MEMORANDUM

In this class action brought by purchasers of stock of Defendant Ubiquiti Networks, Inc., Plaintiffs appeal the district court’s dismissal of their complaint alleging various violations of the federal securities laws against Ubiquiti and its officers. Reviewing de novo, Rubke v. Capitol Bancorp Ltd., 551 F.3d 1156, 1161 (9th Cir. 2009), we affirm in part, reverse in part, and remand for further proceedings.

1. The district court erred by dismissing Count I, which alleges a violation of Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k. “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.” Rubke, 551 F.3d at 1161 (internal quotation marks omitted). Construing Plaintiffs’ allegations in the light most favorable to Plaintiffs, Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010), the registration statement misrepresented the true extent of counterfeiting and the misrepresentation would have misled a reasonable investor.

2. The district court also erred in dismissing Count III, which alleges a violation of Section 15 of the Securities Act of 1933, 15 U.S.C. § 77o. The court reasoned, correctly, that there can be no Section 15 violation without an underlying Section 11 violation. Because we reverse the Section 11 dismissal, we also must reverse the dismissal of this claim.

3. The district court correctly dismissed Count IV, which alleges a violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). Unlike for a Section 11 claim, Plaintiffs must demonstrate “scienter” to establish a Section 10(b) claim. Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). Construing Plaintiffs’ allegations in the light most favorable to Plaintiffs, Daniels-Hall, 629 F.3d at 998 , the complaint fails to demonstrate that Defendants had sufficient knowledge of the misleading nature of the challenged statements.

4. The district court correctly dismissed Count V, which alleges a violation of Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78t(a). The court reasoned, correctly, that there can be no Section 20(a) violation without an underlying Section 10(b) violation.

AFFIRMED in part, REVERSED in part, AND REMANDED. The parties shall bear their own costs on appeal.

This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. . The district court ruled that the Section 11 claim "sounded in fraud” and was, therefore, subject to heightened pleading standard for fraud. We need not reach that issue because the complaint states a plausible claim under either standard.