Ostrager Chong Flaherty & Broitman P.C.


Court Finds in Our Favor in Roth vs. Armistice

Roth v. Armistice Cap., LLC, 20 Civ. 8872 (AT), 2022 U.S. Dist. LEXIS 57480 (S.D.N.Y. Mar. 29, 2022).

Plaintiff filed this derivative action on behalf of Vaxart, Inc. under Section 16(b) of the Securities Exchange Act of 1934 for disgorgement of $87 million in short-swing profits realized by corporate insiders in trading in the Company’s equity securities. In an Order dated March 29, 2022, the District Court denied Defendants’ motion to dismiss.

Before the Court was the question of whether Plaintiff plausibly alleged that June 8, 2020 “Amendments†to Common Stock Purchase Warrants held by Defendants were “sufficiently material to be considered a new purchaseâ€. The Court recognized that an increase in the blocker provisions provided by the Amendments gave Defendants a “greater opportunity to abuse inside information.â€

The Court observed that “[a]n opportunity to exercise the warrants more expeditiously could provide an insider with ‘latitude to use inside information to . . . realize a greater return.’ See Analytical Surveys, 684 F.3d at 48.†(ECF #52, at p. 7; 2022 U.S. Dist. LEXIS 57480, at *9). The Court concluded “Plaintiff has plausibly alleged that the amendments are tantamount to the purchase of new securities.†Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 47-48 (2d Cir. 2012), cert. denied, 569 U.S. 918 (2013).