Alaska Electrical Pension Fund v. Asar, No. 17-50162 (5th Cir. 2018)Annotate this Case
The Fund filed suit alleging that Hangar and three of its officers engaged in securities fraud. The Fifth Circuit held that the district court did not err in dismissing the section 10(b) of the Securities and Exchange Act claims against Defendants Asar and Kirk, but erred in dismissing the claims against Defendants McHenry and Hanger. In this case, the allegations supported a strong inference of scienter as to McHenry where the court could infer from the Audit Committee's report that he intended to enhance Hanger's financial results. The court explained that, taking the allegations holistically, McHenry's having had the requisite state of mind was "cogent" and "at least as compelling" as the alternate explanations. Therefore, McHenry's scienter could be imputed to Hanger, but only as to his allegedly false statements.
The court issued a subsequent related opinion or order on April 10, 2019.