Software Entrepreneur Wins Sanctions for Unsound Stock Claims

Vantage Corp. investors acted unreasonably in bringing two claims against the software company and its founder, making some form of sanction against the shareholders mandatory, the Third Circuit said Wednesday.

A third claim—for securities fraud—did have evidentiary support and was at the heart of the case, so the sanction over the other claims could be as light as an order admonishing the investors’ attorneys, Judge D. Brooks Smith said for the appellate panel. The determination of what sanction to impose will be up to the district court.

The federal procedural rule on abuses in signing pleadings doesn’t by itself require ...