Apollo Capital Fund, LLC v. Roth Capital Partners, LLC

SUMMARY

When their investments in an Internet services company’s bridge notes became worthless, plaintiffs in this suit for corporate securities fraud, common law fraud and related claims sued the broker-dealer that was the placement agent for the bridge note offering. The investors asserted numerous causes of action arising from the transaction, two of them based on failure to register or qualify the securities under federal and state law, and the remainder premised on allegations that the broker-dealer collaborated with others in preparing offering documents for the company’s bridge note offering that contained materially false and misleading statements. When the broker-dealer demurred to the third amended complaint, the trial court sustained its demurrers to all causes of action without leave to amend and dismissed the complaint. We hold that:

FACTUAL AND PROCEDURAL BACKGROUND

In March 2000, 11 individuals and investment companies (collectively, investors) invested funds totaling $2.84 million in privately offered bridge notes (bridge notes or securities) issued by eNucleus, Inc., a company providing software and Internet services designed to facilitate e-commerce…