In an opinion Friday, Judge Koeltl dismissed a shareholder class action against the movie studio Lions Gate.  The case concerned how the company disclosed an SEC enforcement action over how Lions Gate handled various transactions designed to ward off efforts by investor Carl Icahn for control.  The SEC action was ultimately settled for $7.5 million, and the plaintiffs alleged that the company should have disclosed the SEC investigation when it received “Wells” notices. Judge Koeltl disagreed:
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In an opinion issued yesterday, Judge Crotty denied Goldman Sachs’ motion for reconsideration of his refusal to dismiss securities fraud claims that Goldman argued were inactionable “puffery.”  See our post on that decision here. Goldman had pointed to three subsequent Second Circuit opinions — in City of  Pontiac Policemen’s & Firemen’s Ret. Sys. v. UBS AG, Carpenters Pension Trust Fund of St. Louis v. Barclays PLC, and Boca Raton Firefighters & Police Pension Fund v. Bahash — that it argued had changed or clarified controlling law on puffery.  Judge Crotty disagreed:
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Judge Crotty today mostly denied Goldman Sachs’s motion to dismiss a shareholder class action relating to various CDOs allegedly designed to fail, including the transaction which led to a $550 million settlement with the SEC. The motion was granted to the extent Judge Crotty found Goldman had no duty to disclose the SEC’s Wells notice: “At best, a Wells Notice indicates not litigation but only the desire of the Enforcement staff to move forward, which it has no power to effectuate. This contingency need not be disclosed.” The remainder of the claims concerned various statements by Goldman in public filings and elsewhere concerning its loyalty to clients, and procedures to avoid conflicts of interest — statements the plaintiffs claimed were false in light of the undisclosed conflicts in the CDOs at issue.  Judge Crotty found the statements were not, as Goldman argued, non-actionable “puffery”:
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