United States Court of Appeals

For the First Circuit

No. 20-1857

JORGE PONSA-RABELL; CARINA PEREZ-CISNEROS ARMENTEROS; MARILU 

CADILLA-REBOLLEDO, by herself and on behalf of her children's 

accounts,

Plaintiffs, Appellants,

YGRC MINOR CHILD; CIRC MINOR CHILD

Plaintiffs,

v.

SANTANDER SECURITIES LLC; SANTANDER BANCORP; SANTANDER HOLDINGS 

USA, INC.; BANCO SANTANDER PUERTO RICO; BANCO SANTANDER, S.A.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Gustavo A. Gelpí, Chief U.S. District Judge]

Before

Thompson and Howard, Circuit Judges,

and Woodcock,* District Judge.

Eric M. Quetglas-Jordan, with whom José F. Quetglas-Jordán, 

Quetglas Law Offices, and Quetglas Law Firm, P.S.C. were on brief, 

for appellants.

Francesca Eva Brody, with whom Andrew W. Stern, Nicholas P. 

Crowell, James O. Heyworth, Sidley Austin LLP, Néstor M. Méndez, 

Jason R. Aguiló Suro, and Pietrantoni Méndez & Alvarez LLC were on 

* Of the District of Maine, sitting by designation.
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brief, for appellees.

May 20, 2022
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THOMPSON, Circuit Judge. Before us is a dispute between 

brokerage customers of Santander1, who, lacking a crystal ball, 

purchased special Puerto Rico securities during a recession in 

Puerto Rico, but before the crash of the bond market. These 

purchasers (we'll refer to them as the "Ponsa-Rabell plaintiffs" 

or "plaintiffs" hereafter) brought a securities class action 

against Santander asserting claims under federal securities laws 

and Puerto Rico law. The district court adopted the Report and 

Recommendation of the magistrate judge, dismissing all claims. On 

appeal, the Ponsa-Rabell plaintiffs dispute only the federal 

securities claims (more on that later). Our take, reviewing with 

fresh eyes, is that the district court got it right, so we affirm. 

BACKGROUND2

The Ponsa-Rabell plaintiffs purchased Puerto Rico 

Municipal Bonds (PRMBs) and other securities heavily concentrated 

1 In an effort to declutter the opinion of hard-to-remember 

abbreviations, the defendants-appellees here will be collectively 

referred to as "Santander." The parties named in the complaint 

are Santander Securities, LLC (SSLLC), Santander Holdings USA, 

Inc. (SHUSA), Banco Santander, S.A. (BSSA), Santander Bancorp 

(Bancorp), and Banco Santander Puerto Rico (BSPR). Bancorp and 

BSPR were substituted for FirstBank Puerto Rico by order of this 

court on March 30, 2021, pursuant to Fed. R. App. P. 43(b). The 

Ponsa-Rabell plaintiffs have informed this court that the claims 

subject to this appeal are solely against SSLLC. 

2 All facts are taken from the complaint and accepted as true 

on a motion to dismiss, and we disregard any conclusory 

allegations. O'Brien v. Deutsche Bank Nat'l Tr. Co., 948 F.3d 31, 

35 (1st Cir. 2020). We may also consider documents attached to 

the complaint and incorporated by reference therein. Id.
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in PRMBs, including Puerto Rico Closed End Funds (PRCEFs) and 

Puerto Rico Open End Funds (PROEFs) (to avoid overcomplicating 

things, we'll refer to them collectively as "PRMB securities") 

from December 1, 2012, to October 31, 2013 (the "Class Period"). 

PRMBs are bonds used by the Puerto Rican government to finance 

their "commercial operations." Buyers of the PRMBs loan the issuer 

money in exchange for a set number of interest payments. Issuers 

guarantee payment of the monthly yield and principal by a certain 

maturity date. 

The PRMB securities were marketed to the public through 

prospectuses that were specific to each fund. The prospectuses

(also called offering statements or official statements) disclosed 

the fund's investment objectives, risk factors, and tax 

consequences, among other useful information. Relevant to this 

dispute, these prospectuses included specific sections that 

clearly described the investment risks attendant to investment in 

each particular fund. Despite the potential risks, the PRMB 

securities were attractive investments for Puerto Rico residents 

for some years, as they generally offered higher interest than 

comparable investments and were exempt from Puerto Rico and U.S. 

income and estate taxes.

Prior to and throughout the Class Period, Puerto Rico 

was experiencing an economic recession. Given the nature of the 

PRMB securities (as we just discussed), investing in them during 
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a recession was risky. As of December 2012, the PRMB securities' 

funds were highly concentrated in PRMBs and highly leveraged. This 

is because during the recession, Puerto Rico issued billions of 

dollars in PRMB securities, which it used to pay off existing 

debts, or as the complaint complains, used "debt to pay debt." 

The sales of PRMB securities were not used to help stimulate (or 

in this case, revive) the Puerto Rican economy "or alleviate its 

social needs." During the Class Period, Puerto Rico's deficit 

increased to approximately $2.2 billion, and eventually, those 

debts became unpayable. 

In 2012, various public sources began issuing warnings 

about the increasing risks attendant to holding PRMB securities.

The complaint helpfully provides some examples of information that 

was in the public sphere regarding Puerto Rico's economic 

shakiness. This includes: a March 2012 Breckinridge Capital 

Advisors report that warned Puerto Rico was "flirting with 

insolvency" and that someday the Commonwealth may be unable to 

repay its debts; the fact that on August 8, 2012, Moody's Investor 

Service ("Moody's") lowered Puerto Rico's general obligation 

("GO") bond credit rating to Baa1, raised concerns about 

outstanding government debt, and advised that "[c]onservative 

investors with concentrated exposure to any single borrower in the 

municipal market should pursue portfolio diversification"; and, on

December 13, 2012 (just days after the Class Period begins), 
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Moody's downgraded Puerto Rico's credit rating again to Baa3, just 

above junk bond status (i.e., not "investment grade").

As previewed by these public statements on the overall 

infirmity of the Puerto Rico economy in 2012 and 2013, so too was 

the municipal bond market suffering, exemplified by a period of 

heightened volatility, rising yields, and downward pressure on the 

price of PRMBs. The bond market eventually crashed in the fall of 

2013, resulting in financial losses for all those who invested in 

PRMB securities.

Because Santander knew that the PRMB securities were 

risky, it actively tried to rid itself of its inventory. When 

Moody's downgraded Puerto Rico's GO rating to Baa3 (i.e., basically 

junk bond status), Santander began reducing its PRMB securities 

inventory at a more rapid clip because of its concern of risk 

exposure given the direction of the market. While Santander was 

ridding itself of PRMB securities, it was also selling them to the 

Ponsa-Rabell plaintiffs. By October of 2013, the market for PRMB 

securities had crashed. In the meantime, Santander managed to 

reduce its PRMB inventory from $35 million to $105,000, and its 

PRCEF inventory from $9.2 million to $6.8 million. The PonsaRabell plaintiffs weren't as lucky, and suffered severe economic 

losses following the crash. Their complaint alleges that had the 

risks of investing in the PRMB securities been disclosed by 

Santander, they would have never purchased PRMB securities. 
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Santander replies that all risks were adequately disclosed to the 

Ponsa-Rabell plaintiffs by Santander, and that the investment 

risks they complain of were generally known to the public. 

HOW WE GOT HERE

Four years after the bond market crashed, the PonsaRabell plaintiffs filed their initial complaint against Santander. 

They have amended their complaint a few times, leaving us with 

what they style the Third Amended Complaint (for our purposes, 

just the "complaint"). In broad strokes, the complaint alleges 

that Santander devised a "scheme to defraud" investors into 

purchasing the PRMB securities by omitting information about the 

state of the market (and thus the riskiness of the investment), 

and about its own program to rid itself of PRMB securities, in 

violation of Section 10(b) and Rule 10b-5 of the Exchange Act of 

1934 (the "securities claims"). In addition to the securities 

claims, the Ponsa-Rabell plaintiffs also brought claims under 

Section 17(a) of the 1933 Securities Act and Puerto Rico law.3 

3 In addition to the securities claims, the district court's 

Opinion and Order Adopting Report and Recommendation notes that 

the Ponsa-Rabell plaintiffs concede that there is no private right 

of action under Section 17(a). The district court declined to 

exercise supplemental jurisdiction over the claims under Puerto 

Rico law. In their appeal, the Ponsa-Rabell plaintiffs briefly 

state that the district court should exercise supplemental 

jurisdiction over their state law claims because their federal law 

claims should not be dismissed. We decline to address this 

contention not only because it is waived for lack of development

(see United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990)), 

but also because our decision today is that the federal law claims 
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Santander moved to dismiss the complaint, and the magistrate judge 

recommended dismissal. The Ponsa-Rabell plaintiffs filed 

objections to the magistrate judge's Report and Recommendation, 

Santander responded in turn, and the district court adopted the 

Report and Recommendation in its entirety, dismissing the federal 

law claims with prejudice and the state law claims without 

prejudice, entering judgment. A notice of appeal timely followed. 

ANALYSIS

At issue here are the Ponsa-Rabell plaintiffs' federal 

securities claims under Section 10(b) and Rule 10b-5 of the 

Exchange Act of 1934, which we will explain in more detail (along 

with each party's position) in just a moment. "We review de novo 

the district court's dismissal of a securities fraud complaint for 

failure to state a claim under Rule 12(b)(6)." Mehta v. Ocular 

Therapeutix, Inc., 955 F.3d 194, 205 (1st Cir. 2020). "To survive 

a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to 'state a claim to relief that is 

plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 

(2007)). "[W]e may affirm the dismissal 'on any basis available 

fail, and therefore, the supplemental jurisdiction claim must 

fail, too. See Borrás-Borrero v. Corporación del Fondo del Seguro 

del Estado, 958 F.3d 26, 36-37 (1st Cir. 2020). Further, Santander 

moved to dismiss for lack of personal jurisdiction against BSSA. 

The district court granted the motion to dismiss as to this claim, 

and the Ponsa-Rabell plaintiffs do not raise this issue on appeal. 
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in the record.'" Yan v. ReWalk Robotics Ltd., 973 F.3d 22, 30 

(1st Cir. 2020) (quoting Lemelson v. U.S. Bank Nat'l Ass'n, 721 

F.3d 18, 21 (1st Cir. 2013)).

LEGAL FRAMEWORK

Bear with us as we outline a few legal frameworks that 

will guide this analysis. We'll start by previewing the relevant 

provision of the Securities Exchange Act of 1934. Section 10(b) 

of the Securities Exchange Act makes it unlawful for any person to 

"use or employ, in connection with the purchase or sale of any 

security . . . any manipulative or deceptive device or contrivance 

in contravention of such rules and regulations as the Commission 

may prescribe as necessary or appropriate in the public interest 

or for the protection of investors." 15 U.S.C. § 78j(b). The 

accompanying regulation, Rule 10b–5, makes it unlawful to "make 

any untrue statement of a material fact or to omit to state a 

material fact necessary in order to make the statements made, in 

the light of the circumstances under which they were made, not 

misleading." 17 C.F.R. § 240.10b–5(b). Rule 10b-5 "is coextensive 

with the coverage of [Section] 10(b)." S.E.C. v. Zandford, 535 

U.S. 813, 816 n.1 (2002). 

To successfully make out a Section 10(b) claim, a 

plaintiff is required to plead six elements: "(1) a material 

misrepresentation or omission; (2) scienter [legal speak for 

knowledge]; (3) a connection with the purchase or sale of a
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security; (4) reliance; (5) economic loss; and (6) loss causation." 

In re Biogen Inc. Sec. Litig., 857 F.3d 34, 41 (1st Cir. 2017) 

(citing Fire & Police Pension Ass'n of Colo. v. Abiomed, Inc., 778 

F.3d 228, 240 (1st Cir. 2015)). Only the first two elements of 

the Ponsa-Rabell plaintiffs' Section 10(b) claim -- material 

misrepresentation or omission and scienter -- are at issue in this 

appeal. To preview what's to come, because we do not find that 

the Ponsa-Rabell plaintiffs have pled an actionable omission, we 

can avoid a lengthy analysis on whether they pled scienter.

"To establish a material misrepresentation or omission, 

[the Ponsa-Rabell plaintiffs] must show that [the] defendants made 

a materially false or misleading statement or omitted to state a 

material fact necessary to make a statement not misleading." Ganem

v. InVivo Therapeutics Holdings Corp., 845 F.3d 447, 454 (1st Cir. 

2017) (citation omitted). "[W]hether a statement is 'misleading'

depends on the perspective of a reasonable investor." Omnicare, 

Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 575 

U.S. 175, 186 (2015). "Information is material if a reasonable 

investor would have viewed it as 'having significantly altered the 

total mix of information made available.'" Miss. Pub. Emps.' Ret. 

Sys. v. Bos. Sci. Corp., 523 F.3d 75, 85 (1st Cir. 2008) (quoting 

Gross v. Summa Four, Inc., 93 F.3d 987, 992 (1st Cir. 1996)). We 

consider the entirety of the relevant facts available at the time 

of the allegedly misleading statement, not simply the words of the 
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statement itself. See In re Smith & Wesson Holding Corp. Sec. 

Litig., 669 F.3d 68, 75-77 (1st Cir. 2012). "[I]f an alleged 

omission involves speculative judgments about future events, 

materiality will depend at any given time upon a balancing of both 

the indicated probability that the event will occur and the 

anticipated magnitude of the event in light of the totality of 

[Santander's] activity." Hill v. Gozani, 638 F.3d 40, 57 (1st 

Cir. 2011) (cleaned up). We review that "totality" from the 

perspective of what Santander knew at the time, meaning "[the 

Ponsa-Rabell plaintiffs] may not plead 'fraud by hindsight.'" ACA 

Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 62 (1st Cir. 2008) 

(quoting Shaw v. Dig. Equip. Corp., 82 F.3d 1194, 1223 (1st Cir. 

1996)).

The second legal framework in play comes from the Private 

Securities Litigation Reform Act (PSLRA), which governs complaints 

alleging securities fraud (like the one before us).4 The PSLRA 

imposes a heightened pleading standard on complaints alleging 

securities fraud in order "to curb frivolous, lawyer-driven 

4 The Ponsa-Rabell plaintiffs briefly argue that the 

magistrate judge imposed a higher pleading standard when reviewing 

their claims than what is required under the federal securities 

laws without supporting that contention with law or explaining 

what they believe to be the appropriate standard of review. We do 

not agree with the Ponsa-Rabell plaintiffs, most notably because 

the argument is underdeveloped and lacks supporting detail. 

Zannino, 895 F.2d at 17. We therefore decline to address that 

argument at length. 
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litigation, while preserving investors' ability to recover on 

meritorious claims." In re Bos. Sci. Corp. Sec. Litig., 686 F.3d

21, 29–30 (1st Cir. 2012) (quoting Tellabs, Inc. v. Makor Issues 

& Rights, Ltd., 551 U.S. 308, 322 (2007)). "A plaintiff's 

complaint must 'specify each statement alleged to have been 

misleading, [and] the reason or reasons why the statement is 

misleading' . . . [and] 'state with particularity facts giving 

rise to a strong inference that the defendant acted with the 

required state of mind.'" Id. at 30 (quoting 15 U.S.C. § 78u–

4(b)(1), (2)). "Taken together, the [PSLRA] requirements make it 

easier to identify the issues and to dismiss flawed complaints at 

the complaint stage." Id. "[A]lthough 'the PSLRA does not require 

plaintiffs to plead evidence . . . a significant amount of "meat" 

is needed on the "bones" of the complaint.'" Ganem, 845 F.3d at

455 (quoting Hill, 638 F.3d at 56). And finally, plaintiffs "must 

also meet the Rule 9(b) standard for pleading fraud with 

particularity." ACA Fin. Guar. Corp., 512 F.3d at 58. "[T]he 

plaintiff must not only allege the time, place, and content of the 

alleged misrepresentations [or omissions] with specificity, but 

also the 'factual allegations that would support a reasonable 

inference that adverse circumstances existed at the time of the 

offering, and were known and deliberately or recklessly 

disregarded by defendants.'" Greebel v. FTP Software, Inc., 194 
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F.3d 185, 193-94 (1st Cir. 1999) (quoting Romani v. Shearson Lehman 

Hutton, 929 F.2d 875, 878 (1st Cir. 1991)). 

With that out of the way, here's our take, which can be 

summed up by simply saying what a district court colleague said 

way back when: "[r]ule 10b-5 [and Section 10(b) are] not insurance 

against an investment loss." Kennedy v. Josephthal & Co., Inc., 

635 F. Supp. 399, 405 (D. Mass. 1985), aff'd, 814 F.2d 798 (1st 

Cir. 1987). Accordingly, we proceed with dispatch. 

OMISSIONS

In their complaint, the Ponsa-Rabell plaintiffs plead 

that there were allegedly material omissions (rather than any 

affirmative misrepresentations on the part of Santander).

Generally, an omission is actionable under Rule 10b-5 only where 

there is an affirmative duty to disclose. Basic Inc. v. Levinson,

485 U.S. 224, 239 n.17 (1988) ("Silence, absent a duty to disclose, 

is not misleading under Rule 10b-5."). Plaintiffs carry the burden 

of showing "that defendants . . . omitted to state a material fact 

necessary to make a statement not misleading." Ganem, 845 F.3d at 

454 (quoting Geffon v. Micrion Corp., 249 F.3d 29, 34 (1st Cir. 

2001)). "[T]he mere possession of material, nonpublic information 

does not create a duty to disclose it." Hill, 638 F.3d at 57

(quoting Cooperman v. Individual, Inc., 171 F.3d 43, 49 (1st Cir. 

1999)) (cleaned up). Essentially, in order to get past "go" on a 

motion to dismiss, a plaintiff must first identify a statement 
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made by defendants, show how the omission rendered that statement 

misleading, and finally establish that there was a duty to disclose 

the omitted information.

In their blue brief, the Ponsa-Rabell plaintiffs take up 

lots of pages trying get past the go. Through the use of a nifty 

chart, the Ponsa-Rabell plaintiffs identify two disclosures 

contained in a fund prospectus generated when the fund was 

initially offered, which they contend are fatally defective 

because of information Santander omitted. The disclosures read 

first: "[t]here is no Assurance that a Secondary Market for the 

Offered Bonds will Develop" and second "the Underwriters are not 

obligated to do so [meaning to guarantee a secondary market] and 

any such market making may be discontinued at any time at the sole 

discretion of the Underwriters." These two statements are 

misleading, plaintiffs contend, in light of Santander's failure to 

disclose a couple of material facts which plaintiffs say were 

necessary in order to make what facts Santander did disclose not 

misleading, to wit, the deteriorating market conditions in Puerto 

Rico and Santander's economic take on those conditions, and second, 

Santander's failure to disclose that they were ridding their own 

inventory of PRMB securities and doing so at an accelerated pace.5 

5 The Ponsa-Rabell plaintiffs seem to allege a laundry list 

of omissions as the magistrate judge noted, which include: "[t]he 

events and circumstances in Puerto Rico's economy that led to 

increased risk in the PRMB market"; "[t]he nature of the risks 
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The two statements Santander did disclose are misleading in light 

of the alleged omissions, say the Ponsa-Rabell plaintiffs, 

because, in a nutshell (as we understand the argument), (1) they 

were made prior to Santander reducing their PRMB inventory; (2) 

they were not made at the time they purchased the securities during

Class Period; and (3) even if the information that was omitted was 

public, it did not relieve Santander of its duty to disclose the 

information to them at the point of purchase. In other words, we 

take plaintiffs' argument to mean that Santander, by plaintiffs' 

light, was under an ongoing obligation to update its prospectuses 

with the information they allege was material (and omitted). 

involved in purchasing PRMBs"; "[Santander's] concerns about the 

risks involved in owning PRMBs"; "[t]hat [Santander] had begun 

reducing its PRMB inventory because of the risks involved in owning 

such inventory"; "[t]hat Moody's had downgraded Puerto Rico's GO 

and related debt rating to Baa3"; "[t]hat the Moody's downgrade 

had further intensified [Santander's] concerns regarding the risks 

related to PRMBs"; "[t]hat [Santander] accelerated its efforts to 

reduce its inventory of PRMBs as a result of the Moody's 

downgrade"; "[t]hat [Santander] was liquidating its inventory of 

PRMBs because it considered PRMBs too risky"; "[t]hat [Santander] 

had closed its trading desk to new PRMB purchases and that 

[Santander] had stopped purchasing PRMBs that its customers sought 

to sell"; "[t]hat [Santander's] decision to cease purchasing PRMBs 

could reduce their liquidity"; "[t]he reasons why [Santander] was 

liquidating its PRMB inventory"; and "[t]hat the risks associated 

with PRMBs were relevant to the purchase of PRCEFs and PROEFs 

because they were heavily concentrated and leveraged in PRMBs." 

Our take is that all of this boils down to two overarching 

omissions: the state of the economy and its effect on the 

riskiness of PRMBs, and Santander hastily ridding itself of its 

PRMB inventory. 
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Taking the two alleged omissions one by one, we start 

with the Ponsa-Rabell plaintiffs' claim that Santander should have 

disclosed to them information regarding the deteriorating market 

conditions for Puerto Rico bonds. Unfortunately, the Ponsa-Rabell 

plaintiffs' contention is not in line with our precedent -- and as 

our colleagues have said, "[i]t is not a material omission to fail 

to point out information of which the market is already aware." 

Baron v. Smith, 380 F.3d 49, 57 (1st Cir. 2004) (citing In re 

Donald Trump Casino Sec. Litig., 7 F.3d 357, 377 (3d Cir. 1993)). 

Indeed, the Ponsa-Rabell plaintiffs' own complaint points to 

public statements about the deteriorating economy in Puerto Rico, 

quoted supra. Our case law is clear. Santander was simply not 

under any duty to repeat information already known or readily 

accessible to investors. See id.

The second alleged omission relates to Santander failing 

to disclose that it was ridding itself of PRMB securities. They 

argue that "[i]f the risks were material enough for Santander to 

divest itself of those securities, they certainly were material 

enough for it to have a duty to disclose those risks to 

[plaintiffs] at the time of the purchases."6 

6 The Ponsa-Rabell plaintiffs spill much ink in their 

complaint arguing that a duty to disclose can "stem from: the 

Account and Financial Advisor Agreement; the fiduciary and 

suitability duties imposed by [the] Securities Exchange Act, FINRA 

Rule 2111 and Guidelines; the applicable industry standards and 

regulations; MSRB Rule G-17; the fiduciary duties imposed by PR 
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In previous cases, we've examined alleged omissions in 

other securities fraud cases and bucketed them into two categories 

using the oft-employed "Grand Canyon" metaphor7: those where we've 

considered the "risk [of failing to disclose a material fact] so

great that it is akin to the Grand Canyon (and therefore a 

disclosure is misleading if it frames the risk as merely 

hypothetical)" on the one hand, and those that "make[] a situation 

merely risky (i.e., simply a ditch)." Karth v. Keryx 

Biopharmaceuticals, Inc., 6 F.4th 123, 137 (1st Cir. 2021). There 

is one case in particular that serves as a foil for the claims 

brought here, as it deals both with a sudden market downturn and 

a company ridding itself of securities while selling them to a 

client. In Tutor Perini Corp., we held that the defendant, Banc 

of America Securities ("BAS") had a duty to disclose where the 

risks to the company it was advising, Tutor, had "dramatically 

Regulation 6078, Section 25.1; and, the general duties of care and 

good faith in the performance of a contract established by the 

Civil Code. . . ." However, the Ponsa-Rabell plaintiffs do not 

sufficiently plead the existence of any of these duties as it 

relates to the sale of PRMB securities, and we therefore decline 

to consider their arguments further. 

7 The "Grand Canyon" metaphor describes "a situation where 

the broker-dealer makes risk disclosures that, given the market's 

state, are akin to a hiker 'warn[ing] his . . . companion to walk 

slowly because there might be a ditch ahead when he knows with 

near certainty that the Grand Canyon lies one foot away.'" Tutor 

Perini Corp. v. Banc of Am. Sec. LLC, 842 F.3d 71, 90 (1st Cir. 

2016) (quoting In re Prudential Sec. Inc. Ltd. P'ships Litig., 930 

F. Supp. 68, 72 (S.D.N.Y. 1996)).
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changed" when the market for auction-rate securities ("ARS") 

completely collapsed. 842 F.3d at 87. There, "BAS knew (but 

elected not to disclose) that the ARS market teetered on the brink 

of collapse when it encouraged Tutor Perini to snatch up more ARS",

all the while shedding itself of the same securities. Id. at 91. 

BAS and Tutor held a special relationship, where BAS had promised 

to "provide investment solutions that [met Tutor's] needs by 

clearly defining the risk/reward of particular securities." Id.

at 87 (internal quotation marks omitted). "So, Tutor was more 

than just a hiker near the Grand Canyon; it was a hiker that had 

hired BAS as a wilderness guide with the explicit instruction to 

steer clear of cliffs because of a fear of heights." Karth, 6 

F.4th at 137. 

Upon a diligent search of plaintiffs' complaint, we've 

found no allegations of a special relationship, or any 

particularized investment instructions plaintiffs may have given 

Santander, that would support a duty to disclose the allegedly 

omitted information pled by the Ponsa-Rabell plaintiffs, facts 

that were crucial to our holding in Tutor Perini Corp. The best 

factual support the Ponsa-Rabell plaintiffs drum up in support of 

their claims that Santander had a duty to disclose the two 

allegedly omitted facts are that (1) their purchases were 

"solicited" (meaning Santander recommended the purchases) and (2) 

their investment objectives were to "preserve capital" and 
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"current fixed income." We take their argument to be that because 

Santander recommended the purchases, knowing at the time of sale 

that their investment objectives were conservative, Santander was 

somehow recommending to them an unsuitable investment.8 Whether 

or not this assertion is true we cannot determine because the 

Ponsa-Rabell plaintiffs simply do not plead sufficient allegations 

allowing us to do so. In Tutor Perini Corp. (in contrast to the 

Ponsa-Rabell plaintiffs' complaint here), the plaintiffs pled that 

BAS made a special promise to outline the risks of their 

investment, and that BAS did in fact know the ARS market meltdown 

was occurring (i.e., the risks were materializing), and failed to 

inform Tutor. No such allegations about Santander's actions or 

inactions are present here.9 As we earlier explained when 

describing the legal principles that guide our analysis, a 

"plaintiff's complaint must 'specify each statement alleged to 

have been misleading [and] the reason or reasons why the statement 

8 The Ponsa-Rabell plaintiffs are also wrong in arguing that 

the magistrate judge erred in noting that the plaintiffs failed to 

state what kind of investors they were and that the complaint did 

not specify why the Ponsa-Rabell plaintiffs may have been attracted 

to the PRMB securities. Neither of these facts have bearing on 

the outcome, as they are mentioned by the magistrate judge only to 

illustrate how bare the complaint is of facts.

9 To be clear, we are not indicating that proof of a special 

relationship between a securities purchaser and seller is always 

necessary to establish a Section 10(b) securities violation. 

Rather, what we are addressing in our analysis here is the PonsaRabell plaintiffs' specific claims as they have chosen to frame 

them in their complaint.
- 20 -

is misleading' . . . [and] 'state with particularity facts giving 

rise to a strong inference that the defendant acted with the 

required state of mind.'" In re Bos. Sci. Corp. Sec. Litig., 686 

F.3d at 30 (quoting 15 U.S.C. § 78u–4(b)(1), (2)). However, as 

the magistrate judge so eloquently observed in his Report and 

Recommendation, 

[h]ere, plaintiffs have not described specific 

statements by defendants that they wish to challenge. 

The complaint alleges that [Santander] affirmatively 

contacted plaintiffs and recommended that they purchase 

PRMB securities. Presumably, [Santander's] 

representatives must have made some statement in order 

to solicit plaintiffs' purchases, for instance, by 

saying, "I recommend that you purchase these 

securities." But the complaint provides no details 

whatsoever regarding the contents of those 

communications other than to allege that the statements, 

whatever they were, failed to include certain details.

Bottom line here, while finding oneself in a ditch is no 

picnic in a meadow, it is also not dining at the edge of the Grand 

Canyon. 

Because we conclude there is no actionable omission, we 

have no need to address the remaining scienter dispute.10 

10 Even if the Ponsa-Rabell plaintiffs had managed to identify 

an omission that rendered a statement made by Santander misleading, 

nowhere in the complaint do they set forth facts that Santander 

had knowledge, or scienter, which is "a mental state embracing 

intent to deceive, manipulate, or defraud." Tellabs, Inc., 551 

U.S. at 319 (quoting Ernst & Ernst v. Hochfelder et al., 425 U.S. 

185, 193-94 & n.12 (1976)). As the Supreme Court has reminded,

evidence of fraudulent intent, as required to state a plausible 

claim under Section 10(b), must be "at least as compelling as any 

opposing inference of nonfraudulent intent." Id. at 314. 
- 21 -

CONCLUSION

Spying no error with the district court's conclusion, 

and reviewing for ourselves with fresh eyes, we affirm. Each party 

shall bear its own costs.