Judge Pamela Chen of the U.S. District Court for the Eastern District of New York on September 14 granted a motion to dismiss an investor lawsuit against international steel company Ternium S.A. and four executives.
Investors who had bought American Depository Shares of Ternium claimed that the company and the executives made materially false and misleading statements and had violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by failing to disclose an alleged bribery scheme related to Venezuela’s nationalization of a Ternium subsidiary. They sought to represent a class of investors who had bought Ternium securities between May 1, 2014 and November 27, 2018.
Judge Chen held that the plaintiffs had failed to plead an actionable misstatement or omission. Quoting S&C’s motion to dismiss, Judge Chen wrote that “‘[d]isclosure is not a rite of confession, and companies do not have a duty to disclose uncharged, unadjudicated wrongdoing.’”
The judge also held that certifications made by Ternium’s CEO and CFO that they had disclosed “any fraud,” as required by Sarbanes-Oxley, does not apply to alleged fraud that occurred before the certification period. The judge allowed the plaintiffs to file an amended complaint, but noted that “the Court is skeptical that the flaws in the Amended Complaint can be remedied.”
The S&C team representing Ternium was led by Robert Giuffra Jr., Sergio Galvis and Brendan Cullen.