When "Unfinished Business" Really Means "Lost Business": Ninth Circuit Finds A Claim Stated For Securities Fraud Based On Undisclosed Risks Involving Contract Backlog


In a fact-specific but illuminating application of federal pleading standards for securities fraud claims, the Ninth Circuit recently held that plaintiffs stated a claim for securities fraud by alleging that the defendant company listed certain contracted work as part of its ?backlog? but failed to disclose that the work had actually been halted pursuant to customer ?stop-work orders? that made it unlikely that the stopped work would ever be completed. Whiting v. Applied Signal Technology, Inc., 08 C.D.O.S. 6811 (9th Cir. June 5, 2008).

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