between October 13, 1993, and September 7, 1994. They seek to bring this action on behalf of a class of persons similarly situated.
II. The Moving Defendants
Defendant Madonia is named in the Complaint as the designated trustee of the Celestial Charitable Remainder Unitrust, the Century Charitable Remainder Unitrust, the Freedom Charitable Remainder One Trust, the Frontier Charitable Remainder Unitrust, the Island Charitable Remainder Unitrust, the Lake Charitable Remainder Unitrust, the Ocean Charitable Remainder Unitrust, the Sentinel Charitable Remainder Unitrust, and the Blech Family Trust. Madonia is a Certified Public Accountant who has performed accounting services for Defendant David Blech ("Blech") or D. Blech & Co., Inc. ("Blech & Co."), a broker-dealer whose managing director and sole shareholder was Blech.
Defendant Jofen, Blech's cousin, is named as the designated trustee of the Edward Blech Trust.
The Blech Trusts are charitable remainder trusts established by Blech as settlor. Blech is the income beneficiary and is entitled to receive annual minimum distributions from the trust assets of all of the Blech Trusts, except the Blech Family Trust and the Edward Blech Trust, whose income beneficiary is Blech's minor son Edward.
Defendant Bear Stearns is an investment banking and securities trading and brokerage firm organized and existing under the laws of Delaware with its principal place of business in Manhattan. Bear Stearns is registered with the Securities and Exchange Commission (the "SEC") and is a member of the National Association of Securities Dealers ("NASD"). Bear Stearns acted as Blech & Co.'s clearing agent for all securities transactions involving Blech & Co. from September 1993 through the end of the relevant class period.
III. The Remaining Non-Moving Defendants
By opinion dated June 6, 1996, this Court granted the motions of various defendants to dismiss the claims asserted against them in the Amended Consolidated Complaint, granting leave to replead within twenty days. In re Blech Securities Litigation, 928 F. Supp. 1279 (S.D.N.Y. 1996). Plaintiffs filed their Second Amended Complaints on July 26, 1996. The Second Amended Complaint did not include allegations against twelve "Issuer Defendants" who had been named in the prior complaint. The remaining defendants, who have not moved to dismiss the Second Amended Complaint, are described below.
Defendant David Blech, a resident of New York, was at all times material to this action managing director and sole shareholder of Blech & Co.
Blech & Co., a New York corporation with its principal place of business in Manhattan, is a registered broker-dealer. During the period relevant to this case, Blech & Co. acted as an underwriter or market-maker or both for numerous companies, primarily in the biotechnology field. Blech & Co. ceased operations on September 22, 1994, having failed to maintain minimum capital requirements. At that time, Blech & Co. was the principal market-maker for the Blech Securities and had about six-thousand customer accounts in offices in New York, Boston, Atlanta, and Boca Raton, Florida.
Defendant Mark S. Germain ("Germain") was at all material times a Managing Director of Blech & Co. Germain served on the board of directors of ASI, Ecogen, Microprobe, Neoprobe, LXR, NeoRx, Pharmos, and Genemedicine, companies that were named as issuer defendants in the prior complaint and whose stocks were Blech Securities.
Defendant Chancellor Capital Management, Inc. ("Chancellor") is a corporation with its principal place of business in Manhattan. It has been registered with the SEC as an investment advisor since 1973. Chancellor's investment management activities on behalf of its managed accounts are conducted by four business units, one of which is the Alternative Asset Management Group ("AAMG"). Defendant Parag Saxena ("Saxena") was a managing director of Chancellor and a member of the AAMG.
Defendant Baird Patrick & Co. ("Baird Patrick") is a registered broker-dealer with its principal place of business in Manhattan. Baird Patrick is registered with the SEC and is a member of the NASD. During the period of time relevant to this action, Baird Patrick was a market-maker for certain Blech Securities.
The prior proceedings in this action are set forth in the prior opinions of this court, familiarity with which is assumed. See In re Blech Securities Litigation, 928 F. Supp. 1279 (S.D.N.Y. 1996) ("Blech I "); In re Blech Securities Litigation, 1997 U.S. Dist. LEXIS 404, 1997 WL 20833 (S.D.N.Y. January 21, 1997) ("Blech II ").
In re Blech Securities Litigation represents several class actions, which have been consolidated pursuant to a stipulation and pretrial order dated December 12, 1994. Plaintiffs filed an amended consolidated class action complaint (the "Amended Complaint") on March 28, 1995.
By opinion dated June 6, 1996, this Court granted in part and denied in part the motions of various defendants to dismiss the claims alleged against them in the Amended Complaint. Specifically:
1. David Blech's and Blech & Co.'s motions to dismiss for failure to plead fraud with particularity were granted as to the complaint's RICO Claims and denied as to the remaining claims. Their motions to dismiss the control person claims for failure to state claim were granted. Their motions to dismiss the Section 10(b) and common law fraud claims were denied.
2. Mark Germain's motion to dismiss for failure to plead fraud with particularity was granted as to the RICO claims and denied as to the remaining claims. His motion to dismiss the Section 10(b) and common law fraud claims for failure to state a claim was denied.