February 13, 2014
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Fraud: Shareholders failed to raise strong inference of scienter, precluding Securities Exchange Act claim against company and its directors. Biotechnology Value Fund, L.P. v. Celera Corporation, 2013 WL 6731900 (N.D.Cal.) The duty of A group of shareholders, under the Private Securities Litigation Reform Act’s (PSLRA’s) heightened pleading instructions, failed to raise a strong inference of scienter on the part of a company and its directors, precluding their Securities Exchange Act claim alleging material misrepresentations in a recommendation statement regarding the company’s sale. An e-mail that the shareholders cited did not reference a study of the company’s drug assets or indicate that the defendants knew that the company’s advisor misapplied the study’s probabilities. Instead, the e-mail indicated that a director had doubts about the advisor’s analysis. Also, the shareholders provided no details as to how or by what amount the company restated its financials, nor as to the defendants’ access to information that would have revealed errors in the advisor’s analysis, nor as to purported payoffs paid to the directors. 2013 WL 6731900 (N.D.Cal.) (The full-text of the rest of the Topical Highlights is available within Westlaw Next, subscription required).