Securities Fraud Action Against Raser Technologies, Inc. Executives Dismissed (JD Supra - press release)
The U.S. District Court for the District of Delaware dismissed a class action for securities fraud against former officers and directors of Raser Technologies, Inc. , in which the plaintiffs alleged that the defendants had misrepresented the capacity of the Thermo 1 Geothermal Project in southern Utah and their ability to construct more plants.
The court dismissed the complaint for failure to plead scienter and loss causation, rejecting the argument that the energy company had committed securities fraud by waiting too long to record or report the loss incurred after learning of problems at the plant. The court also refused to adopt the “materialization of risk” test for loss causation, which would allow a plaintiff to plead loss causation by showing that the defendant exposed investors to an undisclosed risk which subsequently materialized. Instead, the court held that the absence of any allegation of a corrective disclosure automatically warranted dismissal.