Meadows

ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND GRANTING PLAINTIFF’S MOTION TO FILE A SECOND AMENDED COMPLAINT [149-1], [152-1], [170-1]

I. INTRODUCTION

The present action was filed on March 3, 1997, naming dozens of defendants, including Signal Securities, the Moving Defendants herein. The claims against Defendant Signal Securities are brought by Plaintiffs Carroll B. Grafa III, Grafa Management, Inc., Grafa Partnership, Ltd., and B.J. Grafa, Ltd. (hereinafter “Grafa” or “Plaintiffs”). These plaintiffs, along with approximately twenty-five other plaintiffs in this action, are individual investors in Towers Financial Corporation promissory notes (“Towers notes”). They allege that they purchased the Towers notes based upon recommendations of various brokers, advisors, and brokerage houses named as defendants in this action. Plaintiffs allege that Towers was a sham operation from the outset, and that despite the existence of numerous red flags, the defendants recommended investments in the Towers notes, and that Plaintiffs relied on those recommendations in deciding to purchase the notes.

On April 9, 1998, this Court issued an order granting in part…