United States Second Circuit

In this securities fraud class action, the lead plaintiff alleges that certain auditor defendants committed securities fraud by recklessly making false statements in their audit reports relating to the financial statements of Advanced Battery Technologies, Inc (ABAT). After dismissing the initial complaint because it failed to adequately plead that the auditor defendants acted with the requisite scienter, the district court denied as futile plaintiff's motion to amend. The judgment of the district court is affirmed, where: 1) defendants' failure to detect ABAT's fraudulent reporting is not conduct approximating an actual intent to aid in the fraud being perpetrated by the audited company; and 2) the factual allegations here rise to mere negligence, rather than a strong inference of either fraudulent intent or conscious recklessness.

Appellate Information

• Decided 03/25/2015
• Published 03/25/2015

Judges

• Lohier

Court

• United States Second Circuit

Counsel