Take it up with Judge Donato. Its in his ruling.
"Even if § 10(b) liability were proper, the additional factual allegations in the amended complaint do not salvage this claim. The alleged fraudulent scheme is that La Jolla bought WSGI’s shares at a deep discount and short sold those shares “to manipulate the stock prices to their advantage.” Dkt. No. 38 at 57. Short selling stock, however, requires that the seller borrow shares for a certain period of time and then return them. See United States v. Deeb, 175 F.3d 1163, 1165 n.4 (9th Cir. 1999) (explaining that in a “short sale, an investor contacts his broker and borrows a particular stock from the broker and sells it on the open market. The investor receives the proceeds from the sale and then has a certain amount of time within which to return the borrowed stock to the broker.”) The amended complaint neither alleges that La Jolla borrowed stock from WSGI and subsequently returned it, nor provides any specific details about how La Jolla allegedly manipulated WSGI’s stock price, aside from the details about La Jolla’s history of funding under the Agreements. Moreover, the allegations added to the amended complaint to support WSGI’s claims for fraudulent inducement and intentional misrepresentation do not bolster its § 10(b) claim, because they do not pertain to the alleged scheme to sell WSGI’s shares at a deep discount or through short sales."
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