David Grigsby v. Bofi Holding, Inc., 979 F.3d 1198

Background

BofI (Bank of Internet) issued a March 2017 press release denying any knowledge of a money‑laundering investigation after a New York Post report; plaintiffs allege that denial was false because the SEC had opened a formal investigation in Feb. 2016.
On Oct. 25, 2017 the New York Post published an article—based on a Probes Reporter report that relied on an SEC FOIA response—stating BofI had been subject to a 16‑month SEC investigation; BofI stock fell the next day.
Plaintiffs also pointed to an Oct. 26, 2016 Seeking Alpha article (by an anonymous short seller) as revealing falsity of BofI statements responding to a whistleblower alleging undisclosed risky loans.
The district court dismissed the securities fraud complaint with prejudice for failure to plead loss causation, holding as a matter of law that FOIA‑obtained information counted as publicly available and that the Seeking Alpha piece was not a corrective disclosure.
The Ninth Circuit reversed in part and remanded: it held plaintiffs may rely on corrective disclosures based on FOIA responses if they plausibly allege the FOIA information was not already public, and affirmed that the cited Seeking Alpha article was not corrective.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Can information obtained via FOIA serve as a "corrective disclosure" for loss causation?	FOIA responses can reveal nonpublic truth to the market and therefore can be corrective.	FOIA‑discoverable information is effectively public and thus cannot be corrective.	FOIA responses can support a corrective disclosure claim if plaintiff plausibly alleges the info was not previously disclosed; no special pleading rule.
Was the Oct. 25, 2017 Post article nonpublic (i.e., did it reveal new info via FOIA)?	Post article revealed the SEC investigation via a FOIA response and thus disclosed nonpublic facts that caused the stock drop.	The FOIA information was publicly available or discoverable and market participants could have obtained it earlier.	The Ninth Circuit held the district court erred to decide as a matter of law that FOIA info was public; plaintiffs adequately pled that the Post article revealed the SEC investigation.
Did the Seeking Alpha article qualify as a corrective disclosure for the whistleblower‑related statement?	The article revealed the truth of the whistleblower allegations and thus corrected BofI’s prior reassuring statements.	The article merely rehashed public materials and marketable analysis by an anonymous short seller; not corrective.	Affirmed: the Seeking Alpha piece was not corrective because it relied on public sources and no specialized analysis beyond ordinary market participants.
Should the dismissal be affirmed on scienter grounds?	Plaintiffs maintain scienter adequately alleged.	Defendants argued scienter insufficient.	Court declined to address scienter (issue not passed on below); remanded for further proceedings.

Key Cases Cited

Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804 (2011) (elements of §10(b) securities fraud; loss causation concept)
Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258 (2014) (market efficiency and corrective disclosure principles)
Loos v. Immersion Corp., 762 F.3d 880 (9th Cir. 2014) (pleading corrective disclosure/loss causation)
Lloyd v. CVB Fin. Corp., 811 F.3d 1200 (9th Cir. 2016) (requirements for proximate cause and corrective disclosures)
In re Gilead Scis. Sec. Litig., 536 F.3d 1049 (9th Cir. 2008) (Rule 9(b) and plausibility for loss causation at pleading stage)
Hamdan v. U.S. Dep’t of Justice, 797 F.3d 759 (9th Cir. 2015) (FOIA scope and agency search obligations)
Meyer v. Greene, 710 F.3d 1189 (11th Cir. 2013) (publicly available information generally not corrective)
Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455 (2013) (efficient‑market presumption regarding public information)