Doshi v. General Cable Corp.
In October 2012, and again a year later, General Cable announced that it would reissue several public financial statements because they included material accounting errors. Soon after, City of Livonia Employees’ Retirement System initiated a class-action suit against General Cable, under the 1934 Securities Exchange Act, 15 U.S.C. 78j(b), 78t(a), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. 240.10b-5. Livonia asserted that defendants acted at least recklessly in issuing or approving materially false public financial statements. The defendants countered that the misstatements resulted from accounting errors and a theft scheme in its Brazilian operations of which the defendants were unaware and that they promptly sought to remediate upon discovering them. The district court dismissed Livonia’s complaint with prejudice because it failed to plead scienter adequately. The Sixth Circuit affirmed. Seven factors favored rejecting a scienter inference. Livonia cited no facts with sufficient particularity implicating suspicious insider trading or failure to disclose impending stock sales. View "Doshi v. General Cable Corp." on Justia Law