According to the complaint filed December 22, 2009, the class of investors purchased the BJ Group Service Portfolios based on the claim that the portfolio was managed by a well-known money manager's proprietary model. As it turned out, the portfolio did not follow the management model as explicitly as purported.
According to all of its sales, marketing and disclosure materials disseminated to prospective and current investors in Genworth's Private Client Group, "The BJ Group Service offers clients tactical asset allocation by implementing recommendations from Robert ("Bob") J. Brinker, author of Marketimer newsletter." Defendants represented that "Bob recommends asset allocations and fund selection for GFAM's management of accounts for the BJ Group Advisory Services." The materials explicitly state: "This portfolio is based on the Bob Brinker model, offered through our exclusive partnership with him" and that "[o]ur experienced professionals work to implement Bob's investment strategy utilizing his proprietary tactical asset allocation model."
Contrary to Defendants' representations that the Portfolio was being managed based upon the Brinker recommendations, the percentage of non-Brinker recommended Funds being purchased for the Portfolio routinely exceeded 50%. By not implementing Brinker's tactical asset allocation and fund selection, Genworth was able to generate for itself extra revenues by selecting alternate mutual funds that paid higher administrative and service fees. Defendants purchased these funds, instead of purchasing funds recommended by Brinker, notwithstanding that these funds routinely underperformed Funds recommended by Brinker.
On May 11, 2010, Senior Judge Arthur D. Spatt appointed The Genworth Lead Plaintiff Group as Lead Plaintiff and approved their selection of Weiss & Lurie and Leeds, Morelli & Brown, P.C. as Co-Lead Counsel. On May 24, 2010, an Amended Complaint was filed.
On August 5, 2010, the defendants responded by filing a motion to dismiss the Amended Complaint. The motion to dismiss was granted in part and denied in part on March 31, 2011. According to the Order, as stated on the record at oral argument on March 30, 2011, the Motion to Dismiss is granted as to the state claims and is otherwise denied. The case is now in the discovery phase.
On April 15, 2014, the Court found the plaintiffs failed to establish by a preponderance of the evidence a common method of proving that all class members relied on defendants’ alleged representations and omissions. Thus, if this case went to trial, each class member’s reliance would have to be proven individually, thereby precluding class certification under Rule 23(b)(3). Thus, the Court denied plaintiffs’ motion for class certification, and denied all motions to strike as moot.