Comscore Defeats Putative Securities Class Action in New York Federal Court
A New York federal judge has ruled in favor of Vinson & Elkins client comScore, Inc. (“Comscore”) and two of its executives, dismissing a proposed securities class action alleging that an internal strategy disagreement between Comscore’s executives and the company’s board of directors should have been disclosed to investors.
In an opinion dated June 24, 2020, U.S. District Judge Katherine Polk Failla dismissed securities fraud claims brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by investor Sergii Bratusov on behalf of himself and other similarly situated shareholders.
Siding with V&E’s motion to dismiss filed on November 25, 2019, the Court concluded that there is no duty to disclose an internal business disagreement, noting “the Second Circuit’s ‘reluctance to interpret the securities laws in a manner that requires companies to give competitors notice of proprietary strategies and information.’” The Court also held that Comscore’s public statements cited by Plaintiffs concerning its cross-platform measurement strategy were not false, finding that “[n]othing in the complaint indicates that the company ever abandoned its strategy of establishing a cross-platform measurement currency throughout the class period, even if the prioritization of means to achieve that goal may have shifted over time.”
The Court dismissed the suit with leave to amend, ordering Bratusov to notify the court on or before July 24, 2020 whether a second amended complaint will be filed.
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