Securities & Exchange Commission v. Small Cap Research Group, Inc.

MEMORANDUM **

Ulysses Thomas Ware, Investment Technology, Inc. (IT), Thomas D. Vidmar, Rosenfeld, Goldman & Ware, Inc. (RGW), Small Cap Research Group, Inc., and Centennial Advisors, L.L.C., (collectively, ‘Ware,” unless otherwise indicated) appeal the district court’s order denying dismissal of the complaint by the Securities and Exchange Commission (SEC), entry of default judgment, denial of their motion to set aside the judgment, and imposition of a permanent injunction. We affirm.

I

The complaint adequately states how and why press releases and analyst reports were false when issued. In re Glen- ed, Inc. Sec. Litig., 42 F.3d 1541 , 1548-49 (9th Cir.1994) (en banc). As Ware concedes that the Private Securities Litigation Reform Act, 15 U.S.C. §§ 78u-4, et seq., does not apply, the allegations must only pass muster under Fed.R.Civ.P. 9(b), which they do. Scienter may be, and has been, averred generally. See, e.g., Ponce v. SEC, 345 F.3d 722, 729 (9th Cir.2003) (noting that recklessness suffices). Ware’s argument that statements of “optimism” or “puffery” aren’t actionable fails as this case turns on the standards of Rule 9(b), not on the materiality standards for Rule 10b-5…