Alaska Elec. Pension Fund v. Flotek Indus., Inc.

Facts

1. 6 Intent to deceive, manipulate, or defraud not pleaded

   To withstand a motion to dismiss, "an inference of scienter must be more than merely plausible or reasonable-it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent."

2. 6 Intent to deceive, manipulate, or defraud not pleaded

   However, there is no specific allegation that Chisholm knew at the time he made the statement at issue that FracMax utilized an algorithm.

3. 6 Intent to deceive, manipulate, or defraud not pleaded

   The starkest example of Flotek's provision of false information is that Chisholm presented demonstrably false information at the September 2015 conference in the form of incorrect well data.

4. 6 Intent to deceive, manipulate, or defraud not pleaded

   It does appear that it would have been very easy to check if this data was correct-Flotek verified the alleged errors and responded to the Bronte Report within a day.

5. 6 Intent to deceive, manipulate, or defraud not pleaded

   However, while this suggests negligence, there is no indication that Defendants had reason to know of any deficiencies in quality control problems before the data was made public.

6. 6 Intent to deceive, manipulate, or defraud not pleaded

   Thus, Chisholm's use of incorrect data at the September 2015 conference also fails to give rise to a strong inference of scienter.

7. 6 Intent to deceive, manipulate, or defraud not pleaded

   Indeed, as Chisholm admitted, there was a failure in quality control, because Flotek did not cross-reference "[the Drillinginfo data] with the [Texas] Railroad Commission data."

8. 6 Intent to deceive, manipulate, or defraud not pleaded

   We agree that such allegations are insufficient to raise a strong inference of scienter and, at most, indicate "simple or even inexcusable negligence," a lesser showing than is required here.