Sher Tremonte Wins Complete Dismissal of Securities Fraud Suit

On March 30, 2019, the U.S. District Court for the Southern District of New York granted Sher Tremonte’s motion to dismiss an action against the firm’s client under Section 20 of the Securities and Exchange Act. Plaintiffs, institutional investors who had purchased almost $1 million worth of common stock in Arista Power (a start-up focused on developing wind turbines), alleged that Sher Tremonte’s client, the former Chairman of Arista’s Board of Directors, was liable for the loss of plaintiffs’ investments under a theory of control person liability for alleged misrepresentations made by Arista’s CEO concerning the source of Arista’s funding. After previously granting motions to dismiss the first amended complaint with leave to replead, the Court has now dismissed the action in its entirety with prejudice, finding that plaintiffs’ second amended complaint failed to adequately allege that the purported misrepresentations actually caused plaintiffs’ losses and thus could not state a claim against Sher Tremonte’s client for control person liability. The case was handled by partner Robert Knuts and counsel Erica A. Wolff. Read the full decision here.