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Under the PSLRA, the district court must select the plaintiff (and attorney) to represent the plaintiff investor class.  At step one notice of the action is posted so class members can move to be named the representative plaintiff.  Groups of class members may join to pool their purchases and make a joint bid to be the representative plaintiffs.  At step… Read More

Buyers of VW's corporate bonds could not rely on the Affiliated Ute presumption of reliance on VW's non-disclosure of its diesel engines' pollution testing defeat devices because their complaint was not based solely or primarily on that omission, but instead also included allegations of multiple affirmative misrepresentations about environmental compliance and financial liabilities in its offering documents.  Thus, the case… Read More

To invoke the fraud-on-the-market presumption of reliance under Basic, Inc. v. Levinson (1988) 108 S.Ct. 978, the plaintiff must  prove: (1) that the alleged misrepresentation was publicly known; (2) that it was material; (3) that the stock traded in an efficient market; and (4) that the plaintiff traded the stock between the time the misrepresentation was made and when the… Read More

Under California's Securities Act (Corp. Code, 25400 and 25500, as under federal securities laws, the plaintiff must allege and prove loss causation--that is, that the alleged misstatement caused the rise or decline in stock price over which the plaintiff sues.  When the suit is brought in federal court, the loss causation element, like the rest of the fraud-based claim, must… Read More

Although Omnicare, Inc. v. Laborers Dist. Council Construction Ind. Pension Fund (2015) 135 S.Ct. 1318 dealt with misrepresentations under section 11 of the Securities Act (15 USC 77k(a)), this decision holds that Omnicare's rules with respect to when opinions can be deemed actionable misrepresentations apply to suits for false proxy statements under sections 14(a) and 20(a) of the Securities Exchange… Read More

Under the PSLRA, to state a 10b-5 securities fraud claim, a plaintiff must plead specific facts that make the inference that the defendant acted with fraudulent intent more persuasive than the opposing inference of innocent mistake.  Although it is possible to allege facts making the requisite strong showing of scienter even if the complaint does not allege facts showing the… Read More

The district court wrongly dismissed this suit under SLUSA because plaintiffs did not allege a claim cognizable under federal securities laws.  They claimed that the defendant broker had switched their accounts from commission-based to fee-based without first performing a suitability analysis to see whether plaintiffs, who were buy-and-hold investors, would benefit from the change in fee structure.  That omission was… Read More

Under the Private Securities Litigation Reform Act, forward looking statements are not actionable if accompanied by meaningful cautionary statements, or if not made with actual knowledge of their falsity.  Here, plaintiffs claimed that Tesla's stated goal of producing 5,000 Model 3 cars per week by the end of 2017 was misleading, and led to a drop in stock price once… Read More

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