                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


JOSEPH CURRY, Individually and on        No. 16-15104
Behalf of All Others Similarly
Situated; CITY OF MIAMI FIRE                D.C. No.
FIGHTERS’ AND POLICE OFFICERS’           3:14-cv-03547-
RETIREMENT TRUST,                              JST
                Plaintiffs-Appellants,

                 and                       OPINION

MARY ADAMS, Individually and on
Behalf of All Others Similarly
Situated,
                            Plaintiff,

                  v.

YELP INC.; JEREMY STOPPELMAN;
ROBERT J. KROLIK; GEOFFREY
DONAKER,
              Defendants-Appellees,

                  v.

DRU L. PIO,
                             Movant.
2                      CURRY V. YELP, INC.

         Appeal from the United States District Court
           for the Northern District of California
           Jon S. Tigar, District Judge, Presiding

         Argued and Submitted September 11, 2017
                 San Francisco, California

                    Filed November 21, 2017

    Before: Ronald M. Gould and Paul J. Watford, Circuit
        Judges, and W. Louis Sands, * District Judge.

                    Opinion by Judge Gould


                          SUMMARY **


                         Securities Fraud

    The panel affirmed the district court’s dismissal, for
failure to state a claim, of a securities fraud action brought
against Yelp, Inc., and other defendants, alleging the falsity
of statements regarding the independence and authenticity of
posted Yelp reviews.

    The panel held that the plaintiffs did not adequately
plead loss causation because the disclosure of consumer
complaints, without more, did not form a sufficient basis for
a viable loss causation theory. The panel also held that

     The Honorable W. Louis Sands, United States District Judge for
     *

the Middle District of Georgia, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                    CURRY V. YELP, INC.                       3

allegations of suspicious insider sales of stock without
allegations of historical trading data did not create a strong
inference of scienter. The panel affirmed the district court’s
dismissal with prejudice because amendment of the
complaint as to loss causation would be futile.


                         COUNSEL

Andrew S. Love (argued), Kenneth J. Black, Shawn A.
Williams, and Susan K. Alexander, Robbins Geller Rudman
& Dowd LLP, San Francisco, California; Stephen H. Cypen,
Cypen & Cypen, Miami Beach, Florida; for Plaintiffs-
Appellants.

Gilbert R. Serota (argued) and Daniel M. Pastor, Arnold &
Porter LLP, San Francisco, California, for Defendants-
Appellees.


                          OPINION

GOULD, Circuit Judge:

    Plaintiffs Joseph Curry, individually and on behalf of all
others similarly situated, and Miami Fire Fighters’ and
Police Officers’ Retirement Trust appeal the district court’s
dismissal with prejudice of Plaintiffs’ securities fraud
complaint for failure to state a claim. Plaintiffs argue that
the district court erred by holding that they did not
adequately plead falsity, materiality, loss causation, and
scienter. Plaintiffs further argue that the district court erred
by dismissing their control person claim and by denying
them leave to amend. We hold that the disclosure of
consumer complaints, without more, in the circumstances of
4                      CURRY V. YELP, INC.

this case did not form a sufficient basis for a viable loss
causation theory. We further hold that allegations of
suspicious insider sales of stock without allegations of
historical trading data did not, in the circumstances here,
create a strong inference of scienter. We affirm the district
court’s dismissal of the complaint based on the elements of
loss causation and scienter that were not sufficiently pled.
We need not reach and do not reach Plaintiffs’ arguments
regarding materiality and falsity. We also affirm the district
court’s dismissal of the complaint with prejudice because
amendment of the complaint as to loss causation would be
futile under current precedent.

                                  I

    Yelp Inc. (“Yelp”) is a publicly traded company that
generates revenue by selling advertising to businesses on its
website. During the period from October 29, 2013 to April
3, 2014 (the “Class Period”) Defendants 1 consistently stated
that the reviews generated on Yelp’s website were
“firsthand” and “authentic” information from contributors
about local businesses. On April 2, 2014, pursuant to a Wall
Street Journal (“WSJ”) Freedom of Information Act request,
the Federal Trade Commission (“FTC”) disclosed more than
2,000 complaints from businesses claiming that Yelp had
manipulated reviews of their services. Some complaints
alleged that Yelp salespersons would remove good reviews
or promote bad reviews when businesses did not agree to
advertise with them. Other complaints reported that bad

    1
      Defendants are Yelp Inc. and Jeremy Stoppelman (Yelp’s Chief
Executive Officer during the Class Period), Robert Krolik (Yelp’s Chief
Financial Officer during the Class Period), and Geoffrey Donaker
(Yelp’s Chief Operating Officer during the Class Period) (collectively
“Individual Defendants”).
                    CURRY V. YELP, INC.                      5

reviews were suppressed for companies that advertised with
Yelp. That afternoon, after the market had closed, the WSJ
released an article citing the FTC’s disclosure and noting
that Yelp’s stock had declined 6% after the FTC made its
disclosure of these complaints.

                              A

    Plaintiffs sued Defendants alleging that Yelp’s
statements regarding the independence and authenticity of
posted reviews were materially false; that Defendants knew
the statements were false; and that the revelation of their
falsity through FTC disclosures and news articles caused a
drop in Plaintiffs’ stock value.        The district court
consolidated two cases and appointed City of Miami Fire
Fighters’ and Police Officers’ Retirement Trust as Lead
Plaintiff.

    Defendants filed a motion to dismiss Plaintiffs’ initial
class-action complaint, which the district court granted,
concluding that Plaintiffs did not sufficiently allege falsity,
materiality, causation, or scienter. The district court
concluded that Plaintiffs did not sufficiently plead
materiality because the information revealed in the WSJ
article and the FTC disclosures had previously been
disclosed by Yelp in its Registration Statement and other
SEC filings. The district court concluded that Plaintiffs did
not allege falsity because most of the consumer complaints,
eighteen out of twenty-five, did not allege that Yelp sought
payment in exchange for good reviews. The district court
concluded that Plaintiffs did not sufficiently allege loss
causation because the decline in Yelp’s stock was
“attributable to market speculation about whether fraud
ha[d] occurred,” and it concluded that speculation of fraud
could not form the basis for a viable loss causation theory.
The district court concluded that Plaintiffs did not allege
6                    CURRY V. YELP, INC.

scienter with particularity because Plaintiffs did not allege
that Yelp executives were personally involved in ensuring
the authenticity of Yelp’s reviews. The district court further
concluded that “unusual insider sales” of stocks could not
show scienter because Plaintiffs did not supply trading
history. The district court also concluded that Plaintiffs’
Section 20(a) derivative claim likewise failed. For these and
related reasons, the district court dismissed Plaintiffs’
original consolidated class action complaint but granted
Plaintiffs leave to amend.

                               B

    Plaintiffs then filed their First Amended Class Action
Complaint for Violations of the Federal Securities Laws.
Defendants again moved to dismiss, and the district court
once more granted the motion to dismiss. The district court
held that Plaintiffs did not sufficiently plead material falsity.
The district court reasoned that Plaintiffs’ new allegations
did not implicate the veracity of Defendants’ previous
statements that Yelp reviews, by and large, are “authentic”
and “firsthand” because Defendants had previously
acknowledged that Yelp’s screening technology was
imperfect. The district court specifically found that “no
reasonable investor could have understood Defendants’
statements to mean that all Yelp reviews were authentic,”
and therefore, the FTC complaints did not alter the total mix
of information available to the market. The district court
also found that the WSJ article could not have affected the
total mix of information in the market because it was
published after the market had closed and Yelp’s stock price
had already declined. Finally, the district court found that
the FTC disclosure did not affect the total mix of information
because it was unclear when the FTC made its disclosure and
what the FTC disclosed.
                    CURRY V. YELP, INC.                       7

    The district court further concluded that Plaintiffs’
allegations of consumer complaints did not prove that
Defendants’ statements denying manipulation of Yelp
reviews were false. Although the Plaintiffs had included
nine more consumer complaints, the district court found that
the complaints still only expressed business owners’
inferences about Yelp’s manipulation of reviews, and were
not proof of wrongdoing. Plaintiffs also argued that Yelp’s
statements regarding future business prospects were false or
misleading, but the district court rejected this argument
because Defendants’ claims as to the authenticity of the
reviews did not contribute to Yelp’s projected numbers. The
district court held that the statements were not materially
false because Plaintiffs did not allege that Defendants’
optimistic statements about Yelp’s prospects were
contradicted by undisclosed facts that Defendants already
knew.

    The district court also concluded that Plaintiffs did not
sufficiently allege loss causation because Plaintiffs did not
allege that there was fraud on the market, only potential
fraud. The district court found that Plaintiffs did not supply
allegations connecting the stock drop to the FTC disclosures
or to the WSJ article because the WSJ article came out after
the stock drop occurred. The district court concluded that
Plaintiffs did not sufficiently allege that Yelp’s executives
had the requisite scienter. The district court specifically held
that Plaintiffs’ reliance on management’s general awareness
of day-to-day workings did not show that they had
knowledge and control over Yelp’s content. The district
court also held that Defendants’ sales of Class A+B shares
did not support an inference of scienter because Plaintiffs
again did not provide any historical trading data showing the
stock sales of insiders before the Class Period for
comparison, even though the district court had noted that
8                   CURRY V. YELP, INC.

same deficiency in its prior order granting the first motion to
dismiss. The district court dismissed Plaintiffs’ derivative
Section 20(a) claim because their Section 10(b) claim failed.
Finally, the district court denied Plaintiffs’ new motion for
leave to amend, reasoning that further amendment would be
futile because the first amended complaint did not cure the
previously cited deficiencies.

    Plaintiffs next filed a motion for reconsideration, which
included a proposed second amended complaint. The
district court denied Plaintiffs’ motion for reconsideration,
and this appeal timely followed.

                              II

    We have jurisdiction to decide this appeal under
28 U.S.C. § 1291. In re Atossa Genetics, Inc. Sec. Lit.,
868 F.3d 784, 793 (9th Cir. 2017). We review de novo
challenges to a dismissal for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6). New Mexico State
Inv. Council v. Ernst & Young, LLP, 641 F.3d 1089, 1094
(9th Cir. 2011). On review, we consider the materials
incorporated by reference in the complaint, and judicially
noticed matters. Id. We review the denial of leave to amend
a complaint for abuse of discretion. Zucco Partners, LLC v.
Digimarc Corp., 552 F.3d 981, 989 (9th Cir. 2009).

                             III

    The elements that must be pleaded to state a claim for
securities fraud are strenuous but well established. To state
a claim for violation of Rule 10b-5, a plaintiff must allege a
material misrepresentation or omission of fact, scienter, a
connection with the purchase or sale of a security,
transaction and loss causation, and economic loss. Zucco
Partners, 552 F.3d at 990. “A securities fraud complaint
                     CURRY V. YELP, INC.                       9

under § 10(b) and Rule 10b-5 must satisfy the dual pleading
requisites of Federal Rule of Civil Procedure 9(b) and the
PSLRA.” In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d
694, 701 (9th Cir. 2012). We “accept the plaintiffs’
allegations as true and construe them in the light most
favorable to plaintiffs.” Gompper v. VISX, Inc., 298 F.3d
893, 895 (9th Cir. 2002). A dismissal is inappropriate unless
the complaint fails to “state a claim to relief that is plausible
on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). We affirm the decision of the district court because
we conclude Plaintiffs did not adequately plead loss
causation or scienter.

                               A

    Plaintiffs contend that they sufficiently plead loss
causation and that the district court erred by surmising that
“the market merely became aware of the possibility that
further investigations by the FTC could later establish that
Defendants’ denials were false or misleading.” We have
held that “[t]o prove loss causation, the plaintiff must
demonstrate a causal connection between the deceptive acts
that form the basis for the claim of securities fraud and the
injury suffered by the plaintiff.” Ambassador Hotel Co., Ltd.
v. Wei–Chuan Inv., 189 F.3d 1017, 1027 (9th Cir. 1999); see
also Oregon Pub. Emps. Ret. Fund v. Apollo Grp. Inc.,
774 F.3d 598, 608 (9th Cir. 2014).

    In their first amended complaint, Plaintiffs allege that
Defendants’ misrepresentations, including false denials of
“extortion-like business practices,” caused Yelp’s stock to
trade at artificially inflated prices. Plaintiffs allege that a
WSJ article and a SunTrust Report said that Yelp stock was
down 6% on the afternoon the FTC made its disclosures, that
1,344 of the 2,046 complaints the FTC disclosed had not
been previously disclosed and corroborated each other, and
10                  CURRY V. YELP, INC.

that the FTC disclosures showed that the rate of complaints
had increased. Plaintiffs allege that disclosure of the
complaints and the release of the WSJ article caused the drop
in Yelp’s stock price as reported by various sources.

    Although a securities fraud plaintiff need not allege an
outright admission of fraud to survive a motion to dismiss,
the “mere ‘risk’ or ‘potential’ for fraud is insufficient to
establish loss causation.” Loos v. Immersion, Corp.,
762 F.3d 880, 889 (9th Cir. 2014), as amended (Sept. 11,
2014) (internal citation omitted). In Loos, we held that the
mere announcement of an investigation was insufficient to
establish loss causation because it does not “‘reveal’
fraudulent practices to the market.” Id. at 890. Here,
Plaintiffs rely on even less, as they only cite customer
complaints to the FTC without a subsequent investigation.
Loos makes clear that Plaintiffs’ allegations are insufficient
to plead loss causation. Several cases from the United States
Supreme Court and from our court make clear that in the
context of alleged securities fraud where the PSLRA and
FRCP 9(b) impose heightened requirements, the element of
loss causation cannot be adequately made out merely by
resting on a number of customer complaints and asserting
that where there is smoke, there must be fire. Rather, for
Plaintiffs in this securities fraud context, there must be
particularized allegations of fraud and strong evidence of
scienter or culpable intent of the corporate managers
involved. See Dura Pharm., Inc. v. Broudo, 544 U.S. 336,
346 (2005) (requiring that “a plaintiff prove that the
defendant’s misrepresentation (or other fraudulent conduct)
proximately caused the plaintiff's economic loss”); see, e.g.,
Loos, 762 F.3d at 890 n.3 (“[T]he announcement of an
investigation, ‘standing alone and without any subsequent
disclosure of actual wrongdoing, does not reveal to the
market the pertinent truth of anything.’”) (internal citation
                    CURRY V. YELP, INC.                    11

omitted); Metzler Inv. GMBH v. Corinthian Colleges, Inc.,
540 F.3d 1049, 1064 (9th Cir. 2008) (noting that Supreme
Court and Ninth Circuit precedent do not “support the notion
that loss causation is pled where a defendant’s disclosure
reveals a ‘risk’ or ‘potential’ for widespread fraudulent
conduct”).

    We hold that in the circumstances of this case disclosure
of customer complaints that refer to allegations of fraud,
without more, are insufficient to allege loss causation. The
district court did not err in so concluding.

                              B

    Plaintiffs contend that their allegations about Yelp
executives’ knowledge of core operations created a strong
inference that Defendants were at least reckless in their
statements about Yelp reviews. Plaintiffs further contend
that Defendants’ high volume of insider stock sales supports
a strong inference of scienter. A plaintiff’s complaint must
state facts, with particularity, with respect to each act or
omission alleged, giving rise to a strong inference that the
defendant acted with the required state of mind. 15 U.S.C.A.
§ 78u-4(b)(2)(A); S. Ferry LP, No. 2 v. Killinger, 542 F.3d
776, 782 (9th Cir. 2008). A securities fraud complaint will
survive “only if a reasonable person would deem the
inference of scienter cogent and at least as compelling as any
opposing inference one could draw from the facts alleged.”
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308,
324 (2007); see also New Mexico State Inv. Council,
641 F.3d at 1095. “The inference that the defendant acted
with scienter need not be irrefutable, i.e., of the ‘smoking-
gun’ genre, or even the ‘most plausible of competing
inferences’ . . . Yet the inference of scienter must be more
than merely ‘reasonable’ or ‘permissible’—it must be cogent
12                    CURRY V. YELP, INC.

and compelling.” Tellabs, 551 U.S. at 324 (internal citations
omitted); see also S. Ferry, 542 F.3d at 784.

    “[W]e conduct a two-part inquiry for scienter: first, we
determine whether any of the allegations, standing alone, are
sufficient to create a strong inference of scienter; second, if
no individual allegation is sufficient, we conduct a ‘holistic’
review of the same allegations to determine whether the
insufficient allegations combine to create a strong inference
of intentional conduct or deliberate recklessness.” New
Mexico State Inv. Council, 641 F.3d at 1095.

                                 1

    Plaintiffs allege that insiders, including Individual
Defendants, unloaded more than 1.1 million shares of their
Yelp stock at artificially inflated prices receiving insider
proceeds in excess of $81.5 million. Individual Defendants
Stoppelman, Krolik, and Donaker sold 132,350, 35,000, and
117,640 shares, respectively, during the Class Period. For
sales of stocks to be suspicious, they must be “dramatically
out of line with prior trading practices at times calculated to
maximize the personal benefit from undisclosed inside
information.” Ronconi v. Larkin, 253 F.3d 423, 435 (9th Cir.
2001) (quoting In re Silicon Graphics Inc. Sec. Litig.,
183 F.3d 970, 986 (9th Cir. 1999)) (emphasis omitted).
Here, even after the district court pointed out that it needed
evidence of Individual Defendants’ prior trading history,
Plaintiffs in their first amended complaint made no
allegations and gave no evidence of Individual Defendants’
prior trading history. 2 See also Police Ret. Sys. of St. Louis


     2
      The Form 4s in the record indicate that the vast majority of
Individual Defendants’ stock sales were made pursuant to a Rule 10b5-
                       CURRY V. YELP, INC.                          13

v. Intuitive Surgical, Inc., 759 F.3d 1051, 1064 (9th Cir.
2014) (finding allegations of scienter based on sales of stock
insufficient “because the complaint contains no allegations
regarding the defendants’ prior trading history, which are
necessary to determine whether the sales during the Class
Period were ‘out of line with’ historical practices”). Without
such allegations, the district court correctly determined that
Plaintiffs’ complaint failed to plead that Individual
Defendants’ sales of stock were “dramatically out of line
with prior trading practices.” See Ronconi, 253 F.3d at 435.
Plaintiffs’ allegations related to the sale of stock are not
sufficient to create a strong inference of scienter.

                                   2

     Plaintiffs also allege that Defendants knew that it was not
true that all Yelp’s reviews were based on firsthand
knowledge or were authentic because (1) Defendants used
filtering software to “keep it at a level playing field”,
(2) Defendants used scouts to build interest in new locales
including writing initial business reviews, and
(3) Defendants had community mangers who were
responsible for creating content and encouraging traffic for
different cities and towns. Plaintiffs allege that these
business practices show a policy as evidenced by the large
number of complaints by businesses throughout the country
and the number of different Yelp salespersons involved.
Plaintiffs allege that Defendants knew or deliberately
disregarded that “when local businesses declined the
Company’s overtures to purchase advertising, the Company
would often retaliate by removing or filtering their good
reviews and displaying only negative” reviews, and that the

1 plan, which allows for stock sales over a predetermined period without
concern for the market.
14                  CURRY V. YELP, INC.

“Company would often offer to suppress negative reviews
for a fee” and did not disclose this business practice.

    However, the rule is settled that “[a]s a general matter,
‘corporate management’s general awareness of the day-to-
day workings of the company’s business does not establish
scienter—at least absent some additional allegation of
specific information conveyed to management and related to
the fraud’ or other allegations supporting scienter.” S. Ferry,
542 F.3d at 784–85 (quoting Metzler Inv. GmbH v.
Corinthian Colleges, Inc., 534 F.3d 1068, 1087 (9th Cir.
2008)). “Allegations regarding management’s role in a
corporate structure and the importance of the corporate
information about which management made false or
misleading statements may also create a strong inference of
scienter when made in conjunction with detailed and specific
allegations about management’s exposure to factual
information within the company.” Id. at 785. Although
Plaintiffs’ allegations are numerous, none states that an
Individual Defendant had specific information regarding
employee use of review manipulation when trying to sell
advertising. See Zucco, 552 F.3d at 1000–01 (requiring
“specific admissions from top executives that they are
involved in every detail of the company and that they
monitored portions of the company’s database” or that “the
information misrepresented is readily apparent to the
defendant corporation’s senior management”). Plaintiffs do
not allege that Individual Defendants personally oversaw
reviews or had notice of how some advertising was garnered.
S. Ferry, 542 F.3d at 784 (“Where a complaint relies on
allegations that management had an important role in the
company but does not contain additional detailed allegations
about the defendants’ actual exposure to information, it will
usually fall short of the PSLRA standard.”). According to a
Wells Fargo Securities, LLC report, as of December 2013,
                     CURRY V. YELP, INC.                        15

Yelp had 53 million reviews on its platform. Two thousand
complaints represented one complaint in every 26,500
reviews. We conclude that in this case, complaints regarding
such a small portion of Yelp’s business do not support a
strong inference of scienter.

    Even taken together, Plaintiffs’ allegations do not
support a strong inference of scienter. None of the
allegations forms a nexus between the wrongful behavior
and Individual Defendants’ knowledge.             Plaintiffs’
allegations are not sufficient to allege scienter under the
demanding standards set for claims of federal securities law
violations.

                                C

    Plaintiffs contend that the district court’s dismissal of
their § 20(a) claim should be reversed because the
underlying dismissal of their § 10(b) claim was in error. But
because we have concluded that the district court did not err
by dismissing the underlying § 10(b) claim, Plaintiffs’
§ 20(a) claim also fails. See Howard v. Everex Sys., Inc.,
228 F.3d 1057, 1065 (9th Cir. 2000). We affirm the district
court’s dismissal of Plaintiffs’ § 20(a) claim.

                                D

    Finally, we review denial of leave to amend for abuse of
discretion. Loos, 762 F.3d at 886. When a district court
determines that further amendment would be futile, “we will
affirm the district court’s dismissal on this basis if it is clear,
upon de novo review, that the complaint could not be saved
by any amendment.” Zucco Partners, 552 F.3d at 1007
(internal quotation marks and citation omitted). We
conclude that the district court did not abuse its discretion
here. In the district court’s first order dismissing Plaintiffs’
16                   CURRY V. YELP, INC.

complaint with leave to amend, it pointed out deficiencies in
Plaintiffs’ pleadings of materiality, falsity, loss causation,
and scienter. Despite these explicit warnings, Plaintiffs’ first
amended complaint failed to remedy the deficiencies. Loos,
762 F.3d at 891 (“[W]here the plaintiff has previously been
granted leave to amend and has subsequently failed to add
the requisite particularity to [his] claims, the district court’s
discretion to deny leave to amend is particularly broad.”
(alterations in original)) (quoting Zucco Partners, 552 F.3d
at 1007). We conclude that it is clear that further amendment
on the issue of loss causation would be futile because
Plaintiffs’ proposed second amended complaint realleges
facts regarding the FTC complaints and market analyst
reports as their basis for loss causation without providing
additional facts that demonstrate fraud. Our current circuit
precedent makes clear that market speculation about fraud,
without more, is insufficient to plead loss causation. Loos,
762 F.3d at 890; see, e.g., Oregon Pub. Emps. Ret. Fund,
774 F.3d at 608. Even the unpublished decision Plaintiffs
relied on during oral argument, Cutler v. Kirchner, states,
“[o]ur traditional approach tests whether a statement caused
loss by asking whether ‘subsequent public disclosures’
revealed or at least suggested the truth.’” 2017 WL 3530893
*1 (9th Cir. Aug. 17, 2017) (internal citation omitted).
Plaintiffs have not alleged and cannot allege anything
beyond the FTC’s disclosure of complaints. As discussed
above, that alone is insufficient to support loss causation
under Loos. The district court did not abuse its discretion by
concluding that further amendment would be futile.

                              IV

    We AFFIRM the district court’s dismissal with
prejudice of Plaintiffs’ securities fraud complaint because
                 CURRY V. YELP, INC.               17

Plaintiffs did not adequately plead loss causation and
scienter.

   AFFIRMED.
