You hear a lot about false statements in PSLRA cases, right? So much that sometimes it starts to seem like everyone forgets that hiding the truth can be securities fraud too -- otherwise known as a material omission. Well, Plaintiffs in the Hilb Rogal securities class action didn’t forget, but of course a lot of good it did them.
Judge Gerald Bruce Lee (E.D. Va.), in very similar logic to yesterday’s Nugget, said that “where information about a company was made available in an analyst report, or by newspaper articles, any withholding of information by the company is immaterial and cured any omissions by the company.” He then methodically proceeds through each alleged omission, cutting them down like helpless blades of Poa under a liquid-cooled Grasshopper. Of course, he did find that “Defendants did make a misrepresentation of a material fact,” but don’t break out that bubbly just yet. You see, “the Court finds that Plaintiff fails to plead that the Individual Defendants had a motive to defraud investors based on their desire to obtain increased executive compensation and their desire to expand the business by corporate acquisitions.”
Result? Well, “the Court dismisses Plaintiff's First Amended Complaint with prejudice because Plaintiff has already had two full opportunities to state a claim and failed to do so.”
You can read Iron Workers v. Hilb Rogal, issued April 24, 2006, at 2006 U.S. Dist. LEXIS 29460.
Nugget: “Federal securities laws do not require a company to accuse itself of wrongdoing.”