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District Court Grants Individual Director's Motion to Dismiss Securities Class Action

Posted In Class Actions
In re AstroPower Inc. Securities Litig., C.A. No. 03-260-JJF, 2006 WL 288120 (D. Del. Feb. 7, 2006). Plaintiffs alleged that defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 by fraudulently overstating AstroPower's revenue in press releases and in SEC filings, and that, as a result, they had purchased their AstroPower stock at artifically inflated prices. Plaintiffs also alleged that the defendants qualified as "controlling persons", as that term is defined in Section 20 of the Exchange Act, of AstroPower and therefore liable to plaintiffs. Defendant Thomas J. Stiner, a Chief Financial Officer, Senior Vice President and director of AstroPower, moved to dismiss the complaint as to him. Stiner argued that the plaintiffs failed to meet the heightened pleading requirements of the Private Securities Litigation Reform Act of 1995 (the "PSLRA") because plaintiffs used information allegedly obtained from unidentified AstroPower employees but failed to describe them with sufficient particularity or state why they were not named, failed to raise a strong inference of scienter, and failed to allege sufficient facts from which the court could determine that Stiner was a "controlling person" under the Exchange Act. The court concluded that the amended complaint identified 9 of 10 of the confidential sources with suficient particularity, but found that the remainder of the amended complaint failed to meet the heightened pleading requirements of the PSLRA and dismissed Count I as to Stiner. Noting that in order to state a claim under Section 20(a), the plaintiffs had to plead an independent violation of the Exchange Act by some person controlled by Stiner, which they did not do. The court therefore also dismissed Count II as to Stiner without prejudice, but granted plaintiffs leave to amend the amended complaint. Share
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