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Northern District Of California Grants Motion To Dismiss Securities Fraud Suit Against Payment Technology Company
12/17/2025On December 10, 2025, Judge Noël Wise of the United States District Court for the Northern District of California granted a motion to dismiss a putative securities fraud class action asserting claims against a payment technology company (the “Company”) and certain of its executive officers (the “Individual Defendants”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. Beibei Cai v. Visa Inc., et al., No. 24-cv-08220 (N.D. Cal. Dec. 10, 2025). In granting defendants’ motion to dismiss, the Court held that the complaint did not adequately plead that the Company’s alleged omissions caused investors losses.
Plaintiffs alleged that defendants misrepresented the reasons that the Company had high debit card transaction routing volume to conceal the Company’s “allegedly anticompetitive antics” and identified three categories of alleged misstatements: (1) statements from earnings calls and investor conferences that fail to identify the impact of a Federal Reserve Rule implemented by the Durbin Amendment (“Regulation II”) on the Company’s debit card transaction routing volume; (2) statements from investor conferences about financial technology (“fintech”); and (3) statements in the Company’s public filings. Defendants moved to dismiss, arguing that plaintiffs failed to adequately plead falsity, scienter, and loss causation.
Without addressing the issues of falsity or scienter, the Court held that plaintiffs failed to plead loss causation as to any of the alleged misstatements. With respect to alleged misstatements about the Company’s high debit card transaction routing volume, the Court held that plaintiffs failed to allege a causal connection between defendants’ allegedly material misrepresentations and the loss, i.e., negative impact on the Company’s stock price. The Court emphasized that the complaint failed to include any allegation that the stock drop in question was in response to the revelation of the truth of any of the alleged misstatements identified by plaintiffs. Further, in response to plaintiffs’ allegations that the Company’s alleged anticompetitive behavior was revealed to the market when news articles were published and a related DOJ complaint against the Company was filed, the Court held that the timing of the allegedly corrective disclosures undercut plaintiffs’ argument because, as noted in plaintiffs’ complaint, the Company had already publicly disclosed in SEC filings three years prior to the DOJ’s investigation into the Company. Accordingly, the Court held that plaintiffs’ own alleged facts undermined their contention that the alleged corrective disclosures caused the stock price to drop.
The Court also held that plaintiffs failed to allege facts to support a plausible inference of loss causation because “the modest stock price drop” was followed by a “quick and sustained price recovery.” According to the Court, although the Company’s stock price dropped over the days following the alleged corrective disclosures, the stock price immediately rebounded in the days following the drop, which the Court determined refuted any inference that the stock price decline was evidence of loss causation.
Having found that plaintiffs failed to adequately plead an underlying Section 10(b) claim, the Court dismissed plaintiffs’ control person liability claims under Section 20(a). The Court dismissed the complaint without prejudice and granted leave for plaintiffs to file an amended complaint within 30 days of the order.
