Following the Stoneridge decision on scheme liability, the lower courts continue to explore what conduct is sufficient to induce reliance by investors. In In re Bristol Myers Squib Co. Sec. Litig., 2008 WL 3884384 (S.D.N.Y. Aug. 20, 2008), a corporate officer negotiated a settlement agreement in a patent infringement case, the terms of which were misstated by the company in its disclosures. Even though the corporate officer did not participate in the making of the disclosures, the court considered whether investors relied on his allegedly deceptive conduct in failing to correct the misstatements. In determining that reliance was adequately plead, the court found that the “investors relied on [the corporate officer’s] good faith in negotiating the Apotex settlement agreement and committing the Company to its terms.” In addition, unlike in Stoneridge, the corporate officer’s deceptive conduct was communicated to the public.
Holding: Motion to dismiss denied.