Smallen Revocable Living Trust, et al. v. Western Union Company, et al.Smallen Revocable Living Trust, et al. v. Western Union Company, et al.
Michael Grunfeld (Jeremy A. Lieberman, Emma Gilmore, and Jonathan D. Lindenfeld with him on the brief) of Pomerantz LLP, New York, New York, for Plaintiff-Appellant.
Hille R. Sheppard of Sidley Austin LLP, Chicago, Illinois (David F. Graham of Sidley Austin LLP, Chicago, Illinois; and Holly Stein Sollod and Christina Gomez of Holland & Hart LLP, Denver, Colorado, with her on the brief) for Defendants-Appellees.
Before HARTZ, BALDOCK, and EID, Circuit Judges.
This appeal arises from the district court‘s dismissal of Plaintiff–Appellant Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust‘s securities-fraud class action against Defendant–Appellee The Western Union Company and several of its current and former executive officers (collectively, “Defendants“). Following the announcements of Western Union‘s settlements with regulators in January 2017 and the subsequent drop in the price of the company‘s stock shares, Plaintiff filed this lawsuit on behalf of itself and other similarly situated shareholders. In its complaint, Plaintiff alleges Defendants committed securities fraud by making false or materially misleading public statements between February 24, 2012, and May 2, 2017 (the “Class Period“) regarding, among other things, Western Union‘s compliance with anti-money laundering (“AML“) and anti-fraud laws.
With respect to Defendants’ alleged misstatements concerning Western Union‘s legal compliance, the district court dismissed the complaint because Plaintiff failed to adequately plead scienter under the heightened standard imposed by the Private Securities Litigation Reform Act of 1995 (“PSLRA“),
I.
The actors involved in this case are many, and the allegations in Plaintiff‘s complaint are legion.1 Because the parties are well-acquainted with the record, we need not provide a comprehensive recitation of the full factual background underlying Plaintiff‘s claims. Rather, we set forth only the facts and procedural history necessary for our analysis and then turn to the merits of the arguments on appeal.
Western Union is the world‘s largest provider of money-transfer services, operating through an international network of over 500,000 agent locations in more than 200 countries and territories worldwide. As a major player in the money-transmitter industry, which is heavily regulated, Western
Following the announcement of the Joint Settlement, the price of Western Union stock shares declined. And shortly thereafter, Plaintiff filed its Consolidated Amended Class Action Complaint, on behalf of itsеlf and other similarly situated shareholders, against Western Union and a select group of its senior executives. These senior officers (collectively, the “Individual Defendants“) include:
- Mr. Hikmet Ersek, who has served as Western Union‘s Chief Executive Officer and President since September 2010, and as a member of the company‘s Board of Directors since April 2010. He held each of these positions throughout the Class Period.
- Mr. Scott T. Scheirman, who was Western Union‘s Chief Financial Officer and an Executive Vice President from September 2006 until December 31, 2013. He then served as a “Senior Advisor” until February 28, 2014. Mr. Scheirman was also responsible for “Global Operations” at Western Union from January 2012 through November 2012.
- Mr. Rajesh K. Agrawal, who has served as Western Union‘s Chief Financial Officer since July 2014 and as Executive Vice President since November 2011. He was the company‘s interim CFO from January 2014 to July 2014. Before that, Mr. Agrawal served as President of Western Union Business Solutions from August 2011 through December 2013.
In the complaint, Plaintiff alleges Defendants violated Section 10(b) of the Securities Exchange Act of 1934,
Defendants filed a motion to dismiss Plaintiff‘s complaint under Federal Rules of Civil Procedure 12(b)(6) and 9(b) and
II.
On appeal, Plaintiff argues the district court erred in concluding the complaint does not create a strong inference of scienter with respect to Defendants’ misstatements concerning Western Union‘s compliance with AML and anti-fraud laws. We disagree. To be sure, the complaint contains a plethora of allegations regarding unresolved compliance problems and government investigations into Western Union. But Plaintiff pleads very few particularized allegations, if any, showing Defendants made their statements with either intent to defraud investors or conscious disregard of a risk shareholders would be misled. Without such allegations, the complaint flounders on the PSLRA‘s heightened pleading standard.
A.
Section 10(b) of the Securities Exchange Act and Rule 10b–5 promulgated thereunder “prohibit making any material misstatement or omission in connection with the purchase or sale of any security.” Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 267 (2014); accord
(1) the defendant made an untrue or misleading statement of material fact, or failed to state a material fact necessary to make statements not misleading; (2) the statement complained of was made in connection with the purchase or sale of securities; (3) the defendant acted with scienter, that is, with intent to defraud or recklessness; (4) the plaintiff relied on the misleading statements; and (5) the plaintiff suffered damages as a result of his reliance.
In re Zagg, Inc. Sec. Litig., 797 F.3d 1194, 1200 (10th Cir. 2015) (quoting In re Level 3 Commc‘ns, Inc. Sec. Litig., 667 F.3d 1331, 1333 (10th Cir. 2012)). Only the element of scienter is at issue here.
Scienter is “‘a mental state embracing [1] intent to deceive, manipulate, or defraud,’ or [2] recklessness.” Anderson v. Spirit Aerosystems Holdings, Inc., 827 F.3d 1229, 1236–37 (10th Cir. 2016) (quoting Adams v. Kinder–Morgan, Inc., 340 F.3d 1083, 1105 (10th Cir. 2003)). “Intentional misconduct is easily identified since it encompasses deliberate illegal behavior.” City of Phila. v. Fleming Cos., 264 F.3d 1245, 1260 (10th Cir. 2001) (quoting Novak v. Kasaks, 216 F.3d 300, 308 (2d Cir. 2000)). Recklessness, on the other hand, is defined as “conduct that is an extreme departure from the standards of ordinary
B.
We review de novo the district court‘s dismissal under Federаl Rule of Civil Procedure 12(b)(6). Anderson, 827 F.3d at 1237. In conducting our review, we accept the complaint‘s well-pleaded factual allegations as true. Id. Generally, we only consider facts alleged in the complaint itself in evaluating the sufficiency of the complaint. Employees’ Ret. Sys. of Rhode Island v. Williams Companies, Inc., 889 F.3d 1153, 1158 (10th Cir. 2018). Notwithstanding this general rule, we may consider documents “the complaint incorporates by reference,” “documents referred to in the complaint if the documents are central to the plaintiff‘s claim and the parties do not dispute the documents’ authenticity,” and “matters of which a court may take judicial notice.” Id. (quoting Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010)).4
A plaintiff asserting a claim under Section 10(b) bears a heavy burden at the pleading stage because such claims are governed by the PSLRA, which imposes a heightened standard for pleading the element of scienter. In re Zagg, 797 F.3d at 1201; accord
Although an inference of scienter “need not be irrefutable, i.e., of the ‘smoking-gun’ genre,” it “must be more than merely plausible or reasonable.” Id. at 324. Because the inference must be “powerful or cogent” not only in its own right but “strong in light of other explanations[,]” we must “consider plausible, nonculpable explanations for the defendant‘s conduct, as well as inferences favoring the plaintiff.” Id. at 323–24. Under this standard, a complaint survives dismissal “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.” Id. at 324.
C.
To survive dismissal, Plaintiff must have pleaded particularized facts giving rise to a strong inference Defendants made their
1.
Turning first to the alleged scienter of the Individual Defendants, the complaint identifies facts in five categories Plaintiff argues collectively give rise to a strong inference the Western Union executives intended to defraud investors or acted recklessly in making false statements. Plaintiff relies on: (1) various “red flags” regarding fraud and compliance violations; (2) discussions about compliance issues at Western Union board and committee meetings; (3) Western Union‘s interactions with government regulators and pending investigations; (4) the company‘s admissions in the DPA and the FTC‘s conclusions in the Joint Settlement; and (5) Western Union executives’ motive to defraud investors. We examine each category of facts in turn and then “assess all the allegations holistically” to determine whether they satisfy the PSLRA. Tellabs, 551 U.S. at 326.
a.
First, Plaintiff contends various red flags alerted the Individual Defendants to ongoing regulatory compliance violations. These red flags include the following allegations: (1) Western Union received at least 550,928 consumer complaints between January 1, 2004, and August 29, 2015, concerning at least $632,721,044 in fraud transactions; (2) fraudulent transfers involved Western Union‘s agents in sеveral countries; and (3) several third-party agents, reaching as far back as 2007, were arrested for fraud and money laundering. Because of the serious and pervasive nature of the fraud involving Western Union‘s money-transfer system, Plaintiff argues the Individual Defendants must have known the company‘s compliance programs were ineffective at the time they made their alleged misstatements.
There are two problems with this argument. For one thing, although surely a noteworthy sum, the $632,721,044 in fraudulent transactions—which occurred over a twelve-year period—represents less than 1% of the dollars transferred through Western Union‘s system in 2014 alone, which amounted to $85 billion. This is not a case where allegedly fraudulent transactions amounted to an overwhelming percentage
More importantly, Plaintiff does not plead any particularized facts either tying the Individual Defendants to the consumer complaints or the agent arrests, or otherwise demonstrating the Individual Defendants were aware Western Union‘s compliance program had failed to redress these issues. These allegations demonstrate fraudsters, including Western Union‘s agents, used the company‘s system to commit fraud both before and during the Class Period. But the issue here is not simply whether bad actors used Western Union‘s money-transfer system to perpetrate widespread fraud. Rather, Plaintiff must show the Individual Defendants knew this fraud was occurring (or were severely reckless in not knowing about it) and were also aware Western Union‘s compliance program was not effectively addressing these issues. This is where this category of allegations falls short. Thus, we are not persuaded these “red flags” support any inference the Individual Defendants knew about or consciously disregarded ongoing illegality at the time they made their misstatements regarding Western Union‘s compliance programs.
Plaintiff also argues materials from Western Union‘s board and committee meetings, which the Individual Defendants allegedly attended, evidences their knowledge of flaws in the company‘s compliance programs. These materials derive from meetings which took place between May 2010 and October 2013. The relevant discussions at these meetings concerned regulators’ increased attention to Western Union‘s agents, the need for improvement in compliance programs to mitigate AML and fraud in high-risk regions, and a competitor‘s settlement agreement with DOJ.
Even assuming the Individual Defendants were briefed on these compliance matters while attending the identified meetings, “mere attendance at meetings does not contribute to an inference of scienter.” Anderson, 827 F.3d at 1246; see also In re Level 3, 667 F.3d at 1344 (concluding the fact the defendants “monitored [a contested program] through regular meetings and reports” did not give rise to a “strong inference” of scienter). We fail to see how either government regulators’ increased attention to certain regions or discussions about the need for improving Western Union‘s compliance controls equates to knowledge of ongoing, unaddressed compliance violations. Additionally, Plaintiff‘s allegations concerning the terms of a 2012 settlement agreement Moneygram—Western Uniоn‘s main competitor—reached with DOJ for compliance failures like those at issue here amount to “allegations of ‘fraud by hindsight,’ which does not constitute securities fraud.” See Anderson, 827 F.3d at 1247. These allegations therefore also fail to suggest any inference of scienter.
Turning to the third category of scienter-related allegations, Plaintiff‘s complaint is replete with facts concerning government investigations into Western Union‘s legal compliance, interactions with regulators,
Dovetailing with the existence of the governmental investigations, Plaintiff argues the Individual Defendants knew about Western Union‘s compliance violations because the company produced, among other things, internal reports and records analyzing consumer fraud complaints and suspicious agents to the investigators. These investigations, Plaintiff alleges, revealed the deficiencies in Western Union‘s compliance programs and provided the basis for DOJ‘s and FTC‘s conclusions that Western Union turned a blind eye to third-party agents complicit in money laundering and consumer fraud. Defendants, on the other hand, contend Plaintiff fails to provide any particularized allegations showing the Individual Defendants themselves dealt with the government regulators, reviewed the underlying documents submitted as part of the investigations, or were otherwise informed legal noncompliance existed within the company during the Class Period. We agree with Defendants.
Plaintiff‘s argument is strongest against Mr. Ersek, the CEO of Western Union during the Class Period. Confidential Witness (“CW“) 4, who worked as a former high-level compliance officer at Western Union between late 2011 and April 2013, “regularly briefed Ersek on relevant compliance-related issues, including the status of the Southwest Border Agreement and system and compliance changes.” CW4‘s statements demonstrate Mr. Ersek was a hands-on chief executive, which is “a fact relevant in our weighing of the totality of the allegations.” Adams, 340 F.3d at 1106. But we “cannot infer scienter based only on a defendant‘s position in a company or involvement with a particular project.” Anderson, 827 F.3d at 1245; see also Adams, 340 F.3d at 1106 (explaining the defendant‘s status as chief executive of the company was a relevant fact but direct knowledge of the chief financial officer was “an important link in the inferential chain“). Neither CW4‘s account nor the accounts of the other confidential sources cited in the complaint establish that Mr. Ersek reviewed the documents submitted as part of the investigations or was informed about ongoing, unaddressed compliance violations during the Class Period.6
Plaintiff also points to Western Union‘s admissions in the DPA and the FTC‘s conclusions in the Joint Settlement regarding the company‘s awareness of serious compliаnce problems as evidence of scienter. In the DPA, Western Union admitted to willfully failing to implement an effective AML compliance program from 2004 through December 2012. Similarly, the FTC Complaint, the underlying allegations of which Western Union did not admit to, concluded the company ignored compliance violations through October 2015. Based on these admissions and conclusions in January 2017, Plaintiff argues the Individual Defendants must have been aware of these ongoing legal violations when they made their alleged misstatements.
The problem with Plaintiff‘s argument is the PSLRA does not permit allegations of “fraud by hindsight.” See Anderson, 827 F.3d at 1247. Put another way, Plaintiff may not rely on a subsequent event triggering a decrease in stock price “to say that the later, sobering revelations make the earlier, cheerier statement a falsehood.” Grossman v. Novell, Inc., 120 F.3d 1112, 1124 (10th Cir. 1997) (citation omitted). Rather, Plaintiff must provide particularized allegations showing the Individual Defendants, before the announcement of the Joint Settlement, knew of or recklessly disregarded the falsity of the challenged statements at the time they made the statements. See In re Level 3, 667 F.3d at 1347 (“[H]indsight review . . .
Finally, Plaintiff argues the Individual Defendants had motive to defraud investors because they, along with other Western Union executives, used nonpublic information to sell company stock at artificially inflated pricеs during the Class Period. Specifically, Plaintiff alleges Mr. Ersek sold approximately 600,000 shares of Western Union common stock for proceeds of more than $12 million between 2013 and August 2016. Plaintiff also avers Mr. Agrawal sold over 9,000 shares for proceeds of approximately $200,000 in August 2016. The complaint contains additional allegations regarding other non-defendant executives who allegedly profited by selling Western Union stock during the Class Period.
“Motive can be a relevant consideration, and personal financial gain may weigh heavily in favor of a scienter inference,” Tellabs, 551 U.S. at 325, but these factors are “typically insufficient in themselves” to give rise to a strong inference of scienter. Pirraglia v. Novell, Inc., 339 F.3d 1182, 1191 (10th Cir. 2003). While suspicious insider stock trading is evidence of motive and weighs in favor of inferring fraudulent intent, the amount of profit realized through executive stock sales, standing alone, is insufficient to support an inference of scienter. See In re Level 3, 667 F.3d at 1346–47 (considering various factors in concluding corporate executives’ stock sales did not establish a motive). To determine whether trading activity is suspicious, courts consider several factors, including “the amount of profit from the sales, the portion of stockholdings sold, the change in volume of insider sales, and the number of insiders selling.” In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 74–75 (2d Cir. 2001).
Even assuming the timing of Mr. Ersek‘s and Mr. Agrawal‘s stock sales is suspicious—notwithstanding the fact these transactions were made in connection with an exercise of expiring options—the sales are not unusual when viewed in context. Both Mr. Ersek and Mr. Agrawal increased their aggregate holdings during the Class Period, and their respective sales yield from the identified transactions constituted only a fraction of their respective holdings.9 These factors militate against an
Critically, Plaintiff does not allege Mr. Scheirman sold any Western Union stock during the Class Period. While suspicious stock sales are not necessary to adequately plead scienter, see In re Level 3, 667 F.3d at 1346, “the failure of other defendants to sell their stock undermine[s] [Plaintiff‘s] theor[y] that negative information was withheld to obtain a higher sell price.” In re Scholastic, 252 F.3d at 75; see also Southland Sec. Corp. v. INSpire Ins. Sols., Inc., 365 F.3d 353, 369 (5th Cir. 2004) (same). Because the complaint does not allege Mr. Scheirman sold any Western Union stock, we view Plaintiff‘s argument regarding Mr. Ersek‘s and Mr. Agrawal‘s motive to defraud investors with greater skepticism based on the record before us.
As for the stock sales of other Western Union executives identified in the complaint, Plaintiff fails to provide adequate context for these transactions. There are no allegations concerning the price initially paid for the stock, what percentage of total shares thеse sales consisted of, or whether they were buying other types of shares at the same time. Without such information, it is hard to reach any conclusion as to what kind of financial gain is at issue and whether these sales are unusual or suspicious.
In sum, we are not persuaded the stock sales of Mr. Ersek, Mr. Agrawal, or the other Western Union executives identified in the complaint demonstrate the Individual Defendants had motive to defraud investors. Plaintiff has therefore failed to plead facts showing any of the Individual Defendants had a particularized motive to engage in wrongful conduct. Although the absence of an alleged motive is not fatal to Plaintiff‘s claims, it does weigh against a finding of scienter. See Employees’ Ret. Sys. of Rhode Island, 889 F.3d at 1173.10
b.
Viewing all of Plaintiff‘s allegations holistically, we must decide “if a reasonable person would deem the inference of scienter cogent and at least as compelling as any plausible opposing infеrence one could draw from the facts alleged.” Tellabs, 551 U.S. at 324. Two inferences compete for credence here. The culpable inference is the Individual Defendants were aware, at some point during the Class Period, of ongoing illegality not being redressed by Western Union‘s compliance programs and yet continued to assure investors the company complied with applicable AML and anti-fraud laws. The innocent inference, on the other hand, is the Individual Defendants neither knew about nor consciously disregarded the ongoing illicit behavior at Western Union when they made their alleged misstatements but rather were overly
Based on the totality of the allegations, the inference of scienter arising from Plaintiff‘s complaint is neither cogent nor as compelling as the competing inference of nonfraudulent intent. Plaintiff supplies few, if any, particularized facts giving rise to a strong inference any of the Individual Defendants intentionally misrepresented when they made their alleged misstatements regarding Western Union‘s then-current legal compliance. In the absence of such allegations, the complaint does not adequately allege the Individual Defendants’ misstatements were made with the knowledge of a danger of misleading investors.
Even if the complaint fails to raise a strong inference of intent to deceive, manipulate, or defraud, Plaintiff argues it at least raises a strong inference the Individual Defendants “acted with a reckless disregard of a substantial likelihood of misleading investors.” See Nakkhumpun v. Taylor, 782 F.3d 1142, 1150 (10th Cir. 2015). The allegations Plaintiff advances demonstrate the Individual Defendants were too optimistic about Western Union‘s compliance systems and failed to give adequate weight to certain red flags, such as pending government investigations, at the time they made their alleged misstatements. But as we explained above, “recklessness in this context is a particularly high standard, something closer to a state of mind approximating actual intent.” In re Zagg, 797 F.3d at 1206 (quotation marks and citations omitted). The more compelling inference to be drawn from Plaintiff‘s complaint is, at most, one of negligence or possibly even gross negligence.
In sum, after evaluating all of Plaintiff‘s allegations with respect to the alleged misstatements regarding Western Union‘s legal compliance and considering the competing inference of nonfraudulent intent, we conclude the complaint fails to raise a strong inference any of the Individual Defendants acted with scienter. The district court, therefore, did not err in dismissing Plaintiff‘s Section 10(b) claims against the Individual Defendants.
2.
Although Plaintiff fails to adequately plead scienter for any of the Individual Defendants, the complaint could, in theory, still give rise to a strong inference Western Union acted with the requisite state of mind. Corporations, of course, do not have their own state of mind. Rather, the scienter of a corporation‘s agents must be imputed to it. See Adams, 340 F.3d at 1106. The question remains, however: Whose state of mind matters?
The appropriate standard for evaluating whether a non-defendant corporate agent‘s state of mind can be imputed to a corporate defendant under the PSLRA appears to be an open question in this circuit. We have recognized “[t]he scienter of the senior controlling officers of a corporation may be attributed to the corporation itself to establish liability as a primary violator of § 10(b) and Rule 10b–5 when those senior officials were acting within the scope of their apparent authority.” Id. (emphasis added). Applying this principle in Adams, we determined the complaint adequately alleged scienter on behalf of Kinder–Morgan, the corporate defendant, because the allegations gave rise to a strong inference the company‘s CEO and CFO, who also were named defendants and parties on appeal, acted with scienter when they signed the company‘s misleading financial statements. Id. at 1105–07.
Plaintiff suggests the scienter of any Western Union agent, including lower-level corporate officers who played no role in the misstatement, can be imputed to the company for purposes of liability
Here, Plaintiff argues the alleged scienter of other Western Union executives—including Mr. Barry Koch, Mr. Stewart Stockdale, and “the Company‘s counsel and/or the Company‘s compliance officer” responsible for responding to the government‘s investigative inquiries—is attributable to the company.11 Most of the allegations regarding these executives’ state of mind, such as the pervasive nature of AML violations at Western Union identified in the Joint Settlement, are identical to Plaintiff‘s insufficient allegations against the Individual Defendants. Evеn assuming, for the sake of argument, the state of mind of all these individuals can be imputed to Western Union, Plaintiff‘s argument fails because the complaint does not raise a strong inference any of these individuals acted with scienter.
Plaintiff contends Mr. Koch “had every reason to know in the ordinary course of his job the information described in the Joint Settlement” because he was Western Union‘s Chief Compliance Officer from May 2013 to November 2015. Mr. Koch‘s position would help establish whether he should have known about deficiencies in Western Union‘s compliance systems. “But additional particularized facts are necessary for an inference of scienter.” See Anderson, 827 F.3d at 1245.
The only additional particularized fact allegedly revealing Mr. Koch‘s scienter is a September 2013 report he received concerning a master agent‘s failure to properly record transactions. Western Union did not terminаte this agent, but the report indicates the company had already implemented remedial measures to address the issue. Although Plaintiff argues this action was insufficient, as the FTC concluded in the Joint Settlement, it fails to show Mr. Koch knew or consciously disregarded widespread failures by Western Union to address compliance issues. Plaintiff‘s argument here falters for the same reason as its contentions regarding the Individual Defendants: the complaint lacks particularized allegations giving rise to a strong inference Mr. Koch ignored ongoing, unremedied illegality or was otherwise aware Western Union‘s compliance systems were failing during the Class Period.
Plaintiff‘s argument regarding the scienter of “the Company‘s counsel and/or the Company‘s compliance officer” who ovеrsaw Western Union‘s responses to governmental investigations is also without merit. The only particularized allegation supporting Plaintiff‘s contention is CW4‘s account, which provides “the Company‘s General Counsel w[as] always briefed on the discipline or shutdown of agents and any related investigations.” This fact, even when considered with all the other allegations Plaintiff advances, clearly falls short of giving rise to an inference—must less a strong inference—Western Union‘s General Counsel or some unnamed compliance officer was aware of ongoing, unaddressed illegality within the company.
Notwithstanding the complaint‘s failure to give rise to a strong inference of scienter as to any identifiable Western Union officer, Plaintiff contends the company is nonetheless subject to § 10(b) liability under the doctrine of “corporate scienter,” alternatively referred to as “collective scienter.” This dоctrine—which several of our sister circuits have addressed, but few have adopted, and even less have applied to find scienter—allows a plaintiff to plead scienter against a corporate defendant without doing so for a specific individual. See In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1063 (9th Cir. 2014) (“[T]here could be circumstances in which a company‘s public statements were so important and so dramatically false that they would create a strong inference that at least some corporate officials knew of the falsity upon publication.“) (quoting Glazer Capital Mgmt., LP v. Magistri, 549 F.3d 736, 744 (9th Cir. 2008)).
We have neither accepted nor rejected this theory of corporate scienter, and we need not do so now. Although the compliance violations at Western Union were serious and long-lasting, the facts pleaded are a far cry from the hypothetical situation our sister courts have provided as to when the doctrine would apply:
Suppose General Motors announced that it had sold one million SUVs in 2006, and the actual number was zero. There would be a strong inference of corporate scienter, since so dramatic an announcement would have been approved by corporate officials sufficiently knowledgeable about the company to know that the announcement was false.
Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d 702, 710 (7th Cir. 2008); see also In re NVIDIA, 768 F.3d at 1063 & n.13 (using the same example); Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190, 195–96 (2d Cir. 2008) (same). Even if we deemed it possible to plead scienter against a corporation without pleading scienter against
III.
Finally, we conclude Plaintiff has failed to state a control-person claim against the Individual Defendants. Control-person claims under Section 20(a) of the Securities Exchange Act of 1934,
* * *
For the foregoing reasons, we AFFIRM the judgment of the district court.