IN 2007, Louisiana Pacific (LP) purchased more than $50 million in auction rate securities at auctions managed by Merrill Lynch (ML). When ML withdrew their support from the ARS market on February 13, 2008, LP was left holding illiquid long-term financial instruments.
LP brought claims against ML for market manipulation and material misstatements or omissions under section 10(b) of the Exchange Act and Rule 10b–5. It also asserted a control-person liability claim under section 20(a) of the Exchange Act. Finally, it asserted claims against ML under California law and common law.
The District Court dismissed all claims, holding that the claims were not pled with the required particularity. The Court of Appeals affirmed.