Elliot v. China Green Agricultures, Inc. et al

Filing 137

ORDER. ORDERED that defendant's motion to dismiss 90 is GRANTED. Defendant Roth Capital Partners, LLC is DISMISSED as a defendant in this action. FURTHER ORDERED that defendant's motion to dismiss 102 is GRANTED. Defendant Rodman & Ren shaw, LLC is DISMISSED as a defendant in this action. FURTHER ORDERED that defendants' motion to dismiss 96 is GRANTED in part and DENIED in part. FURTHER ORDERED that defendants Ken Ren and Robert B. Fields are DISMISSED as defendants in this action. FUTHER ORDERED that defendants' motion to strike 94 and 103 are DENIED. Signed by Judge Larry R. Hicks on 11/1/2012. (Copies have been distributed pursuant to the NEF - HJ)

1
2
3
4
5
6

UNITED STATES DISTRICT COURT

7

DISTRICT OF NEVADA

8

***

9

FREDERIC ELLIOT,

14

)
)
)
)
)
)
)
)
)
)
)

15

Before the court are defendants’ various motions to dismiss. Doc. ##90, 96, 102.1 Also

10

Plaintiff,

11

v.

12

CHINA GREEN AGRICULTURES, INC.;
et al.,

13
Defendants.

3:10-CV-0648-LRH-WGC
ORDER

16

before the court are defendants’ motions to strike. Doc. ##94, 103.

17

I.

18

Facts and Procedural History
Defendant China Green Agriculture, Inc. (“China Green”) is a Nevada corporation

19

headquartered in the Shaanxi province of the People’s Republic of China. China Green, together

20

with its subsidiaries, engages in the research, development, manufacture, and distribution of humic

21

acid based compound fertilizers. In December 2007, China Green completed an alternative public

22

opening to become a public company in the United States whose securities currently trade on the

23

New York Stock Exchange (“NYSE”).

24

On July 24, 2009, China Green issued a secondary offering of its securities (“the July 2009

25
26

1

Refers to the court’s docket number.

1

Offering”). Through the July 2009 Offering, China Green issued 3.5 million shares of common

2

stock to investors at a set price of $7.45 a share. In connection with this offering, China Green filed

3

prospectus and registration statements with the Securities and Exchange Commission (“SEC”).

4

Defendant Roth Capital Partners, LLC (“Roth”) served as underwriter for the July 2009 Offering.

5

On November 25, 2009, and again on December 17, 2009, China Green issued another

6

secondary offering (“the December 2009 Offering”). Through the December 2009 Offering, China

7

Green issued over one million shares of common stock at $15.60 per share. In connection with the

8

offering, China Green filed additional prospectus and registration statements with the SEC.

9

Defendant Rodman & Renshaw LLC (“Rodman”) acted as the underwriter for the December 2009

10
11

Offering.
On October 15, 2010, named plaintiff Fredric Elliot filed an initial class action complaint

12

for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”),

13

15 U.S.C. §78, against China Green and individual defendants Tao Li (“Li”), Chief Executive

14

Officer and Chairman of the Board of Directors; Ying Yang (“Yang”), Chief Financial Officer until

15

April 23, 2010; and Ken Ren (“Ren”), Chief Financial Officer as of April 23, 2010. Doc. #1.

16

June 13, 2011, appointed lead plaintiffs Thomas Johnston, Guiliano Lazzeretti, Thuan Ly,

17

Christina Galbraith, and Charles White (collectively “lead plaintiffs”) filed an amended complaint

18

adding underwriting defendants Roth and Rodman, as well as individual director defendants Yu

19

Hao (“Hao”); Lianfu Liu (“Liu”); Yizhao Zhang (“Zhang”); Barry Raeburn (“Raeburn”); and

20

Robert B. Fields (“Fields”) to the action. Doc. #47. The amended complaint alleges five causes of

21

action: (1) violation of Section 11 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §77,

22

against all defendants; (2) violation of Section 12(a)(2) of the Securities Act against defendants

23

China Green, Roth, and Rodman; (3) violation of Section 15 of the Securities Act against the

24

individual defendants; (4) violation of Section 10(b) of the Exchange Act against China Green and

25

the individual defendants; and (5) violation of Section 20(a) of the Exchange Act against the

26

2

On

1

individual defendants. Id. In the amended complaint, lead plaintiffs allege that China Green’s SEC

2

filings contained materially false and misleading information about China Green’s financials and

3

were inconsistent with financial reports filed with the Chinese State Administration of Taxation

4

(“SAT”). Id.

5

In response to the amended complaint, defendant Roth filed the present motion to dismiss.

6

Doc. #90. Defendants China Green, Li, Yang, Ren, Hao, Liu, Fields, Zhang, and Raeburn

7

(collectively “China Green Defendants”) filed a motion to strike (Doc. #94) and motion to dismiss

8

(Doc. #96). Defendant Rodman filed a separate motion to dismiss (Doc. #102) and a motion to

9

strike (Doc. #103). Lead plaintiffs then filed an omnibus opposition to defendants’ motions

10

(Doc. #113)2 to which defendants replied (Doc. ##119, 121, 122, 123).

11

II.

12

Legal Standard
Defendants seek dismissal of the amended complaint pursuant to Federal Rule of Civil

13

Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. To survive a

14

motion to dismiss for failure to state a claim, a complaint must satisfy the Federal Rule of Civil

15

Procedure 8(a)(2) notice pleading standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d

16

1097, 1103 (9th Cir. 2008). That is, a complaint must contain “a short and plain statement of the

17

claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Rule 8(a)(2)

18

pleading standard does not require detailed factual allegations; however, a pleading that offers

19

“‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’” will not

20

suffice. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly,

21
22
23
24
25
26

2

In their opposition, lead plaintiffs concede that their claim for violation of Section 12(a)(2) of the
Securities Act should be dismissed because none of the lead p laintiffs purchased China Green securities
“pursuant to” either secondary offering. Lead plaintiffs also concede that individual defendants Ren and Field s
should be dismissed because they did not sign the r eg istration statements at issue as neither defendant w as
employed by China Green in an officer capacity until 2010, after the secondary offerings w ere co m p leted .
Therefore, the court shall dismiss lead p laintiff’s second cause of action, as well as individual defendants Ken
Ren and Robert B. Fields, from this action.

3

1

550 U.S. 544, 555 (2007)).

2

Furthermore, Rule 8(a)(2) requires a complaint to “contain sufficient factual matter,

3

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 1949 (quoting

4

Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows

5

the court to draw the reasonable inference, based on the court’s judicial experience and common

6

sense, that the defendant is liable for the misconduct alleged. See id. at 1949-50. “The plausibility

7

standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a

8

defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a

9

defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to

10

relief.” Id. at 1949 (internal quotation marks and citation omitted).

11

In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as

12

true. Id. However, “bare assertions . . . amount[ing] to nothing more than a formulaic recitation of

13

the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. U.S. Secret

14

Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1951) (brackets in original)

15

(internal quotation marks omitted). The court discounts these allegations because “they do nothing

16

more than state a legal conclusion—even if that conclusion is cast in the form of a factual

17

allegation.” Id. (citing Iqbal, 129 S. Ct. at 1951.) “In sum, for a complaint to survive a motion to

18

dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be

19

plausibly suggestive of a claim entitling the plaintiff to relief.” Id.

20

III.

21

Motions to Strike (Doc. ##94, 103)
In their motions, defendants request the court strike all references to, and allegations based

22

on, the reports published by the International Financial Research & Analysis Group (“IFRA

23

Report”); J Capital Research (“J Capital Report”); and Alfred Little (“Little article”), from the

24
25
26

4

1

complaint pursuant to Rule 12(f) of the Federal Rules of Civil Procedure.3 See Doc. #94.

2

Defendants argue that lead plaintiffs’ reliance on the reports is inappropriate because the veracity

3

of the allegations were not independently verified by lead plaintiffs’ counsel prior to the filing of

4

the amended complaint in violation of Rule 11 of the Federal Rules of Civil Procedure. Thus,

5

defendants seek an order striking the following portions of the amended complaint: ¶¶ 8, 10, 11,

6

43, 50, 139, 140, 142-146, 148-153, 155-159, 161, 162, 164, 167-169, 179-187, 190, 192-196,

7

footnote 2, and portions of ¶ 9 and 166.

8

Rule 11 states that an attorney, by presenting a pleading to the court, “certifies that to the

9

best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under

10

the circumstances: (3) the factual contentions have evidentiary support or, if specifically identified,

11

will likely have evidentiary support after a reasonable opportunity for further investigation or

12

discovery . . . .” FED. R. CIV. P. 11(b)(3). Thus, under Rule 11, an “attorney has a duty prior to

13

filing a complaint to conduct a reasonable factual investigation.” In re Connetics Corporation

14

Securities Litigation, 542 F. Supp. 2d 996, 1004 (citing Christian v. Mattel, Inc., 286 F.3d 1118,

15

1127 (9th Cir. 2002). This duty is nondelegable and requires the attorney to “personally . . .

16

validate the truth and legal reasonableness of the papers filed.” Pavelic & LeFlore v. Marvel Entm’t

17

Group, 493 U.S. 120, 126 (1989). When drafting a complaint, an attorney may rely in part on other

18

sources, but may not rely entirely on other sources as the sole basis for the complaint’s allegations.

19

In re Connectics, 542 F. Supp. 2d at 1005 (dismissing complaint for failure to investigate

20

allegations contained in another complaint that counsel relied on as sole basis for additional

21

complaint).

22
23

The court has reviewed the documents and pleadings on file in this matter and finds that
striking lead plaintiffs’ allegations is not warranted. The court finds that lead plaintiffs have

24
25
26

3

Under Rule 12(f), the court may strike a filing for “any redundant, immaterial, im p ertinent, or
scandalous matter.” F ED. R. CIV. P. 12(f).

5

1

established the reports’ reliability sufficient to survive the present motions to strike. Both the IFRA

2

and J Capital reports were internally investigated prior to their publication. In particular, the IFRA,

3

which provides complex financial analysis, business research and due diligence for investors,

4

visited China Green’s greenhouse facilities and manufacturing plants and had discussions with

5

several China Green customers and suppliers, as well as industry analysts and financial consultants

6

in drafting its report. Further, the court finds that the amended complaint relies on multiple

7

investigative reports, rather than a single report, to support the allegations that China Green

8

misrepresented its financial information and thus, this action is not an example of improper

9

reliance. Accordingly, the court shall deny defendants’ motions to strike.

10

IV.

Motions to Dismiss (Doc. ##90, 96, 102)

11

A. Legal Standard

12

Defendants seek dismissal of the amended complaint pursuant to Federal Rule of Civil

13

Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. To survive a

14

motion to dismiss for failure to state a claim, a complaint must satisfy the Federal Rule of Civil

15

Procedure 8(a)(2) notice pleading standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d

16

1097, 1103 (9th Cir. 2008). That is, a complaint must contain “a short and plain statement of the

17

claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Rule 8(a)(2)

18

pleading standard does not require detailed factual allegations; however, a pleading that offers

19

“‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’” will not

20

suffice. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly,

21

550 U.S. 544, 555 (2007)).

22

Furthermore, Rule 8(a)(2) requires a complaint to “contain sufficient factual matter,

23

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 1949 (quoting

24

Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows

25

the court to draw the reasonable inference, based on the court’s judicial experience and common

26

6

1

sense, that the defendant is liable for the misconduct alleged. See id. at 1949-50. “The plausibility

2

standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a

3

defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a

4

defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to

5

relief.” Id. at 1949 (internal quotation marks and citation omitted).

6

In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as

7

true. Id. However, “bare assertions . . . amount[ing] to nothing more than a formulaic recitation of

8

the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. U.S. Secret

9

Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1951) (brackets in original)

10

(internal quotation marks omitted). The court discounts these allegations because “they do nothing

11

more than state a legal conclusion—even if that conclusion is cast in the form of a factual

12

allegation.” Id. (citing Iqbal, 129 S. Ct. at 1951.) “In sum, for a complaint to survive a motion to

13

dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be

14

plausibly suggestive of a claim entitling the plaintiff to relief.” Id.

15

B. Section 11 of the Securities Act

16

Section 11 of the Securities Act, 15 U.S.C. § 77k, imposes “liability on signers of a

17

registration statement, and on underwriters, if the registration statement ‘contained an untrue

18

statement of a material fact or omitted to state a material fact required to be stated therein or

19

necessary to make the statements therein not misleading.’” Shaw v. Digital Equip. Corp., 82 F.3d

20

1194, 1201 (1st Cir. 1996) (quoting 15 U.S.C. § 77k).

21

In the amended complaint, lead plaintiffs allege that the defendants violated Section 11 for

22

either issuing, signing, or underwriting an offering based on the materially false registration

23

statements. See Doc. #47. In opposition, defendants argue that the Section 11 claim should be

24

dismissed because lead plaintiffs lack standing to bring a Section 11 claim. The court agrees.

25
26

To have standing to allege a Section 11 claim, a plaintiff must allege that they purchased
7

1

securities either directly in the public offering at issue,4 or that the purchased securities are

2

“traceable to” that public offering. Hertzberg v. Dignity Partners, Inc., 191 F.3d 1076, 1080-81

3

(9th Cir. 1999); Lilley v. Charren, 936 F. Supp. 708, 715 (N.D. Cal. 1996). Moreover, in a class

4

action, a plaintiff must specifically show that he has personal standing and “not that injury was

5

suffered by other, unidentified members of the class to which they belong and which they purport

6

to represent.” Warth v. Seldin, 422 U.S. 490, 502 (1975). If a plaintiff lacks standing to pursue his

7

Section 11 claim, he “cannot pursue those claims on behalf of any purported class.” Me. State Ret.

8

Sys. V. Countrywide Fin. Corp., 722 F. Supp. 2d 1157, 1163 (C.D. Cal. 2010) (“[E]very court to

9

address the issue in a class action has concluded that a plaintiff lacks standing under both Article

10

III of the U.S. Constitution and under Sections 11 and 12(a)(2) of the 1933 Act to represent the

11

interests of investors in offerings in which the plaintiffs did not themselves buy.”).

12

The court has reviewed the amended complaint and finds that lead plaintiffs have failed to

13

allege facts showing how their particular shares can be traced back to either the July 2009 Offering

14

or the December 2009 Offering. Rather, lead plaintiffs rely on unsupported, boilerplate allegations.

15

See Doc. #47, ¶ 17-21 (lead plaintiffs “acquired shares of China Green pursuant or traceable to the

16

Company’s offering of securities . . . .”). A court cannot accept such conclusory and formulaic

17

allegations of traceability that are devoid of any actual factual allegations. See Hertzberg, 191 F.3d

18

at 1080-81.

19

Additionally, at the time of the secondary offerings, there were over 18 million outstanding

20

shares of China Green securities on the market. The July 2009 Offering added only 3.5 million

21

shares to the market while the December 2009 Offering added roughly one million more. No where

22

in the amended complaint do lead plaintiffs demonstrate or allege that they can trace their specific

23

purchased shares to the 4.5 million newly offered shares rather than the the 18 million outstanding

24
25
26

4

It is undisputed that lead plaintiffs did n o t p u r c h as e securities directly from, or pursuant to, the
secondary offerings.

8

1

shares of China Green securities. Therefore, the court finds that lead plaintiffs lack standing to

2

pursue their Section 11 claim. Accordingly, this claim shall be dismissed.

3

C. Section 15 of the Securities Act (China Green Defendants)

4

Section 15 of the Securities Act allows for liability against individuals who caused a

5

primary violation of the Securities Act. To state a claim under Section 15, lead plaintiff must show:

6

(1) a primary violation of the securities law; and (2) the individual defendants exercised control

7

over the primary violators. See Howard v. Everrex Sys., 228 F.3d 1057, 1065 (9th Cir. 2000).

8
9
10

As addressed above, the amended complaint has failed to plead a Section 11 claim against
any defendant. Thus, lead plaintiffs cannot allege a Section 15 control person claim. See Howard,
228 F.3d at 1065. Accordingly, the court shall also dismiss lead plaintiffs’ Section 15 claim.

11

D. Section 10(b) of the Exchange Act (China Green Defendants)

12

Section 10(b) of the Exchange Act makes it unlawful for any person “[t]o use or employ, in

13

connection with the purchase or sale of any security registered on a national securities exchange . . .

14

any manipulative or deceptive device or contrivance in contravention of such rules and regulations

15

as the Commission may prescribe as necessary or appropriate in the public interest or for the

16

protection of investors.” 15 U.S.C. § 78j(b). To allege a Section 10(b) Exchange Act claim a

17

plaintiff must allege: (1) a material misrepresentation or omission by the defendant; (2) scienter;

18

(3) a connection between the misrepresentation or omission and the purchase of a sale of a security;

19

(4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation.

20

Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 522 U.S. 148, 157 (2008). Further, in

21

pleading a Section 10(b) claim, the allegations in the complaint must also satisfy the heightened

22

pleading requirements of Rule 9(b). See 15 U.S.C. § 78u-4(b)(1)(B) (requiring plaintiffs to “specify

23

each statement alleged to have been misleading, the reason or reasons why the statement is

24

misleading, and, if an allegation regarding the statement or omission is made on information and

25

belief, the complaint shall state with particularity all facts on which that belief is formed”). Federal

26

9

1

Rule of Civil Procedure 9(b) states that in all averments of fraud or mistake, the circumstances

2

constituting the fraud or mistake shall be stated with particularity, and must set forth an

3

explanation as to why the statement or omission complained of was false or misleading. FED. R.

4

CIV. P. 9(b); In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994).
In their motion, China Green Defendants argue that the complaint does not sufficiently

5
6

plead either (1) a material misrepresentation or (2) scienter. See Doc. #96. The court shall address

7

each element below.
1. Material Misrepresentation

8
9

The court has reviewed the amended complaint and finds that lead plaintiffs have

10

sufficiently alleged that China Green made material misrepresentations in its SEC filings to survive

11

the present motion to dismiss. For example, the amended complaint alleges that China Green’s

12

SEC filings were false and misleading because: (1) certain payments to Chinese regulatory

13

authorities, which were reported in Chinese taxation and business filings, were listed at different

14

monetary amounts in the SEC filings for the same period; (2) certain tax payments identified in the

15

SEC filings were never made to the Chinese SAT; and (3) the SEC filings contain inconsistent and

16

incompatible financial information from China Green’s Chinese regulatory filings. See Doc. #47,

17

¶ 41-42. Each statement is specifically identified according to what was said, when it was said,

18

how it was said. Doc. #47, ¶ 48-49. Moreover, the reasons each statement was false is laid out in

19

detail. See Doc. #47, ¶ 43, 50, 139 et seq. These affirmative misstatements and omissions are

20

neither vague, nor immaterial as they include false statements regarding the company’s net income

21

amounts and gross and operating profit margins which allegedly resulted in the artificial inflation

22

of China Green’s common stock. Therefore, the court finds that lead plaintiffs have sufficiently

23

pled material misrepresentations in China Green’s SEC filings.

24

///

25

///

26

10

1
2

2. Scienter
To plead scienter, a plaintiff must “state with particularity facts giving rise to a strong

3

inference that defendants acted with the intent to deceive or with deliberate recklessness as to the

4

possibility of misleading investors.” Berson v. Applied Signal Tech., Inc., 527 F.3d 982, 987 (9th

5

Cir. 2008) (citing 15 U.S.C. § 78u-4(b)(2)). In determining whether plaintiffs properly plead

6

scienter (15 U.S.C. §78u-4(b)(2)), the court must consider “all the allegations holistically” and

7

“collectively.” Tellabs v. Makor Issues & Rights, Ltd., 551 U.S. 208, 326 (2007).

8
9

The court has reviewed the amended complaint and finds that when all the scienter
allegations are considered together, the amended complaint raises a strong inference that

10

defendants knowingly made misrepresentations in the SEC filings. First, lead plaintiffs allege that

11

the individual defendants knew the statements at issue were materially false and misleading and

12

that they would be disseminated to the public. Doc. #47, ¶ 208. Second, the amended complaint

13

alleges that by virtue of their control of the company and as signers of the registration statements,

14

the individual defendants necessarily participated in the wrongdoing. Doc. #47, ¶ 209. Finally, lead

15

plaintiffs allege that due to the extent and nature of the fraud, it could not have been perpetrated

16

had it not reached the highest levels of the company. Doc. #47, ¶ 210. The court finds that these

17

allegations are sufficient to raise an inference of scienter on behalf of the individual defendants.

18

Therefore, the court finds that lead plaintiffs have sufficiently alleged a claim under Section 10(b)

19

of the Exchange Act. Accordingly, the court shall deny the motion to dismiss as to this claim.

20

E. Section 20(a) of the Exchange Act

21

Section 20(a) of the Exchange Act allows for liability against individuals who caused a

22

primary violation of the Exchange Act. To state a claim under Section 20(a), lead plaintiff must

23

show: (1) a primary violation of the securities law; and (2) the individual defendants exercised

24

control over the primary violators. See 15 U.S.C. § 78t-1(a). The standard for controlling person

25

liability under Section 20(a) of the Exchange Act is the same as Section 15 of the Securities Act.

26

11

1

Hollinger, 914 F.2d at 1578.

2

The SEC defines “control” as “the possession, direct or indirect, of the power to direct or

3

cause the direction of the management and policies of a [violator], whether through the ownership

4

of voting securities, by contract, or otherwise.” 17 C.F.R. § 240.12b-2 (1995). The determination

5

of who is a controlling person is “an intensely factual question, involving scrutiny of the

6

defendant’s participation in the day-to-day affairs of the corporation and the defendant’s power to

7

control corporate actions.” Howard, 228 F.3d at 1065.
As addressed above, the court has found that lead plaintiffs have sufficiently alleged a

8
9

primary violation of the Exchange Act. As to the second element of control, the court finds that

10

lead plaintiffs have sufficiently alleged control as to the top directors and officers of China Green.

11

In the amended complaint, lead plaintiffs allege that the individual defendants signed the

12

registration statements at issue, as well as made additional false and misleading information in

13

public conference calls and presentations. Further, lead plaintiffs allege that the individual

14

defendants, by virtue of their control, ownership, offices, and directorships, had the power and

15

influence to issue the false registration statements in violation of the Exchange Act. See Doc. #47,

16

¶ 63-65. Therefore, the court finds that lead plaintiffs have alleged a Section 20(a) claim under the

17

Exchange Act. Accordingly, the court shall also deny the motion to dismiss as to this claim.

18
19

IT IS THEREFORE ORDERED that defendant’s motion to dismiss (Doc. #90) is

20

GRANTED. Defendant Roth Capital Partners, LLC is DISMISSED as a defendant in this action.

21

IT IS FURTHER ORDERED that defendant’s motion to dismiss (Doc. #102) is

22

GRANTED. Defendant Rodman & Renshaw LLC is DISMISSED as a defendant in this action.

23

///

24

///

25

///

26

12

1

IT IS FURTHER ORDERED that defendants’ motion to dismiss (Doc. #96) is GRANTED

2

in-part and DENIED in-part. Lead plaintiffs’ first cause of action for violation of Section 11 of the

3

Securities Act; second cause of action for violation of Section 12(a)(2) of the Securities Act; and

4

third cause of action for violation of Section 15 of the Securities Act are DISMISSED.

5
6
7
8
9
10

IT IS FURTHER ORDERED that defendants Ken Ren and Robert B. Fields are
DISMISSED as defendants in this action.
IT IS FURTHER ORDERED that defendants’ motions to strike (Doc. ##94, 103) are
DENIED.
IT IS SO ORDERED.
DATED this 1st day of November, 2012.

11

__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

13