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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Securities Law Exchange BlogSecurities Law Exchange blog offers insight on the latest legal and regulatory developments affecting publicly traded companies. It focuses on a wide variety of topics including regulation and reporting updates, public company advisory topics, IPO readiness and exchange updates including IPO announcements, M&A trends and deal news.

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Chris Lazarini Provides Insight on Case Involving Dismissal of Claims Related to Madoff Ponzi Scheme

Securities Litigation Commentator

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January 19, 2016

Bass, Berry & Sims attorney Chris Lazarini provided insight on the case R.W. Grand Lodge of Free & Accepted Masons of PA vs. Meridian Capital Partners, Inc. in which the plaintiff sued Meridian and others seeking to recover losses suffered in the Madoff Ponzi scheme. The Court upheld the district court's consolidation order and dismissal of all claims. Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.

R.W. Grand Lodge of Free & Accepted Masons of PA vs. Meridian Capital Partners, Inc., No. 15-1064 (2nd Cir., 12/15/15) 

*A district court may consolidate actions when there are common questions of law or fact in the cases pending before the court.
**To state a claim under Section 10(b), plaintiff must specifically identify the fraudulent statements, the speaker, where and when the statements were made and why the statements were fraudulent.
***SLUSA precludes state or common law claims alleging fraud in connection with the purchase or sale of a covered security. 

In multidistrict litigation, Plaintiff sued Meridian and others, seeking to recover losses suffered in Bernard Madoff's Ponzi scheme. The district court dismissed the action, finding that the middlemen defendants were genuinely deceived by Madoff and that Plaintiff failed to state a claim under Section 10(b) of the Securities Exchange Act of 1934. The court also dismissed Plaintiff's state law claims, finding them precluded by the Securities Litigation Uniform Standards Act ("SLUSA").

On appeal, Plaintiff challenged the consolidation order and the dismissal of its claims. The Court finds that the district court did not abuse its discretion in consolidating Plaintiff's claims with those of others, explaining that there are common questions of fact among the cases regarding defendants' investor presentations, letters and quarterly reports.

Conducting a de novo review, the Court affirms the dismissal of the Section 10(b) claims. The Court finds Plaintiff's "red flag" allegations – Defendants recklessly ignored warnings which should have called attention to Madoff's illegal conduct – do not give rise to a strong inference of scienter necessary to state a securities fraud claim. The Court notes that multiple district courts have rejected similar claims based on an alleged failure of due diligence in uncovering Madoff's fraud.

Finally, the Court finds that the district court properly dismissed the state law claims under SLUSA's preclusion provision. The state law claims, the Court explains, allege deception in connection with Plaintiff's decision to invest in one of Madoff's feeder funds and are, therefore, part of a covered class action precluded under SLUSA.


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