On Thursday, November 13, U.S. District Judge Michael A. Telesca of the WDNY dismissed with prejudice the securities class action filed against Bausch & Lomb Inc. and a number of former top executives alleging securities fraud. The court dismissed the case for a range of reasons, including that scienter was not adequately pleaded and loss causation was not established. On the scienter issue, the court explained that
Plaintiffs have not identified any communication or report received by any individual defendant raising a red or yellow flag about the foreign subsidiaries’ accounting prior to the publicly disclosed Audit Committee investigations. Nor do plaintiffs offer any particularized allegation of an inference that management’s assessment of internal controls as of December 2004 and the related CEO and CFO certifications pursuant to the Sarbanes-Oxley Act were not honestly and reasonably believed to be true when made.
On loss causation, the court found that
B&L’s share price did not “[f]all significantly after the truth became known” about these items [alleged in the complaint]. See Dura, 544 U.S. at 347. In fact, B&L’s share price actually rose steadily throughout the duration of the post-Class Period disclosures from $44.61 on May 11, 2006 to $54.46 on February 7, 2007.