United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 24, 2010 Decided December 28, 2010

No. 09-7167

IN RE: INTERBANK FUNDING CORP SECURITIES LITIGATION,

MONICA BELIZAN, AND ALL OTHERS SIMILARLY SITUATED, ET

AL.,

APPELLANTS

v.

RADIN GLASS & CO, LLP,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:02-cv-01490)

Michael G. McLellan argued the cause for appellants. With

him on the briefs were Burton H. Finkelstein, Donald J. Enright,

and Tracy D. Rezvani.

Michael L. Martinez argued the cause and filed the brief for

appellee.

Before: KAVANAUGH, Circuit Judge, EDWARDS and

SILBERMAN, Senior Circuit Judges.
2

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: In 2002, plaintiffappellant Monica Belizan, on behalf of herself and a class of

similarly situated persons, filed a complaint against, inter alia,

defendant-appellee Radin Glass & Co., LLP (“Radin”). Belizan

alleged that she purchased securities of InterBank Funding

Corporation (“Interbank”), and, in doing so, relied on materially

false misrepresentations and omissions by Radin, Interbank’s

auditor, made in violation of section 10(b) of the Securities

Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities and

Exchange Commission (“SEC”) Rule 10b-5,

17 C.F.R. § 240.10b-5. After Belizan consolidated her action

with a related action in 2003, the District Court granted a motion

to dismiss filed by Radin and then-defendant CIBC World

Markets Corp. (“CIBC”). In re Interbank Funding Corp. Sec.

Litig., 329 F. Supp. 2d 84 (D.D.C. 2004). This court vacated the

District Court’s order of dismissal, because the District Court

failed to adequately explain why it dismissed the appellants’

complaint with prejudice. Belizan v. Hershon (“Belizan I”), 434

F.3d 579 (D.C. Cir. 2006). On remand, the District Court again

dismissed the appellants’ suit, because there was no indication

that appellants would be able to cure the deficiencies in their

pleadings. In re Interbank Funding Corp. Sec. Litig., 432 F.

Supp. 2d 51, 55 (D.D.C. 2006). On appeal, this court again

vacated in part and remanded the section 10(b) and Rule 10b-5

claims for the District Court to re-evaluate the appellants’

allegations of scienter. Belizan v. Hershon (“Belizan II”), 495

F.3d 686, 691-92 (D.C. Cir. 2007).

Before the District Court for the third time, appellants

moved for leave to amend their complaint against Radin

pursuant to FED.R.CIV. P. 15(a). The District Court denied the

motion and again dismissed appellants’ suit with prejudice. In

re Interbank Funding Corp. Sec. Litig., 668 F. Supp. 2d 44
3

(D.D.C. 2009). The District Court held that the appellants’

proposed amendment was futile because the draft complaint

failed to adequately plead the reliance element of a securities

fraud claim – i.e., “the causal link between the defendant’s

misconduct and the plaintiff[s’] decision to buy . . . securities,”

Emergent Capital Inv. Mgmt., LLC. v. Stonepath Grp., Inc., 343

F.3d 189, 197 (2d Cir. 2003). Appellants argue that the District

Court erred in its decision not to apply the “Affiliated Ute

presumption” of reliance. See Affiliated Ute Citizens v. United

States, 406 U.S. 128, 153 (1972). Had the District Court found

the presumption applicable, appellants’ amended complaint 

would have properly pled all elements of a cause of action under

SEC Rule 10b-5.

We agree with the District Court that the Affiliated Ute

presumption is inapplicable here. In Affiliated Ute, the Supreme

Court applied a presumption of reliance in a situation “involving

primarily a failure to disclose.” 406 U.S. at 153. Appellants

contend that because their action primarily relies on Radin’s

alleged omissions, they should benefit from a presumption of

reliance. We disagree. The complaint is focused on appellants’

claim that Interbank’s financial statements, which Radin attested

were accurate and in accord with Generally Accepted

Accounting Principles (“GAAP”), did not reveal Interbank’s

alleged “Ponzi scheme.” Thus, the gravamen of the appellants’

complaint is that, by certifying Interbank’s materially false

financial statements, Radin affirmatively misrepresented

Interbank’s financial situation. Because, as appellants concede,

the Affiliated Ute presumption of reliance does not apply to

affirmative misrepresentations, appellants’ proposed amendment

to their complaint would be futile. We therefore affirm the

District Court’s order denying appellants’ motion for leave to

amend.
4

I. BACKGROUND

“[A] district court has discretion to deny a motion to amend

on grounds of futility where the proposed pleading would not

survive a motion to dismiss.” Nat’l Wrestling Coaches Ass’n v.

Dep’t of Educ., 366 F.3d 930, 945 (D.C. Cir. 2004). 

Consequently “our review in this instance is, for practical

purposes, identical to review of a Rule 12(b)(6) dismissal based

on the allegations in the amended complaint.” Platten v. HG

Bermuda Exempted Ltd., 437 F.3d 118, 132 (1st Cir. 2006). On

review of a motion to dismiss, we “treat the complaint’s factual

allegations as true . . . and must grant [appellants] the benefit of

all inferences that can be derived from the facts alleged.” Holy

Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156, 165

(D.C. Cir. 2003) (ellipsis in original) (citation and quotation

omitted). Therefore, the facts recited below are drawn from

appellants’ proposed amended complaint.

Interbank was formed in 1996 with the purpose of buying

distressed loans and restructuring or rehabilitating those loans

for a profit. Proposed Second Consolidated Am. Class Action

Compl. for Violation of the Fed. Securities Laws ¶ 26 (“Second

Amended Complaint”), No. 1:02-cv-01490 (D.D.C. Oct. 20,

2008), reprinted in Appendix (“App.”) 62. Between 1996 and

1999, Interbank formed a succession of wholly-owned funds

that offered private placement notes to investors. Id. ¶ 19, App.

60. These were five-year notes that bore interest between eight

and twelve percent annually, plus a share of the fund’s gross

profits. Id. Shortly after the first fund commenced operations,

Interbank established a “related party transaction policy,” under

which Interbank itself purchased a loan from a fund if there was

a question about whether the loan would be collected before the

fund’s scheduled liquidation. Id. ¶ 42, App. 65-66. With

respect to these transactions, Interbank paid the fund the full

amount outstanding on an acquired loan even if the loan was

uncollectable. Id. ¶ 43, App. 66. As a result, the fact that a loan
5

had gone bad was not disclosed to prospective investors to the

Interbank fund that sold the loan, id. ¶ 44, App. 66, and

Interbank was able to tap fresh offering proceeds to pay off

earlier noteholders, id. ¶ 46, App. 66-67.

Although Radin publicly attested to the accuracy of

Interbank’s balance sheets and private placement memoranda on

many occasions – typically averring that these documents were

“in conformity with generally accepted accounting principles,”

id. ¶¶ 52-71, App. 68-77 – Radin did not comply with GAAP or

Generally Accepted Auditing Standards (“GAAS”) in its audits. 

For example, Radin endorsed financial statements that did not

disclose Interbank’s related-party transfers, id. ¶ 82, App. 80;

Radin reviewed financial documents that did not disclose

specific amounts of one of the funds’ loan losses, id. ¶ 91-94,

App. 82; and the audited financial statements did not state that

some of the Interbank funds were co-obligors with Interbank on

a line of credit, id. ¶ 115, App. 86. Appellants’ complaint also

alleges that “superimposed over each of these

misrepresentations is a single constant omission: the class

members were not informed they were investing in a Ponzi

scheme.” Id. ¶ 76, App. 79.

Belizan first filed a complaint against Radin and numerous

other defendants in July 2002, alleging violations of section

10(b) of the Securities Exchange Act of 1934 and SEC Rule

10b-5 (“Section 10 claims”). Compl. for Violation of the Fed.

Securities Laws, No. 1:02-cv-01490 (D.D.C. July 26, 2002). 

Belizan’s complaint was consolidated with a related action, and,

in September 2003, the named plaintiffs filed an amended

complaint against, inter alia, Radin and broker-dealer CIBC. In

addition to the Section 10 claims, this complaint alleged

violations of section 11 of the Securities Act of 1933 (“Section

11 claims”), 15 U.S.C. § 77k, against Radin for filing a series of

materially false and misleading registration statements. 
6

Consolidated Am. Class Action Compl. for Violation of the Fed.

Securities Laws, No. 1:02-cv-01490 (D.D.C. Sept. 29, 2003).

The District Court granted Radin and CIBC’s motion to

dismiss all of the appellants’ claims with prejudice. In re

Interbank Funding Corp. Sec. Litig., 329 F. Supp. 2d 84 (D.D.C.

2004). In particular, the District Court disposed of appellants’

Section 10 claims on the grounds that they failed to adequately

plead scienter or causation, and did not plead with the

particularity required by FED. R. CIV. P. 9(b) and the Private

Securities Litigation Reform Act. Id. at 94. The court also

dismissed the Section 11 claims. Id. at 94-95. This court

vacated the District Court’s order of dismissal and remanded

because the District Court “fail[ed] adequately to

explain . . . why it dismissed Belizan’s complaint with

prejudice.” Belizan I, 434 F.3d at 584 (emphasis added).

On remand, the District Court again dismissed all claims

against Radin and CIBC – explaining that it was dismissing the

claims with prejudice because “there was no indication that

plaintiffs were capable of making additional allegations,

consistent with their prior pleadings, that would cure the

deficiencies in the claims against CIBC and Radin.” In re

Interbank Funding Corp. Sec. Litig., 432 F. Supp. 2d 51, 55

(D.D.C. 2006). Back before this court on appeal, we vacated the

District Court’s order in part. We affirmed the District Court’s

dismissal of the Section 11 claims. Belizan II, 495 F.3d at 692-

93. With respect to the Section 10 claims, however, we noted

that the allegations in appellants’ proposed complaint

concerning scienter “specifically allege[d] that CIBC and Radin

had access to particular pieces of information that would have

revealed [Interbank]’s allegedly fraudulent and GAAP violating

inter-fund transfers.” Id. at 692 (quotation omitted). We

therefore remanded for the District Court to evaluate appellants’

pleading in light of Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

551 U.S. 308 (2007), in which the Supreme Court held that a
7

“‘strong inference’ of scienter . . . ‘must be more than merely

plausible or reasonable – it must be cogent and at least as

compelling as any opposing inference of nonfraudulent intent.’” 

Belizan II, 495 F.3d at 691 (quoting Tellabs, 551 U.S. at 314).

Following our remand, the District Court approved a

settlement agreement between appellants and CIBC, leaving

Radin as the lone remaining defendant. In the meantime,

appellants moved to file a proposed amended complaint against

Radin under FED. R. CIV. P. 15(a). The proposed complaint

alleged only Section 10 claims. The District Court denied the

motion on the ground that the proposed amendment would be

futile because it did not adequately plead reliance. In re

Interbank Funding Corp. Sec. Litig., 668 F. Supp. 2d 44 (D.D.C.

2009). The appellants proffered three legal theories as to why

they had sufficiently alleged reliance: (1) they had properly pled

direct reliance; (2) they were entitled to a presumption of

reliance under Affiliated Ute; and (3) they were entitled to a

presumption of reliance through the “fraud-created-the-market”

theory.

The District Court rejected all three arguments. The trial

court easily disposed of appellants’ allegations of direct reliance,

noting that appellants did not seriously contest this point. Id. at

49 & n.5. The District Court then pointed out that the Affiliated

Ute presumption applies when reliance is impossible to prove,

a situation not present in this case:

Reliance is not “impossible to prove” in this case because

Radin did offer positive statements: Radin repeatedly

declared that Interbank’s financial disclosures were

materially fair and in conformance with generally accepted

accounting principles. Indeed, plaintiffs’ proposed

amended complaint lists at least eighteen separate

affirmative statements by Radin certifying the Interbank

funds’ balance sheets.
8

Id. at 51. The District Court also noted that the Affiliated Ute

presumption does not apply “[w]here positive statements form

a central part of the alleged fraud such that the evidentiary

problems inherent in proving reliance on a nondisclosure are not

present.” Id. (brackets in original) (quotation omitted). Finally,

the District Court refused to apply the fraud-created-the-market

presumption of reliance, finding that, even assuming the validity

of the fraud-created-the-market theory – which some circuits

have applied “to those cases in which the securities were not

qualified legally to be issued, and . . . there was a scheme to

defraud or act to defraud,” e.g., T.J. Raney & Sons, Inc. v. Fort

Cobb, 717 F.2d 1330, 1333 (10th Cir. 1983) – appellants did not

connect Radin’s alleged fraud to the securities’ unmarketability. 

In re Interbank Funding Corp. Sec. Litig., 668 F. Supp. 2d at 

52-53.

Appellants timely appealed the District Court’s decision to

deny their motion, contesting only the District Court’s refusal to

invoke the Affiliated Ute presumption.

II. ANALYSIS

Rule 15(a)(2) instructs district courts to “freely give leave

[to amend a pleading] when justice so requires.” FED.R.CIV. P.

15(a)(2). “When the district court denies a motion for leave to

amend under Rule 15(a), we review its decision for abuse of

discretion bearing in mind that the rule is to be construed

liberally.” Belizan I, 434 F.3d at 582 (citation omitted). 

However, a district court may properly deny a motion to amend

if the amended pleading would not survive a motion to dismiss. 

See Foman v. Davis, 371 U.S. 178, 182 (1962) (noting that

“futility of amendment” is permissible justification for denying

Rule 15(a) motion); see also Platten v. HG Bermuda Exempted

Ltd., 437 F.3d 118, 132 (1st Cir. 2006) (noting that review in a

case of this sort is akin “to review of a Rule 12(b)(6) dismissal

based on the allegations in [an] amended complaint”). In these

circumstances, the standard of review is de novo. See Gonzalez-
9

Vera v. Townley, 595 F.3d 379, 381 (D.C. Cir. 2010) (standard

of review for motion to dismiss).

“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. A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to

draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949

(2009) (citation and quotation omitted). For legal conclusions,

however, “the tenet that a court must accept as true all of the

allegations contained in a complaint is inapplicable.” Id.

Appellants, on appeal, seek reversal of the District Court’s

denial of their Rule 15(a) motion on the ground that they

properly pled all elements of a cause of action under SEC Rule

10b-5. Rule 10b-5 makes it unlawful for any person, in

connection with the purchase or sale of any security:

(a) To employ any device, scheme, or artifice to defraud,

(b) 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, or

(c) To engage in any act, practice, or course of business

which operates or would operate as a fraud or deceit upon

any person.

17 C.F.R. § 240.10b-5. To prevail under Rule 10b-5, the

appellants here must demonstrate, in connection with their

purchase of Interbank securities, that (1) a material

misrepresentation or omission was made “with an intent to

deceive, manipulate, or defraud”; (2) they reasonably relied on

that misrepresentation or omission; and (3) they suffered an

economic loss as a result. Media Gen., Inc. v. Tomlin, 532 F.3d
10

854, 858 (D.C. Cir. 2008) (quotation omitted). Only the reliance

prong of this test is at issue in this appeal.

In Affiliated Ute, the Supreme Court permitted the plaintiffs

to benefit from a presumption of reliance. Affiliated Ute

involved a bank that served as the transfer agent for all shares of

a stock that had been issued to each “mixed-blood” member of

the Ute Indian Tribe. The stock represented, inter alia, “all

unadjudicated or unliquidated claims against the United States”

and “all gas, oil, and mineral rights of every kind . . . to which

the mixed-blood members of the said tribe [were entitled].” 406

U.S. at 136. Two assistant managers of the bank devised a

scheme to purchase shares from mixed-bloods for themselves

and other non-Indians for less than fair market value. Id. at 148. 

The Court held that the managers possessed an affirmative duty,

under SEC Rule 10b-5, to disclose to the mixed-blood sellers

that they had a financial interest in the transactions. Id. at 153. 

The Court explained:

It is no answer to urge that, as to some of the petitioners,

these defendants may have made no positive representation

or recommendation. The defendants may not stand mute

while they facilitate the mixed-bloods’ sales to those

seeking to profit in the non-Indian market the defendants

had developed and encouraged and with which they were

fully familiar. The sellers had the right to know that the

defendants were in a position to gain financially from their

sales and that their shares were selling for a higher price in

that market.

Id. The Court then held that “[u]nder the circumstances of this

case, involving primarily a failure to disclose, positive proof of

reliance is not a prerequisite to recovery.” Id.

The Third Circuit has applied the Affiliated Ute

presumption in a case involving (1) failures to disclose, i.e.,

“pure omissions”; and (2) failures to clarify “true but misleading
11

statements” relating to investment research, i.e.,“half-truths,

which, although analytically closer to lies than to nondisclosure,

are obviously closer to omissions than are pure

misrepresentations.” Hoxworth v. Blinder, Robinson & Co., 903

F.2d 186, 202 (3d Cir. 1990) (citation, ellipsis, and internal

quotation marks omitted). The Second and Tenth Circuits

likewise have not followed a formulaic approach in these mixed

cases, applying the presumption when reliance on a negative

would be practically impossible to prove. Joseph v. Wiles, 223

F.3d 1155, 1162 (10th Cir. 2000); Wilson v. Comtech

Telecomms. Corp., 648 F.2d 88, 93 (2d Cir. 1981). On the other

hand, the Fourth, Fifth, Ninth, and Eleventh Circuits have

applied the Affiliated Ute presumption more restrictively. 

Regents of Univ. of Cal. v. Credit Suisse First Boston (USA),

Inc., 482 F.3d 372, 384 (5th Cir. 2007) (“primarily based on

omissions”); Binder v. Gillespie, 184 F.3d 1059, 1064 (9th Cir.

1999) (“cases that primarily allege omissions”); Cox v. Collins,

7 F.3d 394, 396 (4th Cir. 1993) (“only nondisclosure”); Cavalier

Carpets, Inc. v. Caylor, 746 F.2d 749, 756 (11th Cir. 1984)

(“primarily omission cases”). 

No court of appeals has applied the Affiliated Ute

presumption in a case involving a claim that primarily alleges

affirmative misrepresentations. See, e.g., Johnston v. HBO Film

Mgmt., Inc., 265 F.3d 178, 192 (3d Cir. 2001) (“[N]o

presumption arises in cases of alleged misrepresentations.”);

Joseph, 223 F.3d at 1162 (“Affiliated Ute’s holding is limited to

omissions as opposed to affirmative misrepresentations.”); Akin

v. Q-L Invs., Inc., 959 F.2d 521, 529 (5th Cir. 1992) (“The Ute

presumption, however, operates only in omissions cases, not

where plaintiffs assert positive misrepresentations of material

information.”). Indeed, appellants concede that they would not

be entitled to a presumption of reliance in a case in which they

merely alleged that the defendants did not disclose that their

affirmative misrepresentations were false. Appellants’ Reply

Br. at 6.
12

Appellants argue that their claims are instead premised on

Radin’s alleged omission of the fact that Interbank operated as

a Ponzi scheme in Interbank’s financial statements, which Radin

audited. Most of these financial statements were balance sheets. 

Second Amended Complaint ¶¶ 52-71, App. 68-77. A balance

sheet reflects a company’s financial position at a particular point

in time by showing assets (resources controlled by the

company), liabilities (creditors’ claims on the company’s

resources), and stockholders’ equity (stockholders’ claims on the

company’s resources). The accounting model of a balance sheet

can be represented by the following equation:

Assets = Liabilities + Stockholders’ Equity.

See FRED PHILLIPS ET AL., FUNDAMENTALS OF FINANCIAL

ACCOUNTING 12-13 (3d ed. 2011). The balance sheets of a

profitable company would show increasing assets and

concomitant increases in stockholders’ equity over time as the

company’s investments gained value. By contrast, the balance

sheets of a Ponzi scheme – which “generally describes a

pyramid-type investment scheme where investors are paid

profits from newly attracted investors promised large returns on

their principal investments,” In re Fin. Federated Title & Trust,

Inc., 309 F.3d 1325, 1327 n.2 (11th Cir. 2002) – would show

decreasing assets as available cash is depleted to pay out

promised rates of return to investors. Because the Ponzi

scheme’s liabilities would not decrease as new investors

continued to contribute capital, the balance sheets would show

decreasing stockholders’ equity as the scheme paid out rates of

return. Consequently, appellants’ characterization of Radin’s

failure to disclose the Ponzi scheme as an omission is off the

mark. The label “Ponzi scheme” is simply a popular

characterization of a fraudulent business practice that an

accurate representation of the balance sheets would reveal. In

order to operate as a Ponzi scheme, Interbank’s financial

statements necessarily misrepresented the company’s financial
13

position in order to attract new investors, and Radin

affirmatively misrepresented the accuracy of these statements by

stating that they fairly presented Interbank’s financial position

and conformed with GAAP.

Even aside from the allegation that Radin failed to disclose

the operation of a Ponzi scheme, other sections of the complaint

confirm that the crux of appellants’ claims are Radin’s

affirmative misrepresentations of Interbank’s financial

statements. For example, the complaint alleges that Radin

publicly attested to the accuracy of numerous Interbank balance

sheets as well as the fact that the balance sheets conformed with

GAAP. Second Amended Complaint ¶¶ 52-71, App. 68-77. 

The District Court correctly considered these attestations

“positive statements,” 668 F. Supp. 2d at 51, which

encompassed Radin’s other alleged misdeeds pertaining to the

nondisclosure of Interbank’s inter-fund transfers, loan losses,

and lines of credit secured by a lien on some of the funds’ assets. 

Appellants portray these errors as failures to disclose, but “the

tenet that a court must accept as true all of the allegations

contained in a complaint is inapplicable to legal conclusions,” 

Iqbal, 129 S. Ct. at 1949, so we need not accept this

characterization. Had the financial statements not included

Radin’s express certification, Radin’s silence about these errors

might have been akin to the silence of the bank managers in

Affiliated Ute, 406 U.S. at 153. But Radin did make express

attestations, which were affirmative misrepresentations that

encompassed the alleged omissions cited in the appellants’

complaint. The Affiliated Ute presumption is therefore

inapplicable.

This analysis is not inconsistent with the Fifth Circuit’s

decision in Akin v. Q-L Investments, Inc., 959 F.2d 521 (5th Cir.

1992), on which appellants heavily rely. Appellants’ Br. at 16

& n. 6. In Akin, the plaintiffs argued that they were entitled to

the Affiliated Ute presumption of reliance for both (1) start-up
14

balance sheets and (2) corporate balance sheets, with respect to

which the defendant accounting firm had furnished reports. The

start-up balance sheets merely indicated the initial capitalization

of the company at issue, along with a brief statement that the

company intended to acquire an apartment complex and offer

partnership interests for sale in the future. Id. at 527. The

corporate balance sheets, by contrast, “included a statement of

assets, liabilities, and shareholders’ equity, a statement of

revenue, expenses, and retained earnings, and a statement of

source and application of funds, along with extensive notes.” Id.

at 528. The Fifth Circuit held that plaintiffs could rely on the

Affiliated Ute presumption for the start-up balance sheets but not

for the corporate balance sheets, because the latter “disclosed

considerable information about the relationship” between the

different entities at issue. Id. at 529-30. Here, the Interbank

financial documents, as described in appellants’ complaint, are

more similar to Akin’s corporate balance sheets than its start-up

balance sheets, because they included a significant amount of

useful information to investors. E.g., Second Amended

Complaint ¶ 69, App. 76 (noting that, in addition to balance

sheets for Interbank fund, Radin audited “related statement of

operations, changes in stockholders’ equity, and cash flow for

each of the years then ended”). To quote the Akin court: “Any

wrong lies in ignoring accounting principles and distorting the

numbers underlying the net worth of [the Interbank funds]. This

is the stuff of misrepresentation and does not entitle plaintiffs to

the Ute presumption.” 959 F.2d at 530.

Finally, appellants press two additional arguments for why

their complaint primarily alleges omissions. First, they contend

that because Radin’s non-disclosure of this Ponzi scheme was of

“primary importance” to their case, they can rely on the

Affiliated Ute presumption. Appellants’ Br. at 17; see also Oral

Arg. Recording 4:27-4:35. But the fact that a fraud is significant

is irrelevant to whether the fraud stems from misrepresentations

or omissions, which is the dispositive inquiry in determining the
15

availability of the Affiliated Ute presumption. Second,

appellants rely on several district court opinions, which they

characterize as holding that the Affiliated Ute presumption

applies if a defendant fails to notify plaintiffs that they invested

in a Ponzi scheme: Katz v. MRT Holdings, LLC, No. 07-61438-

CIV, 2008 WL 4725284 (S.D. Fla. Oct. 24, 2008); Getty v.

Harmon, No. C98-178, 1998 WL 919368 (W.D. Wash. Oct. 23,

1998); Walco Invs., Inc. v. Thenen, 168 F.R.D. 315 (S.D. Fla.

1996); In re Home-Stake Prod. Co. Sec. Litig., 76 F.R.D. 351

(N.D. Okla. 1977). To the extent that these cases are contrary

to the foregoing analysis, we do not find them persuasive.

III. CONCLUSION

For the reasons indicated in the foregoing opinion, the

judgment of the District Court is affirmed.