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Case Updates

On September 6, 2024, U.S. District Judge Denise Cote denied in part defendants’ motion to dismiss the case. 
 
The Amended Complaint, filed on March 29, 2024, alleges that the Defendants violated the securities laws by failing to disclose that National Instruments had received an offer to purchase the company from Emerson Electric Co. at a price that was materially in excess of the then-current market prices of National Instruments’ common stock. After receiving the offer, National Instruments continued to engage in a stock buyback program that it had begun earlier that year. Because of the omission of the offer, shareholders assert that they sold their common stock at artificially depressed prices, including
selling stock back to National Instruments.
 
The Amended Complaint alleges that the Defendants violated the federal securities laws in two ways. First, the Amended Complaint alleges that the Defendants violated Section 10(b) and Rule 10b-5(b) by disclosing National Instrument’s stock repurchases in its quarterly Form 10-Q filings and the investor conference calls that accompanied the filing of those quarterly reports without also disclosing that Emerson had offered to purchase the Corporation. Second, the Amended Complaint alleges that National Instruments violated Section 10(b) and Rule 1b-5 by proceeding with the stock repurchase plan without disclosing Emerson’s offers.
 
In particular, in denying the motion to dismiss in part, Judge Cote found that the Amended Complaint properly alleged that National Instruments committed securities fraud by failing to either abstain from trading in National Instrument’s securities while in possession of material non-public information or to disclose Emerson’s offers while buying back National Instruments’ securities.  The Opinion stated that the stockholders sufficiently pled that the undisclosed information, Emerson’s offer to purchase of all of NI’s stock, was material. The Court also found that scienter was adequately pled because National Instruments repurchased stock with knowledge of Emerson’s offer and that Emerson might return with an improved offer, and also because National Instruments continued to speak optimistically about its future so that any renewed offer would be at a higher price.  The Court also denied the motion to dismiss the control person liability claims against defendants Eric Starkloff and Michael McGrath, who were members of the Board and directly communicated with Emerson regarding the offers.
 

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