MEMORANDUM

This case was tried in 2006 and on appeal to us by the loser, U.S. Bank, was remanded with directions by this court. As we then noted, the key issues were (1) the materiality of the omissions made by the offeror of the securities, Sterne, Agee and Leach, Inc. (SAL) and (2) the reliance of the investors upon the information furnished. U.S. Bank Nat. Ass’n v. Sterne, Agee & Leach, Inc., 281 Fed.Appx. 740 (9th Cir.2008) (unpublished).

On remand, after a second bench trial, U.S. Bank again lost and again appeals.

In 2005, U.S. Bank, the trustee responsible for holding the investment collateral, stepped into the shoes of the investors by purchasing their shares. U.S. Bank’s purchase of the shares was part of a settlement to avoid liability for its own alleged negligence as the trustee that lost control of the collateral. With this nimble move, U.S. Bank now speaks as the allegedly defrauded investors, who were told nothing about the criminal past of Buck Olsen, the entrepreneur for whose benefit SAL arranged the financing.

As this court stated in its first opinion in this case, if material facts were omitted by SAL, then SAL had the burden of showing that the investors would not have acted differently if they had known the omitted facts. 281 Fed.Appx. at 742 .

We focus on the issue that is dispositive. The investors first bought the securities on May 21, 2002. They were informed in the offering memorandum:

In the face of these statements, no reasonable investor would have believed that Olsen’s reputation was relevant.

Four months later, in September of 2002, SAL proposed to amend the original agreement. The amendment substantially changed the security that the Credit Facility afforded the investors and gave substantially more discretion to Olsen in the investment of the funds held as security at U.S. Bank. The long-term Moody’s rating of the security was reduced two notches from Aaa to Aa2. The amendment did not give Olsen unlimited investment authority. The changes were submitted to the investors, who could have terminated their investment but, on September 18, 2002, chose to stay aboard. We construe the amendment as a new sale. See Roberts v. Peat, Marwick, Mitchell & Co., 857 F.2d 646, 651 (9th Cir.1988) (sale of securities takes place where investor makes a new “investment decision”).

Coming so soon after the May sale and proposed as an amendment to its terms, the new sale contained no statements repudiating the original declarations rejecting any reliance on the issuer. Both in May and September, the investors acted through a financial adviser, John Goetz. His testimony as to what he looked to was not consistent. At times he testified that if he had known Olsen’s past, his investment decision would have been different. He also testified that it would have made no difference. His deposition reads:

The factfinder had the task of deciding what parts of Goetz’s testimony to credit. The deposition testimony supports the conclusion that the investors’ decision would not have been affected by disclosure of Olsen’s background. We cannot say that the factfinder’s acceptance of this view of Goetz’s testimony was clear error. See Arrington v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 651 F.2d 615, 619 (9th Cir.1981) (questions of materiality and reliance reviewed under the clear error standard).

Separately, U.S. Bank claimed that SAL omitted to disclose that the shares were defectively issued under Washington’s corporations law. The district court ruled that the alleged omissions as to the legality of the shares were not material. Even assuming that the shares were not properly issued, they were enforceable under Washington contract law. See In re Spokane Concrete Prods., Inc., 126 Wash.2d 269 , 892 P.2d 98 (1995). The district court did not clearly err in finding that the investment decision of a reasonable investor would not have been affected by the technical defects in the issuance of the shares.

For these reasons, the judgment of the district court is AFFIRMED.

This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.