Scarborough v. Berthel Fisher & Co. Financial Services, Inc.

MEMORANDUM

Plaintiffs appeal from the dismissal with prejudice of their First Amended Complaint in this securities fraud case. Reviewing de novo, WPP Luxembourg Gamma Three Sarl v. Spot Runner, Inc., 655 F.3d 1039, 1047 (9th Cir.2011), petition for cert. filed, 80 U.S.L.W. 3531 (U.S. Feb.27, 2012) (No. 11-1069), we affirm.

Claims One and Two

Plaintiffs failed to plead misrepresentation and scienter adequately. See 15 U.S.C. § 78u-4(b)(l) (requiring particularity); Fed.R.Civ.P. 9(b) (same); WPP, 655 F.3d at 1048 (stating the elements of a claim under § 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5). The complaint fails to identify any affirmative misrepresentation. The complaint also fails to identify any material omission, because there is no allegation that the inclusion of further information about the cross-collateralization agreement would have revealed any specific problems with the other properties at the time the Private Placement Memorandum (“PPM”) was issued.

Even assuming that the complaint adequately pleads a misrepresentation or material omission, the facts alleged, taken collectively, do not “give rise to a strong…