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HNRK Wins Partial Dismissal of Putative Securities Fraud Class Action


A New Jersey federal judge has dismissed, in part, federal securities law claims against HNRK client Brian Ferdinand, co-founder of the technology firm Liquid Holdings Group, Inc. Ruling on the defendants’ motions to dismiss the class action plaintiffs’ third amended complaint, the court struck plaintiffs’ claims under Section 11 of the Securities Act (relating to alleged misstatements in Liquid’s public offering documents) as time-barred and also dismissed a Section 10(b) fraud claim.

The court trimmed considerably the proposed class action (which alleges former Liquid Holdings executives, and the underwriter of its IPO, were responsible for alleged misstatements and omissions in documents that Liquid filed with the SEC), holding that the investors failed to demonstrate their shares were traceable to the offering at issue. The court also found that a subsequent offering, and plaintiff Richard Karl Schmidt Trust, was added to the litigation too late.

Finally, HNRK successfully argued that the court should dismiss allegations that Ferdinand violated the Exchange Act by engaging in a scheme to deceive investors into buying shares of Liquid Holdings.

The case is Robert De Vito v. Liquid Holdings Group Inc. et al., case number 2:15-cv-06969, in the U.S. District Court for the District of New Jersey.

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