In City of Livonia Employees Retirement System v. Boeing Co., City sued Boeing on behalf of all persons who bought Boeing stock in a certain time period on the basis that the company was overly optimistic about the time schedule for the new 787 aircraft. When problems with the plane developed, the stock fell ten percent. Suit claimed that company executives made false statements about the plane, so committed securities fraud. The appeals court held that Boeing was "overly optimistic" in its forecasts about its financial future so was liable to investors who lost money when things turned out worse than expected.

Question

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The question misrepresents the holding of the case. The appeals court did not find that Boeing was liable for securities fraud simply because it was "overly optimistic" in its forecasts. Rather, the court found that the plaintiffs had sufficiently alleged that Boeing made specific false statements about the 787's progress and that those statements had a material effect on the stock price. The court did not rule on the ultimate merits of the plaintiffs' claims, but only on whether they had met the pleading requirements necessary to proceed with the case.

In City of Livonia Employees Retirement System V