticated investor. Liberty Prop.. sellers could be liable under 15 USCS § 78j(b) for failure to make adequate tax shelter disclosure within prospectus. Corp. SD Tex) CCH Fed Secur L Rep P 95510. claim is not stated under § 78j and Rule 10b-5. Inc. since these matters either did not relate to purchase and sale of stock. Litig. Where complaint against them alleged facts that. LLP (2009. App DC) 577 F3d 335. while statutory definitions indicate breadth of terms "purchase" and "sale" by using definitional word "include" in 15 USCS § 78c(a)(13) and (14) and by including within definitions contracts "to buy. court must address itself to meaning of words "purchase or sale" in context of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). court disagreed with defendant's suggested cumulative methodology. or concerned matters of which officer-director.10b-5. purchase or otherwise acquire" and "to sell or otherwise dispose of" securities. Membership interest in limited liability company was not "investment contract" and thus was not "security" for purposes of securities fraud action under 15 USCS § 78j(b) and Rule 10b-5.10b-5. documented accounting fraud related to overstatement of vendor allowances by company's U. based vendor allowance accounting fraud. CCH Fed Secur L Rep P 94021. In re Royal Ahold N.V. Inc.15 USCS § 78j https://www. or engage in suitability oversight could constitute securities fraud under 15 USCS § 78j(b). because former officer had never actually purchased or sold securities as required for action under Securities Exchange Act. CCH Fed Secur L Rep P 93061. McKissick v Gemstar-TV Guide Int'l (2005. SEC v Terry's Tips. complaint alleged facts that would support "in connection with" element of § 10(b) of Securities Exchange Act of 1934. (1988. SD Ga) 2005 US Dist LEXIS 16465. where purchasers of annuities presented evidence that issuer had superior knowledge regarding economic value of death benefit for annuities and where they presented some evidence that issuers actually increased difficulty of suitability determination by issuing misleading prospectus.S. (2005. court found transaction-based methodology. Rule 10b-5 claims was reversed and remanded because limited partnership units they sold were securities within meaning of Act. was more than "merely preparatory" to alleged securities fraud associated with overseas purchase of company's shares by foreign plaintiffs. Variable annuity issuer's failure to undertake suitability reviews. and S. In re Sepracor Inc. 15 USCS § 78j(b). DC Vt) 409 F Supp 2d 526. Co. DC Dist Col) 540 F Supp 2d 144. Inc. (2005. moreover.

CA5 Ga) 446 F2d 303. Pelletier v Stuart-James Co. 19 L Ed 2d 470. MD Fla) 664 F Supp 1426. 92 S Ct 165. 19 L Ed 2d 460. CCH Fed Secur L Rep P 92294. CA7 Ill) 933 F2d 603. (1991. 28 FLW D 1863). Berk v Maryland Publick Banks (1998. WD Tenn) 105 F Supp 2d 848) and (criticized in Uwaydah v Van Wert County Hosp. cert den (1981) 454 US 835. 92 S Ct 109. John v Blackstock (1987. Purchase under SEC Rule 10b-5 can occur whenever purchaser takes action that "represents a new decision by him to invest. DC Minn) 688 F Supp 1357. 21 L Ed 2d 668. (1988. CCH Fed Secur L Rep P 93414. but purpose is evidently to make control of securities transactions reasonably complete and effective to accomplish purposes of such legislation.Get a Document . any right to securities fraud being personal to decedent. 89 S Ct 564. DC Mass) 194 F Supp 2d 6. Inc. plaintiff has not alleged recognizable "purchase" or "sale" of securities so as to invoke Rule 10b-5 jurisdiction where "forced seller" theory is nowhere alleged. (1971) 404 US 6. emphasizing breadth of definition. SD NY) 1997 US Dist LEXIS 12975) and (criticized in Isquith v Caremark Int'l (1998. 2002-1 CCH Trade Cases P 73625). CCH Fed Secur L Rep P 93936. Superintendent of Ins. In determining whether certain transactions involved purchase or sale within meaning of antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CCH Fed Secur L Rep P 92406 (criticized in Southern Sys. Corporation is denied summary dismissal of shareholder's 15 USCS § 78j(b) claim. (1978. 89 S Ct 1188.. Ltd. even if there is no performance: there is genuine issue of material fact as to whether alleged oral agreement to purchase stock falls within Statute of Frauds. Rush v Oppenheimer & Co. DC NH) 630 F Supp 1115. SD NY) CCH Fed Secur L Rep P 90640) and (criticized in Howe v Bank for Int'l Settlements (2002. CCH Fed Secur L Rep P 96033. 94 of 158 3/8/11 4:25 PM . CA7 Ill) 380 F2d 262. Hendrickson v Westland Mineral Corp. (1984. SD NY) 596 F Supp 1529 and revd on other grounds (1985. Plaintiffs cannot rely on breach of implied contract to sell stock to give them status as "purchasers" of securities under 15 USCS § 78j(b) where they never entered contract. v Torrid Oven. (2002. Purchaser-seller requirement under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 does not demand sale in strict common-law traditional sense since definitions in 15 USCS § 78c(a)(13) and (14) encourage liberal construction. Airline employees whose unions negotiated wage concessions in return for participation in employee stock ownership plans (ESOPs) have no federal securities fraud cause of action against airline and its management for "promoting the out of" certain benefits derivable from ESOPs. and one could not maintain action for fraudulent refusal to perform contract for sale of securities where there existed no enforceable contract for sale because of failure to comply with state statute of frauds provision requiring writing. 83 L Ed 2d 54. ND Ill) CCH Fed Secur L Rep P 92575. CCH Fed Secur L Rep P 97841. ND Ill) 664 F Supp 343. Fla App D2) 851 So 2d 853. In action alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). 105 S Ct 110. CCH Fed Secur L Rep P 93116. CCH Fed Secur L Rep P 91764. (1986.lexis. dismd (1970. CCH Fed Secur L Rep P 91639. 7 UCCRS2d 1607. CCH Fed Secur L Rep P 99224. CA2 NY) 727 F2d 257. and therefore corporate mismanagement and deception failed to state claim under Rule 10b-5 because alleged deceptive corporate mismanagement did not involve purchase or sale of security. 4 ALR Fed 1037. § 10(b) bars use of deceptive devices and contrivances by stockholder with regard to purchase or sale of securities by corporation. because misrepresentations were not "in connection with purchase or sale of securities. One bringing action under § 10(b) and SEC Rule 10b-5 must show that fraudulent conduct touched purchase or sale of securities. Bonds were not "purchased" where received by inheritance. Inc." and allegation of making deposit of funds to open discretionary securities accounts constitutes sufficient allegation of purchase of investment contract. even though there is no precedent for donor qualifying for protection under § 78j(b). (1981. cert den (1967) 389 US 970.V. v Saldukas (2003. McGrath v Zenith Radio Corp. 88 S Ct 480. Geeting v Prizant (1987.. (1989. on reh (1984.by Citation . (1970. because "purchase or sale" of "securities" is essential element of cause of action and plaintiffs' participation in ESOPs at issue does not meet either of those requirements. Mader v Armel (1968. 10 FR Serv 2d 1549. In determining whether certain transaction constitutes sale within meaning of antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). v Bankers Life & Casualty Co. CA7 Ill) 651 F2d 458. (1969) 393 US 453. Stock issuers' summary judgment motion is denied. (2000. Coffee v Permian Corp. Reprosystem. CA7 Ill) 136 F3d 531. CCH Fed Secur L Rep P 92710. and fact that creditors of corporate buyer or seller of securities may be ultimate victims. (1967. Servs. rather than type of fraud that is usually associated with sale or purchase of securities. 30 L Ed 2d 101. WD Mo) 562 F Supp 1180. Davidson v Belcor. v SCM Corp. Term "sale" as used in antifraud provisions of 15 USCS § 78j(b) is not to be so narrowly construed as to ascribe to it merely such meaning as term "sale" has always had in contracts since verb "include" rather than verb "means" is used in 15 USCS § 78c(a)(13) and (14). While in some circumstances passbooks may be securities within meaning of § 3(a)(10) of Securities Exchange Act (15 USCS § 78c(a)(10)). CA11 Ga) 863 F2d 1550. CA2 NY) 374 F2d 627. where shareholder made gift of his shares to irrevocable trust after CEO misrepresented that corporation had no plans to go public. CCH Fed Secur L Rep P 94180. phrases "or otherwise acquire" and "or otherwise dispose of" are not limiting. because standing for securities fraud requiring purchaser or seller may be met if there is a contract to buy or sell. SD Fla) 463 F Supp 826. SD NY) 592 F Supp 1108.. as does each allegation of subsequent deposit of new funds. definitions of terms "purchase" and "sale" are not limited to transactions ordinarily governed by commercial law of sales. CCH Fed Secur L Rep P 93262. Childers v Northwest Airlines. CCH Fed Secur L Rep P 93961. 9 EBC 2430. Transfer of nonsecurity asset did not constitute purchase or sale of security. and there is sufficient evidence by which reasonable jury could return verdict for "purchaser" on issue of existence of enforceable oral contract not within applicable Statute of Frauds. broad language of statutory definitions in 15 USCS § 78c(a)(13) and (14) indicates congressional intention that words "purchase" and "sale" are not limited to transactions ordinarily governed by commercial law of sales.com/research/retrieve?cc=&pushme=1&tmp. (1971. (1967. cert den (1969) 394 US 930. behavior which was meant to be forbidden by § 10(b) and SEC Rule 10b-5. Troyer v Karcagi (1979. 22 L Ed 2d 459. cert den (1971) 404 US 858. Test for determining whether fraud was in connection with sale is whether transaction involving fraud may be said to touch transaction involving purchase. 19 Ohio Misc 97. Securities fraud claim is dismissed.15 USCS § 78j https://www. 46 Ohio Ops 2d 392. B. and misrepresentations induced shareholder to part with his stock and impaired his ability to reach informed judgment on value of stock transaction. Rose v Arkansas Valley Environmental & Utility Authority (1983. Dasho v Susquehanna Corp. 12 FR Serv 2d 542. CA2 NY) 779 F2d 885. Inc. ND Ohio) 246 F Supp 2d 808) and (criticized in Raymond James Fin. Inc. CCH Fed Secur L Rep P 92871. Vine v Beneficial Finance Co. cert den (1967) 389 US 977. SEC v National Sec. 88 S Ct 463 and (ovrld as stated in United States v Weissman (1997. SD NY) 476 F Supp 1142. cert den (1984) 469 US 828. CCH Fed Secur L Rep P 90141) and (criticized in Koppel v 4987 Corp. (1984. CCH Fed Secur L Rep P 92334. because misrepresentations could be of kind that § 78j(b) was designed to prevent." where fraudulent statements were to induce investment in nonexistent "house account" and show attempt rather than actual purchase and sale of securities when no securities were actually purchased or sold. 30 L Ed 2d 128. 70 L Ed 2d 114. within meaning of 15 USCS § 78j(b) and Rule 10b-5. CCH Fed Secur L Rep P 99667. can occur whenever investor takes action that represents new decision by him to invest. Batchelder v Northern Fire Lites. does not warrant disregard of corporate entity. CCH Fed Secur L Rep P 96929. vacated on other grounds. CA5 Tex) 434 F2d 383. CA6 Ohio) 402 F2d 158. (1999. Dudley v Southeastern Factor & Finance Corp. Exchange of shares during merger transaction constitutes purchase or sale of securities for purposes of § 78j(b). Purchase-sale requirement under 15 USCS § 78j(b) is construed "broadly and flexibly" and is not limited to traditional face to face commercial transaction. Purchase. 102 S Ct 136. it is irrelevant that fraud involves misappropriation of proceeds of sale. DC Md) 6 F Supp 2d 472.

cert den (1981) 454 US 965. 16 FR Serv 2d 30. 95 of 158 3/8/11 4:25 PM . only in those situations where fundamental nature of plaintiff's investment has been changed without actual sale through circumstances beyond plaintiff's control. R. herd owner was making investment choice of whether to sell herd immediately or to commit himself to further substantial payments to increase his equity by breeding more cattle and "growing" healthy ones to maturity. CA1 RI) 873 F2d 411. issue of whether holders who exchanged notes were "purchasers" is close because substance of notes did not substantially change while form of corporation did. whereas shareholder had decided not to buy.) (2007. et al. Rule 10b-5. (1980.e. and § 20(a) of Act. CA5 Tex) 709 F2d 413. Ingenito v Bermec Corp. CCH Fed Secur L Rep P 99413. Dasho v Susquehanna Corp. SD NY) 464 F Supp 73. Broad v Rockwell International Corp. Co. Inc. Castellano v Young & Rubicam. and each extension agreement was entitled to be treated as sale or purchase of security. Gunter v Ridgewood Energy Corp. Although contract to purchase or sell constitutes purchase or sale for purposes of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 94361. Where holders of short term notes exchange old notes issued by not-for-profit corporation for new notes after conversion of corporation to for-profit enterprise. In suit by investors against asset management firm that launched certain fund and wholly owned subsidiary that managed fund.com/research/retrieve?cc=&pushme=1&tmp. SD NY) 2000 US Dist LEXIS 3941). SD NY) 376 F Supp 1154. CA9 Cal) 628 F2d 1214. Agreements affecting prior sales Plaintiffs became parties to new "purchase" and "sale" when they and corporation jointly abandoned earlier 1973 purchase and sales contract and substituted new 1979 purchase and sale contracts which substantially changed obligations of investor. CCH Fed Secur L Rep P 94548. 117. Fischer v New York Stock Exchange (1976. Purchaser-seller standing requirement (i. 114.. even though plaintiff had contractually committed to purchase of stock prior to issuance of allegedly fraudulent accounting audit. (1972. Tully v Mott Supermarkets. CA3 Pa) 680 F2d 933. (1980. within meaning of 15 USCS § 78j(b). Ahern v Gaussoin (1985. Conversion options Conversion option in convertible debenture qualifies as contract for purchase or sale of securities.lexis. Jackvony v Riht Financial Corp. 103 S Ct 476 and (criticized in Page Mill Asset Mgmt. Corporate acquisition of own stock Corporation's acquisition of its own shares in exchange for block of stock of second corporation owned by acquiring corporation was purchase within meaning of SEC Rule 10b-5. 33 L Ed 2d 336. because postaudit amendment to investment contract by which plaintiff relinquished right to realize cash payment and instead received option to convert stock conceivably was such significant change in nature of investment or risks as to amount to new investment. in connection with purchase or sale of any security requirement) does not apply to SEC-instituted cases. CA7 Ill) 461 F2d 11. Vaughn v Teledyne. DC NY) 408 F Supp 745. Owner of bank stock would not maintain action under § 78j(b) and Rule 10b-5 on grounds that acquirer of bank which had offered shareholders of bank either cash or its own stock in exchange for their stock had failed to disclose merger negotiations which might lead to increase in value of acquirer's stock and would thus have led shareholder to exchange more of its shares in acquired bank for acquirer's stock rather than cash. subsequent exchange of maintenance contracts for new modified maintenance contracts constituted sales of a securities for purposes of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). 15 FR Serv 2d 1286. States Bank Nat'l Ass'n v U. different results reached on reh (1981. investors failed to state misrepresentation claim against investment adviser because there were no allegations showing that alleged fraud occurred in connection with purchase or sale of security. 17 CFR § 240. (1972. and determination depends upon whether notes are to be considered "securities" within meaning of Act. in exchanging contract. Wiggins v Janus Capital Group Inc. (1995) 52 SEC 271. DC Md) 487 F Supp 2d 618.by Citation . Timberlands Klamath Falls (2004. SD NY) 683 F Supp 1463. 116. CCH Fed Secur L Rep P 98706. CCH Fed Secur L Rep P 95416. (1998. since Rule 10b-5 prohibits false or misleading statements or omissions only in connection with purchase or sale of security.S. (1982. (In re Mut. Rediker v Geon Industries. Where sales of herds of cattle in conjunction with maintenance contracts were investment contracts. Scheme to defraud is not shown by mere allegation that corporation made 6 major acquisitions of its own shares in 4 years. Securities fraud claim will not be summarily dismissed for failure to allege fraud "in connection with sale or purchase" of security. 92 S Ct 2496 and cert den (1972) 408 US 925. 103 S Ct 475. 74 L Ed 2d 621. CCH Fed Secur L Rep P 97956. Keys v Wolfe (1983. alleging violations of § 10(b) of Securities Exchange Act of 1934.10b-5. v Baltimore & O. Del Ch Ct) 2004 Del Ch LEXIS 106). CA5 Tex) 642 F2d 929. CCH Fed Secur L Rep P 93342. in accepting free animals. CCH Fed Secur L Rep P 93377. Closely held corporations that purchase their own stock have special obligation to disclose to sellers all material information. Litig. v Arthur Andersen & Co. DC Or) 611 F Supp 1465.Get a Document .S. Inc. change of maintenance contract represented new "investment decision" since maintenance contracts were pivotal to herd owners' investment package. 115. 102 S Ct 506 and (ovrld as stated in U. cert den (1972) 408 US 925. (1978. (2000. and thereafter executed extensions of those agreements. (1989. Where plaintiffs were issued nonvoting stock in consideration for entering into subordination agreement with regard to debts owed to them by broker-dealer. Inc. CA5 Tex) 614 F2d 418. coupling of exchange of maintenance contracts with grant of additional cattle without charge satisfied purchase-sale requirement of § 10(b) since. v Credit Suisse First Boston Corp. (1988. CCH Fed Secur L Rep P 97326. In re Martin Herer Engelman. 92 S Ct 2498. each agreement to extend arrangement represented new decision by lenders to invest in broker-dealer and for purposes of SEC Rule 10b-5. approval of takeover by shareholders of target company does not constitute contract to purchase or sell securities.15 USCS § 78j https://www.--Supplemental indentures Execution of supplemental indenture affecting conversion rights of indenture does not constitute purchase or sale under 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and is not forced sale under forced seller doctrine since supplemental indenture does not so substantially change underlying security as to produce purchase and sale under § 78j. DC NJ) 337 F Supp 834. Inc. CCH Fed Secur L Rep P 97637. Acquisition of treasury stock Purchase of treasury stock is purchase of securities within purview of SEC Rule 10b-5. Department of Economic Dev. 70 L Ed 2d 380. herd owners obligated themselves to pay additional maintenance charges on them.. 113. DC NJ) 32 F Supp 2d 166. forced seller doctrine may be applied to permit securities fraud claim under 15 USCS § 78j(b) even in absence of actual sale or purchase of security. Pittsburgh Terminal Corp. 33 L Ed 2d 336. Funds Inv. (1974. cert den (1982) 459 US 1056. CCH Fed Secur L Rep P 92332. CCH Fed Secur L Rep P 93692. Generally.

misrepresentations and concealments does not state claim under 15 USCS § 78j(b) or SEC Rule 10b-5. Goldberg v Hankin (1993. affd in part and revd in part on other grounds.by Citation . v Foxboro Co. Tcherepnin v Franz (1972. MacAndrews & Forbes Co. ND Ill) 628 F Supp 252. 121. CA7 Ill) 461 F2d 544. 81 S Ct 695. v American Barmag Corp. (1985. v Baltimore & O. cert den (1961) 365 US 814. where employee's forced resignation was caused by alleged misrepresentation of corporate officers which resulted in his tendering his resignation and selling his stock back to company for minimal price under stock repurchase agreement. ED Pa) 835 F Supp 815. constituted "sale" of securities under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)). Inc. court will apply sale of business doctrine to exclude purchase of corporation from Securities Acts. and debenture owners' standing to sue under 15 USCS § 78j(b) was not impaired by strict interpretation of "purchaser-seller" rule. WD Pa) 509 F Supp 1002. CA2 NY) 417 F2d 963. 16 FR Serv 3d 1059. which required sale of his company stock. if joint offer were accepted. Sacks v Reynolds Secur. Inc. because shares obtained through exchange as part of reorganization are not purchased or sold within meaning of 15 USCS § 78j.15 USCS § 78j https://www. SD NY) 437 F Supp 723. but that. (1972. Inc. CCH Fed Secur L Rep P 91657. Ltd. depositors in savings and loan institution. without any prior notice. 122. Issuance of bills of exchange Issuance and acceptance of bills of exchange payable in Deutchemarks as purchase price of textile machinery. CA6 Ohio) 747 F2d 209.. 46 Ohio Ops 2d 392. Former shareholders sufficiently state claim for which relief can be granted under 15 USCS § 78j. Issuance by corporation of its own securities constitutes sale for purposes of antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. under which agreement. despite fact that agents of former owner remained with company as managers rather than as consultants. because such allegation. CA5 Ala) 282 F2d 195. "Add on" agreement whereby tenderor agreed to compensate third party corporation in takeover of corporation was not "manipulative device" because agreement did not create artificial barriers to operation of market place nor artificially affect market activity in order to mislead investors. cert den (1970) 399 US 909.. CA2 NY) 899 F2d 195. (1984. Corporation had not duty to disclose preliminary merger discussions to former employee who decided to leave company. (2001. v Berger (2001. (1981. where plaintiffs never parted with ownership of securities. CA6 Ohio) 402 F2d 158. 74 L Ed 2d 621.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 93532. after reverse stock split. plaintiff and defendant would each acquire one of subsidiaries. rendering preliminary merger discussions immaterial as matter of law. Ruckle v Roto American Corp. and claim by plaintiffs. WD Ky) 148 F Supp 2d 792. 93 S Ct 516. could not support 15 USCS § 78j(b) claim since plaintiff inappropriately attempts to equate his termination with sale of stock. CCH Fed Secur L Rep P 94994. Green v Hamilton Int'l Corp. perpetuated their power and ability to perform frauds. 118. (1987. 593 F2d 1234. (1964. 17 BNA IER Cas 1673. DC SC) 339 F Supp 1401. was not purchaser of securities for purposes of § 10b of Securities Exchange Act (15 USCS § 78j(b)). Hooper v Mountain States Sec. (1977. DC Mass) 681 F Supp 965. Pittsburgh Terminal Corp. CCH Fed Secur L Rep P 96192. CA3 Pa) 680 F2d 933. CCH Fed Secur L Rep P 92828. Oak Industries. where shareholders obtained shares in holding company through merger and exchange of their stock in bank for stock in holding company. CCH Fed Secur L Rep P 93474. CCH Fed Secur L Rep P 96715. Inc. even if true. CCH Fed Secur L Rep P 91477 (criticized in Cromer Fin. CCH Fed Secur L Rep P 98706. CCH Fed Secur L Rep P 93507. (1978. (1960. No cause of action was stated under 15 USCS § 78j(b) where plaintiff company alleged that it and defendant had agreed to make joint offer to another company which was selling 2 of its subsidiaries. where antifraud action is based upon alleged wrongful conduct of brokerage firm in connection with transfer of securities accounts between brokers. Securities fraud claim by stockholders of bank holding company is dismissed. Brewer v Lincoln Int'l Corp. CCH Fed Secur L Rep P 91829.. and invited shareholders to tender their shares for purchase. (1984. CCH 96 of 158 3/8/11 4:25 PM . 120. Corp. 119. remanded (1982. defendant had made independent offer to purchase both subsidiaries. Former key employee's federal securities law claim is dismissed. nor was such ownership ever vested in any other party. they had no choice but to redeem their "scrip" for 30 cents per share within 120 days or it became worthless. (2000. 5 L Ed 2d 693. but had instead resold them to third party. 19 Ohio Misc 97.A. CCH Fed Secur L Rep P 98440. Issuance of stock Issuance by corporation of its own stock in exchange for spurious assets was "sale" under antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Inc. that defendants. and transaction was not between different companies but was part of internal corporate reorganization. v Syracuse China Corp. Mader v Armel (1968. Menides v Colonial Group. (2000. Biechele v Cedar Point.--Redemptions of corporate issues Redemption by corporation of convertible debentures was "purchase" by corporation within meaning of SEC Rule 10b-5. custodial transfer of stock from one broker to another while legal ownership remains in same investor is not sale within Rule 10b-5. Custodial transfer of stock Plaintiffs failed to fulfill statutory purchase and sale requirements necessary to invoke Rule 10b-5. since disclosure of tentative discussions may be misleading to shareholders. which offer was accepted. CA2) 257 F3d 171. v Credit Suisse First Boston Corp. Corporate issuer's contract to obtain its common stock in exchange for convertible debenture is contract for purchase or sale within meaning of 15 USCS § 78j(b). CA2 NY) 339 F2d 24. Guy v Duff & Phelps. where they owned less than 400 shares of defendant's common stock and.lexis. Co. 34 L Ed 2d 487. 90 S Ct 2199. Inc. 103 S Ct 475. because "forced sale" occurs when shareholder's investment is altered to point that he or she must choose between liquidating shares in exchange for cash or being completely divested of any interest. Ronzani v Sanofi S. and defendant had refused to resell shares of one of subsidiaries to plaintiff. (1990. Iroquois Industries. "Sale of business" doctrine recognizes that purpose of federal securities laws is to protect passive investor who invests in common enterprise for purpose of profiting from efforts of others. by use of permanent proxies. subsequent app (1994. SD NY) CCH Fed Secur L Rep P 91550). CCH Fed Secur L Rep P 98197. App DC) 193 US App DC 80. doctrine excludes purchase of 100 percent of stock of closely held corporation from Securities Acts. with duty to disclose arising where acquiring corporation is public. (1969. but whose tender offer failed. R.Get a Document . 103 S Ct 476 and (criticized in Page Mill Asset Mgmt. CCH Fed Secur L Rep P 92526. pursuant to contract. only when agreement in principle to merge has been reached. Solicitation of proxies or giving of them or failure to revoke proxy is not by itself purchase or sale of security. Corporate takeover transactions Corporation which made public offer to purchase another corporation's shares. SD NY) 2000 US Dist LEXIS 3941). CA3 Pa) 30 F3d 1486. 26 L Ed 2d 561. cert den (1972) 409 US 1038. 26 FR Serv 2d 463. SD Cal) 596 F Supp 601. cert den (1982) 459 US 1056.

Person who exchanges stock pursuant to corporate merger is purchaser and seller of stock and therefore has standing to bring civil action based upon violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. (1977. intended to apply to transaction of that nature. 13 FR Serv 2d 509 (ovrld as stated in Krieger v Gast (1998. CA5 Ga) 490 F2d 563. (1976. CA5 Tex) 434 F2d 383. Schoenbaum v Firstbrook (1968. CCH Fed Secur L Rep P 98281. Mader v Armel (1968. 89 S Ct 1747. since (1) profitability of business depended not upon efforts of others but of plaintiff. 21 L Ed 2d 668.15 USCS § 78j https://www. Inc. CCH Fed Secur L Rep P 92642. 17 FR Serv 2d 680. which would result in acquisition of securities by corporation through merger with other companies controlled by defendant on terms disadvantageous to corporation. CA6 Mich) 533 F2d 978. 97 of 158 3/8/11 4:25 PM . CCH Fed Secur L Rep P 91405. CCH Fed Secur L Rep P 93985. 125. CCH Fed Secur L Rep P 94414. SEC v National Sec. Inc. 98 S Ct 1243 and (ovrld as stated in Krieger v Gast (1998. CCH Fed Secur L Rep P 95496.. since resolution to merge was not unlike partially consummated contract to buy or sell securities. Dudley v Southeastern Factor & Finance Corp. 30 L Ed 2d 101. Exchange of stock in merger constitutes sale within meaning of antifraud provisions of § 10b of Securities Exchange Act (15 USCS § 78j(b)) serious gap in law would exist if millions of shareholders involved in mergers or consolidations were left unprotected by antifraud provisions of statute. SD NY) 266 F Supp 677. where transaction is motivated by commercial rather than investment purpose. Wright v Heizer Corp. Cohen v Colvin (1967. CA5 Ga) 446 F2d 303. CA5 La) 430 F2d 792. Coffee v Permian Corp. under state merger statute. CCH Fed Secur L Rep P 93263. so that issuance was too attenuated for alleged fraud to have taken place in connection with purchase or sale of securities. reh den (1974. 51 L Ed 2d 803.--As indicia of ownership Sale of all stock in corporation to purchaser who thereby acquires control of day-to-day operation of business is not transaction within scope of 15 USCS § 78j(b). Proposed transaction whereby. 22 L Ed 2d 459. cert den (1971) 404 US 858. 22 L Ed 2d 459. Merger is purchase and sale of stock within purview of 15 USCS § 78j(b) and SEC Rule 10b-5. (2) plaintiff did not acquire shares of stock from defendants but issued them to himself as means of limiting his liability to creditors and public at large. that company would borrow heavily to execute tender offer. 12 FR Serv 2d 542. CCH Fed Secur L Rep P 92458. Inc. 89 S Ct 564. Goldstein v Regal Crest.by Citation . 14 FR Serv 2d 833. CA8 Mo) 741 F2d 234. 4 ALR Fed 1037. 12 FR Serv 2d 1233. Inc. Liquidation of defendant corporation in which plaintiff was not allowed to participate constituted in effect sale of plaintiff's stock. (1984. person who is defrauded in violation of such rule in merger of company in which he is stockholder has right to sue and have reasonable remedy for any wrong. Marsh v Armada Corp. is seller of those securities for purposes of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 46 Ohio Ops 2d 392. Corporation issuing securities. 89 S Ct 1188. Rekant v Desser (1970. CCH Fed Secur L Rep P 92327. (1984. SD NY) 185 F Supp 95. (1969) 393 US 453. thereby converting its stock into claims for cash.. controlled by defendants. CA2 NY) 807 F2d 33. 97 S Ct 1598. and neither Act nor Rule 10b-5 expresses any requirement that stock actually have issued.. CCH Fed Secur L Rep P 92334. constitutes sale for purpose of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). SEC Rule 10b-5 promulgated pursuant to § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) prohibits fraud in connection with purchase of. simultaneously incorporating business and issuing bulk of capital stock to himself is not entitled to fraud action under 15 USCS § 77q against seller of business. (1969. ND Ill) 1998 US Dist LEXIS 15422). Fed Secur L Rep P 92294. Minority shareholders satisfy purchase or sale requirement where merger was approved despite their dissent and merger resulted in exchange of stock. 4 ALR Fed 1037. Issuance by corporation of its new shares of stock to another corporation in exchange for latter's outstanding stock pursuant to amalgamation agreement between such two corporations.com/research/retrieve?cc=&pushme=1&tmp. Corporation's issuance of 3. Somogyi v Butler (1981. 95 S Ct 77. Umstead v Durham Hosiery Mills. cert den (1969) 394 US 930. H. CCH Fed Secur L Rep P 92871. 123. in economic reality. L. CCH Fed Secur L Rep P 96101. CCH Fed Secur L Rep P 92294. Bryan v Brock & Blevins Co. ND Ill) 508 F Supp 952. v Childree (1960. Swanson v American Consumer Industries. (1986. Herpich v Wallace (1970. CA5 Fla) 425 F2d 872. 19 Ohio Misc 97. Sulkow v Crosstown Apparel. stock. Feldbaum v Avon Products. 42 L Ed 2d 72. as federal securities laws are not.831 previously unissued shares of its common stock to second corporation in exchange for net assets of second corporation's wholly owned subsidiary involved purchase and sale of security. DC NJ) 518 F Supp 970. Inc. CCH Fed Secur L Rep P 93116. Barsy v Verin (1981. (1970. stockholder could be forced to surrender stock to corporation in return for cash at appraised value amounted to sale under antifraud provisions of 15 USCS § 78j(b). MD NC) 578 F Supp 342. 12 FR Serv 2d 542. 89 S Ct 1188.--In liquidation Liquidation of corporation's assets. CA5 Ga) 493 F2d 664 and cert den (1974) 419 US 844. CCH Fed Secur L Rep P 97943. ED Pa) 59 FRD 396. "Purchase or sale" requirement was met where plaintiff shareholders alleged broad scheme to defraud corporation. 23 L Ed 2d 219. (1971. and corporation was statutory purchaser-seller under 15 USCS § 78j(b) and SEC Rule 10b-5. (1971. and its interest may be asserted in derivative action. cert den (1969) 394 US 930. Green Co. so that person who has made material misrepresentations in inducing another to part with something of value for purchase of security may not escape liability under Rule 10b-5 simply by refusing to issue written instrument evidencing security. and transaction properly so described may or may not involve purchase and sale within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) plaintiff corporation which issued its stock in exchange for stock of another corporation was engaged in "purchase and sale" in view of broad statutory definition of those terms. made stockholder "seller" under § 10b of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 55 L Ed 2d 767. Loeb v Whittaker Corp. (1973. SD NY) 333 F Supp 484. 124. CA7 Ill) 415 F2d 1326.020. 92 S Ct 109. and plaintiff was seller under 15 USCS § 78j(b). It is no longer open to question that exchange of shares in connection with merger or sale of assets constitutes "purchase or sale" within meaning of § 10b of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5.--In merger Exchange of securities pursuant to merger or consolidation of corporations constitutes purchase and sale for purposes of antifraud provisions of § 10b of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. Although "merger" is not term of fixed and definite content. and that company's current yearly earnings were down in first 9 months. cert den (1969) 395 US 906. CA7 Ill) 560 F2d 236. CCH Fed Secur L Rep P 92714. (1974. Inc. CA2 NY) 405 F2d 215. Plaintiff who purchases assets of business for cash.Get a Document . CCH Fed Secur L Rep P 93009. cert den (1977) 430 US 954. cert den (1978) 434 US 1066. such as warrants. Shareholder's allegations that corporate officers knew of and failed to disclose "strong likelihood" that market value of stock would decline prior to merger is unsupported by Offer to Purchase which disclosed that dilution of per-share earnings of company would result from tender offer. ND Ill) 1998 US Dist LEXIS 15422). or in connection with contract to purchase. CA6 Ohio) 402 F2d 158.lexis.

CA8 Mo) 747 F2d 1195. and such person's subsequent pledging of stock in corporation to secure corporation's debts. CA5 Tex) 497 F2d 516. CA9 Ariz) 565 F2d 602. and canceled checks so that individual's damages could be objectively calculated. trust and shareholder. cause of action was not stated where officers of corporation alleged that they retained stock of corporation in reliance on banks' misrepresentations that they would not call loans and that they would lend additional money to corporation. Pledge of stock as collateral for loan to owner of stock was not "purchase" for purposes of § 17(a) of Securities Act (15 USCS § 77q(a)) or § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). SD NY) 376 F Supp 1154. CCH Fed Secur L Rep P 96295. 32 FR Serv 2d 1266) and (superseded by statute as stated in Labuguen v Carlin (1986. Shelter Mut. Loan and pledge transactions Pledge of stock as additional consideration for extension of overdue commercial loan is not sale of securities within meaning of antifraud provisions of 15 USCS § 78j(b) and SEC Rule 10b-5. 8 FR Serv 3d 642) and (superseded by statute as stated in Sellitti v R. CCH Fed Secur L Rep P 95671. There was purchase and sale of security represented by pledge of 100 percent of stock of subsidiary as security for loans to subsidiary. 126. Ingenito v Bermec Corp. Grubb v Federal Deposit Ins. stock certificates. Bolton v Gramlich (1982. CCH Fed Secur L Rep P 95305. relevant transactions were well documented in written notes. No. affd (1974. and that loans upon collateral are not collectible. transferred. fraud alleged must be in connection with purchase or sale of security. where representations giving rise to action were made directly to individual before holding company even existed. and controlling shareholders through foreclosure sale by lender was "sale" for purposes of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. McClure v First Nat'l Bank (1973. and where number of shares were to be retained by plaintiff in consideration of loan obtained by him. Mere acceptance of stock pledge as collateral in privately negotiated transaction between borrower and lender does not of itself bring transaction within scope of federal securities law. CCH Fed Secur L Rep P 98418. (1975. 40 FR Serv 2d 526 (criticized in Roy v City of Little Rock (1995. Mere acceptance of stock pledge as collateral in commercial loan transaction is not purchase or sale of securities and therefore does not invoke protection of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). 83 L Ed 2d 190. since. 98 of 158 3/8/11 4:25 PM . Stirling v Chemical Bank (1974. Liquidation of real estate investment trust constitutes sale of securities. SD NY) 382 F Supp 1146. Dopp v Franklin Nat'l Bank (1974. Pledge of bonds does not constitute sale under 15 USCS § 78j(b). v Pitney-Bowes. Execution and delivery of promissory notes by person who was stockholder and officer on behalf of corporation. CCH Fed Secur L Rep P 94197. Inc. affd (1984. Ins. SEC v Continental Commodities Corp. Individual was actual purchaser of stock and thus had standing to bring private action under SEC Rule 10b-5 based on seller's alleged misrepresentations. CCH Fed Secur L Rep P 95637. CCH Fed Secur L Rep P 94548. (In re R. ED Ark) 902 F Supp 871). Partial discharge of debt by proceeds of foreclosure sale of stock pledged to secure debt was sale within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CCH Fed Secur L Rep P 93986.. 14 UCCRS 866. Since. Co. 103 S Ct 1892. SD NY) 415 F Supp 95. 105 S Ct 253 and (ovrld as stated in Muzinich & Co." National Bank of Commerce v All American Assurance Co. (1976. Litig.Get a Document . were not sales of securities within meaning of SEC Rule 10b-5. CA2 NY) 511 F2d 1030. (1976. CCH Fed Secur L Rep P 94810. cert den (1983) 461 US 914. ND Ill) 414 F Supp 1270. 77 L Ed 2d 282. SD NY) 407 F Supp 7. CA2 NY) 152 F3d 169. 95 S Ct 1132. app dismd (1975. v Raytheon Co. Disposition of shares in company pledged by its former officers. Alpex Computer Corp. Bankruptcy liquidation is not sale within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). cert den (1984) 469 US 884. (1974. contention that officers offered to pledge stock to banks if banks would forbear from calling outstanding loans did not satisfy purchase or sale requirement. SD NY) 417 F Supp 328. (1978. DC Idaho) 2002 US Dist LEXIS 26962). mere expression of willingness to pledge stock not constituting sale of security. 5 FR Serv 3d 174) and (ovrld in part by Campos v Le Fevre (1987. Macy & Co. however. Rich v Touche Ross & Co. Bosse v Crowell Collier & MacMillan (1977. SD NY) 173 BR 301) and (superseded by statute as stated in In re Paine Webber Short Term United States Gov't Income Fund Sec. CCH Fed Secur L Rep P 95823. directors. no violation of § 78j occurs absent showing of injury to minority shareholders and intentional material misrepresentations or omissions by defendant majority shareholders. ED Mo) 569 F Supp 310. CCH Fed Secur L Rep P 94484.. since it is at that point that nature of investment changes from interest in going enterprise to mere right to receive money as between parties to sale. reh den (1974. SD NY) 1995 US Dist LEXIS 12029) and affd (1975. CA2 NY) 568 F2d 824. although pledge of securities can constitute "sale" under different circumstances. occurring at time trustees vote to liquidate. CCH Fed Secur L Rep P 91830. Corp. CA1 Mass) 663 F2d 348. pledge of stock is not purchase or sale of securities which will give rise to claim under SEC Rule 10b-5. CCH Fed Secur L Rep P 94724. 3 EBC 1142. DC Del) 525 F Supp 292. ND Tex) 352 F Supp 454. cause of action is stated where it is asserted that foreclosure on counterfeit stocks pledged as collateral would be futile gesture. SD NY) 374 F Supp 904. Express Travel Related Servs. CA5 Tex) 583 F2d 1295. (1974. CCH Fed Secur L Rep P 99004. in default. (2004.) (1994. 43 L Ed 2d 402. Although dissolution and liquidation of corporation is "sale" of securities to which 15 USCS § 78j applies. Co. 7 (1983. Kerbs v Fall River Indus. CA5 Tex) 497 F2d 490. CA2 NY) 516 F2d 1396 and (criticized in Dreiling v Am. based upon alleged violations of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5.H. (1989. notwithstanding that exchange of cash for investment interest may not occur until later. Winding down activities. Chemical Bank v Arthur Andersen & Co. did not involve purchase or sale of securities so as to permit minority shareholders to bring action against majority shareholders. SD NY) 540 F Supp 822. CCH Fed Secur L Rep P 98438. affd in part and revd in part (1977. and delivered to plaintiff to be used as collateral for loans. 1978-1 CCH Trade Cases P 61830. (1984. 19 FR Serv 2d 1450 (superseded by statute as stated in Wyzik v Employee Ben. to fall within scope of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CA2 NY) 825 F2d 671. CA7 Ill) 792 F2d 708. and individual did not seek damages for decrease in value of his stock in holding company but for direct injury he suffered as result of note and guarantee he executed in reliance on stock seller's representations. (1981.lexis. who caused such winding down operations to be instituted. Corp. Macy & Co. CA5 Tex) 502 F2d 1167 and cert den (1975) 420 US 930. CA10 Utah) 502 F2d 731. CCH Fed Secur L Rep P 99536. under circumstances. Lincoln Nat'l Bank v Lampe (1976.by Citation . v Public Water Supply Dist. directed toward termination of active business operations of corporation. and unpaid. WD Wash) 351 F Supp 2d 1077). (2002. CA2 NY) 726 F2d 930.H. CA9 Cal) 692 F2d 1262. 23 UCCRS 830. CA10 Okla) 868 F2d 1151. since rights and privileges of parties are not affected by pledge in same manner as by "sale" or "purchase. CCH Fed Secur L Rep P 96609. CCH Fed Secur L Rep P 90266). Plan of Crane Co. Liquidation of securities under Securities Investor Protection Act qualifies as sale of securities where and to extent customers' claims to specific shares are satisfied in cash due to shortage. CCH Fed Secur L Rep P 99643. Stockbroker's obtaining of loan by pledging securities in margin accounts of his customers with lender was sale within meaning of 15 USCS § 78j. United States v Kendrick (1982. CCH Fed Secur L Rep P 94788 (criticized in Wright v Ernst & Young LLP (1998. commodity broker's issuance of notes in partial repayment of customers' deposits was "sale" of securities falling within purview of antifraud provisions of 15 USCS § 78j(b). Jacobs v Hanson (1981. (1974.15 USCS § 78j https://www. Mallis v Federal Deposit Ins. (1995. "Purchase or sale" requirement was satisfied where shares of stock were assigned. CCH Fed Secur L Rep P 94737. where condition of issuance was withholding of legal action by customers. notwithstanding that stock was purchased by holding company. lender has effectively paid amount of loan to purchase counterfeit securities. thus inducing individual to involve himself in transaction by borrowing money to establish holding company and personally guaranteeing repayment of one-half of its loan to purchase stock.com/research/retrieve?cc=&pushme=1&tmp.

Sec. Lawrence v Cohn (2003. Securities fraud action is not barred because there was no "purchase" of securities where plaintiffs' investment in apartment complex was initially structured as joint venture. In order for changes in rights of security holder to qualify as purchase of new security so as to give rise to cause of action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 based upon fraud perpetrated with respect to transaction.by Citation . because (1) under option in which owner had burden or risk attendant to rating agencies' assessments of properties' finances or operations. v Oppenheim. entitled to creditor status with assets of corporation treated as trust fund and empowered to bring derivative action under North Carolina law. under 3 independent theories: (1) as "forced seller" since FDIC had equitable interest in stock which defendants rendered without marketable value due to alleged fraudulent transaction. 127.lexis.. and therefore. because actual liquidation of investment entity must be complete or. because investors obligated themselves to pay $ 150. Partner's estate was not actual purchaser or seller of security where it did not have right of first refusal with respect to sale of limited partner's interest under either partnership agreement or common law. Corp. CA5 La) 683 F2d 914.000 commitment. (2005.com/research/retrieve?cc=&pushme=1&tmp. (1983. Jacobs v Winthrop Fin.15 USCS § 78j https://www. (1986. 107 L Ed 2d 556. CCH Fed Secur L Rep P 95432. paying $ 12. where defendant contends monies provided to him were loans rather than payments for partnership interests. v Nomura Sec. 56 L Ed 2d 403. 56 L Ed 2d 414. Rathborne v Rathborne (1982. McConnell v Frank Howard Allen & Co. and (3) as pledgee under Rule 10(b)-5. and (2) even if parties contemplated that owner would merely transfer notes and mortgages on certain properties. did not constitute purchase or sale of securities within meaning of 15 USCS § 78j or SEC Rule 10b-5. & Loan Asso. CA2 NY) 325 F3d 141.--Forfeiture of partnership rights Limited partner's forfeiture of partnership rights upon occurrence of condition provided for in partnership agreement constituted sale of security within meaning of fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 128. mortgage notes would be securities where banker intended to pool permanent loan notes and distribute participation certificates to public. CA9 Cal) 857 F2d 646. did not constitute "purchase" and "sale" of new securities. SD NY) 398 F Supp 2d 99 of 158 3/8/11 4:25 PM . and complaint fails to demonstrate that liquidation of limited partners' investment is even remote possibility. Investors' promissory note payments did not constitute separate purchases of securities under 15 USCS § 78j(b). there must be such significant change in nature of investment or in an investment risks as to amount to new investment.500 in each of first 2 years on short term promissory notes. CCH Fed Secur L Rep P 92842. standing in position of purchaser with pledge transaction operating as sale under Rule 10(b)-5. cert den (1978) 436 US 905. SD NY) 866 F Supp 807. SD NY) 411 F Supp 287. CCH Fed Secur L Rep P 99356. ND Cal) 574 F Supp 781. & Derivative Litig. Dixon & Co. 98 S Ct 2253. SD NY) 629 F Supp 427. because alleged misconduct was not integral to plaintiffs' purchase or sale of security. agreeing to pay $ 12. stockholders who received shares in corporation as dividend from corporation's parent company were not purchasers of stock as required to pursue action since they did not participate in any sort of investment decision and transaction was not type meant to be governed by securities fraud statutes. whereby parent corporation transferred its income-producing real estate to new subsidiary corporation in exchange for all stock of subsidiary corporation. CCH Fed Secur L Rep P 98786. CCH Fed Secur L Rep P 95889. DC Mass) 77 F Supp 2d 206. where modification of limited partnership agreement did not significantly affect those risks of limited partner. ND Ohio) 939 F Supp 572. Where stockholders of corporation alleged that corporate officials engaged in securities fraud. (2) as holder of beneficial interest in shares of troubled corporation. alleging that partner entered into settlement agreement concerning partnership shares without notifying it of profitable business deal because estate failed to state claim under 15 USCS § 78j(b) because it failed to establish that alleged fraud occurred in connection with actual purchase or sale of security. as pledgee of 50 percent of defendant corporation's stock. cert den (1989) 493 US 1002. CCH Fed Secur L Rep P 98780. First Federal Sav. 110 S Ct 561 and (criticized in Washington Mutual Bank v Superior Court (2001) 24 Cal 4th 906. ND Cal) 670 F Supp 1466. 15 P3d 1071. where partnership still has continuing ownership of 51 retail buildings. expanded in detailed stated purposes of partnership. CA2 NY) 325 F3d 141. estate's common law rights did not fall within 15 USCS § 78c(a)(10)'s definition of "security. Modification of partnership Before changes in rights of security holder can qualify as "purchase" of new security under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and Rule 10b-5. plaintiff's interest amounted to limited partnership. (1999. 2001 Daily Journal DAR 925). CA2 NY) 568 F2d 862. affd in part and revd in part (1988. Roberts v Heim (1987. but under economic realities test.500 up front. change must significantly affect investment risks of investor. restructured as partnership. where typical investor initially made $ 150. CCH Fed Secur L Rep P 92505. with standing also to complain of forced sale caused by fraudulent liquidation. Federal Deposit Insurance Corporation. TAB Partnership v Grantland Fin. 103 Cal Rptr 2d 320. (1994. Limited partners' securities fraud complaint against managing general partner and various controlling entities is dismissed. Abrahamson v Fleschner (1977. Halperin v Edwards & Hanly (1977. and also promising to pay off $ 112. ED NY) 430 F Supp 121. modifications effected by adoption of new partnership agreement which named new general partner. 98 S Ct 2236 and cert den (1978) 436 US 913. owner alleged it was obliged to issue rated securities for repackage and resale by banker. Disgruntled "investor" has no viable federal securities fraud claim against financial corporation. CCH Fed Secur L Rep P 93291. Partner was entitled to summary judgment in securities fraud action filed by another partner's estate. alleged fraud was not in connection with purchase of security and civil action would not lie. because federal securities laws are not properly invoked where loan results from direct negotiations between parties. rather than rated securities. 129. CCH Fed Secur L Rep P 92301. v Kerr (1986. CCH Fed Secur L Rep P 92301. has standing to make Rule 10(b)-5 claim. foregone conclusion. Murphey v Hillwood Villa Associates (1976. In re Adelphia Communs. Parent-subsidiary exchanges Stock-for-assets exchange between parent and subsidiary corporations. CCH Fed Secur L Rep P 96028. and with no understanding that corporation intended to trade loan agreement publicly or that it would distribute prospectus to investors. CCH Fed Secur L Rep P 99538.Get a Document .000 at outset and thus only had valid securities fraud claim against those defendants associated with partnerships at time of investors' initial investments. CCH Fed Secur L Rep P 94028. Realtek Indus. at very least. (1996. WD NC) 637 F Supp 828. Federal Deposit Ins." Lawrence v Cohn (2003. General partner's alleged misconduct of failing to pay plaintiffs return in accordance with their alleged status as partners is not actionable under 15 USCS § 78j(b). SD NY) 871 F Supp 613. and made number of other changes. 2001 CDOS 712. Corp. CCH Fed Secur L Rep P 90726.500 on long term promissory notes in 3 installments 14 to 16 years from subscription. Assocs. Appel. despite fact that no purchase or sale of security occurred. where investors purchased certificates of deposit (CDs) to participate in CD Rollover Program. Corp. investors were neither pledgors nor pledgees of securities involved where dealer pledged securities to bank. even though forced seller doctrine may be applied in limited partnership context. Apartment buildings owner that had sought to refinance mortgages on its properties sufficiently alleged security for purposes of establishing prima facie claim of securities fraud under 15 USCS § 78j(b) against investment banker. 12 FR Serv 3d 810. Although pledge of security constitutes sale for purposes of antifraud provisions of federal securities laws. added large number of limited partners.. Bickhardt v Ratner (1994. CCH Fed Secur L Rep P 98482. through one-on-one negotiation.

ND W Va) 571 F Supp 1054. Recapitalization transactions Recapitalization of European subsidiaries of domestic corporation. Watts v Des Moines Register & Tribune (1981. CCH Fed Secur L Rep P 94765. CA2 NY) 519 F2d 974.. could not constitute trading in securities. 17 FR Serv 2d 1284. O'Neil v Marriott Corp. Schlansky v United Merchants & Mfrs. 92 S Ct 165.com/research/retrieve?cc=&pushme=1&tmp. (1982. private nature of transaction affords no immunity from anti-fraud provisions of securities law. employee making his investment decision through employer's non-gratuitous contributions to plan.F.10b-5). CA9 Hawaii) 300 F2d 200. CCH Fed Secur L Rep P 95250. Investor fails to state securities fraud claim under 15 USCS § 78j. Bersch v Drexel Firestone. RICO Bus Disp Guide (CCH) P 8659. and unlisted elsewhere. CCH Fed Secur L Rep P 95080. 16 FR Serv 2d 6. (1952. Securities fraud claims in action relating to corporation's employees' profit-sharing. CCH Fed Secur L Rep P 95359 and vacated on other grounds (1976) 426 US 944. (1975. cert den (1975) 423 US 1018. ED Pa) 365 F Supp 780. notwithstanding plan accepted stock contributions from corporation. transaction in subsidiary's stock would have met purchase or sale requirement." where unlike interest in employee stock option plan. Kramer v Scientific Control Corp. (1973. WD Mich) 435 F Supp 281.15 USCS § 78j https://www. (1960. FMC Corp.. district court had jurisdiction over subject matter notwithstanding fact that stock option was personal and non-transferable. transf to. 3 EBC 1430. 131. Neither § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) nor SEC Rule 10b-5 require that securities acquired be registered on national securities exchange. v Goldmuntz (1972. SD NY) 675 F Supp 826. thus.Get a Document . v Essaness Theatres Corp. since plan gives trustees no discretion to refuse stock contribution by company. SD NY) 695 F Supp 138. dismd (1993. and participation in such plan did not constitute purchase or sale of security under 15 USCS § 77b(3). CCH Fed Secur L Rep P 94018. and no furnishing of "value". Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) applies to private transactions not conducted through organized security markets. remanded on other grounds (1962. D. 96 S Ct 3161. will be dismissed on grounds there was no purchase or sale of securities. CA5 Fla) 521 F2d 225. DC Md) 538 F Supp 1026." and officer "purchased" security when he accepted employment offer specifically upon employer's representations about vesting rights in plan. sale occurred when employee gave his services to employer who in turn contributed to pension plan. 49 L Ed 2d 1181. was "contributory" as reward for employee's performance and was specifically intended to make participants "investors. Area of private offerings of securities under exemption afforded by § 4(2) of Securities Act (15 USCS § 77d(2)) is so closely related to fairness of public and private securities markets and allocation of investment capital that it must come within scope of SEC Rule 10b-5. savings and retirement plan and trust. CCH Fed Secur L Rep P 94449. (1977.. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) is not applicable to stock listed but not registered on Honolulu stock exchange. because corporation was not purchaser or seller of securities and suffered no actual damages in connection with purchase or sale. 83 S Ct 24. Collins v Rukin (1972. Dubin v E. CA5 Fla) 515 F2d 591. (1971) 404 US 6. Provisions of 15 USCS § 78j(b) cover private transaction although stocks sold are not registered on any exchange. v Bankers Life & Casualty Co. CCH Fed Secur L Rep P 96353. Inc. SD Iowa) 525 F Supp 1311. Woolf v S. Where defendant induced plaintiff to enter employ of corporation by offering plaintiff stock option agreement and making misrepresentations and failing to disclose material facts with respect to condition and potential of corporation. 30 L Ed 2d 128. Inc. CA2 NY) 464 F2d 876. Bamco 18 v Reeves (1987. CCH Fed Secur L Rep P 95223. § 10(b) bars use of deceptive devices and contrivances with regard to purchase or sale of securities whether conducted in organized market or face-to-face. Northern Trust Co. Register v Cameron & Barkley Co. even though insider trading ring used inside information about corporation's recapitalization plan to artificially increase price of stock and recapitalization and to earn $ 20 million in profits. CCH Fed Secur L Rep P 93262. SEC Rule 10b-5 applies whether securities are traded on public stock exchange or sold through private placement. 130. SD NY) 825 F Supp 623. 46 L Ed 2d 389. DC Ill) 103 F Supp 954. Bauman v Bish (1983. Inc. under Securities Exchange Act. resulting in vesting of title to subsidiaries in certain officers and directors of corporation in fiduciary capacity. SD NY) 388 F Supp 670. where condominium purchasers complained about manner in which condominium units were 100 of 158 3/8/11 4:25 PM . are involved in operation of employee stock ownership plan (ESOP) which would cause securities laws to be applicable. 20 FR Serv 2d 340. CCH Fed Secur L Rep P 93527. Sawyer v Pioneer Mill Co. United States v Koenig (1974. No offer. Superintendent of Ins. 1 EBC 1871. since there is no affirmative investment decision. Discharged officer's interest in employer's equity ownership plan constitutes "security. DC Hawaii) 190 F Supp 21. Various federal securities fraud claims must be denied summarily. (1975. Antifraud provisions of Securities Exchange Act apply to many transactions which are not on organized American markets.lexis. plan was compulsory and noncontributory. CCH Fed Secur L Rep P 98406. Harrison v Equitable Life Assurance Soc. sale or purchase. (2006. DC Mass) 342 F Supp 1282. CA2 NY) 36 F3d 255. DC SC) 467 F Supp 2d 519. 132. CCH Fed Secur L Rep P 93548. CCH Fed Secur L Rep P 93556. CCH Fed Secur L Rep P 98411. although. participation was not compulsory. Pension plan contributions In complaint alleging violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). had officers and directors appropriated subsidiaries. Neither creation of voting trust nor implementation of recapitalization plan provoked material change in shareholder investments or in risk thereof sufficient to constitute purchase or sale of security within ambit of 15 USCS § 78j or SEC Rule 10b-5 (17 CFR § 240. where investor was only limited partner in 3-partner.by Citation . 244. ND Ill) 727 F Supp 1182. one-project endeavor to restore motel and conference center. because this limited partnership interest is not investment contract "security" since it is not investment in common enterprise in which investor is led to expect profits solely from efforts of promoter or third party. SD NY) 443 F Supp 1054. 96 S Ct 453. cert den (1962) 371 US 814. (1977. affd (1994. Corporation's securities fraud claims against insider traders must be dismissed. as well as transactions which are so conducted. and had say in at least operation of such center. Radiation Dynamics. Transactions outside stock exchange channels Fact that transaction involving sale of securities is not conducted through securities exchange or organized over-the-counter market is irrelevant to coverage of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Hutton Group (1988. 9 L Ed 2d 55. reh den (1975. v Boesky (1989. Participants of employee stock ownership plan who alleged that plan fiduciaries made materially false or misleading statements failed to state claim under § 10(b) of Securities Exchange Act of 1934 because participation in plan was not voluntary and participants did not furnish value in exchange for stock they acquired through plan. CCH Fed Secur L Rep P 98743. CCH Fed Secur L Rep P 99584. Cohn & Co.

in part. fact that complete disclosure has been made is major consideration in determination of duty question and ultimate question of whether recovery should be allowed. because plaintiffs alleged causal nexus between defendants' fraudulent conduct and plaintiffs' pecuniary loss. 50 L Ed 2d 180. (1975. CA1 Mass) 380 F3d 49.A. ND Cal) 201 F Supp 2d 1051. and registration statements filed in connection with several mergers.E. it is unlawful to attempt to manipulate price of stock in connection with purchase or sale of any security registered on national securities exchange or any security not so registered. silence. DC Me) 838 F Supp 658. 2000. Hughes v Dempsey-Tegeler & Co. press releases. remanded (2002. Litig. Generally In order to be actionable under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 (17 CFR § 240. that affirmative misrepresentation is not necessary for violations under various statutes.FALSE OR MISLEADING STATEMENTS OR OMISSIONS A. and sufficiently alleged recklessness against audit committee members. nevertheless. "no comment" statements are generally functional equivalent of silence.10b-5). offered and sold by vendors and lenders. novel or atypical methods should not provide immunity from securities laws. SD NY) 207 F Supp 2d 292. it is clear from statutory language of Securities Exchange Act. Litig. CCH Fed Secur L Rep P 92896. because plaintiff's only qualifying purchase of security occurred when he acquired single share of corporation common stock in 1988. N. Filler v Lernout (In re Lernout & Hauspie Sec. in light of circumstances under which they were made. CA2 NY) 340 F2d 457. In civil action alleging liability under SEC Rule 10b-5. even though steep market decline accompanying terrorist attacks helped speed alleged market manipulation scheme's collapse. CCH Fed Secur L Rep P 90160). where shareholders maintained that company's executive officers released false and misleading information about company to public and that alleged conduct created false. revd. CCH Fed Secur L Rep P 92222. Hayden v Walston & Co. Caiola v Citibank.In General 133. DC Mass) 236 F Supp 2d 79. (2001. 22 ALR3d 782. (2002. SD Ohio) 216 FRD 596. § 240.R. 101 of 158 3/8/11 4:25 PM . 10 FR Serv 3d 308. CCH Fed Secur L Rep P 95090. Inc. CCH Fed Secur L Rep P 95410. in order to state cause of action for securities fraud under § 10(b) of Securities Exchange Act of 1934. they had to rely on material omissions prong of 15 USCS § 78u-4(b)(1). Krekstein. is not misleading under Rule 10b-5. 99 L Ed 2d 194. based on statements in company's 10-K filed with SEC. DC Md) 398 F Supp 609. Sec. DC Minn) 282 F Supp 2d 1032. Inc. DC Mass) 286 BR 33.. CA2 NY) 295 F3d 312. RMED Int'l. 108 S Ct 978. Bovee v Coopers & Lybrand (2003. so long as misrepresentation is read as including omissions as well as misstatements. CCH Fed Secur L Rep P 91359. investors did not sufficiently plead how challenged statements were false when made as required by 15 USCS § 78u-4(b)(1) of Private Securities Litigation Reform Act. List v Fashion Park. Inc. DC Cal) 989 F Supp 1302.lexis. Inc. artifices. 51 UCCRS2d 613. in part sub nom Bamberg v SG Cowen (2002. CCH Fed Secur L Rep P 91942. practices.) (2002.Get a Document . In re Ramp Networks. because even in context of complete disclosure. Pliskin v Bruno (1993. ND Ga) 310 F Supp 2d 1281. affd (1976.com/research/retrieve?cc=&pushme=1&tmp. because. and class complaint sufficiently alleged insider trading against board member. shareholders adequately stated claim for relief. CCH Fed Secur L Rep P 95513.10b-5. and S.C. V. Federal securities claims against bank are dismissed. CCH Fed Secur L Rep P 93645. 24 Fed Rules Evid Serv 961. 15 USCS § 78j. 15 USCS § 78j(b). v Laventhol. v Sloan's Supermarkets.by Citation . (1975. 17 C. (2002. not misleading so that alleged omission was not actionable where it did not relate to any affirmative statement made. or present unique form of deception. and unjustifiable positive impressions of financial condition and performance of company. CA2 NY) 2010 US App LEXIS 20594.. In re World Access. schemes. common law fraud requirement that plaintiff show misrepresentation on part of defendant is applicable. Class complaint sufficiently stated claims for fraudulent and misleading statements in violation of 15 USCS § 78j(b) against corporation's audit committee members and member of board of directors where class complaint alleged that audit committee members signed documents which included allegedly fraudulent statements. Litig. SD NY) 137 F Supp 2d 362. Stephenson v Deutsche Bank AG (2003. whether artifices employed involve garden type variety of fraud. because these transactions are not now defined as securities. (1965. Plaintiffs adequately alleged loss causation. with certain enumerated exceptions where court granted leave to amend because. dismd. even though synthetic transactions at issue in this case would indisputably be protected under amended 15 USCS § 78j(b) if they were issued after December 21. cert den (1976) 429 US 896. CA9 Cal) 534 F2d 156. (2004. Fact that complete disclosure has been made cannot end inquiry regarding possible violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Not every violation of fraud provision of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 can become or should be forced into category headed "misrepresentations" or "nondisclosures". cert den (1965) 382 US 811. Inc. Rule 10b-5. his securities fraud claims were properly dismissed as barred by applicable statute of limitations. Where plaintiffs conceded that defendants had not engaged in material misstatements. in context of preliminary merger discussions. thereby artificially inflating market and issuance prices of company's securities. CCH Fed Secur L Rep P 91753. SEC Rule 10b-5 proscribes omissions of material facts only where facts are necessary to make statements made. Pursuant to 15 USCS § 78j(b). 15 L Ed 2d 60. v Levinson (1988) 485 US 224. Libaire v Kaplan (2010. Horwath & Horwath (1975. (1976. CA4 Md) 542 F2d 915. Publicly traded corporation and its CEO were denied judgment on securities fraud claims. 97 S Ct 259 and (superseded by statute as stated in Niss v NASD (1997. Secs. 134. Baron v Smith (2004. Basic Inc.F. as matter of law. offer and sale of condominiums do not constitute securities. § 10(b) and Rule 10b-5 prohibit all fraudulent schemes in connection with purchase or sale of securities. and courses of business are also interdicted by securities laws. CA2 NY) 516 F2d 811. statement must be misleading. failed where purchaser did not demonstrate genuine issue of material fact regarding whether defendants' statements were false or contained omission. where plaintiff shareholders raised sufficient allegations of misstatements and non-disclosure of pending investigation by Federal Trade Commission. Claim of open market purchaser of common stock under § 10(b) of Securities and Exchange Act of 1934. Investors failed to state claims for securities fraud. but such statutory proscriptions encompass half-truths and failure to disclose material information. Inc. fraudulent devices. CCH Fed Secur L Rep P 98155. CA9 Or) 528 F2d 901. it is not sound to dismiss complaint merely because alleged scheme does not involve type of fraud that is usually associated with sale or purchase of securities. reh den (1965) 382 US 933. Fox v Kane-Miller Corp. misrepresentation may cause person to whom it is addressed to discount other information available to him. Unpublished Opinions Unpublished: Plaintiffs' 2005 payment for annual membership dues was required by corporate by-laws and afforded plaintiff access to and use of hunting preserve and related facilities maintained by defendant corporation (payment of dues was not purchase of security).15 USCS § 78j https://www. Affirmative misrepresentation not necessary Unlike actions at common law. and were not protected by federal securities law at time they took place. misleading. 86 S Ct 305. absent duty to disclose. Competitive Associates. 86 S Ct 23. 15 L Ed 2d 344.

NYSE specialist. and when corporation is alleged injured seller or purchaser in securities transaction. SEC properly alleged violations against defendant to impose liability under 15 USCS § 77q(a). 28 FR Serv 2d 321. cert den (1974) 419 US 830. by way of affirmative misrepresentation or omission of material facts. CA5 Fla) 606 F2d 602. since knowledge of falsity. practices. there is civil redress for damage to corporation resulting from deception in disclosure of information which affects corporate decisions in purchase and sale of securities even though corporation acts through stockholders. courts had to focus on specific conduct of executives in light of their role in securities market. SD NY) 473 F Supp 544. they must be able to show that misrepresentations complained of were fraudulent. CCH Fed Secur L Rep P 92822. their knowledge. SEC v KPMG LLP (2006. 42 L Ed 2d 56. or reckless disregard for truth may be sufficient. moreover. Defendants' motion to vacate arbitration award was denied. Beecher v Able (1975. stock purchasers could state claim for securities fraud by alleging that company materially misrepresented its financial condition by failing to disclose sales practices that encouraged customers to purchase substantial advance inventories of product because such practices could reduce company's future revenues. Jury verdicts convicting defendant. CA5 Fla) 610 F2d 818 and cert den (1980) 449 US 820. v Tri-State Bank (1981. motion to strike den (2006. and Rule 10b-5. nowhere in complaint did investors allege that they relied on any representations of other defendants or that these caused damage. United States v Finnerty (2008. In order to make out claim under section 10(b) of Securities Exchange Act (15 USCS § 78j(b)). (2004. CCH Fed Secur L Rep P 92846. defendants' failed to show that arbitration award that found that defendants' had violated § 10(b) of Securities and Exchange Act of 1934. 135. CCH Fed Secur L Rep P 96334. (1966. In motion for default judgment. To distinguish between primary and secondary liability. Co. Deceptive conduct Fact that manipulative scheme was known to some or all of corporation's directors does not negate element of deception. In interpreting whether conduct was materially deceptive under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. earnings. (2002. 15 USCS § 78j(b). Inc. Keene Corp. In order for plaintiffs to recover in action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 95236. v Weber (1975. and growth projections were disclosed because such information could be important to reasonable investor. ED NY) 294 F Supp 2d 296. Voege v Magnavox Co. DC Conn) 250 F Supp 297. (1977. partial summary judgment den. SD NY) 435 F Supp 397. CCH Fed Secur L Rep P 98275.. DC Conn) 409 F Supp 2d 122. CCH Fed Secur L Rep P 94785. SEC v Lawbaugh (2005. absent duty to speak. ND Ill) 513 F Supp 885. reh den (1980. CA11 Ga) 374 F3d 1015. CCH Fed Secur L Rep P 97192. Ltd. SD NY) 238 F Supp 766. Simon v New Haven Board & Carton Co. CCH Fed Secur L Rep P 94357. § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934. part of Securities Act of 1933. mere silence is deceptive only to persons with particular reasons to draw specific inferences from it. and prohibition applies not only to officer buying for his own account but also to closely held corporation dealing in own securities. 101 S Ct 77. that is to say fraudulent conduct. Mere silence. whether conduct may fairly be viewed as deceptive will generally depend upon circumstances of particular person or class allegedly deceived. SEC v Tambone (2008. CCH Fed Secur L Rep P 97147.com/research/retrieve?cc=&pushme=1&tmp. 95 S Ct 53. DC Conn) CCH Fed Secur L Rep 93625. v American Fidelity Life Ins. (1979. all information reasonably relevant to rational investment decision must be disclosed to decision-making body. because they are fairly viewed as standing in place of corporate entity under such circumstances.10b-5 (1995) were vacated on grant of his posttrial motion for judgment of acquittal. CCH Fed Secur L Rep P 93141. whereas false statements or partial disclosures may be deceptive generally. district court erred by requiring Securities and Exchange Commission to allege actionable statements publicly attributed to executives as distinct element of its claims of primary liability under § 17(a) (15 USCS § 77q(a)) of Securities Act of 1933. where government failed to provide proof of customer expectations or violations by virtue of any deceptive practices. SD 102 of 158 3/8/11 4:25 PM . affd (2004. whether body be composed of directors. Alabama Farm Bureau Mut. SD NY) 327 F Supp 2d 258. Inc.. where complaint essentially alleged that investors were induced into investing in businessman's corporation and he never intended to and did pay back investors' investments. Klamberg v Roth (1979. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) proscribes nondisclosure as well as affirmative misrepresentation of material facts affecting stock's value. that was precisely what court did in deciding that executives' implied statements that they had reasonable basis to believe that market timing disclosures in prospectuses were truthful and complete fell within purview of "make statement" requirement of Rule 10b-5(b).15 USCS § 78j https://www. (1974. CA1 Mass) 550 F3d 106. requisite "deception" under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 is provided if disinterested directors or shareholders are misled. was made in manifest disregard for law. CA2 NY) 533 F3d 143. in determining whether misrepresentations were fraudulent. Atlanta. ND Ga) 321 F Supp 2d 1342. CCH Fed Secur L Rep P 96104. In re Sci. 17 FLW Fed C 689. permanent injunction was appropriate for this violation. arbitrator rationally held that defendants violated § 10(b) because they made untrue statements of material fact as to ownership. Casualty Co. Under SEC Rule 10b-5. DC Del) 439 F Supp 935. SEC properly alleged consulting firm defendants' "substantial assistance" in fraudulent "finders fee" scheme involving state pension fund where SEC sufficiently alleged that consulting firm knew of fraudulent nature of scheme but nevertheless participated in it by urging increase of investment from state's treasurer and accepted "finders fee" payment without providing meaningful assistance to pension fund or equity firm with whom state's pension funds were invested. Glazer v AA Premier Realty. officers. company was obligated to reveal channel stuffing once sales. 18 FR Serv 2d 847. Alabama Farm Bureau Mut. Arber v Essex Wire Corp. and course of business that operated as fraud and deceit in connection with offer and sale of security. Shareholders' allegations of channel stuffing and violations of generally accepted accounting principles (GAAP) were sufficient to state claim where shareholders alleged that company misrepresented its financial condition by failing to disclose its channel stuffing activity and defendants' violations of GAAP distorted financial information available to public. summary judgment was improper because while one partner presented arguments to support finding that he acted in good faith as to identified accounting irregularities. where defendant diverted approximately $ 2 million from two companies through series of fraudulent transactions causing material misrepresentations and omissions in numerous financial forms and misappropriated funds from investors. there must be deception. Oakhill Cemetery of Hammond.lexis. and under 15 USCS § 78j(b).by Citation . Barnett v Anaconda Co. ND Ga) 239 F Supp 2d 1351. CA6 Ohio) 490 F2d 414. control. rather than on whether investors specifically relied on their statements. Investors' complaint for violations of 15 USCS 78j was dismissed because. deceptive conduct is shown only if there is breach of duty to disclose to either independent directors or shareholders. 66 L Ed 2d 22. (1965. While there was nothing inherently improper about pressing for sales to be made earlier than in normal course. Untrue statement within meaning of SEC Rule 10b-5(b) can be so considered only if it amounts to manipulative or deceptive device or contrivance within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 95016. CCH Fed Secur L Rep P 95102. SEC v Dibella (2005. or shareholders of corporation. part of Securities Exchange Act of 1934. and shares of realty company and engaged in acts. and perceptive faculties. Securities laws' prohibition of deceptive conduct is aimed at breaches of duty to disclose. DC Md) 359 F Supp 2d 418. On motion for summary judgment in enforcement action brought by SEC against audit firm partners. Carpenters Health & Welfare Fund v Coca-Cola Co. is not manipulative or deceptive device or contrivance under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). therefore. SEC was entitled to have inferences drawn it its favor where it presented sufficient evidence to support jury finding of liability under 15 USCS § 78j to find that partner had scienter necessary to be well aware of danger than company's financial statements materially misstated its financial condition but yet authorized audit firm to issue clean audit opinion. (2003.Get a Document . Geldzahler v Weaver (2004. of violating 15 USCS § 78j and 17 CFR § 240. court is not limited to examining defendants' intent. SD NY) 394 F Supp 787. untrue statements and omissions to state material facts which Rule 10b-5(b) are concerned with are limited to those which constitute manipulative or deceptive devices.

CA9 Cal) 327 F3d 851. and it did so. Claims alleging violation of § 10b of Securities Exchange Act of 1934. CA2) 257 F3d 171. CA5 Ala) 564 F2d 416 and cert den (1978) 435 US 952. (2001. CA9 Cal) 2003 US App LEXIS 14351. 15 USCS § 78j. pursuant to 15 USCS § 78j. (1977. 17 CFR § 240. and officer's motion for summary judgment on shareholder's federal securities claims under § 10(b) (15 USCS § 78j(b)) of Securities Act of 1934 and Rule 10b-5.10b-5 because shareholder readily admitted that he entered into Sale Agreement knowing that he was unaware of company's financial condition from date of his resignation onward. 78m. Corporate executives could not be held liable under 15 USCS § 78j(b) and 17 CFR § 240. Inc. ordinarily. 15 USCS § 78j(b) and 17 C. can be based only upon breach of duty to disclose. CA5 Ala) 559 F2d 1307. SEC v Kelly (2009. Prohibition of Rule 10b-5. and related regulations was not subject to dismissal because SEC adequately stated plausible claims and provided sufficient information about which managers were involved in which specific misconduct.10b-5 (Rule 10b-5) was reversed because complaint identified four confidential witnesses who worked for company and who allegedly would testify to existence and effect of stop-work orders on company's profits and once defendants chose to tout company's backlog. thus. Vernazza v SEC (2003. potential consequences of these payments were type of predictions and soft information that did not give rise to duty of disclosure. Inv. SD NY) 663 F Supp 2d 276. as misconduct alleged (that defendants managed corporate earnings and systematically withheld positive information from market with express intention of artificially depressing price of stock. DC NJ) 610 F Supp 2d 342. within meaning of SEC Rule 10b-5. ACA Fin. those who are not parties to any purchase or sale are not under duty to disclose unless they are aiders and abettors or have themselves substantially participated in some concealment. College did not have duty to disclose in official statement every possible material fact about its operations and finances. 17 BNA IER Cas 1673. because there was no underlying violation of Securities Exchange Act. SEC sufficiently alleged fraudulent scheme. 15 USCS § 78j(b) and 17 CFR § 240. DC Mass) 477 F Supp 2d 342. that they were utilized for purpose of deceiving plan's investors. reh den (1977.10b-5. § 240.lexis. 78j. § 240. First Virginia Bankshares v Benson (1977. CCH Fed Secur L Rep P 94554. and knowledge of customer's weak financial situation amounts neither to duty to disclose this information nor to knowledge of fraud. legality of particular device is obviously important factor to consider when determining whether deceptive practice was implemented. Corp.10b-5 claims survived motion to dismiss. so long as disclosures that were made satisfied statute. 78t. 17 C. and officer's statements were not manipulative or deceptive as required under Rule 10b-5. 9(b). 2008 FED App 199P. CA10) 2007 US App LEXIS 19048. company's co-founder did not engage in any deceptive conduct because he had no duty to disclose his stock sales and shareholders failed to allege any causal connection between co-founder's nondisclosure and their loss. (2009. Murphy v McDonnell & Co. Lewis v Termeer (2006.E. Inc. CA9) 335 F3d 1096. amd. partner.10-5 were dismissed because no defendant was officer or director during class period so shareholders could not rely on group pleading doctrine. against misleading and untrue statements is not prohibition against statements that are incomplete. Claims of violations of Securities Exchange Act § 10(b). Cardon v Testout! Corp. executives allegedly gave oral assurances of rights of return or pricing concessions in connection with legitimate sales. Inc.F. 2002 Daily Journal DAR 1540. sought to redress. or strong inference that those employees acted with requisite scienter in signing certifications. Rule 10b-5. where no misrepresentations are alleged. SD NY) CCH Fed Secur L Rep P 91550). silence or omission to state fact is proscribed only in certain situations: first. moreover. Unpublished Opinions Unpublished: District court properly granted corporations. CCH Fed Secur L Rep P 91477 (criticized in Cromer Fin. § 240. Misstatement or omission. 17 CFR § 240. P. court should consider: relationship between plaintiff and defendant. Ltd. were dismissed against three employees of mutual fund services company because SEC did not demonstrate either substantial participation in fraudulent scheme to transfer losses from one client to others. 2003 CDOS 3423. Complaint set forth by Securities and Exchange Commission (SEC) against four corporate managers alleging "round-trip transaction" scheme in violation of 15 USCS §§ 77q. militate against requiring fraudulent scheme to involve clearly illegal conduct. Castellano v Young & Rubicam. encompasses patently false statements.. DC Mass) 477 F Supp 2d 342. in determining whether duty to speak arises. Brody v Transitional Hosps.F. Order of Securities and Exchange Commission (SEC) finding that investment advisers and associated persons committed fraud under 15 USCS § 78j(b) was supported by substantial evidence where advisers failed to disclose their financial interests in certain stocks to their clients or SEC and SEC relied on its experience and expertise in determining that investment advisers were knowledgeable enough to recognize that their shareholder arrangement created potential conflict of interest. Under heightened pleading standard of Fed.R.Get a Document .10b(c).E. Duty to disclose Liability under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. shareholder's claim against partner under 15 USCS § 78t(a) also failed. 15 USCS § 78j(b) and 17 CFR § 240.10-5 (Rule 10b-5) was affirmed because while illegal payments to senator could arguably have been piece of hard information that was subject to disclosure. to bias ratio at which stock would be exchanged) was precisely that which subdivisions (a) and (c) of S. Rule 10b-5(c). CA6 Mich) 527 F3d 564. Lending institution has no duty to disclose based on its role as lender. Dismissal of securities fraud claims brought under § 10b of Securities Exchange Act of 1934.15 USCS § 78j https://www.by Citation . Corp. promulgated under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 96189. SEC v Durgarian (2007. CA2 NY) 553 F2d 292. Closely held corporations that purchase their own stock have special obligation to disclose to sellers all material information. 2003 Daily Journal DAR 7965 and reprinted as amd (2003. CCH Fed Secur L Rep P 92458. parties' relative access to information to be disclosed. Enters. CA9 Nev) 280 F3d 997. shareholder had not shown that any of statements officer made with respect to corporation's debt or its prospects in December 2000 were false. which does not contain freestanding completeness requirement. motion den (2003. (2008. SD Ohio) 553 F Supp 2d 902. In re Nat'l Century Fin. and then conceal both underlying error and fraudulent transfer.10b-5(a) and (c) for deceptive conduct where executives' actions were not inherently deceptive. SEC v Durgarian (2007. 2003 Daily Journal DAR 4369. CA6 Tenn) 982 F2d 936. Zaluski v United Am. Dismissal of securities fraud action brought under § 10b of Securities Exchange Act of 1934. Fin. (2007. SEC v Lucent Techs. 136. (2008. CCH Fed Secur L Rep P 97273. where person has duty to speak. and defendant's role in initiating purchase or sale. 55 L Ed 2d 802. Civ.R.C. they were bound to do so in manner that wouldn't mislead investors as to what that 103 of 158 3/8/11 4:25 PM . 98 S Ct 1580. Plaintiffs' 15 USCS § 78j(b) and 17 C. CCH Fed Secur L Rep P 95216. Guar. R. SD NY) 445 F Supp 2d 366..C. Inc. Smith v American Nat'l Bank & Trust Co. CA1 Mass) 512 F3d 46.. NY) 412 F Supp 2d 349. To extent that some of these statements could have been made after company became aware that payments to senator were being investigated. (1992. (2002. in determining sufficiency of complaint alleging violations of Securities Exchange Act § 10(b). and second. CCH Fed Secur L Rep P 91692. Litig. official statement needed only disclose enough accurate information and not omit pertinent information to allow investors to make informed decision about whether to invest. since person may not deal in half-truths. v Advest. such knowledge did not impute knowledge of myriad of potential consequences that could occur as result of investigation of senator. once disclosure is made. while "as of" trades themselves are not illegal. benefit derived by defendant from purchase or sale.R. 2002 CDOS 1218. there is no duty to make it complete and accurate. where defendant has revealed some relevant material information even though he had no duty. CCH Fed Secur L Rep P 96021. terms of S. defendant's awareness of plaintiff's reliance on defendant in making investment decisions. v Berger (2001. to hide facts and to prevent those investors from realizing that subject investment was not timely made. (2008. but it is not itself conclusive..com/research/retrieve?cc=&pushme=1&tmp. SEC alleged.F. Healthcare Corp.

Corp. (2) information that was allegedly omitted. 17 C. In re Boston Sci. SD Fla) 18 FLW Fed D 401. and that duty exists only in circumstances which indicate investment or fiduciary relationship between seller and buyer. In re CDNOW. DC Mass) 477 F Supp 2d 342.10b-5. R. McGraw v Matthaei (1972. lead plaintiff failed to allege with particularity. that defendants had duty to disclose fund's losses. Denial of Securities and Exchange Commission motion for preliminary injunction on grounds that computer hacking could not be "deceptive" under § 10(b) of Securities Exchange Act of 1934 was vacated and remanded. ED Mich) 388 F Supp 84. P. Litig. Since purchasers did not allege that accountant discovered substantial understatement of reserves for returned merchandise within class period.F. remained silent. (2004. as there was strong inference executives' misstatements were made with intent to deceive investors. (2008. (1973. § 229. there is nonetheless affirmative obligation in commercial dealings not to mislead. DC Kan) 314 F Supp 2d 1119.10b-5 pursuant to Fed. Where it was alleged that manufacturer of cardiovascular and endosurgical devices artificially inflated its stock prices. or forward looking statements. 15 USCS §§ 78j(b). SEC v Dorozhko (2009. Inc. 9(b). Sec. Where it was alleged that manufacturer of cardiovascular and endosurgical devices artificially inflated its stock prices. SEC v Gane (2005. SD Fla) 18 FLW Fed D 401. 15 USCS § 78u-4 because (1) there could have been no omission because corporations that were disclosed in proxy limitations on use of synthetic fuel credits which were imposed by Internal Revenue Code. Inc. on part of seller that unless he speaks buyer may act to his detriment. moreover. actual or implied. was not of type which corporations had duty to disclose because it was well-established law that securities laws did not require disclosure of information that was publicly known. comporting with requirements of Item 103 of Regulation S-K. DC Ohio) 174 F Supp 49. strict duty of full disclosure and failure to disclose any material fact in relation thereto constitutes violation of such provisions. Civ. Although nondisclosure in breach of fiduciary duty satisfies 15 USCS § 78j(b)'s requirement of deceptive device or contrivance. Litig. A. CCH Fed Secur L Rep P 92817. or employees "may" buy or sell stock in their investment opinions. Sec. ED Pa) 138 F Supp 2d 624. challenged statements could not serve as basis for securities claim because they were corporate puffery. (II) (2005.R. or knowledge. CCH Fed Secur L Rep P 93572. CCH Fed Secur L Rep P 95296.103. pursuant to Fed.com/research/retrieve?cc=&pushme=1&tmp. 11 Ohio Ops 2d 289.R.. Litig. SD NY) 388 F Supp 2d 307. that accountant failed to publicly disclose that corporation was no longer in compliance with its debt covenants where there was no allegation that accountant was aware that corporation was in default under its credit agreement. Court granted corporations' motion to dismiss investors' claims under § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934.S. In re Compuware Secs. Securities fraud claims arising from corporation's failure to disclose imminent termination of its chairman and its president survived motion to dismiss with respect to claims under § 10(b) (15 USCS § 78j(b)) and § 14(a) (15 USCS § 78n(a)) of Securities Exchange Act of 1934 alleging specific misleading statements concerning their expected long-term employment.. and Rule 10b-5. and all claims against accounting firm were also dismissed. claim under § 11 (15 USCS § 77k) of Securities Act of 1933 was dismissed. and fact that corporation defaulted under its credit agreements did not render any of accountant's prior statements false. (2004. ED Mich) 301 F Supp 2d 672. 15 USCS § 78j(b). In re Progress Energy. they failed to provide adequate disclosure. CCH Fed Secur L Rep P 93572. statements of truth. CA9 Cal) 527 F3d 982. Complaint alleging violations of Securities Exchange Act § 10(b) failed to adequately allege. 17 CFR § 240. by disclosing potential risk of pending litigation. it was found not to have made material misstatements and omissions regarding civil lawsuit with another manufacturer because it fulfilled its disclosure requirements regarding suit. it was found not to have made material misstatements and omissions regarding U. SEC v Durgarian (2007. CCH Fed Secur L Rep P 94743. and 17 C. Inc. so shareholder's § 10(b) of Securities Exchange Act claim was dismissed for failure to state claim. thus. In re Flag Telecom Holdings. Financial consulting firm and financial public relations firm made material omissions of fact by failing to disclose that they were selling company's shares during and after time that they were recommending company in their investment opinions. which were not basis of liability pursuant to 15 USCS § 78u-5(c)(1)(A). SD NY) 388 F Supp 2d 307. their affiliates. 15 USCS § 78j(b). DC RI) 362 F Supp 226. executives continued to state optimistic projections for corporation because this alleged: (1) misstatement or omission of material fact.10b-5 (2004) thereunder. (2005. and Rule 10b-5. (2007. and furthermore.R. (3) even if it was assumed that corporations should have disclosed existence of alternative minimum tax. Litig. because neither registration statement nor prospectus supplement contained such statements. and Rule 10b-5. § 240. Department of Justice (DOJ) 104 of 158 3/8/11 4:25 PM . CCH Fed Secur L Rep P 95296. and SEC Rule 10b-5 impose. generally applicable tax provision.R. 78t(a). Purchasers failed to state claim under § 10(b) of Securities Exchange Act of 1934.J. Sec. § 240. Inc. In re Warnaco Group. SD NY) 371 F Supp 2d 548. Opinion Sec. N. (II) (2005. affirmative misrepresentation is distinct species of fraud. when corporate customer from which approximately one-third of corporation's revenue was generated became corporation's competitor. 15 USCS §§ 78j(b). CCH Fed Secur L Rep P 91463.F. Litig. DC Mass) 490 F Supp 2d 142. SEC v Gane (2005. where merger termination was not certain until drop-dead date and. 78t(a). and 17 C. General antifraud provisions of 15 USCS § 78j(b). SD Fla) 354 F Supp 1048. seller has duty to disclose those material facts which would not be revealed by buyer's exercise of due care.15 USCS § 78j https://www. SEC v Dorozhko (2009. thereby giving rise to duty to correct.Get a Document . and (4) which proximately caused their injuries when value of their stock dropped dramatically. upon persons engaged in sale of securities.by Citation . SEC Rule 10b-5 imposes duty to speak and to make full disclosure of material facts in those circumstances where silence would constitute fraud. scienter of firm's president was imputed to firms. (2001. v Sprint Corp. CCH Fed Secur L Rep P 93263. Lundy Associates (1973. 78t(a). 12(b)(6) and Private Securities Litigation Reform Act of 1995. 17 C. In re Warnaco Group. backlog consisted of. CCH Fed Secur L Rep P 93988. those defendants violated § 17(a) (15 USCS § 77q(a)) of Securities Act of 1933. there was no fiduciary-duty requirement where alleged fraud was affirmative misrepresentation rather than nondisclosure. § 240. To prevail in action based upon violation of antifraud provisions of Securities Exchange Act.lexis. Connelly v Balkwill (1959. CA2 NY) 574 F3d 42. Civ. 17 CFR § 240. Opinion Sec. Financial public relations and consulting firms repeated practice of promoting company's stock while failing to disclose their interest in and sale of stock was done in violation of securities laws.F. 83 Ohio L Abs 513.10b-5 by alleging that. plaintiff must prove that defendant either made material representations directly to him or. SEC v M. Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). affd (1960. violating § 10(b) and § 20(a) of Securities Exchange Act of 1934. CA2 NY) 574 F3d 42.F. violating § 10(b) and § 20(a) of Securities Exchange Act of 1934.10b-5. LTD. that it settled and paid other manufacturer millions of dollars was of no consequence as loss resulting from materialization of disclosed risk did not support claim of securities fraud. Litig. being duty bound to disclose material information to him. as was required pursuant to 15 USCS § 78u-4(b). CA6 Ohio) 279 F2d 685. there could be no primary violation based on material omission. R. by stating that they. SD NY) 308 F Supp 2d 249. defendants had no duty to inform public that deal was dead prior to that date. purchasers could not maintain claim against accountant under § 10(b) of Securities Exchange Act of 1934. officers. (2004. absent duty to disclose. even if person does not have fiduciary duty to disclose or abstain from trading. Berson v Applied Signal Tech. Corporation defendants were not liable for securities fraud under 15 USCS § 78j(b) for failing to inform public that proposed merger would not go through.. (3) upon which shareholders justifiably relied. (2) made with scienter. full disclosure is only required where law imposes duty to speak. Shareholders adequately alleged violations of 15 USCS §§ 78j(b). § 10(b) (15 USCS § 78j(b))of Securities Exchange Act of 1934. Branham v Material Systems Corp. directors. for failure to disclose understatement. it was simply not case that omission of that information made statements that were disclosed materially misleading. P. any actionable misstatement regarding litigation. Inc. Shareholder's bare assertion--that company did not disclose impact on revenues from swaps or reciprocal transactions until last day of class period--failed because shareholder did not plead facts that demonstrated that company had duty to disclose this information prior to its statement or that company failed to disclose relevant transactions.

that manufacturer's executives invoked their Fifth Amendment rights was not dispositive. to reveal that its sales levels were exceedingly low and that it was in serious danger of failing to meet first revenue metric in July 2004. 15 USCS §§ 78j(b) and 78t(a). dismissal of plaintiff's 15 USCS §§ 78j(b) and 78t(a) claims were affirmed. Stockholders' claim against corporation. MD Fla) 531 F Supp 2d 1334.R. (2010. Unpublished Opinions Unpublished: Although Illinois State Board of Investment asserted that corporation had particular duty. but manufacturer's loss was caused by materialization of risk that it had adequately disclosed. because no reasonable investor would consider statements to be meaningful in making investment decision. of Inv.S.14a-9.R.F. Corp.) (2009. (In re Enron Corp. where alleged omissions are that (1) market accounts contain certain degree of risk and (2) market decline can precipitate margin call requiring investor to put up more money. because information investors claim was withheld is so basic that any investor could be expected to know it. (2010. fundamental problem with plaintiffs' claim was that they did not allege with particularity basis for their belief that individual defendants did riot disclose insider trading fraud to investment bank's auditors and its audit committee. of Inv. (2009. Thesling v Bioenvision. court found that plaintiffs had adequately stated claims under § 14(a) and Rule 14a-9. resulted in no enforcement action against company. which required that loss be caused by concealed risk. DC Mass) 490 F Supp 2d 142. SD Tex) 610 F Supp 2d 600. no reasonable investor would have found manufacturer's comments about its focus on quality important in total mix of information that was available. CA2 NY) 2010 US App LEXIS 5226. moreover. Alleged omissions of broker are not actionable under 15 USCS § 78j(b). (In re Enron Corp. 15 USCS §§ 78j(b). Inc.10b-5. Corp. where plaintiffs cited as evidence of fraud statements in corporation's annual reports that its affairs were conducted according to highest standards of personal and corporate conduct and that regulatory policy was fundamentally important to its subsidiary. 78t(a).15 USCS § 78j https://www. Weill v Dominion Resources (1994. and information that was available to market.lexis. SD Tex) 610 F Supp 2d 600. Defendant secondary-actor banks were not liable under 15 USCS § 78j(b) on allegations of participating in debtor company's structured finance transaction fraud because banks had no duty to disclose information to plaintiff investors who had not had any contact with banks or relied on statements from banks in deciding to invest. (2007. alleging that corporation perpetrated fraudulent scheme to create and maintain artificially inflated stock prices. Corporation and its officers were entitled to dismissal of city pension board's class action securities fraud action pursuant to 15 USCS § 78j(b) because (1) central thrust of board's allegations concerning corporation's deficiencies alleged no more than corporate mismanagement.Get a Document .. Beleson v Schwartz (2009. inter alia. and Securities and Exchange Commission Rule 10b-5. prior to release of First Deficiency Notice. violating § 10(b) and § 20(a) of Securities Exchange Act of 1934. (4) corporation's omission of fact that some of its officers were violating corporation's newly adopted code of ethics from announcements of adoption of that code did not render statement of adoption misleading under17 C. Litig. CA2 NY) 549 F3d 187. (2). In re Countrywide Fin. or paid to executive and thus did not have to be disclosed under 17 C. CCH Fed Secur L Rep P 94532.F.10b-5. was not misleading.) (2009. Ill. there was no duty to disclose that management engaged in multi-tasking to address challenges associated with centralization. In re FBR Inc. (3) board failed to meet pleading requirements of 15 USCS § 78u-4(b)(1). investigation where it fulfilled its obligations by disclosing potential risk of DOJ investigation in its filings. and (5) corporation's failure to disclose information relating to personnel changes were immaterial. no loss causation was alleged.by Citation . there was no duty to disclose challenges posed by shifting from regional to centralized system.10b-5(b) impliedly overrules or eliminates much of multifactor test of Virginia Bankshares for determining duty to disclose. Plaintiffs alleged that Sarbanes-Oxley certifications were false or misleading because individual defendants had not disclosed to outside auditors and to investment bank's audit committee any fraud that involved management or other employees who had significant role in registrant's internal control over financial reporting. In re Winn-Dixie Stores (2007. v JP Morgan Chase Co. In re Boston Sci. even though it failed to inform market about three warning letters from U. which exposed itself to undisclosed level of heightened risk. Corp. and duty to disclose arises when one party has information that other party is entitled to know because of fiduciary or other similar relation of trust and confidence between them." were no more than "puffery" which did not give rise to securities violations. CCH Fed Secur L Rep P 98714. State Bd. Eca & Local 134 IBEW Joint Pension Trust of Chi. space and communications corporation did not have duty to inform public that it was in negotiations that might lead to bankruptcy. district court properly dismissed that claim on ground that statements in February 2004 regarding sales levels and satisfaction of revenue metrics targeted for July 2004 would have been speculative and immaterial. Secs. claim failed. absent duty to disclose. and appellate court agreed that because corporation had no duty to publicly disclose terms of its agreement with United States Postal Service. silence. In re Boston Sci. State Bd. 15 USCS §§ 78j(b)." and that it would "continue to reposition and strengthen its franchises with focus on financial discipline. Plaintiff's § 10(b) of Securities Exchange Act of 1934. CCH Fed Secur L Rep P 93035. § 240. Derivative Litig.R. Unpublished: Because plaintiff had not identified any part of seven challenged statements that were rendered materially misleading by alleged omissions relating to merger negotiations. moreover. (2007. fact that its sales revenues were low relative to those terms was not material information five months before date of first metric. Knowledge assumed of reasonable investors Statements such as assertion that defendant investment bank had "'risk management processes that are highly disciplined and designed to preserve integrity of risk management process. Sec. because he made false and misleading statements which kept investors from learning that corporation was involved in negotiations to sell assets to another corporation which required space and communications corporation to declare bankruptcy.F. Litig. v Authentidate Holding Corp. Litig. (2008. v Authentidate Holding Corp.S. Where plaintiffs' proxy allegations were not limited to failure to disclose breach of fiduciary duty but rather alleged that proxy statements failed to disclose that publicly traded company abandoned its underwriting standards. no investor would have taken such statements seriously in assessing potential investment. Where it was alleged that manufacturer of cardiovascular and endosurgical devices artificially inflated its stock prices. (2007. 17 CFR § 240. Andropolis v Red Robin Gourmet Burgers. FDA letters were not material and manufacturer had no duty to disclose them since letters were informal and advisory. Unpublished Opinions 105 of 158 3/8/11 4:25 PM . in action by investors. and its disclosures were consistent with 17 C. for simple fact that almost every investment bank made these statements. § 229. similarly. Supreme Court case law on 15 USCS § 78j(b) and 17 CFR § 240. CA2 NY) CCH Fed Secur L Rep P 95708." that it "set standard for integrity. Unpublished: District court was correct to dismiss all claims related to corporation's general failure to reveal. is dismissed. one who fails to disclose material information prior to consummation of securities transaction commits fraud only when he is under duty to do so. difficulties it was experiencing in meeting revenue metrics called for in agreement it had with United States Postal Service because second amended complaint did not allege facts establishing that corporation had duty to reveal that information. Food and Drug Administration (FDA). ED Va) 875 F Supp 331. was sufficient to put investors on notice that bankruptcy was possibility. SD NY) 544 F Supp 2d 346.com/research/retrieve?cc=&pushme=1&tmp. DC Colo) 505 F Supp 2d 662. Inc. it had no duty to confess guilt. Secs. Newby v Enron Corp. Ill. Development of U. 137. including in corporation's 10-K filings and reports from market analysts and reporters. CA2 NY) 2010 US App LEXIS 5226. in connection with its February 2004 stock offering. § 229. in addition. (2010. as. it was found not to have made material misstatements and omissions regarding its quality control. Sec. (2) executive's use of company jet for personal reasons was not awarded to. CD Cal) 554 F Supp 2d 1044. Newby v Enron Corp. Sec. Newman v Rothschild (1986. SD NY) 651 F Supp 160. Chief executive officer of space and communications corporation was entitled to summary judgment on investors' claims that he violated §§ 10(b) and 20(a) of Securities Exchange Act of 1934. which did not support federal cause of action.402. 17 CFR § 240. SD NY) 599 F Supp 2d 519. earned by.401(f)(2).. DC Mass) 490 F Supp 2d 142. (2008. and involved only three of manufacturer's 26 facilities.

CCH Fed Secur L Rep P 92627. Inc. Akerman v Oryx Communications. payments were not as group routine or minor. requirement under Fed. Inc. (1984. alleged misstatements were not material because: (1) they were puffery not actionable as matter of law..com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 95788. Ltd. DC Utah) 53 F Supp 2d 1236. DC Conn) 289 F Supp 2d 39.Get a Document . and in any event "surprises. (5) company had no duty to report on its ongoing Food and Drug Administrations approval process. CCH Fed Secur L Rep P 91921. 15 USCS § 78j. reh den. Materiality District court's judgment that underwriter's official statement regarding industrial development bonds did not contain any misrepresentations could be upheld on appeal if there were no misrepresentations or if misrepresentations and omissions complained of were not material. no one would contend these activities alone required reserves. on several occasions. being able to do so only because issuer extended warrants' term. DC Mass) CCH Fed Secur L Rep P 92924) and affd in part and revd in part. 17 BNA IER Cas 1673. making statement meaningless and immaterial. failure to disclose anywhere on websites or in other materials any information about individual's extensive criminal history. Litig. this argument was unpersuasive for three reasons: first. reh. was material omission and some. ED Pa) 315 F Supp 2d 666. 94 CDOS 6903. including convictions for fraud. P. In re Trex Co. would have resulted in rescission claims or damages in lieu thereof against issuer since unclean hands defenses appeared to preclude rescission claims under 15 USCS § 77l(a)(1). (2003. Securities fraud action must fail to extent that it relies on conference call statement that company did not expect any surprises in fourth quarter. affd in part and app dismd in part on other grounds. In re Atlas Air Worldwide Holdings. Company's announced need to significantly adjust its reported financials was sufficient to indicate that its original statements were materially false and plaintiffs pled facts sufficient to establish strong inference of scienter with respect to all but one of individual defendants. when its 1999 annual report was issued. CA2 NY) 810 F2d 336. CCH Fed Secur L Rep P 98433. 6 FR Serv 3d 1136. even if pled with specificity. did not plead fraud with requisite specificity. second. (1994. to extent materiality question was close. App DC) 569 F3d 458. District court properly dismissed pursuant to Fed. Sec. therefore.by Citation . (3) even lies were not actionable when investor possessed information sufficient to call misrepresentation into question. CCH Fed Secur L Rep P 90509. Unpublished: Allegation that surviving party to merger failed to disclose to acquiring party that surviving party had paid its chief executive officer nearly $ 90 million in compensation for most recent year and had made substantial loans and other payments to him as well. CA9 Cal) 610 F3d 1103. en banc. if not all. (2001. and thus. are unexpected. arguing that every manufacturer replaced its products. on causal relationship between misstatement and subsequent decline in value. were allegations that reasonable investor would have wanted to know before investing their pension funds with state treasurer. although plaintiff may successfully allege that statement made in prospectus was material within meaning of statute. remanded (2005. CA6) 2005 US App LEXIS 8053. (4) they were statements predicting future events not worded as guarantees. Civ. rather. v Bridgestone Corp. SEC v Prater (2003. of representations made about foundational companies on defendants' websites and in their literature was false. courts generally reserved such questions for trier of fact. 9(b) and Private Securities Litigation Reform Act of 106 of 158 3/8/11 4:25 PM . Litig. v Kress Assocs. R. ED Va) 303 F Supp 2d 724 (criticized in Argent Classic Convertible Arbitrage Fund L. CCH Fed Secur L Rep P 92818) and (criticized in Swack v Credit Suisse First Boston (2004. CCH Fed Secur L Rep P 91477 (criticized in Cromer Fin. SD NY) CCH Fed Secur L Rep P 91550). SD NY) 405 F Supp 2d 281). Putative class action complaint alleging that CEO and CFO omitted critical information from public statements about occurrences that affected their company's revenue stream--including product recall and Food and Drug Administration plant inspection--failed to state claim for making false and misleading statements under 15 USCS § 78j(b) because facts did not indicate that statements were material. SD NY) 609 F Supp 363. DC Conn) CCH Fed Secur L Rep 93625. Sys. because disclosure of size of officer's compensation would have been important to reasonable investor and would have altered total mix of information available as to value of surviving party's shares. CCH Fed Secur L Rep P 95256. SD NY) CCH Fed Secur L Rep 93099 (criticized in In re NYSE Specialists Sec. Inc. Where scheme involved third party (sellers) exercising their warrants and selling that stock to public. Securities and Exchange Commission (SEC) made prima facie case that defendants violated anti-fraud provisions of securities laws. Civ. consulting firm and its principal owner. remanded (1987. motion to strike den (2006. it was unclear that scheme. Sec. because statement was unrelated to advertising campaign. Litig. BC SD NY) 2006 Bankr LEXIS 2746. City of Monroe Emples. Glaser v Enzo Biochem. based on SEC's failure properly to allege material omissions under 15 USCS § 78j(b) and 15 USCS § 80b-6. P. Statute does not focus on causal relationship between misstatement and original purchase but. Onie v Conners (In re Cutera Secs. Fed. Ret. (In re MarketXT Holdings Corp. assuming truth of facts set forth in complaint. (2005.) (2010. yet. two officers of issuer.. P. investors did not raise plausible claim that stock prices fluctuated with disclosures about sales staff or that reasonable investor would have received materially different impression of corporation's state of affairs had corporation used language from later press releases to describe sales shortfalls in earlier press release. v Rite Aid Corp. Sec. Corp. Inc. N. thus. 12(b)(6) motion to dismiss by defendants. 78j(b). 2005 FED App 52P. survived motion to dismiss fraud claim under § 10(b) of Securities and Exchange Act. even though investors claim that statement was misleading in that it fails to acknowledge commitment of millions of dollars to risky advertising campaign.lexis. as sellers' original shares were not enough to offset anticipated number of shares to be sold to sellers by petitioners. R. Inc. 94 Daily Journal DAR 12687. Litig. den (2005. (2004. CCH Fed Secur L Rep P 93097. was denied because SEC's allegations that these defendants shared personal relationship with state treasurer and were provided "finders fee" related to 25 million dollar investment of state's pension fund but that defendants were not required to perform any work in return for finders fee. CA4 Va) CCH Fed Secur L Rep P 93134.. v MarketXT Holdings Corp. (2) public filings supported statements. R. were remanded for further findings on materiality. (2002. issues as to officers' fraud and reporting violations under 15 USCS §§ 77q(a)(1). Biopharmaceutical company's statements concerning prospective effectiveness of drug in their drug development program were sufficiently material in shareholders' securities fraud claims where reasonable investor would have considered statements significant in making their investment decision and this was underscored by fact that company's stock dropped 57% after statements were made public. and court could not ascertain whether there was any basis for general allegation that senior officers and directors should have known that their failure to disclose details of their alleged channel stuffing was materially misleading omission. and paid claims as part of its day-to-day business. On evidence provided. v Berger (2001. Zacharias v SEC (2009. Inc. Stock purchasers did not plead sufficient facts concerning motive to commit fraud. WD Va) 212 F Supp 2d 596. CCH Fed Secur L Rep P 91680. referring instead to recurring component problems.. 138. even admitted misrepresentation is actionable only if it is material. upon officers exercising their stock options to replace sellers' shares by selling those optioned shares to sellers. (2005. Investors' federal securities law claims against company and its officials failed because investors. and 170 fatalities had occurred yielding thousands of claims. 12(b)(6) fraud-on-the-market class action under 15 USCS § 78j(b) where corporation's alleged incomplete disclosures about its sales force were not material for purposes of 15 USCS § 78u-4(b)(1)(B). Shawmut Bank. moreover. Closely held corporations that purchase their own stock have special obligation to disclose to sellers all material information. while it allowed officers to resell and realize substantial profit substantially simultaneously upon buying them. (2004. CA9 Cal) 33 F3d 1477. CCH Fed Secur L Rep P 93101. Defendant corporation asserted that complaint contained no pleaded fact indicating it knew about any substantial losses or that those amounts actually were substantial for $ 18 billion company. court denied motions to dismiss allegations of securities fraud by material misstatement pursuant to 15 USCS § 78j(b). Castellano v Young & Rubicam. SD NY) 324 F Supp 2d 474.) (2006. third. DC Conn) 409 F Supp 2d 122. Karacand v Edwards (1999. plaintiff will recover no damages where misstatements did not cause losses suffered by plaintiff. size and nature of restatement suggested there were systemic accounting abuses that caused serious public misrepresentation of its financial condition. Civ.A. by March 2000. In re Regeneron Pharms. E*Trade Fin. (2005. partial summary judgment den. 700 serious injuries. CA2) 257 F3d 171. over 2000 rollover accidents.15 USCS § 78j https://www. SEC v Dibella (2005. CA6 Tenn) 399 F3d 651." by definition. settled lawsuits.P. Litig. or (6) statements were inside information not reasonably calculated to influence investing public.

Materiality is mixed question of law and fact. 23 Media L R 2377. which would potentially have allowed corporation to remain in compliance with its terms and avoid cancellation by United States Postal Service (USPS) was so obviously unimportant to reasonable investor that dismissal of those claims on grounds of materiality would have been appropriate. trader may still be liable under misappropriation theory.000. ED Pa) 896 F Supp 434. Shareholders' complaint asserting that corporate executives misrepresented drug evaluation by FDA. SD Ohio) 477 F Supp 2d 891. In shareholder's § 10(b) of Securities Exchange Act action. 15 USCS §§ 78j(b).15 USCS § 78j https://www. SD NY) 378 F Supp 112. Litig. Horwath & Horwath (1974. particularly in light of fact that several million dollars remained due on contract and purchasing corporation had net worth of only $ 100. United States SEC v Blackwell (2007. 97 Daily Journal DAR 7991.Get a Document . Individual's claim under § 10(b) of Securities Exchange Act. ED Pa) 957 F Supp 699. Effectiveness of disclosure As to § 78j(b) and SEC Rule 10b-5. because. and where series of releases issued within reasonably short period of time accurately disclosed financial situation of company. Herzfeld v Laventhol. LTD. reasonable person would not be deceived by their nondisclosure. accountants. Unpublished Opinions Unpublished: Appellate court could not conclude that information regarding amendment of agreement. State Bd. therefore. 28 FR Serv 2d 321. In re Albert Glenn Yesner. 11 FR Serv 3d 694. CA8 Minn) 139 F3d 641. preventing him from learning true and fair value of stock he received under merger agreements failed because companies. 1997 Colo J C A R 1354. Krekstein. 17 C. Litig. and Rule 10b-5. In re ValueVision Int'l Sec. 11 FLW Fed S 154. 15 USCS § 78u-4(b). can lead to liability under both § 11 of Securities Act of 1933 (15 USCS § 77k) and under SEC Rule 10b-5 promulgated pursuant to § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)). there need be only disclosure. individual deficiencies of any one release were cured by content of all releases taken as whole. claim also failed for various other reasons. Individual's conduct was imputable to trust. 107 of 158 3/8/11 4:25 PM . Dujardin v Liberty Media Corp. 15 USCS § 78u-5(c)(1). such duty was not satisfied by qualification in report which stated that it was subject to collectibility of balance receivable on contract. (2001. CPA (2001) 2001 SEC LEXIS 978. CCH Fed Secur L Rep P 93801. United States v Koenig (1974. Ill. when offering document's forecasts. 139. 138 L Ed 2d 724. SD NY) 388 F Supp 670. Plumbers & Pipefitters Local Union 719 Pension Fund v Zimmer Holdings. ND Cal) 163 F Supp 2d 1079. disclosed facts sufficient for individual to ascertain that companies engaged in transactions with one another valuing stock substantially below market value. Press release did not violate § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) because it allegedly did not accurately describe corporation's financial picture where release. when read together with other contemporaneous releases. as well as insiders. Under "bespeaks caution" doctrine of 15 USCS § 78j(b).by Citation . Isquith ex rel. since he would be able to draw whatever inferences and append whatever characterizations he believed appropriate. 97 CDOS 4931. There is presumption of materiality for information concerning financial condition of company. Klamberg v Roth (1979. it is not deceptive within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) to fail to characterize those facts with pejorative nouns and adjectives or to fail to verbalize all adverse inferences expressly. where SEC had established that individual dominated and controlled trust. so that documents which were alleged to emphasize positive aspects of business but "glossed over" negative aspects of business so as to induce sale of securities in business could be subject of action under § 11 of 1933 Act and Rule 10(b)-5. CPA (2001) 2001 SEC LEXIS 978. law firm and its client but makes disclosure to only one. SD NY) 308 F Supp 2d 249. appellate court vacated district court's dismissal of complaint as to those claims. on remand. application of accounting principles alone will not adequately inform investors.F. CA2 NY) 540 F2d 27. even though it may be true that proposed amendment would relinquish valuable corporate asset and would impact comparative value of common and preferred stock of corporation. (2005. although corporation asserted that statements were nonactionable under bespeaks caution doctrine and safe harbor provision. designed to achieve broad dissemination to investing public generally and without favoring any specific person or group. Re Albert Glenn Yesner. CA5 La) 847 F2d 186. Utils. CCH Fed Secur L Rep P 98996. not doing so would have given trusts more insulation than those persons who controlled them.com/research/retrieve?cc=&pushme=1&tmp. If. Inc. (1988. in public accountant's preparation of financial statement to be used in connection with private placement of securities. (2009. CCH Fed Secur L Rep P 94574. (2004. v Authentidate Holding Corp. United States v O'Hagan (1997) 521 US 642. where financial statement of corporation referred to sale of property. so long as material facts are disclosed or already known. Isquith v Middle S. stated claims for relief under §§ 10(b)and 20(a) of Securities Exchange Act of 1934. § 240. because district court appeared not to have considered those statements as basis for liability. proper and adequate disclosure of significant corporate developments can only be effected by public release through appropriate public media. CCH Fed Secur L Rep P 90178. 117 S Ct 2199. as distinguished from what information is disposed. remanded (1998. if fiduciary discloses to source of confidential information that fiduciary plans to trade on information. alleging scheme to conceal material information. 15 USCS § 78j(b). moreover.lexis. affd in part and revd in part on other grounds (1976. SD NY) 473 F Supp 544. in their public filings. then there is no deceptive device. and statements in question were statements of then-present fact.R. where company disclosed to investors that it expected prices to decline subsequent to its initial public offering. must take pains to bare all facts needed by investors to interpret financial statement accurately. 102 L Ed 2d 329. of Inv. Litig. CCH Fed Secur L Rep P 95660. including that it was time-barred and individual failed to plead facts indicating that companies knew he was acting on basis of mistaken knowledge. dependent on circumstances at time of alleged misstatement. SD NY) 359 F Supp 2d 337. 1995. or projections are accompanied by meaningful cautionary statements. Directors are entitled to summary dismissal of fellow director's securities fraud complaint about proposal to amend Articles of Incorporation to eliminate corporation's right to redeem preferred stock at $ 100 per share. opinions.. CCH Fed Secur L Rep P 94765. cert den (1988) 488 US 926. CCH Fed Secur L Rep P 91488). effectively manipulating stock prices. 109 S Ct 310 and (superseded by statute as stated in In re Harmonic Inc. many of misleading statements alleged by shareholder failed because they were not material in light of disclosures made by company. when person trading on basis of material nonpublic information owes duty of loyalty and confidentiality to two entities for example. (2004. because these potentialities are not hidden from shareholders. SD Ind) 673 F Supp 2d 718. How information is disclosed. who can readily discern effects of straightforward proposal. (2010. report revealing neither identity nor net worth of purchasing corporation. In re Flag Telecom Holdings. Talk on "street" does not make information public.. thus creating unjustified means of circumventing securities laws. ND Cal) 59 FR Serv 3d 251. CA2 NY) 2010 US App LEXIS 5226. it was misleading for public accounting firm which prepared statement not to disclose its reservations and doubts concerning likelihood of corporation's receipt of full payment.10b-5 to satisfy requirement that there be no deception. In re Schaefer (1975) 46 SEC 59. Generally. it is not necessary that every release during period of time repeat information contained in earlier releases. CCH Fed Secur L Rep P 99482.10b-5. CCH Fed Secur L Rep P 97147. forward-looking statements will not form the basis for a securities fraud claim if those statements did not affect "total mix" of information document provided investors. where full disclosure forecloses fiduciary's liability under misappropriation theory. second amended complaint alleged sufficient facts to state claims premised on corporation's duty to update statements made in conference call and its allegedly misleading statements. CCH Fed Secur L Rep P 93207. which was largest single transaction corporation had ever entered into. CCH Fed Secur L Rep P 98061. DC Puerto Rico) 827 F Supp 83. gave fair and accurate description of corporation's financial problems. both defenses applied only to forward-looking statements. Merino Vinas v Boto (1993. dismd (1997. however. 78t(a). Secs. In re CV Therapeutics Sec. (1995. 17 CFR § 240.

by its terms. Holt v Katy Industries. are unimportant. Sec. SD NY) 71 FRD 424. CCH Fed Secur L Rep P 91694. CCH Fed Secur L Rep P 94747. (1997. means through which such statements are published. Lerman v Tenney (1969. it is in violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 whether it is in form of report required to be filed with SEC or registered national security exchange. 90 S Ct 1121. Inc. or omissions of material fact. supp op (1968. DC NJ) 133 F Supp 753. v Huffines (1968. where they allege (1) filing of financial statements during class period showing upward trend in airline's profitability. CCH Fed Secur L Rep P 95291. G. Swanson v American Consumers Industries. CCH Fed Secur L Rep P 92483. CCH Fed Secur L Rep P 94765. Sprayregen v Livingston Oil Co. SD NY) 304 F Supp 1096. (1968. such as stockholders. or even that such misstatement or withholding be directed toward particular identifiable class of persons." both orally and in slides. cert den (1970) 397 US 989. Securities fraud plaintiffs must replead to include much more specific information. app dismd (1985) 101 NJ 208. inquiry into circumstances under which statements were made might reveal that statements gave distorted impression of facts in violation of SEC Rule 10b-5. (2001. Section 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 were violated where individual failed to cause material information to be disclosed in annual reports of corporation. v NatWest Fin.. they seek to have individual defendants found liable for all alleged false and misleading statements under "group-published information" doctrine. CCH Fed Secur L Rep P 92272. Although certain facts might appear to be adequately disclosed on face of proxy statement. and was not material because fact that tendered price was artificially low was evident from numbers disclosed in proxy. 2000 Form 10-K was. Federal securities laws were not violated when proxy statements issued in connection with merger did not reveal breach of fiduciary duty. (1986. Liability may arise under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) where material facts are misstated or omitted from proxy statements. or through which material facts omitted should have been published. First Jersey Secur.. CCH Fed Secur L Rep P 91260. SD NY) 288 F Supp 855. liability may attach where such statements or omissions occur in prospectuses. it is not necessary that misstatement be made directly to particular person. Cant v A. because jury must decide whether timely receipt of offering memorandum can defeat investors' reliance on material presented at road show. and (3) misrepresentations that airline's safety record was among best and that its imminent growth would be significant. Gabriel Capital.15 USCS § 78j https://www. CCH Fed Secur L Rep P 99579. are unimportant.by Citation . Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). because they fail to allege that individual defendants were directly involved in preparation of statements or to specify which statements provide basis for application of doctrine. broker's disclosure to customer with long and dependent relationship with broker was not sufficient when effected by means of confirmation slips where customer did not understand code employed on such slips and broker did not educate customer with respect to code. Becker & Co. Sec. CCH Fed Secur L Rep P 91522. where investors also clearly claim timely reliance on misrepresentations made at "road show. and at investor conferences in connection with purchase or sale of securities. reh den. Securities fraud claims of investors in Thailand steel mill may proceed. Inc. (1969. inter alia. 141. 15 USCS §§ 78m. CCH Fed Secur L Rep P 92411. or through which omissions should have been published. CCH Fed Secur L Rep P 92501. SD NY) 295 F Supp 1376. ND Ga) 984 F Supp 1472. v SEC (1984) 194 NJ Super 284.. Loeb v Whittaker Corp. since breach concerned state law claim. (1974.8 million note in company's 2000 Form 10-K was non-starter. Baron v Smith (2004. Litig. CA2 NY) 416 F2d 1189. ND Ill) 374 F Supp 36.--Speeches Stockholder stated good claim under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 in alleging that 2 directors of corporation had fraudulently failed to disclose material inside information in making speech to induce securities dealers to promote corporation's stock. Plaintiff's claim that defendants omitted material information with respect to $ 6. since dissemination of misinformation to public in general. 1 Fed Rules Evid Serv 105. CA1 Mass) 380 F3d 49.. Effect of means of publication or omission With respect to false and misleading statements. there is implicit in § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) further responsibility of accomplishing disclosure in manner that results in facts being clearly and intelligently communicated and not obtusely to cryptically communicated. DC Dist Col) 400 F Supp 1248. or failure to make public disclosure of material information.com/research/retrieve?cc=&pushme=1&tmp.P. If items disclosed in statement do not disclose facts accurately or reveal insufficient data. because misrepresentations and omissions as to safety and growth of airline were certainly material and were issued in press releases. CCH Fed Secur L Rep P 93811. even though lack of reliance on offering memorandum dooms claims made on that basis. Mills v Sarjem Corp.--Corporate reports and proxies Shareholders who showed that there were material misstatements and omissions contained in proxy statements soliciting proxies for proposed merger established necessary elements for recovery under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). Litig. as by press release. official financial statements. (1955. 501 A2d 893. affd in part and remanded in part on other grounds (1969. Under provisions of Securities Exchange Act with respect to false and misleading statements or omissions of material fact. 23 FR Serv 2d 975. CCH Fed Secur L Rep P 93263. Inc. Alleged misrepresentations in proxy statement may give rise to claim under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CCH Fed Secur L Rep P 92764. 142. CCH Fed Secur L Rep P 92896. (1976. 476 A2d 861. 108 of 158 3/8/11 4:25 PM . Investors state viable securities fraud claim against airline. Inc. SD NY) 295 F Supp 780. or through which omissions should have been published.Get a Document . 12 FR Serv 2d 21. In re Autodesk. or letter to stockholders. L. CCH Fed Secur L Rep P 92204. (2000. means through which false and misleading statements are published. in compliance with § 13 and § 15(d) of Securities Exchange Act of 1934. Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). CA7 Ill) 475 F2d 516. and it included financial data for both parent company and its subsidiaries. and liability may attach where such statements or omissions are made in or omitted from verbal communications. means through which such statements are published. press release. ND Cal) 132 F Supp 2d 833. 140. and SEC reports regarding securities holdings. (1973. (2) failure to disclose that profits were due to airline's failure to comply with FAA regulations and other safety guidelines. (1975. SD NY) 177 F Supp 2d 169.lexis. 25 L Ed 2d 396. In addition to responsibility for making disclosure of material facts. SD NY) 333 F Supp 484. and liability may attach under antifraud provisions of Exchange Act where such statements or omissions are made in or omitted from letters to stockholders. CCH Fed Secur L Rep P 95602. proxy materials. Astor v Texas Gulf Sulphur Co. In re ValuJet. are unimportant. Inc. CA7 Wis) 792 F2d 614. SEC v General Refractories Co. Kademian v Ladish Co. SD NY) 388 F Supp 670. Norte & Co.. renders party liable for injury sustained by investors by reason of such misinformation or withholding. Inc. United States v Koenig (1974. 78o(d). DC NY) 306 F Supp 1333. consolidated return. (1971. or that material information be purposely withheld from him individually for cause of action to arise in such person. where.

where items disclosed do not describe facts accurately or where insufficient data are revealed.--Press statements SEC Rule 10b-5 is violated whenever assertions are made by corporation in manner reasonably calculated to influence investing public by means of financial news media if such assertions are false or misleading or are so incomplete as to mislead. whether sufficient facts have been disclosed so that informed investment decision can be made. 30 L Ed 2d 753. 92 S Ct 733 and cert den (1971) 404 US 1005. 92 S Ct 734 and cert den (1971) 404 US 1005. 30 L Ed 2d 753. 30 L Ed 2d 558. reh den (1972) 404 US 1064. may appear from nature of statement considered alone. depends upon whether release conveys to public false impression of situation at time of issuance or. where investors do not contest that copies of that magazine were delivered to post offices for mailing April 14. SD NY) 587 F Supp 1369. SD NY) 312 F Supp 77. and (2) conclusory claim that organizational defendants verified "titles" and "operative language" did nothing to demonstrate their reasonable belief in truth of their statements. (1971. so as to be in violation of § 10(b) and Rule 10b-5. Litigation (1987. because positive statements about new product were not "premature. 92 S Ct 734 and cert den (1972) 405 US 918. reh den (1972) 404 US 1064. (1968. 92 S Ct 563. meetings. CCH Fed Secur L Rep P 94165. (1998. CCH Fed Secur L Rep P 93616. In action in which SEC filed suit against defendants. (2007. 30 L Ed 2d 558. despite evidence of internal executive statements 8 months later warning that "forecasting process is not working. Corporation and its president violated § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) where corporation issued press release. v Joy Mfg. 15 USCS § 78j(b). 92 S Ct 563. SD NY) 388 F Supp 670. ND Cal) 243 F Supp 2d 1012. cert den (1971) 404 US 1005. Press release reporting that computer corporation has "introduced" new product possessing unique quality that sets it apart from other disk drives cannot be basis for 15 USCS § 78j liability. and conference calls was insufficient to survive motion to dismiss because shareholders' claims did not sufficiently allege that information provided was knowingly false or misleading to proceed under conduit theory of liability under § 10(b) of Securities Exchange Act of 1934. from halftruths. CCH Fed Secur L Rep P 92572. and it is immaterial as matter of law. testimony of parties expressing their intentions. Litig." In re Apple Computer Sec. Blakely v Lisac (1973. and materially misleading. Inc. and its in-house counsel (organizational defendants) and three individuals (consultant defendants). cert den (1971) 404 US 1004. information in article could not have affected them. so as to constitute violation of § 10(b) and Rule 10b-5. SD NY) 10 F Supp 2d 398. Fact that computer manufacturer and its chief executive officer (CEO) hosted media events. CCH Fed Secur L Rep P 93139. 17 FR Serv 2d 153. DC NJ) 662 F Supp 32. 144. (2007. affd in part and revd in part on other grounds (1971. where report merely states true facts that new. summary judgment was denied on securities fraud claims against one of consulting defendants where issues of fact remained as to his knowledge and state of mind at time of his alleged conduct. CCH Fed Secur L Rep P 93760. SD NY) 475 F Supp 2d 412.lexis. Mitchell v Texas Gulf Sulphur Co. nor did they dispute that these statements were at best misleading and sometimes wholly fantastical. Inc. CA9 Cal) CCH Fed Secur L Rep P 93203. its chief executive officer.C. when facts are fully disclosed. SEC was granted summary judgment on securities fraud claims against organizational defendants where (1) organizatoinal defendants did not dispute that they created and issued press releases publicly announcing hundreds of millions of dollars in financing commitments and heralding acquisitions of other companies. 14 FR Serv 2d 1544. United States SEC v Universal Express. § 10(b) of Securities Exchange Act of 1934. motion den (1998. In action in which SEC filed suit against defendants. 92 S Ct 943. SD NY) 1998 US Dist LEXIS 14386. PullmanPeabody Co. 92 S Ct 562. SD NY) 475 F Supp 2d 412. In re Apple Computer Sec. CCH Fed Secur L Rep P 94765. 92 S Ct 733 and cert den (1971) 404 US 1005.E. omissions or absence of full candor contained therein. United States v Koenig (1974. where nondisclosure of impure motives or of fiduciary breach does not constitute federal securities fraud. where it is alleged that insufficient data have been disclosed. where new forecasting method turned out to be flop. its chief executive officer. 30 L Ed 2d 754. because dissatisfied shareholders were unable to establish that proxy statement was representation on which they were entitled to rely or that causal connection existed between alleged violation and injury. misleading. Federal securities laws are not violated by failure to include in proxy statements information concerning earlier merger transaction involving acquiring corporation. (2002.E. 2 ALR Fed 190. reh den (1972) 404 US 1064. corporation. 92 S Ct 564. Officer and director of corporation is liable to those who engage in securities transactions based upon misleading statements or omissions contained in or omitted from newspaper article relating to issuer where such officer or director furnished information to writer of article and where article is correct representation of such information. CCH Fed Secur L Rep P 93616. CCH Fed Secur L Rep P 92251. where proxy statements only recited what bank anticipated shareholders would be entitled to receive for their shares. CCH Fed Secur L Rep P 93072. Statements can be misleading. § 10(b) of Securities Exchange Act of 1934. within meaning of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. ND Ill) 644 F Supp 689. SEC v Texas Gulf Sulphur Co. (1986. 30 L Ed 2d 753. Rule 10b-5 promulgated thereunder. 143. reh den (1972) 404 US 1064. 92 S Ct 561. 30 L Ed 2d 754. Securities fraud defendants cannot be held liable for information contained in April 1994 magazine article. held meetings and conference calls with financial analysts and participated in interviews is sufficient to show that they intended that their statements be communicated to market and that shareholders made detailed allegations about statements analysts actually made to market as result of information provided at computer manufacturer's media events. In re Apple Computer. Statement from 1982 Annual Report of computer corporation indicating that corporation had refined its planning process cannot provide basis for 15 USCS § 78j(b) liability. and S. CA10 Utah) 446 F2d 90. Inc. because investors would not have received magazine until after close of class period on April 15. information concerning acquiring corporation's intentions when to use tax-loss carry forwards of acquired corporation. containing misleading information as to mineral discovery by corporation. DC Or) 357 F Supp 267. (1970. 30 L Ed 2d 788.. and shareholders could not show they sold bank stock in reliance upon alleged misrepresentation of value of shares. Rule 10b-5 promulgated thereunder. CCH Fed Secur L Rep P 93019. 92 S Ct 734.com/research/retrieve?cc=&pushme=1&tmp. determination of whether press release is misleading. 30 L Ed 2d 558. reconsideration den. corporation. alleging violations of §§ 5 and 17(a) of Securities Act of 1933. 30 L Ed 2d 558. statements concerning future business prospects of acquired corporation. innovative product is being introduced to market.C. Defendants' alleged violation of 15 USCS § 78j(b) through issuance of press releases in its alleged failure to disclose purpose for corporate actions and nondisclosure of plaintiffs' proposed merger is dismissed. CA2 NY) 401 F2d 833. 29 ALR Fed 620. cert den (1969) 394 US 976. CCH Fed Secur L Rep P 92407. CA2) 446 F2d 1301.Get a Document . No violation of Rule 10b-5 by bank is proved. ND Cal) 672 F Supp 1552. without reasonable basis.--Prospectus statements Language of prospectus. or information concerning alleged breach of fiduciary duties by acquiring corporation. request den. alleging violations of §§ 5 and 17(a) of Securities Act of 1933. and its in-house counsel (organizational defendants) and three individuals (consultant defendants). Corporation violated provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) by issuing press release where framers of press release did not exercise due diligence in its issuance.by Citation . United States SEC v Universal Express." because cases are legion to effect that 20-20 hindsight in securities cases is equivalent to Monday morning quarterbacking--enjoyable but nonproductive. CCH Fed Secur L Rep P 94165. Co. and testimony of market experts provided sufficient evidence for jury to have found that 109 of 158 3/8/11 4:25 PM . drafted by president. reh den (1972) 404 US 1064. 22 L Ed 2d 756. In re Kidder Peabody Sec. 30 L Ed 2d 558. misrepresented or untruthful character of information released. and S. 1994. SEC v Texas Gulf Sulphur Co.. ND Cal) 672 F Supp 1552. Hahn v Breed (1984. or. affd (2005. 89 S Ct 1454.15 USCS § 78j https://www. Litigation (1987. Yabsley v Conover (1986. and where press release was misleading to reasonable investor using due care.

L. statement does not violate § 10(b) where it employs term which is subject to varying interpretation so long as.15 USCS § 78j https://www. Disclosed predictions concerning company during sale of securities of company can be subject of action under § 11 of Securities Act of 1933 (15 USCS § 77k) and SEC Rule 10b-5 promulgated pursuant to § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)). CA8 Mo) 787 F2d 355. because investor only offered vague claims of "guidance" by company without any specification of acts that allegedly led analysts astray. G & M. but where it is beyond control of person charged. CCH Fed Secur L Rep P 92202. nor heightened pleading requirements of Private Securities Litigation Reform Act of 1995 (PSLRA).10b-5. DC NJ) 133 F Supp 753. CA1 NH) 311 F3d 11. had no duty to make such notification and request. joined majority of courts in applying "entanglement" test. Shareholders' complaint for securities fraud satisfied neither Fed. whether undisclosed predictions can be actionable must 110 of 158 3/8/11 4:25 PM . but where there was gross disparity between prediction and fact. CCH Fed Secur L Rep P 98005.by Citation . cert den (1986) 479 US 823. Section 11 of Securities Act of 1933 (15 USCS § 77k) does not provide exclusive federal remedy to purchaser of securities in registered public offering who alleges misstatements and omissions in prospectus. but which is no longer true. (2004. Harris v Union Electric Co. by their activity. 737 (1995) (codified in various sections of 15 USCS §§ 77a et seq.com/research/retrieve?cc=&pushme=1&tmp. prospectus was ambiguous and misleading in that it omitted material facts that would have disclosed company's right to call bonds. (1973. CCH Fed Secur L Rep P 97609. violates antifraud provisions of Securities Exchange Act. with respect to fact to which it relates. As to materially misleading statements. ND Ohio) 268 F Supp 2d 887.) (2002. with respect to shareholders' claims under § 10(b) of Exchange Act and S.. with no intent to defraud investors. or impression. Local 144 v Oracle Corp. Inc. Inc. Although defendants cannot be held liable for information that is promulgated by and financial forecasts that are created by third parties.000. 145. Forecasts by 2 independent analysts could not be imputed to company and its officers as basis for Rule 10b-5 liability. unless defendants put their own imprimatur on information and projections. CCH Fed Secur L Rep P 92909. where plaintiff's claim was based on allegedly misleading forecasts issued by market analysts. Litig. made implied representation that information they have reviewed is true or at least in accordance with company's views. DC Mass) 817 F Supp 204.E. such as misstatement or omission contained in newspaper article. P. where articles did not quote any company officials or reports or describe any misstatements of fact by company officials. & Co. 17 FR Serv 2d 1410. (In re Cabletron Sys. reasoned and justified statement of opinion with sound factual or historical basis is not actionable. v Newbern (1973. SD NY) 599 F Supp 527. to state that price offered for securities is fair and adequate does not constitute misrepresentation where price concerned is above book or market value. (1984. 12(b)(6) and 9(b). 19 FR Serv 2d 447. (1955. (1993. No. such prediction was actionable. for example.. 107 S Ct 94. Marx v Computer Sciences Corp. In re Caere Corporate Sec. State Teachers Retirement Bd. and where person making prediction had made other misrepresentations and failed to disclose other information. which misrepresentations and failures to disclose were relevant to accuracy of prediction. For person to be liable under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) for materially misleading statement or omission. (2002. district court erred in overly restrictive test it applied to statements made by third parties--in this instance mostly market analysts--which were in turn based on statements made by company officials. CCH Fed Secur L Rep P 94826. Bielski v Cabletron Sys. CCH Fed Secur L Rep P 92202. and nature of which could not have induced reasonable investor into blind reliance. Mills v Sarjem Corp. and caused to be disseminated to investors and potential investors. interpretation.000 overseas construction contract and request that trading in its shares be suspended. Misleading prospectus can play part in scheme which violates SEC Rule 10b-5 when misrepresentation is of sort that would cause reasonable investors to rely thereon and. for example. Prediction in form of financial forecast relating to corporation may be regarded to be "fact" within meaning of SEC Rule 10b-5. when statements that are contained in analysts' reports clearly originated from defendants and they do not otherwise represent third party's projection. CA2 NY) 635 F2d 156.). Bielski v Cabletron Sys. ND Cal) 837 F Supp 1054. as. CD Cal) 364 F Supp 352. Pub. Hutto v Texas Income Properties Corp. 15 USCS § 78j(b). In re Keithley Instruments. CCH Fed Secur L Rep P 94904. (1976.) (2002. Defendant construction company in action for damages for alleged violations of 15 USCS § 78j(b) based upon defendant's failure.Get a Document . Corporate officers' and directors' motion to dismiss granted in suit alleging securities fraud. term represents reasonable interpretation thereof. CA2 NY) 654 F2d 843. Darrah v Garrett (1984. Fox v Prudent Resources Trust (1974. CA9 Cal) 507 F2d 485. Rule 10b-5. Directors of corporation were under no duty. CA9 Or) 488 F2d 742.000. CA9 Cal) 380 F3d 1226. Colby v Hologic. CCH Fed Secur L Rep P 98121. (15 USCS § 78j(b)) where they knowingly and recklessly filed with SEC and disseminated. (1981.C. they can be held liable under § 10(b) of Securities Exchange Act of 1934. so relying. 146. in response to market rumors and unusually heavy trading in defendant's stock. Inc. but acted scrupulously. Elkind v Liggett & Myers. (1980.lexis. such statement or omission must be directly attributable to person charged therewith. material misrepresentations and omissions of material fact. CCH Fed Secur L Rep P 92535. since it did not originate rumors and did not know reason for market developments. appellate court rejected district court's determination that executives or directors must have either "controlled" content of third party statements or adopted them. defendants' (a company and its president) alleged misrepresentations were either forward-looking statements that were not actionable under PSLRA.F. Secs. Litig.R. (In re Cabletron Sys. v Fluor Corp. CA1 NH) 311 F3d 11. SD Tex) 416 F Supp 478. Court found that entanglement test is correct approach to analyze third-party statements. 17 C. to notify Stock Exchange that it had been awarded $ 1. cause them to purchase or sell corporation's securities. ED Pa) 382 F Supp 81. to retract unsigned newspaper articles which in no way attributed any representation to directors. under SEC Rule 10b-5. CCH Fed Secur L Rep P 97716. since complaint failed to provide specific allegations of adoption of the forecasts by corporate insiders or knowledge by insiders that the forecasts were unreasonable. Opinions or predictions Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)). of which they had no detailed knowledge. ND Ohio) CCH Fed Secur L Rep P 91472. Inc. Orn v Eastman Dillon. by use of out-of-date prospectus. 93 L Ed 2d 45. CCH Fed Secur L Rep P 94189. (1993. Statements not controlled by issuer Company may so involve itself in preparation of reports and projections by outsiders as to assume duty to correct material errors in those projections. where officials of company have. such purchaser may also maintain action under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5 thereunder. Civ. CCH Fed Secur L Rep P 94181. charged person is not liable therefor under § 10(b). SEC v Champion Sports Management. (1986. Nursing Home Pension Fund. prospectus containing materially false and misleading statements. Inc. and 78a et seq. where statement or omission is misleading. Defendants have violated § 10(b) of Securities Exchange Act. and instead. or not attributable to defendants. R. Publishing of information which was true at one time. 109 Stat. 104-67. when it revealed to Exchange that award of contract might be reason for unusual market activity in its stock and endorsed Exchange's decision to halt trading pending public announcement of contract. (1974. § 240. Union Sec. CCH Fed Secur L Rep P 91843.

is not obligated to confer upon outside investors benefit of his superior financial or other expert analysis by disclosing his educated guesses or predictions. reliability. where investors claim corporation's forecasts and projections of its 1985 growth were false and misleading. on their own. where stockholder alleges that internal reports not disclosed in public reports misled public regarding future financial performance and caused stock price to rise rapidly and then nosedive at end of first quarter of 1991. ND Ill) 796 F Supp 1120. Utils. Rule 10b-5. and he is under no obligation to render economic forecast. CA5 Tex) 992 F2d 517. glowing yet relatively vague language would be allowed even if fraudulent. 109 S Ct 310 and (superseded by statute as stated in In re Harmonic Inc. 11 FR Serv 3d 694.R. CCH Fed Secur L Rep P 94894. CCH Fed Secur L Rep P 93597. F. (1977. or S. were insufficient to plead scienter in case under Private Securities Litigation Reform Act. sensitive inquiry. since that information was opinion and was neither fact nor material. without more. Under federal securities laws. In re Midlantic Corp.lexis. 54 OGR 1. Litig. plaintiffs made no allegation that defendants had actual knowledge statements regarding company freeing itself from operating leases in bankruptcy were actually false or misleading.F. accountants could not avoid liability on ground that report was in form of opinion. CCH Fed Secur L Rep P 93801. CA6 Mich) 988 F2d 635. Rule 10b-5. CA5 La) 847 F2d 186. which plaintiffs sought to attribute to defendants. is not actionable thereunder. ND Cal) 441 F Supp 1056.E. Brown v Credit Suisse First Boston LLC (In re Credit Suisse First Boston Corp. CA2) 533 F2d 826.F.by Citation . but virtually no disclosure by chairman at that point would have significantly altered total mix of information already available to investors. and therefore came under protection of statutory safe harbor of 15 USCS § 78u-5(c)(1). CA1 Mass) 537 F3d 35. and that all defendants violated 15 USCS § 78t-1--failed to meet pleading requirements for scienter. ND Cal) 672 F Supp 1552. 17 C.R. Litigation (1987. success should continue" is not actionable misstatement. and officers may proceed but only on basis of representations made after October 1984. even though insider. 102 L Ed 2d 329. because allegedly concealed information is both consistent with and provides reasonable basis for publicly stated opinions regarding future company performance. In re Apple Computer Sec. and determining what specific facts surrounding predictive information indicated about information's importance. to support fraud pleading under § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934 with respect to subjective falsity of eight "buy" recommendations issued on corporation's stock. Shushany v Allwaste.Get a Document . comments that program was doing well and that prospective buyer of partnership interest in program could expect similar performance.C. seller of securities. 15 USCS § 78u-4. Computer corporation chairman's statement in business magazine article that "I don't think we will have any trouble selling all Lisas we can build" is unactionable statement of opinion.com/research/retrieve?cc=&pushme=1&tmp. Inc. notwithstanding that statements involve degree of subjective impression. CA1 Mass) 380 F3d 49. or that bankruptcy was imminent. Inc.) (2005. await trial court's careful. To extent that plaintiffs relied on language that was in press release to bolster its claim that company violated § 10(b) of Securities Exchange Act of 1934. unless company had actual knowledge that statements were false or misleading. (2008. In action against accountants. and thus. Inc. however. otherwise. DC Del) 420 F Supp 1057. In federal securities class action. which were based on content of prospectus and informational reports provided by reliable source. Meier v Texas International Drilling Funds. McLean v Alexander (1976. predictions or forecasts. or impact on potential investor. not only is statement not misleading. Litigation (1987. and such generalities. CCH Fed Secur L Rep P 97379. Securities fraud claim is stated under 15 USCS § 78j. Analyst Reports Secs. none of statements that were made by company in press release. Litig.E. CCH Fed Secur L Rep P 95725. recognizing in statutory policy interests both in requiring and not requiring disclosure. Mayer v Mylod (1993. CCH Fed Secur L Rep P 91488). Eichen v E. did not violate rule since reasoned and justified statement of opinion. that information was not considered probative of alleged omissions. CA1 Mass) 380 F3d 49. While investors' allegations regarding obvious conflicts of interest and general state of corruption within firm's analyst ranks may have been enough to upset ethically sensitive observer. 25 FR Serv 3d 1547. were actionable under § 10(b) of Securities Exchange Act of 1934. investors' allegations were insufficient to show that firm's analyst reports concerning corporation were at odds with analysts' privately held beliefs. Isquith ex rel. Newspaper article quotes that new product "is going to be phenomenally successful in first year" and "is going to make computer corporation's growth before this look small" fall into unactionable category of expressions of opinion. directors. § 240. Material statements which contain speaker's opinion are actionable under 15 USCS § 78j(b) if speaker does not believe opinion and opinion is not factually well-grounded. where complaint alleges that statements by corporate officers referring to quality of corporation's management were false and made in order to induce stock purchases. Hutton & Co.10b-5. complaint--which advanced theory of material misstatements about safety of new drug and related theory about material overstatements of market for drug and growth in company's sales and alleged that acts and omissions of all defendants but one violated 15 USCS §§ 78j(b) and 78t(a). Such allegations were tantamount to pleading conclusory statements regarding motive and opportunity. Sec.. one with sound factual or historical basis. Securities fraud claim against corporation. Carpenters Pension & Annuity Funds v Biogen Idec Inc. CA1 Mass) 431 F3d 36. 15 USCS § 78j(b). thus.C. ND Cal) 672 F Supp 1552. § 240. CCH Fed Secur L Rep P 97710. in context. (1975. there was no violation where seller. Baron v Smith (2004. CCH Fed Secur L Rep P 92896." because seen in this context. (1992. SD NY) 411 F Supp 659. CCH Fed Secur L Rep P 94135. is not actionable. they were insufficient. CCH Fed Secur L Rep P 97058. Forecast. Baron v Smith (2004. may be regarded as "fact" within meaning of SEC Rule 10b-5. re-engineer and re-introduce product successfully. and where person making statement neither knew comments to be untrue nor had any reason to believe they were based on false information. one with sound factual or historical basis. Isquith v Middle S. 17 C. DC NJ) 758 F Supp 226. CCH Fed Secur L Rep P 92896. and focusing on particular nature of predicted information lack of disclosure of which was questioned. In re Apple Computer Sec. because disparity between what defendant corporate executives knew and what general market knew at time was not wide enough information gap to impose on defendants duty to disclose negative facts in order to prevent predictions from being materially misleading.15 USCS § 78j https://www.J. and S. Wright v International Business Machines Corp. ED Pa) 697 F Supp 183. weight of certified public accountant's opinion audit is presumed to have basis in fact and not in speculation. affd in part and revd in part (1976. where statement is qualified by preceding disclosure that management had problem with specific previous computer system product but was able to remove. SD Cal) 402 F Supp 823. where quotes appeared in article raising serious doubts about new product's prospects for success. Corporate officer's statement in 1982 Annual Report that "from all that I've seen so far. especially since statement appeared in article that presented decidedly sobering picture of brash young company's prospects with "Lisa. essentially prediction. In re Apple Computer Sec. who prepared audit report relating to corporation. creating question of material fact as to propriety of disclosures from that time on. (1990. who was officer and employee of issuer. cert den (1988) 488 US 926. 15 USCS § 78j(b). Securities fraud class action against large business machines corporation must fail. making such general opinions and projections by board chairman and director of investor relations not actionable under 15 USCS § 78j(b). N. Statements that are predictive in nature are actionable only if they were false when made. ND Cal) 163 F Supp 2d 1079. Shareholder Litig. because. as they were protected by statutory safe harbor of 15 USCS § 78u-5(c)(1). Under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. CCH Fed Secur L Rep P 96132. CCH Fed Secur L Rep P 93616. CCH Fed Secur L Rep P 93616. CCH Fed Secur L Rep P 95497. failed to disclose his conclusions that certain of his fellow employees were incompetent. 111 of 158 3/8/11 4:25 PM . CCH Fed Secur L Rep P 93616. Press release that was issued by company on October 11. (2001. CA5) 1993 US App LEXIS 16369. because rosy projections set forth through October 1984 were supported by record 1984 sales and other information but evidence of downturn in semiconductor industry began mounting in late 1984. reh den (1993. (1993. Jackson v Oppenheim (1974. Secs. Litigation (1988.. CCH Fed Secur L Rep P 95316. 2000. (1988. brought under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. 25 FR Serv 3d 151. In re Kulicke & Soffa Industries. Litigation (1987.10b-5. statement was obviously fair and reasoned opinion with sound historical and factual basis. contained forward-looking statements. reasoned and justified statement of opinion. ND Cal) 672 F Supp 1552.

MD Tenn) 200 F Supp 2d 853. 30 L Ed 2d 128. where it relies on allegedly misleading statements that (1) there are "indications" that product is "gaining market share. Steiner v Tektronix. where complaining shareholders did not establish that statements of goals and projections in annual report were false or misleading. or to show that. CCH Fed Secur L Rep P 98794).E. CCH Fed Secur L Rep P 92727. SD NY) 872 F Supp 97. (2) that they were hot on market. reh den (1980. decrease in projected earnings. (1992. CA4 W Va) 58 F3d 961. § 240. Miscellaneous Person dealing with corporation in securities transaction violates SEC Rule 10b-5 when he denies corporation's directors access to material information known to him. Sec. given disclosure of relevant facts such as impending layoffs by company. remanded sub nom San Leandro Emergency Medical Group Profit Sharing Plan v Philip Morris Cos. where broker allegedly made 3 statements about speculative overcounter stocks: (1) that they were just as good as another stock offering. because there is no indication his statements were false or misleading at time he made them. Grossman v Novell." (2) company has "accelerated effort to create new products.. CA4 Va) 27 F3d 562. because. because. (1971) 404 US 6. Securities fraud class action must fail summarily. Securities fraud claims will be dismissed under "bespeaks caution" doctrine. and certainly this is true of allegations of garden-variety mismanagement. Inc. DC NJ) 2004 US Dist LEXIS 28930. ED Va) 829 F Supp 828. CCH Fed Secur L Rep P 99017. CA4 Va) 1994 US App LEXIS 16242. even though he expresses surprise "at how Wall Street turned on his company. Morse v McWhorter (1998. Litig. CA5 Tex) 615 F2d 1046. DC Or) 817 F Supp 867. dismd (2000. where complaint did not sufficiently plead that sales forecasts were false when made.F. negotiations concerning proposed action must be disclosed even though future event is not absolutely certain to occur. Superintendent of Ins. 92 S Ct 165. 66 ALR Fed 833 (criticized in United States v Bryan (1995. to extent it is based on Wall Street Journal article quoting chief executive. Proposal need not be final or consummated in order to be relevant to shareholder decisionmaking. at time projections were made. followed by announcement in April of new marketing strategy that included price reduction of 40 cents per pack on flagship Marlboro brand. affd in part and revd in part. and nondisclosure of discrepancies between projections and internal reports does not give rise to fraud action. and where occurrence of proposed course of action has reached stage of probability rather than mere possibility. DC Utah) 809 F Supp 880. optimistic statements about company's future. failure to disclose proposal which had very good chance of succeeding or to amend certain statements in registration statement and prospectus made these documents false and misleading. and they are properly characterized as broad. SD NY) 312 F Supp 2d 526.R. and S. (2004. based upon information obtained by employees of investment banking firms. In re Merck & Co. Magistrate was correct in his determination that corporation's opinion as to whether its business practices were legal was "soft information. motions ruled upon (1996. CCH Fed Secur L Rep P 93262. Litig. 2002 FED App 176P (criticized in D. CCH Fed Secur L Rep P 92721. and anticipated number of new openings. was granted. in class action against steakhouse chain's Upton v McKerrow (1995. CCH Fed Secur L Rep P 93905. v Bankers Life & Casualty Co. Borow v nVIEW Corp. In re QLT Inc. CCH Fed Secur L Rep P 98787) and (criticized in United States v ReBrook (1995. accurate information was available from news reports. CA2 NY) 664 F2d 12. even though neither investment firms nor their clients are at anytime purchaser or seller of target company securities or involved in any transaction with defendant or any of his confederates. 109 S Ct 1122." because these are all simply statements of corporate optimism.C. affd (2005. Inc. thus disabling corporation from availing itself of informed judgment on part of its board regarding merits of transaction. Investors' securities fraud claim against information technology company must fail. Inc. Carney v Cambridge Tech. (1995. 1997 Colo J C A R 1616. there is no evidence that company intended to commit fraud. CA4 W Va) 58 F3d 933. 147. (1995. 34 FR Serv 3d 530. totality of all statements cited reflects neither misleading optimism nor fraud.. Field v Trump (1988. CCH Fed Secur L Rep P 98211. but where remedy of injunction is needed (and is available under state law) to prevent injury to company for willful misconduct of self-serving nature. CA5 Tex) 618 F2d 781 and cert den (1980) 449 US 901. In re Philip Morris Sec. quality of management. because shareholders failed to plead that difference between optimistic projections and disappointing result is attributable to fraud. such as managers failing to maximize value for shareholders or directors failing to adequately inform themselves or of managers acting in generally self-entrenching fashion. without identifying any concrete mechanism through which possession of certain information revealed misleading nature of sales forecasts. DC Mass) 135 F Supp 2d 235. 112 of 158 3/8/11 4:25 PM . despite some optimistic statements made in January in various reports about prospects for 1993. either (1) officers did not genuinely believe projections. 66 L Ed 2d 131. 17 C. Marchese v Nelson (1993.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 98509. disclosure of facts necessary to make other statements not misleading is required where misleading statements will allow shareholders into foregoing injunctive remedy. & J L. CCH Fed Secur L Rep P 97362. affd (1997. 101 S Ct 271. Motion to dismiss stock purchaser's complaint alleging claims under § 10(b) of Securities Exchange Act of 1934. Allegations that defendant failed to disclose facts material only to support action for breach of state-law fiduciary duties ordinarily do not state claim under § 10(b) or under § 14(a) or (e) of Securities Exchange Act of 1934 (15 USCS § 78j(b) or § 78n(a) or (e)).Get a Document . bald assertion of falsity of initial sales forecasts was deficient. Federal securities fraud claim against stockbroker must fail. CA3 NJ) 432 F3d 261. CCH Fed Secur L Rep P 91415. and consequent 25 percent decrease in stock price.by Citation . CCH Fed Secur L Rep P 98332. reported in full (1994. Rule 10b-5. Inc.10b-5. CCH Fed Secur L Rep P 99006. In re Bristol-Myers Squibb Sec. Violation of Securities and Exchange Act of 1934 (15 USCS § 78j) is found where securities trader and 2 confederates.E. Company and its officers did not guarantee that drug would be federally approved but merely expressed non-actionable opinions and personal optimism about regulatory events not under company's control. Sec. or (3) actual situation undermined grounds for belief in projections. (2001. MD Tenn) 200 F Supp 2d 853 and subsequent app (2002. (2004. (1993. cert den (1989) 489 US 1012. adopted. 103 L Ed 2d 185. and (3) that they could do as well as money market." and was not required to be disclosed. Partners.lexis.15 USCS § 78j https://www. reports of stock analysts and stock prices. Securities fraud complaint against tobacco industry leader must be dismissed. Unpublished Opinions Unpublished: Investors failed to state claim under 15 USCS § 78j(b) arising from alleged misstatements in initial public offering press release that subsidiary of pharmaceutical company would be independent from company following planned spin-off. SEC v Mize (1980. CA2 NY) 75 F3d 801. Litig. 100 ALR Fed 421. CA2 NY) 850 F2d 938. to extent they allege misstatements concerning training program. ND Ga) CCH Fed Secur L Rep P 99060. Shareholders' securities fraud claim is dismissed." and (3) merger was "perhaps smoothest of mergers in recent history. where allegedly fraudulent statements consisted of optimistic and ultimately incorrect projections for release dates of computer products. (2) officers had no reasonable grounds for believing projections. CCH Fed Secur L Rep P 93606. ND Ga) 887 F Supp 1573. CCH Fed Secur L Rep P 98706.. Litig. mod. DC Utah) 909 F Supp 845. CA6 Tenn) 290 F3d 795. CA10 Utah) 120 F3d 1112. SD NY) 312 F Supp 2d 549. CCH Fed Secur L Rep P 97321. CCH Fed Secur L Rep P 99507. purchase stock in companies that are merger and takeover targets of clients of investment firms. (1996." where he also acknowledges that company faces tighter computer-consulting budgets at major corporations. v Conaway (2003. because these statements were mere opinions and not material misrepresentations. not material or actionable since reasonable investors do not rely upon them when making investment decisions.P. United States v Newman (1981. statements fell within safe harbor under 15 USCS § 78u-5 for forwardlooking statements accompanied by meaningful cautionary language. Company's motion for summary judgment in securities fraud action under 15 USCS § 78j granted. ED Mich) 284 F Supp 2d 719). 15 USCS § 78j(b). and for increased sales and earnings. taken together. affd without op (1994. (2004.

district court erred by dismissing their claims pursuant to Fed. by making that allegation. (2001. (2002. P. to send and/or disseminate false and misleading statements concerning corporation. which does not contain freestanding completeness requirement. affd (2004.com/research/retrieve?cc=&pushme=1&tmp.by Citation . in addition to allegation that investors knew initial stock sale was not yet complete and was contingent on conditions that had not yet occurred. (2002. (2) statements of past sales say nothing about possible future growth and are not misleading. press releases and shareholder letters. Teamsters Local Nos.C. Ltd. there was no question that company disclosed fact that it had guaranteed 50 percent of debt of South American joint venture. request gr (2003. United States v Schiff (2010. and pled those claims separately from their 15 USCS § 78j(b) claims against same defendants. In re Clorox Co. Corp. investors stated claim for relief. and declaration showed that he did not say that problems with corporation were temporary or transitory and because company established that there was no evidence to support investors' claim that officer stated that inventory problem was minor and temporary. and given that Securities Act claims were expressly negligence-based and pled distinctly in complaint from fraud-based claims. In re Healthsouth Corp. furthermore. Emplrs. v Salomon Smith Barney. CA2) 257 F3d 171. SD NY) 219 FRD 267. officers made series of false and misleading statements and omissions between 1995 and 1998. and class as whole were too great to ignore and negated adequacy of representation. because officer's script. Presumption of reliance on allegedly misleading registrations statements and analysts report applied to named securities purchasers' 15 USCS § 78j(b) class action claims where allegations of quid pro quo relationship between telecommunications company and auditors were integral to claims of false statements and material omissions and named purchasers had no burden to prove reliance on omission. it was error for district court to hold that they sounded in fraud. news wires and telephone lines. Inc. Baron v Smith (2004. Secs. and sellers had disclosed that proceeds from earlier securities offerings would be used to repay previously issued stock certificates in their entirety. 175 & 505 Pension Trust Fund v Clorox Co. Prohibition of Rule 10b-5. CCH Fed Secur L Rep P 95715. where court found that: (1) in carrying out their fraud. (1993. as § 78j(b) and § 240. and aiding and abetting in violation of 18 USCS § 2. Shareholders suing corporation for securities violations did not prove requirements for class certification. Closely held corporations that purchase their own stock have special obligation to disclose to sellers all material information.. Plaintiffs failed to state claim for defendants' alleged material omissions in its public filings regarding two synthetic leases where company disclosed material facts that were necessary to allow reasonable investor to make informed decision regarding purchase of company's stock. Inc. CCH Fed Secur L Rep P 91943. 9(b) & 12(b)(6) and 15 USCS § 78u-4(b)(1) where purchasers failed to specifically allege why sellers' representations regarding collection methods were false or misleading.E. Secs. among other things. 15 USCS § 78j(b). in connection with purchase or sale of security. P. Brown v E. defendant one had no fiduciary duty in quarterly filings to rectify defendant two's alleged misstatements to analysts. Civ. AIG Global Secs. (2004. Castellano v Young & Rubicam. Purchasers' claims brought under 15 USCS § 78j(b) against sellers of securities issued by specialty furniture retailer were dismissed pursuant to Fed. annual reports. CA2 NY) 991 F2d 1020.. that corporation's inventory problem had been quantified and would be short term were made. mails and wires.10b-5(b)--misrepresentations and misleading statements. thus. v Banc of Am. Hutton Group. Simpson v AOL Time Warner Inc.F. principally in violation of § 240. once disclosure is made. R. Consolidated class action complaint did not allege valid claim for primary liability under § 10(b) of Securities Exchange Act of 1934. dismissal of that omissions liability theory from indictment was not error. ND Cal) CCH Fed Secur L Rep P 92227. R. (2002. Sec.Get a Document . SD NY) CCH Fed Secur L Rep P 91550). CA3 NJ) 438 F3d 256. (2006. complaint failed to allege with particularity that defendants acted with purpose and effect of creating false appearance of company's revenues with aim of deceiving investing public. since Government's contention that defendant one actually made omissions by not rectifying defendant two's purported misstatements conflated two independent grounds of liability under § 240. CA3 NJ) 602 F3d 152.10b-5. Halperin v eBanker USA. Unsuitability claim under 15 USCS § 78j(b) is subset of ordinary § 78j(b) fraud claim in which plaintiff must allege material misstatements or omissions. LLC (2003. CA9 Wash) 403 F3d 1050. CCH Fed Secur L Rep P 97420 (superseded by statute as stated in Louros v Kreicas (2005. Brody v Transitional Hosps. conflicts among representatives. CCH Fed Secur L Rep P 91692. Secs. and (4) statements made after investor purchased his stock are not actionable under 15 USCS § 78j. 2002 Daily Journal DAR 1540. SD NY) 254 F Supp 2d 373. that three officers of corporation committed securities fraud by violating § 10(b) (15 USCS § 78j(b)) of Securities Exchange Act of 1934. CA9 Cal) 452 F3d 1040. In re Suprema Specialties. In connection with criminal charges of conspiracy to commit securities fraud in violation of 18 USCS § 371. and securities fraud. subclasses. corrected (2002. CA9 Nev) 280 F3d 997. where offering memoranda explicitly warned of risk that stocks at issue might not be registered. contrary to 15 USCS § 78j(b) and 17 CFR § 240. 9(b). R. District court granted company and others summary judgment on stockholders' 15 USCS § 78j(b) claims where transcripts of conference and conference call showed that company representatives had not made any of allegedly misleading statements regarding merging company's inventory problems. Civ. (2005. as they were type of information shareholders and potential investors were likely to consider in making 113 of 158 3/8/11 4:25 PM . ND Ala) 213 FRD 447. and Washington Securities Act by misrepresenting that $ 25 million initial stock sale was completed by adding to document to be given to prospective investors language that stated that document had not been updated to reflect recent events and did not reflect that $ 25 million private equity fund raising had been completed. P. thus. further. Litig. Litig.15 USCS § 78j https://www. against misleading and untrue statements is not prohibition against statements that are incomplete. ND Cal) 238 F Supp 2d 1139.10b-5 did not contemplate general failure to rectify others' misstatements. SD NY) 658 F Supp 795. shareholders did not show common questions predominated over individual questions. Litig. A/S (1987. Litig. 17 BNA IER Cas 1673. SD NY) 2003 US Dist LEXIS 19737. failed to indicate amount that rates of loss and delinquency figures were supposedly under or overstated. CA9 Cal) 353 F3d 1125. Schwartz v Novo Industri.10b-5.COM. CCH Fed Secur L Rep P 92896. (3) with respect to press releases. (3) statement in newspaper by company president regarding future growth was not fraudulent where investor offers no sources for knowledge it seeks to impute to president and president had less than complete control over article. Investor's securities fraud action against corporation for alleged false and misleading statements regarding future earnings and growth of corporation must fail where (1) investor did not allege facts that statements made were untrue. by preponderance of evidence. CA9 Cal) 353 F3d 1125. Inc. (4) misstatements and omissions at issue in this matter were material to investing public. In re WorldCom. Investors alleged that successors to business committed fraud in violation of Securities Exchange Act of 1934. failed to explain why servicing obligations had not passed to bank. and facts regarding substantial impediments to registration were disclosed or implied in offering memoranda. CCH Fed Secur L Rep P 93235.lexis. shareholders letters. they avoided triggering Fed. Livid Holdings Ltd. SD NY) CCH Fed Secur L Rep P 93233). CCH Fed Secur L Rep P 93234. Judgment dismissing plaintiffs' securities fraud complaint was affirmed. including Internet. Rule 10b-5. Civ. Because investors alleged ordinary negligence in their 15 USCS § 77k and 15 USCS § 77l claims. indicating intent to deceive or defraud. District court did not err when it granted summary judgment for company on claim that false statements. Inc. (2006. (2) as officers disseminated false and misleading information into marketplace through SEC filings. financial statements and SEC filings. including. they did so "in connection with" purchase or sale of security. CA1 Mass) 380 F3d 49. S. because plaintiffs failed to sufficiently show that defendants committed actions with purpose and effect of creating false appearance in furtherance of scheme to defraud. (2003. failed to show relationship between allegedly unorthodox accounting practices and allegedly misleading representations. slides. Inc. nor did defendants omit material information that was necessary for reasonable investor to determine company's financial condition with respect to $ 6. failed to specify why statements as to aggregate total amount owed under contracts and subordination of certain certificates were misleading. 2002 CDOS 1218. 12(b)(6). officers used means and instrumentalities of interstate commerce. CCH Fed Secur L Rep P 91477 (criticized in Cromer Fin. there is no duty to make it complete and accurate. CA2 NY) 295 F3d 352. nor did § 78j(b) encompass aiding and abetting liability. Secs. Inc. Securities and Exchange Commission (SEC) showed. finally. Lending Corp.8 million note. (2003. v Berger (2001.

it therefore could not serve as basis for 15 USCS § 78j(b) liability. In re Unumprovident Corp. in part. ED Tenn) 2005 US Dist LEXIS 31853. motion den. all of analysts' reports that were cited by investors were published at least one week after private placement. were at least reckless in not knowing that they were disseminating materially false and misleading statements and omissions in press releases. Purchasers alleged that such disclosures would have revealed particularly poor quality of corporation's investments. plaintiffs stated valid claim for material omissions. investment decision.000. Rule 10b-5. Thompson v Paul (2005. In securities fraud action. In re Unumprovident Corp.com/research/retrieve?cc=&pushme=1&tmp. Secs. in part. in part. Rule 10b-5. shareholders letters. In securities fraud action. ED Tenn) 2005 US Dist LEXIS 31853. In re Alcatel Sec. Sec. SD NY) 405 F Supp 2d 388. because laundry list of various statements followed by list of "specific" reasons why statements were false were insufficient where statements were not linked with reasons. 15 USCS § 78j(b). motion gr. motion den. dismd. Investors' claims under § 10(b) of Securities Exchange Act of 1934.10b-5. motion gr. in part. so allegations concerning importance of defendant subsidiary's revenue to defendant parent company's revenue growth. in part. Investors' claims under § 10(b) of Securities Exchange Act of 1934. breach of that duty. without more. however. (2005. its lack of liquidity in its bond holdings. were dismissed where investors alleged that price of company's stock was artificially inflated by scheme in which stock analysts were secretly paid to praise company and its stock. with one debatable exception.C. Pub. CCH Fed Secur L Rep P 93098. claims failed as to all reports except for one report whose exact date of publication was matter of dispute.V. motion gr. DC Minn) 282 F Supp 2d 1032.. (2005. motion den. and as such were not sufficient to plead that parent company or individual defendants had motive to commit securities fraud. or even $ 50. Litig. Sec. (2005. Purchasers alleged that corporation conceived. 17 CFR § 240. Litig.E. all in violation of generally accepted accounting practices. motion gr. SEC v Solucorp Indus. without more. $ 100. motion den. In re Van Der Moolen Holding N. instituted. at best. in part. Former employee had no right to rely on statements made by attorney's opposing her in litigation against her former employer and as such her § 10b of Securities Exchange Act of 1934. so to extent that investors alleged analysts' recommendations were solicited to boost demand for initial issuance of stock. motion gr. and failed to provide specific information about company's actual investments. none of events cited involved revelations or disclosures of corporation's allegedly unlawful and/or fraudulent claims handling practices. claims did not meet requirements of Private Securities Litigation Reform Act of 1995. Secs. R. (2005. claims failed absent duty on part of company and its chairman to disclose payments that were at issue. securities purchasers sufficient alleged material misstatements and/or omissions as to their claims concerning corporation's alleged claims handling misrepresentations because they alleged that corporation instituted company-wide policy under which disability claims were approved or denied based not upon merit but according to pre-determined financial objectives designed to maximize amount of claims reserves that could be eliminated from corporation's books and then recognized as income. press release was defendant corporation's and was not attributed to bank at time of its dissemination or otherwise. SD NY) 405 F Supp 2d 388. L. allegations. Stephenson v Deutsche Bank AG (2003. (2005. because these assertions ran afoul of bright line rule requiring attribution to defendant at time statement was made. DC Mass) 354 F Supp 2d 73.lexis. CCH Fed Secur L Rep P 93132. Litig. Investors adequately stated Securities Exchange Act claim using group pleading doctrine. Garvey v Arkoosh (2005. even assuming viable theory of aiding and abetting. 15 USCS § 78j(b). claims failed because disclosures were contained in analysts' reports. CCH Fed Secur L Rep P 93098. Litig. In re Van Der Moolen Holding N. in part. In securities fraud action.V. and substantial nature and extent of unrealized losses it was carrying. (2005. were dismissed where investors alleged that price of company's stock was artificially inflated by scheme in which stock analysts were secretly paid to praise company and its stock. Secs. in part (2005. allegations regarding press release that was allegedly approved by defendant bank failed first. motion den. dismd. Sec. In re Unumprovident Corp. (2005. Where amended complaints pled facts sufficient to establish duty to disclose. loss causation. further. 51 UCCRS2d 613. claim and her claims for fraudulent misrepresentation. 15 USCS § 78j(b). parent company intended to use its shares of defendant subsidiary to finance some or all of these acquisitions. (2005. engagement partners in audit firm had ultimate authority to determine whether audit opinion should be issued so that they were properly responsible for primary liability for misstatements under 15 USCS § 78j and 15 USCS § 77q(a). Litig. Where plaintiff investors alleged no facts to demonstrate that defendant parent company exerted pressure of any sort on defendant subsidiary or on chief executive officer or chief financial officer of subsidiary.V. ED Tenn) 396 F Supp 2d 858. and parent company's competitors were also engaged in programs of strategic acquisitions during class period. Civ. and oversaw claims handling strategy that was. statements that corporation made about its plans to bring Universal Mobile Telecommunications System (UMTS) product to market were protected by safe harbor provision of Private Securities 114 of 158 3/8/11 4:25 PM . SD NY) 376 F Supp 2d 472. motion gr. 104-67. dismd. SD NY) 405 F Supp 2d 388. securities purchasers did not sufficiently allege causation because beyond their general allegations of having purchased another entities certificates at inflated price. SD NY) 382 F Supp 2d 513. concurring review partner could only be liable as aider and abettor under 15 USCS § 78t(f). In re Van Der Moolen Holding N. if they did not know. did not amount to evidence of parent pressure. 9(b). dismd. (2005. In securities fraud action. in part (2005. motion gr. in part (2005.by Citation . failed to disclose corporation's general investment policy and portfolio. in part. in part. DC Mass) 354 F Supp 2d 73. motion gr. 15 USCS § 78u-4(b)(1). in part. in part. No. ED Tenn) 2005 US Dist LEXIS 31853. In re Parmalat Sec. 737. Thus. Litig. were inadequate to properly plead motive to commit fraud. motion den. inter alia. (2005. In re Van Der Moolen Holding N. however. Litig. in part. in part (2005. in part.C. motion den. negligent misrepresentation.V. ED Tenn) 2005 US Dist LEXIS 31853. ED Tenn) 396 F Supp 2d 858. transaction causation. Garvey v Arkoosh (2005. and any reasonable investor that was told that publisher of investment report had received $ 700.E. In SEC enforcement action. ED Tenn) 396 F Supp 2d 858. and most importantly. ED Tenn) 396 F Supp 2d 858. although investors insisted that 450 percent increase in price of shares during week following private placement was proof enough of defendants' misdeeds. Investors failed to sufficiently plead claim under § 10(b) of Securities and Exchange Act of 1934. In re Unumprovident Corp.. Allegations concerning defendant's desire to sustain appearance of corporate profitability are not legally sufficient to plead motive to commit securities fraud.15 USCS § 78j https://www. and Fed. in part. P. unethical and then both failed to credit this conduct as cause of company's success and knowingly failed to reflect potential liabilities in corporation's financial disclosures. in part. and S.Get a Document . (2003. In securities fraud action. SD NY) 274 F Supp 2d 379. Litig.000. Litig. SD NY) 405 F Supp 2d 388. Plaintiff investors properly alleged that. 109 Stat. Secs. and S. annual reports. DC Ariz) 402 F Supp 2d 1110. such allegations adequately alleged that parent company was motivated to artificially inflate value of its shares of subsidiary company in order to maximize use of those shares as currency for acquisitions. but rather investors merely reiterated unremarkable fact that proprietary trading was most profitable aspect of subsidiary's operation. In action that purchasers of corporation's securities brought pursuant to 15 USCS § 78j(b). SEC v KPMG LLP (2006. during class period defendant parent company was engaged in program of strategic acquisitions designed to maintain its position in market undergoing unprecedented consolidation.000 to tout particular stock would have given analyst's recommendation proverbial grain of salt regardless of source of funds. Sec. in part. securities purchasers sufficiently alleged material misstatements and/or omissions as to their claims concerning corporation's alleged investment misrepresentations where purchasers alleged that any statements regarding corporation's investments and net income were false and misleading because they failed to disclose that corporation was carrying impaired assets that should have been written off. motion den. and scienter. and third party professional negligence failed. 15 USCS § 78j(b). and (5) officers knew or. securities purchasers sufficiently alleged causation as to their claims concerning corporation's alleged claims handling misrepresentations because purchasers pointed to two sizeable dips in corporation's stock price following disclosures of information which in some marginal way tended to disclose existence of alleged underlying fraudulent scheme. Litig. financial degree and SEC filings. SD NY) 412 F Supp 2d 349.

In re Interbank Funding Corp. Litig. because they did not show that failure to disclose fact that Securities and Exchange Commission (SEC) had issued Wells Notice against corporation constituted false and misleading statement about corporation.10b-5. In re Morgan Stanley Derivative Litig. Workers of Am. executives could not be held primarily liable for securities fraud under 15 USCS § 78j(b) based on "bright line" test. False or misleading Sarbanes-Oxley certification could form basis of misleading statement for purposes of § 10(b) of Securities Exchange Act of 1934. defendants were not alleged to have provided any qualitative assurances that investment bank's compliance program was properly managed or employed best procedures in industry.15 USCS § 78j https://www." Harborview Master Fund. (2007. In action brought by pension trust on behalf of purchasers of common stock defendant company alleging that company and defendant officers made false and misleading public statements about current and projected success of company's growth strategy and one of its products that artificially inflated value of common 115 of 158 3/8/11 4:25 PM . ED Va) 553 F Supp 2d 582. SD NY) 528 F Supp 2d 236. Litig.by Citation . violated Section 10(b) of Securities Exchange Act of 1934.. Plaintiff's complaint. Plaintiff's § 10(b) of Securities Exchange Act of 1934. the indictment therefore accomplished its dual purpose and in attacking accuracy of accounting firm's accounting decisions. (2009. complaint. City of Roseville Employees' Ret. DC Del) 686 F Supp 2d 404. which alleged that defendants made false statements and failed to disclose material information during the course of negotiating and closing a private placement transaction with plaintiff. (2009. and the misstatements were not materially misleading because they constituted non-actionable "puffery. ND Ill) 527 F Supp 2d 791. second. 15 USCS § 78j(b). Secs. and 17 CFR § 240. Inc. this did not satisfy heightened pleading standard imposed on securities actions by Private Securities Litigation Reform Act. it could not be misleading for purposes of § 10(b) of Securities Exchange Act of 1934. which provided elements for securities fraud. part of Securities and Exchange Act. LP v LightPath Techs. Inc. 15 USCS § 78j(b). (2008. Count two of indictment--securities fraud--withstood defendant's attack: first. CCH Fed Secur L Rep P 94302. (2009. CCH Fed Secur L Rep P 95522. United States v Johnson (2008. Inc. Communs. SD NY) 482 F Supp 2d 365. SEC v Lucent Techs. CPA firm was correct that proposed amended complaint failed to plead facts that established that it made material misstatements or omissions of fact. read as whole. (2007. In securities fraud case in which investors' claim against certified public account firm was that it. investors' proposed amended complaint did not adequately plead transaction causation. that plaintiffs relied on any such statements or omissions. director and officer could not be held liable under § 10(b) of Securities and Exchange Act of 1934 for misrepresentations or misstatements that were made before commencement of class period. plaintiff did not identify concrete statements or explain why they were false at time that they were made. investors had not connected CPA firm's alleged fraud to securities' unmarketability. part of Securities Exchange Act of 1934. company and its executives knew. v Horizon Lines. v Horizon Lines. 15 USCS §§ 78j(b). and that amendment would be futile. v CSK Auto Corp.10b-5. if proven false. Litig. violated Section 10(b) of Securities Exchange Act of 1934. failed to state a federal securities claim because.Get a Document . Secs. shareholders failed to show that former and current directors violated § 10(b) of Securities Exchange Act of 1934. including alleged insider trading scheme. further. Secs. 15 USCS § 78j(b). In re Winn-Dixie Stores (2007. Plaintiffs claimed that defendants' brief description of compliance program's aims misled investors into believing that they had effective compliance program that would root out any impropriety. (2009. Plaintiffs' § 10(b) of Securities Exchange Act of 1934. 15 USCS § 78j(b). through its statements about funding company's securities. shareholder did not identify source of any duty to correct alleged misstatements or precise avenue for making corrections. Where corporate executives did not draft or sign financial reports filed with Securities and Exchange Commission. and investors urged court to presume transaction causation based on Affiliated Ute presumption. survived motion to dismiss because court was not persuaded by argument that plaintiffs unreasonably relied on allegedly misleading press release. it identified four representations in press release that. Where plaintiffs brought nothing more than generalized and conclusory assertions that defendants made false representations about company's financial health.10b-5. DC Dist Col) 668 F Supp 2d 44. In securities fraud case in which investors' claim against certified public account firm was that it. Inc. and investors urged court to presume transaction causation based on fraud created market theory. 15 USCS § 78j(b). all of plaintiff's claims were dismissed. SD NY) 544 F Supp 2d 346. Sys. because each statement was accompanied by cautionary statements that would have put reasonable investor on notice that plans to launch UMTS product were contingent on various factors and that there was risk that product would not be launched as planned. In securities fraud case in which investors moved for leave to file amended complaint against certified public account (CPA) firm. as officers had not cited any authority suggesting that plaintiffs were required to seek out specific article on specific website and compare it to press release before purchasing corporation stock.. or consciously avoided any meaningful exposure to information that rendered their Sarbanes-Oxley certification erroneous. even assuming defendants made the alleged omissions and misstatements. 17 CFR § 240. it tracked language of 17 CFR § 240. DC Ariz) 525 F Supp 2d 1116. Sawant v Ramsey (2008. (2009. In re Sierra Wireless. CCH Fed Secur L Rep P 95508. MD Fla) 531 F Supp 2d 1334. CCH Fed Secur L Rep P 94407. at time of certification. claim failed. but such allegation failed to state claim of securities fraud. Publication of company's code of conduct on its website did not constitute representation that its code of conduct was not being violated and thus. would subject defendant to criminal liability. and where reports did not contain any statements attributed to executives. against him was granted because COO's statement that inventory system was "dynamic" was too vague to constitute actionable misrepresentation and COO's mere participation in conference calls during class period was not sufficient to subject him to liability under Private Securities Litigation Reform Act of 1995. Sec.. intervening decision regarding scope of "scheme" liability did not govern primary liability resulting from misstatements. Roth v OfficeMax. Rule 10b-5. DC Conn) 570 F Supp 2d 336. (2008. DC Del) 686 F Supp 2d 404.C. Litigation Reform Act of 1995. 15 USCS § 78u-4. Plan for Emples. reliance element of securities fraud claim. Sec.com/research/retrieve?cc=&pushme=1&tmp. CCH Fed Secur L Rep P 95508. In re Openwave Sys. were derivative claims and only actionable if plaintiffs adequately alleged primary violation under 15 USCS § 78j. SD NY) 542 F Supp 2d 317. although. In re FBR Inc. Litig. CCH Fed Secur L Rep P 94532. Chief operating officer's (COO) motion to dismiss securities fraud claims under § 10b of Securities Exchange Act of 1934. the omissions were not materially misleading to plaintiff under the expressed terms of the written agreement governing the private placement. (2009. through its statements about funding company's securities. In action in which shareholder alleged that corporation's stock dropped dramatically as result of seven-year-long stock options backdating scheme. CCH Fed Secur L Rep P 94621. (2009. In derivative lawsuit. since reliance was not impossible to prove as CPA firm offered positive statements.lexis. 15 USCS § 78u-5(c)(1)(A)(i). In re Interbank Funding Corp. Furthermore. "bright line" test governed based on law of case. 15 USCS § 78j(b). that theory did not apply. SD NY) 601 F Supp 2d 537. In re Interbank Funding Corp. CCH Fed Secur L Rep P 95522.E. Litig. Pensions & Death Bens. (2007. defendant executives made some representations that were specific and could be considered significant. Secs. CCH Fed Secur L Rep P 95508. 15 USCS § 78u-4(b)(1)-(2). DC Dist Col) 668 F Supp 2d 44. CCH Fed Secur L Rep P 95216. Sys. DC NJ) 610 F Supp 2d 342. Litig. in order to show demand futility for their suit. (2007. and S. CCH Fed Secur L Rep P 94509. did not meet requirements of Private Securities Litigation Reform Act of 1995 for pleading scienter because allegations did not support inference that defendants knew or really should have known that targeted statements were false at time that they were made or otherwise lacking necessary information. because claims of control-person liability under 15 USCS § 78t. where investors asserted that. or that any such reliance caused plaintiffs' injury. City of Roseville Employees' Ret. Inc. DC Dist Col) 668 F Supp 2d 44. defendant jumped procedural gun because whether corporation or firm accounted for corporation's first quarter revenue correctly was factual dispute that might or might not be relevant at end of day. that presumption did not apply.

requires projection of future business conditions. CA5 La) 863 F2d 882 and cert den (1989) 490 US 1065. Laborers-Employers Pension Trust v Panera Bread Co. art. CA4 SC) 857 F2d 240. en banc (1988. aided and abetted company's 15 USCS § 78j(b).. LLC v Carothers (2008. Civ. ED Mo) 697 F Supp 2d 1081. Before acquisition activity relating to corporation can rise to level of materiality. (2010. Taylor v First Union Corp. SEC v Mulcahey (2009. and Tex. CA5 La) 854 F2d 780. P. en banc (1988. Unpublished: Although class' allegations regarding remedial measures suggested that company's management team exhibited poor judgment. merger discussions had culminated in vague "agreement" to establish relationship. Sec. which included filing Form 10-Q and issuing press releases that contained false or misleading information. W.15 USCS § 78j https://www.E. Ann. Wash. and S. Ward v Succession of Freeman (1988. whether statement was misleading given available inside information depends upon credibility and weight afforded officer's explanation. much less required significant role. Unpublished: SEC failed to state claim of substantial involvement against chief operating officer under § 17(a) of Securities Act of 1933. In re Cambrex Corp. Holdings. 15 USCS § 77q(a). violations. SD NY) 411 F Supp 40. In this action under § 10(b) of Securities Exchange Act of 1934. 9(b). LLC (2010. verifiable representation about present state of affairs. 22 L Ed 2d 756. P'ship v West Fork Energy Co. CA5 La) 863 F2d 882 and cert den (1989) 490 US 1065. obstinacy. S. whether publicly known or not. CCH Fed Secur L Rep P 94904. Auditors violate 15 USCS § 78j(b) and Rule 10b-5 when they prepare and certify publicly filed financial statements that they know. and information concerning speculative and tentative discussions is of dubious and marginal significance to discussion of investor in reaching decision as to purchase and sale of stock. or are reckless in not knowing.C. Rule 10b-5. was not sufficient to satisfy Fed. reh den. beyond his presence at meetings.Get a Document .com/research/retrieve?cc=&pushme=1&tmp. cautionary language accompanying all of challenged statements was meaningful for purposes of 15 USCS § 78u-5(c)(1)(A) safe harbor because cautionary statements addressed specific. 103 L Ed 2d 837. (1975. 109 S Ct 2064. plaintiffs simply repeated their basic allegations that defendants must have known that offering circular contained inaccurate valuations of corporation's leasehold interests and goodwill because later financial reports contained lower valuations. DC Ariz) 2009 US Dist LEXIS 70198. and under § 10(b) of Securities Exchange Act of 1934. DC NJ) CCH Fed Secur L Rep P 93561. (1974. 109 S Ct 1532.C. because purchasers had no duty to disclose acquisitions in industry.Issuer's Potential 148. nothing within provisions of § 10(b).E. are false. 2004 SEC LEXIS 1015. Ltd. acquisition activity must involve negotiations between corporation and another corporation. Lessler v Dominion Textile. that were not related to transaction for which disclosure was being made. (2010. Unpublished: Dismissal of plaintiffs' securities fraud claims was affirmed because plaintiffs had failed to plead. Unpublished: Statements that were not alleged to be false were inactionable under § 10(b) of Securities and Exchange Act of 1934. since Rule 10b-5 imposes duty to disclose only when silence would make other statements misleading or false.E. R. former vice-president of public cable television company. In re Philip L. CPA (2004) 82 CCH SEC Doc 3231. violation can not be based on assertion that statement did not set forth valid business purpose since lack of valid business purpose is not necessarily fatal under federal securities laws.C. with no agreement as to price or structure of deal. CCH Fed Secur L Rep P 94021. CA2 NY) 401 F2d 833. CCH Fed Secur L Rep P 94019. 104 L Ed 2d 629. and safety harbor covered defendants' quarterly earnings per share and comparable sales growth projections throughout class period as they were quintessential forward-looking statements under § 78u-5(i)(1)(A). principal risks associated with company's business and were more than merely boilerplate litany of generally applicable risk factors. (2005.Particular Misstatements or Omissions As to Issuer 1. and information concerning merger was not material since.10b-5. P. (1988. Acquiring corporation in merger does not violate fraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) by including information statement in proxy materials which disclosed that corporation was formed solely for purpose of merger and that simple result of merger would be 100 percent ownership of corporation to be acquired. CCH Fed Secur L Rep P 94019. Rule 10b-5 because there was no allegation that he had any role in actual drafting or editing of Forms 10-K. reh den. CA5 La) 854 F2d 780. cause of action under Rule 10b-5 based on failure to disclose acquisition possibility should not have been submitted to jury.. corporate mismanagement was not actionable fraud under 15 USCS § 78j(b) or 17 § 240. CA9 Cal) 507 F2d 485. SEC v Texas Gulf Sulphur Co. Secs. 15 USCS § 78j(b). Allegations that at time controlling shareholders of bottling company purchased stock of company from other shareholders they failed to disclose that soft drink manufacturer whose product corporation bottled had embarked on restructuring program or that acquisitions of bottlers had increased tremendously in recent years did not assert omissions of "material" facts as required for action under SEC Rule 10b-5. Litig. with requisite particularity. as well as statements about product and company's growth strategy that did not make any specific. stock in violation of § 10(b) of Securities Exchange Act of 1934. SD Cal) 702 F Supp 2d 1202. Ward v Succession of Freeman (1988. 50(a) as to investor's securities claims under 15 USCS § 78j. at best. and S. Failure of banking corporations located in different states to disclose to owner of stock in one of corporations when they entered into agreement for purchase of her stock that they had discussed merging if interstate banking became legal was neither misleading nor material as required for omission of information to give rise to cause of action under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) and SEC Rule 10b-5 promulgated thereunder. Pascale. so as to make failure to disclose such activity when engaging in purchase and sale of stock of corporation actionable under SEC Rule 10b-5. 89 S Ct 1454. (1968. Bay Harbour Mgmt. or rules thereunder. (2008. facts supporting jury's inference that corporation had made material misrepresentations in offering circular. CCH Fed Secur L Rep P 92251. In re Remec Inc. CD Cal) 554 F Supp 2d 1083. when he created certain false documents. Litig. but absent reasonable method of preparation or valid basis. failure to absence of specific facts of his involvement. also.by Citation . and sellers had failed to identify any statements made misleading by defendants' nondisclosure of merger discussions. SEC v Fraser (2009. B. reckless and unfounded statements as to future earnings and future acquisitions of corporation are sufficiently misleading to be actionable under Rule. Mere fact that forecast is inaccurate does not make it violative of SEC Rule 10b-5. 15 USCS § 78j(b). 15 USCS § 78t(a). Rule 10b-5 and that officers were liable as "control persons" under § 20(a) of Exchange Act. Stat. Generally Misleading statements or omissions of material fact regarding probable future of issuer are fraudulent under Securities Exchange Act.lexis. but statements that were assertions about present facts were not covered by safe harbor. Civ. 2 ALR Fed 190. but such "fraud by hindsight" theory was not actionable. and thus should not have been submitted to jury regardless of any limiting instruction. CA5 Tex) 2010 US App LEXIS 13269. Unpublished Opinions Unpublished: Defendant. cert den (1969) 394 US 976. In re Impac Mortg. may be regarded to be "fact" within meaning of SEC Rule 10b-5. Arkoma Basin Projet Ltd. materiality of information concerning proposed merger is directly related to likelihood merger will be accomplished. Rev. Marx v Computer Sciences Corp. and where acquiring company had not opened discussions with company whose stock was subject of purchase and sale transaction until after transaction. court denied plaintiffs' motion for summary judgment to find statement--"our China ramp is proceeding on plan"--false as matter of law. R. Unpublished: Natural gas lease owners were entitled to judgment as matter of law under Fed. arrogance and incompetence. Civ. letter in which 116 of 158 3/8/11 4:25 PM . Financial forecast relating to corporation. auditors also violate these provisions by issuing false audit report. cert den (1989) 489 US 1080. 581-33A because investor failed to show that owners breached any of specific duties of operator under joint operating agreements and there was no evidence that owners knew that projections contained in business plan were false when made. Inc. essentially prediction. 104 L Ed 2d 629. 109 S Ct 2064. CA2) CCH Fed Secur L Rep P 94759. CA2 NY) 2009 US App LEXIS 3785. however.

Servs. Scritchfield v Paolo (2003. Rude v Cambell Square. 52 BNA FEP Cas 558. Inc. since transaction was buyout to privately held corporation. and quotes here were just generally optimistic and predictive of future success.. It was violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) for securities broker. and statement was qualified by information about losses on new contract. and manufacturer's submissions. CCH Fed Secur L Rep P 99257. (1965) 42 SEC 689. Environmental services corporation shareholders' federal securities fraud complaint is dismissed. CCH Fed Secur L Rep P 95421. v Merrill Lynch. high-flying prose of corporation. where company had enjoyed 9 quarters of increased earnings and net revenues. represents precisely type of "rosy affirmation" and vague optimistic hyperbole that First Circuit has held to be mere corporate puffery. revd on other grounds (1976. because court cannot as matter of law declare that reasonable juror could not find that reasonable investor could have been misled by unmitigated. CCH Fed Secur L Rep P 93767. who was never involved with 117 of 158 3/8/11 4:25 PM . Relevant facts relating to value of stock of closely held corporation. where both personal computer hard disk drives manufacturer and its stockholders rely heavily on contradictory news accounts to establish what market did or did not know based on manufacturer's disclosures or lack thereof. CCH Fed Secur L Rep P 92476. its core business had experienced 65 percent revenue growth during prior year. to make material misrepresentations with respect to business prospects of issuer of securities notwithstanding that broker had no intent to defraud and had honest optimism about prospects of company. where it relies in part on company's late 1997 claim that it was experiencing "unprecedented market demand. CCH Fed Secur L Rep P 94445. that earnings would be as projected. DC Conn) 135 F Supp 2d 317. CCH Fed Secur L Rep P 90500. Fenner & Smith. Louis Union Trust Co. SD NY) 410 F Supp 192. provided information concerning status of corporation with which partnership had entered into agreement. (1976. because facts reveal that corporation disclosed all material facts regarding risks entailed in permit process. McCabe & Co. In re Schmidt. CCH Fed Secur L Rep P 95554. and skill of management. ND Cal) 802 F Supp 271. because even if merger negotiations were in fact conducted." In re Seagate Tech. Earnings and profits predictions Forecast. (1974. St. CA2 Conn) 34 Fed Appx 408. Inc. sell. notwithstanding that acquisition never took place. Material facts.." "dominant. nature of any competition. made approximately 2 months before end of corporation's fiscal year. CCH Fed Secur L Rep P 94904. CA2 NY) 538 F2d 953. McLaury v Duff & Phelps. (1988. DC SD) 411 F Supp 1040. REA Express. DC RI) 274 F Supp 2d 163. (1965) 42 SEC 784. In re Fidelity/Apple Sec. Inc. Sharp. II Sec. include future prospects of corporation. ED Mo) 412 F Supp 45. Sec. SD NY) 279 F Supp 2d 171). in conducting high pressure securities sales campaign. Consumer Products Business Sec.15 USCS § 78j https://www. are sufficiently "vague" so as to constitute puffery). CCH Fed Secur L Rep P 91479. (1997. (1992. because statement was too vague to be anything other than puffery. ND Ill) 691 F Supp 1090. where investors claim that manager who invested portfolio funds heavily in computer corporation misled market by way of statements published in financial journal. because (1) at time of purchase. Alleged statement that earnings of corporation would be at specified figure at future time. (2003. It was violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) for securities broker to make false and misleading representations with respect to prospective business outlook of issuer of securities being sold. Inc. lengthy strike. Federal securities fraud claim against portfolio manager must be denied summarily. v Interway Corp. Inc. Sec. Litig. Corp. deus ex machina approach would have been plainly insufficient and statements were properly interpreted only by reference to relevant circumstances that underlay their meaning. DC Mass) 52 F Supp 2d 211. "Fraud on market" claim under 15 USCS § 78j(b) cannot be decided on summary judgment motions. CA8 Mo) 562 F2d 1040. Litig. Army's cancellation of major contract. CCH Fed Secur L Rep P 97028. made by chairman of board of directors. 92 Daily Journal DAR 13359. do not yet prove "truth on market" defense since it is not clear that such information reached market "credibly. or hold company's securities.. Pierce. misleading representations about their progress or predictions about their outcome are potentially actionable. DC Conn) 921 F Supp 914. 55 L Ed 2d 519. Marx v Computer Sciences Corp. DC Mass) 718 F Supp 1003. Summary judgment is inappropriate in shareholders' securities fraud class action. because statements must be factual and specific to perpetrate fraud on market." because such statement. SD NY) 676 F Supp 458. In re Atlantic Financial Management. where shareholders allege corporation and directors made and omitted statements which falsely overestimated sale price expected for corporation assets. nature of business engaged in.lexis." or "leading" must not be assessed in vacuum (i. CCH Fed Secur L Rep P 95691. (1999. In re Peritus Software Servs. as to what earnings would be for year was "untrue" statement of fact if corporation did not believe. make fraudulent and unbased claims as to business prospects of issuers of securities being sold. at time forecast was made. CCH Fed Secur L Rep P 91791 and (criticized in In re Alliance Pharm. company had some communications regarding possibility of buyout and (2) merger or acquisition discussions are "material" even if entities involved had not reached agreement in principle as to price and structure of transaction.) (1996. CCH Fed Secur L Rep P 96151. which caused stock price to drop from almost $ 6 to $ 1 per share. this. placed in context. 98 S Ct 1490. Feinman v Schulman Berlin & Davis (1988. include not only information disclosing earnings and distributions of company but also those facts which affect probable future of company and those which may affect desire of investors to buy. despite fact that eventual sale price obtained was well within range represented by corporation. in selling stock of corporation. Contextual approach to assessing applicability of puffery defense set forth in Number Nine-Peritus-Allaire line of cases made clear that company's statements that it was "premier. (1976. Securities fraud claim against corporation focusing on products and services that would help customers resolve so-called "Year 2000 problem" is dismissed. SD NY) 677 F Supp 168. Company that purchased its own stock had duty to inform seller about possible buyout of company under 15 USCS § 78j(b). Inc. 149. under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. taken per se.com/research/retrieve?cc=&pushme=1&tmp. (1976. (2001. Levin v Hunter Envtl. whether information is material will depend at any given time upon balancing of indicated probability that event will occur and anticipated magnitude of event in light of totality of company activity. by plucking statements out of their context to determine whether words.by Citation . Freedman v Value Health. (1965) 42 SEC 745. DC Mass) 986 F Supp 42.e. CCH Fed Secur L Rep P 93806. Servs. Litig. CA9 Cal) 507 F2d 485. even though individual insiders sold off thousands of shares for period of approximately one month prior to water commission's denial of application for hazardous waste project permits. affd (2002. where class alleges fraudulent scheme regarding misleadingly positive statements about merger negotiations which caused stock price to rise dramatically and then fall.Get a Document . while showing that information concerning failure of its risky market strategy did seep into market. and warned that IRS might determine that partnership was not "for profit" activity. business forecast was included did not contain material omissions of factors which led to unexpected downturn of business. because stockholders' submissions do not prove that omitted information remained unknown. Litigation (1987. cert den (1978) 435 US 925. Corp. (In re Hunter Envtl. In re Union Carbide Corp. In re Hamilton Waters & Co. CCH Fed Secur L Rep P 93596. Securities broker violated antifraud provisions of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) where it had its employees. which must be disclosed in transaction involving that stock. 46 CCH EPD P 38050. In re Underhill Secur. Shareholders' 15 USCS § 78j(b) complaint raises genuine questions of material fact properly reserved for jury. Inc.. Claims of misrepresentation asserted against limited partnership in 15 USCS § 78j(b) action are dismissed where offering memorandum prepared by defendants unequivocably warned potential investors of investment risk. Securities fraud claim based on corporate executive's statement that merging company was "thriving business" must fail. revd on other grounds (1977. Litigation (1988. and increase in interest rates were neither known to nor were foreseeable by management of corporation sending letter at time letter was drafted.

Inc. even though corporation ended up shipping only 844. CA10 Colo) 340 F3d 1083. CA11 Ala) 88 Fed Appx 390. CCH Fed Secur L Rep P 92479). In re Tseng Lab. In re Remec Inc. (1973. SD Fla) 18 FLW Fed D 401. Testimony of two coconspirators established that defendant directed scheme designed to defraud investors by artificially enhancing revenue that corporation announced on April 26. to be evidence that accountant was aware that it was without sufficient knowledge to form opinion about accounts receivable. uncertainty in company's relationship with its major customers was well known. as no reasonable investor would have relied on these statements in arriving at investment decision. standing alone. 15 USCS § 78j. affd in part and revd in part (2003.15 USCS § 78j https://www. DC Del) 420 F Supp 1057. ND Ill) 751 F Supp 1320. could not be basis of civil recovery under SEC Rule 10b-5 since it was at most opinion or prediction rather than statement of fact. CCH Fed Secur L Rep P 95725.--Cautionary language used Investors in real estate partnership do not state claim under § 10(b) of Securities Exchange Act of 1934 (15 USCS § 78j(b)) where they allege that offering memorandum contained intentional misrepresentations as to potential cash and tax benefit of partnership. Chazen v Deloitte & Touche. because word "expects" limits potential to mislead. at breakfast meeting without reference to notes or papers and without reference to specific future time. and investor elected to bypass class actions. inventory deficiencies. Inc. CA3 Pa) 107 F3d 8. Reasonable person in position of considering investment in corporation would deem important its certified audit with particular emphasis upon accounts receivable as independent confirmation of existence of sales. revd on other grounds (1976. In re Exabyte Corp.056 units. which linked company and officers to purported accounting fraud was assertion that company overstated financial results in order to keep anticipated merger on track. because evidence failed to show that company was aware of undisclosed facts undermining accuracy of its 1990 earnings projections as its 1990 financial plan was too obsolete to serve as evidence that company's projection was unreasonable. Shareholders' allegations concerning company's improper shipping. SEC Rule 10(b)-5 may be violated by inaccurate or misleading projection of future earnings. when revenue goal statements were made. and company had at least some reasonable basis to believe in projections. ED Pa) 954 F Supp 1024. such allegation was inadequate to plead scienter under 15 USCS § 78u-4. (2006. Statements which grossly overestimate business volume and prospective profits of corporation are material. Corp. but then $ 13 million second quarter loss made corporate principals publicly "less confident that company would be more profitable in 1989 than in 1988" which caused price of stock to fall.7 million units in second quarter. ND Cal) 787 F Supp 912. where shareholders alleged that manufacturer failed to disclose anticipated shift in sales from higher-profit customers to lower-profit customers.F. (2003. where purchasers claim that company issued misleading statements about its earnings prospects so that its officers could sell significant amounts of their stock at inflated prices. (1990. CCH Fed Secur L Rep P 96879. Purchasers of computer company stock may not recover under 15 USCS § 78j. one month discrepancy in due dates between invoice and purchase order are not sufficient." $ 4 million first quarter loss was said to be "anticipated" and not reason for reevaluation of expected full-year profit improvement. DC Colo) 823 F Supp 866. including discussion with its operating officers. so that such information is material under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) and SEC Rule 10b-5. and press release distribution service. because opinion or forecast of earnings may violate 15 USCS § 78j(b) if made without reasonable basis or by ignoring facts seriously undermining accuracy of forecast..--Statements made without basis or knowledge Accountant's reference to accounts receivable on balance sheets do not apply to statements of operations and retained earnings. company was planning to increase its activities and revenue by (1) expanding its product market beyond software to include hardware. Secs.by Citation .. CCH Fed Secur L Rep P 97890. Sec. failure to disclose general economic trends--as opposed to internal firm information--cannot be basis of securities fraud allegation. Black v Riker-Maxson Corp.com/research/retrieve?cc=&pushme=1&tmp. Inc. Defendant corporation's accurate reports of earnings and financial successes were not material misrepresentations under 15 USCS § 78j(b) and 17 C. (1976.2 to 1. Litig. limitations period should not be tolled where investor had disregarded court's order as to where to file his claims. Litigation (1992. ED Pa) 2003 US Dist LEXIS 7062 and (criticized in Adams v Kinder-Morgan. Holders of common stock purchased after April 25 first quarter earnings statement and held at time of July 21 second quarter earnings statement state securities fraud claim against corporation and its officers. no investor would attach importance to bare earnings prediction without thorough analysis of company. v Interway Corp. CCH Fed Secur L Rep P 96816.lexis.. CCH Fed Secur L Rep P 97711. SD NY) 401 F Supp 693. § 240. affd without op (1997. (1996. 2001 and earnings announcement was transmitted through interstate commerce by telephone. McLean v Alexander (1976. In re ATI Techs. Where investor refiled securities fraud claims in Alabama federal court after Alabama state court had dismissed similar claims on grounds of forum non conveniens. and accountant can only be held to have necessary scienter to support claim of misrepresentation under § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) if evidence supports inference that when it expressed opinion it had no genuine belief that it had information on it which it could predicate that opinion.. (2002. Litig. prior to announcing lower than expected earnings causing 30 percent drop in stock's value. ED Pa) 216 F Supp 2d 418. DC Utah) 249 F Supp 2d 1256. and lack of internal controls failed to state claim under 15 USCS § 78j(b) where shareholders did not adequately described how statements were false. ED Va) 553 F Supp 2d 582. SEC v Gane (2005. CA2 NY) 538 F2d 953. corporation's operations. Good v Zenith Electronics Corp. where vice-president at time lacked reasonable basis to foresee that customers would experience delays in their own manufacturing facilities. and to help ensure that they would secure personal financial benefits that would flow to them if merger went ahead as planned. particularly where. 150. had such investigation been made. Litig. Sec. Revenue goal statements were not materially misleading. In re Adobe Systems. CA3 Del) 599 F2d 1190. CCH Fed Secur L Rep P 99074. Software manufacturer's motion to dismiss securities fraud action for failure to state claim is granted. Anderson v First Sec. Sec. CCH Fed Secur L Rep P 91987.Get a Document . injunction gr (2003. CCH Fed Secur L Rep P 96142. Sec. Connellan v Himelhoch (1981. where it was clear that investor should have discovered any injury more than two years prior to filing suit. and sales figures indicate sales in accordance with product-mix projections. (1975. because economic trend information is generally available. in which vice-president is quoted as saying he "expected" corporation to ship 1. 49 ALR Fed 373. but offering memorandum made it quite clear that its 118 of 158 3/8/11 4:25 PM . (1993. Inc. and (2) expanding its geographic markets beyond North America. and inability to foresee future does not constitute fraud. United States v Johnson (2008. second suit was barred by collateral estoppel and applicable statutes of limitations. false and unreliable sales forecasts. (2002. LLP (2003. CCH Fed Secur L Rep P 95421. Predictions of sales for corporation of approximately twice those of previous year constituted violation of § 10(b) of Securities Exchange Act (15 USCS § 78j(b)) where there was no basis for such estimates and no investigation of their accuracy had been made. company made no projections about sales to low-profit and high-profit customers. Securities fraud claim is denied summarily to extent it is based on new service report.R. CCH Fed Secur L Rep P 93940. SD Cal) 415 F Supp 2d 1106. overstated revenue recognition. ED Mich) 506 F Supp 1290. McLean v Alexander (1979. it would have been discovered that projections had no support from available facts. ND Ala) 247 F Supp 2d 1259. DC Or) 358 F Supp 413. internet.10b-5(b). REA Express. and financial forecasts were immaterial under "bespeaks caution" doctrine and sheltered by safe harbor of 15 USCS § 78u-5(c)(1)(B). Green v Jonhop. Litig. settled. where previous year annual report predicted "further profit improvements. Purchasers' sole allegation in complaint brought under § 10(b) of Securities Exchange Act of 1934. because SEC filings by manufacturer contained business cycle information from which shift could have been anticipated. SD NY) 410 F Supp 192. 151. Inc.

In re Van Der Moolen Holding N. in selling registered limited liability partnership interests. where investors challenge 1989 "guarantee" of continuation of past few years' revenue growth trend through fiscal 1990 and beyond. SD NY) 314 F Supp 2d 256. therefore. Litig (2009. Investors in limited partnership for development of transdermal and ophthalmic pharmaceutical products fail to state viable claim under 15 USCS § 78j(b). reported in full (1995. Under certain circumstances.Get a Document . CCH Fed Secur L Rep P 92804. application of cautionary statements prong of safe harbor was itself sufficient to render corporation and officers forward-looking statements non-actionable under 15 USCS § 78j(b) and Rule 10b-5. to effect that shares were expected to trade at discount from or premium to their net asset values.com/research/retrieve?cc=&pushme=1&tmp. motion gr sub nom Hirsch v Arthur Anderson & Co. district court erred in finding that there was no securities fraud because while early circulars advised that there were no assurances that any amount of debt purchased in debt pools could actually be recovered. and. of Unsecured Creditors v R. CCH Fed Secur L Rep P 98309. SD Tex) 876 F Supp 870. CCH Fed Secur L Rep P 94194. where stockholders base their case on series of statements concerning corporation's growth and revenues which turned out to be overly optimistic. unrebutted testimony showed that defendants knew their business model was not succeeding. 107 S Ct 1389. Sec. that statements regarding expected projected profits and demand were merely predictions that were subject to risk. and company was protected from liability under safe harbor provision of Private Securities Litigation Reform Act. two principals and their firm. and were not "specific guarantees" providing proper basis for fraud claim. less favorable forecasts. Inc. because future presentations or projections of potential profits were prefaced by cautionary language and tempered by specific warnings of significant risk factors and disclosure of underlying factual assumptions. and (3) warned of difficulties in completing and shipping product and effect upon corporation's position in market. Partnership Litig. Corp. CCH Fed Secur