Jury Returns Complete Defense Verdict for Exxon and Its Officers in Securities Fraud Case

Jury Returns Complete Defense Verdict for Exxon and Its Officers in Securities Fraud Case

Exxon Mobil’s former CEO Rex W. Tillerson, former Senior VP/Principal Financial Officer Andrew P. Swiger, and former VP/Controller David S. Rosenthal came out victorious after a jury trial in the U.S. District Court for the Northern District of Texas, defeating claims that they violated Section 10(b) of the Exchange Act and Rule 10b-5. The jury returned a verdict for the defense on all claims after being instructed that corporate scienter cannot be found by aggregating the collective knowledge of Exxon’s officers and employees.

The trial centered on three disclosures made in Exxon’s Form 10-K for fiscal year 2015. First, Exxon disclosed that its Kearl oil sands operations in Alberta, Canada, qualified as “proved reserves” per the applicable SEC rules. Second, Exxon disclosed average production prices and average production costs by geographic area and by product type for the preceding three years for the Kearl operation. Third, Exxon made disclosures relating to an impairment analysis for its Rocky Mountain dry gas assets.

Exxon stated in its Form 10-K for fiscal year 2015 that it was able to continue operating without any write-downs, notwithstanding that its competitors were writing off more than $200 billion in assets due to falling gas prices worldwide. However, in October 2016, Exxon announced its Q3 2016 financial results, in which it disclosed that some of its proved reserves may no longer meet the SEC’s definition, which requires such proved reserves to be economically feasible to recover at current market prices. Shortly thereafter, Exxon’s stock fell approximately 2.46%. In the following months, Exxon disclosed that it would take an upstream impairment charge of approximately $2 billion, largely related to its Rocky Mountain dry gas operations, and ultimately de-booked its entire proved reserve base from its Kearl operations in Alberta, Canada.

In November 2016, the plaintiff sued Exxon and certain of its officers, alleging securities fraud, based on the theory that Exxon allegedly knew it could not survive the drop in oil and gas prices without writing down assets when the above statements were made. The plaintiff further claimed that Exxon made these alleged misrepresentations to maintain its AAA credit rating and to complete its upcoming public debt offering. The plaintiff alleged that by the end of 2015, Exxon’s Rocky Mountain dry gas operations were impaired, its Canadian bitumen operations no longer qualified as proved reserves, and its Kearl operations had been operating at a loss for three months — as well as that Exxon’s failure to disclose these facts constituted material misrepresentations.

After approximately 10 years of litigation, the question of whether the challenged statements constituted violations of Section 10(b) and Rule 10b-5 was tried before a jury. At trial, the plaintiff focused on three alleged misstatements: (1) Exxon’s statements about proved bitumen reserves at its Kearl oil sands operations in Alberta, Canada; (2) its statements about “average production prices” and “average production costs” at Kearl; and (3) its statements that its Rocky Mountain dry gas operations were not impaired. After a 14-day trial, the jury rejected all of the plaintiff’s theories and issued a verdict in favor of the defendants.

Of particular import to this outcome was the jury instruction on scienter for a corporate party. The court instructed the jury to “look to the state of mind of the individual corporate official who made or issued the statement or ordered or approved the statement’s making or issuance, or who furnished information or language for inclusion therein.” It continued that “[a] defendant corporation can have the requisite state of mind only when that state of mind is possessed by a single corporate official” rather than being “aggregated from the collective knowledge of the corporation’s officers and employees.”

The court’s instruction and its subsequent finding on all counts against the plaintiff reinforces a critical shield for corporate defendants: No matter how extensive a company’s internal information flows, plaintiffs bear the burden of pinning scienter on a specific individual — and that individual’s isolated knowledge and intent is what governs.

Class Certification Denied in Securities Fraud Action Against Battery Technology Company, Finding “Mismatch” Between Alleged Misstatement and Corrective Disclosures

On April 21, 2026, the U.S. District Court for the Northern District of California refused to certify a proposed class of plaintiffs in a putative securities class action alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 against lithium-ion battery technology company Enovix Corporation (“Enovix”) and certain of its officers, finding that the alleged misstatement at issue had no impact on the price of Enovix stock.

In early 2020 — before going public — Enovix started the process of procuring equipment for its first production factory, Fab-1. Enovix outsourced development and production of a large portion of the Fab-1 manufacturing equipment to another company, Shenzhen Yinghe Technology Co. Ltd. (“Yinghe”). The Yinghe-made equipment repeatedly failed pre-shipment testing performed offsite at the vendor’s facility. After six months and repeated failed tests, Enovix executives allegedly then secretly waived that testing requirement and, in April 2021, imported the equipment from China. On August 10, 2021, Enovix issued a shareholder letter indicating that its factory equipment was installed and undergoing qualification for production without mention of the failed testing. The letter continued: “[t]he first step in this process is a site acceptance test to confirm the individual pieces of equipment are meeting performance requirements . . . follow[ing] factory acceptance testing already performed at the vendor’s facility before taking delivery[.]” Once delivered, the equipment never became operable at full capacity or passed testing.

Enovix subsequently issued three alleged corrective disclosures. The first was on November 1, 2022, downgrading its expectations in the performance of Fab-1 production. The second was on January 3, 2023, in which the CEO stated shareholders were “reasonably misled” about Fab-1 and described various equipment and product problems. After both disclosures, Enovix’s share price fell. On November 7, 2022 — between the first and second alleged corrective disclosures — Enovix disclosed that it waived the testing requirement before taking delivery of the Yinghe-made equipment; upon that announcement, however, Enovix’s stock price increased. Finally, on October 3, 2023, Enovix announced it was abandoning commercial production at Fab-1 altogether, and its share price fell again.

This suit followed, the court allowed claims to proceed past the pleadings stage, and the putative plaintiffs sought to certify a class consisting of anyone who purchased Enovix stock between August 11, 2021, and October 2, 2023. The court’s decision turned on whether, at the class certification stage, the defendants successfully rebutted the Basic presumption of reliance, without which the plaintiffs would not be able to certify the purported class, as each class member would need to prove reliance separately. The defendants sought to rebut the presumption by demonstrating that the alleged misstatement in the shareholder letter had no price impact for two reasons: first, because the August 2021 statement caused no increase in Enovix’s stock price (i.e., no “front-end” price impact), and second, because the three “corrective disclosures” identified by the plaintiffs did not “match” the alleged truth purportedly concealed by the challenged statement in the shareholder letter. In other words, the defendants did not “actually correct” the purported misstatement at issue (i.e., no “back-end” price impact). The plaintiffs conceded that the alleged misstatement did not artificially increase Enovix’s stock price and argued only for a “back-end” price inflation maintenance theory.

The court ultimately denied class certification, finding a fundamental disconnect between the challenged statement and the identified corrective disclosures. The court found significant that the disclosures in question all focused on the overall Fab-1 line broadly rather than just the Yinghe equipment. Yinghe was not the only equipment provider for Fab-1, and the August 2021 statement concerned the performance of the Fab-1 equipment overall, including the manufacturing equipment that had not been produced by Yinghe — rather than the issues with the Yinghe equipment specifically. The court found that none of the purported corrective disclosures actually contained new information about the testing or the Yinghe equipment, and the only statement that did, which was not alleged by the plaintiffs to be a corrective statement, actually caused Enovix’s share price to increase. As the three statements in question were neither “corrective” nor “new,” they could not support the plaintiffs’ reliance claim and disallowed proceeding as a class action.

This decision underscores the importance of precision in investor communications: The disclosure of adverse operational developments will be closely scrutinized. In addition, misleading statements alone are not enough to give rise to claims for securities fraud, and officers should consult with counsel before making any public statements that could be interpreted as conceding wrongdoing.

Northern District of California Denies Motion to Dismiss Securities Fraud Claims Against Electric Vehicle Charging Company

On May 21, 2026, the U.S. District Court for the Northern District of California denied a motion to dismiss a third amended complaint alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 in a putative securities class action against ChargePoint Holdings, Inc. (“ChargePoint”), a provider of networked hardware and subscription charging solutions for electric vehicles (EVs), finding that the plaintiffs adequately addressed the court’s previous rulings on motions to dismiss that their factual allegations were deficient.

From December 7, 2021, to November 16, 2023 (the Class Period) — in a series of quarterly earnings calls, press releases, and SEC filings — ChargePoint reported six consecutive quarters of revenue growth, which it attributed to organic increased customer charging demand and effective supply chain management. As examples, on a December 7, 2021, earnings call, ChargePoint executives highlighted “strong Q3 execution,” tying it “to the arrival of electric vehicles” and the “strong demand from auto dealers for charging infrastructure, an indicator that they are prepping for high volume EV sales;” on a March 2, 2022, earnings call, ChargePoint executives stated that ChargePoint’s “strong performance and record revenue throughout the year was fueled by growth in charging demand from accelerated EV adoption;” on December 1, 2022, ChargePoint announced its Q3 financial results, highlighting another quarter of growth “as [it] continue[d] to scale the business to meet strong demand for our solutions across North America and Europe.” However, on September 6, 2023, ChargePoint reported Q2 financial results, disclosing a $28 million inventory impairment charge attributable to “legacy supply chain–related costs and supply overruns” on one of its products and a GAAP gross margin of 1%, after which ChargePoint’s stock fell 11%. Then, on November 16, 2023, ChargePoint announced preliminary Q3 financial results, reporting that it expected to miss revenue guidance by approximately 30%, disclosing a second impairment charge of an additional $42 million, and announcing immediate departures of top executives. ChargePoint’s stock declined again, falling 35%.

The plaintiffs sued ChargePoint and certain of its officers, alleging that representations about ChargePoint’s financial results and revenue growth were false and misleading and that ChargePoint inflated revenue growth during the Class Period by (1) shipping products to customers without authorization in order to recognize revenue before a valid contract existed; (2) shipping incomplete, non-functioning, or wrong products and recognizing the revenue before the customer received a useable product; (3) channel stuffing through coercive practices and undocumented “side deals” and then recognizing revenue on unsold products sitting in warehouses; (4) prematurely activating software subscription tokens for hardware that had not been sold to end customers, inflating subscription revenue; and (5) entering into undisclosed oral side agreements for rebates, discounts, and special terms that were not reflected in purchase orders. These allegations were allegedly drawn from nine former ChargePoint employees, from a confidential witness employed at a major ChargePoint reseller who allegedly had interactions regarding the channel stuffing and undocumented side arrangements at issue, and from charges in a separate whistleblower lawsuit brought by ChargePoint’s former corporate counsel. The plaintiffs further alleged that ChargePoint concealed overvaluation of its fast EV charger inventory, which ChargePoint allegedly purchased too aggressively during the COVID-19 pandemic, by continuing to carry it on the company’s books at an inflated value rather than writing it down pursuant to ChargePoint’s inventory valuation policy.

The court had dismissed the plaintiffs’ previous complaints, finding that they failed to plead facts showing falsity, that their factual allegations about supply constraints and excess inventory were contradictory when viewed together, and that they improperly relied upon facts outside of the Class Period. This time, however, the court found that the amended complaint sufficiently pled securities fraud.

With respect to falsity, the court held that the plaintiffs’ more “methodical, chronological presentation” of the allegations “substantially” clarified and bolstered the plaintiffs’ claims by identifying each allegedly misleading statement, the specific contemporaneous facts drawn from the confidential witnesses that allegedly rendered those statements false when made, and the material facts allegedly omitted. The court also found that the amended complaint adequately addressed the apparent contradiction between ChargePoint’s supply constraints and excess inventory. The plaintiffs reconciled the two by describing how external supply constraints (the COVID-19 pandemic, manufacturing disruptions, and a global chip shortage) on certain products allegedly created the risk of a revenue guidance miss and created pressure to fill the shortfall through the improper shipment of incomplete, non-functional, or incorrect products, while the simultaneous pandemic-era over-ordering of one of ChargePoint’s fast EV charger products — an aggressive stockpiling strategy that left the company holding obsolete inventory once demand softened and a preferred successor product came to market — was a separate and parallel phenomenon concentrated in that single legacy product. Finally, the court implicitly accepted the plaintiffs’ clarified allegations that certain pre-December 2021 sales practices by ChargePoint, described in the whistleblower lawsuit, were adequately connected to the Class Period. While the court did not specifically comment on this set of revisions, the plaintiffs were allowed to use these earlier actions to bolster both the credibility of the later-following misconduct and an inference of scienter — i.e., that the executive defendants institutionalized, authorized, and actively concealed those practices — and retaliated against the whistleblower for raising internal objections — sufficiently alleges that the Class Period misstatements were the product of intentional conduct.

This decision shows that, even after multiple failed pleading attempts, a court will allow revised complaints to survive dismissal so long as plaintiffs genuinely address the court’s specific deficiency findings rather than simply re-pleading the same theory with additional bulk. This is especially true where plaintiffs’ counsel is able to contact confidential witnesses and procure statements from them to bolster their allegations.

Eastern District of Wisconsin Partially Grants Motion for Attorneys’ Fees Against the Rosen Law Firm Following Groundless Securities Fraud Complaint

Following a December 3, 2025, order by the U.S. District Court for the Eastern District of Wisconsin granting defendants’ motion for attorneys’ fees and costs against The Rosen Law Firm (RLF) in a putative securities fraud class action, on May 14, 2026, the court awarded the defendants $286,289.11 in fees and $801.42 in costs.

On March 29, 2024, defendant Harbor Diversified, a holding company that primarily operates in the regional airline sector, disclosed it would restate $52.3 million in previously recognized revenue. RLF filed an initial complaint on behalf of putative class members against Harbor Diversified and two of its officers, but the court ultimately appointed a different lead plaintiff, who filed an amended complaint that replaced RLF’s original complaint. The defendants successfully moved for dismissal of the amended complaint for failure to state a claim, and the lead plaintiff opted against filing a second amended complaint. The defendants — having been told that the court would only consider sanctions motions after final adjudication of the case — immediately filed a motion for sanctions against RLF, which the court granted. The court determined that the original complaint did nothing more than make purely conclusory allegations regarding scienter and failed to plead with specificity any facts that would reasonably lead one to believe that the defendants knew or were reckless in not knowing the financial statements issued were materially false or misleading. The court concluded that even the most basic pre-suit investigation would have made clear that the original complaint was groundless on the facts alleged; it also concluded that “whether out of ignorance of the law or simple laziness, the original complaint reflected a failure to conduct a reasonable inquiry prior to filing,” in violation of Rule 11. The court ordered the defendants to submit a fee petition, with billing records, establishing their fees attributable to RLF’s original complaint. The defendants’ subsequent submittal sought $580,482.29 in fees and costs.

The court started by excluding fees and costs incurred after the amended complaint was filed, limiting the award to work attributable solely to the original pleading, which brought the request down to $478,552.02. In evaluating the reasonableness of that fee request, the court held that the hourly rates of the defendants’ attorneys ranging from $595 to $1,390 per hour were reasonable, but it applied a 40% reduction to the lodestar for duplicative and excessive billing. The court took issue with the notion that the defendants could incur this much to review the RLF complaint, draft the initial motion to dismiss and reply brief, draft the motion for sanctions and reply brief, review lead plaintiff motions, and draft a letter requesting reconsideration of an early sanctions motion. The court explained that nearly 500 hours of work by six experienced attorneys responding to a 25-page, facially deficient complaint generated duplicative and excessive billing, reasoning that defending against a groundless complaint “would require less time than responding to a more sophisticated and robust pleading.” Ultimately, the court awarded $287,090.53 in attorneys’ fees and costs to Harbor Diversified.

This decision is a reminder that the PSLRA’s heightened pleading standard for scienter is not a formality. A complaint that does nothing more than recite that defendants “knew” their statements were false, without alleging specific facts giving rise to a strong inference of fraudulent intent or recklessness, is not merely dismissible; it is sanctionable. Oftentimes, companies facing such frivolous lawsuits are satisfied with a dismissal; companies should consider aggressively pursuing sanctions, as well, to help deter future baseless lawsuits.

Northern District of California Dismisses Claims Against Debit and Credit Card Transaction Processor Based on Underlying Antitrust Claims

On June 29, 2026, the U.S. District Court for the Northern District of California dismissed with prejudice securities fraud claims against debit and credit card transaction processor Visa and its current and former executives. The claims, brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleged that Visa and its executives misled investors about antitrust issues.

Shortly before the class period, the Federal Reserve issued a regulatory “Clarification” requiring debit card issuers to permit unaffiliated networks to process certain transactions. According to the plaintiffs, the defendants misled investors by saying that the Clarification was unlikely to have much effect on the volume of transactions routed to Visa. The plaintiffs agreed that was technically true but only because of allegedly anticompetitive conduct by Visa to pressure issuers and merchants to use Visa’s network. The plaintiffs alleged that this fraud was revealed when news leaked of the DOJ’s plans to file an antitrust complaint against Visa.

The court dismissed the claims because the plaintiffs did not plead loss causation. They failed to plausibly allege a causal connection between the news articles about the DOJ complaint and a stock price drop. Over three years earlier, Visa had disclosed to investors that the DOJ was investigating its debit card practices, so the possibility of a DOJ lawsuit was thus already known to the market. Although the news articles disclosed some additional detail about the DOJ’s allegations, the court determined that the plaintiffs failed to allege that the stock drop was caused by the news articles, rather than the filing of the DOJ complaint itself.

In addition, the purported stock drop was modest and was immediately followed by a sustained price recovery, refuting the plaintiffs’ position that the news articles had caused the stock drop. The plaintiffs tried to address this issue by relying, in the complaint, on an expert opinion about the statistical significance of the stock price drop. The court concluded the expert opinion was not a factual allegation that could support loss causation on a motion to dismiss.

This decision acts as a reminder that loss causation can serve as a powerful argument in securities cases, particularly when the alleged “corrective disclosure” recycles old news or the stock price rapidly rebounds.

Second Circuit Affirms Dismissal of Securities Claims Against Clothing Manufacturer and Retailer Based on Allegedly Misleading Risk Disclosures

On May 28, 2026, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of securities fraud claims brought against clothing manufacturer and retailer Gap and two of its executives. The claims, brought under Sections 10(b) and 20(a) of the Exchange Act, concerned a program instituted by Old Navy stores to offer all Old Navy products at all sizes.

In 2021, Gap launched the “BODEQUALITY” program whereby Old Navy stores would begin carrying all sizes of every product sold. According to the plaintiffs, Old Navy stores did not increase their capacity for stocking and storage; thus, in order to carry additional products in smaller and larger sizes, Old Navy had to carry fewer products in medium sizes. As a result, Old Navy allegedly began experiencing shortfalls in medium sizes, and excess plus-size inventory had to be sold as clearance at reduced prices. Gap rolled back the BODEQUALITY program in early 2022.

The plaintiffs challenged various statements from late 2021 and early 2022 as false or misleading because they: 1) disclosed possibly failing to meet demand or maintain adequate supply as “risks,” allegedly misleading investors because those “risks” had already materialized due to the BODEQUALITY program; 2) allegedly misrepresented the level of customer demand for plus-size clothing as “strong;” and 3) attributed supply issues and lower sales to COVID-19, when, in reality, the BODEQUALITY program was allegedly causing Old Navy to stock lower quantities of its most popular sizes.

The district court dismissed the plaintiffs’ claims, and the Second Circuit affirmed. First, the Second Circuit concluded that Gap’s risk disclosure statements were not misleading. The Second Circuit rejected the “[p]laintiffs’ proposed rule that a risk disclosure is actionable whenever a company fails to disclose that the risk already materialized in some way.” Gap’s risk disclosures discussed risks ubiquitous in the retail industry, such as the risk that retailers might “misjudge the market” and need to discount prices. Everyone knows that retailers routinely have to discount prices to move unsold merchandise; no reasonable investor would infer from Gap’s risk disclosures that Gap wasn’t already doing that. Next, the Second Circuit held that Gap’s statements about “strong” demand were inactionable statements of puffery. Last, the Second Circuit concluded it was not misleading to say that supply issues and lower sales were due to COVID-19. The plaintiffs did not dispute that COVID-19 was having this effect, and Gap had no obligation to disclose all other possible factors affecting supply or sales.

The Second Circuit also held that the plaintiffs failed to plead a strong inference of scienter. They did not identify any internal documents that contradicted the defendants’ public statements or suggest that BODEQUALITY had caused inventory issues or lower sales. Instead, the plaintiffs relied on confidential witness statements about issues raised by just two store managers, which did not suggest a nationwide problem with BODEQUALITY.

This case serves as an important reminder that generic risk disclosures and other general statements about business performance do not require public companies to make exhaustive disclosures about every issue potentially affecting the business.

District of New Jersey Dismisses with Prejudice Securities Fraud Claims Against a Telecommunications Company Arising from Environmental Issues

On May 29, 2026, the U.S. District Court for the District of New Jersey dismissed an action brought against Verizon Communications and certain of its directors and officers. The plaintiffs alleged violations of Section 10(b) of the Exchange Act in connection with Verizon’s transition from wireline copper to fiber-optic cable. During this transition, Verizon allegedly left behind miles of lead-sheathed copper wire rather than removing it, causing potential health issues due to lead exposure. After a series of “bombshell” Wall Street Journal articles from July 2023 discussed these issues, Verizon’s stock price fell. The plaintiffs alleged that, prior to the articles, the defendants made various statements that misled investors about the abandoned leaded cables.

The court held that the plaintiffs failed to plead that any of the challenged statements were false or misleading when made. The plaintiffs challenged statements generally discussing the conversion of legacy copper cables into fiber — for example, “you get cost saving . . . as you take copper out.” The plaintiffs alleged that the defendants should have also disclosed that the copper wire was encased with lead and that Verizon was not actually removing all of it but leaving some behind as it installed new fiber-optic cable. These allegations, the court found, alleged only that the statements were incomplete, not that they misled investors by giving a false impression about the state of affairs.

Similarly, the plaintiffs failed to adequately challenge Verizon’s statements about its commitment to employee safety, environmental stewardship, and e-waste recycling. Here, too, the plaintiffs did not explain how the statements created a misleading impression; moreover, these statements were corporate “puffery.”

Finally, the court found that the plaintiffs failed to plead a strong inference of scienter. The plaintiffs tried to allege scienter by pointing out, for example, that executives had access to a database that tracked lead-sheathed cable. These general allegations did not establish “connective tissue” between any particular misstatement and any defendant’s knowledge.

The decision underscores the PSLRA’s demanding pleading requirements, which require courts to dismiss claims where plaintiffs rely on broad statements instead of particularized facts showing that statements were misleading and made with scienter.

Central District of California Dismisses Securities Act Claim Against Caitlyn Jenner Arising From $JENNER Memecoin

The U.S. District Court for the Central District of California granted in part the defendants’ motion to dismiss a putative class action alleging the unlawful sale of unregistered securities under Section 12(a)(1) of the Securities Act. The case arises from the creation, promotion, and sale of the “$JENNER” cryptocurrency token, launched by celebrity Caitlyn Jenner on the Ethereum blockchain and promoted using her celebrity status. The token became worthless after the defendants abandoned their promotional efforts. Lead Plaintiff Lee Greenfield filed suit, claiming he lost $40,000 as a result.

The dispositive question was whether the $JENNER token constituted an “investment contract” — and therefore a security — under the Supreme Court’s three-part Howey test, which requires: “(1) an investment of money (2) in a common enterprise (3) with an expectation of profits produced by the efforts of others.” The defendants did not dispute that Greenfield invested money to purchase $JENNER but challenged the second prong (common enterprise) and third prong (reasonable expectation of profits). The court focused on the second prong, finding that Greenfield failed to plausibly allege a common enterprise under either horizontal or vertical commonality.

Horizontal commonality is typically proved by showing that assets from two or more investors are pooled into a single investment fund from which they share pro rata profits and losses. Greenfield argued that because all token holders’ fortunes rose and fell in lockstep, investors shared a common enterprise. The court rejected that argument, holding that horizontal commonality requires an actual pooling of funds, not merely parallel movement in price. The defendants here did not pool money to pursue a common enterprise, such as developing cryptocurrency technology. Rather, the token was promoted as a “memecoin” that was supposed to increase simply because Jenner would use her fame to promote it. Greenfield tried to allege pooling of resources by pointing to defendants’ promises to use transactions fees they received for various purposes, such as marketing and donations to a presidential campaign. The court found that these allegations did not show any pooling of investor funds or a coordinated plan to share profits and losses.

Vertical commonality typically requires showing a common enterprise between investors and a promotor so that the fortunes of the two are linked. On this issue, the court found Greenfield’s own allegations doomed his claim. Because Jenner collected a 3% “tax” on every $JENNER transaction — earning hundreds of thousands of dollars in fees even as investors’ holdings became nearly worthless — her financial success did not depend on whether investors profited or lost. Under Ninth Circuit precedent, the court reasoned, a promoter who reaps large commissions regardless of investor outcomes cannot be said to share a “common enterprise” with those investors.

The decision is a useful reminder that celebrity promotion does not, in and of itself, transform a “memecoin” into a security. Without a genuine pooling of investor assets or a financial structure that ties the promoter’s fortunes to those of investors, the Howey common enterprise requirement remains unmet.