Livid Holdings Ltd. v. Salomon Smith Barney, Inc.

Livid Holdings, Ltd. (“Livid”) appeals the district court’s dismissal with prejudice of its complaint against the corporate successors to Schroders & Co., Inc. (collectively referred -to as “Schroders” or “Defendants”) under Federal Rule of Civil Procedure 12(b)(6). Livid’s complaint alleges that Defendants violated: (1) § 10(b) of the Securities Exchange Act of 1934 (“1934 Act”), 15 U.S.C. § 780 (b), and Rule 10b-5, 17 C.F.R. § 240 .10b-5, promulgated thereunder; (2) the Washington Securities Act (“WSA”), Wash. Rev.Code § 21.20.010; and (3) Washington tort law. We hold that the district court erred in dismissing Livid’s complaint. •

FACTS AND PROCEEDINGS BELOW

Livid’s claims arise out of its December 1999 purchase of $10 million worth of shares in Purely Cotton, Inc. (“PCI”) stock. In January 1999, Schroders helped PCI arrange a private placement of $25 million worth of its stock. For this purpose, Schroders created a Confidential Offering Memorandum (“the Memorandum”), which outlined PCI’s operations, business plan, and financial position. After the distribution of the Memorandum to potential investors, Livid alleges that UAE Investments, Ltd. (“UAE”), a Gibralter-based…