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Mintz Prevails Over SEC in Rare Motion to Dismiss Victory

SAN DIEGO – Mintz won a significant victory for client Kingston Diversified Holdings, LLC when Judge James C. Mahan in the District of Nevada dismissed claims brought by the Securities Exchange Commission (SEC) in SEC v. Live Ventures, Inc., et al., Case No. 2:21-CV-1433 JCM (D. Nevada). 

Led by Member Sean Prosser, Mintz secured a rare motion to dismiss on behalf of the Delaware entity, in the federal court enforcement action filed by the SEC in the District of Nevada. The action was filed against Kingston Diversified, an entity owned by a Colombia-based individual, Live Ventures, a Las Vegas-based public company that our client worked closely with and several others. The SEC alleged various fraud-based claims, including that Kingston sold shares in Live Ventures at a time that it, allegedly, knew the stock price was artificially inflated.  The SEC also alleged that Mintz’s client was the “nominee” of the Live CEO and attempted to impute his scienter to our client.

In August 2022, led by Mr. Prosser, the firm won its motion to dismiss the SEC’s Section 10(b) fraud lawsuit. While the decision was without prejudice, it is a rare victory over the SEC. Moreover, we were the only named defendant to win our Motion to Dismiss in this case.  

Mr. Prosser said: “Federal courts typically defer to the SEC’s allegations at the pleading stage because, unlike private plaintiffs in securities class actions, the SEC is not held to the heightened pleading standard necessary to support the inference of scienter required to plead Section 10(b) fraud claims. The SEC also has the advantage of developing detailed facts during its extensive pre-litigation investigations, which often occur over several years. As a result, it is exceedingly difficult to defeat SEC enforcement actions on the pleadings. But Mintz recently did just that.”

He continued, “We have been seeing more and more situations like this where the SEC has overreached by bringing enforcement actions not warranted by the facts so we are especially gratified by Judge Mahan’s decision.”

Mintz’s powerhouse Securities Litigation team has expertise representing the nation’s leading life sciences, pharmaceuticals, construction, insurance and financial services companies as well as high-profile individuals, directors and officers, senior executives, and CEOs in complex securities claims that require a multi-disciplinary bench of attorneys.