Case Explained: Todd Targgart Plaintiff— v. Next Bridge Hydrocarbons, Incorporated; George Palikaras; Robert L. Cook; Clifton Dubose, Jr.; Joseph DeWoody; Lucas T. Hawkins; Delvina Oelkers; Mia Pitts; Kristin Whitley; Gregory McCabe; John Brda Defendants—

Court: United States Court of Appeals for the Fifth Circuit Filed: 2026-06-26 The Fifth Circuit reversed the district court’s dismissal of a securities-fraud suit brought by shareholders of Next Bridge Hydrocarbons, Incorporated, holding that the plaintiffs satisfied the statutory “purchase for value” requirement under Sections 11, 12, and 15 of the Securities Act of 1933. The court determined that the district court erred in concluding that receiving Next Bridge shares via a spinoff constituted a mere distribution rather than a purchase. Applying the standard of review de novo for Rule 12(b)(6) motions and accepting the complaint’s facts as true, the court found that plaintiffs were dispossessed of their Meta Materials Preferred Stock when they received the Next Bridge common stock. Citing *7547 Corp. v. Parker & Parsley Dev. Partners, L.P.*, the court ruled that this stock-for-stock exchange constituted a purchase for value because plaintiffs surrendered one security to acquire another. The court further rejected the defendants’ argument that the “fundamental-change doctrine” barred the claims, noting that precedent limits that doctrine to claims under the Securities Exchange Act of 1934 and does not apply to the Securities Act of 1933. Additionally, the court held that allegations regarding individual defendant John Brda were sufficient to plausibly state a claim for liability as a statutory seller under Section 12. Because controlling person liability under Section 15 is derivative of Sections 11 and 12, the Section 15 claim was also reinstated. The case is remanded to the district court to address alternative grounds for dismissal that were not previously considered by the lower court. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.