Schuyler Roche, P.C. Triumphs in Federal Securities Fraud Action
SRZ attorneys Michael Roche and Michael Braun successfully defended one of their clients, a director and officer for a technology-based corporation, against multiple claims of fraud and misrepresentation asserted in connection with the solicitation and sale of securities. The trial, held in the United States District Court for the Central District of Illinois, resulted in a final judgment dismissing every claim against this client.
The case involved the solicitation and sale of a substantial amount of the issuer’s stock to a large group of investors. The twelve plaintiff investors alleged that the company’s prospectus was fraudulently and/or negligently prepared and disseminated. The plaintiffs further alleged that SRZ’s client and his co-defendant, another officer and director of the company, fraudulently induced them into purchasing the securities through a deceptive prospectus and fraudulent misrepresentations. In total, the plaintiffs alleged claims for fraud, negligent misrepresentation, strict responsibility and breach of fiduciary duty.
After successfully obtaining a summary dismissal of the latter two counts, Michael Braun tried the fraud and negligence counts. The case then turned on the testimony and credibility of the plaintiffs. Cross-examination exposed inconsistencies in their accounts of what they claimed the defendants had told them and undercut their purported reliance upon the prospectus or the misrepresentations about which they had complained.
Judge Gorman focused on these issues in his 32-page opinion. He repeatedly cited the plaintiffs’ testimony in holding that they had failed to fulfill their burden of proof on all their causes of action. The carefully crafted opinion constituted an overwhelming validation of the defendants’ legal and factual arguments and likely played a key role in the plaintiffs’ decision not to seek an appeal.
“I knew the law was on our side and felt that if we could lock the plaintiffs into various admissions and their prior deposition testimony, the facts would lead the judge to find in our favor. After eliciting testimony about the true basis for the plaintiffs’ investment and highlighting the inconsistencies in the plaintiffs’ stories, I was cautiously optimistic that we would win the case,” said Braun.
Driving the plaintiffs’ investment decisions, Roche explained, “were their personal familiarity with the technology of the issuer, which they believed had great potential, and the strong belief by one of the plaintiffs that the stock would appreciate sharply in value within a very short period.”
SRZ’s lawyers were pleasantly surprised by the judge’s blanket acceptance of their arguments. “Trying any case to verdict is always somewhat of a gamble; I am most pleased that our client’s confidence in Mike's judgment proved to be justified,” said Mike Roche, who supervised the case.