EP MedSystems, Inc. v. EchoCath, Inc.

EchoCath (defendant) issued a prospectus with general cautionary language warning that its stock was speculative, but its officers separately and repeatedly told EP MedSystems (plaintiff) during investment negotiations that EchoCath was deep in imminent contract negotiations with major corporations to market its women's health products; MedSystems invested $1.4 million based partly on these representations, but fifteen months later no such contracts had materialized. The district court dismissed MedSystems's securities fraud claims, finding the challenged statements immaterial under the bespeaks-caution doctrine given the prospectus's general risk disclosures.