A securities fraud action was brought on behalf of all persons who purchased or acquired the common stock of Jarden Corp., a consumer products company, between June 29, 2005 and January 11, 2006. The complaint alleged that the company and its officers made materially false and misleading statements concerning its acquisition of another company, including misrepresenting the synergies that would result from the acquisition. Defendants moved to dismiss and the court denied the motion.
The court found that the PSLRA’s safe harbor for forward-looking statements did not apply in this case because, in order for statements to fall within the safe harbor, the statements could not include representations of present fact, even if they also contained forward-looking aspects. The court found that statements, such as that the target company’s cash flows and sales were “trending exactly as we would like,” could be false or misleading given the data available concerning those cash flows and sales at the time the statements were made.
The court also found that plaintiffs adequately pleaded scienter, noting that allegations of motivation to artificially inflate the stock price to convert preferred stock and to gain incentive performance bonuses were sufficient to plead scienter adequately. The court held that even if the defendants were innocent, the timing of the sales of substantial portions of their personal holdings was “curiously coincidental.” (Darquea v. Jarden Corp., 2007 WL 1610146 (S.D.N.Y. May 31, 2007))