Pino v. Cardone Capital, LLC

“A person may be liable as a “seller” under the predecessor version of § 12(a) if the person either: (1) passes title to the securities to the plaintiff; or (2) “engages in solicitation,” i.e., “solicits the purchase [of the securities], motivated at least in part by a desire to serve his own financial interests or those of the securities owner.” Pinter v. Dahl, 486 U.S. 622, 643, 647–48 (1988).

Pino appealed an order granting summary judgment for Cardone Capital, LLC., dismissing all claims of material misstatements in certain real estate investment offering materials in violation of §12(a)(2) of the Securities Act 28 U.S.C. §1291. Cardone Capital failed to communicate the speculative and risky nature of their investments in various social media posts. On appeal, Pino argued the district court erred when it concluded that Cardone Capital did not qualify as statutory sellers under the Act.  “A person may be liable as a “seller” if the person either: (1) passes title to the securities to the plaintiff; or (2) “engages in solicitation,” i.e. “solicits the purchase [of the securities], motivated at least in part by a desire to serve his own financial interests or those of the securities owner.” Pinter v. Dahl, 486 U.S. 622, 643, 647–48 (1988). The Court determined that YouTube and Instagram posts by Cardone Capital qualified as "solicitation" under Pinter. The Court adopted reasoning from Wildes v. BitConnect Int’l PLC, 25 F.4th 1341 (11th Cir. 2022), expanding the definition of “seller” under §12 to include advertising through mass communication. Because these advertisements were solicitations that were intended to persuade potential purchases to invest in the funds during the first stage of a selling transaction, “solicitation” does not need to be directed or targeted to a particular plaintiff. Reversed and Affirmed in Part.