On January 9, 2004, Judge Duffy of the SDNY dismissed Antigenics Inc.'s complaint (Case No. 03 Civ. 0971(RCC)) against U.S. Bancorp Piper Jaffray ("Piper Jaffray"), an unusual case alleging retaliatory withdrawal of research analyst coverage by Piper Jaffray. Antigenics alleged that after it declined to use Piper Jaffray as lead underwriter on its secondary offering (because Piper Jaffray said it could not complete the offering in the desired time frame), Piper Jaffray threatened to, and then did, drop their analyst coverage of Antigenics and stopped making a market in Antigenics stock. The Complaint alleged that Piper Jaffray employees stated on multiple occasions that such a course of action was necessary to "teach their clients a lesson" or to "send a message to other clients."

According to the Complaint, Piper Jaffray subsequently released a public statement stating: "Research Coverage Discontinued. We are discontinuing coverage of Antigenics, Inc. [ ] Our last published rating was Strong Buy." No reason for the discontinuation was stated in the press release.

Antigenics claimed that Piper Jaffray's conduct "caused certain investors--some of whom were contacted by Piper Jaffray directly--to cancel orders making up nearly 25% of the offering; that this cancellation caused a decline in the price of the offering; and that an option which permitted an increase in the number of shares to be offered was not exercised because of the damage done to the market by Piper Jaffray."

Antigenics sued Piper Jaffray for, among other things, violation of Section 10(b) of the Exchange Act, alleging that "the cessation of analyst coverage of Antigenics by Piper Jaffray without disclosing their illicit intentions manipulated the interest in the offering and the market price of the stock." The Court rejected this claim, however. First, the Court found that Piper Jaffray's ""Research Coverage Discontinued..." statement was not a material misstatement, as it was "literally accurate and remains so in both its context and presentation. As such, it is improbable, if not impossible, that this statement would mislead investors."

Second, the Court found that an omission of material information had not been pleaded:

Antigenics has not shown that Piper Jaffray was under an obligation to explain the reasons why they dropped analyst coverage. Although Antigenics argues that the defendants breached "contractual" and "fiduciary" duties, they fail to provide any foundation as to how such duties were established. Without such a duty, Piper Jaffray was in no different a position than any other firm providing analyst coverage. Moreover, even if such a "contractual" or "fiduciary" relationship existed, these allegations would still not constitute a claim under 10b-5. The damage alleged does not arise from "manipulative or deceptive" conduct but rather from some additional duty placed on the defendants. Since the plaintiff has insufficiently pleaded securities fraud under Rule 10b-5, the claim is dismissed. (Citations omitted).