Union Asset Management Holding AG v. Sandisk LLC

ORDER RE PENDING MOTIONS

This is the third iteration of a securities fraud class action that was most recently dismissed for failure to allege the required level of scienter. See Dkt. No. 143. To fix their scienter problem, the plaintiffs have amended their complaint to include statements from two confidential witnesses who previously worked at SanDisk. These confidential witnesses allegedly have knowledge of meetings at which high-level SanDisk executives received information inconsistent with the picture of corporate performance they shared with the investing public. The most important of the confidential witnesses is Confidential Witness 5 (“CW5”), whose statements (according to the complaint) suggest that SanDisk executives played down the difficulties encountered in integrating SanDisk’s new acquisitions with its existing staff, sales methods, and technology.

The defendants have moved to dismiss. They have also requested that dismissal be with prejudice. Ostensibly in connection with their request that dismissal be with prejudice—but ostensibly not in connection with the motion to dismiss itself—the defendants have submitted a “recanting declaration” in which CW5 alleges he…