Opinion ID: 691552
Heading Depth: 4
Heading Rank: 2

Heading: The tight expense controls statements

Text: 36 An April 23rd press release noted that, although Legent fell short of expected new license revenues and although several particularly large orders did not close during the quarter, tight expense controls helped Legent achieve its $.52 earnings per share for the second quarter. (J.A. 2614-15.) Legent also made other statements in April stating that it achieved its second quarter earnings by using tight expense controls. Appellants argue that these statements were fraudulent statements of historical fact because Legent made representations that use of these tight expense controls could be relied upon again in later quarters to help meet earnings expectations. Appellants, however, refer us to no such representation, and we are unable to find one in the record. 21 Moreover, no analyst testified about any market expectations that Legent would repeat its use of any particular expense controls, and there is no evidence that Legent told the market that it would use these same tight expense controls in order to make its third quarter earnings. As with the Goal thirteenth month adjustment in January, use of the April expense controls was an accepted accounting practice that was not, in itself, evidence of securities fraud under Sec. 10(b) or Rule 10b-5. See Malone, 26 F.3d at 477-78.