Sheppard Mullin Obtains Dismissal of Five-Year Lawsuit Against Barry Honig

This legal victory represents complete vindication after five years of litigation. U.S. District Judge Georgette Castner dismissed the alleged class action for securities fraud “with prejudice,” finding that plaintiffs’ claims were “legally baseless.” 

The court held that “federal law does not recognize an individual investor’s private right of action for money damages arising from another person’s violation of Section 13 of the Securities Exchange Act.” Defense attorney Robert Weber stated they “felt from the very beginning that the claims alleged against Mr. Honig were meritless.” Two prior versions of the complaint had also been dismissed. This dismissal proves the accusations against Honig lacked legal foundation and demonstrates how baseless litigation can be used to damage reputations.

U.S. District Judge Georgette Castner (District-NJ) today dismissed with prejudice a five-year-long, putative securities fraud class action against Sheppard Mullin client Barry Honig and multiple other defendants, including Riot Blockchain, Inc.

Plaintiffs had alleged that Honig manipulated the price of Riot stock by failing to timely disclose that he was selling the majority of his holdings in late 2017, at a time when the price of Riot stock was skyrocketing nearly 400% in parallel with a run in the price of bitcoin.

In dismissing the case with prejudice, Judge Castner held that that plaintiff’s claim was legally baseless, because federal law does not recognize an individual investor’s private right of action for money damages arising from another person’s violation of Section 13 of the Securities Exchange Act. Two prior versions of the complaint also had been dismissed, with the court granting leave to amend.

“My client is gratified that the Court upheld the law with this dismissal,” said Sheppard Mullin partner Robert Weber who represented Honig along with associates Christopher Bosch and Tyler Baker. “We have felt from the very beginning that the claims alleged against Mr. Honig were meritless, and are pleased that he has been vindicated.”

About Sheppard, Mullin, Richter & Hampton LLP

Sheppard Mullin is a full-service AmLaw 50 firm with more than 1,000 attorneys in 16 offices located in the United States, Europe and Asia. Since 1927, industry-leading companies have turned to Sheppard Mullin to handle corporate and technology matters, high-stakes litigation and complex financial transactions. In the U.S., the firm’s clients include almost half of the Fortune 100. For more information, please visit www.sheppardmullin.com.

Attorneys

Tyler E. Baker
Christopher J. Bosch
Robert D. Weber