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Berk v. Moore

February 23, 2009

ADAM BERK, INDIVIDUALLY, AND AS AN ASSIGNEE, PLAINTIFF
v.
MOORE, CLAYTON & CO., INC., AND ITS SUBSIDIARY, MCC FIANCIAL SERVICES, DEFENDANTS.



The opinion of the court was delivered by: Louis L. Stanton, U.S.D.J.

Opinion and Order

Defendants move to dismiss the amended complaint pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction, and pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted.

For the reasons that follow, the Court finds that the plaintiff has sufficient standing to support jurisdiction over the assignors' claims, and that the amended complaint adequately states claims on which relief can be granted, except for the third claim for negligence and negligent misrepresentation.

BACKGROUND

Plaintiff brings this action on behalf of himself and twelve assignors against Moore, Clayton & Co., Inc. ("Moore Clayton") and its subsidiary, MCC Financial Services ("MCC Financial"), a consulting and private equity services firm hired by Centurion Gold Holdings, Inc. ("Centurion"). The following allegations are taken from the amended complaint and are accepted as true on this motion to dismiss. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993).

Centurion is a South African gold firm whose shares are publicly traded in the United States. Am. Cmplt. ¶ 6. On April 4, 2005 Centurion announced that MCC Financial would represent Centurion in its effort to raise its visibility among investors. Id. at ¶ 7. In exchange for its services, defendants*fn1 received 300,000 shares of Centurion common stock. Id. at ¶ 8.

On June 27, 2005, defendants issued a press release announcing that Centurion's Board of Directors was considering an offer for the purchase of Centurion at 45ó per share, more than twice its closing price of 22ó per share on June 24, 2005. Id. at ¶ 10. Defendants issued another press release on July 14, 2005 announcing that the competition to purchase Centurion had intensified, with several bids reaching $1.00 per share. Id. at ¶ 11. Plaintiff alleges that as a result of these press releases, investors purchased shares, or did not sell shares, of Centurion. Id. at ¶ 12.

On August 1, 2005 defendants issued a press release stating that Centurion Gold Holdings, Inc. (OTCBB:CGHI -- News), the only South African junior gold mining company publicly listed in the U.S., announced today that it has signed an irrevocable agreement with a UK listed company for such company to bid to purchase 100% of the common stock of Centurion for consideration equal to $0.60 per share with a value of approximately $151.1 million on a fully diluted basis. After careful review of several offers, Centurion's Board accepted an offer from a company that it felt provides the most synergy and maximization for the value of the company's assets. Consideration in accepting the offer involved available working capital, maintaining control of the Company and the access to capital for future projects. CEO Dale Paul, will join the new company as President. It is anticipated that a formal bid, with more details, will be submitted to Centurion's shareholders within the next few weeks. The buyout is intended to be completed before the end of the year and listed on the London AIM market.*fn2

Id. at Ex. F. Following the August 1, 2005 press release, the market price of Centurion's stock rose from approximately 30ó to 40ó per share in one day. Id. at ¶ 14. Plaintiff alleges that based on the press releases, he and his assignors purchased additional Centurion stock and decided not to sell stock already owned. Id.

On August 9, 2005 plaintiff contacted Leslie Richardson, an employee of MCC Financial, to ask whether the August 1, 2005 press release was accurate. Ms. Richardson confirmed that "the Company has signed an irrevocable agreement." Id. Defendants issued another press release on August 11, 2005 stating: the buy-out process with the U.K. listed company is going forward as planned. The buy-out is currently in the final stage of the due diligent [sic] process and is expected to be completed shortly. Once the due diligence process is finalized the Company will send out an official notice to shareholders with the full terms of the deal.

Id. at ¶ 17. On September 16, 2006 defendants issued a press release stating:

Centurion...announced today that it is on track to close the buy-out...Centurion also added that it expects to complete the filing for its 10Q early next week. Once the 10Q has been submitted to the SEC, an announcement regarding the finality of the buy out will be issued along with the identity of the AIM listed Platinum company and full details of the transaction.

Id. at ¶ 18. The market price of Centurion's stock then rose in one day from 27ó to 35ó per share. Id.

On September 23, 2005, defendants issued a press release stating that Centurion was restructuring its Board of Directors and several members ...


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