Dell Investors Defeat Motion to Dismiss in Securities Class Action
On September 16, 2016, the Honorable Lee Yeakel of the United States District Court for the Western District of Texas issued an order denying Dell Inc.’s motion to dismiss in City of Pontiac General Employees’ Retirement System v. Dell Inc. The securities fraud action alleges that Dell and certain of its past and present officers violated Sections
10(b) and 20(a) of the Securities Exchange Act of 1934.
Dell Inc. is a global information-technology company that designs, develops, markets, sells and supports mobile and desktop products. The case alleges that during the February 22, 2012 through May 22, 2012 class period, the company issued false and misleading statements regarding its performance, leading to a half-billion dollar shortfall in revenue for the first quarter of 2013 and a stock decline of more than 17%.
In denying the motion to dismiss, the court noted that “in light of Dell's specific problems, Defendants’ statements and omissions regarding these problems may not be disregarded, as Plaintiffs allege in sufficient detail Defendants' failure to reveal known, material adverse facts regarding Dell’s PC market and PC-sales prospects in the future.” The court further commented that “Defendants’ arguments are fact-based and are insufficient to support a motion to dismiss. The court finds that Plaintiffs have adequately pleaded the scienter element of the applicable Section 10(b) and Rule 10b-5 analysis. Therefore, the court concludes that Defendants’ motion to dismiss Plaintiffs’ Section 10(b) claim should be denied.”
City of Pontiac General Employees’ Retirement System v. Dell Inc., et al., Case No. 1:15-cv-00374-LY (W.D. Tex. Sept. 16, 2016).