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SEC v. Das

SEC v. Das

United States District Court for the District of Nebraska

November 4, 2010, Decided; November 4, 2010, Filed

CASE NO. 8:10CV102

Opinion

MEMORANDUM AND ORDER

This matter is before the Court on the Defendants' Motions to Dismiss (Filing Nos. 16, 25). The motions are supported by Briefs (Filing Nos. 17, 26) and Indexes of Evidence (Filing Nos. 18, 27). The Plaintiffs submitted their Brief in Opposition (Filing No. 35) and Index of Evidence (Filing No. 36), and Defendants each submitted Reply Briefs (Filing Nos. 47 and 50), and Indexes of Evidence in support of their respective replies (Filing Nos. 48 and 52). The parties also submitted supplemental materials after this case  [*2] became ripe for decision (Filing Nos. 53, 55, 56, 57) and those have been considered. For the reasons discussed below, the motions will be denied.

FACTUAL AND PROCEDURAL HISTORY

The following facts are based on the allegations in the Complaint (Filing No. 1), which the Court accepts as true for the purposes of the motions to dismiss.

This case was brought by the United States Securities and Exchange Commission ("SEC") against the Defendants, alleging fraud and other misconduct by two former chief financial officers ("CFOs") of infoUSA Inc. (now InfoGroup Inc.) ("Info"). Defendant Rajnish K. Das ("Das") is a New York resident and was Info's CFO from September 2003 until January 2006. Info terminated Das's employment in July 2006. Defendant Stormy L. Dean ("Dean") is a Nebraska resident and served as Info's CFO from January 2000 to September 2003, and from January 2006 until December 2008. As CFOs, Das and Dean were responsible for Info's accounting, financial reporting, and internal controls and policies. The SEC generally claims that, during their respective tenures, the Defendants prepared and reviewed Info's Forms 10-K and proxy statements that contained material understatements and  [*3] failed adequately to disclose the compensation of Vinod Gupta ("Gupta"), Info's former chief executive officer ("CEO") and former chairman of Info's board of directors. The SEC also claims the Defendants failed to disclose related-party transactions involving entities owned or controlled by Gupta.

I. Defendants' Responsibilities at Info

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2010 U.S. Dist. LEXIS 118625 *; Fed. Sec. L. Rep. (CCH) P95,951

SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. RAJNISH K. DAS and STORMY L. DEAN, Defendants.

Subsequent History: Summary judgment denied by, Motion granted by, in part, Motion denied by, in part SEC v. Das, 2011 U.S. Dist. LEXIS 106982 (D. Neb., Sept. 20, 2011)

Motion denied by SEC v. Das, 2011 U.S. Dist. LEXIS 160068 (D. Neb., Oct. 24, 2011)

CORE TERMS

alleges, transactions, perquisites, proxy statement, reimbursement, entities, requests, expenses, Exchange Act, misleading, disclosure, cause of action, jet, factual allegations, related parties, documentation, particularity, related-party, knowingly, omissions, proxy, fail to disclose, securities fraud, solicitation, structured, controls, Leasing, motion to dismiss, Regulation, misconduct