David Jaroslawicz v. M&tbank Corporation

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 17-3695
_____________
DAVID JAROSLAWICZ
v.
M&T BANK CORPORATION; HUDSON CITY
BANCORP INC.; *THE ESTATE OF ROBERT G.
WILMERS, BY ITS PERSONAL REPRESENTATIVES
ELISABETH ROCHE WILMERS, PETER MILLIKEN,
AND HOLLY MCALLISTER SWETT; RENE F. JONES;
MARK J. CZARNECKI; BRENT D. BAIRD; ANGELA C.
BONTEMPO; ROBERT T. BRADY; T. JEFFERSON
CUNNINGHAM, III; GARY N. GEISEL; JOHN D.
HAWKE, JR.; PATRICK W.E. HODGSON; RICHARD G.
KING; JORGE G. PEREIRA; MELINDA R. RICH;
ROBERT E. SADLER, JR.; HERBERT L. WASHINGTON;
DENIS J. SALAMONE; MICHAEL W. AZZARA;
VICTORIA H. BRUNI; DONALD O. QUEST; JOSEPH G.
SPONHOLZ; CORNELIUS E. GOLDING; WILLIAM G.
BARDEL; SCOTT A. BELAIR
BELINA FAMILY; JEFF KRUBLIT,
Appellants
(*Amended pursuant to Clerk’s Order dated 3/1/18)

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________________
On Appeal from the United States District Court
for the District of Delaware
(D.C. Civ. No. 1-15-cv-00897)
District Judge: Honorable Richard G. Andrews
_________________
Agued July 17, 2018
_________________
Before: McKEE, VANASKIE and SILER, JR., * Circuit
Judges
(Opinion Filed: December 26, 2018)
Deborah R. Gross, Esq. [Argued]
Kaufman Coren & Ress
2001 Market Street
Two Commerce Square, Suite 3900
Philadelphia, PA 19103
Francis J. Murphy, Esq.
Jonathan L. Parshall, Esq.
Murphy & Landon
1011 Centre Road
Suite 210
Wilmington, DE 19805
Laurence D. Paskowitz, Esq.
* Honorable Eugene E. Siler, Jr., Senior Judge for the
Sixth Circuit Court of Appeals, sitting by designation.

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Suite 380
208 East 51st Street
New York, NY 10022
Counsel for Appellants Belina Family and Jeff Krublit
George T. Conway, III, Esq.
Bradley R. Wilson Esq. [Argued]
Jordan L. Pietzsch, Esq.
Wachtell Lipton Rosen & Katz
51 West 52nd Street
New York, NY 10019
John C. Cordrey, Esq.
Brian M. Rostocki, Esq.
Reed Smith
1201 Market Street
Suite 1500
Wilmington, DE 19801
Counsel for Appellees M&T Bank Corporation, The
Estate of Robert G. Wilmers, Rene F. Jones, Mark J.
Czarnecki, Brent D. Baird, Angela C. Bontempo,
Robert T. Brady, T. Jefferson Cunningham, III, Gary
N. Geisel, John D. Hawke, Jr., Patrick W.E. Hodgson,
Richard G. King, Jorge G. Pereira, Melinda A. Rich,
Robert E. Sadler, Jr., and Herbert L. Washington
Tracy R. High, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Kevin R. Shannon, Esq.
Potter Anderson & Corroon

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1313 North Market Street
6th Floor
Wilmington, DE 19801
Counsel for Appellees Denis J. Salamone, Michael W.
Azzara,Victoria H. Bruni, Donald O. Quest, Joseph G.
Sponholz, Cornelius E. Golding, William G. Bardel,
and Scott A. Belair
________________
OPINION OF THE COURT
________________
VANASKIE, Circuit Judge.
After Hudson City Bancorp (“Hudson”) merged with
M&T Bank Corporation (“M&T”), former Hudson
shareholders sued, alleging that the consumer banks had
violated securities laws by omitting from their joint proxy
materials several facts concerning M&T’s purported
compliance with pertinent regulatory requirements. The
allegations presented two distinct theories of liability. First,
because the proxy materials did not discuss M&T’s non-
compliant practices, M&T failed to disclose significant risk
factors facing the merger as required by Item 503(c) of
Regulation S-K, 17 C.F.R § 229.503. Second, M&T’s failure
to discuss the allegedly non-compliant practices in the proxy
materials rendered M&T’s opinion statements regarding its
adherence to regulatory requirements and the prospects of
prompt approval of the merger misleading under Omnicare,
Inc. v. Laborers District Council Construction Industry
Pension Fund, 135 S. Ct. 1318 (2015). The District Court

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dismissed the suit on the ground that the allegations failed to
plead an actionable omission under either theory.
We disagree in part. We conclude that the shareholders
pleaded actionable omissions under Item 503(c) but failed to
do so under Omnicare. Additionally, we conclude that the
shareholders plausibly alleged loss causation and thus reject
M&T’s alternative ground for affirmance. Accordingly, we
will vacate dismissal of the claims concerning mandatory
disclosure under Item 503(c) and will affirm dismissal of the
claims concerning misleading opinions.
I. BACKGROUND1
This case arises out of the 2015 merger of consumer
banks Hudson and M&T. According to former Hudson
shareholders, the banks violated § 14(a) of the Exchange Act,
15 U.S.C. § 78n(a), and Rule 14a-9 of the Securities Exchange
Commission (“SEC”), 17 C.F.R. § 240.14a-9, by omitting
several facts concerning M&T’s regulatory compliance from
their joint proxy materials. The alleged omissions concerned
two non-compliant practices: (1) M&T’s having advertised no-
fee checking accounts but later switching those accounts to fee-
based accounts (the “consumer violations”); and (2)
deficiencies in M&T’s Bank Secrecy Act/anti-money
laundering compliance program, particularly its “Know Your
1 These facts are taken mainly from the second amended
complaint. (App. A0917–72.) Excerpts from filings are taken
from the documents themselves. See In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)
(holding that a court may consider a “document integral to or
explicitly relied upon in the complaint” when deciding a
motion to dismiss).

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Customer” program (the “BSA/AML deficiencies”). Beyond
these general descriptions, the parties do not provide any more
detail about M&T’s allegedly non-compliant practices.
A. The Merger and Accompanying Disclosures
Hudson announced its proposed merger with M&T on
August 27, 2012. According to the merger agreement, Hudson
shareholders would receive a combination of M&T stock and
cash upon the merger’s close. The shareholder vote on the
proposed merger was scheduled for April 18, 2013.
Prior to the shareholder vote, Hudson and M&T issued
a joint Proxy Prospectus (the “Joint Proxy”). The Joint Proxy
was filed with the SEC on February 22, 2013 and was mailed
to shareholders on or around February 27, 2013. The Joint
Proxy contained several references to regulatory compliance.
For instance, the Joint Proxy contained a section titled
“Regulatory Approvals Required for the Merger.” This section
provided, in pertinent part:
Completion of the merger and the
bank merger are subject to the
receipt of all approvals required to
complete the transactions
contemplated by the merger
agreement [including] from the
Federal Reserve Board . . . .
Although we currently believe we
should be able to obtain all
required regulatory approvals in a
timely manner, we cannot be
certain when or if we will obtain

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them or, if obtained, whether they
will contain terms, conditions or
restrictions not currently
contemplated that will be
detrimental to M&T after the
completion of the merger or will
contain a burdensome condition.
Federal Reserve Board.
Completion of the merger is
subject, among other things, to
approval by the Federal Reserve
Board . . . . As part of its evaluation
. . . , the Federal Reserve Board
reviews: . . . the effectiveness of
the companies in combatting
money laundering.
(App. A0304–05) (emphasis in original). The “Risk Factors”
section of the Joint Proxy addressed the recent increase in
banking regulations:
M&T is subject to extensive
government regulation and
supervision and this regulatory
environment is being significantly
impacted by the financial
regulatory reform initiatives in the
United States, including the Dodd-
Frank Act and related regulations.
. . .

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The United States government and
others have recently undertaken
major reforms of the regulatory
oversight structure of the financial
services industry. M&T expects to
face increased regulation of its
industry as a result of current and
possible future initiatives. M&T
also expects more intense scrutiny
in the examination process and
more aggressive enforcement of
regulations on both the federal and
state levels. Compliance with
these new regulations and
supervisory initiatives will likely
increase M&T’s costs, reduce its
revenue and may limit its ability to
pursue certain desirable business
opportunities.
. . .
Reforms, both under the Dodd-
Frank Act and otherwise, will have
a significant effect on the entire
financial industry. Although it is
difficult to predict the magnitude
and extent of these effects, M&T
believes compliance with the
Dodd-Frank Act and its
implementing regulations and
other initiatives will likely
negatively impact revenue and
increase the cost of doing business,

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both in terms of transition
expenses and on an ongoing basis,
and may also limit M&T’s ability
to pursue certain desirable
business opportunities. Any new
regulatory requirements or
changes to existing requirements
could require changes to M&T’s
businesses, result in increased
compliance costs and affect the
profitability of such businesses.
Additionally, reform could affect
the behaviors of third parties that
M&T deals with in the course of its
business, such as rating agencies,
insurance companies and
investors. Heightened regulatory
practices, requirements or
expectations resulting from the
Dodd-Frank Act and the rules
promulgated thereunder could
affect M&T in substantial and
unpredictable ways, and, in turn,
could have a material adverse
effect on M&T’s business,
financial condition and results of
operations.
(Id. at A0239–41) (emphasis in original).
Additionally, M&T’s annual report on Form 10-K for
the fiscal year ending December 31, 2011, was incorporated

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into the Joint Proxy. The Annual Report discussed M&T’s
current state of compliance, explaining in part:
[The USA Patriot Act] imposes
obligations on U.S. financial
institutions, including banks and
broker dealer subsidiaries, to
implement and maintain
appropriate policies, procedures
and controls which are reasonably
designed to prevent, detect and
report instances of money
laundering . . . . The Registrant and
its impacted subsidiaries have
approved policies and procedures
that are believed to be compliant
with the USA Patriot Act.
(Id. at A1028.) Although the Joint Proxy discussed the
regulatory framework facing consumer banks, it did not
mention M&T’s allegedly non-compliant practices.
On April 12, 2013, six days before the scheduled
shareholder vote, Hudson and M&T filed a proxy supplement,
announcing that one of their regulators, the Federal Reserve
Board, had identified “certain regulatory concerns with M&T’s
[BSA/AML] procedures.” (Id. at A1041.) The banks
explained that they “expect[ed] additional time [would] be
required to obtain a regulatory determination on the application
necessary to complete their proposed merger.” (Id.)
Three days later, on April 15, 2013, M&T’s CFO, René
F. Jones, provided an update to investors on the expected delay.

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Jones explained that M&T “recently [was] made aware” of the
fact that the Federal Reserve Board had identified “certain
deficiencies in [its] BSA/AML compliance program,” which
“would impact [M&T’s] ability to close the merger . . . in the
near term.” (Id. at A0470.) He also stated that M&T “ha[d]
no reason to believe that the issues involve[d] any wrongdoing
or illegal conduct by anyone in M&T or any identifiable
instances of actual money laundering activity using [M&T],”
but that M&T would need to “implement [a] plan [to]
improve[]” its compliance programs before approval could be
secured and, therefore, it did not “take regulatory approval for
granted.” (Id.) None of the supplemental disclosures
mentioned the consumer violations.
Despite the projected regulatory delay, Hudson and
M&T decided not to postpone the shareholder vote. On April
18, 2013, Hudson shareholders voted to approve the merger.
Regulators eventually approved the merger more than two
years later, and the merger closed on November 1, 2015.
B. Procedural History
In October 2015, David Jaroslawicz, a former Hudson
shareholder, filed a putative class action on behalf of Hudson
shareholders, claiming, inter alia, that the joint proxy materials
violated the Exchange Act’s prohibition against misleading
omissions, 15 U.S.C. § 78n(a)(1); 17 C.F.R. § 240.14a-9(a).
The original complaint named M&T, Hudson, and their
directors and officers as defendants. 2 In January 2016, the
2 Since the filing of this lawsuit, Hudson was merged
into non-party Wilmington Trust Corp., a wholly-owned
subsidiary of M&T. Accordingly, Hudson no longer exists.

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District Court appointed the Belina Family, former Hudson
shareholders, to serve as lead plaintiffs. One month later, the
Belina Family and plaintiff Jeff Krublit, another former
shareholder, filed an amended complaint.3
M&T moved to dismiss the first amended complaint,
which the District Court granted. See Jaroslawicz v. M&T
Bank Corp., No. 15-897-RGA, 2017 WL 1197716 (D. Del.
Mar. 30, 2017). The District Court reasoned that the first
amended complaint failed to plausibly allege an actionable
omission. However, in light of allegations made for the first
time during oral argument, the District Court granted leave to
amend so that the shareholders could assert allegations the
Court believed constituted misleading omissions.
Additionally, the District Court observed, in a conclusory
fashion, that the shareholders had plausibly alleged loss
causation and negligence.
The shareholders then filed their second amended
complaint, adding the allegations which the District Court had
identified as potentially relevant. M&T moved to dismiss the
second amended complaint. The shareholders objected to the
motion as duplicative of the earlier motion to dismiss and,
alternatively, argued that the complaint was sufficiently pled.
Before resolving the motion, the District Court requested
additional briefing on the applicability of Item 503(c) to the
Joint Proxy. The parties filed a joint response, stating that
3 For ease of reference, we will refer to Plaintiff
Jaroslawicz and Plaintiffs–Appellants, the Belina Family and
Krublit, as “the shareholders.” We will refer to Defendants–
Appellees M&T, Hudson, and their directors and officers as
“M&T,” the “bank,” or the “banks.”

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Schedule 14A, 17 C.F.R. § 240.14a–101, incorporated Item
503(c) and that, therefore, M&T had been required to comply
with Item 503(c).
The District Court then granted M&T’s second motion
to dismiss. Jaroslawicz v. M&T Bank Corp., 296 F. Supp. 3d
670 (D. Del. 2017). After rejecting the shareholders’
procedural arguments, the District Court concluded that the
second amended complaint failed to plead an actionable
omission under either a mandatory disclosure or misleading
opinion theory. In particular, the District Court concluded that
the complaint failed to plausibly allege that, at the time the
proxy materials issued, the consumer violations posed a risk to
regulatory approval of the merger. Additionally, the District
Court concluded that, as a matter of law, M&T had adequately
disclosed in the Joint Proxy the risk that the BSA/AML
deficiencies posed to the merger. The District Court was silent
with regard to loss causation and negligence. Once again, the
District Court granted the motion to dismiss without prejudice,
giving the shareholders another opportunity to amend their
pleadings.
The shareholders elected to stand on their second
amended complaint. Shortly thereafter, the District Court
dismissed the complaint with prejudice. The shareholders
timely filed their Notice of Appeal.
We invited the SEC to participate in the appeal as
amicus. On July 13, 2018, we received a letter from David R.
Fredrickson, Chief Counsel of the SEC’s Division of
Corporation Finance, declining to participate as amicus but
providing background information on the legal obligations
imposed by the federal securities laws at issue in this case.

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II. JURISDICTION AND STANDARD OF REVIEW
The District Court had jurisdiction under 15 U.S.C.
§ 78aa and 28 U.S.C. §§ 1331, 1337. We have appellate
jurisdiction under 28 U.S.C. § 1291.
We exercise plenary review over a district court’s
decision to grant a motion to dismiss a complaint for failure to
state a claim. In re NAHC, Inc. Sec. Litig., 306 F.3d 1314,
1322–23 (3d Cir. 2002). We accept as true all factual
allegations contained in the complaint and construe the
complaint in the light most favorable to the plaintiffs. Jones v.
ABN Amro Mortg. Grp., Inc., 606 F.3d 119, 123 (3d Cir. 2010).
“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (internal quotation marks omitted). A claim
is plausible “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id.
The District Court reviewed the allegations in the
second amended complaint under the general pleading
standard set out in Rule 8 of the Federal Rules of Civil
Procedure. The shareholders contend that this was proper
because their claims sounded in negligence. M&T argues that
all § 14(a) claims, even those that sound in negligence, are
subject to the heightened pleading requirements of the Private
Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u-
4(b)(1). Ultimately, however, we need not resolve this issue.
Neither party has convinced us that the pleading standard is
determinative here. This is because the parties do not dispute
which statements are alleged to have been misleading; nor do

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they dispute the specificity of those allegations. Accordingly,
our analysis applies with equal force under either standard.
III. DISCUSSION
The shareholders allege that M&T violated § 14(a) of
the Exchange Act and SEC Rule § 14a-9. Section 14(a) of the
Exchange Act makes it “unlawful for any person . . . in
contravention of such rules and regulations as the Commission
may prescribe . . . to solicit or to permit the use of his name to
solicit any proxy . . . in respect of any security.” 15 U.S.C.
§ 78n(a)(1). SEC Rule 14a-9 prohibits any solicitation via
proxy that “contain[s] any statement which . . . is false or
misleading with respect to any material fact, or which omits to
state any material fact necessary in order to make the
statements therein not false or misleading . . . .” 17 C.F.R.
§ 240.14a–9(a). “To prevail on a § 14(a) claim, a plaintiff must
show that (1) a proxy statement contained a material
misrepresentation or omission which (2) caused the plaintiff
injury and (3) that the proxy solicitation itself, rather than the
particular defect in the solicitation materials, was an essential
link in the accomplishment of the transaction.” Tracinda Corp.
v. DaimlerChrysler AG, 502 F.3d 212, 228 (3d Cir. 2007)
(internal quotation marks omitted). The parties dispute
whether the second amended complaint plausibly alleged the
first and second elements: a material omission and loss
causation.4
4 The shareholders assert procedural challenges to the
propriety of the second motion to dismiss, contending that: (1)
the motion was actually a time-barred motion for
reconsideration; and (2) the motion was subject to the bar on
successive motions to dismiss under Rule 12(g)(2) of the
Federal Rules of Civil Procedure. Both arguments lack merit.

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First, the second motion to dismiss was not a motion for
reconsideration because the District Court had previously ruled
in M&T’s favor when it dismissed the first amended complaint
without prejudice. In any event, the District Court had the
power to reconsider its own interlocutory order. See United
States ex rel. Petratos v. Genentech Inc., 855 F.3d 481, 493 (3d
Cir. 2017) (“Interlocutory orders remain open to trial court
reconsideration, and do not constitute law of the case. And the
grant of a leave to amend is an interlocutory order.”) (citation
and alterations omitted). Second, Rule 12(g)(2) prohibits a
party from making a successive motion to dismiss if that
motion “rais[es] a defense or objection that was available to the
party but omitted from its earlier motion.” Fed. R. Civ. P.
12(g)(2). In its second motion to dismiss, M&T either raised
new arguments opposing new allegations made in the second
amended complaint or renewed arguments from its previous
motion seeking to dismiss the first amended complaint. Thus,
the arguments raised by M&T in its second motion were either
not previously available or not previously omitted.
Additionally, it is well-established that if, as here, an amended
complaint “contain[s] new information or different allegations
making it subject to a defense or objection that was not
previously apparent . . . a party may move to dismiss on the
basis of the newly discovered ground even if she has filed a
Rule 12 motion previously.” 5C Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 1388 (3d
ed. 2018). Because it was procedurally proper to consider the
second motion to dismiss, the District Court did not err in doing
so.

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We first address whether the second amended complaint
plausibly alleged an actionable omission and then consider
whether it plausibly alleged loss causation.5
5 Additionally, in their briefs and at oral argument, the
shareholders repeatedly argued that the District Court erred
because it held that securities fraud defendants had no duty to
perform due diligence under the federal proxy laws. This
argument is unavailing. First, the District Court and the parties
agreed that the second amended complaint sounded in
negligence. In the context of a § 14(a) claim, we have treated
the negligence standard and the duty to conduct due diligence
as interchangeable. Gould v. American–Hawaiian S.S. Co.,
535 F.2d 761, 777–78 (3d Cir. 1976) (alternatively referring to
the standard as a “negligence” standard and a “standard of due
diligence”). Second, the shareholders’ argument appears to be
directed at the District Court’s fourth footnote, which states
that “[t]he availability of an affirmative defense of due
diligence does not create an affirmative duty to perform due
diligence.” (App. 0019.) The shareholders contend that this
statement conflicts with Gould’s treatment of the negligence
standard as co-extensive with a due diligence standard. In
context, however, the District Court was distinguishing another
district court case, In re WorldCom, Inc. Sec. Litig., 346 F.
Supp. 2d 628, 691–92 (S.D.N.Y. 2004), rather than
commenting on the mens rea requirement applicable to § 14(a)
claims generally. In re WorldCom was a Securities Act case
brought pursuant to § 11(b), 15 U.S.C. § 77k, and addressed
the specific affirmative defense of due diligence, which is
unique to that provision and which M&T did not raise here.
345 F. Supp. 2d at 636–67, 659, 662–64.

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A. Whether the Second Amended Complaint
Plausibly Alleged an Actionable Omission
“The omission of information from a proxy statement
will violate [§ 14(a)] if either the SEC regulations specifically
require disclosure of the omitted information in a proxy
statement, or the omission makes other statements in the proxy
statement false or misleading.” Seinfeld v. Becherer, 461 F.3d
365, 369 (3d Cir. 2006) (internal quotation marks omitted).
The shareholders proceeded on both theories. First, they
argued that the non-compliant practices posed significant risks
to regulatory approval of the merger and therefore that
disclosure of those risks was mandated by Item 503(c).
Second, they contended that omitted facts related to the non-
compliant practices made two statements of opinion contained
in the Joint Proxy misleading.
1. Theory One: Mandatory Disclosure under Item 503(c)
The parties agree that the Joint Proxy had to comply
with Item 503(c). That provision requires issuers to “provide
under the caption ‘Risk Factors’ a discussion of the most
significant factors that make the offering speculative or risky.”
17 C.F.R. 229.503.
Before the District Court, the shareholders argued that,
while a reasonable investor might be willing to take some
chances with regard to regulatory approval of a merger, she
might be less willing to vote for a merger with a company that
had committed thousands of consumer violations and
maintained a deficient BSA/AML compliance program
because of the heightened risk those issues pose to regulatory
approval. According to the shareholders, the proxy materials
failed to disclose these non-compliant practices. Thus, they

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argue, the second amended complaint plausibly alleged that
M&T violated Item 503(c).
First, we address whether the allegations in the second
amended complaint plausibly alleged that the consumer
violations presented a significant risk to the merger at the time
the proxy materials issued. Second, we explore the scope of
adequate disclosure under Item 503(c). Third, we decide
whether the proxy materials sufficiently disclosed the alleged
risk factors as a matter of law.
a. The Second Amended Complaint Plausibly Alleged the
Consumer Violations Presented a Significant Risk to the
Merger
It is self-evident that an issuer cannot be liable for
failing to disclose a risk factor that did not exist at the time of
disclosure. See In re NAHC, 306 F.3d at 1330 (“To be
actionable, a[n] . . . omission must have been misleading at the
time it was made . . . .”); see also Silverstrand Invs. v. AMAG
Pharm., Inc., 707 F.3d 95, 103 (1st Cir. 2013) (requiring that
plaintiff “allege sufficient facts to infer that a registrant knew,
as of [the] time of the offering, that . . . a risk factor existed”).
Thus, if the second amended complaint failed to plausibly
allege that the consumer violations posed a risk to the merger
at the time the Joint Proxy issued, then this claim related to the
consumer violations was properly dismissed.
Very few of the allegations in the second amended
complaint relate to the consumer violations. The complaint
does, however, allege that the practice underlying the
violations was curtailed prior to the date the Joint Proxy was
filed with the SEC. It also alleges that the Consumer Financial
Protection Bureau (“CFPB”) eventually took action against

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M&T for the consumer violations. From these allegations, the
shareholders ask us to infer that the consumer violations posed
a risk to regulatory approval of the merger, despite cessation of
the practice by the time the Joint Proxy issued. The District
Court declined to draw such an inference. We, however,
conclude that this inference was reasonable and, as such, the
pleading standard required the District Court to draw it.
Despite the fact that M&T had ceased the practice, it is
plausible that the allegedly high volume of past violations
made the upcoming merger vulnerable to regulatory delay.
Accordingly, the District Court erred when it concluded that
the second amended complaint failed to plausibly allege that
the consumer violations posed a significant risk to the merger
at the time the Joint Proxy issued.6
b. Scope of Disclosure under Item 503(c)
Nonetheless, M&T may avoid liability if the risks posed
by the consumer violations and BSA/AML deficiencies were
fully disclosed in the proxy materials. Unsurprisingly, the
parties dispute whether these risks were adequately disclosed.
We begin with the text of the regulation itself. Item
503(c) requires issuers, “[w]here appropriate, [to] provide
under the caption ‘Risk Factors’ a discussion of the most
significant factors that make the offering speculative or risky.”
6 Regarding whether the BSA/AML deficiencies presented a
risk to the merger at the time the proxy materials issued, the
District Court assumed this was so, and M&T does not argue
otherwise. In any event, independent review of the
allegations confirms that the shareholders properly pleaded
that the deficiencies did pose a risk to approval of the merger.

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17 C.F.R. 229.503(c). With respect to the scope of a sufficient
disclosure, Item 503(c) instructs:
[t]his discussion must be concise
and organized logically. Do not
present risks that could apply to
any issuer or any offering. Explain
how the risk affects the issuer or
the securities being offered. Set
forth each risk factor under a
subcaption that adequately
describes the risk.
Id. Additionally, Item 503(c) includes a non-exhaustive list of
potential risk factors to be disclosed. Id. We note that the plain
text of the regulation directs issuers to avoid generic
disclosures. 7
Although we have yet to analyze the scope of adequate
disclosure under Item 503(c), two of our sister Circuits—the
First and the Second—have considered the sufficiency of Item
7 As an aside, the shareholders acknowledge that
certain statements relevant to our analysis were made outside
of the “Risk Factors” section of the Joint Proxy. They,
however, do not argue that this amounts to a per se violation
of Item 503(c). Rather, they assume we may consider these
statements and contend that the statements do not provide
details sufficient to demonstrate adequate disclosure as a
matter of law.

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503(c) disclosures as a matter of law.8 In Silverstrand
Investments v. AMAG Pharmaceuticals, Inc., 707 F.3d 95 (1st
Cir. 2013), the First Circuit denied a motion to dismiss,
concluding that plaintiffs plausibly alleged that disclosures
made in a pharmaceutical company’s offering documents were
inadequate. AMAG was a pharmaceutical company marketing
Feraheme, “an alternative to current treatments for iron
deficiency anemia.” Id. at 99. In its offering documents,
AMAG included detailed disclosures about the FDA approval
process and the results of Feraheme’s clinical trials prior to
receiving FDA approval. Id. However, AMAG did not
disclose that it had reported to the FDA at least twenty-three
occurrences of severe adverse events (“SAEs”) since the
drug’s inception to market. Id. at 98–100. When a security
analyst publicly reported the SAEs, AMAG’s stock
plummeted. Id. at 99–100.
The Silverstrand plaintiffs argued that Item 503(c)
required disclosure of the SAEs. The First Circuit agreed,
opining that “[c]ommon sense . . . dictate[d] that AMAG knew
that the riskier Feraheme appeared, the less attractive the drug
would be as a method of treatment, and the less likely an
investor would be to invest in AMAG, whose profits entirely
depended on Feraheme’s commercial success.” Id. at 104.
Ultimately, the First Circuit concluded that plaintiffs’
complaint, which alleged that AMAG failed to disclose the
8 Both Circuits reviewed securities fraud claims brought
pursuant to §§ 11 and 12 of the Securities Act, 15 U.S.C.
§§ 77k and 77l. Any distinctions between these statutory
provisions and § 14(a) (i.e., the securities filings they address
or the participants they make liable) are, however, immaterial
for our purposes.

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SAEs despite knowing about them, plausibly stated a claim for
omission of an Item 503(c) risk factor. Id. at 103–06.
The Second Circuit’s opinion in City of Pontiac
Policemen’s and Firemen’s Retirement System v. UBS AG, 752
F.3d 173 (2d Cir. 2014), provides a useful contrast. In that
case, the court granted a motion to dismiss, concluding that
disclosures regarding tax compliance made in a company’s
offering materials were adequate as a matter of law. UBS, 752
F.3d at 182–88. The plaintiffs alleged that, between 2001 and
2007, UBS engaged in a cross-border scheme wherein Swiss
bankers evaded taxes by travelling in and out of the United
States to advise clients. Id. at 178. In May 2008, the
Department of Justice (“DOJ”) and the SEC investigated UBS
for this conduct and, in 2009, UBS entered into a deferred
prosecution agreement (“DPA”) with the DOJ and the IRS. Id.
The DPA stated that UBS had violated United States tax laws
and that it had paid a fine of hundreds of millions of dollars.
Id. In its offering material, UBS disclosed that it was under
investigation by the DOJ for its cross-border scheme. Id. at
182, 184. However, UBS did not disclose that its cross-border
activities were ongoing, nor did it disclose the magnitude of
UBS’s exposure. Id.
Plaintiffs argued that UBS violated Item 503(c)
because, “in addition to disclosing the existence of an
investigation, defendants were required to disclose that UBS
was, in fact, engaged in an ongoing tax evasion scheme.” Id.
at 184. The Second Circuit rejected this argument, holding that
plaintiffs failed to plead a cause of action because UBS had
satisfied its disclosure obligations under Item 503(c):

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As we have explained,
“[d]isclosure is not a rite of
confession,” and companies do not
have a duty “to disclose
uncharged, unadjudicated
wrongdoing.” By disclosing its
involvement in multiple legal
proceedings and government
investigations and indicating that
its involvement could expose UBS
“to substantial monetary damages
and legal defense costs,” as well as
“injunctive relief, criminal and
civil penalties[,] and the potential
for regulatory restrictions,” UBS
complied with its disclosure
obligations under our case law.
Id. (internal citations omitted).
Read together, these cases suggest that generic
disclosures which could apply across an industry are
insufficient. Rather, adequate disclosures are company-
specific. They include facts particular to a company, such as
its financial status, its products, any ongoing investigations,
and its relationships with other entities. See, e.g., Plymouth
Cty. Ret. Ass’n v. Primo Water Corp., 966 F. Supp. 2d 525,
560–61 (M.D.N.C. 2013) (granting motion to dismiss where
risk disclosures “were specific and tailored and fairly
addressed the risks that the amended complaint alleges”); City
of Roseville Emps’ Ret. Sys. v. EnergySolutions, Inc., 814 F.
Supp. 2d 395, 405, 427 (S.D.N.Y. 2011) (denying motion to
dismiss where offering materials emphasized company’s

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25
“unique stewardship initiative” and identified thirteen potential
clients, but allegations suggested regulatory agency had
rejected similar initiatives and clients had already declined
company’s services); In re WorldCom, Inc. Sec. Litig., 346 F.
Supp. 2d 628, 691–92 (S.D.N.Y. 2004) (denying summary
judgment for defendants where registration statement
repeatedly discussed “the intense competition that WorldCom
was facing,” but not “the alleged precarious state of
WorldCom’s profit margins . . . and the impact of that problem
on its business as a whole, including its ability to service its
debt.”).
We next turn to SEC guidance concerning the scope of
Item 503(c) disclosures. Cf. Krieger v. Bank of Am., N.A., 890
F.3d 429, 438 (3d Cir. 2018) (finding further support in agency
guidance when interpreting an unambiguous statutory
provision). This guidance indicates that inadequate
disclosure—particularly in the form of disclosing only generic
risk factors—presents a persistent problem. The Updated Staff
Legal Bulletin released by the SEC in 1999 is illustrative. See
SEC Division of Corporation Finance: Updated Staff Legal
Bulletin No. 7, “Plain English Disclosure,” Release No. SLB-
7, 1999 WL 34984247 (June 7, 1999). A section of the Bulletin
titled “Risk Factor Guidance” leads with the directive that
“issuers should not present risks that could apply to any issuer
or any offering.” Id. at *1. Observing that “Item 503(c) seems
to be the least understood of the plain English requirements,”
the Bulletin includes two examples of what the SEC would
consider to be sufficient disclosures. Id. at *1, *6–7. These
examples are highly descriptive and include facts regarding,
inter alia, each company’s finances—including debt and
leverage positions—products, market, and competition. Id. at

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26
*6–7. They also describe how certain risks may impact the
value of the company. Id.
The Bulletin also provides a heuristic for drafting risk
factors. The SEC explains that Item 503(c) risk factors loosely
fall into three broad categories:
Industry Risk — risks companies
face by virtue of the industry
they’re in. For example, many
[real estate investment trusts] run
the risk that, despite due diligence,
they will acquire properties with
significant environmental issues.
Company Risk — risks that are
specific to the company. For
example, a [real estate investment
trust] owns four properties with
significant environmental issues
and cleaning up these properties
will be a serious financial drain.
Investment Risk — risks that are
specifically tied to a security. For
example, in a debt offering, the
debt being offered is the most
junior subordinated debt of the
company. When drafting risk
factors, be sure to specifically link
each risk to your industry,
company, or investment, as
applicable.

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27
Id. at *5–6.
Additionally, the Bulletin contains comments
frequently issued by SEC investigators when they are
confronted with inadequate risk factor disclosures. For
example:
#35 Item 503(c) of Regulation
S-K states that issuers should not
“present risk factors that could
apply to any issuer or to any
offering.” For example, the risk
you disclose under “Dependence
on Key Personnel” could apply to
nearly any issuer in your industry
and even in other industries. If you
elect to retain these and other
general risk factors in your
prospectus, you must clearly
explain how they apply to your
industry, company, or offering.
For example, explain why you are
concerned you could lose these
key personnel. Are they about to
retire? Do you not have
employment contracts with them?
Id. at *14.
The 1999 Bulletin’s focus on making risk disclosures
more specific is not unique. As recently as 2016, the SEC
sought comments on how to revise its regulations in a way that

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28
would “encourage registrants to describe risks with greater
specificity and context[,]” and “discourage registrants from
providing risk factor disclosure that is not specific to the
registrant but instead describes risks that are common to an
industry or registrants in general.” See Business and Financial
Disclosure Required by Regulation S–K, Exchange Act
Release No. 33-10064, 81 Fed. Reg. 23916, 23956 (Apr. 22,
2016). We note that the SEC guidance is consistent with the
First and Second Circuit’s conclusion that a disclosure of risk
factors is insufficient if it could apply to any company in a
given industry.
Additionally, the shareholders suggest that Item 503(c)
incorporates two general obligations beyond what we have
described above: (1) a duty to disclose all material facts; and
(2) a duty to disclose corporate wrongdoing. Not so.
First, our securities laws do not impose a duty to
disclose all material facts. Rather, mandatory disclosures are
limited by our holding in Seinfeld, in which we explained that
“omission of information from a proxy statement” is not
actionable unless either “SEC regulations specifically require
disclosure of the omitted information” or “the omission makes
other statements in the proxy statement materially false or
misleading.” 461 F.3d at 369 (internal quotation marks
omitted); see also In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410, 1432 (3d Cir. 1997) (holding that securities
laws do not impose a “general duty . . . to provide the public
with all material information”).
Second, we have never recognized a duty to disclose all
corporate wrongdoing in securities filings. See Gen. Elec.
Co. by Levit v. Cathcart, 980 F.2d 927, 935 (3d Cir. 1992)

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(“[S]peculative disclosure is not required under Section 14(a).
Wide authority establishes that while pending litigation may be
material under certain circumstances, the mere possibility of
litigation is not.”); accord UBS, 752 F.3d at 184 (“Disclosure
is not a rite of confession, and companies do not have a duty to
disclose uncharged, unadjudicated wrongdoing.”) (internal
quotation marks and alterations omitted). Rather, a duty to
disclose corporate misconduct is only triggered where non-
disclosure makes other voluntary statements misleading. See
Meyer v. Jinkosolar Holdings Co., 761 F.3d 245, 251–52 (2d
Cir. 2014) (affirming denial of summary judgment because
trier of fact could find omissions regarding ongoing
compliance violations may have “render[ed] misleading the
comforting statements . . . about compliance measures”).
c. The Proxy Materials Did Not Sufficiently Disclose the
Alleged Risk Factors as a Matter of Law
Having explored the scope of adequate disclosure under
Item 503(c), we consider whether the District Court erred in
applying this regulation to the allegations in the second
amended complaint. The District Court did not discuss
whether the risks posed by the consumer violations were
sufficiently disclosed. Similarly, the District Court did not
decide whether the supplemental disclosures cured any alleged
omissions in the Joint Proxy. The District Court did, however,
conclude that the statements made in the Joint Proxy
sufficiently disclosed the risks related to the BSA/AML
deficiencies as a matter of law.
Regarding the consumer violations, the Joint Proxy did
not make any reference to the fraudulent practice underlying
the violations, the dates the practice was in place, the extent of
consumer accounts affected by the practice, or the subsequent

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30
CFPB investigation into the practice. Rather, in the section
labelled “Regulatory Approvals Required for the Merger,” the
Joint Proxy reminded shareholders that “[c]ompletion of the
merger and bank merger are subject to the receipt of all
approvals required to complete the transactions contemplated
by the merger agreement . . . .” (App. A304.) The Joint Proxy
further warned:
Although we currently believe we
should be able to obtain all
required regulatory approvals in a
timely manner, we cannot be
certain when or if we will obtain
them or, if obtained, whether they
will contain terms, conditions or
restrictions not currently
contemplated that will be
detrimental to M&T after the
completion of the merger or will
contain a burdensome condition.
(Id.)
The shareholders’ allegations plausibly suggested that
the Joint Proxy’s disclosures concerning the consumer
violations were too generic to be adequate. Most strikingly,
the Joint Proxy’s statements are not company-specific. For
instance, the “Regulatory Approvals Required for the Merger”
section could easily apply to any consumer bank in the industry
considering a merger. See In re WorldCom, 346 F. Supp. 2d at
691–92 (denying summary judgment where offering
documents referenced competition generally, rather than

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31
details of company’s indebtedness, lack of cash flow, and
underperforming stock).
While it is possible that the supplemental disclosures
cured any inadequate disclosures in the Joint Proxy, the
supplemental disclosures related exclusively to the BSA/AML
deficiencies and did not address the consumer violations.
Accordingly, we conclude that the shareholders alleged a
plausible claim for relief under Item 503(c) regarding M&T’s
inadequate disclosure of the consumer violations.
Regarding the BSA/AML deficiencies, the Joint Proxy
did not discuss them expressly. It did not describe M&T’s
“Know Your Customer” program, its claimed deficiencies, the
number of customer accounts affected by the program’s
deficiencies, the Federal Reserve Board investigation, or the
costs of remediation. The Joint Proxy did, however, mention
anti-money laundering compliance. For example, the Joint
Proxy explained that completion of the merger was subject to
approval by the Federal Reserve Board. According to the Joint
Proxy, “[a]s part of its evaluation of these factors, the Federal
Reserve Board reviews: . . . the effectiveness of the companies
in combatting money laundering.” (App. A0305.) As with the
consumer violations, it is plausible that these boilerplate
disclosures were too generic to communicate anything
meaningful about this specific risk to the merger.
Unlike the consumer violations, however, the
BSA/AML deficiencies are addressed in the supplemental
disclosures. Specifically, M&T stated in the supplemental
disclosures that it was the subject of a Federal Reserve Board
investigation regarding its BSA/AML compliance. M&T
warned that the investigation would likely result in delay of

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32
regulatory approval of the merger and, by extension, closing of
the merger. The substance of these disclosures was likely
adequate as a matter of law. As in UBS, M&T disclosed the
pertinent fact—i.e., that it was the subject of an investigation
that could impact the closing of the merger. See 752 F.3d at
184 (holding disclosure of ongoing FBI investigation into UBS
was sufficient despite absence of details of scheme under
investigation). Because “[d]isclosure is not a rite of
confession,” id., M&T was likely not required to dive into the
weeds and provide details of the shortcomings of its “Know
Your Customer” program.
Even if the supplemental disclosures were sufficient
with respect to the BSA/AML deficiencies, however, the
shareholders dispute that the supplemental disclosures were
disseminated in a way that guaranteed adequate disclosure.
The SEC has long recognized that it is “of overriding
importance . . . that shareholders be given timely and accurate
information of material changes” occurring since the proxy
was filed. Staff Report on Proxy Solicitations, Exchange Act
Release No. 34-16343, 8 SEC Docket 927 (Nov. 27, 1979).
However, “[t]he manner in which those responsible for
solicitation of proxies elect to correct information which has
proven incorrect due to subsequent circumstances, must, of
necessity, be dictated by the individual set of circumstances
that exist.” Id. According to the shareholders, the six days
between the first supplemental disclosure, issued on April 12,
2013, and the April 18 shareholder vote was not enough time
for a reasonable investor to digest the information. M&T
counters by arguing there is no hard and fast deadline for filing
supplemental disclosures.

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33
While we agree that there is no deadline for filing a
supplemental disclosure, we are not prepared to say the six
days provided here was adequate as a matter of law. Rather,
we think the effect of the supplemental disclosures raises a fact
issue, which precludes dismissal of the BSA/AML allegations
at this time.
Accordingly, we will vacate the District Court’s
dismissal of the mandatory-disclosure claims relating to both
the consumer violations and the BSA/AML deficiencies.
2. Theory Two: Misleading Opinions
In their second theory of liability, the shareholders
argue that two statements of opinion contained in the Joint
Proxy—that M&T believed the merger would close timely and
that M&T believed its BSA/AML program was compliant with
the Patriot Act—are actionable under Omnicare.
In Omnicare, the Supreme Court held that an opinion is
only misleading under an omissions theory if the speaker
“omits material facts” about its “inquiry into or knowledge
concerning a statement of opinion” that “conflict with what a
reasonable investor would take from the statement itself.” 135
S. Ct. at 1329. Satisfying this standard, the Court warned, is
“no small task.” Id. at 1332. To illustrate, the Court considered
the hypothetical statement: “We believe our conduct is lawful.”
Id. at 1328. According to the Court, a reasonable investor may
assume an issuer consulted a lawyer before forming such an
opinion. Id. A reasonable investor may also assume that the
lawyer concurred with the substantive assessment. Id. at 1328–
29. In other words, reasonable investors may expect
compliance opinions to be both supported by “meaningful
legal inquir[ies]” and to “fairly align[] with the information in

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34
the [speaker’s] possession at the time.” Id. If the issuer did
not consult a lawyer, or if the lawyer did not agree with the
assessment, the issuer’s opinion regarding its compliance
“could be misleadingly incomplete.” Id. at 1328.
The Court also recognized that not every omission
related to a speaker’s knowledge or process in forming an
opinion is misleading. “An opinion statement . . . is not
necessarily misleading when an issuer knows, but fails to
disclose, some fact cutting the other way.” Id. at 1329. This is
because “[r]easonable investors understand that opinions
sometimes rest on a weighing of competing facts; . . . [a]
reasonable investor does not expect that every fact known to
an issuer supports its opinion statement.” Id. Accordingly,
plaintiffs must “identify particular (and material) facts going to
the basis for the [speaker’s] opinion—facts about the inquiry
[the speaker] did or did not conduct or the knowledge it did or
did not have—whose omission makes the opinion statement at
issue misleading to a reasonable person reading the statement
fairly and in context.” Id. at 1332. A conclusory allegation
that the speaker “lacked ‘reasonable grounds for the belief’ it
stated” will not suffice. Id. at 1333.
We have yet to decide whether Omnicare applies to
claims brought under the Exchange Act, and in particular under
§ 14(a). Cf. In re Amarin Corp. PLC Sec. Litig., 689 F. App’x
124, 132 n.12 (3d Cir. 2017) (“[W]e decline to decide whether
Omnicare is applicable to § 10(b) claims . . . .”). We decline
to do so again today because, even assuming Omnicare’s
applicability, the shareholders failed to plausibly allege an
actionably misleading opinion.

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35
Here, the shareholders contend that two opinion
statements made in or incorporated by reference into the Joint
Proxy violated Omnicare. The statements read as follows:
[1] Although we currently believe
we should be able to obtain all
required regulatory approvals in a
timely manner, we cannot be
certain when or if we will obtain
them or, if obtained, whether they
will contain terms, conditions or
restrictions not currently
contemplated that will be
detrimental to or have a material
adverse effect on M&T or its
subsidiaries after the completion
of the merger.
. . .
[2] The Registrant and its impacted
subsidiaries have approved
policies and procedures that are
believed to be compliant with the
USA Patriot Act.
(App. A0220, A1028) (emphasis added). The shareholders
argue that these opinion statements are misleading because: (1)
they proved to be false; and (2) the Joint Proxy omitted facts
concerning M&T’s process for forming these opinions.
The shareholders’ first argument is meritless. They
contend that the opinion statements are actionable because they
were ultimately proved to be false—in other words, regulatory

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36
approval was not obtained in a timely manner; and M&T was
not compliant with the Patriot Act. A similar argument was
rejected by the Supreme Court in Omnicare: “[A] sincere
statement of pure opinion is not an ‘untrue statement of
material fact,’ regardless [of]whether an investor can
ultimately prove the belief wrong.” 135 S. Ct. at 1327.
The shareholders’ second argument, though stronger, is
ultimately unpersuasive. Apart from asserting, in conclusory
fashion, that the banks acted negligently, the second amended
complaint specifically alleges that M&T conducted “intensive
due diligence” of Hudson’s operations from June 2012 to
August 27, 2012. (App. A0935.) The complaint also alleges
that Hudson’s due diligence investigation into M&T began on
August 20, 2012 and lasted at most five business days. It does
not allege particular facts about the banks’ conduct during
those investigations. However, it does allege that sampling
would have revealed the BSA/AML deficiencies—the
implication being that the banks did not sample M&T’s
customer accounts. From these allegations, the shareholders
ask us to infer that the banks did not conduct a meaningful
inquiry before forming their opinions.
The first shortcoming in this argument is that the facts
concerning the duration of the diligence period were disclosed
in the Joint Proxy. “[T]o avoid exposure for omissions,” a
speaker “need only divulge an opinion’s basis, or else make
clear the real tentativeness of its belief.” Omnicare, 135 S. Ct.
at 1332. Even if a reasonable investor would have expected
the banks to conduct a lengthier due diligence period, the Joint
Proxy provided her with enough information to understand that
the banks did not do so here.

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37
What remains, then, are general allegations of
inadequate diligence and one specific allegation that the banks
did not conduct a sampling of M&T’s customer accounts.
Because general allegations of negligence are insufficient to
plead an Omnicare violation, see id. at 1333, we are left with
the question of whether a reasonable investor would have
expected the banks to conduct a sampling of customer
accounts. We think this solitary allegation concerning
sampling is too weak to defeat the motion to dismiss.
First, sampling is a generic term that merely describes
the act of selecting a subset of a much larger set one wishes to
study. The second amended complaint does not explain the
method of sampling—i.e., how individual accounts should
have been selected—nor does it describe the type of review to
be conducted once an account was selected by this method.
Second, sampling is presumably just one of several ways to
conduct due diligence; nothing in the complaint suggests that
sampling was the only way to conduct diligence here. Without
more, we do not think it plausible that a reasonable investor
would have expected the banks to conduct a sampling of
customer accounts; nor do we think it is plausible that a
reasonable investor would have been misled by the banks’
failure to disclose that a sampling was not conducted.
The context of the opinions at issue further underscores
our conclusion that a reasonable investor would not have been
misled. The opinions were made in the context of the Joint
Proxy’s description of the increased scrutiny into BSA/AML
compliance across the industry. The opinions are also
surrounded by cautionary language, warning of the uncertainty
of future projections regarding regulatory approval. This
hedging is similar to that which was persuasive to the Supreme

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38
Court in Omnicare, and suggests to us that a reasonable
investor would not have been misled by the opinions.
Accordingly, we will affirm the District Court’s
dismissal of the misleading-opinion claims.
B. Whether the Second Amended Complaint
Plausibly Alleged Loss Causation
We conclude by addressing M&T’s alternative ground
for affirmance: the shareholders’ alleged failure to plead loss
causation. See Hassen v. Gov’t of V.I., 861 F.3d 108, 114 (3d
Cir. 2017) (acknowledging that we may affirm on any ground
supported by the record). “The loss causation inquiry asks
whether the misrepresentation or omission proximately caused
the economic loss.” McCabe v. Ernst & Young, LLP, 494 F.3d
418, 426 (3d Cir. 2007) (analyzing § 10(b) claim). To
plausibly allege loss causation, a “plaintiff must show that the
defendant misrepresented or omitted the very facts that were a
substantial factor in causing the plaintiff’s economic loss.” Id.
“[R]ecovery is not limited to out of pocket loss, a diminution
in the value of one’s investment, but may include loss of a
possible profit or benefit, an addition to the value of one’s
investment, unless the loss is wholly speculative.” Gould, 535
F.2d at 781, 782 (recognizing “that by the circulation . . . of the
defective proxy materials the plaintiffs were lulled to inaction
and thereby suffered the loss of an opportunity to attempt to
secure a merger agreement which would be more favorable to
them”).
The District Court did not address whether the second
amended complaint plausibly alleged loss causation. The
District Court did, however, find that the first amended
complaint plausibly alleged loss causation, and the allegations

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39
regarding loss are identical in both pleadings. The shareholders
maintain three theories of loss on appeal: (1) the lost
opportunity of a more favorable merger premium; (2) the lost
opportunity of a higher dividend; and (3) the lost opportunity
of investing in a company without—to use the language of the
complaint—M&T’s “spotty regulatory record.” (App.
A0926.) M&T counters that there was no loss as a matter of
law because: (1) the shareholders profited from the merger to
the tune of $1.9 billion; (2) the shareholders’ more-favorable-
merger-premium theory is “entirely speculative” in that there
was no competing offer and no reason to believe the
shareholders would have rejected the merger but for a more
favorable premium; (3) the shareholders’ higher dividend
theory is “too attenuated” in that Hudson’s Board had complete
discretion to issue a dividend; (4) the alleged dividends were
dispensed between the shareholder vote and the merger’s
closing and so cannot be attributed to the merger; and (5)
despite an allegedly “spotty regulatory record,” M&T’s stock
price rose after the merger closed. (Appellees’ Br. at 45–48.)
While it is true that the shareholders earned a profit after
the merger closed, this does not necessarily negate any alleged
lost opportunities. See Gould, 535 F.2d at 781. On the other
hand, we agree that the shareholders’ loss allegations border
on speculative. Although loss causation may ultimately be
difficult for the shareholders to establish, we will not say that
the shareholders’ allegations are facially implausible. Where,
as here, resolution is likely to turn on the specifics of the
merger negotiations and the inferences that should be drawn
therefrom, we think dismissal would be premature.
Accordingly, we find that the shareholders’ allegations of loss
causation are sufficient to survive the motion to dismiss.

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40
IV. CONCLUSION
For the foregoing reasons, we will vacate in part and
affirm in part the District Court’s Order dated November 21,
2017. On remand, the District Court is directed to proceed to
discovery on the mandatory-disclosure claims.

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