Thе New Orleans Employees’ Retirement System, the lead plaintiff in this class action, appeals from Judge Pauley’s grant *504 of summary judgment dismissing its complaint alleging securities fraud in violation of Section 10(b), 15 U.S.C. § 78j(b), against Omnicom Group, Inc. and its managers. The district court held that appellant proffered no evidence sufficient to support a finding of loss causation.
For the reasons set forth below, we affirm.
BACKGROUND
Given the procedural posture of this matter, an appeal from a grant of summary judgment dismissing a complaint, “we construe the evidence in the light most favorable to the plaintiff, drawing all reasonable inferences and resolving all ambiguities in [its] favor.”
Colavito v. N.Y. Organ Donor Network, Inc.,
a) The Seneca Transaction
Omnicom is a large global marketing and advertising holding company. Around 1996, Omnicom began using its subsidiary, Communieade, to invest in intеrnet marketing and advertising companies. The value of the internet companies began to decline in 2000. Omnicom determined that these losses were not “other-than-temporary impairment[s],” and thus non-reportable, a position that was reviewed without exception by Arthur Andersen.
During the first quarter of 2001, Omnicom entered into a transaction with Pegasus Partners II, L.P., a Delaware private equity firm, that created a new company, Seneca, owned by both Omnicom and Pegasus. In a press release, Omnicom and Pegasus stated that the objective of the Seneca transaction was to “maximize consolidation and other strategic opportunities among companies in the currently depressed e-services consulting and professional services marketplace.” The Seneca transaction involved Omnicom’s transfer to Seneca of $47.5 million in cash and its Communieade subsidiary, whose sole assets were the internet companies, and Pegasus’s promise to transfer a total of $25 million in cash, $12.5 million up front and $12.5 million when Seneca requested it. Omnicom received $325 million in Seneca’s non-voting preferred stock, while Pegasus received all of Seneca’s common stock. Omnicom reported that it would incur no gain or loss from this transaction because it was exchanging the internet companies, purported to be worth $277.5 million, and $47.5 million in cash for preferred stock of equivalent value.
Appellant alleges that the accounting for the Seneca transaction was fraudulent, a claim we assume to be true, albeit one that is disputed. While Omnicom’s auditors, it is claimed, viewed Pegasus’s willingness to invest $25 million in Seneca as support for Omnicom’s valuation of the internet companies at $277.5 million, there is evidence that, despite the representations that Pegasus would immediately transfer $12.5 million to Seneca, it instead transferred only $100 to Seneca, while transferring the $12.5 million to a Pegasus holding company. Appellant argues that this fact, which was not disclosed to the market in any of the news articles that appellant relies on, raises doubts about Omnicom’s valuation of the assets transferred to Seneсa.
Appellant also claims that Omnicom misrepresented the value of its Seneca stock to its auditors at the end of 2001. To conceal the decline in the value of Seneca’s assets, Omnicom is said to have arranged for Seneca, rather than Omnicom, to buy a technology license from Live Technology Holdings, Inc., one of Seneca’s investee companies. Seneca would then sell the license to Omnicom for $75 million. The $75 million would -nearly offset Seneca’s yearly losses.
*505 b) Publicly Available Information About the Seneca Transaction
Several news articles at or near the time reported the Seneca transaction and suggested that it was an attempt to move the internet companies, whose value was deteriorating, off Omnicom’s books. 1 Indeed, observers expressed these views well into 2002. 2 However, Omnicom’s stock never experienced any statistically significant drop in value at or near the time of these news reports.
On June 5, 2002, Omnicom filed a Form 8-K disclosing that Robert Callander, an outside director and Chair of Omnicom’s Audit Committee, had resigned from its board of directors on May 22, 2002. Although the Form 8-K did not disclose the reason for Callander’s resignation, appellant argues that it was because of Callander’s concern over the accounting of the Seneca transaction. Appellant relies on Callander’s request for a review of the Seneca transaction by a separate accounting firm, his handwritten notes on a . copy of Omnicom’s 2001 Form 10-K, his request for Senecа’s financial statements, questions he asked during audit committee meetings, and his request for advice regarding his responsibilities from a Columbia Business School professor. Appellant also relies on the fact that Callander resigned the same day that the board rejected his suggestion that the audit committee review Omnicom’s proposal to reacquire two of the internet companies recently transferred to Seneca.
On June 6, 2002, Omnicom’s stock price declined as rumors circulated that The Wall Street Journal would be publishing a negative article about accounting issues at Omnicom. That same day, Salomon Smith Barney issued a report noting “an article circulated on Briefing.com which speculated that The Wall Streеt Journal was set to break a potentially negative story about accounting issues at Omnicom.” Joint App. at 1566. However, the report also expressed the belief that Callander resigned because his “relationship with other board members had become increasingly strained and counter-productive,” noting that “[h]ad Mr. Callander complained about or disagreed with something in particular, Omnicom would have had to disclose it.” Id. The next day, June 7, 2002, *506 UBS Warburg published a report stating that “[w]e believe that [Callander’s] resignation has more to do with ‘fit’ than actual auditing improprieties, but note that the director who headed the audit committee has given fuel to concerns with auditing irregularity.” Id. at 1570.
On June 10, 2002, The Wall Street Journal published a short article in which it stated that Callаnder “quit the board after expressing concerns about the creation of an entity that houses Omnicom’s Internet assets,” and, in particular, his “unhappfiness] with Omnicom management’s limited disclosure to the audit committee about the entity that holds many of Omnicom’s former Internet assets.” Vanessa O’Connell & Jesse Eisinger, Leading the News: Omnicom Director Quits Due to Entity Concerns, Wall St. J., June 10, 2002, at B4. The article further suggested that Callander left due to “some broader corporate governance concerns,” but quoted Omnicom’s Chairman as reassuring investors that “ ‘there is no issue’ with Seneca.” Id.
Late on June 11, 2002, the Financial Times published an article describing Omnieom’s investors’ “post-Enron concerns about disclosure.” Richard Tomkins & Christopher Grimes, Omnicom Shares Wobble Amid Disclosure Fears, Fin. Times, June 11, 2002. It acknowledged that “there is no suggestion of imprоpriety, still less any breaking of the rules,” but noted that, nonetheless, industry executives and analysts were still concerned with Omnicom’s methods of calculating organic growth. Id. The article also stated that investors were concerned with the Seneca transaction, which the article stated had been described as “a clever ploy” and “very skillful financial engineering,” but the article stated that “there is no suggestion of impropriety or rule-breaking.” Id.
On June 12, 2002, The Wall Street Journal published the rumored article on Omnicom that discussed Callander’s resignation and the Seneca transaction. Vanessa O’Connell & Jesse Eisinger, Unadvertised Deals: At an Ad Giant, Nimble Financing Fuels Rapid Growth — But Omnicom’s Web Stakes Spark Board Controversy; A Question of Disclosure — The Impact of Acquisitions, Wall St. J., June 12, 2002, at Al. The article stated that Callander had “resigned amid questions about how the company handled a series of soured Internet investments,” that “[h]e questioned whether something wasn’t being disclosed to the board about the initial off-loading of the problematic investments and the proposal to buy two Internet firms,” that “he had voiced doubts about Seneca’s purpose for months,” and that he had concerns that management “had engaged in transactions without running it through the board.” Id. (internal quotation marks omitted). In further discussing the Seneca transaction, the article stated that it “allowed the company to avoid the possibility of writing down the value of its investments in some of the online firms.” Id. It quoted Omnicom’s CEO as saying that “Seneca was smart because instead of just walking away from these [Internet investments] and taking a write-off, we said we believe that Pegasus, through Seneca, could restructure the assets and make them valuable again.” Id. (internal quotation marks omitted) (alteration in original).
The article also quoted Omnicom’s general counsel, who stated that he had told Callander that the board had not approved Seneca. Id. This information was mistaken because “the still-unnamed venture wasn’t called Seneca then, so the word hadn’t shown up in automated searches of board minutes,” even though the transaction had been approved. Id. (internal quotation marks omitted). Furthermore, the June 12 article referred to statements by *507 two accounting profеssors, one who thought that Seneca “raises a red flag,” and one who said, “[y]ou really have to wonder where this fair value is coming from in this environment, in this area.” Id. (internal quotation marks omitted).
The June 12 article also raised questions about Omnicom’s general accounting practices. For example, the article stated that “[i]n the wake of the collapse of Enron Corp., investors are demanding clearer and simpler financial statements from big companies, putting particular pressure on serial acquirers with tangled webs of deals.” Id. It noted that Omnicom “uses a more aggressive means than its competitors to calculate the critical statistic of how much of its growth it generates from existing operations.” Id. The article also claimed that “[t]he clash over Seneca [between Callander and management] signals new concern about the financial side of the Omnicom juggernaut.” Id. In addition, it suggested that Omnicom may have a cash flow problem because “if cash spent on acquisitions is subtracted, the company has a negative cash flow,” further noting that “Omnicom has sharply increased its borrowing lately.” Id. Finally, the June 12 article discussed Omnicom’s use of earn-out payments in its deal structures, stating that “[w]ith such a high volume of acquisitions, Omnicom’s obligations to make future earn-out payments amount to a substantial potential liability.... [that Omnicom does not] carry ... on its balance sheet.” Id.
Later that day, Omnicom held a telephone cоnference to reassure investors. During the conference, Omnicom’s CEO stated that there was no dissent among the board members, but acknowledged that “Mr. Callander’s reasons [for resigning from the board] were presented accurately as in ‘The Journal’ this morning.”
A number of articles and analyst reports also responded to the June 12 article, some of which suggested that the article raised questions about Omnicom’s accounting practices. For example, a Reuters article that day stated that Omnicom “was forced to play defense on Wednesday amid questions about its accounting,” and suggested that Omnicom’s management’s credibility was harmed by the June 12 article. Adam Pasick, UPDATE 1-Omnicom Defends Accounting as Stock Plunges, Reuters, June 12, 2002. Nonetheless, the article also noted that “Omnicom said Callander’s resignation was the result of a misunderstanding: that he was told, erroneously, that the board had not approved the creation of Seneca when it [sic] fact it had.” Id. A New York Times article on June 13 also suggested that Omnicom “scrambled yesterday to repair damage caused by a newspaper article critical of its accounting practices.” Stuart Elliott, Omnicom Shares Tumble 20%, N.Y. Times, June 13, 2002, at Cll. Similarly, an analyst report from Lehman Brothers on June 13, 2002, stated that “[i]nvestors’ concerns focus on whether or not the assets should have been written down either at the time of the transaction or at the end of last year,” yet it noted that “yesterday’s Wall Street Journal article did not bring up any substantial ‘new’ issues.” On June 21, 2002, a Campaign аrticle stated that “[t]he questions now being asked are about whether the [Seneca] deal was entirely at arm’s length, whether it was adequately disclosed and whether there might still be some lingering potential liabilities that might come back to haunt Omnicom in the future.” Bob Willott, Omnicom Could Stand Test of WSJ Allegations, Campaign, June 21, 2002.
However, some analyst reports and news articles also indicated that the June 12 article did not raise any new factual issues and suggested that the market’s *508 negative reaction was due to the article’s negative tone and innuendo in the Enron market. See, e.g., Merrill Lynch, Flash-Note, Omnicom Group Inc.: Good News: No New Neios in WSJ Article, June 12, 2002; Richard Morgan, Hatchet Job, The-Deal.com, June 14, 2002; Bear Stearns, Omnicom Group (OMC-62.30) — Buy: Follow Up On WSJ Article, June 13, 2002; SalomonSmithBarney, Omnicom Group Inc. (OMC): Comments on Management Meeting, June 13, 2002; SalomonSmithBarney, Omnicom Group Inc. (OMC): Comments on WSJ Article, June 12, 2002; Richard Tomkins, Omnicom Slides on S & P’s Move to Cut Outlook, Fin. Times, June 13, 2002; UBS Warburg, Global Equity Research: Omnicom Group (OMC), June 13, 2002.
In the two days following the June 12 article, Omnicom’s stock dropped over twenty-five percent relative to trading prices and activity in the market and the industry. However, after Omnicom announced that its new auditor, KPMG, reviewed the accounting for the Seneca transaction and had not recommended any changes, Omnicom’s stock increased substantially relative to the industry and the market.
c) The Present Action
On June 13, 2002, as Omnicom’s closing price fell, appellant and other plaintiffs filed this action. On May 19, 2003, appellant filed an amended complaint, which appellees moved to dismiss. The district court granted appellees’ motion in part, dismissing claims involving Omnicom’s organic growth calculations and its earn-out and put-out liabilities, but denied the motion with regard to the Seneca transaction.
The complaint made three allegations of fraud concerning the Seneca transaction. First, it alleged that Omnicom should havе written down the value of the internet companies before engaging in the Seneca transaction. Second, it alleged that the accounting of the Seneca transaction was fraudulent because Omnicom failed to appropriately value the internet companies. Third, it alleged that Omnicom should have accounted for Seneca’s losses after the Seneca transaction occurred because Omnicom controlled Seneca. Each allegation, therefore, focused on the loss in value of the internet companies and the failure to reflect that loss on Omnicom’s books.
The class action complaint invoked the rebutable presumption of shаreholder reliance established in
Basic, Inc. v. Levinson,
In July 2005, appellant moved to certify a class “consisting of all persons and entities who purchased or otherwise acquired the securities of Omnicom from February 20, 2001 through June 11, 2002 and who were damaged thereby.” Appellant’s Br. at 24. The district court certified the class on April 30, 2007.
After extensive discovery and in response to appellees’ motion for summary judgment, appellant proffered, inter alia, a report of its expert witness, Dr. Scott D. Hakala. Dr. Hakala prepared an event study analysis and was prepаred to testify that “the investing public’s initial reactions to the partially corrective disclosures in June 2002 were tied to the news of Omnicom’s inappropriate accounting for investments in Internet-related entities and not to other news during that time period.” Joint App. at 1221. He claimed that “[i]nvestors legitimately feared that Omnicom’s transfers of its Internet investments created the potential for losses and hidden liabilities and/or had allowed Omnicom to *509 hide losses in the past.” Joint App. at 803. Dr. Hakala also stated that:
[T]he declines from June 5 to June 13, 2002, would not have occurred on those dates had Defendants not previously engaged in the fraudulent scheme alleged by Plaintiffs. The information revealed in that time period constituted a partial revelation of information about this scheme.
Id. at 793-94 (internal citation omitted).
On January 29, 2008, the district court granted appellees’ motion for summary judgment.
See In re Omnicom Group, Inc. Sec. Litig.,
DISCUSSION
a) Standard of Review
“We review the grant of summary judgment de
novo.” Lawrence v. Cohn,
has moved for summary judgment on the ground that undisputed facts reveal that the plaintiff cannot establish an essential element of the claim, on which element the plaintiff has the burden of proof, and the plaintiff has failed to come forth with evidence sufficient to permit a reasonable juror to return a verdict in his or her favor on that element. ...
Burke v. Jacoby,
b) The Section 10(b) Claims
To sustain a claim under Section 10(b), appellant must show (i) a material misrepresentation or omission; (ii) scienter; (iii) “a connection with the purchase or sale of a security[;]” (iv) reliance by the plaintiff(s); (v) economic loss; and (vi) loss causation.
Dura Pharms., Inc. v. Broudo,
Use of the term “loss causation” is occasionally confusing because it is often used to refer to three overlapping but somewhat different concepts. It may be used to refer to whether the particular plaintiff or plaintiff class relied upon — or is refutably presumed to have relied upon— the misrepresentation.
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
“Loss causation” may also refer to the requirement that the wrong for which the action was brought is a but-for cause or cause-in-fact of the losses suffered, also a requirement for an actionable Section 10(b) claim.
Dura Pharms.,
A third concept sometimes referred to as “loss causation” relates to the question whether events that are a cause-in-fact of investor losses fall within the class of events from which Section 10(b) was intended to protect the particular plaintiffs and which the securities laws were intended to prevent. This issue, one of proximate cause, was the subject of extended (to say the least) discussion in three opinions in
AUSA Life Ins. Co. v. Ernst & Young,
To one degree or another, all three of these overlapping but somewhat differing issues are involved in the present matter.
With regard to reliance, appellant’s complaint invokes the presumption of reliance based on the fraud-on-the-market theory adopted in
Basic,
Having sought to establish investor reliance by the fraud-on-the-market theory, appellant faces a difficult task. The fraud alleged — the Seneca transaction and failure to write down the value of the internet companies — was the subject of continuing media reports beginning in May 2001. See supra notes 1 & 2. The stock price decline, which is the basis for the damages claim, occurred in June 2002. In short, appellant must concede that the numerous public reports on the Seneca transaction were “promptly digested” by the market and “refleсted ... in Omnicom’s stock price” in 2001 while seeking to recover for a stock price decline a year later in 2002.
Appellant seeks to do so through two means: first, by claiming the existence of cause-in-fact on the ground that the market reacted negatively to a corrective disclosure of the fraud,
Lentell,
1) Corrective Disclosure
A fraud regarding a comрany’s financial condition in May 2001, if concealed, may cause investors’ losses in June 2002 when disclosure of the fraud is made and the available public information regarding the company’s financial condition is corrected.
See Lentell,
To reiterate, the June 12 article reported that Callander, a director and Chair of Omnicom’s Audit Committee, had resigned amid questions he had raised for months regarding the purpose of the Seneca transaction. Callander was also reported to have questioned whether the board had received full information about the initial Seneca transaction and-about the new proposal to buy back two of the internet companies. The article also noted concerns, including those of accounting professors, about Omnicom’s aggressive accounting strategy and about Omnicom’s cash flow and increased borrowing. In opposing the motion for summary judgment, appellant offered the expert testimony of Dr. Hakala regarding causation issues.
However, none of these matters even purported to reveal some then-undisclosed fact with regard to the specific misrepresentations alleged in the complaint concerning the Seneca transaction.
See In re Flag Telecom Holdings, Ltd. Sec. Litig.,
All that the June 12 article stated was that Callander’s resignation was due to general concerns over an aggressive accounting strategy, including perhaps Omnicom’s year-old failure to write-down the *512 value of the internet companies, and other matters concerning governance, in particular management’s keeping the board informed. At best, from appellant’s viewpoint, it has shown that the market may have reacted as it did because of concerns that Callander’s resignation and the negative tone of the June 12 article implied accounting or other problems in addition to the known Seneca transaction.
Appellant also relies on comments in the June 12 article by the two accounting professors to support a nexus between the fraud alleged and the June 2002 decline in share price. They argue that “a reasonable jury could conclude that the professоr found Omnicom’s accounting suspicious in light of Callander’s resignation and Omnicom’s decision to unwind Seneca, which were newly disclosed facts.” Appellant’s Br. at 55. However, the conclusory suspicions of the accounting professors and the unwinding of the Seneca transaction added nothing to the public’s knowledge that the Seneca transaction was designed to remove losses from Omnicom’s books. 4
What appellant has shown is a negative characterization of already-public information.
See Teacher’s Ret. Sys. of La. v. Hunter,
Dr. Hakala’s study does not alter our conclusion. It is true that “[wjhere, as here, there are conflicting expert reports presented, courts are wary of granting summary judgment.”
Harris v. Provident Life & Accident Ins. Co.,
Summary judgment is appropriate here because Dr. Hakala’s testimony does not suffice to draw the requisite causal connection between the information in the June 12 article and the fraud alleged in the complaint. His event study merely “links the decline in the value of [the company’s] stock to various events.”
Flag Telecom,
If Dr. Hakala is opining that Omnieom’s stock dropped because investors first became aware in June 2002 of the fraud *513 alleged in the сomplaint, that opinion is, as a matter of law, unsustainable on this record. It runs squarely into the undisputed fact that the internet company losses and the failure to write them down was known in May 2001 and into appellant’s allegation that the market for Omnicom’s securities at all times promptly digested and reflected in its share price all public information. 5 If he is opining that Omnicom’s stock dropped because the fraud in May 2001 caused the negative press of June 2002 attending Callander’s resignation, then his testimony is irrelevant because these events were not proximately caused by the fraud alleged, for reasons discussed immediately below. The remainder of his report establishes only that, as previously noted, the Junе 12 article raised questions about potential accounting concerns, including the Seneca transaction.
Because appellant failed to demonstrate any new information in the June 12 article regarding Omnicom’s alleged fraud, appellant has failed to show a price decline due to a corrective disclosure.
2) The Materialization of the Risk Theory
Appellant argues that, even if no new financial facts were revealed in June 2002, Callander’s resignation and the ensuing negative media attention were foreseeable risks of the fraudulent Seneca transaction and caused the temporary share price decline in June 2002. The losses suffered by the class are, the argument goes, due to the materializаtion of that risk.
As noted, plaintiffs can prove loss causation by showing “that the loss was foreseeable and caused by the materialization of the risk concealed by the fraudulent statement.”
ATSI,
The zone of risk is determined by the purposes of the securities laws,
i.e.,
“to make sure that buyers of securities get what they think they are getting.”
Chem. Bank v. Arthur Andersen & Co.,
Fraud may lead to a director’s resignation — to escape personal liability, if for no other reason, see, e.g., 15 U.S.C. § 77k(b)(l) (providing exemption from civil liability for director who resigns before effective date of fraudulent registration statement) — and to negative stories by the *514 media. In such circumstances, it is generally the facts underlying the fraud and resignation that causes a compensable investor’s loss. In the present case, as noted, the facts were known a year before the resignation, and the resignation did not add to the public knowledge any new material fact about the Seneca transaction. The essence of the claim is that Callander’s resignation concerned the Senеca transaction and that the resultant negative publicity suggesting possible accounting malfeasance may lead to recovery for a temporary drop in share price.
To be sure, the record shows that Cal-lander was concerned over general accounting practices and governance problems. In that regard, he was concerned about the Seneca transaction, but he had also been mistakenly informed that the Board had never approved it. On the present record, appellant has at best shown that Callander’s resignation and resulting negative press stirred investors’ concerns that other unknown problems were lurking in Omnicom’s past. Indeed, there is no allegation that investors were ever told that improper accounting had in fact occurred with regard to the Seneca transaction, either in the June 2002 stories or later.
The generalized investor reaction of concern causing a temporary share price decline in June 2002, is far too tenuously connected — indeed, by a metaphoric thread — to the Seneca transaction to support liability. The securities laws require disclosure that is adequate to allow investors to make judgments about a company’s intrinsic value. Firms are not required by the securities laws to speculate about distant, ambiguous, and perhaps idiosyncratic reactions by ■ the press or even by directors. To hold otherwise would expose companies and their shareholders to potentially expansive liabilities for events later alleged to be frauds, the facts of which were known to the investing public at the time but did not affect share price, and thus did no damage at that time to investors. A rule of liability leading to such losses would undermine the very investor confidence that the securities laws were intended to support.
CONCLUSION
Appellant has failed to raise a material issue of fact that would support a finding of loss causation, and, as a result, the district court properly granted defendants’ summary judgment motion. 6 For the foregoing reasons, we affirm.
Notes
. On May 7, 2001, Advertising Age published an article stating that the Seneca transaction "was seen by some as a way for Omnicom to get struggling stоcks off of its books.” Debra Aho Williamson, The Fairy Tale Ends; Interactive 100 Stumbles After Dot-Com Business Blows Away, Advertising Age, May 7, 2001, at SI. InternetNews.com featured an article about the Seneca transaction on June 26, 2001, in which it stated that "[t]he merger comes out of a complicated effort by ad agency group Omnicom to lessen its losses in the interactive sector, by sharing its stakes in Agency.com and other I-shops with a private equity firm, Pegasus Partners.” Christopher Saunders, Seneca to Absorb Agency.com, InternetNews.com, June 26, 2001. Later, on September 17, 2001, an article in Fortune stated that "[Omnicom’s CEO John] Wren is just cleaning up the mess from his last big foray into untapped market terrain: the Internet,” and that "Wren is now getting all the Net assets off Omnicom's books by shoveling them into a private holding company called Seneca.” Patricia Sellers, Rocking Through the Ad Recession: Omnicom Is Defying the Madison Avenue Slump Thanks to Its CEO's Aggressive, Contrarian Strategy, Fortune, Sept. 17, 2001, at 145.
. In May 2002, New Media Agencies reported that if Omnicom hadn’t entered into the Seneca transaction, it "might have faced the prospect of having to accept sizeable write-offs in the value of its [internet] investments and, in the case of Agency.com, it would have had to deduct its share of the increasing losses from the profit that Omnicom would hope to report for 2001.” How Omnicom Detached its Internet Ventures But Still Kept its Options Open, New Media Agencies Financial Intelligence, May 2002, at 2-1.
. Appellant argues that:
It is not Lead Plaintiffs burden, on this motion, to show that the entire relative price drop in June 2002 was due to the fraud. Rather, summary judgment may bе granted only if Defendants can prove as a matter of undisputed fact that none of the price drop could have resulted from the fraud.
Appellant’s Br. at 42 (emphasis omitted). In doing so, it misstates the parties' burdens on summary judgment. Although “a party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying [the evidence] which it believes demonstrate the absence of a genuine issue of material fact," this does not relieve appellant of its burden of making "a showing sufficient to establish the existence of an element essential to [appellant’s] case, and on which [appellant] will bear the burden of proof at trial.”
Celotex, All
U.S. at 322,
. Appellant also relies on the fact that Omnicom's stock price recovered after Omnicom announced that KPMG had reviewed its accounting of the Seneca transaction and did not recommend any changes. Appellant's Br. at 52-53. However, KPMG’s conclusion that there was no fraud in the Seneca transaction hardly supports a finding that fraud in the Seneca transaction caused a loss.
. Appellant is mistaken to compare this to our cases in
Suez Equity Investors, L.P. v. Toronto-Dominion Bank,
. Plaintiffs also rely on Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78t. However, in order to establish control person liability, appellant must first establish a primary violation. See
ATSI,