Share
Financial Services & Capital Markets| Client Successes

Securities Fraud Claim Dismissed for Retailer

Situation

A publicly traded retailer client was sued for securities fraud under Section 10(b) and Rule 10b-5 of the Exchange Act. The claimant, one of the company’s suppliers, alleged that the company made false and misleading statements in connection with the sale of a security.

Result

We filed a motion to dismiss the securities fraud claim, arguing that the arrangement between the two companies was not an investment contract and, therefore, was not a security within the meaning of the federal securities laws. The court agreed and dismissed the claim.