BMK Attorneys Successfully Defend Registered Investments Adviser’s Senior Officers and Directors Against SEC Rule 10b-5 and Other Securities Claims in U.S. District Court

BMK attorneys Edward Kutchin, Kerry Northup, and Matthew Dunn successfully represented a New York-based registered investment adviser, and its senior officers and directors, against multiple securities law, common law and corporate governance claims. The claims were brought by individuals who had invested in a Ponzi scheme perpetrated by another senior officer of the investment adviser through an unaffiliated investment partnership he controlled.

Investors in the Ponzi scheme brought numerous securities law and related claims in the U.S. District Court for the Eastern District of Pennsylvania against the investment adviser and its directors and senior officers personally, as well as the Ponzi scheme perpetrator. After extensive discovery, BMK obtained summary judgment on all counts, including claims of SEC Rule 10b-5, control person liability under Section 20(a) of the Securities and Exchange Act, violations of Pennsylvania’s consumer protection law, negligent supervision, and breach of fiduciary duty. The investors appealed to the Third Circuit Court of Appeals which, after oral argument, affirmed the district court’s summary judgment ruling in favor of BMK’s clients on virtually all counts. Ultimately the case was settled on terms that were extremely favorable for BMK’s clients.