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  • Ninth Circuit Affirms Decision Dismissing Securities Class Action Against Medical Device Manufacturer For Failure To Allege An Actionable False Or Misleading Statement
     
    07/12/2022

    On July 7, 2022, a panel of the United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of a putative securities fraud class action against a medical device manufacturer company (the “Company”) and certain of its executives.  Macomb County Employees’ Retirement System et al. v. Align Technology Inc. et al., No. 21-15823 (9th Cir. July 7, 2022).  Plaintiff alleged that defendants violated Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, by misrepresenting the Company’s prospects about its future success in China.  The Court affirmed the district court’s order granting defendants’ motion to dismiss, holding that six of the challenged statements were non-actionable “puffery,” and the remaining six statements did not misrepresent the Company’s growth in China.
  • First Circuit Affirms Dismissal Of Putative Securities Class Action Against Bank For Alleged Failure To Disclose Deteriorating Bond Market Conditions
     
    06/02/2022

    On May 20, 2022, the United States Court of Appeals for the First Circuit affirmed the district court’s dismissal of claims under Section 10(b) of the Securities Exchange Act (the “Exchange Act”) and Rule 10b-5 thereunder against a bank and its affiliates (the “Bank”).  Ponsa-Rabell v. Santander Sec. LLC, et al., No. 20-01857 (1st Cir. May 20, 2022).  Plaintiffs alleged the Bank devised a scheme to defraud investors into purchasing Puerto Rican government bonds by omitting material information about the state of the market and about its own alleged program to rid itself of those securities.  The appeal did not pertain to the district court’s dismissal of claims under Section 17(a) of the 1933 Securities Act or Plaintiffs’ claims brought under Puerto Rican law for which the district court declined to exercise supplemental jurisdiction after dismissing plaintiffs’ securities claims.
    CATEGORIES : Exchange ActOmission
  • Second Circuit Vacates In Part Decision To Dismiss Putative Securities Class Action Against Tobacco And Cannabis Company For Alleged Failure To Disclose SEC Investigation
     
    06/02/2022

    On May 24, 2022, the United States Court of Appeals for the Second Circuit affirmed and vacated in part the district court’s dismissal of claims under Sections 10(b) and 20(a) of the Securities Exchange Act (the “Exchange Act”) and Rule 10b-5 thereunder against a company that genetically engineers tobacco and cannabis products (the “Company”) and two of its former officers.  Noto, et al. v. 22nd Century Group Inc. et al., No. 21-347 (2d Cir. May 24, 2022).  Plaintiffs alleged the Company engaged in an illegal stock promotion scheme by paying authors to write promotional articles about the Company without revealing that the Company paid for the articles, and further failed to disclose an SEC investigation into the Company’s alleged financial control weaknesses.  The Court affirmed the district court’s order granting defendant’s motion to dismiss in part, holding that plaintiffs did not adequately plead a claim that the Company violated the Exchange Act by failing to disclose that it paid for the articles, but vacated the district court’s dismissal of claims related to the SEC investigation and remanded for further proceedings.
    CATEGORIES : Exchange ActOmission
  • Southern District Of New York Dismisses With Prejudice Securities Act Claims For Failure To Allege Actionable Misstatement Or Omission
     
    05/04/2022

    On April 25, 2022, U.S. District Judge Jesse M. Furman dismissed a putative securities class action alleging that a fintech company (the “Company”) misrepresented its internal control weaknesses and financial results in its prospectus and registration statement (collectively, the “Offering Materials”) in connection with its 2018 initial public offering (the “IPO”) of ADSs in violation of Sections 11 and 15 of the Securities Act of 1933.  Yaroni v. Pintec Technology Holdings Limited et al., No. 20-cv-08062 (S.D.N.Y. Apr. 25, 2022).  The Court held that the complaint failed to allege that defendants made misstatements and also that the claims based on certain statements were time-barred.  The Court dismissed the action with prejudice because “the problems with [p]laintiffs’ claims are substantive.”
  • District Of Nevada Pares Down Class Action Against Resort And Casino Operator For Failure To Allege Falsity
     
    08/10/2021

    On July 28, 2021, Judge Andrew P. Gordon of the United States District Court for the District of Nevada granted in part and denied in part a motion to dismiss a putative securities class action against a resort and casino operator (the “Company”) and its current and former officers alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), Rule 10b-5, and Section 20(a) of the Exchange Act.  Ferris v. Wynn Resorts Ltd., No. 18-CV-00479 (D. Nev. July 28, 2021).  Plaintiffs alleged that the Company made material misstatements and omissions concerning allegations that its CEO engaged in sexual misconduct.  The Court denied the Company’s motion to dismiss plaintiffs’ claims relating to alleged misstatements made directly in response to a newspaper article and lawsuit concerning the CEO’s alleged misconduct, but granted the motion to dismiss with respect to the alleged misstatements that concerned the Company’s code of conduct, compliance with laws and regulations, and corporate culture.
    CATEGORIES : Exchange ActFalsityOmission
  • New York Appellate Court Reverses Denial Of Motion To Dismiss Securities Act Claim And Dismisses Complaint Against Chinese E-Commerce Company Alleging Material Omissions
     
    12/08/2020

    On December 3, 2020, the Appellate Division of the New York Supreme Court, First Judicial Department, reversed an order that denied defendants’ motion to dismiss a securities action complaint against a Chinese e-commerce marketing company (the “Company”) under Section 11 of the Securities Act of 1933, and directed that a judgment be entered dismissing the complaint.  Lyu v. Ruhnn Holdings Ltd., No. 12553, 2020 WL 7062118 (1st Dep’t Dec. 3, 2020).  This is the first substantive Securities Act ruling from a New York appeals court since the United States Supreme Court’s decision in Cyan Inc. v. Beaver County Employees Retirement Fund, 138 S. Ct. 1061 (2018), which held that state courts have jurisdiction to adjudicate class actions brought under the Securities Act and that such actions generally cannot be removed from state to federal court.
     
    CATEGORIES : OmissionSecurities Act