PRECEDENTIAL 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

_____________ 

No. 17-3695 

_____________ 

DAVID JAROSLAWICZ 

v. 

 M&T BANK CORPORATION; HUDSON CITY 

BANCORP INC.; *THE ESTATE OF ROBERT G. 

WILMERS, BY ITS PERSONAL REPRESENTATIVES 

ELISABETH ROCHE WILMERS, PETER MILLIKEN, 

AND HOLLY MCALLISTER SWETT; RENE F. JONES; 

 MARK J. CZARNECKI; BRENT D. BAIRD; ANGELA C. 

BONTEMPO; ROBERT T. BRADY; T. JEFFERSON 

CUNNINGHAM, III; GARY N. GEISEL; JOHN D. 

HAWKE, JR.; PATRICK W.E. HODGSON; RICHARD G. 

KING; JORGE G. PEREIRA; MELINDA R. RICH; 

ROBERT E. SADLER, JR.; HERBERT L. WASHINGTON; 

DENIS J. SALAMONE; MICHAEL W. AZZARA; 

 VICTORIA H. BRUNI; DONALD O. QUEST; JOSEPH G. 

SPONHOLZ; CORNELIUS E. GOLDING; WILLIAM G. 

BARDEL; SCOTT A. BELAIR 

BELINA FAMILY; JEFF KRUBLIT, 

 Appellants 

(*Amended pursuant to Clerk’s Order dated 3/1/18) 
2 

________________ 

On Appeal from the United States District Court 

for the District of Delaware 

(D.C. Civ. No. 1-15-cv-00897) 

District Judge: Honorable Richard G. Andrews 

_________________ 

Agued July 17, 2018 

_________________ 

Before: McKEE, VANASKIE and SILER, JR.,* Circuit 

Judges

(Opinion Filed: December 26, 2018) 

Deborah R. Gross, Esq. [Argued] 

Kaufman Coren & Ress 

2001 Market Street 

Two Commerce Square, Suite 3900 

Philadelphia, PA 19103 

Francis J. Murphy, Esq. 

Jonathan L. Parshall, Esq. 

Murphy & Landon 

1011 Centre Road 

Suite 210 

Wilmington, DE 19805 

Laurence D. Paskowitz, Esq. 

 *

 Honorable Eugene E. Siler, Jr., Senior Judge for the 

Sixth Circuit Court of Appeals, sitting by designation. 
3 

Suite 380 

208 East 51st Street 

New York, NY 10022 

Counsel for Appellants Belina Family and Jeff Krublit 

George T. Conway, III, Esq. 

Bradley R. Wilson Esq. [Argued] 

Jordan L. Pietzsch, Esq. 

Wachtell Lipton Rosen & Katz 

51 West 52nd Street 

New York, NY 10019 

John C. Cordrey, Esq. 

Brian M. Rostocki, Esq. 

Reed Smith 

1201 Market Street 

Suite 1500 

Wilmington, DE 19801 

Counsel for Appellees M&T Bank Corporation, The 

Estate of Robert G. Wilmers, Rene F. Jones, Mark J. 

Czarnecki, Brent D. Baird, Angela C. Bontempo, 

Robert T. Brady, T. Jefferson Cunningham, III, Gary 

N. Geisel, John D. Hawke, Jr., Patrick W.E. Hodgson, 

Richard G. King, Jorge G. Pereira, Melinda A. Rich, 

Robert E. Sadler, Jr., and Herbert L. Washington 

Tracy R. High, Esq. 

Sullivan & Cromwell 

125 Broad Street 

New York, NY 10004 

Kevin R. Shannon, Esq. 

Potter Anderson & Corroon 
4 

1313 North Market Street 

6th Floor 

Wilmington, DE 19801 

Counsel for Appellees Denis J. Salamone, Michael W. 

Azzara,Victoria H. Bruni, Donald O. Quest, Joseph G. 

Sponholz, Cornelius E. Golding, William G. Bardel, 

and Scott A. Belair 

________________ 

OPINION OF THE COURT 

________________ 

VANASKIE, Circuit Judge. 

 After Hudson City Bancorp (“Hudson”) merged with 

M&T Bank Corporation (“M&T”), former Hudson 

shareholders sued, alleging that the consumer banks had 

violated securities laws by omitting from their joint proxy 

materials several facts concerning M&T’s purported 

compliance with pertinent regulatory requirements. The 

allegations presented two distinct theories of liability. First, 

because the proxy materials did not discuss M&T’s noncompliant practices, M&T failed to disclose significant risk 

factors facing the merger as required by Item 503(c) of 

Regulation S-K, 17 C.F.R § 229.503. Second, M&T’s failure 

to discuss the allegedly non-compliant practices in the proxy 

materials rendered M&T’s opinion statements regarding its 

adherence to regulatory requirements and the prospects of 

prompt approval of the merger misleading under Omnicare, 

Inc. v. Laborers District Council Construction Industry 

Pension Fund, 135 S. Ct. 1318 (2015). The District Court 
5 

dismissed the suit on the ground that the allegations failed to 

plead an actionable omission under either theory. 

We disagree in part. We conclude that the shareholders 

pleaded actionable omissions under Item 503(c) but failed to 

do so under Omnicare. Additionally, we conclude that the 

shareholders plausibly alleged loss causation and thus reject 

M&T’s alternative ground for affirmance. Accordingly, we 

will vacate dismissal of the claims concerning mandatory 

disclosure under Item 503(c) and will affirm dismissal of the 

claims concerning misleading opinions. 

I. BACKGROUND1

This case arises out of the 2015 merger of consumer 

banks Hudson and M&T. According to former Hudson 

shareholders, the banks violated § 14(a) of the Exchange Act, 

15 U.S.C. § 78n(a), and Rule 14a-9 of the Securities Exchange 

Commission (“SEC”), 17 C.F.R. § 240.14a-9, by omitting 

several facts concerning M&T’s regulatory compliance from 

their joint proxy materials. The alleged omissions concerned 

two non-compliant practices: (1) M&T’s having advertised nofee checking accounts but later switching those accounts to feebased accounts (the “consumer violations”); and (2) 

deficiencies in M&T’s Bank Secrecy Act/anti-money 

laundering compliance program, particularly its “Know Your 

 1

 These facts are taken mainly from the second amended 

complaint. (App. A0917–72.) Excerpts from filings are taken 

from the documents themselves. See In re Burlington Coat 

Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) 

(holding that a court may consider a “document integral to or 

explicitly relied upon in the complaint” when deciding a 

motion to dismiss). 
6 

Customer” program (the “BSA/AML deficiencies”). Beyond 

these general descriptions, the parties do not provide any more 

detail about M&T’s allegedly non-compliant practices. 

A. The Merger and Accompanying Disclosures 

Hudson announced its proposed merger with M&T on 

August 27, 2012. According to the merger agreement, Hudson 

shareholders would receive a combination of M&T stock and 

cash upon the merger’s close. The shareholder vote on the 

proposed merger was scheduled for April 18, 2013. 

Prior to the shareholder vote, Hudson and M&T issued 

a joint Proxy Prospectus (the “Joint Proxy”). The Joint Proxy 

was filed with the SEC on February 22, 2013 and was mailed 

to shareholders on or around February 27, 2013. The Joint 

Proxy contained several references to regulatory compliance. 

For instance, the Joint Proxy contained a section titled 

“Regulatory Approvals Required for the Merger.” This section 

provided, in pertinent part: 

Completion of the merger and the 

bank merger are subject to the 

receipt of all approvals required to 

complete the transactions 

contemplated by the merger 

agreement [including] from the 

Federal Reserve Board . . . . 

Although we currently believe we 

should be able to obtain all 

required regulatory approvals in a 

timely manner, we cannot be 

certain when or if we will obtain 
7 

them or, if obtained, whether they 

will contain terms, conditions or 

restrictions not currently 

contemplated that will be 

detrimental to M&T after the 

completion of the merger or will 

contain a burdensome condition. 

Federal Reserve Board.

Completion of the merger is 

subject, among other things, to 

approval by the Federal Reserve 

Board . . . . As part of its evaluation 

. . . , the Federal Reserve Board 

reviews: . . . the effectiveness of 

the companies in combatting 

money laundering. 

(App. A0304–05) (emphasis in original). The “Risk Factors” 

section of the Joint Proxy addressed the recent increase in 

banking regulations: 

M&T is subject to extensive 

government regulation and 

supervision and this regulatory 

environment is being significantly 

impacted by the financial 

regulatory reform initiatives in the 

United States, including the DoddFrank Act and related regulations. 

. . . 
8 

The United States government and 

others have recently undertaken 

major reforms of the regulatory 

oversight structure of the financial 

services industry. M&T expects to 

face increased regulation of its 

industry as a result of current and 

possible future initiatives. M&T 

also expects more intense scrutiny 

in the examination process and 

more aggressive enforcement of 

regulations on both the federal and 

state levels. Compliance with 

these new regulations and 

supervisory initiatives will likely 

increase M&T’s costs, reduce its 

revenue and may limit its ability to 

pursue certain desirable business 

opportunities. 

. . . 

Reforms, both under the DoddFrank Act and otherwise, will have 

a significant effect on the entire 

financial industry. Although it is 

difficult to predict the magnitude 

and extent of these effects, M&T 

believes compliance with the 

Dodd-Frank Act and its 

implementing regulations and 

other initiatives will likely 

negatively impact revenue and 

increase the cost of doing business, 
9 

both in terms of transition 

expenses and on an ongoing basis, 

and may also limit M&T’s ability 

to pursue certain desirable 

business opportunities. Any new 

regulatory requirements or 

changes to existing requirements 

could require changes to M&T’s 

businesses, result in increased 

compliance costs and affect the 

profitability of such businesses. 

Additionally, reform could affect 

the behaviors of third parties that 

M&T deals with in the course of its 

business, such as rating agencies, 

insurance companies and 

investors. Heightened regulatory 

practices, requirements or 

expectations resulting from the 

Dodd-Frank Act and the rules 

promulgated thereunder could 

affect M&T in substantial and 

unpredictable ways, and, in turn, 

could have a material adverse 

effect on M&T’s business, 

financial condition and results of 

operations. 

(Id. at A0239–41) (emphasis in original). 

Additionally, M&T’s annual report on Form 10-K for 

the fiscal year ending December 31, 2011, was incorporated 
10 

into the Joint Proxy. The Annual Report discussed M&T’s 

current state of compliance, explaining in part: 

[The USA Patriot Act] imposes 

obligations on U.S. financial 

institutions, including banks and 

broker dealer subsidiaries, to 

implement and maintain 

appropriate policies, procedures 

and controls which are reasonably 

designed to prevent, detect and 

report instances of money 

laundering . . . . The Registrant and 

its impacted subsidiaries have 

approved policies and procedures 

that are believed to be compliant 

with the USA Patriot Act. 

(Id. at A1028.) Although the Joint Proxy discussed the 

regulatory framework facing consumer banks, it did not 

mention M&T’s allegedly non-compliant practices. 

On April 12, 2013, six days before the scheduled 

shareholder vote, Hudson and M&T filed a proxy supplement, 

announcing that one of their regulators, the Federal Reserve 

Board, had identified “certain regulatory concerns with M&T’s 

[BSA/AML] procedures.” (Id. at A1041.) The banks 

explained that they “expect[ed] additional time [would] be 

required to obtain a regulatory determination on the application 

necessary to complete their proposed merger.” (Id.) 

Three days later, on April 15, 2013, M&T’s CFO, René 

F. Jones, provided an update to investors on the expected delay. 
11 

Jones explained that M&T “recently [was] made aware” of the 

fact that the Federal Reserve Board had identified “certain 

deficiencies in [its] BSA/AML compliance program,” which 

“would impact [M&T’s] ability to close the merger . . . in the 

near term.” (Id. at A0470.) He also stated that M&T “ha[d] 

no reason to believe that the issues involve[d] any wrongdoing 

or illegal conduct by anyone in M&T or any identifiable 

instances of actual money laundering activity using [M&T],” 

but that M&T would need to “implement [a] plan [to] 

improve[]” its compliance programs before approval could be 

secured and, therefore, it did not “take regulatory approval for 

granted.” (Id.) None of the supplemental disclosures 

mentioned the consumer violations. 

Despite the projected regulatory delay, Hudson and 

M&T decided not to postpone the shareholder vote. On April 

18, 2013, Hudson shareholders voted to approve the merger. 

Regulators eventually approved the merger more than two 

years later, and the merger closed on November 1, 2015. 

B. Procedural History 

In October 2015, David Jaroslawicz, a former Hudson 

shareholder, filed a putative class action on behalf of Hudson 

shareholders, claiming, inter alia, that the joint proxy materials 

violated the Exchange Act’s prohibition against misleading 

omissions, 15 U.S.C. § 78n(a)(1); 17 C.F.R. § 240.14a-9(a). 

The original complaint named M&T, Hudson, and their 

directors and officers as defendants.2

 In January 2016, the 

 2

 Since the filing of this lawsuit, Hudson was merged 

into non-party Wilmington Trust Corp., a wholly-owned 

subsidiary of M&T. Accordingly, Hudson no longer exists. 
12 

District Court appointed the Belina Family, former Hudson 

shareholders, to serve as lead plaintiffs. One month later, the 

Belina Family and plaintiff Jeff Krublit, another former 

shareholder, filed an amended complaint.3

 

M&T moved to dismiss the first amended complaint, 

which the District Court granted. See Jaroslawicz v. M&T 

Bank Corp., No. 15-897-RGA, 2017 WL 1197716 (D. Del. 

Mar. 30, 2017). The District Court reasoned that the first 

amended complaint failed to plausibly allege an actionable 

omission. However, in light of allegations made for the first 

time during oral argument, the District Court granted leave to 

amend so that the shareholders could assert allegations the 

Court believed constituted misleading omissions. 

Additionally, the District Court observed, in a conclusory 

fashion, that the shareholders had plausibly alleged loss 

causation and negligence. 

The shareholders then filed their second amended 

complaint, adding the allegations which the District Court had 

identified as potentially relevant. M&T moved to dismiss the 

second amended complaint. The shareholders objected to the 

motion as duplicative of the earlier motion to dismiss and, 

alternatively, argued that the complaint was sufficiently pled. 

Before resolving the motion, the District Court requested 

additional briefing on the applicability of Item 503(c) to the 

Joint Proxy. The parties filed a joint response, stating that 

 3

 For ease of reference, we will refer to Plaintiff 

Jaroslawicz and Plaintiffs–Appellants, the Belina Family and 

Krublit, as “the shareholders.” We will refer to Defendants–

Appellees M&T, Hudson, and their directors and officers as 

“M&T,” the “bank,” or the “banks.” 
13 

Schedule 14A, 17 C.F.R. § 240.14a–101, incorporated Item 

503(c) and that, therefore, M&T had been required to comply 

with Item 503(c). 

The District Court then granted M&T’s second motion 

to dismiss. Jaroslawicz v. M&T Bank Corp., 296 F. Supp. 3d 

670 (D. Del. 2017). After rejecting the shareholders’ 

procedural arguments, the District Court concluded that the 

second amended complaint failed to plead an actionable 

omission under either a mandatory disclosure or misleading 

opinion theory. In particular, the District Court concluded that 

the complaint failed to plausibly allege that, at the time the 

proxy materials issued, the consumer violations posed a risk to 

regulatory approval of the merger. Additionally, the District 

Court concluded that, as a matter of law, M&T had adequately 

disclosed in the Joint Proxy the risk that the BSA/AML 

deficiencies posed to the merger. The District Court was silent 

with regard to loss causation and negligence. Once again, the 

District Court granted the motion to dismiss without prejudice, 

giving the shareholders another opportunity to amend their 

pleadings. 

The shareholders elected to stand on their second 

amended complaint. Shortly thereafter, the District Court 

dismissed the complaint with prejudice. The shareholders 

timely filed their Notice of Appeal. 

We invited the SEC to participate in the appeal as 

amicus. On July 13, 2018, we received a letter from David R. 

Fredrickson, Chief Counsel of the SEC’s Division of 

Corporation Finance, declining to participate as amicus but 

providing background information on the legal obligations 

imposed by the federal securities laws at issue in this case. 
14 

II. JURISDICTION AND STANDARD OF REVIEW 

 The District Court had jurisdiction under 15 U.S.C. 

§ 78aa and 28 U.S.C. §§ 1331, 1337. We have appellate 

jurisdiction under 28 U.S.C. § 1291. 

We exercise plenary review over a district court’s 

decision to grant a motion to dismiss a complaint for failure to 

state a claim. In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 

1322–23 (3d Cir. 2002). We accept as true all factual 

allegations contained in the complaint and construe the 

complaint in the light most favorable to the plaintiffs. Jones v. 

ABN Amro Mortg. Grp., Inc., 606 F.3d 119, 123 (3d Cir. 2010). 

“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) (internal quotation marks omitted). A claim 

is plausible “when the plaintiff pleads factual content that 

allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Id. 

The District Court reviewed the allegations in the 

second amended complaint under the general pleading 

standard set out in Rule 8 of the Federal Rules of Civil 

Procedure. The shareholders contend that this was proper 

because their claims sounded in negligence. M&T argues that 

all § 14(a) claims, even those that sound in negligence, are 

subject to the heightened pleading requirements of the Private 

Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u4(b)(1). Ultimately, however, we need not resolve this issue. 

Neither party has convinced us that the pleading standard is 

determinative here. This is because the parties do not dispute 

which statements are alleged to have been misleading; nor do 
15 

they dispute the specificity of those allegations. Accordingly, 

our analysis applies with equal force under either standard. 

III. DISCUSSION 

The shareholders allege that M&T violated § 14(a) of 

the Exchange Act and SEC Rule § 14a-9. Section 14(a) of the 

Exchange Act makes it “unlawful for any person . . . in 

contravention of such rules and regulations as the Commission 

may prescribe . . . to solicit or to permit the use of his name to 

solicit any proxy . . . in respect of any security.” 15 U.S.C. 

§ 78n(a)(1). SEC Rule 14a-9 prohibits any solicitation via 

proxy that “contain[s] any statement which . . . is false or 

misleading with respect to any material fact, or which omits to 

state any material fact necessary in order to make the 

statements therein not false or misleading . . . .” 17 C.F.R. 

§ 240.14a–9(a). “To prevail on a § 14(a) claim, a plaintiff must 

show that (1) a proxy statement contained a material 

misrepresentation or omission which (2) caused the plaintiff 

injury and (3) that the proxy solicitation itself, rather than the 

particular defect in the solicitation materials, was an essential 

link in the accomplishment of the transaction.” Tracinda Corp. 

v. DaimlerChrysler AG, 502 F.3d 212, 228 (3d Cir. 2007) 

(internal quotation marks omitted). The parties dispute 

whether the second amended complaint plausibly alleged the 

first and second elements: a material omission and loss 

causation.4

 4

 The shareholders assert procedural challenges to the 

propriety of the second motion to dismiss, contending that: (1) 

the motion was actually a time-barred motion for 

reconsideration; and (2) the motion was subject to the bar on 

successive motions to dismiss under Rule 12(g)(2) of the 

Federal Rules of Civil Procedure. Both arguments lack merit. 
16 

 

First, the second motion to dismiss was not a motion for 

reconsideration because the District Court had previously ruled 

in M&T’s favor when it dismissed the first amended complaint 

without prejudice. In any event, the District Court had the 

power to reconsider its own interlocutory order. See United 

States ex rel. Petratos v. Genentech Inc., 855 F.3d 481, 493 (3d 

Cir. 2017) (“Interlocutory orders remain open to trial court 

reconsideration, and do not constitute law of the case. And the 

grant of a leave to amend is an interlocutory order.”) (citation 

and alterations omitted). Second, Rule 12(g)(2) prohibits a 

party from making a successive motion to dismiss if that 

motion “rais[es] a defense or objection that was available to the 

party but omitted from its earlier motion.” Fed. R. Civ. P. 

12(g)(2). In its second motion to dismiss, M&T either raised 

new arguments opposing new allegations made in the second 

amended complaint or renewed arguments from its previous 

motion seeking to dismiss the first amended complaint. Thus, 

the arguments raised by M&T in its second motion were either 

not previously available or not previously omitted. 

Additionally, it is well-established that if, as here, an amended 

complaint “contain[s] new information or different allegations 

making it subject to a defense or objection that was not 

previously apparent . . . a party may move to dismiss on the 

basis of the newly discovered ground even if she has filed a 

Rule 12 motion previously.” 5C Charles Alan Wright & 

Arthur R. Miller, Federal Practice and Procedure § 1388 (3d 

ed. 2018). Because it was procedurally proper to consider the 

second motion to dismiss, the District Court did not err in doing 

so. 
17 

We first address whether the second amended complaint 

plausibly alleged an actionable omission and then consider 

whether it plausibly alleged loss causation.5

 5

 Additionally, in their briefs and at oral argument, the 

shareholders repeatedly argued that the District Court erred 

because it held that securities fraud defendants had no duty to 

perform due diligence under the federal proxy laws. This 

argument is unavailing. First, the District Court and the parties 

agreed that the second amended complaint sounded in 

negligence. In the context of a § 14(a) claim, we have treated 

the negligence standard and the duty to conduct due diligence 

as interchangeable. Gould v. American–Hawaiian S.S. Co., 

535 F.2d 761, 777–78 (3d Cir. 1976) (alternatively referring to 

the standard as a “negligence” standard and a “standard of due 

diligence”). Second, the shareholders’ argument appears to be 

directed at the District Court’s fourth footnote, which states 

that “[t]he availability of an affirmative defense of due 

diligence does not create an affirmative duty to perform due 

diligence.” (App. 0019.) The shareholders contend that this 

statement conflicts with Gould’s treatment of the negligence 

standard as co-extensive with a due diligence standard. In 

context, however, the District Court was distinguishing another 

district court case, In re WorldCom, Inc. Sec. Litig., 346 F. 

Supp. 2d 628, 691–92 (S.D.N.Y. 2004), rather than 

commenting on the mens rea requirement applicable to § 14(a) 

claims generally. In re WorldCom was a Securities Act case 

brought pursuant to § 11(b), 15 U.S.C. § 77k, and addressed 

the specific affirmative defense of due diligence, which is 

unique to that provision and which M&T did not raise here. 

345 F. Supp. 2d at 636–67, 659, 662–64. 
18 

A. Whether the Second Amended Complaint 

Plausibly Alleged an Actionable Omission 

“The omission of information from a proxy statement 

will violate [§ 14(a)] if either the SEC regulations specifically 

require disclosure of the omitted information in a proxy 

statement, or the omission makes other statements in the proxy 

statement false or misleading.” Seinfeld v. Becherer, 461 F.3d 

365, 369 (3d Cir. 2006) (internal quotation marks omitted). 

The shareholders proceeded on both theories. First, they 

argued that the non-compliant practices posed significant risks 

to regulatory approval of the merger and therefore that 

disclosure of those risks was mandated by Item 503(c). 

Second, they contended that omitted facts related to the noncompliant practices made two statements of opinion contained 

in the Joint Proxy misleading. 

1. Theory One: Mandatory Disclosure under Item 503(c) 

The parties agree that the Joint Proxy had to comply 

with Item 503(c). That provision requires issuers to “provide 

under the caption ‘Risk Factors’ a discussion of the most 

significant factors that make the offering speculative or risky.” 

17 C.F.R. 229.503. 

 Before the District Court, the shareholders argued that, 

while a reasonable investor might be willing to take some 

chances with regard to regulatory approval of a merger, she 

might be less willing to vote for a merger with a company that 

had committed thousands of consumer violations and 

maintained a deficient BSA/AML compliance program 

because of the heightened risk those issues pose to regulatory 

approval. According to the shareholders, the proxy materials 

failed to disclose these non-compliant practices. Thus, they 
19 

argue, the second amended complaint plausibly alleged that 

M&T violated Item 503(c). 

 First, we address whether the allegations in the second 

amended complaint plausibly alleged that the consumer 

violations presented a significant risk to the merger at the time 

the proxy materials issued. Second, we explore the scope of 

adequate disclosure under Item 503(c). Third, we decide 

whether the proxy materials sufficiently disclosed the alleged 

risk factors as a matter of law. 

a. The Second Amended Complaint Plausibly Alleged the 

Consumer Violations Presented a Significant Risk to the 

Merger 

It is self-evident that an issuer cannot be liable for 

failing to disclose a risk factor that did not exist at the time of 

disclosure. See In re NAHC, 306 F.3d at 1330 (“To be 

actionable, a[n] . . . omission must have been misleading at the 

time it was made . . . .”); see also Silverstrand Invs. v. AMAG 

Pharm., Inc., 707 F.3d 95, 103 (1st Cir. 2013) (requiring that 

plaintiff “allege sufficient facts to infer that a registrant knew, 

as of [the] time of the offering, that . . . a risk factor existed”). 

Thus, if the second amended complaint failed to plausibly 

allege that the consumer violations posed a risk to the merger 

at the time the Joint Proxy issued, then this claim related to the 

consumer violations was properly dismissed. 

Very few of the allegations in the second amended 

complaint relate to the consumer violations. The complaint 

does, however, allege that the practice underlying the 

violations was curtailed prior to the date the Joint Proxy was 

filed with the SEC. It also alleges that the Consumer Financial 

Protection Bureau (“CFPB”) eventually took action against 
20 

M&T for the consumer violations. From these allegations, the 

shareholders ask us to infer that the consumer violations posed 

a risk to regulatory approval of the merger, despite cessation of 

the practice by the time the Joint Proxy issued. The District 

Court declined to draw such an inference. We, however, 

conclude that this inference was reasonable and, as such, the 

pleading standard required the District Court to draw it. 

Despite the fact that M&T had ceased the practice, it is 

plausible that the allegedly high volume of past violations 

made the upcoming merger vulnerable to regulatory delay. 

Accordingly, the District Court erred when it concluded that 

the second amended complaint failed to plausibly allege that 

the consumer violations posed a significant risk to the merger 

at the time the Joint Proxy issued.6

 

b. Scope of Disclosure under Item 503(c) 

Nonetheless, M&T may avoid liability if the risks posed 

by the consumer violations and BSA/AML deficiencies were 

fully disclosed in the proxy materials. Unsurprisingly, the 

parties dispute whether these risks were adequately disclosed. 

We begin with the text of the regulation itself. Item 

503(c) requires issuers, “[w]here appropriate, [to] provide 

under the caption ‘Risk Factors’ a discussion of the most 

significant factors that make the offering speculative or risky.” 

 

6

 Regarding whether the BSA/AML deficiencies presented a 

risk to the merger at the time the proxy materials issued, the 

District Court assumed this was so, and M&T does not argue 

otherwise. In any event, independent review of the 

allegations confirms that the shareholders properly pleaded 

that the deficiencies did pose a risk to approval of the merger. 
21 

17 C.F.R. 229.503(c). With respect to the scope of a sufficient 

disclosure, Item 503(c) instructs: 

[t]his discussion must be concise 

and organized logically. Do not 

present risks that could apply to 

any issuer or any offering. Explain 

how the risk affects the issuer or 

the securities being offered. Set 

forth each risk factor under a 

subcaption that adequately 

describes the risk. 

Id. Additionally, Item 503(c) includes a non-exhaustive list of 

potential risk factors to be disclosed. Id. We note that the plain 

text of the regulation directs issuers to avoid generic 

disclosures. 7

Although we have yet to analyze the scope of adequate 

disclosure under Item 503(c), two of our sister Circuits—the 

First and the Second—have considered the sufficiency of Item 

 7

 As an aside, the shareholders acknowledge that 

certain statements relevant to our analysis were made outside 

of the “Risk Factors” section of the Joint Proxy. They, 

however, do not argue that this amounts to a per se violation 

of Item 503(c). Rather, they assume we may consider these 

statements and contend that the statements do not provide 

details sufficient to demonstrate adequate disclosure as a 

matter of law. 
22 

503(c) disclosures as a matter of law.8

 In Silverstrand 

Investments v. AMAG Pharmaceuticals, Inc., 707 F.3d 95 (1st 

Cir. 2013), the First Circuit denied a motion to dismiss, 

concluding that plaintiffs plausibly alleged that disclosures 

made in a pharmaceutical company’s offering documents were 

inadequate. AMAG was a pharmaceutical company marketing 

Feraheme, “an alternative to current treatments for iron 

deficiency anemia.” Id. at 99. In its offering documents, 

AMAG included detailed disclosures about the FDA approval 

process and the results of Feraheme’s clinical trials prior to 

receiving FDA approval. Id. However, AMAG did not 

disclose that it had reported to the FDA at least twenty-three 

occurrences of severe adverse events (“SAEs”) since the 

drug’s inception to market. Id. at 98–100. When a security 

analyst publicly reported the SAEs, AMAG’s stock 

plummeted. Id. at 99–100. 

The Silverstrand plaintiffs argued that Item 503(c) 

required disclosure of the SAEs. The First Circuit agreed, 

opining that “[c]ommon sense . . . dictate[d] that AMAG knew 

that the riskier Feraheme appeared, the less attractive the drug 

would be as a method of treatment, and the less likely an 

investor would be to invest in AMAG, whose profits entirely 

depended on Feraheme’s commercial success.” Id. at 104. 

Ultimately, the First Circuit concluded that plaintiffs’ 

complaint, which alleged that AMAG failed to disclose the 

 8

 Both Circuits reviewed securities fraud claims brought 

pursuant to §§ 11 and 12 of the Securities Act, 15 U.S.C. 

§§ 77k and 77l. Any distinctions between these statutory 

provisions and § 14(a) (i.e., the securities filings they address 

or the participants they make liable) are, however, immaterial 

for our purposes. 
23 

SAEs despite knowing about them, plausibly stated a claim for 

omission of an Item 503(c) risk factor. Id. at 103–06. 

The Second Circuit’s opinion in City of Pontiac 

Policemen’s and Firemen’s Retirement System v. UBS AG, 752 

F.3d 173 (2d Cir. 2014), provides a useful contrast. In that 

case, the court granted a motion to dismiss, concluding that 

disclosures regarding tax compliance made in a company’s 

offering materials were adequate as a matter of law. UBS, 752 

F.3d at 182–88. The plaintiffs alleged that, between 2001 and 

2007, UBS engaged in a cross-border scheme wherein Swiss 

bankers evaded taxes by travelling in and out of the United 

States to advise clients. Id. at 178. In May 2008, the 

Department of Justice (“DOJ”) and the SEC investigated UBS 

for this conduct and, in 2009, UBS entered into a deferred 

prosecution agreement (“DPA”) with the DOJ and the IRS. Id. 

The DPA stated that UBS had violated United States tax laws 

and that it had paid a fine of hundreds of millions of dollars. 

Id. In its offering material, UBS disclosed that it was under 

investigation by the DOJ for its cross-border scheme. Id. at 

182, 184. However, UBS did not disclose that its cross-border 

activities were ongoing, nor did it disclose the magnitude of 

UBS’s exposure. Id. 

Plaintiffs argued that UBS violated Item 503(c) 

because, “in addition to disclosing the existence of an 

investigation, defendants were required to disclose that UBS 

was, in fact, engaged in an ongoing tax evasion scheme.” Id.

at 184. The Second Circuit rejected this argument, holding that 

plaintiffs failed to plead a cause of action because UBS had 

satisfied its disclosure obligations under Item 503(c): 
24 

As we have explained, 

“[d]isclosure is not a rite of 

confession,” and companies do not 

have a duty “to disclose 

uncharged, unadjudicated 

wrongdoing.” By disclosing its 

involvement in multiple legal 

proceedings and government 

investigations and indicating that 

its involvement could expose UBS 

“to substantial monetary damages 

and legal defense costs,” as well as 

“injunctive relief, criminal and 

civil penalties[,] and the potential 

for regulatory restrictions,” UBS 

complied with its disclosure 

obligations under our case law. 

Id. (internal citations omitted). 

 Read together, these cases suggest that generic 

disclosures which could apply across an industry are 

insufficient. Rather, adequate disclosures are companyspecific. They include facts particular to a company, such as 

its financial status, its products, any ongoing investigations, 

and its relationships with other entities. See, e.g., Plymouth 

Cty. Ret. Ass’n v. Primo Water Corp., 966 F. Supp. 2d 525, 

560–61 (M.D.N.C. 2013) (granting motion to dismiss where 

risk disclosures “were specific and tailored and fairly 

addressed the risks that the amended complaint alleges”); City 

of Roseville Emps’ Ret. Sys. v. EnergySolutions, Inc., 814 F. 

Supp. 2d 395, 405, 427 (S.D.N.Y. 2011) (denying motion to 

dismiss where offering materials emphasized company’s 
25 

“unique stewardship initiative” and identified thirteen potential 

clients, but allegations suggested regulatory agency had 

rejected similar initiatives and clients had already declined 

company’s services); In re WorldCom, Inc. Sec. Litig., 346 F. 

Supp. 2d 628, 691–92 (S.D.N.Y. 2004) (denying summary 

judgment for defendants where registration statement 

repeatedly discussed “the intense competition that WorldCom 

was facing,” but not “the alleged precarious state of 

WorldCom’s profit margins . . . and the impact of that problem 

on its business as a whole, including its ability to service its 

debt.”). 

 We next turn to SEC guidance concerning the scope of 

Item 503(c) disclosures. Cf. Krieger v. Bank of Am., N.A., 890 

F.3d 429, 438 (3d Cir. 2018) (finding further support in agency 

guidance when interpreting an unambiguous statutory 

provision). This guidance indicates that inadequate 

disclosure—particularly in the form of disclosing only generic 

risk factors—presents a persistent problem. The Updated Staff 

Legal Bulletin released by the SEC in 1999 is illustrative. See

SEC Division of Corporation Finance: Updated Staff Legal 

Bulletin No. 7, “Plain English Disclosure,” Release No. SLB7, 1999 WL 34984247 (June 7, 1999). A section of the Bulletin 

titled “Risk Factor Guidance” leads with the directive that 

“issuers should not present risks that could apply to any issuer 

or any offering.” Id. at *1. Observing that “Item 503(c) seems 

to be the least understood of the plain English requirements,” 

the Bulletin includes two examples of what the SEC would 

consider to be sufficient disclosures. Id. at *1, *6–7. These 

examples are highly descriptive and include facts regarding, 

inter alia, each company’s finances—including debt and 

leverage positions—products, market, and competition. Id. at 
26 

*6–7. They also describe how certain risks may impact the 

value of the company. Id. 

 The Bulletin also provides a heuristic for drafting risk 

factors. The SEC explains that Item 503(c) risk factors loosely 

fall into three broad categories: 

Industry Risk — risks companies 

face by virtue of the industry 

they’re in. For example, many 

[real estate investment trusts] run 

the risk that, despite due diligence, 

they will acquire properties with 

significant environmental issues. 

Company Risk — risks that are 

specific to the company. For 

example, a [real estate investment 

trust] owns four properties with 

significant environmental issues 

and cleaning up these properties 

will be a serious financial drain. 

Investment Risk — risks that are 

specifically tied to a security. For 

example, in a debt offering, the 

debt being offered is the most 

junior subordinated debt of the 

company. When drafting risk 

factors, be sure to specifically link 

each risk to your industry, 

company, or investment, as 

applicable. 
27 

Id. at *5–6. 

Additionally, the Bulletin contains comments 

frequently issued by SEC investigators when they are 

confronted with inadequate risk factor disclosures. For 

example: 

#35 Item 503(c) of Regulation 

S-K states that issuers should not 

“present risk factors that could 

apply to any issuer or to any 

offering.” For example, the risk 

you disclose under “Dependence 

on Key Personnel” could apply to 

nearly any issuer in your industry 

and even in other industries. If you 

elect to retain these and other 

general risk factors in your 

prospectus, you must clearly 

explain how they apply to your 

industry, company, or offering. 

For example, explain why you are 

concerned you could lose these 

key personnel. Are they about to 

retire? Do you not have 

employment contracts with them? 

Id. at *14. 

 The 1999 Bulletin’s focus on making risk disclosures 

more specific is not unique. As recently as 2016, the SEC 

sought comments on how to revise its regulations in a way that 
28 

would “encourage registrants to describe risks with greater 

specificity and context[,]” and “discourage registrants from 

providing risk factor disclosure that is not specific to the 

registrant but instead describes risks that are common to an 

industry or registrants in general.” See Business and Financial 

Disclosure Required by Regulation S–K, Exchange Act 

Release No. 33-10064, 81 Fed. Reg. 23916, 23956 (Apr. 22, 

2016). We note that the SEC guidance is consistent with the 

First and Second Circuit’s conclusion that a disclosure of risk 

factors is insufficient if it could apply to any company in a 

given industry. 

 Additionally, the shareholders suggest that Item 503(c) 

incorporates two general obligations beyond what we have 

described above: (1) a duty to disclose all material facts; and 

(2) a duty to disclose corporate wrongdoing. Not so. 

First, our securities laws do not impose a duty to 

disclose all material facts. Rather, mandatory disclosures are 

limited by our holding in Seinfeld, in which we explained that 

“omission of information from a proxy statement” is not 

actionable unless either “SEC regulations specifically require 

disclosure of the omitted information” or “the omission makes 

other statements in the proxy statement materially false or 

misleading.” 461 F.3d at 369 (internal quotation marks 

omitted); see also In re Burlington Coat Factory Sec. Litig., 

114 F.3d 1410, 1432 (3d Cir. 1997) (holding that securities 

laws do not impose a “general duty . . . to provide the public 

with all material information”). 

 Second, we have never recognized a duty to disclose all 

corporate wrongdoing in securities filings. See Gen. Elec. 

Co. by Levit v. Cathcart, 980 F.2d 927, 935 (3d Cir. 1992) 
29 

(“[S]peculative disclosure is not required under Section 14(a). 

Wide authority establishes that while pending litigation may be 

material under certain circumstances, the mere possibility of 

litigation is not.”); accord UBS, 752 F.3d at 184 (“Disclosure 

is not a rite of confession, and companies do not have a duty to 

disclose uncharged, unadjudicated wrongdoing.”) (internal 

quotation marks and alterations omitted). Rather, a duty to 

disclose corporate misconduct is only triggered where nondisclosure makes other voluntary statements misleading. See

Meyer v. Jinkosolar Holdings Co., 761 F.3d 245, 251–52 (2d 

Cir. 2014) (affirming denial of summary judgment because 

trier of fact could find omissions regarding ongoing 

compliance violations may have “render[ed] misleading the 

comforting statements . . . about compliance measures”). 

c. The Proxy Materials Did Not Sufficiently Disclose the 

Alleged Risk Factors as a Matter of Law

Having explored the scope of adequate disclosure under 

Item 503(c), we consider whether the District Court erred in 

applying this regulation to the allegations in the second 

amended complaint. The District Court did not discuss 

whether the risks posed by the consumer violations were 

sufficiently disclosed. Similarly, the District Court did not 

decide whether the supplemental disclosures cured any alleged 

omissions in the Joint Proxy. The District Court did, however, 

conclude that the statements made in the Joint Proxy 

sufficiently disclosed the risks related to the BSA/AML 

deficiencies as a matter of law. 

Regarding the consumer violations, the Joint Proxy did 

not make any reference to the fraudulent practice underlying 

the violations, the dates the practice was in place, the extent of 

consumer accounts affected by the practice, or the subsequent 
30 

CFPB investigation into the practice. Rather, in the section 

labelled “Regulatory Approvals Required for the Merger,” the 

Joint Proxy reminded shareholders that “[c]ompletion of the 

merger and bank merger are subject to the receipt of all 

approvals required to complete the transactions contemplated 

by the merger agreement . . . .” (App. A304.) The Joint Proxy 

further warned: 

Although we currently believe we 

should be able to obtain all 

required regulatory approvals in a 

timely manner, we cannot be 

certain when or if we will obtain 

them or, if obtained, whether they 

will contain terms, conditions or 

restrictions not currently 

contemplated that will be 

detrimental to M&T after the 

completion of the merger or will 

contain a burdensome condition. 

(Id.) 

The shareholders’ allegations plausibly suggested that 

the Joint Proxy’s disclosures concerning the consumer 

violations were too generic to be adequate. Most strikingly, 

the Joint Proxy’s statements are not company-specific. For 

instance, the “Regulatory Approvals Required for the Merger” 

section could easily apply to any consumer bank in the industry 

considering a merger. See In re WorldCom, 346 F. Supp. 2d at 

691–92 (denying summary judgment where offering 

documents referenced competition generally, rather than 
31 

details of company’s indebtedness, lack of cash flow, and 

underperforming stock). 

While it is possible that the supplemental disclosures 

cured any inadequate disclosures in the Joint Proxy, the 

supplemental disclosures related exclusively to the BSA/AML 

deficiencies and did not address the consumer violations. 

Accordingly, we conclude that the shareholders alleged a 

plausible claim for relief under Item 503(c) regarding M&T’s 

inadequate disclosure of the consumer violations. 

 Regarding the BSA/AML deficiencies, the Joint Proxy 

did not discuss them expressly. It did not describe M&T’s 

“Know Your Customer” program, its claimed deficiencies, the 

number of customer accounts affected by the program’s 

deficiencies, the Federal Reserve Board investigation, or the 

costs of remediation. The Joint Proxy did, however, mention 

anti-money laundering compliance. For example, the Joint 

Proxy explained that completion of the merger was subject to 

approval by the Federal Reserve Board. According to the Joint 

Proxy, “[a]s part of its evaluation of these factors, the Federal 

Reserve Board reviews: . . . the effectiveness of the companies 

in combatting money laundering.” (App. A0305.) As with the 

consumer violations, it is plausible that these boilerplate 

disclosures were too generic to communicate anything 

meaningful about this specific risk to the merger. 

Unlike the consumer violations, however, the 

BSA/AML deficiencies are addressed in the supplemental 

disclosures. Specifically, M&T stated in the supplemental 

disclosures that it was the subject of a Federal Reserve Board 

investigation regarding its BSA/AML compliance. M&T 

warned that the investigation would likely result in delay of 
32 

regulatory approval of the merger and, by extension, closing of 

the merger. The substance of these disclosures was likely 

adequate as a matter of law. As in UBS, M&T disclosed the 

pertinent fact—i.e., that it was the subject of an investigation 

that could impact the closing of the merger. See 752 F.3d at 

184 (holding disclosure of ongoing FBI investigation into UBS 

was sufficient despite absence of details of scheme under 

investigation). Because “[d]isclosure is not a rite of 

confession,” id., M&T was likely not required to dive into the 

weeds and provide details of the shortcomings of its “Know 

Your Customer” program. 

 Even if the supplemental disclosures were sufficient 

with respect to the BSA/AML deficiencies, however, the 

shareholders dispute that the supplemental disclosures were 

disseminated in a way that guaranteed adequate disclosure. 

The SEC has long recognized that it is “of overriding 

importance . . . that shareholders be given timely and accurate 

information of material changes” occurring since the proxy 

was filed. Staff Report on Proxy Solicitations, Exchange Act 

Release No. 34-16343, 8 SEC Docket 927 (Nov. 27, 1979). 

However, “[t]he manner in which those responsible for 

solicitation of proxies elect to correct information which has 

proven incorrect due to subsequent circumstances, must, of 

necessity, be dictated by the individual set of circumstances 

that exist.” Id. According to the shareholders, the six days 

between the first supplemental disclosure, issued on April 12, 

2013, and the April 18 shareholder vote was not enough time 

for a reasonable investor to digest the information. M&T 

counters by arguing there is no hard and fast deadline for filing 

supplemental disclosures. 
33 

While we agree that there is no deadline for filing a 

supplemental disclosure, we are not prepared to say the six 

days provided here was adequate as a matter of law. Rather, 

we think the effect of the supplemental disclosures raises a fact 

issue, which precludes dismissal of the BSA/AML allegations 

at this time. 

Accordingly, we will vacate the District Court’s 

dismissal of the mandatory-disclosure claims relating to both 

the consumer violations and the BSA/AML deficiencies. 

2. Theory Two: Misleading Opinions 

 In their second theory of liability, the shareholders 

argue that two statements of opinion contained in the Joint 

Proxy—that M&T believed the merger would close timely and 

that M&T believed its BSA/AML program was compliant with 

the Patriot Act—are actionable under Omnicare. 

 In Omnicare, the Supreme Court held that an opinion is 

only misleading under an omissions theory if the speaker 

“omits material facts” about its “inquiry into or knowledge 

concerning a statement of opinion” that “conflict with what a 

reasonable investor would take from the statement itself.” 135 

S. Ct. at 1329. Satisfying this standard, the Court warned, is 

“no small task.” Id. at 1332. To illustrate, the Court considered 

the hypothetical statement: “We believe our conduct is lawful.” 

Id. at 1328. According to the Court, a reasonable investor may 

assume an issuer consulted a lawyer before forming such an 

opinion. Id. A reasonable investor may also assume that the 

lawyer concurred with the substantive assessment. Id. at 1328–

29. In other words, reasonable investors may expect 

compliance opinions to be both supported by “meaningful 

legal inquir[ies]” and to “fairly align[] with the information in 
34 

the [speaker’s] possession at the time.” Id. If the issuer did 

not consult a lawyer, or if the lawyer did not agree with the 

assessment, the issuer’s opinion regarding its compliance 

“could be misleadingly incomplete.” Id. at 1328. 

 The Court also recognized that not every omission 

related to a speaker’s knowledge or process in forming an 

opinion is misleading. “An opinion statement . . . is not 

necessarily misleading when an issuer knows, but fails to 

disclose, some fact cutting the other way.” Id. at 1329. This is 

because “[r]easonable investors understand that opinions 

sometimes rest on a weighing of competing facts; . . . [a] 

reasonable investor does not expect that every fact known to 

an issuer supports its opinion statement.” Id. Accordingly, 

plaintiffs must “identify particular (and material) facts going to 

the basis for the [speaker’s] opinion—facts about the inquiry 

[the speaker] did or did not conduct or the knowledge it did or 

did not have—whose omission makes the opinion statement at 

issue misleading to a reasonable person reading the statement 

fairly and in context.” Id. at 1332. A conclusory allegation 

that the speaker “lacked ‘reasonable grounds for the belief’ it 

stated” will not suffice. Id. at 1333. 

We have yet to decide whether Omnicare applies to 

claims brought under the Exchange Act, and in particular under 

§ 14(a). Cf. In re Amarin Corp. PLC Sec. Litig., 689 F. App’x 

124, 132 n.12 (3d Cir. 2017) (“[W]e decline to decide whether 

Omnicare is applicable to § 10(b) claims . . . .”). We decline 

to do so again today because, even assuming Omnicare’s 

applicability, the shareholders failed to plausibly allege an 

actionably misleading opinion. 
35 

Here, the shareholders contend that two opinion 

statements made in or incorporated by reference into the Joint 

Proxy violated Omnicare. The statements read as follows: 

[1] Although we currently believe

we should be able to obtain all 

required regulatory approvals in a 

timely manner, we cannot be 

certain when or if we will obtain 

them or, if obtained, whether they 

will contain terms, conditions or 

restrictions not currently 

contemplated that will be 

detrimental to or have a material 

adverse effect on M&T or its 

subsidiaries after the completion 

of the merger. 

. . . 

[2] The Registrant and its impacted 

subsidiaries have approved 

policies and procedures that are 

believed to be compliant with the 

USA Patriot Act. 

(App. A0220, A1028) (emphasis added). The shareholders 

argue that these opinion statements are misleading because: (1) 

they proved to be false; and (2) the Joint Proxy omitted facts 

concerning M&T’s process for forming these opinions. 

 The shareholders’ first argument is meritless. They 

contend that the opinion statements are actionable because they 

were ultimately proved to be false—in other words, regulatory 
36 

approval was not obtained in a timely manner; and M&T was 

not compliant with the Patriot Act. A similar argument was 

rejected by the Supreme Court in Omnicare: “[A] sincere 

statement of pure opinion is not an ‘untrue statement of 

material fact,’ regardless [of]whether an investor can 

ultimately prove the belief wrong.” 135 S. Ct. at 1327. 

 The shareholders’ second argument, though stronger, is 

ultimately unpersuasive. Apart from asserting, in conclusory 

fashion, that the banks acted negligently, the second amended 

complaint specifically alleges that M&T conducted “intensive 

due diligence” of Hudson’s operations from June 2012 to 

August 27, 2012. (App. A0935.) The complaint also alleges 

that Hudson’s due diligence investigation into M&T began on 

August 20, 2012 and lasted at most five business days. It does 

not allege particular facts about the banks’ conduct during 

those investigations. However, it does allege that sampling 

would have revealed the BSA/AML deficiencies—the 

implication being that the banks did not sample M&T’s 

customer accounts. From these allegations, the shareholders 

ask us to infer that the banks did not conduct a meaningful 

inquiry before forming their opinions. 

 The first shortcoming in this argument is that the facts 

concerning the duration of the diligence period were disclosed 

in the Joint Proxy. “[T]o avoid exposure for omissions,” a 

speaker “need only divulge an opinion’s basis, or else make 

clear the real tentativeness of its belief.” Omnicare, 135 S. Ct. 

at 1332. Even if a reasonable investor would have expected 

the banks to conduct a lengthier due diligence period, the Joint 

Proxy provided her with enough information to understand that 

the banks did not do so here. 
37 

 What remains, then, are general allegations of 

inadequate diligence and one specific allegation that the banks 

did not conduct a sampling of M&T’s customer accounts. 

Because general allegations of negligence are insufficient to 

plead an Omnicare violation, see id. at 1333, we are left with 

the question of whether a reasonable investor would have 

expected the banks to conduct a sampling of customer 

accounts. We think this solitary allegation concerning 

sampling is too weak to defeat the motion to dismiss. 

 First, sampling is a generic term that merely describes 

the act of selecting a subset of a much larger set one wishes to 

study. The second amended complaint does not explain the 

method of sampling—i.e., how individual accounts should 

have been selected—nor does it describe the type of review to 

be conducted once an account was selected by this method. 

Second, sampling is presumably just one of several ways to 

conduct due diligence; nothing in the complaint suggests that 

sampling was the only way to conduct diligence here. Without 

more, we do not think it plausible that a reasonable investor 

would have expected the banks to conduct a sampling of 

customer accounts; nor do we think it is plausible that a 

reasonable investor would have been misled by the banks’ 

failure to disclose that a sampling was not conducted. 

 The context of the opinions at issue further underscores 

our conclusion that a reasonable investor would not have been 

misled. The opinions were made in the context of the Joint 

Proxy’s description of the increased scrutiny into BSA/AML 

compliance across the industry. The opinions are also 

surrounded by cautionary language, warning of the uncertainty 

of future projections regarding regulatory approval. This 

hedging is similar to that which was persuasive to the Supreme 
38 

Court in Omnicare, and suggests to us that a reasonable 

investor would not have been misled by the opinions. 

 Accordingly, we will affirm the District Court’s 

dismissal of the misleading-opinion claims. 

B. Whether the Second Amended Complaint 

Plausibly Alleged Loss Causation 

We conclude by addressing M&T’s alternative ground 

for affirmance: the shareholders’ alleged failure to plead loss 

causation. See Hassen v. Gov’t of V.I., 861 F.3d 108, 114 (3d 

Cir. 2017) (acknowledging that we may affirm on any ground 

supported by the record). “The loss causation inquiry asks 

whether the misrepresentation or omission proximately caused 

the economic loss.” McCabe v. Ernst & Young, LLP, 494 F.3d 

418, 426 (3d Cir. 2007) (analyzing § 10(b) claim). To 

plausibly allege loss causation, a “plaintiff must show that the 

defendant misrepresented or omitted the very facts that were a 

substantial factor in causing the plaintiff’s economic loss.” Id. 

“[R]ecovery is not limited to out of pocket loss, a diminution 

in the value of one’s investment, but may include loss of a 

possible profit or benefit, an addition to the value of one’s 

investment, unless the loss is wholly speculative.” Gould, 535 

F.2d at 781, 782 (recognizing “that by the circulation . . . of the 

defective proxy materials the plaintiffs were lulled to inaction 

and thereby suffered the loss of an opportunity to attempt to 

secure a merger agreement which would be more favorable to 

them”). 

The District Court did not address whether the second 

amended complaint plausibly alleged loss causation. The 

District Court did, however, find that the first amended 

complaint plausibly alleged loss causation, and the allegations 
39 

regarding loss are identical in both pleadings. The shareholders 

maintain three theories of loss on appeal: (1) the lost 

opportunity of a more favorable merger premium; (2) the lost 

opportunity of a higher dividend; and (3) the lost opportunity 

of investing in a company without—to use the language of the 

complaint—M&T’s “spotty regulatory record.” (App. 

A0926.) M&T counters that there was no loss as a matter of 

law because: (1) the shareholders profited from the merger to 

the tune of $1.9 billion; (2) the shareholders’ more-favorablemerger-premium theory is “entirely speculative” in that there 

was no competing offer and no reason to believe the 

shareholders would have rejected the merger but for a more 

favorable premium; (3) the shareholders’ higher dividend 

theory is “too attenuated” in that Hudson’s Board had complete 

discretion to issue a dividend; (4) the alleged dividends were 

dispensed between the shareholder vote and the merger’s 

closing and so cannot be attributed to the merger; and (5) 

despite an allegedly “spotty regulatory record,” M&T’s stock 

price rose after the merger closed. (Appellees’ Br. at 45–48.) 

While it is true that the shareholders earned a profit after 

the merger closed, this does not necessarily negate any alleged 

lost opportunities. See Gould, 535 F.2d at 781. On the other 

hand, we agree that the shareholders’ loss allegations border 

on speculative. Although loss causation may ultimately be 

difficult for the shareholders to establish, we will not say that 

the shareholders’ allegations are facially implausible. Where, 

as here, resolution is likely to turn on the specifics of the 

merger negotiations and the inferences that should be drawn 

therefrom, we think dismissal would be premature. 

Accordingly, we find that the shareholders’ allegations of loss 

causation are sufficient to survive the motion to dismiss. 
40 

IV. CONCLUSION 

 For the foregoing reasons, we will vacate in part and 

affirm in part the District Court’s Order dated November 21, 

2017. On remand, the District Court is directed to proceed to 

discovery on the mandatory-disclosure claims.