Ninth Circuit Revives Lawsuit Against Grant Cardone Over Misleading Fund Claims
A federal appeals court has delivered a significant blow to real estate mogul and social media influencer Grant Cardone by reviving a lawsuit alleging he misled investors about his real estate funds. The Ninth Circuit Court of Appeals ruled on June 10, 2025, that claims against Cardone and his firm, Cardone Capital, may proceed under the Securities Act.
Background
The case originated with a lawsuit filed in September 2020 by Christine Pino, who inherited the complaint from her late father. He alleged that Cardone promoted Cardone Equity Fund V and VI to unaccredited investors by promising inflated returns of around 15% annual internal rate of return (IRR), downplaying fund liabilities, and hiding an SEC warning letter instructing him to remove those projections.
The district court initially dismissed the case on two grounds:
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Cardone and Cardone Capital were not “sellers” under Section 12(a)(2) of the Securities Act.
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Pino’s amended complaint improperly disclaimed fraud, and she failed to allege sufficient subjective disbelief or material omission.
Ninth Circuit Decision
A three-judge panel reversed those rulings, finding:
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Seller liability includes mass social media promotions: The court ruled that Cardone’s Instagram and YouTube posts offering investment opportunities qualify as public solicitations under Section 12(a)(2), making him a statutory “seller.”
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Complaint may proceed despite disclaiming fraud: Aligned with Omnicare, the court held that Pino adequately alleged Cardone subjectively disbelieved his profit projections — such as failing to remove them after receiving the SEC caution.
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Omission of SEC letter actionable: Cardone’s silence on the SEC’s demand to retract IRR promises is potentially material, even if the letter was publicly available — actual knowledge rather than constructive knowledge is required to defeat a Section 12(a)(2) cause of action.
Because these claims survived, the Ninth Circuit reinstated both the Section 12(a)(2) and Section 15 (control-person) claims and remanded the case to district court for further proceedings.
Industry Impact
The decision marks a pivotal shift in how securities law treats social media promotions, potentially broadening liability for “finfluencers” who tout investment returns without adequate disclosures.
As InvestmentNews noted, Cardone’s bold IRR statements — like “you’re gonna walk away with a 15% annualized return” — are now squarely vulnerable to investor claims.
What Comes Next
The case returns to the Central District of California, where Pino will likely file another amended complaint. Discovery phases — including deposition of Cardone and examination of fund materials — will determine whether the claims prove material misrepresentations or omissions. Cardone’s defense will likely reassert belief in the IRR numbers and attempt to argue no investor actually relied on the social media posts.
At this stage, no settlement or trial has been scheduled. The ruling itself, however, sends a clear message: even widely shared social media promotions can trigger serious legal liability under the Securities Act.
