The original complaint charges CBRE and certain of its officers and directors with violations of the Securities Act. CBRE is a commercial real estate specialty finance company. The Company primarily focuses on originating, acquiring, investing, financing, and managing a diversified portfolio of commercial real estate related loans and securities in North America.
On or about September 26, 2006, CBRE filed with the SEC a Form S-11/A Registration Statement (the “Registration Statement”), for the IPO. On or about September 29, 2006, the Prospectus (the “Prospectus”) with respect to the IPO, which forms part of the Registration Statement, became effective. The complaint alleges that the Registration Statement and Prospectus failed to disclose that at the time of the IPO more than $20 million in loans on the company’s books were impaired and should have been written down but were not.
The complaint further alleges that on August 6, 2007, CBRE issued a press release announcing its financial results for the second quarter of 2007, the period ending June 30, 2007. The Company reported that it was taking a $7.8 million impairment charge due to a write-down on a foreclosed asset. Following this announcement, the price of CBRE stock declined to $4.25 per share, 70% lower than the IPO price of $14.50, on extremely heavy trading volume.
The judge ordered related cases to be consolidated, appointed lead plaintiffs, including a union, and approved selection of lead counsel. Plaintiffs filed their Amended Class Action Complaint on March 24, 2008. A follow up Corrected Amended Class Action Complaint was later filed on May 6, 2008. The Corrected Amended Complaint add CBRE's Chairman of the Board and several Underwriters to the defendants list. First rounds of motions for dismissal were filed on July 29, 2008 by all defendants. On November 11, 2008, Judge Stefan R. Underhill issued the oral order granting in part the defendants' motion, dismissing without prejudice the plaintiffs' section 12 claims. Plaintiffs were given 30 days to file an amended complaint. On December 22, 2008 the plaintiffs entered a notice of voluntary dismissal against the underwriter defendants and filed their Second Amended Complaint against the remaining parties. The named defendants responded by filing a motions to dismiss the Second Amended Complaint on January 15, 2009.
According to an article dated July 30, 2009, CBRE Realty Finance Inc. has won a bid to dismiss a proposed shareholder class action accusing the company of failing to disclose, on the eve of its initial public offering, that the recipient of a $51 million loan was on the verge of defaulting. Judge Stefan R. Underhill of the U.S. District Court for the District of Connecticut on Wednesday granted CBRE's motion to dismiss the suit, finding that the lead plaintiffs had failed to show that the alleged omission was material, as the loan to real estate developer Triton Real Estate Partners Inc. was collateralized. Judge Underhill dismissed the plaintiffs' claims under sections 11, 12(a)(2) and 15 of the Securities Act of 1933, which are not subject to the same heightened pleading standards of a securities fraud claim and may therefore be tougher to get dismissed early on.
On August 12, 2009, Judgment was entered for the defendants. That day, the plaintiffs filed a motion for reconsideration of the July 29, 2009 Order dismissing the action. On March 25, 2010, the motion was denied. On April 23, 2010, the plaintiffs filed a Notice of Appeal. According to the Mandate from the Second Circuit Court of Appeals entered on August 18, 2011, the judgment of the district court is affirmed.