BOSTON, April 30 (2012) – A team of litigators lead by Hinckley, Allen & Snyder Boston office partner, Kevin O’Connor, has successfully moved for summary judgment dismissing a securities misrepresentation case brought by John F. “Jack” Welch, Jr., the former chairman and CEO of General Electric. Hinckley Allen’s clients in this case included Daniel J. Barach, a hedge fund run by Mr. Barach called MLT Capital LP, and the general partner and investment advisor to the hedge fund.
Welch sued Barach and the MLT entities in Massachusetts Superior Court in 2009 for allegedly making “absolutely false” and “highly misleading” written and oral representations, and purposely withholding material information, in connection with Welch’s decision to invest $7 million in the hedge fund. Welch sought approximately $7 million in alleged actual damages, plus an additional $14 million in punitive damages and attorneys’ fees.
O’Connor successfully argued to Superior Court Judge Christine M. Roach that Barach never made a false statement in any of his communications with Welch, and that the information supposedly withheld was immaterial because it had nothing to do with the hedge fund or Barach’s performance as a fiduciary or an investor. O’Connor primarily relied on testimony obtained from Welch himself, and case law under the Uniform Securities Act, M.G.L. c. 110A, § 410(a)(2).
As O’Connor explained, “Under the Uniform Securities Act, an investor can unwind an investment if the seller of the securities made a materially false or misleading statement in connection with the sale, even if the investor didn’t rely on the statement. However, the court must objectively evaluate the statement, and any information that the plaintiff claims was improperly withheld, through the eyes of a reasonable investor to determine if either would significantly alter the total mix of information about the investment. In this case, the court determined that our clients did not make any false statements to Mr. Welch, and that the allegedly withheld information would be immaterial to a reasonable investor.”
O’Connor added, “I’m proud of Mr. Barach for defending himself and all of the other MLT investors vigorously against a very aggressive claim, and happy for him that his good name is on its way to being cleared.”
Welch has filed a notice that he intends to appeal the dismissal of his case.
The case is entitled Welch v. Barach et. al, Mass. Superior Court Civil Action No: 09-01811-BLS2.
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