Securities Act Sections 11 and 12 Claims in State Court Not Required to be Plead with Particularity

On February 26, 2020, Justice Scarpulla of the New York County Commercial Division issued a decision in Matter of PPDAI Group Sec. Litig. v. XXX, 2020 NY Slip Op. 50285(U), holding that Securities Act Sections 11 and 12 claims brought in New York state court did not have to be plead with particularity under CPLR 3016, explaining:

As a preliminary matter, Defendants posit that because Plaintiffs' claims include allegations of misrepresentation, the heightened pleading standard of CPLR 3016(b) applies. This is incorrect. Although the CAC alleges that Defendants made materially false and misleading statements, it does not contain claims for fraud or misrepresentation but rather alleges strict liability and negligence claims under Sections 11, 12(a)(2) and 15 of the '33 Act. Thus, CPLR 3016(b)'s heightened pleading standard does not apply.

(Internal citations omitted).

We have substantial experience in litigation regarding securities, both in state and federal court. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client need help regarding a claim related to stocks, bonds or other financial instruments.