Thursday, November 7, 2013

In re Time Warner Inc. Securities Litigation case brief

In re Time Warner Inc. Securities Litigation case brief summary
9 F.3d 259 (1993)

Plaintiff stock purchasers appealed the order of the United States District Court for the Southern District of New York that dismissed for failure to adequately plead scienter and material misrepresentations or omissions their securities fraud class action that alleged defendants, a corporation and its officers, misled the investing public by statements and omissions made in the course of defendant corporation's efforts to reduce its debt.

Plaintiff stock purchasers brought a securities fraud class action under 15 U.S.C.S. §§ 78j(b),78t(a) and state law against defendant corporation and its officers, alleging they publicly misrepresented the status of ongoing strategic partnership discussions and failed to disclose consideration of a stock offering alternative that was later adopted to reduce debt and which diluted existing shareholder rights. The complaint referred to both attributed statements and those anonymously made. The case was dismissed pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6). Plaintiffs appealed.

  • In reversing the dismissal with respect to the attributed statements, the court held that, having publicly promoted strategic alliances, defendants may have had a duty to disclose facts regarding other approaches that were under consideration, which would place the statements about strategic alliances in a materially different light. 
  • Thus, plaintiffs' pleadings with respect to omissions and scienter were sufficient. 
  • With respect to the anonymous statements, however, dismissal was affirmed because Fed. R. Civ. P. 9(b)required identification of the speaker of the fraudulent statements.


The order to dismiss was reversed and the case was remanded for further proceedings with respect to attributed statements and omissions by defendants because plaintiffs' allegations concerning omissions and scienter were adequate to survive a motion to dismiss. However, dismissal was affirmed with respect to unattributed statements because identification of the speaker was a pleading requirement under the rules of procedure.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials

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