Ninth Circuit Issues Key Ruling On Pleading Of Loss Causation In Securities Class Actions

Loos v. Immersion Corp., et. al., Case No. 12-15100, ---F.3d--- (9th Cir. 2014)

On August 7, 2014, the Ninth Circuit issued a key opinion on the pleading of loss causation in securities class actions, ruling for the first time that the mere announcement of an internal investigation, standing alone, is insufficient to establish loss causation. The Ninth Circuit affirmed as well that earnings releases announcing disappointing financial results were also insufficient by themselves to meet the loss causation requirement. The decision in Loos v. Immersion Corp., et. al.has significant ramifications for companies that disclose an internal investigation or announce financial results falling short of market expectations, and for the securities fraud litigation those companies may consequently face.