Shmuel Levy, Individually and on Behalf of All Others Similarly Situated v. Jason Luo, James Taylor, Albert Li, Marshall Kiev, David Boris, and BDO USA, LLP

Summary

The United States District Court for the District of Delaware denied BDO USA, LLP’s motion to dismiss an amended securities-fraud class action complaint. The court held that the complaint sufficiently alleged actionable opinions, scienter, and reliance under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. BDO was ordered to answer the amended complaint within ten days.

Holdings

1. The amended complaint sufficiently alleged with particularity that BDO possessed the requisite scienter.
2. BDO failed to carry its burden of demonstrating that the amended complaint failed to allege reliance; at least the alleged presumption of reliance under Affiliated Ute was sufficient to defeat dismissal.
3. As determined in the court's prior memorandum opinion, an alleged opinion is actionable if the speaker did not sincerely hold the stated belief when made, the opinion contains embedded untrue statements of fact, or the opinion reasonably implies untrue facts and omits qualifying language.

Questions Presented

1. Whether the amended complaint sufficiently alleged that BDO acted with scienter in issuing its audit opinion and stating that it complied with auditing standards.
2. Whether the amended complaint sufficiently alleged reliance, including through the Affiliated Ute presumption and the Basic fraud-on-the-market presumption.
3. Whether BDO's prior falsity challenge was resolved by the court's prior holding that the alleged opinions were actionable.

Disposition

dismissed