Joseph Noto, Garden State Tire Corp., Stephens Johnson, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants, v. 22nd Century Group, Inc., Henry Sicignano, III, John T. Brodfuehrer, Defendants-Appellees., 35 F.4th 95

Summary

HOLDINGS: [1]-Where plaintiffs alleged that defendants violated § 10(b) of the Exchange Act, 15 U.S.C.S. § 78j, and SEC Rule 10b-5(b), 17 C.F.R. § 240.10b-5, when, in an effort to artificially inflate defendant's stock price, they published certain promotional articles, dismissal for failure to state a claim was warranted because the complaint did not adequately allege that defendants qualified as the makers of the promotional articles or that they had a duty to disclose that they paid for the articles' publication or that the content of the articles was false or misleading; [2]-However, plaintiffs sufficiently stated an actionable claim that defendants violated SEC Rule 10b-5 by failing to disclose an SEC investigation into defendants' accounting controls because, by not mentioning the investigation, defendants' disclosures of their accounting deficiencies were misleading.