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Southern District Of New York Denies Motion To Dismiss Putative Securities Class Action Against Semiconductor Manufacturer
09/30/2025On September 15, 2025, Judge Alvin Hellerstein of the U.S. District Court for the Southern District of New York denied a motion to dismiss a putative securities class action against a semiconductor manufacturer (the “Company”) and its CEO and CFO (the “Executives” and, collectively, the “Defendants”). In re STMicroelectronics N.V. Sec. Litig., 24 Civ. 6370 (AKH) (S.D.N.Y. Sept. 15, 2025). Plaintiffs alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based upon numerous alleged statements touting the Company’s performance and projected growth that Defendants allegedly knew contradicted internal information and industry trends. The Court denied Defendants’ motion, holding that the alleged misstatements were not inactionable corporate puffery or protected forward-looking statements.
The Company manufactures semiconductor chips, with the automative market driving a plurality of its revenue. Plaintiffs allege that business grew in 2021 and early 2022 due to customer overordering post-COVID to avoid supply chain disruptions and that demand cooled by late 2022. Plaintiffs aver that, at investor events and earnings calls that took place between March 14, 2023, and October 30, 2024, Defendants described product demand in the automotive market as “solid and strengthening,” the Company’s growth as steady, and the Company’s inventory backlog as shrinking, while key indicators, including industry reports and internal data, showed the opposite.
Defendants primarily argued the complaint should be dismissed because the allegedly misleading statements were expressions of non-actionable optimism about market trends and growth. The Court disagreed, finding plaintiffs alleged sufficiently that specific statements about demand, growth, and inventory were actionable because the statements were contradicted by internal reporting and key business metrics known to Defendants. The Court noted that the complaint claimed that a senior Company executive allegedly “called out” Defendants in internal meetings for unsupported forecasts and allegedly objected to the Company allegedly providing discounts to conceal a decline in demand. Plaintiffs claimed the executive was fired after allegedly challenging these practices. Also noted by the Court were statements by Defendants claiming that they had “visibility into” and were following, the very metrics and trends about which they had allegedly made untruthful statements.
The Court also rejected Defendants’ safe harbor defense under PSLRA. First, the Court held that the complaint plausibly alleged the challenged statements could be read to concern present market conditions. Second, plaintiffs plausibly alleged the statements were made with actual knowledge of falsity. And third, the Court held that the complaint sufficiently alleged that the Company’s cautionary language was too generic to constitute “meaningful cautionary statements” and plausibly alleged that the risks that had materialized when allegedly disclosed as “hypothetical.”
