Opinion ID: 4521757
Heading Depth: 2
Heading Rank: 3

Heading: Secondary Claims

Text: Because we agree with the district court that Plaintiffs fail to state a claim for either market manipulation or a material misrepresentation or omission, we further agree with the dismissal of the Plaintiffs’ related secondary claims. Because Plaintiffs’ allegations concerning the “scheme” cannot support a claim that the Kalani defendants possessed any material, nonpublic information, Plaintiffs fail to allege that the Kalani defendants engaged in insider trading — or any other violation of the securities laws — and thus do not state a claim under § 20A of the Exchange Act, 15 U.S.C. § 78t-1. Plaintiffs’ claims against Murchinson and Bistricer were also rightly dismissed. The Complaint does not allege any specific conduct by either defendant sufficient to support a claim that they themselves violated the securities laws (as opposed to aiding and abetting violations by the entities they allegedly control). See Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 158 (2008) (stating that in private actions for securities fraud, “[t]he conduct of a secondary actor must satisfy each of the elements or preconditions for liability”). And, lastly, the Complaint also does not state a claim that transactions’ terms, and thus they fail to state a claim of manipulation. And to the extent Plaintiffs contend that Sharette stands for a broader proposition concerning the viability of market manipulation claims against similar “schemes” without more specific allegations of nondisclosure, we cannot agree that such a reading withstands our precedents, including ATSI and Wilson. 4 Because we agree with the district court that dismissal is warranted due to the Complaint’s failure to allege a manipulative act, we do not reach the Top Ships defendants’ alternative arguments in support of dismissal, including that the Complaint fails to adequately allege scienter or loss causation. 5 these defendants may be liable as “control persons” under Exchange Act § 20(a), 15 U.S.C §78t(a), because, as discussed above, Plaintiffs fail to allege a primary violation of the securities laws.