Filed January 11, 2012
The theory has been rejected by the Third and Seventh Circuits. See Malack v. BDO Seidman, LLP, 617 F.3d 743 (3d Cir. 2010); Eckstein v. Balcor Film Investors, 8 F.3d 1121 (7th Cir. 1993). The Sixth, Eighth, and Ninth Circuits have declined to apply the theory based on the facts in particular cases, but have not passed on its viability generally.
Filed May 21, 2010
And both the Sixth and Seventh Circuits have expressly criticized this presumption. See Ockerman v. May Zima & Co., 27 F.3d 1151, 1159-60 (6th Cir. 1994); Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1130 (7th Cir. 1993) (rejecting the presumption). In any event, even if this theory had some currency within the Second Circuit, it still would not apply in this case.
Filed March 26, 2010
Finally, as with statements of belief and opinion, Defendants are not entitled to safe harbor protection where they already know their statements to be false. In re Viropharma, 2003 U.S. Dist. LEXIS 5623, at *29 (holding that a defendant “may not use cautionary language to protect himself when he is already aware that the risks he is cautioning against have come to fruition”).32 No amount of cautionary language insulates such conduct from liability: “the safe 32 See also Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1127 (7th Cir. 1993) (“A prospectus stating a risk that such a thing could happen is a far cry from one stating that this had happened. The former does not put an investor on notice of the latter.”)
Filed March 3, 2010
Indep. Energy, 154 F. Supp. 2d at 756; see also Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1127 (7th Cir. 1993) (“A prospectus stating a risk that such a thing could happen is a far cry from one stating that this had happened. The former does not put an investor on notice of the latter.”)
Filed February 17, 2010
Id. at 1179; see also Berson v. Applied Signal Tech., Inc., 527 F.3d 982, 986-87 (9th Cir. 2008) (general risk disclosure that a customer might issue a stop-work order did not satisfy duty to disclose where four stop-work orders had already been received); Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1127-28 (7th Cir. 1993) (general risk disclosures were insufficient Case 1:09-cv-00386-JLK-KMT Document 91 Filed 02/17/10 USDC Colorado Page 15 of 46 56855-0005/LEGAL17720125.1 8 420 F.3d 598 (6th Cir. 2005), a mutual fund disclosed that “sales personnel may receive different compensation for selling each Class of share.” Id.
Filed February 1, 2010
§III.D.1. Defendants knew that Client B had cut back virtually all of 14 See also Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1127 (7th Cir. 1993) (“A prospectus stating a risk that such a thing could happen is a far cry from one stating that this had happened. The former does not put an investor on notice of the latter.”)
Filed December 3, 2009
Id. at 1551-52; see also Sterlin, 154 F.3d at 1202 (“purpose behind commencing the one-year limitations period upon inquiry notice is to discourage investors from adopting a wait-and-see approach”); Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1128 (7th Cir. 1993) (“Investors must bring their claims as soon as they become aware of misrepresentations or omissions, instead of waiting while avoidable damages accrue.”).
Filed December 3, 2009
Id. at 1552; see also Sterlin, 154 F.3d at 1202 (“purpose behind commencing the one-year limitations period upon inquiry notice is to discourage investors from adopting a wait-and-see approach”); Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1128 (7th Cir. 1993) (“Investors must bring their claims as soon as they become aware of misrepresentations or omissions, instead of waiting while avoidable damages accrue.”).
Filed October 14, 2009
Defendants stated that the Funds “generally seek” to use derivative instruments and transactions as a portfolio management or 31 See also Rombach v. Chang, 355 F.3d 164, 173 (2d Cir. 2004) (“Cautionary words about future risk cannot insulate from liability the failure to disclose that the risk has transpired.”); Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1127 (7th Cir. 1993) (“A prospectus stating a risk that such a thing could happen is a far cry from one stating that this had happened. The former does not put an investor on notice of the latter.”)
Filed April 1, 2009
Litig., 211 F.R.D. 255, 263-266 (D.N.J. 2002) (discussing fraud-on-the-market in the context of a Rule 23 motion); see also Nanophase, 2003 WL 21372471, at *7 (“The [fraud-on-the-market] theory holds that efficient trading markets automatically establish a causal link between material misstatements or omissions and a stock purchaser’s injury, and manifest that link in the stock’s price.”) (citing Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1129 (7th Cir. 1993)). While the Seventh Circuit has not specifically articulated standards for establishing Case 1:06-cv-01493 Document 221 Filed 04/01/2009 Page 23 of 31 15 market efficiency, district courts in this Circuit12 and other Circuit Courts of Appeals13 have utilized the so-called “Cammer factors” for proof of market efficiency, to wit: (1) whether the stock trades at a high weekly volume; (2) whether securities analysts report on the stock; (3) whether the stock has market makers and arbitrageurs; (4) whether the company is eligible to file SEC registration form S-3, as opposed to Form S-1 or S-2; and (5) whether there are empirical facts showing a causal relationship between unexpected corporate events or public news releases and a subsequent response in the stock price.