SECURITIES AND INVESTMENT LITIGATION

Furlong, et al. v. Appiant Technologies, Inc., et al.

Thompson Coburn defended a group of officers and directors of Appiant Technologies in a securities fraud action. The case was filed in the United States District Court for the Eastern District of Missouri by a group of investors who purchased secured convertible debentures and warrants in Appiant, a public company. The investors claimed that Appiant and the other defendants violated federal securities laws, as well as the securities laws of Missouri, Florida, Illinois, New Jersey and Maine, by failing to disclose investment risks known to the defendants. The defendants moved to dismiss, citing, among other grounds, the investors’ failure to plead with specificity any untrue statement of material fact or omission of material fact, or any facts giving rise to a strong inference that the defendant acted with the required state of mind. The judge granted the motions to dismiss.

Class Action Dismissals for Scottrade, Inc.

We secured orders of dismissal for failure to state a claim upon which relief can be granted in separate class action suits filed against Scottrade, Inc. The suits were unrelated and separately filed in California and Michigan state courts. Each asserted various state law theories of recovery based upon allegedly false advertising by Scottrade, and each was plead in an effort to avoid removal. The California case was successfully removed based on the Securities Litigation Uniform Standards Act, and the Michigan case was successfully removed based on the Class Action Fairness Act. Following removal, each case was dismissed, with prejudice, on Scottrade's motion.

Alex Herman, Secretary of the United States Department of Labor v. Mercantile Bank of St. Louis, N.A., et al.

Mercantile Bank was the trustee of the Lenco, Inc., a closely held Missouri corporation, Employees’ Stock Ownership Plan (ESOP). Mercantile, acting as trustee of the ESOP, sold the ESOP’s Lenco stock to an individual. This individual, with this purchase and several others, was able to acquire all of Lenco’s stock. Lenco’s ESOP committee immediately replaced Mercantile as trustee of the ESOP. The new trustee bought back all Lenco stock for the ESOP. Several years later, Lenco experienced financial problems and filed for bankruptcy, resulting in the ESOP losing the vast majority of its funds. The Secretary of Labor brought suit against Mercantile, alleging ERISA violations for the ESOP buy-back of Lenco stock because Mercantile failed to prevent it. Following a bench trial, the District Court entered judgment for Mercantile. The U.S. Court of Appeals for the Eighth Circuit affirmed.