Disclosure of defendant company’s president’s misdeeds did not render the company’s previous touting of its ethics code an actionable misrepresentation or omission under Rule 10b-5, since ethics codes are inherently aspirational, not an actual depiction of corporate practice. Plaintiffs failed to allege any actionable misrepresentation or omission and so their 10b-5 suit was properly dismissed. After a major ethics scandal, HP’s president touted the company’s corporate code of ethics. He didn’t mention that he himself violated it in various ways that ultimately were revealed forcing his resignation and causing a steep drop in HP’s stock price. There was no actionable affirmative misrepresentation. HP did have the touted ethics code. Disclosure of the president’s misdeeds was not necessary to make that affirmative disclosure not misleading since ethics codes are inherently aspirational, not an actual depiction of corporate practice.
Ninth Circuit Court of Appeals (Christensen, J., sitting by designation); January 19, 2017; 2017 WL 218026