In re BofI Holding Inc. Sec. Lit.
United States Court of Appeals for the Ninth Circuit
977 F.3d 781 (2020)
- Written by David Bloom, JD
Facts
Shareholders (plaintiffs) of BofI Holding Inc. (BofI) (defendant) commenced multiple securities-fraud lawsuits against BofI, accusing BofI’s executives of misrepresenting the company’s business operations. The lawsuits were consolidated into a single class action. The shareholders alleged that BofI’s stock price declined immediately after two corrective disclosures revealed the alleged fraud. The first corrective disclosure relied upon by the shareholders was a whistleblower complaint filed by a former BofI insider who claimed that BofI’s executives falsified reports to a bank regulator and withheld information about BofI’s risky and illegal loans to foreign nationals. The shareholders did not allege that the whistleblower’s accusations of fraud had been confirmed either by BofI’s admission or by a formal finding of fraud by a government agency. The second corrective disclosure relied upon by the shareholders was a blog post that revealed publicly available negative information about BofI’s operations. BofI moved to dismiss the shareholders’ securities-fraud claims. The district court granted the motion to dismiss, concluding that neither of the corrective disclosures relied upon by the shareholders was actionable. The shareholders appealed.
Rule of Law
Issue
Holding and Reasoning (Watford, J.)
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