According to the docket posted, on January 3, 2001, the Court entered the Order dismissing the case, but the plaintiffs soon after filed a notice of appeal from the judgment and order dismissing the case. On June 28, 2001, the Court entered the certified copy of the Mandate of the U.S. Court of Appeals. The Plaintiffs-Appellants withdrew with prejudice their appeal.
By the closing Order, entered on December 29, 2000, from U.S. District Judge John S. Martin of the United States District Court For the Southern District Of New York, the Defendants moved to dismiss plaintiffs' complaint and the motion was granted. The complaint did not establish defendants' primary liability since there were no allegations that defendants instigated trading that it knew or should have known would have resulted in fraudulent trades that would have artificially inflated the price of the manipulated securities, nor that defendants asserted control over the brokerage houses trading operations.
The original complaint alleged that defendants, since as early as 1991, provided clearing services and financing for the Brokerages (see Note 1 below). Defendants provided the aforesaid services in regard to the Securities, usually new issues and securities for which the Brokerages acted as market makers for many current and defunct companies (see Note 2 below). The Complaint alleged that the activities of Defendants exceeded mere processing of customer trades for the Brokerages and became direct participants in a course of conduct which violated the
anti-fraud provisions of the federal securities laws and common law.
Specifically, the Complaint charges Defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder as well as Section 20(a) of the Exchange Act. The Complaint alleges that Defendants participated directly in a continuing course of conduct, which was intended to and did artificially inflate the price of the Securities and which manipulated or maintained the market for the Securities sold by the Brokerages in transactions in which Defendants provided financial or clearing services. In addition, the Complaint charges
Defendants with breach of contract and common law fraud and deceit in
regard to these same transactions.
NOTE 1: The Brokerages include:
A.R. Baron & Co., Inc.
D. Blech & Co.
Corporate Securities Inc.
First Cambridge Securities Corp.
Hillcrest Financial Corp.
A/K/A HFC Capital Corp.
Josephthal, Lyon & Ross, Inc.
Kensington Wells Incorporated
Lew Lieberbaum & Co.
Meyers Pollock Robbins, Inc.
Nobel International Investments, Inc.
Paragon Capital, PCM Securities
Rooney-Pace Inc.; Securities Corp.
Sterling Foster & Co.
NOTE 2: The companies are:
Advanced Surgical Inc.
Advanced Voice Technologies, Inc. (OTC BB:HMWKE)
Applewoods Inc. (NASDAQ:APWD)
Ariad Pharmaceuticals Inc. (NASDAQ:ARIA)
BioSepra, Inc. (NASDAQ:BSEP)
Bristol Technology Systems, Inc.
Chemex Pharmaceuticals Inc. later
known as Access Pharmaceuticals (OTC BB:AXCS)
Children's Wonderland, Inc.
Cypros Pharmaceuticals Corp.
Technologies Inc. (OTC BB:CMTK)
DNA Plan Technology Inc.
Ecogen Inc. (NASDAQ:EECN)
Embryo Development Corporation (NASDAQ:EMBR)
Envirogen Corp. (NASDAQ:ENVGD)
First Team Sports Inc. (NASDAQ:FTSP)
Genemedicine, Inc. (NASDAQ:GMED)
Globus Group, Inc. (OTC BB:GBUS)
Guilford Pharmaceuticals Inc. (NASDAQ:GLFD)
HemaSure, Inc. (OTC BB:HMSR)
ICOS Corp. (NASDAQ:ICOS)
IFS International Inc. (NASDAQ:MNYC)
Innovair Laboratories Inc.
Intelligent Surgical Lasers, Inc. later known
as Escalon Medical Corp. (NASDAQ:ESMC)
Iatros Health Network Inc. (NASDAQ:IHNI)
La Jolla Pharmaceutical Co. (NASDAQ:LJPC)
Lasergate Systems, Inc. (OTC BB:LSGT)
Liposome Technology Inc.
LXR Biotechnology Corp. (AMEX:LXR)
ML Direct Inc. (OTC BB:MLDR)
Microprobe Corp. later known as Epoch
Pharmaceuticals (OTC BB:EPPH)
Ministor Peripherals International LTD (OTC BB:MINSF)
Neoprobe Corp. (NASDAQ:NEOP)
NeoRx Corp. (NASDAQ:NERX)
New Vision Technology Corp. later known
as Sight Resource Corp. (NASDAQ:VISN)
Nu-tech Bio-Med Inc. (OTC BB:NTBM)
Pacific Animation Imaging Corp.
later known as Strategic Solutions Group (OTC BB:SSGI)
Paperclip Imaging Software Inc. (OTC BB:PCLP)
Pharmos Corp. (NASDAQ:PARS)
Procept Inc. (NASDAQ:PRCT)
Texas Biotechnology Corp. (AMEX:TXB)
Voxtel Advanced Mammography
Xechem International, Inc. (OTC BB:ZKEM)
Xybernaut Corporation (NASDAQ:XYBR)