Opinion ID: 751831
Heading Depth: 3
Heading Rank: 1

Heading: Merisel's Liability for Statements of Securities Analysts

Text: 39 Merisel argues that it is not responsible for the recommendations of securities analysts, even if it provided information on which the analysts' assessments were based. This argument fails, as we have held that corporate defendants may be directly liable under 10b-5 for providing false or misleading information to third-party securities analysts. 40 [I]f defendants intentionally misled securities analysts and the press in order to stave off a Xoma stock sell off, then these third-party reports would be relevant to determine Xoma's securities fraud liability. The Complaint asserts that Xoma intentionally used these third parties to disseminate false information to the investing public. If this is true, Xoma cannot escape liability simply because it carried out its alleged fraud through the public statements of third parties. The Complaint should not have been dismissed under 12(b)(6) without a contextual, delicate assessment of the facts presented-including the statements of third-party analysts. 41 Warshaw, 74 F.3d at 959 (citation omitted). Merisel contends that our decisions in In re Stac Electronics Securities Litigation, 89 F.3d 1399 (9th Cir.1996) (Stac) and In re Syntex Corporation Securities Litigation, 95 F.3d 922 (9th Cir.1996) (Syntex) foreclose liability for corporate defendants who provide information to securities analysts without placing their imprimatur, express or implied, on the projections issued by analysts. Syntex, 95 F.3d at 934 (quoting Stac, 89 F.3d at 1410). However, our decisions in Stac and Syntex did not consider whether corporate defendants could be directly liable for misrepresentations to securities analysts. See In re Cirrus Logic Securities Litigation, 946 F.Supp. 1446, 1467 n. 13 (N.D.Cal.1996). Instead, the issue in Stac and Syntex was whether corporate defendants could be held liable for analysts' interpretations of defendants' truthful statements. See id. Our decisions in Stac and Syntex do not preclude plaintiffs' claims that Merisel made false and misleading statements to securities analysts with the intent that the analysts communicate those statements to the market.