Ellen Rubke, as Trustee of the 1986 Rubke Living Trust, and Jack Ferguson, individually and on behalf of other similarly situated minority shareholders of Napa Community Bank, appeal the district court’s dismissal of their First Amended Complaint, which alleges that Capital Ban-corp, Ltd. and its CEO and Chairman Joseph Reid violated section 11 of the Securities Act of 1933 and sections 10(b) and 14(e) of the Securities Exchange Act of 1934. They argue that the district court erred in dismissing their section 11 claims for failure to meet the pleading standards of Federal Rule of Civil Procedure 9(b) and in dismissing their section 10(b) and 14(e) claims for failure to meet the pleading standards of the Private Securities Litigation Reform Act of 1995. For the reasons discussed below, we conclude that the district court did not commit reversible error in either regard and affirm the dismissal of the plaintiffs’ First Amended Complaint with prejudice.
*1159 I
Capitol Bancorp, Ltd. (“Capitol”) is a bank holding company that uses an unusual business model to create and control small community banks. Capitol begins its process by soliciting investors in a proposed bank’s community to provide capital in exchange for common stock in the bank. In this initial stock offering, Capitol informs potential investors that it will buy approximately 51% of the community bank’s common stock and will thus be the controlling shareholder in the bank. It also warns these investors that there will likely be no public market for the bank’s stock. Capitol does indicate, however, that it may buy out the investors around the third anniversary of the bank’s opening-usually for a price equivalent to the book value of the common stock plus a 50% premium. Capitol provides administrative and other sendees to the bank (albeit not necessarily at competitive prices), but community members comprise the bank’s board of directors and have general autonomy to set pricing and make other strategic decisions.
In November 2001, consistent with this basic business model, Capitol solicited investors in California’s Napa region to purchase common shares of Napa Community Bank (“NCB”). Capitol also formed a holding company — First California Northern — whose primary function was to own a controlling share of NCB. Capitol then solicited separate investors in First California Northern and bought a controlling stake in that company. First California Northern thereafter bought 51% of NCB’s common stock, and community investors, including Rubke and Ferguson, purchased the remaining 49%. NCB began operating in March 2002, and was quite successful.
In May 2004, Capitol began a share exchange offering for First California Northern. This exchange offer gave First California Northern’s minority shareholders the opportunity to exchange their shares for shares of Capitol at a ratio that translated to a payment of 167% of the book value of First California Northern shares. The offer was accompanied by a fairness opinion prepared by JMP Financial (“JMP”). As a result of this offering, Capitol acquired 100% of shares in First California Northern.
Thereafter, in early 2005, Capitol began its anticipated attempt to acquire the minority shares of NCB (the “Exchange Offer” at issue in this case). It filed a registration statement with the SEC in April 2005, and amended that statement in May. On June 7, 2005, the effective date of the Exchange Offer, Capitol sent all NCB shareholders the offer document. In the document, Capitol offered to exchange shares of NCB common stock for shares of Capitol (which was publicly traded on the New York Stock Exchange) at a ratio equal to approximately 150% of the book value of the NCB common stock. Specifically, because Capitol estimated the book value of the NCB stock at approximately $10.60 per share, it would issue $15.90 worth of Capitol shares for each NCB share tendered (approximately 0.51 Capitol shares for every NCB share). The Exchange Offer was set to expire on June 30, 2005. The offer document was accompanied by two fairness opinions — one by JMP, and the other by Howe Barnes Investment, Inc. (“Howe Barnes”). Each concluded after analysis that the transaction was “fair from a financial point of view.”
Several minority shareholders, believing that the Exchange Offer was unfair, formed a minority shareholders’ committee (“MSC”) to combat the offer. The MSC obtained competing fairness opinions from The Findley Group and Hoefer & Arnett, *1160 Inc., each of which stated that the fair market value of the NCB common shares was approximately $21 per share (around 33% higher than Capitol was offering).
During this time period, some NCB minority shareholders reported receiving phone calls from members of the bank’s board of directors encouraging them to participate in the Exchange Offer and tender their shares to Capitol. During these phone calls, NCB’s directors allegedly claimed that NCB shares would be worthless if they were not sold to Capitol through the Exchange Offer, that the NCB shareholders were required to sell their shares, that the NCB shares would be illiquid if they were not sold to Capitol, that 98% of NCB’s shareholders had already tendered their shares to Capitol, and that all members of NCB’s board of directors had already tendered their shares to Capitol.
The Exchange Offer closed on June 30, 2005. Capitol, through the offer, acquired approximately 87% of NCB stock. Several minority shareholders who tendered their stock to Capitol, however, filed suit, claiming that Capitol was able to purchase their shares at a price below fair market value because of misrepresentations made in the registration statement, the offer document, and the telephone calls.
The plaintiffs in this action filed their original complaint on November 23, 2005, in the Northern District of California. The plaintiffs formulated their claims as actions under sections 11 and 15 of the Securities Act of 1933 (“Securities Act”); sections 10(b), 14(e), and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”); and state law violations of the California Corporations Code. On June 16, 2006, the district court dismissed the original complaint, holding that the claims were subject to heightened pleading standards under Federal Rule of Civil Procedure 9(b) and/or the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4, and that the complaint failed to meet these heightened standards. Although the state law claims were dismissed with prejudice, the court gave plaintiffs leave to file an amended complaint remedying the federal claims.
The complaint at issue in this case was filed shortly thereafter, on July 31, 2006. This First Amended Complaint added a claim under section 12(a)(2) of the Securities Act, but otherwise retained the same federal claims alleged in the original complaint. Again, the defendants moved to dismiss the complaint, and the district court granted that motion on October 27, 2006.
See Rubke v. Capitol Bancorp Ltd.,
*1161 II
We review de novo dismissals for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).
Livid Holdings Ltd. v. Salomon Smith Barney, Inc.,
A
The plaintiffs (collectively, "Rub-ke”) first challenge the district court’s determination that their First Amended Complaint failed to allege with the particularity required by Federal Rule of Civil Procedure 9(b) that Capitol’s registration statement in connection with the NCB Exchange Offer contained material misrepresentations in violation of section 11 of the Securities Act. Section 11 of the Securities Act contains a private right of action for purchasers of a security if the issuer publishes a registration statement in connection with that security that “contain[s] an untrue statement of a material fact or omit[s] to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” 15 U.S.C. § 77k(a). To prevail in such an action, a plaintiff must prove “(1) that the registration statement contained an omission or misrepresentation, and (2) that the omission or misrepresentation was material, that is, it would have misled a reasonable investor about the nature of his or her investment.”
In re Daou Sys., Inc.,
Although the heightened plead~ ing requirements of the PSLRA do not apply to section 11 claims,
Falkowski v. Imation Corp.,
Because Rule 9(b) thus applies to Rub-ke’s section 11 claims, her First Amended Complaint must “state with particularity the circumstances constituting fraud....” Fed. R. Civ. P. 9(b). In other words, the complaint must “set forth what is false or misleading about a statement, and why it is false.”
Yourish v. Cal. Amplifier,
1
Rubke's First Amended Complaint alleges that six types of statements in Capitol’s registration statement were either affirmatively misleading or were misleading by omission. First, according to the complaint, Capitol’s registration statement misled the NCB minority sharehold *1162 ers by incorporating two fairness opinions (by JMP and Howe Barnes) concluding that the transaction was “financially fair” to the minority shareholders.
Because these fairness determinations are alleged to be misleading opinions, not statements of fact, they can give rise to a claim under section 11 only if the complaint alleges with particularity that the statements were both objectively and subjectively false or misleading.
See Va. Bankshares, Inc. v. Sandberg,
The First Amended Complaint fails to allege that either JMP, Howe Barnes, or Capitol believed the deal offered the minority shareholders was unfair. Although the complaint alleges that the MSC’s competing Findley Group fairness opinion was circulated to members of Capitol, and thus that Capitol should have known that JMP’s opinion was unreliable, nothing in the complaint indicates that anyone at Capitol actually saw or assessed the Findley Group fairness report. The complaint only alleges, “[bjased on information and belief,” that “copies of the [Findley Group] Fairness Opinion and the Fairness Memorandum, and/or a written or oral summary of their terms, were delivered to Capitol and Reid, and/ or Capitol and Reid should have known about the substance of the [report].” The complaint does not indicate on what facts this belief is formed. Similarly, Rubke’s allegations that JMP’s prior relationship with Capitol should have alerted Capitol to the investment bank’s biases do not adequately allege subjective falsity. Although the First Amended Complaint alleges that “in 26 of 30 [prior] transactions, JMP Financial, Inc.’s fairness opinions concluded that a valuation of 150% of book value (or very minor deviations from 150% of book value) were fair, and in the other four, the highest valuation ... was approximately 175% of book value and the lowest ... approximately 124% of book value,” it fails to plead facts indicating that Capitol believed these prior valuations were incorrect.
2
Second, according to the First Amended Complaint, Capitol’s registration statement was misleading because it failed to mention the fact that one year prior to the tender offer, Capitol initiated a similar offer for shares of NCB’s holding company, First California Northern, and paid approximately 167% of book value for those shares.
A securities fraud complaint based on a purportedly misleading omission must “specify the reason or reasons why the statements made by [the defendant] were misleading or untrue, not simply why the statements were incomplete.”
Brody v. Transitional Hosps. Corp.,
Also, as the district court noted, information concerning the First California Northern tender offer was publicly available. As many of our sister circuits have
*1163
recognized, “[i]t is pointless and costly to compel firms to reprint information already in the public domain.”
Wielgos v. Commonwealth Edison Co.,
3
Third, according to the First Amended Complaint, Capitol materially misrepresented NCB’s future income projections in the registration statement. Specifically, the complaint notes that “Page 28 of the Prospectus included in the Registration Statement ... stated that ‘Capitol believes that NCB’s profitability will increase.’ ” This projection, the complaint alleges, “failed to adequately disclose the dramatic growth in NCB’s net income, retained earnings and book value in 2005 that Capitol knew was occurring.” Essentially, Rubke appears to argue that because the statement “profitability will increase” did not indicate the extraordinary nature of NCB’s growth, the Prospectus should have included more expressive language such as “Capitol believes NCB’s profitability will dramatically increase.”
In addition to the fact that Capitol
did
disclose that NCB’s net income for the first quarter of 2005 was nearly four times as large as that for the first quarter of 2004, this allegation clearly does not state a claim under section 11. This allegation merely squabbles about the adverbs used in the registration statement, and fails to indicate that the language used was false. Furthermore, there is no duty to disclose income projections in a prospectus.
See In re Lyondell Petrochemical Co. Sec. Litig.,
4
Fourth, according to the First Amended Complaint, several references in the offer document and elsewhere to a preconceived “plan” to sell NCB shares to Capitol on the three year anniversary of NCB’s operations misled investors into believing that they had a moral or legal obligation to tender their shares to Capitol. Thus, Rubke claims, Capitol had an obligation to disabuse the shareholders of this notion by “disclosing] in the Registration Statement that the NCB shareholders had no obligation, legal or moral, to participate, and that they were not bound by any ‘plan.’ ”
As with the other omission allegations, the complaint fails to demonstrate that the failure to include this disclaimer was misleading. There is no allegation in the complaint that the characterization of the tender offer as part of a “plan” was false (in fact, although the third anniversary tender offer was not guaranteed, it was suggested as typical in the original investment documents). Moreover, there were numerous disclosures in the registration statement and offer documents indicating that accepting the tender offer was optional. It is difficult to imagine that a shareholder *1164 who was not adequately appraised of her options by these existing disclosures would suddenly understand after being exposed to simply one more disclaimer.
5
Fifth, according to the First Amended Complaint, Capitol’s registration statement also contained misleading references to a “premium” that caused the NCB minority shareholders to believe that accepting the tender offer would give them a premium on their shares’ fair value. As the district court noted, however, these allegations simply misconstrue the language in the registration statement. The language in the registration statement specifically referred to a premium to the “book value” of the NCB shares, not a premium to the fair value of the shares.
6
Finally, the First Amended Complaint alleges that Capitol made misleading statements in connection with the registration statement through telephone communications with the minority shareholders. According to the complaint, members of the NCB board were encouraged by Capitol to call the minority shareholders and convince them that, inter alia, their shares would be worthless if not sold to Capitol.
Although these allegations are fashioned as claims under section 11, because they were allegedly made after the registration statement became effective on June 7, 2005, they cannot be a basis for relief under that section. A claim under section 11 based on the omission of information must demonstrate that the omitted information existed at the time the registration statement became effective.
Cooperman v. Individual, Inc.,
B
Rubke also challenges the district court’s determination that her claims under section 10(b) of the Exchange Act, which employ the same factual allegations as her section 11 claims, fail to meet the pleading standards of the PSLRA.
Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), in combination with SEC Rule 10b-5, prohibits “any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.” 17 C.F.R. § 240.10b-5(c). To prevail on a section 10(b) claim, a plaintiff must prove “(1) a material misrepresentation or omission of fact, (2) scienter, (3) a connection with the purchase or sale of a security, (4) transaction and loss causation, and (5) economic loss.”
Daou,
*1165
The Supreme Court recently defined “strong inference of scienter,” concluding that a complaint will survive a motion to dismiss under the PSLRA “only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.”
Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
Because the inquiry into whether plaintiffs have pled falsity with the requisite particularity under the PSLRA is nearly identical to that under Federal Rule of Civil Procedure 9(b), the foregoing analysis of Rubke’s section 11 claims also demonstrates (with the exception of the telephone call allegations 2 ) that Rubke’s First Amended Complaint fails to allege a material misrepresentation or omission in connection with the purchase or sale of securities. Thus, the only issue under section 10(b) is whether the complaint’s allegations regarding telephone calls to minority shareholders adequately plead falsity and scienter under the PSLRA.
The First Amended Complaint details a large number of telephone conversations between one of NCB’s board members, Dennis Pedisich, and NCB minority shareholders in which Pedisich exhorted the shareholders to accept Capitol’s tender offer. The complaint alleges that in these phone calls, Pedisich told the shareholders that if they failed to tender their NCB shares to Capitol as part of the Exchange Offer, “[their] shares were likely to wind up as worthless pieces of paper” and that the shareholders would “lose [their] investments],” that the shareholders “had no choice but to tender [their] NCB shares to Capitol,” that the shares would be illiquid if not sold to Capitol, that 98% of minority shareholders were going to tender, and that “all of the members of the NCB board of directors were tendering their shares to Capitol.” All of these statements, Rubke contends, were materially false or misleading.
Because the First Amended Complaint only provides detailed allegations about Pedisich’s calls, however, and fails to allege with particularity that Capitol or its officers either made similar calls themselves or exhorted Pedisich to make the calls, these allegations are not sufficient to meet the PSLRA’s pleading requirements for either falsity or scienter.
Dennis Pedisich, although he was in contact with Capitol and its executive officers throughout the time covered by the complaint, was not an employee of Capitol. We acknowledge that this does not make his misrepresentations to the NCB minority shareholders irrelevant. In
Warshaw v. Xoma Corp.,
The First Amended Complaint fails to allege with the requisite particularity that Pedisich called the minority shareholders at the behest of Capitol or its executive officers. The complaint states that “in a meeting of the board of directors on May 26, 2005 in the NCB boardroom in Napa, California, and on other occasions [Pedi-sich and other NCB directors] were exhorted by Reid [Capitol’s CEO] to call or otherwise communicate with the NCB shareholders on behalf of Capitol.” This allegation, the complaint admits, is based only on “information and belief.” As such, in order to meet the PSLRA’s standard for pleading falsity, the complaint must “state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u — 4(b)(1);
see Daou,
The First Amended Complaint has also failed to allege with particularity that Capitol made any of the statements or omissions “intentionally or with deliberate recklessness.”
Daou,
C
Finally, Rubke argues that the district court erred in dismissing her claims under section 14(e) of the Exchange Act for fail
*1167
ure to meet the PSLRA’s pleading standards. Section 14(e) was enacted as one of the 1968 Williams Act amendments to the Exchange Act, for the purpose of “in-surfing] that public shareholders who are confronted by a cash tender offer for their stock will not be required to respond without adequate information.”
Plaine v. McCabe,
We have previously applied the PSLRA’s falsity pleading requirement to claims under section 14(e).
Brody,
Ill
When a district court dismisses a complaint without leave to amend, we must review for abuse of discretion,
see Gompper v. VISX, Inc.,
IV
Rubke’s First Amended Complaint fails to allege with the requisite particularity that Capitol and its CEO Reid made materially misleading statements and omissions in connection with the Exchange Offer in violation of section 11 of the Securities Act and sections 10(b) and 14(e) of the Exchange Act. We therefore affirm the district court’s dismissal of the First Amended Complaint with prejudice.
AFFIRMED.
Notes
. Rubke challenges only the dismissal of her claims under section 11 of the Securities Act
*1161
and sections 10(b) and 14(e) of the Exchange Act. Rubke makes no argument about the dismissal of her claims under sections 12 and 15 of the Securities Act and section 20(a) of the Exchange Act. Thus, these claims have been forfeited on appeal.
Indep. Towers of Wash. v. Wash.,
. Because we found that Rubke could not sustain a claim under section 11 based on allegedly omitted information that did not exist at the time the registration statement became effective, we did not have the occasion to analyze Rubke’s telephone call allegations under section 11. See supra Part II.A.6.