Rost v. Textor
An investor sued a corporation and its controlling CEO under the Florida Securities and Investor Protection Act (sections 517.301 and 517.211) and for fraudulent inducement, alleging he bought stock based on representations that the company would acquire an English soccer club when the CEO intended to acquire it personally. The trial court dismissed the securities, rescission, and fraudulent-inducement counts with prejudice, relying on cautionary language in the term sheet that the acquisition 'might not be consummated.' The Fourth District reversed, holding the allegations sufficiently pled material misrepresentations and omissions and that the cautionary language did not render them immaterial as a matter of law.
Key facts
- Investor sued a corporation and its controlling CEO alleging he purchased stock based on representations that the company would acquire an English soccer club, when the CEO allegedly intended to acquire it personally.
- The trial court dismissed the securities fraud, rescission, and fraudulent-inducement counts, relying on cautionary language in the term sheet stating the acquisition 'might not be consummated.'
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Why it matters
This is one of the few recent Florida DCA opinions to address the bespeaks-caution doctrine at the pleading stage, and it holds that generic 'the deal may not close' cautionary language cannot immunize a defendant who… — full analysis with a trial
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