rules violation. Plaintiff does not allege a single document that the Auditor Defendant
was aware of which showed that its opinion was in error. Plaintiff has not identified any
fact that would lead the Auditor Defendant to be aware that the statements in the CAC
were false. There are no allegations of “red flags” that the Auditor Defendant should
have picked up on. Plaintiff alleges nothing more than conclusory allegations that the
Auditor Defendant should have known about the fraud, with no details as to how, why
and when it should have known. This is insufficient under Rule 9(b). See Garfield v.
NDC Health Corp., 466 F.3d 1255, 1262 (11th Cir. 2006) (affirming dismissal of
securities fraud claims against the company’s auditor for failing to plead the “who, what,
when, where, and how”).
Second, the CAC fails to allege any facts which show scienter. The SAC alleges
no facts as to the Auditor Defendant’s state of mind. Statements that it acted recklessly
are not sufficient. Statements as to other defendants’ state of mind do not transfer to
the Auditor Defendant. As noted above, plaintiff has not even alleged that the Auditor
Defendant violated any GAAP or other accounting standards.
The Auditor Defendant also argues that the CAC fails to establish loss causation
because the press releases are not linked to any of the three theories of fraud. For the
reasons stated above with respect to the Whitney Defendants’ motion, the Court agrees
that the CAC fails to plead loss causation. As to the Auditor Defendant, it is clear that
the press releases cannot be interpreted to “correct” any materially false or misleading
information which could possibly be attributed to any statement alleged to have been
made by the Auditor Defendant as there are no allegations that it made any specific
misstatements or omissions. There are no allegations as to how the announcement of