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State Courts Securities Litigation: Va. County Can Sue Over Bond Offering Advice, Plaintiff’s Breach Claim Against Brother to Go to Jury, & Ruling Affirms that Investment Bank’s Offer to Buy Minority Shares Triggered Company’s First Refusal Rights
Fluvanna County, VA Can Sue Over Bond Offering Advice, Says Supreme Court of Virginia
Virginia’s highest court has reinstated a securities fraud lawsuit filed by Fluvanna County, Virginia Board of Supervisors against Davenport & Co. The county claims that the investment concern gave it faulty bond offering advice about the building of a new high school.
The Board said that it depended on this investment advice when deciding to put out standalone bonds that caused it to incur $18 million in excess payments. It then sued Davenport in circuit court, making numerous contentions, including breach of fiduciary duty, gross negligence, and Virginia securities law violations. That court ‘sustained the demurrer with prejudice’ and would not let the board make amendments to pleadings. It said that the separation of powers doctrine won’t let the court resolve the securities case because then it would have to look into the Board’s motives. The latter then appealed.