SACRAMENTO — A company’s announcement of an internal investigation may trigger a bad stock market reaction but, by itself, it’s not enough to establish loss causation in a securities class action, the U.S. Court of Appeals for the Ninth Circuit held on Thursday.
A three-judge panel affirmed U.S. District Judge Maxine Chesney’s 2011 dismissal of a shareholders’ suit targeting Immersion Corp. and five company executives. In Loos v. Immersion, filed in the U.S. District Court for the Northern District of California, plaintiffs argued the San Jose tech company effectively revealed it had “cooked the books” in a 2009 press release announcing it was reviewing previous years’ revenue calculations. Immersion’s stock price dropped 23 percent on the news.
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