Court Sides with LPGM, Dismissing Most Claims in $1.8 Billion Securities Class Action



By Decision and Order dated February 16, 2023, New York State Supreme Court Justice Margaret Chan granted, in part, LPGM’s motion to dismiss several theories of liability asserted in a putative class action complaint arising out of $1.8 billion in pandemic-driven declines in a mutual fund’s net asset value.

Plaintiff, an investor in a mutual fund that invests primarily in non-agency residential mortgage-backed securities, brought claims against the fund, its advisor, distributor, independent trustees and others alleging that the fund’s offering materials contained misrepresentations regarding its investment objective, risks, valuation of securities and portfolio liquidity, in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. LPGM, leading the defense on behalf of the fund, the advisor and other defendants, moved to dismiss the claims, and after oral argument the Court granted LPGM’s motion in large part, dismissing claims under Section 12(a)(2) and all allegations except those pertaining to the fund’s liquidity.

LPGM’s securities litigators regularly defend investment advisors, mutual funds, trustees and others in complex class, derivative and other matters asserting violations of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. These matters often involve parallel investigations by various regulators including the Securities and Exchange Commission, Commodity Futures Trading Commission, FINRA and Department of Justice.

LPGM Team: James F. Moyle, Jacob Englander, and Christina Dellaporte. Contact: LPGM Partner James F. Moyle, jmoyle@lpgmlaw.com, 212-784-2407.