On December 21, Judge Eric Vitaliano of the U.S. District Court for the Eastern District of New York dismissed all claims against JPMorgan Chase & Co. and certain of its executives and former traders alleging violations of Section 10(b) and Section 20(a) of the Exchange Act arising out of JPMorgan’s conduct in the precious metals market.
The plaintiffs, a putative class of shareholders, alleged that the defendants misled investors when former traders engaged in spoofing, and later by failing to disclose such conduct. Judge Vitaliano dismissed the plaintiffs’ claims for failure to plead a material misstatement or omission and failure to plead scienter.
The court held that the challenged statements either were not false or misleading as a matter of law or were too general to give rise to a duty to disclose. Addressing the plaintiffs’ novel theory that the former traders’ spoof orders themselves were materially false and misleading statements, Judge Vitaliano held that they were not representations made “in connection with the purchase or sale of any security.”
The S&C team representing JPMorgan included Bob Sacks, Amanda Davidoff, Jonathan Carter, Shane Palmer and Sheeva Nesva.