On November 26, 2008, the US Court of Appeals for the Ninth Circuit affirmed the dismissal of a securities fraud lawsuit brought by Glazer Capital Management against InVision Technologies, Inc. and two of its executive officers. In Re InVision Technologies, Inc. Securities Litigation, U.S.D.C., N.D. Cal., C-04-3181. Please go the following url [http://www.fenwick.com/docstore/court/2008-11- 26_Decision_on_Appeal.pdf] to read the Ninth Circuit’s opinion.
A team from Fenwick & West LLP led by Susan Muck represented InVision in the Northern District of California and the United States Court of Appeals for the Ninth Circuit. The decision is significant in several respects.
First, the decision rejects application of the collective scienter theory on the facts alleged.
Second, the decision makes it more difficult for plaintiffs to base securities fraud claims on regulatory proceedings or settlements absent factual allegations demonstrating a strong inference of scienter by the named defendants.
Third, the decision rejects an officer’s SOX certification as evidence of scienter absent facts showing the officer was severely reckless.
Finally, the decision rejects “personal profit” as a basis for pleading scienter of an officer for merger-related representations.
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