The defense bar gained an additional quiver in its arsenal against securities fraud claims in August when, for the first time, the Eleventh Circuit, in Carvelli v. Ocwen Financial, formally recognized the “puffery defense” in affirming the dismissal of a securities fraud class action case.

In Carvelli, the lead plaintiff brought a putative federal securities fraud class action against Ocwen claiming investors had detrimentally relied on Ocwen’s claims that it would achieve regulatory compliance after serious flaws in Ocwen’s mortgage servicing software caused the company to improperly track payments, assess late fees, and initiate thousands of wrongful foreclosures. Ocwen’s software failures provoked the ire of 49 state attorneys’ general, state regulatory agencies, and the CFPB. As a result, Ocwen was required to pay over $2 billion in a combination of restitution and fines, and was required to subject itself to a monitor.

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