This is an appeal from a final judgment entered in the United States District Court for the Eastern District of New York (Spatt, J.), dismissing for failure to state a claim the complaint in a federal securities fraud class action filed against defendant-appellee Bear Stearns Securities Corp. and its corporate parent, defendant-appellee Bear Stearns & Co., Inc. (collectively, "Bear Stearns"). See In re Sterling Foster & Co., Inc. Sec. Litig., 222 F.Supp.2d 312 (E.D.N.Y.2002) ("Levitt"). The putative plaintiff class consists of members of the public who purchased securities of ML Direct, Inc. ("ML Direct") from the Long Island brokerage firm of Sterling Foster & Co., Inc. ("Sterling Foster") during the approximately three-and-a-half months following ML Direct's initial public offering ("IPO"). Id. at 314. The gravamen of Plaintiffs' complaint is that Bear Stearns knowingly and actively participated in a stock fraud scheme perpetrated by Sterling Foster involving the ML Direct IPO.
The District Court determined that Plaintiffs' claim was time barred. Specifically, the District Court found, as a matter of law, that there were sufficient "storm warnings" that would have caused a reasonably prudent investor to discover Bear Stearns' alleged role in the Sterling Foster scheme at least one year before Plaintiffs filed their class action complaint. Id. at 318-26. For the reasons set forth below, we hold that the District Court's conclusion is not supported by the facts contained in the pleadings, when viewed in the light most favorable to Plaintiffs. Accordingly, we vacate the judgment and remand the case to the District Court for further proceedings consistent with this opinion.
Miner '56, Roger J., "Levitt v. Bear Stearns & Co., Inc., 340 F. 3d 94 - Court of Appeals, 2nd Circuit 2003" (2003). Circuit Court Opinions. 153.