NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: SEMICONDUCTOR 

MANUFACTURING INTERNATIONAL 

CORPORATION SECURITIES 

LITIGATION, 

______________________________ 

EDMOND K.L. TO, Lead Plaintiff; et al., 

Plaintiffs-Appellants, 

 v. 

SEMICONDUCTOR MANUFACTURING 

INTERNATIONAL CORPORATION, 

Defendant-Appellee, 

and 

ZIXUE ZHOU; et al., 

Defendants.

No. 22-55660 

D.C. Nos. 

2:20-cv-11219-GW-AFM 

2:21-cv-00067-GW-AFM 

MEMORANDUM*

Appeal from the United States District Court

for the Central District of California

George H. Wu, District Judge, Presiding

Argued and Submitted September 14, 2023

Pasadena, California

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

FILED

SEP 27 2023

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 

Before: SCHROEDER, FRIEDLAND, and MILLER, Circuit Judges.

Plaintiff appeals the district court’s order granting Defendants’ motion to 

dismiss Plaintiff’s second amended securities-fraud class action complaint 

(“SAC”). Reviewing de novo, we affirm. See Vess v. Ciba-Geigy Corp. USA, 317 

F.3d 1097, 1102 (9th Cir. 2003).

“To recover damages in a private securities fraud action, the plaintiff must 

establish a causal connection between the defendant’s fraudulent conduct and the 

plaintiff’s economic loss—an element known as loss causation.” In re BofI 

Holding, Inc. Sec. Litig., 977 F.3d 781, 786 (9th Cir. 2020). “One way to prove 

loss causation is to show that the defendant’s fraud was revealed to the market 

through one or more ‘corrective disclosures’ and that the company’s stock price 

declined as a result.” Id.

Plaintiff alleges that Defendants misled investors about the ties Defendant

Semiconductor Manufacturing International Corporation (“SMIC”) had to the 

Chinese military, including by stating on a call with analysts in May 2020 that 

SMIC was “commit[ted]” to “non-military use from day one, 20 years back,” and 

continued to be “full[y] commit[ted]” to non-military end-use of its products. 

Plaintiff alleges that later news articles revealed the falsity of those statements and

caused a correction of the fraudulently inflated stock price that caused him 

economic loss. Alternatively, Plaintiff argues that even if those news articles are 
3 

best understood as merely announcing an investigation into SMIC’s suspected ties 

to the Chinese military, he has still plausibly alleged loss causation under Lloyd v. 

CVB Financial Corp., 811 F.3d 1200, 1209-10 (9th Cir. 2016).

We assume without deciding that SMIC misled investors into thinking that it 

had no ties to the Chinese military. But we hold that Plaintiff has not plausibly 

alleged loss causation.

First, the Wall Street Journal (“WSJ”) article from September 2020 is not a 

corrective disclosure. It merely reported that the Trump administration was 

weighing putting SMIC on the Entity List because of the suspicion that it “aids 

China’s defense establishment,” and it only summarized allegations in a third

party’s report about SMIC’s alleged ties to the Chinese military, equivocating 

about the allegations’ veracity by noting that an expert on China found the

allegations of ties “tenuous.” Moreover, the WSJ article reported that the Trump 

administration had taken an increasingly broad approach to placing Chinese 

companies on the Entity List, “increasingly justif[ying] listings on broader 

national-security grounds.” The WSJ article therefore lacks the level of detail and 

certitude needed to “disclose[] facts that, if true, rendered false [SMIC’s] prior 

statements.” BofI, 977 F.3d at 793.

1

1 To the extent the underlying third-party report, which contained highly 

detailed allegations, could constitute a corrective disclosure, it could do so only if 
4 

Second, the Reuters article from September 26, 2020 is not a corrective 

disclosure because it lacks any purported facts contradicting the May 2020 

statement. It reports only that the Trump administration imposed trade restrictions 

on SMIC because of an “unacceptable risk” that equipment supplied to SMIC 

could be used by the Chinese military, not that SMIC indeed had ties to the 

Chinese military when it made the allegedly false statements.

Third, we disagree with Plaintiff that he has pleaded loss causation under the 

standard set forth in Lloyd, 811 F.3d 1200, by pointing to later actions by the 

Trump and Biden administrations restricting the sale of SMIC securities. Under

Lloyd, “the announcement of an investigation can ‘form the basis for a viable loss

causation theory’ if the complaint also alleges a subsequent corrective disclosure 

by the defendant.” Id. at 1210 (quoting Loos v. Immersion Corp., 762 F.3d 880, 

890 n.3 (9th Cir. 2014)). That subsequent disclosure must “confirm[]” the 

market’s fears—triggered initially by the investigation—that a defendant had 

misled investors. Id. at 1211. Even if the WSJ article and Reuters article can be 

characterized as announcements that the Trump administration would be 

investigating SMIC’s potential ties to the Chinese military, the Trump 

it were available to the market when the WSJ article drew attention to it. See BofI, 

977 F.3d at 786 (explaining that a defendant’s alleged fraud must be “revealed to 

the market”). But the WSJ article did not attach the report, and the SAC does not 

allege that the report was publicly available when the WSJ article was published. 

The report therefore cannot constitute a corrective disclosure either. 
5 

administration’s December 2020 action categorizing SMIC as a Communist 

Chinese Military Company is insufficient to confirm that Defendants misled 

investors during the relevant time period. The Biden executive order from June 

2021 also cannot establish loss causation because Plaintiff makes no allegation 

about how the relevant market reacted to that executive order. 

Because Plaintiff has failed to plead loss causation, which is an essential 

element of a securities-fraud claim, Plaintiff’s SAC fails to state a claim.

AFFIRMED.