The U.S. Court of Appeals for the Eleventh Circuit affirmed the dismissal of a consolidated securities fraud action, holding that the complaint's scienter allegations did not meet the required heightened pleading standards.

Plaintiffs were shareholders in Technical Olympic USA, Inc. (TOUSA), and defendants were TOUSA executive officers. TOUSA entered into a significant joint venture acquisition funded in large part by a $675 million loan. TOUSA provided certain guarantees to the lenders. After the acquisition, TOUSA described the loan as "non-recourse" to TOUSA in Securities and Exchange Commission filings, press releases and analyst conference calls, and did not disclose the guarantees until March of 2006, after it had finalized the loan in August 2005. In November of 2006, TOUSA disclosed demand letters by the lenders under the guarantees. TOUSA's share price plummeted and it subsequently went bankrupt. Litigation followed.