Burzotta et al v. Manulife Financial Corporation et al
Filing
46
OPINION AND ORDER: Having been given the opportunity to amend their pleadings,Plaintiffs have failed to plead materiality, scienter, or loss causation. If Plaintiffs have thus failed to state a claim for securities fraud. Defendants' motion to dismiss the SAC is therefore granted with prejudice. SO ORDERED. (Signed by Judge John F. Keenan on 9/19/2012) (ama)
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: Sept. 19, 2012
UNITED STATES DISTRICT COURT
UNITED STATES OF NEW COURT
SOUTHERN DISTRICT DISTRICTYORK
SOUTHERN DISTRICT OF NEW YORK
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IN RE: MANULIFE FINANCIAL CORPORATION : No. 09 Civ. 6185 (JFK)
In re FANNIE MAE 2008
: :
08 Civ. 7831 (PAC)
SECURITIES LITIGATION SECURITIES
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OPINION AND ORDER
LITIGATION
:
09 MD 2013 (PAC)
This document relates to all actions. : :
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:
OPINION & ORDER
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APPEARANCES
For Lead Plaintiffs:
ROBBINS GELLER RUDMAN & States District
HONORABLE PAUL A. CROTTY, UnitedDOWD LLP Judge:
By: Samuel H. Rudman
David A. Rosenfeld
Erin W. BoardmanBACKGROUND1
For Defendants: of this decade saw a boom in home financing which was fueled, among
The early years
DEBEVOISE & PLIMPTON LLP
By:
other things, byEdwin G. rates and lax credit conditions. New lending instruments, such as
low interest Schallert
Gary W. Kubek
Stuart credit risk loans) and Alt-A mortgages (low-documentation loans)
subprime mortgages (highC. Naifeh
Peter J. Kim
Scott N. Auby
kept the boom going. Borrowers played a role too; they took on unmanageable risks on the
assumption that the market would continue to rise and that refinancing options would always be
John F. Keenan, United States District Judge:
available in the future. Lending discipline was lacking in the system. Mortgage originators did
On May 23, 2011, this Court dismissed the First Amended
not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the
Complaint filed by lead plaintiffs Locals 302 and 612 of the
originators sold their loans into the secondary mortgage market, often as securitized packages
International Union of Operating Engineers–Employers
known as mortgage-backed securities (“MBSs”). MBS markets grew almost exponentially.
Construction Industry Retirement Trust, Western Washington
But then the housing bubble burst. In 2006, the demand for housing dropped abruptly
Laborers–Employers Pension Trust, and California Ironworkers
and home prices began to fall. In light of the changing housing market, banks modified their
Field Pension Trust (“Plaintiffs”), but granted Plaintiffs leave
lending practices and became unwilling to refinance home mortgages without refinancing.
to replead. Three months later, Plaintiffs filed their Second
Amended Complaint and thereafter, defendants Manulife Financial
1
Unless otherwise indicated, all references cited as “(¶ _)” or to the “Complaint” are to the Amended Complaint,
Corporation22, 2009. For purposes of this Motion, allD’Alessandro (“D’Alessandro), true.
dated June (“Manulife”), Dominic allegations in the Amended Complaint are taken as
and Peter Rubenovitch (“Rubenovitch”) (together, “Defendants”)
1
moved to dismiss it pursuant to Rule 12 of the Federal Rules of
Civil Procedure.
Currently before the Court is Defendants’ motion to dismiss
the Second Amended Complaint (“SAC”).
For the reasons explained
below, the SAC fails to correct the deficiencies identified in
the Court’s Opinion and Order dated May 23, 2011 (“first
Opinion”).
Accordingly, Defendants’ motion to dismiss is
granted with prejudice.
I.
Background
The Court presumes familiarity with the allegations made in
Plaintiffs’ First Amended Class Action Complaint (the “FAC”) and
the procedural history of this litigation prior to the entry of
its first Opinion. See In re Manulife Financial Corp. Secs.
Litig., 276 F.R.D. 87 (S.D.N.Y. 2011) (hereinafter “Op.”).
Briefly stated, this putative securities fraud class action suit
concerns whether Manulife, D’Alessandro, former Manulife Chief
Executive Officer, and Rubenovitch, former Manulife Senior
Executive Vice President and Chief Financial Officer, defrauded
a class of investors who acquired Manulife common stock between
March 28, 2008 and March 2, 2009, inclusive (the “class
period”).
The fraud allegations relate to Manulife’s public
statements about the financial impact of Manulife's segregated
fund and variable annuity products on the value of Manulife
common stock.
These two investment products (the “Guaranteed
– 2 –
Products”) are profitable for Manulife so long as the long-term
value of the funds exceeds the guaranteed payment obligations,
but may incur losses when the value of the funds are
insufficient to cover the guarantees.
A.
The Court’s Dismissal of the FAC
The Court dismissed the FAC on the grounds that Plaintiff
failed to adequately plead materiality, scienter, and loss
causation.
Specifically, the Court found that the misstatements
alleged in the FAC were not actionable because they allege only
“fraud-by-hindsight.” Op. at 31 (citing Jackson Nat'l Life Ins.
Co. v. Merrill Lynch & Co., Inc., 32 F.3d 697, 703 (2d Cir.
1994), In re Citigroup Inc. Secs. Litig., 753 F. Supp. 2d 206,
246 (S.D.N.Y. 2010) (claim failed where plaintiffs relied on
subsequent writedowns to argue that prior disclosures were
misleading)).
Moreover, the Court found that other statements
were not false or misleading, and others were taken out of
context. Op. at 33-35.
The Court also held that “Plaintiffs’
allegations do not give rise to a strong inference of scienter
unless all competing inferences are ignored.” Op. at 38.
Finally, the Court dismissed the FAC because the Plaintiffs
“failed to allege facts sufficient to attribute the Class
members’ economic loss to the disclosure of an alleged
fraudulent scheme.” Id. at 46.
– 3 –
In the Plaintiffs’ papers opposing Defendants’ motion to
dismiss the FAC, Plaintiffs attempted to support their
allegations by requesting that the Court take judicial notice of
an article entitled “Inside the Fortress:
Drama Behind
Manulife's Doors,” which appeared in the Canadian newspaper
Financial Post on January 30, 2010.
While the Court adhered to
precedent and declined to consider facts not alleged in the
Complaint, the court noted in a footnote that “the result of
this motion would be no different if the Court did consider the
allegations in this motion.” Id. at 24.
B.
The Allegations of the SAC
Now, in their second attempt to plead its case before the
Court, Plaintiffs have revamped their Complaint.
The SAC is ten
paragraphs and three pages longer than the FAC and covers the
same time period.
Many of the allegations in Plaintiffs’ SAC
are identical to or substantially the same as the allegations in
the FAC. See, e.g., SAC ¶¶ 1–3, 5–8, 11–12, 13-32.
The Court
notes that Paragraphs 163–169, which comprise Counts I and II of
the SAC, are unaltered from the original, and the “Prayer for
Relief” is identical to that found in the FAC, except that
Plaintiffs withdraw their petition for “rescission or a
rescissory measure of damages.” Id. ¶ D.
The Court will focus
only on Plaintiffs’ pertinent new allegations.
These
allegations fall generally into three categories: (1)
– 4 –
information set forth in an article published by the Financial
Post on January 30, 2010; (2) statements made by Manulife and
its representatives; and (3) the downgrade by Fitch Ratings.
1.
Financial Post Article
Paragraphs 42-43 of the SAC allege that the Financial Post
article reported that Manulife was warned about “growing equity
risk” arising from Manulife’s Guaranteed Products, by its Chief
Risk Officer and “internal company documents.” Id. ¶ 42.
As a
result, Paragraph 43 alleges, D’Alessandro was encouraged to
increase hedging of its equity market exposure.
The article
also published statements from Manulife investors about “a real
credibility issue” with past management and the board. Id. ¶¶
50-51, 134.
Next, the SAC provides additional detail to the FAC’s
allegations about an investigation by Canada’s Office of the
Superintendent of Financial Institutions (the “OSFI”), which
began in September 2008 and was reported in the Financial Post
article. Id. ¶¶ 44-50.
The OSFI is alleged to have raised
questions about the adequacy of Manulife’s risk controls and
exposure to equity markets, and to have “insisted” that Manulife
“shore up its capital provisions” at unspecified times in
October 2008. Id. ¶¶ 45, 46, 78, 82, 85, 137.
The SAC also cites the Financial Post for the proposition
that the OSFI issued a “supervisory letter” expressing concerns
– 5 –
about Manulife’s capital adequacy and recommended that Manulife
retain the accounting firm Deloitte & Touche to review its riskmanagement processes. Id. ¶¶ 47-49.
2.
Statements by Manulife and its Representatives
Paragraph 9 of the SAC adds an allegation that during the
class period, Manulife publicly represented that its capital
reserves were adequate, that it could “withstand a stock market
downturn,” and that it would not need to issue equity while at
the same time, the OSFI expressed concerns about Manulife’s
capital reserves and was privately insisting that Manulife
engage “in a series of transactions to raise capital.”
In paragraph 10, Plaintiffs add the allegation that
Manulife announced a $2 billion equity offering to bolster its
capital reserves on December 2, 2008, and that it would increase
its capital reserves to $5 billion by the end of 2008, thus
incurring a $1.5 billion loss in the fourth quarter of 2008.
Similarly, paragraphs 57 and 58 allege that Manulife’s 2007
Annual Report contained false and misleading statements as to
its stress tests of regulatory capital.
Plaintiffs allege that
Manulife did not disclose the results of its stress tests under
the scenario of a 10% or greater market decline, “despite the
known and substantial risks posed by potential stock market
declines.” Id. ¶ 58.
– 6 –
Next, Plaintiffs have added an allegation relating to
D’Alessandro’s May 2008 public statement that Manulife could
“expect to do well no matter what and how turbulent the
financial markets may get.”
Plaintiffs state that this was
false and misleading because Defendants “knew or recklessly
disregarded [that] Manulife’s balance sheet could not absorb the
growing equity risk posed by its variable annuity and segregated
fund products.” Id. ¶ 67.
In Paragraph 91, Plaintiffs point to a press release issued
on November 6, where D’Alessandro describes Manulife’s capital
position as “comfortable.”
According to Plaintiffs, he was
deliberately attempting to mislead the public by concealing and
downplaying the “significant risk that a continuing equity
market downturn would require Manulife to shore up the capital
reserves backing its guaranteed payments to variable annuity and
segregated fund policyholders,” given that the OSFI was
conducting a series of “activity reviews” of Manulife’s capital
adequacy and insisting that it raise capital.
The alterations in paragraphs 114-118 and 157 of the SAC
relate to a presentation made by Rubenovitch March 2, 2009.
Plaintiffs claim that this presentation “disclosed additional
details about the damage that Manulife’s equity market exposure
had inflicted” on Manulife’s balance sheet. Id. ¶ 114.
Specifically, Rubenovitch informed those who attended the
– 7 –
presentation that “Manulife’s variable annuity and segregated
fund products had reduced 2008 earnings by over 3.7 billion,”
and that the total value of Manulife’s Guaranteed Product
obligations exceeded the value of the associated funds by $27
billion even though the expected profit from these Guaranteed
Products was only $135 billion. Id. ¶ 115.
3.
Fitch Ratings Downgrade
In paragraphs 112, 113 and 156 of the SAC, Plaintiffs
provide additional detail to the FAC’s allegations relating to
Fitch Ratings downgrade of Manulife’s credit ratings on February
27, 2009.
Plaintiffs claim that the Fitch Ratings downgrade
“enhanced the market’s understanding of Manulife’s equity market
exposure,” thus causing a decline in the price of Manulife’s
stock.
Id. ¶ 112.
II. Discussion
A.
1.
Legal Standard
Motion to Dismiss
As it did in reviewing Defendants’ motion to dismiss the
FAC, the Court treats all factual allegations in the SAC as true
and draws all reasonable inferences in Plaintiffs’ favor. See
Ganino v. Citizens Util. Co., 228 F.3d 154, 161 (2d Cir. 2000);
Lee v. Bankers Trust Co., 166 F.3d 540 (2d Cir. 1999).
“Dismissal is proper ‘only if it is clear that no relief could
be granted under any set of facts that could be proved
– 8 –
consistent with the allegations.’” In re Scholastic Corp. Sec.
Litig., 252 F.3d 63, 69 (2d Cir. 2001) (quoting Hishon v. King &
Spalding, 467 U.S. 69, 73 (1984)).
Because the SAC charges
securities fraud, Plaintiffs must satisfy the heightened
pleading requirements of Fed. R. Civ. P. 9(b) and the PSLRA, 15
U.S.C. § 78u-4. See Kalnit v. Eichler, 264 F.3d 131, 138 (2d
Cir. 2001).
Thus, “[t]he complaint must identify the statements
plaintiff[s] assert[ ] were fraudulent and why, in plaintiff[s]’
view they were fraudulent, specifying who made them, and where
and when they were made.” In re Scholastic Corp., 252 F.3d at
69-70.
In addition to the allegations in the SAC, the Court
considers written instruments attached to the SAC as exhibits
and all statements or documents incorporated in the SAC by
reference, “as well as public disclosure documents required by
law to be, and that have been, filed with the SEC.” Rothman v.
Gregor, 220 F.3d 81, 88 (2d Cir. 2000) (citations omitted); see
also DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir.
2010).
The Court also considers matters of which the Court may
take judicial notice, Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322 (2007), including well-publicized stock
prices and equity index levels, Ganino, 228 F.3d at 167 n.8.
– 9 –
2.
Section 10 of the Securities Exchange Act
Plaintiffs’ claims are brought pursuant to section 10(b) of
the Securities Exchange Act and Rule 10b-5.
To bring a cause of
action pursuant to these provisions, plaintiffs must allege with
particularity that Manulife “(1) made misstatements or omissions
of material fact; (2) with scienter; (3) in connection with the
purchase or sale of securities; (4) upon which plaintiffs
relied; and (5) that plaintiffs’ reliance was the proximate
cause of their injury.” Lentell v. Merrill Lynch & Co., Inc.,
396 F.3d 161, 172 (2d Cir. 2005).
A misstatement or omission is material “‘if there is a
substantial likelihood that a reasonable shareholder would
consider it important in deciding how to [act].’” Basic, Inc. v.
Levinson, 485 U.S. 224, 231 (1988) (quoting TSC Indus., Inc. v.
Northway, Inc., 426 U.S. 438, 449 (1976)).
“Material facts
include those that affect the probable future of the company and
that may affect the desire of investors to buy, sell, or hold
the company's securities.” Castellano v. Young & Rubicam, Inc.,
257 F.3d 171, 180 (2d Cir. 2001).
“At the pleading stage, a
plaintiff satisfies the materiality requirement of Rule 10b-5 by
alleging a statement or omission that a reasonable investor
would have considered significant in making investment
decisions.” Ganino, 228 F.3d at 162 (citing Basic, 485 U.S. at
231).
– 10 –
With regard to scienter, plaintiffs must allege “an intent
to deceive, manipulate or defraud.” Kalnit, 264 F.3d at 138.
In
evaluating whether plaintiffs have satisfied this requirement,
“the Court must read the complaint in toto and most favorably to
plaintiff.” In re Regeneron Pharm., Inc. Sec. Litig., No. 03
Civ. 3111, 2005 WL 225288, at *24 (S.D.N.Y. Feb. 1, 2005).
However, Plaintiffs must allege facts that give rise “to a
strong inference that [defendants] acted with the required state
of mind,” 15 U.S.C. § 78u-4(b)(2); “a weak yet reasonable
inference of scienter” will not suffice. In re JP Morgan Chase
Secs. Litig., 363 F. Supp. 2d 595, 618 (S.D.N.Y. 2005).
Plaintiffs can establish scienter in either of two ways:
“(a) by alleging facts to show that defendants had both motive
and opportunity to commit fraud, or (b) by alleging facts that
constitute strong circumstantial evidence of conscious behavior
or recklessness.” Acito v. IMCERA Group, Inc., 47 F.3d 47, 51
(2d Cir. 1995).
B.
Application
As explained above, the Court dismissed the FAC because it
failed to establish materiality, scienter, and loss causation.
Defendants assert that none of the new factual allegations in
the SAC – the information from the Financial Post article,
Manulife’s statements, and the Fitch rating - remedy the
– 11 –
deficiencies that led the Court to dismiss the FAC.
For the
reasons stated below, the Court agrees.
1.
Material Misrepresentations Alleged in the SAC
a.
Financial Post Article
The Court notes that it briefly addressed the Financial
Post article in its first Opinion, stating that the allegations
derived from the article were insufficient to plead a material
misstatement.
Nonetheless, the Court will revisit the
allegations from the article that have been added to the SAC.
First, Plaintiffs point to information in the article about
the April 2006 presentation that detailed Manulife’s growing
equity risk.
According to Plaintiffs, “Defendants specifically
described Manulife’s risk management framework as designed to
protect against the very type of earnings losses and capital
strain that, in truth, the Company was then highly vulnerable to
as a result of the equity market exposure from its Guaranteed
Products.” Pls.’ Mem. at 9 (quoting SAC ¶¶ 52, 54-55).
These
allegations are insufficient to demonstrate materiality, as they
– still – only demonstrate “fraud by hindsight.” See Op. at 30.
The fact that a news article raised concerns about Manulife’s
disclosure of its equity market exposure in 2010 does not render
statements made by D’Alessandro in 2008 misleading or
fraudulent.
– 12 –
Second, the SAC includes allegations from the Financial
Post article about expressions of concern by the OSFI and its
insistence in October that Manulife undertake “a series of
transactions” to shore up its capital.
As an initial matter,
Defendants point out that there is no allegation about when in
October 2008 the OSFI “insisted” that Manulife raise capital, so
the Court cannot conclude that the OSFI made this request before
Defendants’ statements of October 13 and 14 regarding Manulife’s
capital adequacy.
In any event, these allegations of
information from the OSFI do not make any public statement
identified in the SAC actionable under the securities laws.
As
the Court found in its first Opinion, allegations that the “OSFI
was performing its duty as an insurance regulator . . . do not
contradict any public statements nor render any public
statements of opinion attributable to Manulife or the individual
defendants actionably false.” Op. at 24 n.2.
b.
Statements by Manulife and its Representatives
In its SAC, Plaintiffs have also identified a series of
statements in Manulife’s 2007 Annual Report, issued March 28,
2008, which they allege are false or misleading.
Specifically,
Plaintiffs discuss Defendants’ statements that hedging programs
would only reduce exposure for newly-issued guarantees, that it
would only assume prudent risks going forward, and that it would
remain diversified across risk categories. SAC ¶¶ 52-61.
– 13 –
According to Plaintiffs, Manulife’s decision to engage in what
they characterize as “minimal” hedging against the risk of stock
market declines “exposed [Manulife] to the risk that stock
market declines would leave it with inadequate reserves to cover
its guaranteed payments under the applicable regulatory capital
requirements.” SAC ¶¶ 5–6.
Plaintiffs also focus on several statements made by
D’Alessandro in 2008, alleging that they were “reckless”
forward-looking statements. SAC ¶¶ 64, 71.
According to
Plaintiffs, “Defendants’ highly positive statements were
misleading because they conveyed the impression that Manulife’s
exposure to the stock market due to its Guaranteed Products did
not pose a material risk to the Company’s financial condition,
when in truth, it did.” Pls.’ Mem. at 12.
Finally, Plaintiffs contend that the SAC “clarifies that
Defendants’ selective statements about Manulife’s hedging
initiatives first misled investors by overstating the extent to
which hedging was part of Manulife’s risk management strategy
for its Guaranteed Products.” Id. at 10.
In Plaintiffs’ view,
the Defendants “failed to disclose that [Manulife] was
continuing to amass a huge amount of exposure to the stock
markets, and hedging newly-issued guarantees would not have a
material impact on offsetting that exposure.” Id. at 11.
– 14 –
The statements that Plaintiffs have added to its SAC are
all statements of opinion or general corporate optimism, since
the statements merely conveyed generalized confidence only about
Manulife’s long-term prospects.
Therefore, they are not
actionable in light of the unpredictability and volatility of
the stock market.
This is particularly true where, as here,
Manulife made no attempt to conceal its exposure to market
changes. See Rosner v. Star Gas Partners, L.P., 344 F. App’x
642, 644 (2d Cir. 2009), Rombach v. Chang, 355 F.3d 164, 174 (2d
Cir. 2004) (a company is “not required to take a gloomy, fearful
or defeatist view of the future; subject to what current data
indicates, they can be expected to be confident about their
stewardship and the prospects of the business that they manage”)
(internal quotation omitted).
Moreover, as the Court previously
observed, Manulife did “weather the storm” wrought by the
financial crisis:
“despite declines in equity markets, Manulife
maintained positive net shareholder income annually in 2008 and
2009.” Op. at 34.
c.
Fitch Ratings Downgrade
Third, Plaintiffs have alleged that the Fitch downgrade
notified the market about Manulife’s equity market exposure.
This Court does not find this suggestion plausible, having
already found that no “new material information was revealed by
the downgrade,” Op. at 45.
Because Manulife “clearly disclosed
– 15 –
the risks of an equity market downturn to its investors,” Op. at
35, the Court can discern no additional information in the SAC
to warrant amending its finding as to the materiality of the
Fitch downgrade.
2.
Allegations of Scienter in the SAC
As in the FAC, Plaintiffs do not claim that Manulife or the
Individual Defendants possessed a motive to commit fraud, but
rather have attempted to allege circumstances to suggest
conscious misbehavior or recklessness.
However, the additions
to the SAC have done nothing to fix the fatal flaws in the FAC
with respect to scienter.
a.
Financial Post Article
Plaintiffs’ new allegations from the Financial Post article
do nothing to bolster Plaintiffs’ attempt to establish conscious
misbehavior or recklessness.
The OSFI’s request that the
Defendants “shore up its capital” does not necessarily indicate
that Manulife would need to issue equity to do so.
Rather,
according to the Financial Post article, issuance of common
stock was only one of several possible options mentioned by the
OFSI “to flush up Manulife’s capital.”
In fact, D’Alessandro
initially “refused to consider diluting Manulife’s shareholders
with a share offering, insisting it was a last-resort option.”
Pls.’ Mem. At 14.
As Defendants point out, D’Alessandro’s
– 16 –
statement is consistent with Manulife’s earlier representations
that it did not plan to issue equity.
b.
Statements by Manulife and its Representatives
The new allegations as to statements by Manulife and its
representatives similarly do not provide any additional basis
for scienter.
As described above, statements of corporate
optimism are not actionable.
Indeed, as the Court found in its
first Opinion, the allegations more plausibly give rise to the
conclusion “that the Defendants believed the Guaranteed Products
would be profitable over the long term and that in the short
term, Manulife's other revenue streams and accumulated capital
would keep the Company afloat.” Op. at 40.
3.
Loss Causation Allegations in the SAC
Plaintiffs have not satisfied their burden as to loss
causation because they have failed to establish a causal link
between the drop in stock price and the purported corrective
disclosures.
Despite Plaintiffs’ grand allegations regarding
Manulife’s tumbling stock price, the fact remains that over 75%
of the total decline in price occurred before any of the socalled corrective disclosures were issued.
Indeed, as the Court
noted in its initial opinion, Plaintiffs’ loss causation
allegations do not “support the inference that a defendant's
fraud proximately caused the loss.” Op. at 44.
Because the SAC
alleges no additional facts to support its theory of loss
– 17 –
causation, the decline in Manulife’s stock price is not
logically attributable to the disclosures.
As to the Fitch ratings downgrade of February 27, 2009,
Plaintiffs acknowledge that it merely “reflect[ed] the adverse
information that the market was [already] absorbing,” SAC ¶ 112,
and thus did not reveal anything new about the purported falsity
of Defendants’ prior statements.
Therefore, the Fitch downgrade
does not qualify as a corrective disclosure. See In re Omnicom
Group, Inc. Secs. Litig., 541 F. Supp. 2d 546, 552 (S.D.N.Y.
2008) (to be a corrective disclosure for the purpose of loss
causation, an alleged disclosure must “reveal the falsity of an
alleged misstatement.”).
The Court notes that Plaintiffs plead no new facts
concerning the March 2, 2009 presentation given by Rubenovitch.
The SAC merely extracts slides from that presentation and
attempts to characterize those slides as revealing previously
undisclosed material information. But this presentation was
included in the FAC and rejected as corrective by the Court. Op.
at 45-46.
C.
SAC’s Section 20(a) Claims Against the Individual
Defendants
Because the SAC fails to state a Section 10(b) claim
against Manulife, Plaintiffs’ claims under Section 20(a) against
the Individual Defendants must also be dismissed.
– 18 –
III. Conclusion
Having been given the opportunity to amend their pleadings,
led to plead materiality, scienter, or loss
Plaintiffs have
if
causation.
securities fraud.
have thus failed to state a claim for
Defendants' motion to dismiss the SAC is
therefore granted with prejudice.
SO ORDERED.
Dated:
New York, New York
September
2012
11 '
~ 1:
Jf Q-.~-.J
John F. Keenan
United States
strict Judge
- 19
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