# BARBEE v. AMIRA NATURE FOODS, LTD.

> District Court, D. New Jersey · September 2, 2025

URL: https://www.frixlaw.com/law-library/cases/11131478

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** September 2, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11131478

## How later opinions describe it (automated extraction)

- concluding that the plaintiff sufficiently asserted control-person liability against the interim chief financial officer because he was a chief executive who either prepared or had ultimate control over the allegedly actionable statements

## Opinion text

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

JAMES K. BARBEE,
Case No. 21–cv–12894–ESK–AMD
Plaintiff,

v.
OPINION
AMIRA NATURE FOODS, LTD., et
al.
Defendants.
KIEL, U.S.D.J.
THIS MATTER is before the Court on defendant Brian M. Speck’s motion
to dismiss the second amended complaint. (ECF No. 120.) For the following
reasons, the motion will be GRANTED IN PART AND DENIED IN PART.
I. BACKGROUND
A. The Second Amended Complaint
The second amended complaint is as voluminous as the procedural history
of this case is long. The Court presumes the parties’ familiarity with the
history of this case and the facts alleged. A non-exhaustive recitation of the
allegations follows only to frame the parties’ substantive arguments.
Plaintiff James K. Barbee is an individual who purchased relevant
securities while living in Ohio, where he current lives, and in Washington,
where he previously resided. (ECF No. 107 (Second Am. Compl.) p. 3.)
Defendant Amira Nature Foods, LTD is an entity organized under the laws of
the British Virgin Islands with a principal place of business in Dubai, United
Arab Emirates that sells specialty rice and third-party branded food products.
(Id. p. 4.) Defendant Karan A. Chanana is and was the president and/or chief
executive officer of Amira during all relevant times. (Id.) Defendants Bruce
C. Wacha, Varun Sethi, and Speck served as chief financial officers of Amira
from June 2014 to August 2017, August 2017 to June 2019, and late June 2019
to present, respectively. (Id. pp. 5–7.)
Amira was listed on the New York Stock Exchange from October 2012 to
August 2020. (Id. p. 4.) The company’s ultimate delisting and related
preceding actions and inactions are central to plaintiff’s claims against Speck.
As alleged in the second amended complaint, the New York Stock
Exchange informed Amira in August 2019 that it would cease being traded and
be delisted if it did not file its Form 20–Fs for the periods ending March 2019
and March 2020 and Form 6–K for the period ending September 2019. (Id.
p. 78.) Plaintiff alleges that Amira did not disclose the material facts in the
letter and, instead, described it in a Form 6–K filing as a notice that the
company did not comply with sections of the New York Stock Exchange Listed
Company Manual. (Id.) Amira stated that it could return to compliance by
filing its Form 20–F for March 2019 by February 16, 2020 and holding its
shareholder meeting soon after. (Id.) Plaintiff claims that this statement
was false because to be in compliance with listing requirements as of February
16, 2020, Amira would have had to file both its Form 20–F for March 2019 and
Form 6–K for September 2019. (Id. pp. 78, 79.)
Additional issues include Speck never furnishing, and never intending to
furnish the September 2019 Form 6–K and the failure to reference a possible
delisting on a particular date, even though the notice implied delisting by July
31, 2020 or August 16, 2020. (Id. pp. 79–81.) Plaintiff alleges that Amira, and
Speck as chief financial officer, had a duty to accurately disclose information in
real time and breach of that duty damaged him as he was purchasing and
holding shares unaware that the company would soon be delisted. (Id. pp. 82,
83.)
Plaintiff goes on to allege that, when Speck signed the Form NT–20–F for
the fiscal year ending March 2020 on August 10, 2020, he knew with certainty
that the Form 20–F was not near completion and would not be filed within the
necessary five days. (Id. pp. 83, 84.) Ambiguous language was used to induce
investors to hold their shares. (Id. p. 84.) Plaintiff claims that, in addition to
the Form 20–Fs for the years ending March 2019 and March 2020, Speck never
intended to file the Form 6–K for September 2019 by the August 16, 2020
deadline and, in fact, the Form 6–K has yet to be filed. (Id. p. 85.) Plaintiff
did not sell his stock on August 10, 2020 and alleges that Speck intentionally
did not reference the approaching delisting because it would have caused
investors to sell. (Id. pp. 85, 86.)
Speck further stated that significant changes in fiscal results were not
anticipated for March 2020, which plaintiff claims was either based on results
known as of August 10, 2020—in which case they should have been reported—
or for which there was no basis to make the statement. (Id. pp. 86, 87.) The
undisclosed lack of factual basis constitutes an omission. (Id. p. 87.) Amira
did not timely file the Form 20–Fs, according to plaintiff, in order to delay or
avoid disclosure of Amira India’s insolvency, internal litigation between
Chanana and Amira India, and criminal charges of fraud and stock
manipulation against Chanana and others. (Id. pp. 88, 89.) Speck chose not
to disclose these facts despite knowledge of them. (Id. p. 89.)
Trading was halted on August 17, 2020 and never resumed, with Amira
eventually being delisted. (Id. p. 7 n. 3.) Speck filed the Form 20–F for the
year ending March 2019 the following day, a time allegedly selected so that
investors could not sell shares with trading halted. (Id. pp. 89, 90.) Specific
to litigation involving Chanana and Amira India, plaintiff claims that Speck
should have been aware of the litigation in the exercise of his Sarbanes-Oxley
duties and that he did not disclose facts of the litigation to investors in real time
because it would have likely resulted in them selling shares. (Id. pp. 98, 99.)
Similarly, plaintiff alleges that Speck should have been aware of Amira India’s
insolvency soon after joining Amira and disclosure of same should have been
made in real time. (Id. p. 106.)
B. Procedural History
Plaintiff originally filed this action in June of 2021 (ECF No. 1) and filed
an amended complaint on August 15, 2022 while dismissal motion practice was
ongoing (ECF No. 32 (Am. Compl.)). On November 10, 2022, District Judge
Michael A. Shipp concluded that the amended complaint was operative and
denied Speck and Wacha’s pending motions to dismiss as moot. (ECF No. 41.)
Speck again moved to dismiss (ECF No. 44) and Judge Shipp granted the
motion in significant part (ECF No. 48 (Mot. Dismiss Op.); ECF No. 49). Judge
Shipp dismissed plaintiff’s claim under Section 10(b) of the Securities Exchange
Act of 1934 (Exchange Act) and Rule 10b–5, concluding that: (1) the 2019 Form
6–K was not signed by Speck and plaintiff failed to adequately allege
affirmative falsity or a duty to disclose, (2) the Form NT–20–F was not
actionable merely because Speck chose not to reference delisting and any
misleading statements were immunized by the safe-harbor provision of the
Private Securities Litigation Reform Act of 1995 (PSLRA), and (3) insufficient
facts supported plaintiff’s claims related to the March 2019 Form 20–F. (Mot.
Dismiss Op. pp. 23–27.) From there, plaintiff’s state-law claims and Section
20(a) claim similarly fell. (Id. pp. 28–31.) An exception was plaintiff’s claim
under the Washington State Securities Act, for which Judge Shipp “decline[d]
to wade into choice of law waters.” (Id. p. 29.)
Plaintiff and Speck’s motions for reconsideration were denied. (ECF No.
75 (Mot. Recons. Op.) pp. 12–18, 21, 22.) Judge Shipp nonetheless granted
plaintiff’s request for leave to file a second amended complaint and accordingly
dismissed the claims against Speck without prejudice. (Id. pp. 18, 19.)1
Plaintiff filed notices of appeal (ECF Nos. 83, 84) that were later
withdrawn (ECF No. 89). This case was then reassigned to me. (ECF No.
90.) The second amended complaint followed. (Second Am. Compl.)2 The

1 Speck asserts in his motion brief that plaintiff was only permitted to amend his
Washington State Securities Act claim and no other causes of action should be
considered. (ECF No. 120–1 (Speck Mot. Br.) pp. 12, 34 n. 6.) This is not a fair
reading of Judge Shipp’s decisions. Judge Shipp denied Speck’s original motion to
dismiss as to the Washington State Securities Act claim, declining to engage in a
choice-of-law analysis without the benefit of discovery. (Mot. Dismiss Op. p. 29.)
Speck’s motion for reconsideration was denied (Mot. Recons. Op. pp. 21, 22) but Judge
Shipp still dismissed all counts against Speck without prejudice and provided plaintiff
one finally opportunity to amend. (Id. pp. 18, 19; ECF No. 76 (Mot. Recons. Order)
p. 2.) Plaintiff sought clarification from Judge Shipp on the status of the Washington
State Securities Act claim because Speck’s motion for reconsideration was denied, but
the claim was dismissed. (ECF No. 78 p. 1.) The order cited by Speck in his moving
brief (Speck Mot. Br. p. 12) was Judge Shipp’s response to plaintiff’s inquiry, in which
he clarified that plaintiff was required to replead his Washington State Securities Act
claim and that the claim was to proceed to discovery (ECF No. 80). This instruction
was not to the express exclusion of plaintiff’s other causes of action and, given that
plaintiff’s claims against Speck were dismissed without prejudice and with leave to
amend (Mot. Recons. Order p. 2), it is unclear what Speck’s basis is for arguing that
only the Washington State Securities Act counts should be considered. Speck did not
file a reply brief further explaining his position.

2 Plaintiff states that certain allegations made in the second amended complaint
ought to be read with allegations in the amended complaint. (ECF No. 125 (Pl.’s
Opp’n Mot.) pp. 13, 24, 27.) I have reviewed plaintiff’s red-lined proposed second
amended complaint (ECF No. 102–1) and, more usefully, compared the second
amended complaint and amended complaint side-by-side to determine whether the
deficiencies identified by Judge Shipp have been adequately addressed. Any further
consideration of the amended complaint would be inappropriate as it has been
superseded by the second amended complaint. See Garrett v. Wexford Health, 938
F.3d 69, 82 (3d Cir. 2019). Furthermore, as intimated, I do not read the second
amended complaint or compare it to the amended complaint with fresh eyes. Rather,
I am bound by Judge Shipp’s earlier decisions and reasoning. See Wu v. GSX Techedu
Inc., 738 F. Supp. 3d 527, 555 (D.N.J. 2024) (concluding that the prior judge’s finding
that allegations were not pleaded with sufficient particularity was controlling because,
when provided an opportunity to replead, the plaintiff did not assert new allegations).
second amended complaint asserts 13 causes of action including violations of
Sections 10(b) and 20(a) of the Exchange Act, primary and control-person
liability under Ohio, Washington, and New Jersey statutes, common-law fraud
and negligent misrepresentation, and lesser-included claims of breach of
fiduciary duty, negligence, and fraudulent concealment. (Id. pp. 157–90.)3
The parties subsequently stipulated to Wacha’s dismissal. (ECF No.
117.) On November 21, 2024, more than three months after the second
amended was filed, plaintiff filed a letter on the docket stating that he had
refrained from seeking default against Speck based on representations that a
motion to dismiss was forthcoming. (ECF No. 118.) I directed Speck to
respond to the second amended complaint (ECF No. 119) and the pending
motion followed (ECF No. 120). Plaintiff moved for denial of Speck’s motion
as to the Securities Act of Washington claims and to strike the remainder of the
motion. (ECF No. 121.) I denied plaintiff’s motion. (ECF No. 122.)
II. MOTIONS TO DISMISS
Prior to the filing of a responsive pleading, a defendant may move to
dismiss a complaint for failure to state a claim upon which relief can be granted.
See Fed. R. Civ. P. 12(b)(6). To survive dismissal under Federal Rule of Civil
Procedure (Rule) 12(b)(6), “a complaint must provide ‘a short and plain
statement of the claim showing that the pleader is entitled to relief,’” Doe v.
Princeton Univ., 30 F.4th 335, 341 (3d Cir. 2022) (quoting Fed. R. Civ. P.
8(a)(2)), and—accepting the plaintiff’s factual assertions, but not legal
conclusions, as true—“‘plausibly suggest[ ]’ facts sufficient to ‘draw the
reasonable inference that the defendant is liable for the misconduct alleged,’”
id. at 342 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) and

3 As plaintiff notes, Speck’s motion brief does not challenge the adequacy of these
lesser-included claims. I therefore do not analyze Counts 11, 12, and 13 and permit
them to proceed. See Otero v. Port Auth. of N.Y., Case No. 14–01655, 2016 WL
1260682, at *12 (D.N.J. Mar. 31, 2016).
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Courts further evaluate the
sufficiency of a complaint by “(1) identifying the elements of the claim, (2)
reviewing the complaint to strike conclusory allegations, and then (3) looking
at the well-pleaded components of the complaint and evaluating whether all of
the elements identified in part one of the inquiry are sufficiently alleged.”
Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011).
Relevant to this motion, a plaintiff alleging securities fraud must go
beyond the pleading requirements of Rule 8 and “include particularized
allegations of fraud” pursuant to both Rule 9(b) and the PSLRA. City of
Warren Police and Fire Ret. Sys. v. Prudential Fin., Inc., 70 F.4th 668, 680 (3d
Cir. 2023). Rule 9(b) requires that, when alleging fraud, “a party must state
with particularity the circumstances constituting fraud ….” Fed. R. Civ. P.
9(b). Malice, intent, knowledge, and other conditions of the mind may be
alleged generally. Id. The complaint must describe the time, place, and
contents of alleged misrepresentations and omissions and the identity of the
individual who made the statement and basis for the statement’s falsity. City
of Warren Police and Fire Ret. Sys., 70 F.4th at 680.
The PSLRA imposes two heightened pleading requirements. Williams v.
Globus Med., Inc., 869 F.3d 235, 240 (3d Cir. 2017). The complaint must first
“specify each allegedly misleading statement, why the statement was
misleading, and if an allegation is made on information and belief, all facts
supporting that belief with particularity.” Id. (quoting Inst. Inv. Grp. v. Avaya,
Inc., 564 F.3d 242, 252 (3d Cir. 2009)). Second, the complaint must “state with
particularity facts giving rise to a strong inference that the defendant acted
with the required state of mind” for each act or omission alleged. Id. at 240–
41 (quoting 15 U.S.C. § 78u–4(b)(2)(A)).
Rule 9(b) and the PSLRA’s pleading standards as to falsity may be read in
harmony, but the PSLRA’s requirements for alleged scienter control over Rule
9(b)’s more lenient standard. City of Warren Police and Fire Ret. Sys., 70 F.4th
at 681 n. 1; see also City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp.,
908 F.3d 872, 880 n. 7 (3d Cir. 2018) (“In general, a complaint that satisfies the
PSLRA’s heightened pleading standards will also satisfy Rule 9(b)’s
requirements.”). Irrefutable evidence of a statement’s falsity need not be
pleaded pursuant to Rule 9(b) or the PSLRA, but rather the “complaint must
contain particularized factual allegations that plausibly allege that a statement
was misleading.” City of Warren Police and Fire Ret. Sys., 70 F.4th at 681.
III. DISCUSSION
A. Count 1 – Section 10(b) and Rule 10b–5
Section 10(b) of the Exchange Act makes it unlawful for any person to
directly or indirectly “use or employ, in connection with the purchase or sale of
any security … any manipulative or deceptive device or contrivance in
contravention of such rules and regulations as the [Securities and Exchange
Commission] may prescribe ….” 15 U.S.C. § 78j(b). Likewise, Rule 10b–5
makes it unlawful, in connection with the purchase or sale of a security, to (1)
employ any device, scheme, or artifice to defraud; (2) make an untrue statement
of material fact or omit a material fact necessary in order to make statements
made not misleading under the circumstances; or (3) engage in an act, practice,
or course of business that operates or would operate as a fraud or deceit on any
person. 17 C.F.R. § 240.10b–5. Section 10(b) and Rule 10b–5 require a
plaintiff to allege “(1) a material misrepresentation or omission by the
defendant; (2) scienter; (3) a connection between the misrepresentations or
omission and the purchase or sale of a security; (4) reliance upon the
misrepresentation or omission; (5) economic loss; and (6) and causation” in
order to survive dismissal. Dang v. Amarin Corp., 750 F. Supp. 3d 431, 458
(D.N.J. 2024) (quoting Stoneridge Inv. Partners, LLC v. Sci.-Atlanta, 552 U.S.
148, 157 (2008)).
1. Party Arguments
Speck generally alleges that plaintiff’s Section 10(b) and Rule 10b–5
claims fail to satisfy Rule 9(b) and the PSLRA’s heightened pleading standards.
(Speck Mot. Br. pp. 12–15.) There is no dispute that Amira filed a Form 6–K
and press release disclosing the contents of notice, including noncompliance
with New York Stock Exchange rules—which are publicly available. (Id.
pp. 16–18.) Plaintiff has failed to show that the statements made in the Form
6–K and press release were affirmatively false and the release nonetheless
contained a forward-looking statement of Amira’s intent. (Id. pp. 17, 18.)
Speck highlights that he did not sign the August 2019 Form 6–K and argues
that the complaint summarily asserts that his position and independent duties
render him liable. (Id. pp. 18, 19.) Amira’s Form 6–K was adequate and
Speck possessed no affirmative duty to disclose. (Id. p. 19.)
As for the March 2020 NT–20–F, Speck notes that even plaintiff
acknowledges that merely “best efforts” would be made to file the Form 20–F
within 15 days and submits that plaintiff’s allegations lack scienter. (Id.
pp. 20, 21.) Relevant facts as to delisting were already disclosed in the August
2019 Form 6–K and Speck had no duty to say more. (Id. p. 21.) Plaintiff’s
allegation that Speck stated that the company did not anticipate significant
operational changes fails to consider that Speck’s role did not give him insight
into this prediction and also lacks requisite scienter. (Id. pp. 21, 22.) Finally,
as for the March 2019 Form 20–F, Speck asserts that there are insufficient
allegations concerning his knowledge of any charges or investigations involving
Chanana and Amira India. (Id. p. 23.) There are also insufficient facts as to
when Speck learned of information that plaintiff alleges should have been
disclosed sooner. (Id. p. 24.) Nothing in the March 2019 Form 20–F can be
actionable, according to Speck, because trading had already halted and plaintiff
generally fails to establish loss causation. (Id. pp. 25–29.)
Plaintiff responds that Judge Shipp permitted him to cure the pleading
deficiencies in the amended complaint. (Pl.’s Opp’n Mot. pp. 12, 13.) The
second amended complaint now explains why, for example, the August 2019
Form 6–K contained misrepresentations and reasonable reliance and loss
causation exist. (Id. pp. 12, 13, 17, 18.) Speck is incorrect to state that there
is no general duty to provide information outside of periodic reports, according
to plaintiff, and omissions from timely disclosures rendered prior statements
misleading. (Id. pp. 14, 15.) Further, whether information was timely
reported is a question of fact inappropriate for the motion-to-dismiss stage.
(Id. p. 15.) Plaintiff argues that Speck had substantial obligations to detect the
fraud at issue and the inference of scienter is at least as compelling as the
opposite inference when considering that Speck filed the March 2019 Form 20–
F just after trading halted and he was aware of forthcoming delisting. (Id.
pp. 15, 16.) Even if Speck accurately disclosed Amira’s financial status and
litigation, now-alleged deficient internal controls are actionable, according to
plaintiff. (Id. p. 17.)
2. Analysis
i. The August 2019 Form 6–K
Judge Shipp found in favor of Speck as to the August 23, 2019 Form 6–K.
(Mot. Dismiss Op. pp. 24, 25.) He concluded that it was unclear whether Speck
could be held liable because he did not sign it and, in any case, the Form 6–K
disclosed that Amira was not compliant with the New York Stock Exchange
Manual and therefore faced delisting. (Id.) The second amended complaint
claims that the Form 6–K was false when made because—in order to be
compliant with listing requirements by February 16, 2020—Amira would have
had to file both its Form 20–F for March 2019 and September 2019 Form 6–K.
(Second Am. Compl. pp. 78, 79.) Additional issues include the alleged failure
to reference a specific delisting date and Speck’s alleged violation of his ongoing,
real-time disclosure obligations. (Id. pp. 79–81.)
The New York Stock Exchange notice, addressed to Chanana, stated that
Amira failed to timely file its Form 20–F for the fiscal year ending March 2019.
(ECF No. 44–12 p. 2.)4 It further directed Amira to both contact the stock
exchange to discuss the status of the filing and issue a press release disclosing
the status of the filing, delay, reason for the delay, and anticipated filing date
if known. (Id.) The first requirement was already satisfied. (Id.) The
notice advised that the New York Stock Exchange could—in its discretion—
permit continued trading for an additional six months if the annual report and
subsequent filings were not filed within six months of their due date. (Id.)
Delisting would commence if the stock exchange determined that an additional
six-month period was inappropriate and delisting would also generally
commence if the annual report and subsequent delayed filings were not made
by the end of the additional six-month period. (Id.) Finally, the notice stated
that Amira would be expected to hold its annual meeting as soon as practicable
following completion of the delayed filing. (Id. p. 3.)
The Form 6–K filed on August 23, 2019 disclosed that Amira had been
notified that it was not compliant with Sections 802.01E and 302 of the New
York Stock Exchange Listed Company Manual for failure to timely file its
March 2019 Form 20–F and failure to hold its annual meeting. (ECF No. 44–
4 p. 4.) It added that, under New York Stock Exchange rules, it would “have
six months from August 16, 2019, or until February 16, 2020, to file its Form

4 Speck seems to refer to this notice document, which was included with his prior
motion to dismiss, in his brief. (Speck Mot. Br. p. 17.) I find that I may consider it
because it is integral to plaintiff’s allegations in the second amended complaint. See
Samra Plastic and Reconstructive Surgery v. United Healthcare Ins. Co., 768 F. Supp.
3d 661, 667 (D.N.J. 2025).
20–F” and that it could regain compliance with listing requirements by filing
the Form 20–F prior to that date. (Id.) The Form 6–K expressed Amira’s
intent “to file its Form 20–F as soon as practicable.” (Id.) The associated
press release contained similar information, specifying that forward-looking
representations such as Amira’s intent to meet filing requirements and the
stated compliance deadline fell within the PSLRA’s safe-harbor provision.
(ECF No. 44–5 p. 2.)
It is therefore difficult to depart from Judge Shipp’s conclusion that “by all
accounts, Amira did disclose the contents of the August 2019 Correspondence”
through the August 23, 2019 Form 6–K and press release indicating that it was
not compliant with the New York Stock Exchange Manual. (Mot. Dismiss Op.
p. 24.) Section 802.01E of the manual further made clear that noncompliance
with deadlines could result in delisting. (Id.; see also 3 Brent A. Olson,
Publicly Traded Corporations Handbook § 12:61 (2025) (“[U]nder the ‘truth on
the market’ theory, a misrepresentation is immaterial if the information is
already known to the market and therefore cannot defraud the market.”).)
Plaintiff tries to rope the September 2019 Form 6–K in as a subsequent
filing that Amira was also required to file. (Second Am. Compl. pp. 79, 80.)
But the second amended complaint does not address the obvious question of
why the Form 6–K and press release disclosing the New York Stock Exchange
notice would refer to a filing subsequent to the March 2019 Form 20–F at issue
and not cited in the notice. Somewhat contradictorily, the second amended
complaint alleges that the February 16, 2020 filing deadline in the Form 6–K
and press release was not referenced in the notice (id. p. 79) but nonetheless
argues that a filing not referenced in the notice should have been included.
Plaintiff’s claim as to the September 2019 Form 6–K never being filed and
Speck’s alleged lack of intent to file similarly do not relate to representations
made in August 2019. (See id. pp. 79–81.)
ii. The August 2020 Form NT–20–F
Judge Shipp’s motion-to-dismiss opinion acknowledged the apparent
contradiction in Speck’s defense as to the Form NT–20–F filed on August 10,
2020 and the March 2019 Form 20–F in which Speck disclosed that Amira was
required to file the March 2019 and March 2020 Form 20–Fs and September
2019 Form 6–K or face delisting. (Mot. Dismiss Op. p. 25.) Nonetheless,
Judge Shipp concluded that plaintiff’s allegation that Speck “chose not to say
anything” was not actionable and representations as to Amira’s intent to
complete the March 2020 Form 20–F and anticipated operational changes were
protected by the PSLRA’s safe-harbor provision. (Id. pp. 25, 26.)
Absent a few additional details, such as Chanana’s personal guarantee of
$237 million in debt, the second amended complaint’s allegations regarding the
Form NT–20–F are almost identical to the amended complaint. (Compare
Second Am. Compl. pp. 83–89 with Am. Compl. pp. 70–75.) Plaintiff adds the
allegation that, in addition to never filing the September 2019 Form 6–K and
March 2020 Form 20–F, Speck never intended to file these forms. (Second Am.
Compl. p. 85.) This bald assertion is not otherwise adequately supported and
is not dissimilar from plaintiff’s allegation in the amended complaint that Speck
had no reasonable belief that either form would be filed prior to the delisting
deadline. (Am. Compl. p. 72.) This allegation is, too, repeated in the second
amended complaint. (Second Am. Compl. p. 85.)
“[C]ourts in this Circuit routinely dismiss amended complaints that fail to
add new factual allegations after having been previously dismissed for failure
to state a claim.” Ozturk v. Amsher Collection Servs., Inc., Case No. 21–18317,
2023 WL 8271808, at *3 (D.N.J. Nov. 30, 2023) (collecting cases); see also Wu,
738 F. Supp. 3d at 555 (concluding that the prior-assigned district judge’s
determination that alleged misstatements were not pleaded with particularity
was controlling because the plaintiff did not add new allegations despite the
opportunity to re-plead). Because plaintiff does little more than repackage the
same allegations Judge Shipp dismissed in the amended complaint, I will
dismiss them again here.
iii. The March 2019 Form 20–F
Finally, Judge Shipp dismissed plaintiff’s claims related to the March
2019 Form 20–F. (Mot. Dismiss Op. pp. 26, 27.) Judge Shipp divided these
claims in two categories: (1) events disclosed in the Form 20–F that should have
been reported sooner and (2) the failure to disclose India’s Central Bureau of
Investigations (CBI) audit and charges brought against Chanana and others.
(Id. p. 26.) The amended complaint failed to plead when charges were brought
or when the results of the audit were disclosed, according to Judge Shipp, and
further omitted facts supporting the inference that Speck intentionally delayed
or omitted information or that anything in the March 2019 Form 20–F caused
a loss for plaintiff. (Id. p. 27.)
Speck raises similar arguments in his brief, asserting that the second
amended complaint does not support his knowledge of charges or the audit.
(Speck Mot. Br. p. 23.) Even if Speck did have knowledge, Speck had no duty
to disclose uncharged wrongdoing. (Id. pp. 23, 24.) The second amended
complaint also lacks loss causation, according to Speck. (Id. p. 28.)
Plaintiff contends that these allegations have been amended. (Pl.’s Opp’n
Mot. pp. 13, 14.) Indeed, while much of the second amended complaint repeats
its predecessor, plaintiff has added new allegations. These include that, in the
exercise of his Sarbanes-Oxley duties, Speck would have been aware of the May
2019 audit that preceded the CBI investigation and failed to disclose the audit,
investigation, or ultimate report in an effort to deceive investors. (Second Am.
Compl. pp. 130, 131.) Plaintiff also adds allegations of scienter. (Id. pp. 135–
41.)
The second amended complaint alleges that criminal charges were filed
against Chanana and others at Amira India in “late 2020.” (Id. pp. 131, 132.)
This allegation buttresses Judge Shipp’s understanding that news of the CBI
investigation was not released until November 2020. (Mot. Dismiss Op. p. 27.)
Judge Shipp determined that it was unclear whether Speck was aware of the
charges—or even the preceding audit—prior to the filing of the March 2019
Form 20–F. (Id.) Plaintiff, again, does not allege when precisely the CBI’s
report was registered but nonetheless alleges that Speck did not disclose the
report or the underlying audit and investigation as part of a scheme to deceive
investors. (Second Am. Compl. pp. 131, 132.) Even assuming—as I do not—
that Speck was aware of the audit and investigations, insofar as plaintiff seeks
to hold Speck liable for failing to provide notice of the possibility of charges,
“[t]here is no duty to disclose specific ‘litigation risks’ that were not
‘substantially certain to occur.’” SLF Holdings, LLC v. Uniti Fiber Holdings,
Inc., 499 F. Supp. 3d 49, 60 (D. Del. 2020) (quoting In re Citigroup, Inc. Sec.
Litig., 330 F. Supp. 2d 367, 377 (S.D.N.Y. 2004)). Plaintiff seeks more—
disclosure of underlying information and investigations without alleging when
such information was known and the degree of risk that then-existed. I
conclude that plaintiff’s Section 10(b) and Rule 10b–5 claims still struggle to
clear the hurdles identified by Judge Shipp and will accordingly dismiss Count
1 as to Speck.
B. Count 2 – Section 20(a)
Section 20(a) of the Exchange Act imposes joint and several liability on
any person who directly or indirectly controls a person liable under the
Exchange Act. 15 U.S.C. § 78t(a). An exception exists if the controlling
person acted in good faith and did not induce the act underlying the violation.
Id. Section 20(a) claims are derivative of an underlying violation committed
by a controlled person. See Rahman v. Kid Brands, Inc., 736 F.3d 237, 247 (3d
Cir. 2013). Such claims require that “(1) the defendant controlled another
person or entity; (2) the controlled person or entity committed a primary
violation of the securities laws; and (3) the defendant was a culpable participant
in the fraud.” Carmack v. Amaya Inc., 258 F. Supp. 3d 454, 466 (D.N.J. 2017).
Control-person liability may be premised on inaction if the inaction “was
deliberate and done intentionally to further the fraud.” Belmont v. MB Inv.
Partners, Inc., 708 F.3d 470, 485 (3d Cir. 2013) (quoting Sharp v. Coopers &
Lybrand, 649 F.2d 175, 185 (3d Cir. 1981)); see also Stichting Pensioenfonds
ABP v. Merck & Co., Inc., Case No. 05–05060, 2012 WL 3235783, at *11 (D.N.J.
Aug. 1, 2012) (“The culpable participation element of a § 20(a) claim mirrors the
scienter element of a § 10(b) claim.”).
Speck asserts that plaintiff’s Section 20(a) claim fails because the second
amended complaint insufficiently pleads his culpable participation. (Speck
Mot. Br. p. 29.) There is no allegation that Speck controlled any other
individual defendant. (Id.) Insofar as Section 20(a) liability is based on
Speck’s control of the company, Speck asserts that it fails because it is not
supported by an underlying violation of Section 10(b). (Id. p. 30.)
Plaintiff responds that he has sufficiently alleged that Speck was a control
person of Amira and that he can be liable if Amira committed a primary
violation. (Pl.’s Opp’n Mot. p. 19.) He notes that courts within this District
have not required plaintiffs to plead culpable participation by a control person
and he does not have access to potential evidence supporting culpable
participation. (Id. pp. 20, 21.) Assuming that he must plead culpable
participation, plaintiff claims that he has adequately amended his allegations
and that, while scienter is distinct from culpable participation, such allegations
may bolster claims of culpable participation. (Id. pp. 19, 20, 22.)
Plaintiff notes that Judge Shipp dismissed his Section 20(a) claim for
failure to plead a primary violation of the Exchange Act. (Id. p. 18.) That
reasoning was then substituted in the motion-for-reconsideration opinion and,
instead, lack of culpable participation was used to support dismissal of
plaintiff’s claim. (Id.) This is a fair reading of the decisions. Judge Shipp
originally dismissed the Section 20(a) claim by concluding that plaintiff “fail[ed]
to make a viable primary claim against Speck.” (Mot. Dismiss Op. p. 28.) In
the motion-for-reconsideration decision, Judge Shipp acknowledged—as
pointed out by plaintiff—that “a Section 20(a) claim may exist here because he
alleged that Amira committed a primary violation, and that Speck was a control
person over at least one of Amira’s primary violations.” (Mot. Recons. Op. p. 12
n. 7.) He then went on to make explicit findings as to plaintiff’s control-person
claim, concluding that culpable participation must be pleaded and that plaintiff
failed to adequately do so. (Id. pp. 13–15.)
Whether a plaintiff must plead culpable participation remains an open
question within this Circuit. See City of Southfield Fire and Police Ret, Sys. v.
Hayward Holdings, Inc., Case No. 23–04146, 2025 WL 1577315, at *17 n. 5
(D.N.J. June 4, 2025). Indeed, the trend within the Third Circuit is to not
require a plaintiff to plead culpable participation. See Strougo v. Mallinckrodt
Pub. Ltd. Co., Case No. 20–10100, 2022 WL 17740482, at *11 (D.N.J. Dec. 16,
2022). I am not considering this question on first instance, however. Judge
Shipp explicitly stated in his motion-for-reconsideration opinion that he was
persuaded by caselaw requiring plaintiffs to plead culpable participation and
plaintiff was to be held to that standard. (Mot. Recons. Op. p. 14 n. 8.) I am
bound by that decision notwithstanding conflicting, nonbinding opinions within
this District.5
I thus turn to the amended pleadings. Though some of the allegation that
plaintiff points me to (Pl.’s Opp’n Mot. pp. 19, 20) repeat those contained in the

5 Because I will ultimately permit plaintiff’s Section 20(a) claim to proceed, I do
not consider his request for certification to the Third Circuit. (Pl.’s Opp’n Mot. pp. 22,
23.)
amended complaint, plaintiff makes some notable additions. For instance, in
alleging scienter, plaintiff claims that Speck’s failure to disclose Amira India’s
fraud, Amira’s insolvency, and Amira and Chanana’s litigation to investors was
motivated by a desire to prevent them from being able to sell their shares and
to avoid negative effects on Amira’s listing status, Amira India’s liquidation
proceedings, and internal litigation between Chanana and Amira. (Second
Am. Compl. pp. 135–38.) Speck would have learned of these facts and disclosed
them in the reasonable exercise of his Sarbanes-Oxley duties, raising the
inference that he intentionally delayed disclosure. (Id. p. 138 n. 90.) If
disclosure was not delayed because Speck did know of these facts, such lack of
knowledge evidences scienter in disregarding his statutory duties and
concealing issues plaguing the company. (Id. p. 138 ns. 89, 90; see also id. p. 161
(alleging that, insofar as Speck did not learn of facts prior to August 2020, his
lack of knowledge demonstrates scienter and satisfies the culpable
participation requirement).) I am satisfied that plaintiff has adequately
pleaded culpable participation by Speck. See In re Cognizant Tech. Sols. Corp.
Secs. Litig., Case No. 16–06509, 2020 WL 3026564, at *34 (D.N.J. June 5, 2020)
(concluding that the plaintiff’s allegations that the defendants participated and
implemented the bribery scheme demonstrated their knowledge of the scheme
and their alleged scienter allowed the court to infer that subsequent inaction
was with requisite intent).
Working backward, plaintiff alleges that Speck participated in the daily
management of Amira’s finances and operations, could and did influence control
over the board of directors’ decision-making, and had direct supervisory
involvement in day-to-day operations. (Second Am. Compl. pp. 158, 159.) I
am satisfied that plaintiff adequately pleads that Speck was a control person
over Amira. See Zhengyu He v. China Zenix Auto Int’l Ltd., Case No. 18–
15530, 2020 WL 3169506, at *13 (D.N.J. June 12, 2020) (finding that the
defendants “easily” fit the definition of “control persons” because they were both
high-level officers with control over SEC filings); see also e.g., Touchtone Grp.,
LLC v. Rink, 913 F. Supp. 2d 1063, 1082 (D. Colo. 2012) (concluding that the
plaintiff sufficiently asserted control-person liability against the interim chief
financial officer because he was a chief executive who either prepared or had
ultimate control over the allegedly actionable statements).
Speck argues that he did not control the other individual defendants and
to the extent that liability is premised on his control of Amira, no primary
violation has been adequately alleged. (Speck Mot. Br. pp. 29, 30.) However,
there is no motion before me concerning Amira’s potential liability and I am not
satisfied at this juncture and without fulsome briefing that no liability exists.
As Judge Shipp has already recognized, a Section 20(a) claim may be asserted
against Speck premised on a primary violation committed by Amira. (Mot.
Recons. Op. p. 12 n. 7.) Because I will not dismiss claims against Amira for
which a motion has not been filed and I find that plaintiff has adequately
addressed Judge Shipp’s concerns as to culpable participation (id. pp. 13–15), I
will permit the Section 20(a) claim to proceed.
C. Counts 3 and 4 – Ohio Securities Act
Judge Shipp dismissed plaintiff’s Ohio Securities Act claim, concluding
that the amended complaint failed to allege that Speck knowingly made any
false representation or caused Amira to sell any shares with knowledge of its
insolvency. (Mot. Dismiss Op. pp. 28, 29.) Judge Shipp declined to reconsider
his decision, finding again that plaintiff failed to plead that Speck acted
knowingly by, for instance, alleging when, how, and to whom Speck caused
shares to be sold or when and how he knew Amira was insolvent. (Mot.
Recons. Op. pp. 15–17.)
Speck piggybacks on Judge Shipp’s decisions, asserting that plaintiff fails
to plead scienter and does not allege that Speck knowingly made any false
misrepresentation, intended to deceive, or caused any shares to be sold with
knowledge of Amira’s insolvency. (Speck Mot. Br. pp. 31, 32.) Speck claims
that he was not even employed by Amira during the year in which it was
allegedly insolvent. (Id. p. 32.) Rather, the complaint states that Speck was
the one who disclosed Amira’s insolvency. (Id.)
Plaintiff contends that “knowingly” may be met where knowledge should
have been obtained through the exercise of reasonable diligence. (Pl.’s Opp’n
Mot. p. 23.) The second amended complaint claims that Speck should have
obtained knowledge through the reasonable exercise of his Sarbanes-Oxley
duties. (Id pp. 23, 24.) Control-person liability is also asserted. (Id. p. 25.)
Amira could not have been listed on the New York Stock Exchange and plaintiff
could not have purchased shares absent Speck’s certification of financial
disclosures. (Id.) Liability does not require knowing participation in the
primary violation, according to plaintiff, and he has cured any potential
pleading deficiencies. (Id. p. 26.)
The second amended complaint alleges that Amira was insolvent during
the entire period between March 2019 and March 2020. (Second Am. Compl.
p. 115.) Plaintiff relies on the company’s book value of -$7.50 per share for the
year ending March 2019 and uses Speck’s representation in the March 2020
Form NT–20–F that operations were not anticipated to significantly change for
March 2020 to extend that insolvency through the year. (Id. pp. 115, 163, 164.)
Plaintiff claims that Speck was a substantial contributing factor to his
purchases due to his failure to make real-time disclosures of Amira’s insolvency
and knowledge may be deemed to have been obtained through reasonable
exercise of his Sarbanes-Oxley duties. (Id. pp. 162, 163.) Ohio Rev. Code
§ 1707.41(A) places liability on individuals who offer a security through an
advertisement that contains a false statement or omission of material fact.
(Id. p. 165.) As for control-person liability, the second amended complaint
states that Speck may be liable to the extent that he actively participated in the
alleged conduct. (Id. p. 139.) Speck was the officer in charge of preparing
internal financial documents and even if it was Amira that chose not to disclose
insolvency, Speck prepared and signed financial documents. (Id. p. 167.)
Plaintiff asserts liability under several sections of Ohio Code including
knowingly making or causing to be made false representations in the sale of
any security; selling any security without disclosing insolvency to the
purchaser; selling or causing to be sold or offering or causing to be offered
securities of an insolvent issuer with intent to deceive; knowingly engaging in
an illegal, fraudulent, or prohibited act in the sale of securities; or making,
issuing, or publishing—or causing the same—any statement or advertisement
as to the value of securities with knowledge of material falsity. Ohio Rev. Code
§§ 1707.44(B)(4), (D), (F), (G), (J). The substance of his allegations against
Speck is the alleged failure to disclose insolvency. Therefore, I can conclude
off the bat that his claims against Speck cannot be maintained under Ohio Rev.
Code §§ 1707.44(B)(4) and (J). See Escue v. Sequent, Inc., 869 F. Supp. 2d 839,
853 (S.D. Ohio 2012) (“It is well settled that §§ 1707.44(B)(4) and 1707.44(J)
prohibit only an affirmative misrepresentation. Neither statutory provision
applies to a fraudulent nondisclosure or an omission of material facts.”). I am
further constrained to agree with Speck that, even if knowledge is adequately
pleaded, it does not explain when or how Speck caused shares to be sold.
(Speck Mot. Br. p. 32.) Judge Shipp relied on a similar absence of such details
in denying plaintiff’s motion for reconsideration and I review the second
amended complaint through that lens. (Mot. Recons. Op. p. 17.) Count 3 will
therefore be dismissed.
These barriers do not extend to Count 4, alleging control-person liability.
Ohio law imposes liability for losses or damages sustained by the reliance on a
false material statement or omitted material fact in a circular, prospectus, or
advertisement on those who offer for sale or receive profits from the sale of the
security. Ohio Rev. Code § 1707.41(A). When a corporation is liable under
Ohio Rev. Code § 1707.41(A), its directors are also liable unless they show that
they had no knowledge of the publication at issue or had just and reasonable
grounds to believe that statements were true and omissions were immaterial.
Ohio Rev. Code § 1707.41(B)(1). Director liability is the rule rather than the
exception when the company is liable. See In re Nat’l Century Fin. Enters.,
Inc., 504 F. Supp. 2d 287, 307 (S.D. Ohio 2007) (“[T]he Ohio statute expressly
provides that directors are liable for the securities violations of their
corporations unless they prove otherwise.”).
Like my analysis of Section 20(a) liability, I will permit plaintiff’s control-
person claim to proceed because claims against Amira remain viable and I have
not received briefing as to the merits of those claims. See id. at 306 (finding
that an Ohio Rev. Code § 1707.41(B)(1) claim was sufficiently pleaded because
the complaint alleged an underlying securities violation by the corporation and
that the defendants were outside directors). Speck’s motion to dismiss will be
denied as to Count 4.
D. Counts 5 and 6 – Washington State
Securities Act
Judge Shipp allowed plaintiff’s Washington State Securities Act claim to
proceed rather than “wade into the choice of law waters presented by
[plaintiff’s] claims ….” (Mot. Dismiss Op. p. 29.) He reiterated that position
on reconsideration, declining to entertain Speck’s more robust argument
asserting that plaintiff failed to adequately plead his Washington claim. (Mot.
Recons. Op. pp. 21, 22.)
Speck covers his bases this time around, first alleging that there is no
territorial nexus between Speck, plaintiff, and Washington. (Speck Mot. Br.
p. 32.) The place of residence or business of a non-party broker in Washington
does not create such nexus and, in any case, purchases through the Washington
broker predate Speck’s tenure. (Id. pp. 32, 33.) On the merits, the complaint
does not include untrue statements or omissions made by Speck. (Id. p. 33.)
No alleged omissions were about existing facts, according to Speck, and because
there is no underlying violation, control-person liability is inapplicable. (Id.
p. 34.)
Plaintiff responds that Speck’s arguments were twice rejected by Judge
Shipp and he has repleaded his claims to include an alleged violation of Wash.
Rev. Code § 21.20.010(3), which prohibits fraud or deceit. (Pl.’s Opp’n Mot.
pp. 26, 27.) Scienter nor intent to defraud are required and the second
amended complaint alleges purchases from Washington-based accounts while
Speck was chief financial officer. (Id. p. 27.) Plaintiff adds that he has clearly
pleaded primary violations and Speck is a control person. (Id. p. 28.) Control-
person liability does not require culpable participation or scienter, according to
plaintiff, but rather the burden is on Speck to establish good faith. (Id. p. 29.)
Liability is presumed based on Amira’s primary violation. (Id. p. 30.)
The Washington State Securities Act makes it unlawful for any person—
in connection with the offer, sale, or purchase of any security—to (1) employ a
device, scheme, or artifice of fraud; (2) make an untrue statement of material
fact or omit to state a material fact necessary to make statements made not
misleading under the circumstances in which they were made; or (3) engage in
an act, practice, or course of business that operates or would operate as a fraud
or deceit on a person. Wash. Rev. Code § 21.20.010. A Washington statutory
claim requires (1) the commission of a fraudulent or deceitful act and (2) the
act’s connection with the offer, sale, or purchase of a security. McClellon v.
Citigroup Glob. Mkts., Inc., Case No. 18–00978, 2018 WL 5808440, at *3 (W.D.
Wash. Nov. 6, 2018). Washington State Securities Act claims differ from Rule
10b–5 claims in that there are no scienter or causation requirements.
Somerset Commc’ns Grp., LLC v. Wall to Wall Advert., Inc., Case No. 13–02084,
2014 WL 1794676, at *8 (W.D. Wash. May 6, 2014). A fact is material if a
reasonable person would attached importance to it in choosing their action in
the relevant transaction and an omission is material if there is a substantial
likelihood that disclosure would have been viewed by the reasonable investor
as significantly altering the total mix of information available. Zunum Aero,
Inc. v. Boeing Co., Case No. 21–00896, 2022 WL 2116678, at *13 (W.D. Wash.
June 13, 2022). Rule 9(b)’s heightened pleading standard applies to
Washington State Securities Act claims. See McClellon, 2018 WL 5808440, at
*3.
Like Judge Shipp, I decline to dismiss plaintiff’s Washington statutory
claims based on a lack of territorial nexus. The case cited by Speck, WM High
Yield Fund v. O’Hanlon, dismissed the Washington State Securities Act claim,
concluding that the nonparty advisor’s receipt of mail in Washington was
insufficient. Case No. 04–03423, 2005 WL 6788446, at *18 (E.D. Pa. May 13,
2005). Plaintiff alleges more here. Plaintiff claims that he purchased Amira
stock in Washington-based accounts and based on misrepresentations
transmitted over the phone and email to Washington in 2017, 2018, 2019, and
2020. (Second Am. Compl. pp. 20, 21.) Plaintiff alleges that Speck informed
his Washington-based broker that he was planning to prepare the March 2020
Form 20–F without mentioning that the September 2019 Form 6–K was due
first. (Id. p. 80 n. 57.)
Without on-point authority with which to dismiss plaintiff’s claim on
territorial grounds, I turn to the merits of plaintiff’s claim, which Judge Shipp
declined to do on reconsideration. Plaintiff’s brief points to allegations
including that he purchased Amira stock in Washington-based accounts in
2017, 2018, 2019, 2020 and information was withheld, and Form 20–Fs were
delayed, regarding Amira India’s insolvency, investigations, and litigation so
that investors would not sell their stock. (Pl.’s Opp’n Mot. p. 27 (citing Second
Am. Compl. pp. 20, 21, 88, 89, 131).) These allegations are sufficient under
Rule 9(b). See Farley v. GameStop Corp., Case No. 12–04734, 2013 WL
4042434, at *3 (D.N.J. Aug. 7, 2013) (“A plaintiff is not required to allege a date,
place, or time to meet Rule 9(b)’s heightened standards. Rule 9(b) requires a
plaintiff to ‘plead with particularity the circumstances of the alleged fraud in
order to place the defendants on notice of the precise misconduct with which
they are charged.’” (quoting Seville Indus. Mach. Corp. v. Southmost Mach.
Corp., 742 F.2d 786, 791 (3d Cir. 1984))) (analyzing a New Jersey Consumer
Fraud Act claim).
I also find that the allegations are sufficient to set out a Washington State
Securities Act claim. For example, in Freeman v. Seneca Ventures, LLC, the
defendant property developer sold plaintiff an interest in a limited liability
company created to purchase, renovate, and operate a hotel. Case No. 80541–
0–I, 2021 WL 423135, at *1 (Wash. Ct. App. Feb. 8, 2021). The venture
defaulted following building-permit and construction-loan issues and the
plaintiff filed suit and prevailed at summary judgment. Id. at *2. None of
the investment materials warned of risks associated with permitting and
financing delays or the risk of default before construction began. Id. at *4.
The Washington Court of Appeals, in affirming, concluded that the defendant
omitted such risks from the total mix of information available to investors. Id.
at *5.
Similar considerations are at play here. Taking plaintiff’s allegations as
true, there is a substantial likelihood that undisclosed issues including Amira
India’s insolvency and internal litigation would have been viewed by the
reasonable investor as significantly altering the total mix of information
available. Zunum Aero, Inc., 2022 WL 2116678, at *13. Speck’s motion to
dismiss Count 5 of the second amended complaint will be denied.
The Washington State Securities Act also imposes joint and several
liability on partners, officers, and directors absent proof that they did not know,
and could not have known in the exercise of reasonable care, the facts on which
liability is premised. Wash. Rev. Code § 21.20.430(3). Such claims require
both a primary violation and the defendant’s exercise of control over the
primary violator. Hunichen v. Atonomi LLC, Case No. 19–00615, 2019 WL
7758597, at *15 (W.D. Wash. Oct. 28, 2019), report and recommendation
adopted, 2020 WL 1929372 (W.D. Wash. Apr. 21, 2020). Washington courts
look to whether the defendant possessed the requisite level of control by looking
to their participation in the operations of the corporation in general and their
power to control the specific activity on which the violation is predicated. See
Hyun Jung Hong v. Yoo, Case No. 77164–7–I, 2019 WL 182525, at *4 (Wash.
Ct. App. Jan. 14, 2019).
The second amended complaint makes allegations including that the chief
financial officers, including Speck, exercised control over Amira’s financial
statements. (Second Am. Compl. pp. 21, 22.) This includes control over their
contents, their accuracy, and whether and how to communicate them. (Id.) I
am satisfied that plaintiff has met his burden at the pleading stage and will
permit Count 6 to proceed.
E. Counts 7 and 8 – New Jersey Uniform
Securities Act
Judge Shipp dismissed plaintiff’s New Jersey Uniform Securities Act
claim based on his earlier finding that plaintiff failed to adequately allege
scienter as part of his federal claims. (Mot. Dismiss Op. pp. 29, 30.) Speck
asserts that plaintiff is incorrect that scienter is not an element of a Uniform
Securities Act claim and his New Jersey claims must fail. (Speck Mot. Br.
pp. 34, 35.)
Plaintiff argues that even if scienter under the Exchange Act and Uniform
Securities Act requires similar proofs at trial, no more than the Rule 9(b)
standard is applicable to the Uniform Securities Act at pleading. (Pl.’s Opp’n
Mot. pp. 30, 31.) Thus a claim may survive dismissal under the Uniform
Securities Act, but not the Exchange Act. (Id.) Plaintiff claims that he has
sufficiently pleaded that Speck induced him to hold his shares and his
knowledge and intent while doing so. (Id. pp. 31, 32.) The second amended
complaint also separates out control-person liability into a separate claim and
plaintiff argues that it is unclear whether the same pleading standards apply
for Exchange Act and Uniform Securities Act claims. (Id. pp. 32, 33.)
Culpable participation need not be pleaded. (Id. p. 33.) Plaintiff states that
he has bolstered his Uniform Securities Act claims and that, while scienter and
a misrepresentation or omission by Speck is not required, he has nonetheless
made such allegations. (Id. p. 34.)
The Uniform Securities Act imposes civil liability on those who offer or sell
a security “by means of any untrue statement of material fact or any omission
to state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they are made, not misleading (the
buyer not knowing of the untruth or omission)….” N.J. Stat. Ann. § 49:3–
71(a)(2). Liability may also be imposed for offering or selling a security by
employing a device, scheme or artifice to defraud or offering or selling a security
by engaging in an act, practice, or course of business that operates or would
operate as a fraud or deceit on a person. Id. §§ 49:3–71(a)(3), (4). To plead a
Uniform Securities Act claim, “a plaintiff must allege: ‘(1) an untrue material
statement or omission; (2) scienter; (3) causation; and (4) injury to a plaintiff.’”
Lord Abbett Mun. Income Fund, Inc. v. Citigroup Glob. Mkts., Inc., Case No.
11–05550, 2012 WL 13034154, at *8 (D.N.J. July 12, 2012) (quoting Derobbio v.
Harvest Cmtys. of Sioux City, Inc., Case No. 01–01120, 2002 WL 31947203 at
*6 (D.N.J. Oct. 30, 2002)). Causation is established through privity and,
unlike a common-law fraud claim, reliance is not an element of the claim. Id.;
see also Greenberg v. Pro Shares Trust, Case No. A–0759–10T3, 2011 WL
2636990, at *9 (N.J. Super Ct. App. Div. July 7, 2011) (“Our Supreme Court has
examined this statutory language and noted that plaintiffs have ‘a significantly
lower burden’ under the [Uniform Securities Act] than for common law fraud.”
(quoting Kaufman v. i-Stat Corp., 754 A.2d 1188, 1197 (N.J. 2000))). Rule
9(b)’s pleading standard applies to Uniform Securities Act claims. See Sync
Labs LLC v. Fusion Mfg., Case No. 11–03671, 2013 WL 4776018, at *6 (D.N.J.
Sept. 4, 2013).
Insofar as Judge Shipp’s earlier dismissal was premised on lack of
scienter, I find that this deficiency has been addressed in the second amended
complaint. (Second Am. Compl. pp. 135–41.) Because Speck relies on that
same argument in his moving brief, I will not dismiss Count 7 on unasserted
grounds.
The Uniform Securities Act also imposes joint and several liability on
every partner, officer, or director of a seller liable under N.J. Stat. Ann. § 49:3–
71(a) unless they sustain their burden of proving that they did not know and
could not have known in the exercise of reasonable care the existence of facts
giving rise to liability. N.J. Stat. Ann. § 49:3–71(d). As I have recognized in
assessing plaintiff’s other control-person claims, the question of whether Amira
is liable is not before me. I will therefore permit plaintiff’s derivative claim to
proceed. See EcoShelf Grp., Inc. v. Horn, Case No. 10–02171, 2010 WL
11570285, at *5 (D.N.J. Sept. 21, 2010) (finding that the complaint stated a N.J.
Stat. Ann. § 49:3–71(d) claim by alleging that the defendant was a shareholder
and manager and, since the company and principal filed an answer instead of a
motion to dismiss, declining to dismiss the derivative claim). In Horn, the
defendant challenged his status as a manager, but the court nonetheless
accepted the plaintiff’s allegations as true and stated that the extent of the
defendant’s involvement could be deciphered in discovery. Id. at *5 n. 2.
Speck makes no such argument here or otherwise explicitly addresses plaintiff’s
control-person claim. His motion will be denied as to Count 8.
F. Counts 9 and 10 – Common-Law Fraud
and Negligent Misrepresentation
Judge Shipp dismissed plaintiff’s common-law fraud and negligent
misrepresentation claims due to his conclusion that plaintiff failed to plead
material misrepresentations or scienter as part of his Section 10(b) and Rule
10b–5 claims. (Mot. Dismiss Op. pp. 30, 31.) Judge Shipp repeated this
conclusion on reconsideration, finding that plaintiff merely disagreed with his
earlier opinion rather than offered new evidence or a contrary controlling
decision. (Mot. Recons. Op. pp. 17, 18.)
Speck argues that plaintiff’s common-law fraud claim continues to fall
short without a material misrepresentation, scienter, or loss. (Speck Mot. Br.
p. 35.) The negligent misrepresentation claim similarly fails as it hinges on
real-time disclosure requirements. (Id. p. 36.) Claims premised on SEC
filings and the 2018 investor presentation fail, according to Speck, because they
are not attributable to him. (Id.) Speck’s alleged statement to plaintiff’s
broker about moving on to the March 2020 Form 20–F was forward-looking and
not actionable. (Id.) Plaintiff represents that he has cured the deficiencies
identified by Judge Shipp. (Pl.’s Opp’n Mot. pp. 35, 36.)
A plaintiff pleading a common-law fraud claim must allege “(1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by
the defendant of its falsity; (3) an intention that the other person rely on it; (4)
reasonable reliance thereon by the other person; and (5) resulting damages.”
Marina Dist. Dev. Co., LLC v. Ivey, 93 F. Supp. 3d 327, 339 (D.N.J. 2015)
(quoting Hoffman v. Hampshire Labs, Inc., 963 A.2d 849, 855 (N.J. Super. Ct.
App. Div. 2009)). A negligent misrepresentation claim requires the plaintiff to
allege an incorrect statement that was negligently made, justifiably relied
upon, and resulted in economic loss due to the reliance. Rapid Models &
Prototypes, Inc. v. Innovated Sols., 71 F. Supp. 3d 492, 505 (D.N.J. 2014).
Plaintiff directs me to a paragraph in the second amended complaint in
which he states that fraud based on an omission need not be pleaded as
precisely as a claim based on an affirmative misrepresentation. (Pl.’s Opp’n
Mot. p. 36; see also Second Am. Compl. p. 177.) This is true. See Albers v.
Mercedes-Benz USA, LLC, Case No. 16–00881, 2020 WL 1466359, at *11 (D.N.J.
Mar. 25, 2020). However, highlighting the latitude he has in pleading does not
address the deficiencies raised by Judge Shipp and repeated by Speck here.
Plaintiff’s fraud and negligent misrepresentation claims are premised on
an alleged duty to timely disclose information that would purportedly be
material in an investor’s decision to buy, sell, or hold securities—including
internal litigation and insolvency. (Second Am. Compl. pp. 178, 180.) A court
within this District recently considered an analogous factual scenario in which
the plaintiffs invested in a start-up company, the defendant became corporate
counsel for the start-up, the start-up and its chief executive officer were named
in a lawsuit, the plaintiffs made an additional investment and the individual
plaintiff accepted a seat on the board, and the start-up, individual plaintiff, and
others were sued by another investor for securities fraud. Gould Ventures,
LLC v. Cooley LLP, Case No. 24–09485, 2025 WL 1482493, at *1–3 (D.N.J. May
23, 2025). The plaintiffs’ fraud and negligent misrepresentation claims were
premised, in part, on a failure to disclose fraud allegations underling the
lawsuit prior to the plaintiffs’ second investment and individual plaintiff’s
acceptance of a board seat. Id. at *11–12. The court dismissed the claims
insofar as they were premised on an omission or duty to disclose the allegations,
finding that no special relationship or duty to disclose existed. Id.
Acknowledging the obvious factual differences between Gould Ventures
LLC and the case at bar—namely the differences in defendants’ roles—I find
its reasoning persuasive. Further, in light of Judge Shipp’s denial of plaintiff’s
fraud and negligent misrepresentation claims based on his Section 10(b) and
Rule 10b–5 analyses, my dismissal of those same claims above, and my
conclusion that the second amended complaint inadequately cures the
deficiencies identified by Judge Shipp, Counts 9 and 10 will be dismissed.
IV. CONCLUSION
For the foregoing reasons, Speck’s motion to dismiss will be GRANTED IN
PART AND DENIED IN PART. Counts 1, 3, 9, and 10 of the second amended
complaint will be dismissed as to Speck.6 An appropriate order accompanies
this opinion.

/s/ Edward S. Kiel
EDWARD S. KIEL
UNITED STATES DISTRICT JUDGE
Dated: September 2, 2025

6 Dismissal of Counts 1, 3, 9, and 10 will be with prejudice. Plaintiff states that
Judge Shipp’s decision following the parties cross-motions for reconsideration provided
him just one opportunity to cure deficiencies. (Pl.’s Opp’n Mot. p. 37.) He asks that
if I dismiss any claims due to other deficiencies, that he be permitted to amend. (Id.)
The dismissal of these counts follows Judge Shipp’s earlier reasoning. Judge Shipp
also granted plaintiff leave to file a second amended complaint which was to “be the
final amendment permitted.” (Mot. Recons. Order p. 2.) I find that the second
amended complaints lingering deficiencies warrant dismissal with prejudice. See
Vicente v. DePuy Synthes Cos., 570 F. Supp. 3d 232, 245 (D.N.J. 2021) (dismissing the
second amended complaint with prejudice and noting that, despite two opportunities
to amend, the amendments did “not suggest that the plaintiff [wa]s progressing in the
direction of an actionable claim”).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11131478. Public record. Not legal advice.