Thursday, November 7, 2013

Semerenko v. Cendant Corp. case brief

Semerenko v. Cendant Corp. case brief summary
223 F.3d 165 (2000)

CASE SYNOPSIS
Plaintiffs appealed from an order of the United States District Court for the District of New Jersey, which dismissed pursuant to Fed. R. Civ. P. 12(b)(6) their claims for securities fraud filed under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5(b).

CASE FACTS
Plaintiffs and the class of similarly situated investors appealed from a district court order dismissing their claims for securities fraud filed under § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The court vacated and the district court's order.

DISCUSSION
  • The court found that plaintiffs alleged sufficient facts to establish the elements of reliance and loss causation and that the district court applied the incorrect analysis for determining whether the complaint alleged that the purported misrepresentations under § 10(b) and Rule 10b-5 were made "in connection with" the purchase or the sale of a security. 
  • The fact that defendants' alleged misrepresentations did not implicate the investment value of the securities in question was insufficient to defeat plaintiffs' claims. 
  • Accordingly, because the standard the court articulated, applying the materiality and public dissemination approach, was different from the one applied by the district court, the judgment of the district court was vacated and remanded for further proceedings.

CONCLUSION
Judgment dismissing class action securities fraud claims was vacated and remanded where the district court applied the incorrect analysis for determining whether the complaint alleged that the purported misrepresentations were made "in connection with" the purchase or the sale of a security.



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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