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 Wins Dismissal With Prejudice of Securities Class Action Over Regulatory Compliance
- Client News
- April 27, 2023
Practices
Paul, Weiss achieved a significant victory for PayPal Holdings, Inc., and several company executives, obtaining the dismissal with prejudice of all claims asserted in a 2021 securities fraud class action.
In their second amended complaint filed in the Northern District of California, the 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. While the theories were largely the same as those previously dismissed in August 2022, the plaintiffs sought to augment their allegations with additional confidential witness allegations asserting that PayPal knowingly violated various regulations and the prior regulatory settlement.
U.S. District Judge Charles Breyer issued a 12-page opinion dismissing the complaint with prejudice. The court 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 held 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.
The Paul, Weiss team included litigation partners Daniel Kramer, Melinda Haag, Audra Soloway and Geoffrey Chepiga and counsel Daniel Sinnreich.