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Investors Lose Claim For Misleading Registration Statements Against Omnicare

By Contributor Joshua Goldsborough, graduate of Florida Coastal School of Law, after working with Well Fargo Financial, and was an intern for the Florida Chief Financial Officer.

The issue is whether Defendants, Omnicare, Incorporated, its officers, and directors, made material misstatements and/or omissions to Plaintiff investors. The investors bought Omnicare securities in connection with a December 2005 public stock offering.

Relief may be sought under § 11 of the Securities Act of 1933, which provides a remedy for investors who have acquired securities under a registration statement that was materially misleading or omitted material information. Furthermore, it imposes liability on issuers and signers of registration statements containing untrue statements or omissions of material fact.

Here, Plaintiffs allege that Omnicare’s Registration Statement stated that Omnicare’s therapeutic interchanges were meant to provide patients with more efficacious and/or safer drugs than those presently being prescribed and that its contracts with drug companies were “legally and economically valid arrangements that bring value to the healthcare system and patients that we serve.” Plaintiffs argue that these representations were material, untrue and misleading because they effectively concealed Omnicare’s illegal activities from its investors.

Omnicare argues that liability only exists to the extent that the statement was both objectively false and disbelieved by the defendant at the time it was expressed. Furthermore, Omnicare argues that Plaintiff’s failed to state a claim and moved to dismiss the complaint because Plaintiff’s did not adequately plead any allegations that Omnicare knew that the legal compliance statements were false when made.

The court held that the plaintiffs had not adequately pleaded knowledge of wrongdoing.

Raymond James Arbitration Claims by Investors Barred by the Statute of Limitations in Florida.

The Supreme Court of Florida examined a case certified by a lower court as an issue of great public importance held that Florida’s statute of limitations applies to an arbitration proceeding because it is within the statutory term “civil action or proceeding” under section 95.011 of Florida statutes. This case involved a mandatory provision for clients of Raymond James Financial Services, Inc. to arbitrate all disputes arising from their investments.  A group of investors claimed that the statute only applies to judicial actions, not contractual arbitration clauses, and thus claims could be brought against Raymond James beyond the statutory deadlines.  The Supreme Court reversed the 2nd District Court of Appeals, reasoning that the statutory terms “action” or “proceeding” was intended by the Florida legislature to include an adjudication by an arbitrator since the parties are engaged in a legal process to resolve a dispute. Additionally, the Court stated that if the legislature had intended to limit proceedings to only judicial actions, it would have so declared. The statute did not include that limitation, so the Court refused to add that limitation.  See the Supreme Court opinion, Case No. SC11-2513 (May 16, 2013).

Contributor: Roger M. Groves, Professor of Law, Director of Business Law Program