Fraud and Forbearance: State Courts Divided on Whether to Recognize Claims by Securities Holders
14 June 2010
Mayer Brown Legal Update
Two recent appellate court decisions from Georgia and New York demonstrate the current divergence between a number of US states regarding whether holders of securities can maintain a cause of action related to alleged fraud and negligent misrepresentation (holder claims). With its recent decision, Georgia joins a handful of other states, including California, Massachusetts, Wisconsin, New Hampshire and New Jersey, that have recognized holder claims, while a New York state appellate court cast doubt on the viability of holder claims.