Ninth Circuit Holds That Whistleblower Allegations Qualify As Corrective Disclosure In Securities Class Action

In re Bofl Holding, Inc. Securities Litigation  [PDF], a decision released on October 8, 2020, the U.S. Court of Appeals for the Ninth Circuit (the "Ninth Circuit") concluded that allegations in a whistleblower retaliation lawsuit can serve as corrective disclosure in a securities class action.  In doing so, the Ninth Circuit rejected two categorical rules:

• that allegations in a lawsuit, standing alone, can never qualify as corrective disclosure; and
• that disclosure based on publicly available information can never constitute corrective disclosure. 

This decision appears to contradict a previous holding by the Eleventh Circuit that allegations made in related civil litigation cannot serve as stand-alone corrective disclosures.