read-rite's shareholders did not allege specific particulars of any intent to defraud sufficient to support their securities fraud class action, the 9th U.S. Circuit Court of Appeals held on July 3. In re Read-Rite Corp. Securities Litigation, No. 00-17098.

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DECISIONS Young’s e-mail address is gyoungnlj.com. read-rite’s shareholders did not allege specific particulars of any intent to defraud sufficient to support their securities fraud class action, the 9th U.S. Circuit Court of Appeals held on July 3. In re Read-Rite Corp. Securities Litigation, No. 00-17098. Owners of Read-Rite common stock brought a securities class action against Read-Rite Corp. and its CEO and chief operations officer pursuant to the Private Securities Litigation Reform Act (PSLRA), alleging that they violated the Securities Exchange Act of 1934 § 10(b), which forbids the use of any deceptive contrivance in connection with the sale of securities. A California federal court concluded that the stockholders did not allege intent to defraud with the particularity required by the PSLRA, and dismissed the case. On appeal, the 9th Circuit affirmed the dismissal, agreeing with the district court that the plaintiffs had not adequately alleged specific facts that support a “strong inference” of intent to defraud on the part of the CEO and COO of Read-Rite through the making of false statements to investors regarding the status of product development and the demand for the products. While they established a “reasonable inference,” it fell short of the “strong inference” required.

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