Jules Brody Joyce T. Crawford v. Transitional Hospitals Corporation Wendy L. Simpson Richard L. Conte
Opinion
Opinion
Berzon, J.
In this case we address several securities fraud issues, centering on whether a plaintiff must have traded at about the same time as the insider it alleges violated securities laws. Jules Brody and Joyce T. Crawford brought suit against Transitional Hospital Corporation (“THC” or “the company”) and its officers claiming violations of the Securities and Exchange Act of 1934 (“Exchange Act”) and state law because the defendants both traded in reliance on inside information and released misleading public information. The district court granted the defendant’s motion to dismiss for failure to state a claim. Brody and Crawford now appeal the district court’s order on several grounds.
BACKGROUND
In determining whether the complaint states a claim upon which relief could be granted, we assume the facts alleged in the complaint to be true. Ronconi v. Larkin, 253 F.3d 423, 427 (9th Cir.2001). The facts alleged in the complaint are as follows:
On February 24, 1997, Vencor, Inc. submitted to THC’s board of directors a written offer to acquire the company for $11.50 per share. THC did not disclose this offer publicly. Between February 26 and February 28, THC purchased 800,000 shares of its…