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The Ninth Circuit has amended its opinion in a securities fraud class action against a pop culture collectibles manufacturer, clarifying that the company's risk disclosures improperly framed already-realized harms as hypothetical future risks. The court denied petitions for panel rehearing and rehearing en banc, maintaining its partial reversal of the district court's dismissal of claims under Sections 10(b) and 20(a) of the Securities Exchange Act.
within Compliance, Strategy and Real Estate and Construction topic(s)
On September 2, 2026, the United States Court of Appeals for the Ninth Circuit amended its opinion affirming in part and reversing in part the dismissal of a putative securities fraud class action against a manufacturer of pop culture collectibles (the “Company”), and its former CEO and former CFO, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Constr. Laborers Pension Trust of Greater St. Louis v. Funko Inc., No. 24-4909 (9th Cir. Sept. 2, 2026). We previously covered the panel’s February 4, 2026, decision reversing in part the dismissal of the complaint here, as well as the district court’s underlying dismissal here.
In its latest order, the panel amended its February opinion to include that “[f]alsity has been even more clearly alleged here than in Facebook or Alphabet because all of these facts demonstrate that the harms had already come to fruition, even though the risk disclosures from that same period framed these realities as mere hypotheticals. The harms had already happened and were ongoing, but Funko executives continued to tell investors only there was a risk of conditions arising that could cause future harm.” In amending its prior decision, the Court denied petitions for a panel rehearing and for a rehearing en banc.
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