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Dailey v. Medlock, 1/13/14

A bank’s statements about its levels of capital were not misleading under 15 U.S.C.S. ? 78j(b) and 17 C.F.R. ? 240.10b-5 where the investors failed to sufficiently allege that the bank officers and directors had prior knowledge that a valuation allowance was to be taken at the end of the year. Statements that the bank was well capitalized were not false or misleading as there were no allegations that the bank did not meet the regulatory criteria at the time of the description, and the statement’s context made clear the need for additional capital and a poor economic forecast. The statements that the bank’s operations were subject to government regulation were not misleading as it was accurate, and the investors failed to identify any laws or regulations that may have been violated. A state law claim for silent fraud was improperly dismissed with prejudice. The lower court?s judgment was affirmed in part, reversed in part, and the case was remanded to the lower court.