Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
PayPal Secures Dismissal of Regulatory Compliance-Related Securities Class Action
- Client News
- August 8, 2022
Practices
Paul, Weiss achieved a significant victory for multinational financial technology company PayPal Holdings, Inc. and several company executives, obtaining the dismissal of all claims in a regulatory compliance-related securities class action.
In a complaint filed in the U.S. District Court for the Northern District of California, plaintiffs alleged that PayPal failed to disclose supposed violations of a consent order with the Consumer Financial Protection Bureau in 2015, as well as supposed violations of regulations governing debit card interchange fees, thereby misleading investors about PayPal’s compliance program and commitment to compliance.
In his comprehensive 24-page opinion dismissing the case without prejudice, U.S. District Judge Charles Breyer held that the plaintiffs failed to identify any material misstatement or omission, specifically finding that the company had no obligation to disclose uncharged, unadjudicated alleged wrongdoing; that plaintiffs failed to allege any actual regulatory violation; and that general statements about compliance were nonactionable corporate puffery. The court also found that the plaintiffs failed to plead a strong inference of scienter because they were unable to point to any statement or conduct indicating any defendant’s knowledge of any regulatory violation. Furthermore, the fact that the company’s CEO and then-CFO increased their holdings of PayPal stock during the putative class period was also inconsistent with fraudulent intent, the court found.
The Paul, Weiss team included litigation partners Daniel Kramer, Melinda Haag, Audra Soloway and Geoffrey Chepiga, and counsel Daniel Sinnreich.