A U.S. District Court jury recently returned a defense verdict in favor of Number Nine Visual Technology Corp., a pioneer developer of high-end video graphics accelerators.
The plaintiff, KA Investments LDC, a hedge fund affiliated with Knight Trading Group, Inc., had claimed that Number Nine violated Section 10(b) of the Securities Exchange Act of 1934.
KA Investments alleged that Number Nine had made material misrepresentations concerning Number Nine’s compliance with specific NASDAQ listing requirements in order to induce KA Investments to purchase $3 million in convertible preferred securities from Number Nine.
KA Investments contended that it had relied on Number Nine’s representations in reaching a decision to invest in Number Nine, and that had it known the truth, KA Investments would not have invested. As a result, KA Investments claimed to have suffered millions of dollars in damages.
The defendant argued that KA Investments did not rely on Number Nine’s representations, but instead invested in Number Nine solely to reap benefits from subsequent declines in Number Nine’s share price.
“We are gratified, but not surprised, that the jury saw through KA Investment’s story and instead focused on KA’s true investment strategy,” said Jack F. Sylvia of Boston, lead trial counsel for Number Nine.
“With the recent spate of corporate scandals commanding daily media coverage, it is comforting that our jury system still affords the best mechanism to prevent innocent corporations from being tarred with this same brush,” Sylvia added.
The defense team included Boston attorneys Adam L. Sisitsky and McKenzie E. Webster.