Modern Settings, Inc. v. Prudential-Bache Sec.

3 Citing cases

  1. In re Bayou Hedge Fund Litigation

    534 F. Supp. 2d 405 (S.D.N.Y. 2007)   Cited 49 times
    Finding contract void under statute of frauds but not discussing it under preemption

    However, while reckless conduct may satisfy the scienter requirement of ยง 10(b) and Rule 10b-5, "the complaint must make clear that more than mere negligence is alleged." Modern Settings, Inc. v. Prudential-Bache Sees., Inc., 603 F.Supp. 370, 372 (S.D.N.Y. 1985). Thus, conclusory "allegations that a defendant `knew or [was] reckless in not knowing' the true facts will not satisfy a plaintiffs pleading requirements."

  2. Finn v. Prudential-Bache Securities, Inc.

    821 F.2d 581 (11th Cir. 1987)   Cited 37 times
    Finding that fraud claims based on the allegations that the defendant "lied about [their broker's] conduct in an effort to induce the [Plaintiffs] to sign the release" were barred where there was a relationship of mistrust established by Plaintiff's knowledge that defendant had used a fraudulent financial statement and had reason to believe their account was mismanaged

    There are, however, material issues of fact as to whether Bache had the legal right to liquidate the account. If the Finns' allegations that Bache fraudulently and unlawfully mismanaged their account are taken as true, as they must for the purposes of this appeal, then Bache's liquidation of the account could very possibly have given rise to a cause of action for unlawful liquidation. See Modern Settings, Inc. v. Prudential-Bache Securities, Inc., 603 F. Supp. 370, 374-75 (S.D.N.Y. 1985). If we followed Bache's reasoning, an investment firm could illegally manipulate a customer's account to create a large indebtedness and then use the threat of liquidation as a tool to secure a release of all claims against the firm. We cannot sanction such a result.

  3. Loper v. Advest Inc.

    617 F. Supp. 652 (W.D. Pa. 1985)   Cited 2 times

    In so finding, we do not hold that securities violations cannot occur in the management of margin accounts, or that wrongful liquidations of such accounts cannot play a part in securities frauds. Cf. Angelastro v. Prudential-Bache Sec. Inc., 764 F.2d 939, 942 (3d Cir. 1985) (finding misrepresentation or nondisclosure of credit terms of margin account "in connection with" purchase or sale of security; purpose underlying ยง 10(b) and rules adopted under section is to insure that investors obtain disclosure of material facts in connection with their investment decisions regarding the purchase or sale of securities); Modern Settings v. Prudential-Bache Sec. Inc., 603 F. Supp. 370, 373-75 (S.D.N.Y. 1985) (plaintiffs stated claim for violations of federal securities laws where alleged wrongful liquidations of plaintiff's margin account part of scheme by which defendants attempted to depress and artificially manipulate market in order to then purchase undervalued securities to sell at profit). Here, however, the SEC claim doesn't pass muster.