Mr. Sacher Successfully Obtains Dismissal of SEC Complaint in U.S. District Court

November 10, 2015 | Category: News, Reported Decisions

SOUTH FLORIDA, November, 2015 -- Following extensive briefing, the U.S. District Court for the Southern District of Florida, sitting in West Palm Beach, dismissed a voluminous Complaint filed by the U.S. Securities and Exchange Commission ("SEC" or "Commission") against 2 of Mr. Sacher's clients, and others.

Previously, on April 16, 2015, the SEC filed a voluminous, 29-count Complaint against 6 named Defendants and another 4 Relief Defendants, alleging numerous violations of the antifraud provisions of the Federal Securities Laws, as well as many other alleged violations, purportedly based on control person liability, books and records violations, and aiding and abetting.

During the Summer of 2015, the remaining Defendants filed Motions to Dismiss the Complaint, based on numerous grounds.  Mr. Sacher's clients filed an independent Motion to Dismiss that took the position that the SEC's Complaint did not satisfy the basic pleading requirements of the Federal Rules of Civil Procedure with respect to allegations of fraud.  In advocating for this position, the motion explained that the vast majority of the Commission's Complaint involved interrelated allegations of purported fraud, which required the SEC to set forth particularized allegations, explaining the "who, what, when, where, and how" of the alleged false statements giving rise to the various alleged claims.    

In granting the Motion to Dismiss, the U.S. District Court Judge agreed with Mr. Sacher's argument.  The Court found that, "the brevity of each counts and the wholesale inclusion of the entire factual recitation section into each of those counts makes it difficult to determine which facts relate to which count and to which defendant."  Based on that, alone, the Court found it unnecessary to address further arguments regarding the sufficiency of the plead claims.  

In addition to the foregoing pleading deficiencies, the Motion to Dismiss also focused on the applicable statute of limitations applicable under 28 U.S.C. § 2462.  The Court found that, "Given the lack of compliance with Rule 9(b), the Court is unable to determine whether the statute of limitations bars the civil penalty claim.  Thus, the Court will defer ruling on this argument at this point."  

Ultimately, the Court ordered the dismissal of the initial Complaint and directed the Commission to file an Amended Complaint within 20 days.


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