Say goodbye to the Lexar Media class action, at least for now. Judge Samuel Conti (N.D. Cal.) summed it all up with the following colloquy: "Neither party disputes that Lexar and its executives made optimistic statements about the company's performance that were soon followed by a business slowdown and a dramatic decrease in the stock price. However, there is nothing unusual or necessarily unlawful about such a fact pattern. Businessmen are by nature optimistic, and sudden stock price movements are often a sign that the market is digesting new information about a company. Financial markets could hardly function if every significant decline in a company's stock created liability on the part of formerly optimistic executives. Rather, this fact pattern is only unlawful if the optimistic statements are part of a fraudulent plan. Plaintiffs here have put forth virtually no evidence to suggest that there was such a fraudulent plan carried out by Lexar's executives. Plaintiffs merely point to an anonymous source who sheds little light on Plaintiffs' allegations and some far from unusual stock trades by senior management. Such allegations come nowhere close to meeting the heightened pleading requirements of the PSLRA."
You can read In re Lexar Media, issued July 5, 2005, at 2005 U.S. Dist. LEXIS 21467.
Nugget: "Almost every day, some company somewhere announces a change in its business forecast that results in a steep fall in the share price. Not every such event gives rise to legal liability."