Two On Falsity

Two circuit court opinions were issued last week affirming dismissals based on the plaintiffs’ failure to adequately plead that any false or misleading statements were made.

In the 8th Circuit case, In re Amdocs Ltd. Sec. Litig., 2004 WL 2735530 (8th Cir. Dec. 2, 2004), the court held that the “bespeaks caution” doctrine rendered Amdocs’ statements about its customer demand immaterial as a matter of law because the statements were accompanied by warnings of market erosion.

In the 4th Circuit case, Nolte v. Capital One Financial Corp., 2004 WL 2749867 (4th Cir. Dec. 2, 2004), the court held that the plaintiffs had failed to adequately allege that Capital One’s management did not believe its stated opinions about the sufficiency of the company’s reserves and computer infrastructure. Moreover, the plaintiffs could not rely on a memorandum of understanding with federal regulators that required Capital One to make prospective changes to its business to establish that the company’s past practices were deficient.

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