Case Name: ELITE AVIATION LLC, Endless H3, Plaintiffs-Appellants, David Schottenstein, Individually and on behalf of all others similarly situated, Plaintiff, William Bostedo, Individually and on behalf of all others similarly situated, Grace Trading, LLC, Ann Nicolosi, Individually and on behalf of all other similarly situated, Consolidated-Plaintiffs, v. CREDIT SUISSE AG, Renato Fassbind, Credit Suisse Securities (USA) LLC, Paul J. O'Keefe, Hans-Ulrich Doerig, Brady W. Dougan, D. Neil Radey, Walter B. Kielholz, Peter Brabeck-Letmathe, Thomas W. Bechtler, Robert H. Benmosche, Noreen Doyle, Jean Lanier, Anton Van Rossum, Aziz R.D. Syriani, David W. Syz, Ernst Tanner, Richard E. Thornburgh, Peter F. Weibel, Defendants-Appellees, Nicholas Cherney, VelocityShares LLC, Richard Hoge, VLS Securities LLC, Consolidated-Defendants-Appellees
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 2014-12-16
Citations: 588 F. App'x 37
Docket Number: No. 14-2241
Parties: ELITE AVIATION LLC, Endless H3, Plaintiffs-Appellants, David Schottenstein, Individually and on behalf of all others similarly situated, Plaintiff, William Bostedo, Individually and on behalf of all others similarly situated, Grace Trading, LLC, Ann Nicolosi, Individually and on behalf of all other similarly situated, Consolidated-Plaintiffs, v. CREDIT SUISSE AG, Renato Fassbind, Credit Suisse Securities (USA) LLC, Paul J. O’Keefe, Hans-Ulrich Doerig, Brady W. Dougan, D. Neil Radey, Walter B. Kielholz, Peter Brabeck-Letmathe, Thomas W. Bechtler, Robert H. Benmosche, Noreen Doyle, Jean Lanier, Anton Van Rossum, Aziz R.D. Syriani, David W. Syz, Ernst Tanner, Richard E. Thornburgh, Peter F. Weibel, Defendants-Appellees, Nicholas Cherney, VelocityShares LLC, Richard Hoge, VLS Securities LLC, Consolidated-Defendants-Appellees.
Judges: PRESENT: RICHARD C. WESLEY, PETER W. HALL, GERARD E. LYNCH, Circuit Judges.
Reporter: West's Federal Appendix
Volume: 588
Pages: 37–39

Head Matter:
ELITE AVIATION LLC, Endless H3, Plaintiffs-Appellants, David Schottenstein, Individually and on behalf of all others similarly situated, Plaintiff, William Bostedo, Individually and on behalf of all others similarly situated, Grace Trading, LLC, Ann Nicolosi, Individually and on behalf of all other similarly situated, Consolidated-Plaintiffs, v. CREDIT SUISSE AG, Renato Fassbind, Credit Suisse Securities (USA) LLC, Paul J. O’Keefe, Hans-Ulrich Doerig, Brady W. Dougan, D. Neil Radey, Walter B. Kielholz, Peter Brabeck-Letmathe, Thomas W. Bechtler, Robert H. Benmosche, Noreen Doyle, Jean Lanier, Anton Van Rossum, Aziz R.D. Syriani, David W. Syz, Ernst Tanner, Richard E. Thornburgh, Peter F. Weibel, Defendants-Appellees, Nicholas Cherney, VelocityShares LLC, Richard Hoge, VLS Securities LLC, Consolidated-Defendants-Appellees.
No. 14-2241.
United States Court of Appeals, Second Circuit.
Dec. 16, 2014.
Mark C. Rifldn (Matthew M. Guiney, on the brief), Wolf Haldenstein Adler Freeman & Herz LLP, New York, NY, for Appellants.
James H.R. Windels (Emmet P. Ong, Melissa C. King, Scott A. Eisman, on the brief), Davis Polk & Wardwell LLP, New York, NY, for Appellees.
PRESENT: RICHARD C. WESLEY, PETER W. HALL, GERARD E. LYNCH, Circuit Judges.

Opinion:
SUMMARY ORDER
Plaintiffs-Appellants Elite Aviation LLC and Endless H3 appeal from an order and judgment dismissing their complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). See In re TVIX Secs. Litig., 25 F.Supp.3d 444, 2014 WL 2575776 (S.D.N.Y. June 9, 2014). We assume the parties' familiarity with the underlying facts, procedural history, and issues on appeal.
Plaintiffs in this putative class action allege that they purchased Velocity Shares Daily 2x VIX Short Term Exchange Traded Notes (TVIX ETNs) pursuant to a Registration Statement, Prospectus, Pricing Supplement, and a February 2012 Press Release issued by Defendant Credit Suisse that contained misstatements or omissions of material fact in violation of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77k, 77o.
In assessing the materiality of an alleged misstatement, we consider "[wjhether the defendants' representations, taken together and in context, would have misled a reasonable investor." In re Morgan Stanley Info. Fund Secs. Litig., 592 F.3d 347, 360 (2d Cir.2010). "It is not sufficient to allege that the investor might have considered the misrepresentation or omission important." In re ProShares Trust Secs. Litig., 728 F.3d 96, 102 (2d Cir.2013) (internal quotation marks omitted)
First, Plaintiffs allege that the Pricing Supplement contained material misstatements regarding the risk of holding TVIX ETNs for longer than one trading session. In particular, Plaintiffs point to a series of hypothetical examples projecting performance of TVIX ETNs over a twenty-year period and references to a "cash payment at maturity" and the "path of daily returns" as suggesting that the TVIX ETNs could or should be held longer than a single trading day. However, the Pricing Supplement clearly disclosed in numerous, repeated, sometimes boldfaced warnings that the ETNs were short-term trading vehicles designed to achieve their stated investment objectives only on a daily basis and that the investment's value was likely to erode if held for longer periods. The hypothetical examples — prefaced by extensive disclaimers — could only be viewed as examples of the effects of various market factors on the ETNs and did not suggest that they were an appropriate long-term investment. Neither the hypothetical examples nor the other language cited by Plaintiffs undercuts the resounding theme of the Pricing Supplement that the ETNs are unsuitable for any investment period longer than a single day. Id. at 106.
Second, a subclass of Plaintiffs that purchased TVIX ETNs during a period in which Credit Suisse had suspended new issuances alleges that the offering documents and February Press Release omitted material information regarding the risk of purchasing TVIX ETNs during the suspension period. However, the Pricing Supplement and Press Release explained Credit Suisse's complete discretion over the issuance or nonissuance of new ETNs and that the temporary suspension of new issuances might cause the ETN's market value to trade at values that differed significantly from the ETN's indicative value. No reasonable investor could have read these materials without realizing the risk inherent in purchasing TVIX ETNs at inflated prices in the secondary market during the suspension period.
"To establish section 15 liability, a plaintiff must first show a primary violation of section 11. Having affirmed the dismissal of Plaintiffs' section 11 claims, we also affirm the dismissal of their section 15 claims." Id. at 108 (citations and alterations omitted).
We have considered all of Plaintiffs' arguments and find them to be without mer it. Accordingly, for the reasons set forth above, the judgment of the district court is AFFIRMED.
. The standard of review is neither in dispute nor determinative in this matter. This Court reviews a district court's dismissal under Rule 12(b)(6) de novo, accepting all factual allega tions as trae and drawing all reasonable inferences in favor of the plaintiff. Litwin v. Blackstone Grp., L.P., 634 F.3d 706, 715 (2d Cir.2011).