LifeWise Family Financial Security, Inc. v. Triangle Capital Corp., No. 19-2162 (4th Cir. 2021)Annotate this Case
LifeWise, a shareholder in Triangle, filed a securities fraud class action against Triangle, alleging that defendants knew or should have known of the risks of certain investments but defrauded them by failing to disclose such alleged risks. The district court dismissed the amended complaint and subsequently denied leave to amend as futile.
The Fourth Circuit affirmed, concluding that LifeWise has not satisfied the Private Securities Litigation Reform Act of 1995's (PSLRA) heightened burden of pleading scienter and this failure is fatal to both its securities fraud claim against Triangle and its director liability claims against Defendants Poole, Lilly, and Tucker. The court considered LifeWise's allegations holistically and in their proper context and held that Lifewise failed to allege a strong inference of scienter. Rather, the court explained that the much stronger inference is that defendants had an honest debate about the merits of a subjective business judgment, and in hindsight, simply made the wrong choice with some investments.