In Re: Rigel Pharmaceuticals

Summarized by:

  • Court: 9th Circuit Court of Appeals Archives
  • Area(s) of Law: Civil Law
  • Date Filed: 09-06-2012
  • Case #: 10–17619
  • Judge(s)/Court Below: Circuit Judge Hug for the Court; Circuit Judges B. Fletcher and Paez
  • Full Text Opinion

District court did not err by granting defendants’ motion to dismiss because plaintiffs failed to sufficiently plead securities violations for misleading and fraudulent statements issued by a drug development company in relation to their 2008 stock offering.

Inter-Local Pensions Fund filed suit for securities fraud, individually and on behalf of common stock purchasers of Rigel Pharmaceuticals, Inc. (Rigel), for violations of the Securities Exchange Act. The complaint alleged that Rigel and others (collectively “Defendants”) made false or misleading statements regarding their registration and prospectus statements issued in relation to their 2008 stock offering. The district court granted Defendants’ motion to dismiss, finding that the complaint did not “sufficiently allege a false or misleading statement or omission and failed to sufficiently allege scienter[.]” Plaintiffs appealed. The Ninth Circuit held that the complaint did not sufficiently allege misstatements in connection with partnership prospects and did not sufficiently plead scienter, which requires showing a “strong inference” that Defendants intended to deceive by making fraudulent or misleading statements. Additionally, the Court ruled that Plaintiffs’ Section 11 claims, creating a remedy under the Securities Act for registration misstatements, were based in fraud, and, therefore, did not meet the particularity pleading requirements to sufficiently allege fraud. AFFIRMED.

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