Grant Cardone and Cardone Capital LLC suffered a staggering legal setback in December 21, 2022 when the US 9th Circuit Court of Appeals overturned a lower court by ruling that Cardone’s online solicitations for his private equity funds made both Cardone and his company statutory sellers of of securities. The case is captioned Luis Pino v. Cardone Capital, LLC et. al. No. 21-55564 (9th Cir. 2022).
We reported on this in a previous article.
As a consequence of legal loss in Pino v. Cardone et. al., Grant Cardone filed a petition for a writ of certiorari before the US Supreme Court in April 2023. Scroll down to read the document. Cardone’s petition makes for interesting reading as it reveals Cardone’s incredible fear of what a loss in Pino v. Cardone would cost him financially inasmuch as it would open a floodgate of litigation and class action lawsuits against him personally and his funds.
In this excerpt from his petition, Cardone’s attorneys argue a theory of economic harm to the American economy as if this means anything whatsoever:
In 2022, 205 new securities class actions were filed. Janeen McIntosh et al., Recent Trends in Securities Class Action Litigation: 2022 Full-Year Review, NERA Econ. Consulting 1 (Jan. 24, 2023), . In the same year, companies paid $4 billion to settle securities class actions. The costs of defending these lawsuits, on top of paying these settlements, are enormous. As Justice Gorsuch has observed, “new corporate investments are deterred, the efficiency of the capital markets is reduced, and the competitiveness of the American economy declines.” Neil M. Gorsuch & Paul B. Matey, Settlements in Securities Fraud Class Actions: Improving Investor Protection 32 (Wash. Legal Found., Critical Legal Issues Working Paper No. 128, 2005).
Cardone’s attorneys make the same generalized inapposite argument later in the filing. In Scientology this would be called “creating a dangerous environment” in order to scare people. Based upon the language in the excerpt below, Grant Cardone implies that if he is sued into oblivion the entire US economy will suffer:
This Court has recognized the tremendous power that securities litigation wields over both investors and the national economy. Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 80-81 (2006) (noting that, in the context of securities, the “class action device” can “injure ‘the entire U.S. 34 economy’” (quoting H.R. Conf. Rep. No. 104-369, at 31); see also Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 277 (2014) (Congress enacted the PSLRA “to combat perceived abuses in securities litigation”); Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 739 (1975) (“There has been widespread recognition that litigation under Rule 10b-5 presents a danger of vexatiousness different in degree and in kind from that which accompanies litigation in general.”).
What Cardone ignores is the fact that if Cardone Capital is sued into oblivion then his debt-bloated assets would be sold off and the lenders and investors would be paid off whatever remained.
When Cardone’s petition does focus specifically on what Cardone said in his online solicitations, it attacks the 9th Circuit and attempts to mitigate Cardone’s statements in social media as off the cuff comments:
In addition to opening a split with other circuits, the Ninth Circuit’s decision also contravenes the basic policy rationale underlying the bespeaks caution doctrine. For starters, it elevates off-the-cuff remarks made in social media posts above the extensive disclosures and cautions in formal offering circulars and other documents.
However, investors watched the Cardone videos for years and saw Grant Cardone offer very specific promises on performance and rates of return. Many investors on YouTube called out Grant Cardone. What Cardone said were not off the cuff remarks. The evidence is all there.
SCOTUS may choose to hear Cardone’s case as so many private solicitations are made in social media.
Over against his reckless solicitations on social media, Grant Cardone has long attacked the idea of home ownership and urged people to invest in his apartment funds. Cardone has even urged his viewers to sell their homes and invest everything into Cardone Capital.
Robert Kiyosaki recently criticized Grant Cardone’s chronic attacks on home ownership and said exactly what Cardone is doing and that is to sell you apartment buildings:
Categories: Grant Cardone