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The Law at Issue

To demonstrate a claim in a securities fraud case under section 10(b)(5) of the Securities Exchange Act of 1934, a plaintiff must  demonstrate (1) deceptive practices (2) in connection with the purchase or sale of securities, (3) materiality, (4) scienter, (5) loss causation, (6) damages, (7) reliance, and (8) standing.

Case Background

In Matrixx Initiatives, Inc. v Siracusano, the Plaintiffs alleged that the Defendants’ committed fraud when they failed to disclose reports that their pharmaceutical product (Zicam) had been linked to the loss of smell. Matrixx, the manufacturer of Zicam had been made aware of a number of reports that patients using their product had suffered from asomnia (the loss of smell). Multiple lawsuits had been filed against Matrixx…

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This NY Times article focuses on Seattle’s economic growth. The 2010 Census data is being released, and while some are focused on the growth of Texas and Florida, this Article focuses on Seattle. In an effort to understand why Seattle is growing while most other cities are shrinking in population, the article traces Seattle’s economy from 1880 to today. Edward Glaeser, the author, hypothesizes that key to Seattle’s growth is having highly educated workers. He also suggests that Seattle helped itself when it allowed taller buildings to be built in the downtown area.

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The economic structure of a limited liability company determines the amount and timing of the distributions of cash and property to the members (remember that in an LLC owners are called “members”). Distributions may occur periodically during the operation of the organization and at the time when the organization either redeems the member’s interest or liquidates.

Washington law provides a default rule that members will receive distributions and allocations of profits and losses in proportion to the amount of capital each member contributed to the company (RCW 25.15.205). (A distribution is something a member actually receives from the LLC. An allocation of profit or loss is a tax and accounting concept that relates to the division of profits and losses for…

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