Attorney Albert A. Chapar, Jr. has succeeded in obtaining a dismissal in another securities case filed against his client Clifford Harris, Jr. (TI).
The plaintiff Fedance brought a class action lawsuit against TI and Ryan Felton. He alleged that the defendants solicited and sold the securities as part of a “pump-and-dump” scheme—a type of fraud scheme in which company owners artificially inflate the price of a security (the “pump”) to then sell it at a higher price to duped investors (the “dump”). Counts included Count I for an alleged violation of Section 12(a)(1) of the Securities Act, 15 U.S.C. § 77l(a) (sale of unregistered securities), Count II against the defendants under Section 15(a) of the Securities Act, 15 U.S.C. § 77o(a) (control person liability), and Count III against Harris under Section 12(a)(1) of the Securities Act, 15 U.S.C. §§ 77e(a) and (c) and 77l(a)(1) (statutory seller liability).
On behalf of TI, the Chapar Firm filed a motion to dismiss claiming that the lawsuit was defective for several grounds. On May 4, 2020, Judge Charles A. Pannell granted that Motion. The Court agreed with TI that the lawsuit was brought too late. Actions for the alleged sale of unregistered securities are to be brought within one year of the wrongful sale. The Plaintiff alleged that the defendants concealed the nature of the transaction, and that the time for his filing of the Class Action was tolled until he actually learned of his claim.
In his Motion, Chapar on behalf of TI argued that the registration of securities is a matter of public record. Citing various decisions from around the country, Chapar argued that the one year period ran from the date of the sale and that the period could not be extended by assertions by a plaintiff that he or she was mislead.
Judge Pannell agreed, writing that
The court concludes that all courts within the Eleventh Circuit to address this issue, as well as the vast majority of courts nationwide, have correctly held that the statute of limitations for Section 12(a)(1) claims is not subject to the discovery rule or equitable tolling.
The case is Kenneth Fedance, v. Clifford Joseph Harris, Jr. and Ryan Felton, Civil Action No. 1:19-CV-02125-CAP.
The decision can be found at the Securities Class Action Clearinghouse at Stanford here.