Atlanta, GA (PRWEB) May 25, 2011
The international law firm of Greenberg Traurig, LLP obtained a dismissal of a putative securities class action on behalf of JP Turner & Co., LLC , making JP Turner the only broker-dealer that has been successful in having its Provident-related putative class action dismissed by motion. Terry R. Weiss, Greenberg Traurig Shareholder and Chair of its Atlanta Securities Litigation Practice, and Michael J. Biles, a Shareholder in the practice in the firm's Austin, TX office, represented J.P. Turner in Brown v. J.P. Turner & Company, Civil Action No. 1:09-cv-02649-JEC, in the United States District Court for the Northern District of Georgia, Atlanta Division.
The Brown case is one of several class action law suits filed against dozens of broker dealers involved in the sale of Provident securities. According to the lawsuit, Provident was alleged to be a $485 million Ponzi scheme, and the underlying allegation in the putative class action law suits was that the selling broker-dealers owed a legal duty to discover the fraud.
“This was the only motion to dismiss filed in the case, and the dismissal is a great result for our client, JP Turner,” said Weiss. “It is appropriate that the Court did not give the plaintiffs the right to re-plead to remedy their pleading errors.”
In the May 17, 2011 order dismissing the case, United States District Court Judge Julie E. Carnes agreed with JP Turner that there were no facts or legal authority cited to support the conclusory allegation that JP Turner owed a duty to confirm the accuracy of Provident's statements in the Private Placement Memoranda. "Neither has the Court found any Georgia authority that imposes a duty on a broker to conduct due diligence concerning the investment materials it provides to clients." [Order pg 12.]
The Court specifically underscored the lack of legal authority to support the position that a broker-dealer has the same duties imposed on a securities underwriter, which might include the responsibility to ensure accurate representations in a PPM. [Order, pg 9.] The Court also rejected the Georgia securities law and various other common law claims, noting that the plaintiffs do not allege that they relied on such efforts, "[n]or would such reliance be reasonable, as the PPMs expressly advise potential investors that they should only rely on information provided by Provident itself." [Order, pg 12.]
Procedurally, the Court was critical of the complaint in its attempt to plead fraud "on information and belief," in violation of the heightened pleading requirements of Rule 9(b). The Court noted that the facts of the alleged wrongdoing were not uniquely within JP Turner's knowledge, in part because JP Turner did not prepare the allegedly defective private placement memoranda. "Thus, it is unclear how defendant could be in any better position than plaintiffs to discover the details about the misrepresentations underlying this case," concluded the Court.
In rejecting one of the plaintiff's arguments that it should not be subject to the burden of heightened pleading, the Court concluded "that [JP Turner's] reputation will likely suffer as a result of plaintiffs' allegations that it fraudulently disseminated false investment material to its clients." [Order, pg 7.]
About Greenberg Traurig, LLP
Greenberg Traurig, LLP is an international, full-service law firm with approximately 1800 attorneys serving clients from more than 30 offices in the United States, Europe and Asia. In the U.S., the firm has more offices than any other among the Top 10 on The National Law Journal’s 2011 NLJ 250. In the U.K., the firm operates as Greenberg Traurig Maher LLP. Greenberg Traurig has a strategic alliance with the independent law firm, Studio Santa Maria in Milan and Rome. The firm was Chambers and Partners' USA Law Firm of the Year in 2007 and among the Top 3 in the International Law Firm of the Year at the 2009 The Lawyer Awards. For additional information, please visit http://www.gtlaw.com.
Kristi Wallace, Greenberg Traurig, 678-553-2145/ Email: wallacek(at)gtlaw(dot)com