Plastic2Oil Inc (PTOI)

[Johnik]

The JBI class action suit isn't based on forward looking statements, but rather it's based misrepresentations of existing facts.
"Specifically, Defendants made false and/or misleading statements and/or failed to disclose: (1) that the media credits acquired by the Company in connection with the acquisition of JavaCo were substantially overvalued; (2) that the Company was improperly accounting for acquisitions; (3) that, as such, the Company’s financial results were not prepared in accordance with Generally Accepted Accounting Principles (“GAAP”); (4) that the Company lacked adequate internal and financial controls; and (5) that, as a result of the above, the Company's financial statements were materially false and misleading at all relevant times."


IMO the bases for the claims are materially different from those in the article.

Maybe so, but reliance and causation are still elements of a misrepresentation claim, regardless of the alleged misrepresentation. Also, by U.S. statute, a securities fraud class action plaintiff must satisfy a heightened pleading standard, specifying "each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed." The complaint must also state with particularity facts giving rise to a strong inference that the defendant acted with the requisite state of mind, and must do so with respect to each act or omission alleged to be a violation of securities laws (aka the "scienter" requirement). The scienter requirement is often the kicker, as GAAP violations or accounting irregularities, standing alone, have been held insufficient.

To get a taste of what a class action plaintiff must demonstrate in a securities fraud suit based on accounting irregularities, this case provides some guidance:

The proof of scienter in fraud cases is often a matter of inference from circumstantial evidence. However, the mere publication of inaccurate accounting figures, or a failure to follow GAAP, without more, does not establish scienter. Rather, scienter requires more than a misapplication of accounting principles. The plaintiff must prove that the accounting practices were so deficient that the audit amounted to no audit at all, or an egregious refusal to see the obvious, or to investigate the doubtful, or that the accounting judgments which were made were such that no reasonable accountant would have made the same decisions if confronted with the same facts.

Software Toolworks, 50 F.3d at 627-28 (internal alternations, quotations and citations omitted). Thus, mere allegations that an accountant negligently failed to closely review files or follow GAAP cannot raise a strong inference of scienter. Id. at 628.

http://scholar.google.com/scholar_case?q=288+f.3d+385&hl=en&as_sdt=2,22&case=14286418464571855843&scilh=0

The case involved an overstatement of revenues, earnings, and receivables, as well as a cease trade in the company's stock. Note that I intentionally selected a case from the Ninth Circuit, given that the JBI case is in the Ninth Circuit.