In the alternative, defendants move for an order dismissing the third cause of action and dismissing plaintiffs' claims for punitive damages. The total number of shares purchased by the plaintiffs was 4,227,272. Defendants acted as exclusive placement agents and advisors to AbTox in connection with the private placement.
Plaintiffs assert that they relied upon defendants' misstatements in purchasing the stock.
Plaintiffs state that, in order to induce plaintiffs to purchase the AbTox stock, defendants falsely represented that AbTox had received FDA clearance to market the Plazlyte System in the United States in December 1994 and that AbTox had subsequently begun to sell it in January 1995. Plaintiffs assert that they undertook reasonable and thorough due diligence to investigate AbTox and the Plazlyte System. They allege, however, that defendants failed to disclose to them that the FDA clearance that AbTox received in December 1994 did not relate to the product that AbTox had in fact been marketing, and which was described in detail in the Offering Memo. Rather, the FDA had only authorized AbTox to market a sterilizer with a usable chamber volume of 1.2 cubic feet, with a specified sterilant, plasma delivery system, injection system, and software system designed solely for the sterilization of stainless steel surgical devices, which AbTox had never marketed in the United States. Plaintiffs state that the product which was detailed in the Offering Memo, and which AbTox had marketed, was a significantly modified sterilizer system with a substantially different chamber volume, as well as other modifications.