C.A.9 (Or.),2009.
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.18 k. In General. Most Cited Cases
Plaintiff asserting securities fraud claim under Rule 10b–5 must demonstrate: (1) material misrepresentation or omis-
sion of fact, (2) scienter, (3) connection with purchase or sale of security, (4) transaction and loss causation, and (5)
economic loss. Securities Exchange Act of 1934, § 10(b), 15 U.S.C.A. § 78j(b); 17 C.F.R. § 240.10b-5(c).
[3] Securities Regulation 349B 60.51(2)
349Bk60.51(2) k. Scienter. Most Cited Cases
Court reviewing complaint’s scienter allegations under Private Securities Litigation Reform Act (PSLRA) must con-
sider complaint in its entirety, as well as other sources courts ordinarily examine when ruling on motions to dismiss,
in particular, documents incorporated into complaint by reference, and matters of which court may take judicial no-
tice. Private Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4.
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
In ruling on motion to dismiss securities fraud complaint for failure to adequately plead scienter, court must deter–
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51(2) k. Scienter. Most Cited Cases
Complaint alleging that company violated federal securities laws by purposefully manipulating its financial pro-
spects by capitalizing internal software development expenditures that should have been expensed failed to allege
change Act of 1934, § 10(b), 15 U.S.C.A. § 78j(b); Private Securities Litigation Reform Act of 1995, § 101b, 15
U.S.C.A. § 78u-4; 17 C.F.R. § 240.10b-5(c).
[13] Securities Regulation 349B 60.51(2)
349Bk60.51(2) k. Scienter. Most Cited Cases
Where single statement indicative of scienter is contradicted by readily available physical evidence, it is impossible
to conclude that statement creates inference of scienter sufficiently cogent or compelling to prevent dismissal of
securities fraud complaint. Private Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4.
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
Confidential witness’s statement that company’s president told him not to write down obsolete inventory because
that would result in company’s missing market expectations was insufficient, by itself, to establish scienter required
[15] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349Bk60.45(1) k. In General. Most Cited Cases
Reporting false information will only be indicative of scienter in securities fraud case where falsity is patently obvi-
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
1934, § 10(b), 15 U.S.C.A. § 78j(b); Private Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4;
17 C.F.R. § 240.10b-5(c).
[20] Securities Regulation 349B 60.51(2)
349Bk60.51(2) k. Scienter. Most Cited Cases
Where resignation of company officials occurs slightly before or after defendant corporation issues restatement of
earnings, plaintiff asserting securities fraud claim must plead facts refuting reasonable assumption that resignation
occurred as result of restatement‘s issuance itself in order for resignation to be strongly indicative of scienter. Private
Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4.
349BI(C)7 Fraud and Manipulation
349Bk60.43 Grounds of and Defenses to Liability
349Bk60.45 Scienter, Intent, Knowledge, Negligence or Recklessness
349Bk60.45(1) k. In General. Most Cited Cases
Boilerplate Sarbanes-Oxley certifications signed by company’s chief executive officer and chief financial officer
[25] Securities Regulation 349B 60.51(2)
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
Stock sales by company’s chief executive officer and chief financial officer were not strongly indicative of scienter
required to establish securities fraud claims against officers, where there was no allegation that sales, though signifi-
cant, were inconsistent with officers’ usual trading patterns. Securities Exchange Act of 1934, § 10(b), 15 U.S.C.A. §
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
[28] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
349Bk60.51(2) k. Scienter. Most Cited Cases
Stock purchasers’ allegations that company purposefully manipulated its financial prospects by capitalizing internal
software development expenditures that should have been expensed, taken as a whole, were insufficient to raise
strong inference of scienter required to establish securities fraud claims against company and its officers, where pur-
chasers’ allegations were not as cogent or compelling as plausible alternative inference that, although company was
170A Federal Civil Procedure
170AVII Pleadings and Motions
170AVII(E) Amendments
170Ak828 Discretion of Court
170AVII(E) Amendments
170Ak828 Discretion of Court
170Ak830 k. Time for Amendment. Most Cited Cases
Federal Civil Procedure 170A 834
Federal Civil Procedure 170A 851
170A Federal Civil Procedure
170AVII Pleadings and Motions
170AVII(E) Amendments
[30] Federal Civil Procedure 170A 829
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.18 k. In General. Most Cited Cases
Plaintiff asserting securities fraud claim under Rule 10b–5 must demonstrate: (1) material misrepresentation or omis-
sion of fact, (2) scienter, (3) connection with purchase or sale of security, (4) transaction and loss causation, and (5)
economic loss. Securities Exchange Act of 1934, § 10(b), 15 U.S.C.A. § 78j(b); 17 C.F.R. § 240.10b-5(c).
[3] Securities Regulation 349B 60.51(2)
349Bk60.51(2) k. Scienter. Most Cited Cases
Court reviewing complaint’s scienter allegations under Private Securities Litigation Reform Act (PSLRA) must con-
sider complaint in its entirety, as well as other sources courts ordinarily examine when ruling on motions to dismiss,
in particular, documents incorporated into complaint by reference, and matters of which court may take judicial no-
tice. Private Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4.
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
In ruling on motion to dismiss securities fraud complaint for failure to adequately plead scienter, court must deter–
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51(2) k. Scienter. Most Cited Cases
Complaint alleging that company violated federal securities laws by purposefully manipulating its financial pro-
spects by capitalizing internal software development expenditures that should have been expensed failed to allege
change Act of 1934, § 10(b), 15 U.S.C.A. § 78j(b); Private Securities Litigation Reform Act of 1995, § 101b, 15
U.S.C.A. § 78u-4; 17 C.F.R. § 240.10b-5(c).
[13] Securities Regulation 349B 60.51(2)
349Bk60.51(2) k. Scienter. Most Cited Cases
Where single statement indicative of scienter is contradicted by readily available physical evidence, it is impossible
to conclude that statement creates inference of scienter sufficiently cogent or compelling to prevent dismissal of
securities fraud complaint. Private Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4.
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
Confidential witness’s statement that company’s president told him not to write down obsolete inventory because
that would result in company’s missing market expectations was insufficient, by itself, to establish scienter required
[15] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349Bk60.45(1) k. In General. Most Cited Cases
Reporting false information will only be indicative of scienter in securities fraud case where falsity is patently obvi-
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
1934, § 10(b), 15 U.S.C.A. § 78j(b); Private Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4;
17 C.F.R. § 240.10b-5(c).
[20] Securities Regulation 349B 60.51(2)
349Bk60.51(2) k. Scienter. Most Cited Cases
Where resignation of company officials occurs slightly before or after defendant corporation issues restatement of
earnings, plaintiff asserting securities fraud claim must plead facts refuting reasonable assumption that resignation
occurred as result of restatement‘s issuance itself in order for resignation to be strongly indicative of scienter. Private
Securities Litigation Reform Act of 1995, § 101b, 15 U.S.C.A. § 78u-4.
349BI(C)7 Fraud and Manipulation
349Bk60.43 Grounds of and Defenses to Liability
349Bk60.45 Scienter, Intent, Knowledge, Negligence or Recklessness
349Bk60.45(1) k. In General. Most Cited Cases
Boilerplate Sarbanes-Oxley certifications signed by company’s chief executive officer and chief financial officer
[25] Securities Regulation 349B 60.51(2)
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
Stock sales by company’s chief executive officer and chief financial officer were not strongly indicative of scienter
required to establish securities fraud claims against officers, where there was no allegation that sales, though signifi-
cant, were inconsistent with officers’ usual trading patterns. Securities Exchange Act of 1934, § 10(b), 15 U.S.C.A. §
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
[28] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
349Bk60.51(2) k. Scienter. Most Cited Cases
Stock purchasers’ allegations that company purposefully manipulated its financial prospects by capitalizing internal
software development expenditures that should have been expensed, taken as a whole, were insufficient to raise
strong inference of scienter required to establish securities fraud claims against company and its officers, where pur-
chasers’ allegations were not as cogent or compelling as plausible alternative inference that, although company was
170A Federal Civil Procedure
170AVII Pleadings and Motions
170AVII(E) Amendments
170Ak828 Discretion of Court
170AVII(E) Amendments
170Ak828 Discretion of Court
170Ak830 k. Time for Amendment. Most Cited Cases
Federal Civil Procedure 170A 834
Federal Civil Procedure 170A 851
170A Federal Civil Procedure
170AVII Pleadings and Motions
170AVII(E) Amendments
[30] Federal Civil Procedure 170A 829