This adequately states a ‘scheme' . . . under Rule[s] 10b-5(a) and (c).”); SEC v. GPL Ventures LLC, Civ. A. No. 21-6814, 2022 WL 158885, at *9 (S.D.N.Y. Jan. 18, 2022) (finding that plaintiffs adequately stated scheme liability claim where defendants “orchestrated and contrived a marketing apparatus” and used third-party promoters
To show control person liability when the primary violation is of Section 15(a), the SEC must show, "(1) a primary violation by a controlled person and (2) direct or indirect control of the primary violator by the defendant." SEC v. GPL Ventures LLC, 21 Civ. 6814, 2022 WL 158885, at *7 (S.D.N.Y. Jan. 18, 2022).
("[T]he Court finds River North and Keener persuasive, and denies Defendants' Motion [to Dismiss pursuant to Rule 12(b)(6)] predominantly for the reasons set forth in those cases ... not only does the Complaint sufficiently explain how Defendants operated the business in which they bought and sold securities for their own account, but it also alleges some of the dealer factors that Defendants mistakenly suggest must be established at the pleading stage."); Carebourn Capital, 2022 WL 1639515, at *5 ("Defendants' position also reflects a misplaced reliance on a multi-factored inquiry discussed in the SEC's Guide ... Like other courts faced with this argument, however, this Court concludes that the Guide invites a fact-intensive analysis that is ill-suited for application to a [Rule 12(b)(6) motion to dismiss]."); see also SEC v. GPL Ventures LLC, 2022 WL 158885 (S.D.N.Y. Jan. 18, 2022) (Hellerstein, J.) (denying the defendants' Rule 12(b)(6) motion to dismiss and rejecting the argument the SEC inadequately pled defendants met the Exchange Act's "dealer" definition" for the purposes of alleging failure to register pursuant to section 15(a) of the Act); Pl. Mem. at 18, n.10 (noting, at the time of writing, GPL Ventures LLC was the only case within the Second Circuit to have addressed the issue and stating "[t]he GPL court appears to have conflated the standard for brokers (defined under Exchange Act 3(a)(4)) with the standard for dealers (defined in Exchange Act 3(a)(5)), but did also analyze the regularity of defendants' participation in the at-issue transactions in deciding whether the complaint alleged dealer activity."
These facts are therefore distinct from other cases in which courts have found that plaintiff successfully stated a claim for scheme liability because the defendants performed an inherently deceptive act that was distinct from an alleged misstatement: i.e., sham agreements, sham transactions, sham companies, or undisclosed payments to doctors who appeared independent. See also Sec. & Exch. Comm'n v. GPL Ventures LLC, 2022 WL 158885, at *10 (S.D.N.Y. Jan. 18, 2022) (finding scheme liability adequately pled where defendants "were the puppetmasters of a scheme to launder their investments for profit"). Moreover, even if Plaintiffs had adequately alleged a scheme based on the other conduct (e.g., retaliating against whistleblowers, destroying evidence), the claim would fail for lack of reliance.
These facts are therefore distinct from other cases in which courts have found that plaintiff successfully stated a claim for scheme liability because the defendants performed an inherently deceptive act that was distinct from an alleged misstatement: i.e., sham agreements, sham transactions, sham companies, or undisclosed payments to doctors who appeared independent. See also Sec. & Exch. Comm'n v. GPL Ventures LLC, 2022 WL 158885, at *10 (S.D.N.Y. Jan. 18, 2022) (finding scheme liability adequately pled where defendants “were the puppetmasters of a scheme to launder their investments for profit”).
These facts are therefore distinct from other cases in which courts have found that plaintiff successfully stated a claim for scheme liability because the defendants performed an inherently deceptive act that was distinct from an alleged misstatement: i.e., sham agreements, sham transactions, sham companies, or undisclosed payments to doctors who appeared independent. See also Sec. & Exch. Comm'n v. GPL Ventures LLC, 2022 WL 158885, at *10 (S.D.N.Y. Jan. 18, 2022) (finding scheme liability adequately pled where defendants “were the puppetmasters of a scheme to launder their investments for profit”).