An Interesting Auction Rate Securities Suit Dismissal

An Interesting Auction Rate Securities Suit Dismissal - 9/23/2009

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

An Interesting Auction Rate Securities Suit Dismissal
Kevin LaCroix

The D & O Diary. September 23, 2009
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EXCERPT: […] Judge Kaplan’s September 17, 2009 dismissal in the Raymond James auction rate securities case is noteworthy in its own right and by contrast to the prior dismissals in the UBS and Northern Trust cases, because in the Raymond James, by contrast to UBS and Northern Trust, had not entered into regulatory settlements involving its investors. Indeed, Raymond James has been the target of certain high profile media criticism as a "holdout" for its resistance to entry into a regulatory settlement. Because Raymond James has not entered a regulatory settlement, the defendants in the Raymond James auction rate securities case were unable to seek dismissal on the same "absence of recoverable damages" theory as did the defendants in the Northern Trust and UBS cases. Thus, by contrast to the dismissals in those other two cases that turned on the existence of the regulatory settlements, the dismissal in the Raymond James case actually related to the sufficiency of plaintiffs’ allegations on the merits, and therefore may be of greater potential significance for other auction rate securities cases, particularly those relating to other defendant companies that have not entered regulatory settlements. In granting the dismissal motions, Judge Kaplan very carefully distinguished the allegations that had been made against the various corporate defendants, and he carefully assessed the adequacy of the allegations as to each. Judge Kaplan determined that many of the alleged misrepresentations were made by or on behalf of Raymond James Financial Services (RJFS), the parent company’s retail sales subsidiary that actually sold to investors the auction rate securities that other corporate subsidiaries had underwritten or managed the related auction processes. Judge Kaplan found that there were insufficient allegations concerning the alleged misrepresentations supposedly made to the plaintiff or as part of the overall scheme to be able to attribute misrepresentations as to defendants other than RJFS.

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