Camcorp Interests Ltd. v. Bank of Am. Corp., 566 F. App'x 93

Camcorp Interests Ltd. (with movants Alaska Electrical Pension Fund and Northern Ireland Local Government Officers’ Superannuation Committee) sued Bank of America and certain officers under §10(b)/Rule 10b-5 alleging misleading disclosures related to potential AIG-related liability.
The Second Amended Complaint (SAC) alleged Bank of America’s disclosures violated Accounting Standards Codification (ASC) 450 by not sufficiently disclosing a possible lawsuit and contingent loss exposure tied to AIG.
Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6); the district court (Koeltl, J.) granted the motion, finding the SAC failed to plead actionable falsity and, critically, failed to plead scienter with particularity.
On appeal, Camcorp primarily challenged the district court’s conclusions that (1) the SAC did not plausibly allege materially false statements under ASC 450, and (2) the SAC did not allege facts giving rise to a strong inference of scienter.
The Second Circuit reviewed the dismissal de novo, applied the PSLRA scienter standard (strong inference of conscious misbehavior or recklessness) and the Circuit’s reckless-conduct tests.
The Second Circuit affirmed, holding that even if ASC 450 plausibly required disclosure, the SAC failed to plead the requisite strong inference of conscious misbehavior or extreme recklessness.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the SAC plausibly alleged materially false/misleading statements by failing to disclose a potential AIG-related lawsuit under ASC 450	ASC 450 required particularized public disclosure of the potential lawsuit and the SAC pleaded facts showing nondisclosure was misleading	Bank argued disclosures and market information were sufficient and no definitive regulatory requirement compelled more specific disclosure	Even assuming ASC 450 could require such disclosure, the court did not rest its decision on falsity; the central failure was on scienter, so dismissal was affirmed
Whether the SAC adequately alleged scienter (strong inference of conscious misbehavior or recklessness)	Allegations of internal knowledge and undisclosed contingent liability support a strong inference of recklessness/conscious misbehavior	Defendants argued plaintiffs’ allegations were insufficiently cogent; defendants reasonably believed no public disclosure was required given existing disclosures and lack of definitive regulatory duty	Court held plaintiffs failed to plead facts giving rise to the required strong, cogent inference of conscious misbehavior or extreme recklessness; dismissal affirmed

Steginsky v. Xcelera Inc., 741 F.3d 365 (2d Cir. 2014) (standard of review for Rule 12(b)(6) dismissal)
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (scienter may be shown by strong circumstantial evidence of conscious misbehavior or recklessness)
Chill v. Gen. Elec. Co., 101 F.3d 263 (2d Cir. 1996) (recklessness requires conduct that is highly unreasonable and an extreme departure from ordinary care)