Reasonable Investors Rely on More Than Positive Statements By Company Executives

Following a scandal where Whole Food Market, Inc. mislabeled pre-packaged foods and overcharged consumers, a group of shareholders filed suit alleging the company defrauded them because the company and its executives knew about the weights-and-measures problems prior to it coming to public light. Two of the plaintiffs’ claims hinge on allegedly false statements made by Whole Foods. The Fifth Circuit Cout of Appeals upheld the district court’s dismissal of the claims because a reasonable investor would not rely solely on positive statements made by a company to determine whether to purchase a stock. Find out more about the case here.