LOS ANGELES, April 4, 2012 /PRNewswire/ -- Weingarten Brown LLP announced today that Federal District Court Judge Shira A. Scheindlin dismissed two more claims - for violation of the proxy rules under the federal securities laws and for aiding and abetting breaches of fiduciary duties - and narrowed another in the second of three separate investor suits against Bermuda-based Gerova Financial Group, Ltd. The case arises from Gerova's acquisition of the assets of a family of hedge funds managed by Stillwater Capital Partners, LLC.
"From the inception of these lawsuits we have stressed that we could get to the bottom of the baseless rumors and innuendo against Gerova spread by short sellers and gossipmongers," said Ethan Brown of Weingarten Brown in Los Angeles, who represents Gerova. "The Court agreed with our arguments that Gerova is a foreign private issuer and was not in violation of U.S. securities laws related to proxy solicitations. As in the related lawsuit, the court found that plaintiffs' aiding and abetting claims are barred by federal securities laws. This ruling goes a long way toward vindicating our client and helping restore Gerova's good name."
The court ruled that because Gerova is a foreign private issuer and met all SEC requirements for holding such status, it is not subject to Section 14(a) of the Securities and Exchange Act of 1934 regarding liability for unlawful proxy solicitation. Once again, the plaintiffs' aiding and abetting breach of fiduciary duty claim was precluded by the Securities Litigation Uniform Standards Act (SLUSA).
Earlier this year, the court dismissed the bulk of the claims against Gerova in another related lawsuit, leaving only one claim for an alleged breach of contact intact. See, In Re Stillwater Capital Partners Inc. Litigation, 11 Civ. 2737 SAS (S.D N.Y 2012). http://www.wbllp.com/images/uploads/Order_on_Motio_to_Dismiss_In_re_Stillwater.pdf.
In this second case, In Re Stillwater Capital Partners Inc. Litigation, 11 Civ. 7107 SAS (S.D.N.Y. 2012), http://www.wbllp.com/images/uploads/Gerova-ruling.pdf, the only claim remaining against Gerova is an alleged violation of Section 10(b) of the Securities and Exchange Act. With respect to the Section 10(b) claim, the court sharply narrowed its scope by holding that, pursuant to the Supreme Court's recent decision in Janus Capital, plaintiffs would have to prove the existence of false statements or material omissions in a single memorandum attributed to Gerova attached to the Consent Solicitation Stillwater sent its investors. Unlike the claims dismissed, plaintiffs will also have to prove scienter - or fraudulent intent - in order to prove the Section 10(b) claim.
"We are confident that we will be able to defeat the sole remaining claim against Gerova on a motion for summary judgment," said Brown. Gerova Chief Operating Officer Eugene Scher added, "We are thrilled with this result and all of the excellent work that Weingarten Brown has done for us."
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Weingarten Brown LLP is a Los Angeles-based law firm of business trial lawyers with sterling credentials, having graduated from top law schools and formerly practiced with some of the nation's most prestigious law firms. The Firm's practice emphasizes entertainment, technology, corporate, finance, securities, insurance coverage, intellectual property, and real estate litigation. The Firm represents clients in forums across the nation.
SOURCE Weingarten Brown LLP