127 F.Supp.3d 60
Willard A. SHARETTE, David, Goldman, and Esta Goldman, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,
v.
CREDIT SUISSE INTERNATIONAL, a foreign company, Credit Suisse Securities (USA) LLC, a Delaware limited liability Company, and Does 1–100, Defendants.
No. 14–cv–8486 (VM).
United States District Court, S.D. New York.
Signed Aug. 20, 2015.
Gary Vance Mauney, Lewis & Roberts, PLLC, Charlotte, NC, James A. Roberts, III, Lewis and Roberts PLLC, Raleigh, NC, Hal Davis Cunningham, Scott + Scott, Attorneys at Law, LLP, San Diego, CA, Joseph Peter Guglielmo, Deborah Clark–Weintraub, Thomas L. Laughlin, IV, Scott + Scott, L.L.P., New York, NY, for Plaintiffs.
Patrick E. Gibbs, Allison S. Davidson, Latham & Watkins, LLP, Menlo Park, CA, for Defendants.
DECISION AND ORDER
VICTOR MARRERO, District Judge.
| I. | BACKGROUND | –––– |
| A. | TWO OFFERINGS OF ECD STOCK | –––– |
| B. | SHORT SALES OF ECD STOCK SKYROCKET WHILE THE PRICE OF ECD STOCK PLUMMETS, SENDING ECD INTO BANKRUPTCY | –––– |
| C. | THE CREDIT SUISSE DEFENDANTS' ALLEGED MISREPRESENTATIONS AND MANIPULATIVE SCHEME | –––– |
| 1. | Convertible Notes, Short Sales, and "Hedging" | –––– |
| 2. | Short Sales With Almost No Risk; Misaligned Investor And Shareholder Interests | –––– |
| 3. | Allegations Against the Credit Suisse Defendants | –––– |
| II. | CHOICE OF LAW | –––– |
| III. | JUDICIAL NOTICE | –––– |
| IV. | LEGAL STANDARD | –––– |
| A. | RULE 12(b)(6) MOTION TO DISMISS | –––– |
| B. | THE EXCHANGE ACT | –––– |
| 1. | Section 10(b), Rule 10b–5, and Section 9 | –––– |
| 2. | Market Manipulation | –––– |
| 3. | Misstatements or Omissions of Material Fact | –––– |
| 4. | Scienter | –––– |
| 5. | Loss Causation | –––– |
| V. | DISCUSSION | –––– |
| A. | ACTS OF MARKET MANIPULATION | –––– |
| 1. | Manipulative Acts Under Section 10(b) and Rule 10b–5 | –––– |
| a. | ATSI and Cohen | –––– |
| b. | "Something More" | –––– |
| c. | "Legitimate" Hedging | –––– |
| 2. | The Credit Suisse Defendants' Participation in Manipulative Acts Under Section 10(b) and Rule 10b–5 | –––– |
| B. | MISSTATEMENTS OR OMISSIONS OF MATERIAL FACT | –––– |
| 1. | The Existence of Misleading Statements Under Section 10(b) and Rule 10b–5 | –––– |
| a. | Accuracy and Disclosure | –––– |
| b. | False When Made | –––– |
| 2. | Misstatements "Made" by the Credit Suisse Defendants under Section 10(b) and Rule 10b–5 | –––– |
| C. | SCIENTER | –––– |
| 1. | Motive and Opportunity | –––– |
| 2. | Strong Circumstantial Evidence of Conscious Misbehavior or Recklessness | –––– |
| a. | Structure of Offerings | –––– |
| b. | Solicitation Conversations Prior to the Offerings | –––– |
