The Second Circuit Court of Appeals Grants Plaintiffs a Significant Victory in SAIC Securities Case
On March 29, 2016, the United States of Court of Appeals for the Second Circuit ruled in plaintiffs’ favor, vacating the district court’s denial of plaintiffs’ post-judgment motion to amend the two central claims against SAIC, Inc. In doing so, the Second Circuit issued a precedent-setting opinion construing the scope of Financial Accounting Standard No. 5 and Item 303 of SEC Regulation S-K. The Second Circuit remanded the case to the district court for further proceedings.
SAIC focuses its business on providing defense, intelligence, homeland security, logistics, energy, environment and health solutions and services to federal, state and local government agencies, foreign governments and customers in select commercial markets. The case alleges that during the class period SAIC and certain of its officers and/or directors issued materially false and misleading statements regarding the company’s financial performance and future prospects.
The appeals court also noted that “SAIC acted with the requisite scienter when it violated FAS 5 and Item 303 in connection with its March 2011 Form 10‐K . . . [and] that the allegations support the inference that SAIC acted with at least a reckless disregard of a known or obvious duty to disclose when, as alleged, it omitted this material information from its March 2011 10‐K in violation of FAS 5 and Item 303.”
Indiana Public Retirement System, v. SAIC, Inc., No. 14-4140-cv, Opinion (2d Cir. Mar. 29, 2016)