Lawrence Steckman Wins Dismissal of $20M Rule 10b-5 Fraud Suit

  • October 2013 – CONGRATULATIONS to Eaton Partner Lawrence Steckman who recently acted as defense counsel to an outside auditor in Rule 10b-5 and Section 11 class suit seeking in excess of $20 million in New York’s Southern District. Plaintiffs’ amended claim alleged that differences between SAIC Chinese Regulatory filings and SEC US GAAP filings of Chinese reverse merger company were sufficient to show PSLRA scienter against the auditor, which had opined that a Chinese reverse merger company’s financial statements were in accord with GAAP. Plaintiffs claimed that the auditor’s statement that its opinion was in compliance with PCAOB standards was a basis for a Rule 10b-5 claim. Judge Kaplan rejected plaintiffs arguments which were based on non-disclosure of alleged material, related party transactions. He dismissed the amended complaint with prejudice.