In re Excelsior, Federated and Scudder [Scudder Sub-Track] (Maryland U.S.D.C.) (Approved for Publication)

Signed February 9, 2007. Memorandum opinion by Judge Catherine C. Blake.

In a follow up to an earlier decision which was based in part on matters resolved in the earlier Janus opinion by Judge J. Frederick Motz in another branch of this litigation, the judge considered motions to dismiss after the plaintiffs filed a second consolidated amended class action complaint, which were GRANTED in part and DENIED in part.

The judge first noted that she had, in the earlier decision, adopted the reasoning and conclusions in the Janus opinion, and would not revisit those rulings. Some of the new pleadings met the test of the earlier rulings, and thus, while some of the other allegations such as "under the radar" market timing and late trading might not demonstrate the scienter necessary to prevail, the plaintiffs have stated a sufficient basis for the suit to survive against those defendants. The judge also noted that the plaintiffs had conceded that claims based upon fraudulent conduct prior to July 30, 1999 were time barred, and issues of holder standing and standing generally were dealt with or deferred in the Janus opinion, and likewise for disposition of claims under Section 36(b) of the ICA, Section 48(a), and Section 20(a) of the Exchange Act.

Claims against certain new defendants, various timers/traders, were sufficiently pled, as were the claims against three companies alleged to have engaged in late trading by use of the BAS "box". However, some of the claims against some of the new defendants were time barred, based upon the time the plaintiffs knew or should have known of the potential claims against those defendants.

Determination of standing and personal jurisdiction as to several defendants continued to be deferred, and others had their motions to dismiss denied as before. Section 10(b) claims against certain defendants (the "UBS Defendants") were found to fall short, while the Section 20(a) claims against them were not dismissed since, unlike the Section 10(b) claims, there were allegations of specific acts of wrongdoing.

The opinion is available in PDF format.