Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, September 9, 2010

A First: ARS Buyers State Fraud Claim Against Raymond James

I have followed the ARS lawsuits quite closely, and until recently plaintiffs have been consistently unsuccessful in surviving the motion to dismiss stage, because courts find they have failed to plead scienter with the requisite scienter required by the PSLRA..  In essence, the courts think the firms were negligent, or stupid, but not deceitful.  Recently, however, Judge Lewis Kaplan allowed some of plaintiffs' allegations against Raymond James Financial, go forward.  In that case ARS buyers allege that the firm failed to disclose that auction brokers routinely intervened to maintain the liquidity of the market.  The judge did dismiss many of the complaint's allegations.  Defer v. Raymond James Financial, Inc. (S.D.N.Y. Sept. 2, 2010)

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