Intent to deceive, manipulate, or defraud

basis: proved; party: Scott Ginsburg; theory: communication and knowing use of inside information; subject: party=Scott Ginsburg; theory=communication and knowing use of inside information

Ginsburg was chairman and CEO of Evergreen Media Corporation, which owned and operated a number of radio stations. In 1996 Evergreen became interested in acquiring EZ, a corporation that owned radio stations. Ginsburg met with EZ’s CEO Alan Box on Friday, July 12, 1996, and Box told him EZ was considering several “strategic alternatives.” Before the meeting no decision had been made to sell the company. On Sunday evening, July 14, Ginsburg called Mark at 10:02 p.m., and they spoke for 26 minutes. The next day, Monday, July 15, Mark bought 3800 shares of EZ stock. Mark spoke with Jordan in person and on the telephone over the next few days, and they admit they discussed the purchase of EZ stock.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

On July 24, EZ’s investment banker faxed a letter to Ginsburg stating that EZ bids were due by July 26. At 7:40 a.m. July 25, a call was placed from Ginsburg’s cell phone to his parents’ home. Later that day Mark purchased 3200 shares of EZ stock for Mark and his wife’s joint account. On July 26, Mark purchased 4300 shares of EZ stock for the same joint account and 7500 shares for a trust account for his son. Also on July 26, Ginsburg, on Evergreen’s behalf, submitted a written offer to acquire EZ for cash and stock. On Sunday, July 28, a ten minute call was placed from Ginsburg’s home to Mark’s home. On Monday, July 29, Jordan bought 5000 shares of EZ stock, and an hour later Mark bought 30,000 shares.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

That same evening, June 16, a call was placed from a cell phone registered to Ginsburg to a phone registered to Mark. The next day, June 17, Mark bought 150,-000 shares of Katz. On July 14, Evergreen/Chancellor announced it would acquire Katz through a tender offer for Katz stock at $11 a share. On July 16 or 17, 1997, Mark sold 132,500 shares of Katz and tendered the rest, resulting in a total profit of $729,000.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Ginsburg offered evidence of public information about the companies as motivation for Mark’s trading, argued that the trades were consistent with prior trading history, and put forward innocent explanations for the calls.

Evidence kind: fact; polarity: cuts-against; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The SEC must prove violations of § 10(b) and § 14(e), and their supplementary Rules, by a preponderance of the evidence, and may use direct or circumstantial evidence to do so.

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The call/trade pattern occurrences coupled with the jury’s right to disbelieve the innocent explanations of the calls and trades are enough to support the verdict.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: conceded; party: Sameer P. Sethi; count: SEC enforcement action; subject: party=Sameer P. Sethi; count=SEC enforcement action

Sethi knew that he did not have relationships with the listed companies, and Sethi does not dispute that the venture never partnered with a major oil company.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

By touting his relationships with major oil companies, Sethi created a "danger of misleading buyers" into believing that his venture would be well-managed and their investments would be in the hands of the most successful drillers in the world.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Nowhere in the record do we find any sign that Sethi relied on statements by his consultants, or that consultants ever made statements about Sethi Petroleum's relationships with major oil companies.

Evidence kind: fact; polarity: supports; absent flag: 1; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

To prove scienter, the SEC need only prove that the defendant acted with severe recklessness.

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

These facts also establish scienter.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: pleaded; party: Flotek Industries, Inc. and CEO Chisholm; count: class action securities fraud; subject: party=Flotek Industries, Inc. and CEO Chisholm; count=class action securities fraud

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.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

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.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

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."

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

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.

Evidence kind: fact; polarity: cuts-against; absent flag: 1; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

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

Evidence kind: fact; polarity: cuts-against; absent flag: 1; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

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."

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

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

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

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.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: pleaded; party: individual executives; count: safety-profile statements; subject: party=individual executives; count=safety-profile statements

The complaint alleges that Sandrock made this statement before Biogen's October announcement of the PML-related death, and the plaintiffs do not contend that any of the individual defendants knew about that death before Sandrock made this statement. The plaintiffs nevertheless contend that the District Court erred in concluding that the complaint failed adequately to allege that Sandrock made the statement with the "intentional or willful" design to deceive investors.

Evidence kind: fact; polarity: cuts-against; absent flag: 1; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

To make this case, the plaintiffs point out that, in August and September of 2014, Dr. Ben Thrower, the medical director at the Shepherd Center in Atlanta, notified Keith Ferguson, the company's senior sales director, and Eric Hall, the medical science liaison for Biogen, that his research showed that patients who were taking Tecfidera had a higher risk of developing low lymphocyte counts than Biogen had originally disclosed. The complaint further alleges that, for this reason, Dr. Thrower chose to discontinue Tecfidera prescriptions for approximately 200 of his patients and to stop issuing new prescriptions for the drug. The complaint also alleges that he told Ferguson and Hall about this development.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

By April of 2015, according to the complaint, Biogen had already disclosed the PML death and updated the drug's label to account for the increased understanding of its risk.

Evidence kind: fact; polarity: cuts-against; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

"For an inference of scienter to be strong, 'a reasonable person would [have to] deem [it] cogent and at least as compelling as any opposing inference one could draw from the facts alleged.' "

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 1 (1 = tagged; 0 = not tagged)

And thus, the allegations regarding Sandrock fail to establish a "strong inference" of scienter as to even him, let alone as to any individual defendant.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: pleaded; party: Stuart Kingsley; count: usage-rate statements; subject: party=Stuart Kingsley; count=usage-rate statements

We first address the January 29, 2015 statement by Kingsley that "Tecfidera [was] on track to become the most prescribed therapy for MS worldwide." The plaintiffs argue that this statement was misleading and creates the "strong inference" of scienter on Kingsley's part, because at the time of the statement, Kingsley knew about both the PML death and about Tecfidera's declining sales and discontinuation rates.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

At the time that Kingsley made the statement, however, Biogen had already disclosed to the public the news of the PML death, had already changed the drug's label, had already publicized that it expected the drug's growth rate to "slow," and had already disclosed that the drug's discontinuation rates were higher than expected.

Evidence kind: fact; polarity: cuts-against; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Yet, the complaint alleges no facts that are illuminating in that regard.

Evidence kind: fact; polarity: cuts-against; absent flag: 1; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

But, we find no basis for concluding that any of these statements permit us to infer the necessary intent to deceive that could suffice to create the "strong inference" of scienter that the PSLRA requires.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: proved; party: Dennis Malouf; subject: party=Dennis Malouf

Mr. Malouf and Mr. Lamonde had a financial arrangement that resulted in payments to Mr. Malouf from bond trades that he had routed through the Raymond James branch. This arrangement gave an incentive to Mr. Malouf to route his clients' bond trades through the Raymond James branch, compromising the independence of UASNM and Mr. Malouf as investment advisers. The SEC reasonably concluded that Mr. Malouf was aware of the conflict and tried to exploit it, for UASNM's outside consultant testified that Mr. Malouf had lied and resisted disclosure of the financial arrangement with Mr. Lamonde.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Second, the evidence allowed the SEC to reasonably find that Mr. Malouf was familiar with the contents of UASNM's Forms ADV and its website. For example, Mr. Malouf admitted that he had periodically reviewed the Forms ADV and the website. Yet for several years, Mr. Malouf took no action to correct material misstatements on the forms or the website.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Third, the evidence suggests that Mr. Malouf dragged his feet even after being directed to disclose the conflict. This directive stemmed from the outside consultant's discovery that Mr. Malouf had been receiving installment payments from the buyer of the Raymond James branch. Upon this discovery, the consultant told Mr. Malouf and UASNM that the arrangement had created a conflict of interest that needed to be disclosed. But about nine months passed before UASNM disclosed the conflict. Mr. Malouf's contribution to that delay reasonably supports a finding of scienter.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Conduct is extremely reckless when the petitioner knows or must have known that the conduct created a danger of misleading investors.

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

For three reasons, we reject Mr. Malouf's arguments and conclude that substantial evidence supports the SEC's finding of scienter.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: pleaded; party: Pier 1 Imports, Inc. and executives Smith and Turner; count: class action securities fraud; subject: party=Pier 1 Imports, Inc. and executives Smith and Turner; count=class action securities fraud

Fourth , the investors allege that Pier 1's former Director of Distribution and Transportation reported that Smith asked him about almost 1,000 trailers full of inventory parked outside Pier 1's Baltimore distribution center.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Third, the investors allege that a confidential witness reported that "[d]uring at least one inventory review meeting in mid-2014, Smith acknowledged that inventory problems were pervasive."

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Here, even the lowest possible performance-based bonuses that Smith and Turner could receive-which were only 11.5 percent and 8 percent of their respective base salaries-proved to be well out of reach: Pier 1's Fiscal Year 2015 earnings before interest, tax, depreciation, and amortization were $60 million lower than the lowest target number in their employment contracts.

Evidence kind: fact; polarity: cuts-against; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

As in that case, rather than concealing its inventory problem, Pier 1 "repeatedly alerted investors" that the problem "would affect the company's output" throughout the Class Period.

Evidence kind: fact; polarity: cuts-against; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

And the investors have not explained why Pier 1 executives kept ordering more inventory when they supposedly knew deep down that they would not be able to sell it.

Evidence kind: fact; polarity: cuts-against; absent flag: 1; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Plaintiffs properly plead scienter when they allege that a company knowingly or recklessly made statements to the market while aware of facts that, if not disclosed, would render those statements misleading.

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

We agree with the district court that the investors have failed to plead a "strong inference" of scienter.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

In summary, we conclude that the investors' allegations that Smith and Turner knew that Pier 1 had significant markdown risk fail to create a strong inference of scienter.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: law; party: Hui Feng; subject: party=Hui Feng

Feng stated that he did not want to tell clients about his commissions from the regional centers because it would be costly.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Feng's brief similarly describes his choice not to disclose as a "business decision."

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Although there are differences in the state of mind requirements for Rule 10b-5(b) and Section 17(a)(2), a showing of intentional or knowing conduct satisfies both.

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Finally, Feng's testimony establishes intent to deceive.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)