                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

OREGON PUBLIC EMPLOYEES                  No. 12-16624
RETIREMENT FUND; AMALGAMATED
BANK, as Trustee for the LongView           D.C. No.
LargeCap 500 Index Fund, the             2:10-cv-01735-
LongView LargeCap 500 Index                   JAT
VEBA Fund, the LongView
Quantitative LargeCap Fund, and the
LongView Quantitative LargeCap             OPINION
VEBA Fund; MINEWORKERS’
PENSION SCHEME,
                Plaintiffs-Appellants,

                  v.

APOLLO GROUP INCORPORATED;
JOHN SPERLING; GREGORY W.
CAPPELLI; CHARLES B. EDELSTEIN;
GREGORY J. IVERSON; JOSEPH I.
D’AMICO; BRIAN L. SWARTZ; BRIAN
E. MUELLER; PETER V. SPERLING;
WILLIAM J. PEPICELLO,
             Defendants-Appellees.


      Appeal from the United States District Court
               for the District of Arizona
      James A. Teilborg, District Judge, Presiding

                Argued and Submitted
          October 10, 2014—Phoenix, Arizona
2                  OPERF V. APOLLO GROUP

                    Filed December 16, 2014

      Before: J. Clifford Wallace, Barry G. Silverman,
          and Milan D. Smith, Jr., Circuit Judges.

             Opinion by Judge Milan D. Smith, Jr.


                           SUMMARY*


                         Securities Fraud

    The panel affirmed the district court’s dismissal of
investors’ class action under § 10(b) of the Securities
Exchange Act and SEC Rule 10b-5 against Apollo Group,
Inc., a for-profit education company, and Apollo officers and
directors.

    The plaintiffs alleged that the defendants made false and
misleading statements of material fact regarding Apollo’s
enrollment and revenue growth, financial condition,
organizational values, and business focus. They also alleged
that, during the class period, certain individual defendants
traded on inside information related to the false and
misleading statements of material fact.

    Agreeing with the Fourth Circuit, the panel held that the
heightened pleading standards of Fed. R. Civ. P. 9(b) apply
to all elements of a securities fraud action, including loss
causation.

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                  OPERF V. APOLLO GROUP                         3

    The panel held that the material misrepresentations
alleged in Counts I, III, and IV of the amended complaint
were not objectively false statements, but rather were
examples of lawful “business puffing.” The plaintiffs also
failed adequately to plead scienter or loss causation.

    The panel held that, as to Count II, the plaintiffs did not
show how Apollo’s accounting numbers regarding student
revenue were incorrect or misstated.

    The panel held that the plaintiffs failed to state a claim for
insider trading because the alleged non-public information to
which the defendants had access was the same information at
issue in Counts I–IV.

   The panel held that the plaintiffs also could not establish
control person liability.


                          COUNSEL

Stuart M. Grant (argued), Grant & Eisenhofer P.A.,
Wilmington, Delaware, for Plaintiffs-Appellants.

Linda T. Coberly (argued), William P. Ferranti, and Benjamin
L. Ellison, Winston & Strawn LLP, Chicago, Illinois; David
B. Rosenbaum, Osborn Maledon, P.A., Phoenix, Arizona, for
Defendants-Appellees.
4                 OPERF V. APOLLO GROUP

                          OPINION

M. SMITH, Circuit Judge:

    In this consolidated class action, the Plaintiffs-Appellants
(Plaintiffs) represent a class of investors that purchased stock
in Apollo Group Inc., between May 21, 2007 and October 13,
2010 (the Class Period). The Plaintiffs allege that the
Defendants-Appellees (Defendants), Apollo, a for-profit
education company, and Apollo officers and directors,
violated section 10(b) of the Securities and Exchange Act and
SEC Rule 10b-5. According to the Plaintiffs, the Defendants
made false and misleading statements of material fact
regarding Apollo’s enrollment and revenue growth, financial
condition, organizational values, and business focus. The
Plaintiffs also allege that, during the Class Period, certain
individual Defendants traded on inside information related to
the false and misleading statements of material fact. Finally,
the Plaintiffs allege that certain officers and directors of
Apollo are liable as controlling persons for the misstatements
and omissions of their supervisees. The district court
dismissed the Plaintiffs’ Amended Complaint for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6).
We affirm the decision of the district court for four reasons.

    First, the material misrepresentations the Plaintiffs alleged
in Counts I, III, and IV of the Amended Complaint are not
objectively false misstatements, but are examples of lawful
“business puffing.” Even if the Plaintiffs adequately alleged
a misstatement or omission, they did not adequately plead
scienter or loss causation, both of which are independent
bases on which to affirm the district court’s decision.
                  OPERF V. APOLLO GROUP                        5

    Second, Count II contains largely conclusory allegations
that Apollo improperly recorded student revenue. The
Plaintiffs do not show how Apollo’s accounting numbers
were incorrect or misstated. Apollo also disclosed to its
investors information concerning the collection of revenue
and tuition, which negates the Plaintiffs’ misstatement and
omission theory.

    Third, the Plaintiffs’ allegations that the Defendants are
guilty of insider trading fail to state a claim because the
alleged non-public information to which the Defendants had
access is the same information at issue in Counts I, II, III, and
IV of the Amended Complaint.

    Fourth, the Plaintiffs cannot establish control person
liability because their control person claim relies on the faulty
allegations made in the other counts.

  FACTUAL AND PROCEDURAL BACKGROUND

    Defendant Apollo Group Inc. is an Arizona-based
company that owns and operates postsecondary education
institutions, and is one of the largest private education
providers in the United States. The majority of Apollo’s
revenue comes from its subsidiary, the University of Phoenix.
The remaining Defendants are individuals who served as
Apollo officers and directors during the Class Period,
between May 21, 2007 and October 13, 2010. The Plaintiffs
represent a class of investors who purchased Apollo stock
during the Class Period.

   Counts I, II, III, and IV of the Plaintiffs’ Amended
Complaint allege that, during the Class Period, the
Defendants made materially false and misleading statements
6                OPERF V. APOLLO GROUP

concerning Apollo’s (1) enrollment and revenue growth,
(2) financial condition, (3) organizational values, and
(4) business focus in violation of section 10(b) of the
Securities and Exchange Act and SEC Rule 10b-5. These
alleged misstatements appeared in Apollo’s filings with the
SEC, press releases, and conference calls and interviews. The
Plaintiffs also allege that the Defendants failed to disclose
material facts necessary to make the statements not
misleading.

    In Counts V and VII of their Amended Complaint, the
Plaintiffs allege that individual Defendants John Sperling,
Peter Sperling, Joseph D’Amico, and William Pepicello
committed insider trading by trading on non-public
information related to the allegedly false and misleading
disclosures that Apollo made to its investors.

    Finally, in Count VI, the Plaintiffs allege that, during the
Class Period, Defendants John Sperling, Peter Sperling,
Joseph D’Amico, Gregory Capelli, Charles Edelstein, Brian
Swartz, Brian Mueller, and Gregory Iverson violated section
20(a) of the Securities and Exchange Act because each was
a controlling person who had direct and supervisory
involvement in the daily operations of Apollo. As controlling
persons, they would be jointly and severally liable for
violations of section 10(b) of the Securities and Exchange Act
and Rule 10b-5.

   After allowing the Plaintiffs to amend their initial
complaint, the district court dismissed the Plaintiffs’
Amended Complaint under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim. The Plaintiffs
subsequently filed this timely appeal.
                  OPERF V. APOLLO GROUP                         7

   JURISDICTION AND STANDARD OF REVIEW

    We have subject matter jurisdiction pursuant to Section
27 of the Securities and Exchange Act, 15 U.S.C. § 78aa(a),
and 28 U.S.C. §§ 1331 and 1337(a). We have jurisdiction
over this appeal pursuant to 28 U.S.C. § 1291.

    We review de novo the district court’s dismissal of the
Plaintiffs’ Amended Complaint under Federal Rule of Civil
Procedure 12(b)(6) and accept all factual allegations in the
Amended Complaint as true. N.M. State Inv. Council v. Ernst
& Young LLP, 641 F.3d 1089, 1094 (9th Cir. 2011).

                        DISCUSSION

I. Legal Standard

    To plead a claim under section 10(b) and Rule 10b-5, the
Plaintiffs must allege: (1) a material misrepresentation or
omission; (2) scienter; (3) a connection between the
misrepresentation or omission and the purchase or sale of a
security; (4) reliance; (5) economic loss; and (6) loss
causation. Stoneridge Inv. Partners, LLC v. Scientific-Atlanta,
Inc., 552 U.S. 148, 157 (2008).

    A. PSLRA and Rule 9(b)

    The Plaintiffs incorrectly argue that each of the six
elements of their 10(b) claims is subject to the pleading
standards of Federal Rule of Civil Procedure 8(a)(2), which
requires that “a complaint [] contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
8                 OPERF V. APOLLO GROUP

(2007)). Securities fraud class actions must meet the higher,
exacting pleading standards of Federal Rule of Civil
Procedure 9(b) and the Private Securities Litigation Reform
Act (PSLRA). See Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 313–14 (2007). Rule 9(b) requires that
“[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake.”
Fed. R. Civ. P. 9(b).

    The PSLRA requires that “the complaint shall, with
respect to each act or omission . . . , state with particularity
facts giving rise to a strong inference that the defendant acted
with the required state of mind.” 15 U.S.C. § 78u-4(b)(2)(A).
The PSLRA also requires that “the complaint shall specify
each statement alleged to have been misleading, the reason or
reasons why the statement is misleading, and, if an allegation
regarding the statement or omission is made on information
and belief, the complaint shall state with particularity all facts
on which that belief is formed.” Id. at § 78u-4(b)(1)(B).

    B. Pleading Standard for Loss Causation

    Although it is clear that Rule 9(b) and the PSLRA apply
to almost all elements of a securities fraud action, the law is
less clear about the pleading standard that applies to the loss
causation element. In Dura Pharmaceuticals, Inc. v. Broudo,
the Supreme Court suggested that Rule 8’s “short and plain
statement” might apply: “we assume, at least for argument’s
sake, that neither the Rules nor the securities statutes impose
any special further requirement in respect to the pleading of
proximate causation or economic loss.” 544 U.S. 336, 346
(2005).
                  OPERF V. APOLLO GROUP                         9

    After Dura, we have applied a plausibility standard to loss
causation, which avoids the question of whether the Rule 8(a)
or Rule 9(b) pleading standard applies. See WPP Luxembourg
Gamma Three Sarl v. Spot Runner, Inc., 655 F.3d 1039, 1053
(9th Cir. 2011) (“It is unclear in this Circuit whether Rule
9(b)’s heightened pleading standard or whether Rule 8(a)(2)’s
‘short and plain’ statement applies to allegations of loss
causation.”); In re Gilead Sciences Sec. Litig., 536 F.3d 1049,
1057 (9th Cir. 2008) (“So long as the complaint alleges facts
that, if taken as true, plausibly establish loss causation, a Rule
12(b)(6) dismissal is inappropriate.”). At times, we have
applied both Rule 8(a) and 9(b) standards to allegations of
loss causation, finding that plaintiffs meet both standards. See
Berson v. Applied Signal Tech., Inc., 527 F.3d 982, 989–90
(9th Cir. 2008).

    Some of our sister circuits have suggested that heightened
pleading standards apply to loss causation. See Katyle v. Penn
Nat’l Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011) (“We
review allegations of loss causation for ‘sufficient
specificity,’ a standard largely consonant with Fed. R. Civ. P.
9(b)’s requirement that averments of fraud be pled
with particularity.”); Tricontinental Indus., Ltd. v.
PricewaterhouseCoopers, LLP, 475 F.3d 824, 842 (7th Cir.
2007) (“To plead loss causation, the plaintiff must allege that
it was the very facts about which the defendant lied which
caused its injuries.”). The Second Circuit applies a different,
but heightened, two-part test for loss causation, requiring that
plaintiffs show that the loss was both foreseeable and caused
by the materialization of the risk concealed by the fraudulent
statement. See ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
493 F.3d 87, 107 (2d Cir. 2007). At least one district court in
the Sixth Circuit has suggested that heightened pleading
requirements apply to loss causation. See Fla. Carpenters
10               OPERF V. APOLLO GROUP

Reg’l Council Pension Plan v. Eaton Corp., 964 F. Supp. 2d
875, 891 (N.D. Ohio 2013). The First Circuit, like our court,
has only stated that it is unclear whether a plaintiff has to
plead loss causation under Rule 8(a) or 9(b). See Mass. Ret.
Sys. v. CVS Caremark Corp., 716 F.3d 229, 239 n.6 (1st Cir.
2013).

    Other circuits have suggested that heightened pleading
standards do not apply to loss causation. The Fifth Circuit has
concluded that Rule 8(a) applies. See Lormand v. US
Unwired, Inc., 565 F.3d 228, 258 (5th Cir. 2009). At least one
court in the Third Circuit agrees with this approach. See Nat’l
Junior Baseball League v. Pharmanet Dev. Grp. Inc., 720 F.
Supp. 2d 517, 558 (D.N.J. 2010).

    We are persuaded by the approach adopted in the Fourth
Circuit and hold today that Rule 9(b) applies to all elements
of a securities fraud action, including loss causation. This
approach is appropriate for at least three reasons.

    First, the law on securities fraud is derived from common-
law fraud. As the Supreme Court has noted, “the case law
developed in this Court with respect to § 10(b) and Rule
10b-5 has been based on doctrines with which we, as judges,
are familiar: common-law doctrines of fraud and deceit.”
Basic Inc. v. Levinson, 485 U.S. 224, 253 (1988). The
requirement of loss causation, in particular, is founded on the
common law of fraud and deceit. Dura, 544 U.S. at 343–44
(“the common law has long insisted that a plaintiff in [a fraud
or deceit] case show not only that had he known the truth he
would not have acted but also that he suffered actual
economic loss.”). Since Rule 9(b) applies to all circumstances
of common-law fraud, Salameh v. Tarsadia Hotel, 726 F.3d
1124, 1133 (9th Cir. 2013) cert. denied, 134 S. Ct. 1322
                    OPERF V. APOLLO GROUP                             11

(2014), and since securities fraud is derived from common
law fraud, it makes sense to apply the same pleading standard
to all circumstances of securities fraud.

    Second, Rule 9(b) clearly states that “[i]n alleging fraud
or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.” Securities fraud
encompasses six elements, including loss causation. Dura,
544 U.S. at 341–42. Loss causation is part of the
“circumstances” constituting fraud because, without it, a
claim of securities fraud does not exist.

    Third, our approach creates a consistent standard through
which to assess pleadings in 10(b) actions, rather than the
piecemeal standard adopted by some courts.

    Accordingly, we hold that Rule 9(b) governs the
Plaintiffs’ Amended Complaint. However, the Plaintiffs’
claims fail even if the less stringent Rule 8(a) standard
applied.

II. Counts I, III, and IV

    We first address Counts I, III, and IV of the Amended
Complaint.1 The Plaintiffs allege that the Defendants made
false and misleading statements concerning Apollo’s
enrollment, revenue growth, business model, and recruitment

  1
    The Plaintiffs’ allegations in Counts I, III, and IV of the Amended
Complaint allege similar legal theories and cover the same factual matter.
This Opinion treats the allegations together. For example, the Plaintiffs’
business ethics claim, Count IV, alleges misstatements concerning
Apollo’s “student recruitment practice” and its organizational values.
Count I also contains allegations related to Apollo’s business and
recruitment model.
12               OPERF V. APOLLO GROUP

of students. The Plaintiffs allege that Apollo grew largely as
a result of unethical recruitment of unqualified students, in
contrast to Apollo’s disclosures and public filings, and did not
disclose their unsavory practices to investors.

     A. Material Misstatement

    The Plaintiffs fail to state a claim because the material
misrepresentations the Plaintiffs allege are not objectively
false statements. We distinguish “puffing” from
misrepresentation. “Puffing” concerns expressions of opinion,
as opposed to knowingly false statements of fact: “When
valuing corporations,[] investors do not rely on vague
statements of optimism like ‘good,’ ‘well-regarded,’ or other
feel good monikers. This mildly optimistic, subjective
assessment hardly amounts to a securities violation.” In re
Cutera Sec. Litig., 610 F.3d 1103, 1111 (9th Cir. 2010).
Statements by a company that are capable of objective
verification are not “puffery” and can constitute material
misrepresentations. See SEC v. Todd, 642 F.3d 1207,
1216–17 (9th Cir. 2011) (finding that a defendant’s
accounting calculation of the financial impact of a transaction
was objective and a material misrepresentation).

    The statements the Plaintiffs allege Apollo made are
inherently subjective “puffing” and would not induce the
reliance of a reasonable investor. The Plaintiffs’ Amended
Complaint cites several alleged statements made by Apollo,
but we analyze a few illustrative examples here. In each of its
Form 10-K filings between 2006 and 2008, Apollo stated that
“[w]e believe that our track record for enrollment and revenue
growth is attributable to our offering comprehensive services
combining quality educational content, teaching resources
and customer service with formats that are accessible and
                 OPERF V. APOLLO GROUP                      13

easy to use for students as well as our corporate clients. ” In
several of its 10-K and 10-Q filings between 2006 and 2008,
Apollo described enrollment and revenue growth as
“significant events.” These statements are vague and do not
set out with specificity the reasons for its enrollment and
revenue growth. We concluded that the statement “all the
advantages only the nation’s largest wireless company can
provide” was vague and provided nothing concrete upon
which a plaintiff could reasonably rely. Shroyer v. New
Cingular Wireless Servs., Inc., 622 F.3d 1035, 1042–43 (9th
Cir. 2010). Much like the defendant in New Cingular, who
only used the general term “advantages” in its description,
Apollo’s use of general terms like “educational content” and
“teaching resources” “provided nothing concrete upon which
[the Plaintiffs] could rely.” Id. at 1043. See also Glen Holly
Entm’t, Inc. v. Tektronix, Inc., 343 F.3d 1000, 1015 (9th Cir.
2003) (affirming dismissal of fraud claim that was based on
defendants’ alleged promise that development was a “high
priority”).

    The cases cited by the Plaintiffs are inapposite because
they consider statements that can be true or false on an
objective standard, rather than business puffery or opinion. In
SEC v. Todd, we considered an objective misstatement, where
a defendant publicly reported an incorrect amount for the
accounting impact of a transaction. 642 F.3d at 1217–18. In
Freudenberg v. E*Trade Financial Corporation, the Southern
District of New York considered financial statements that
clearly understated net income and loss reserves as well as the
quality of mortgage loans. 712 F. Supp. 2d 171, 178, 182
(S.D.N.Y. 2010). In re Van der Moolen Holding N.V.
Securities Litigation dealt with a company that did not
disclose that its revenue had been generated by unlawful
trading practices, even though it had knowledge that its
14               OPERF V. APOLLO GROUP

employees were violating rules of the New York Stock
Exchange. 405 F. Supp. 2d 388, 400–401 (S.D.N.Y. 2005).
Unlike accounting calculations or ignorance of rule
violations, the statements by Apollo were subjective and
preceded by qualifiers, such as “We believe.”

     B. Omission

    According to the Plaintiffs, Apollo failed to disclose to
investors that it recruited flawed students, who were
ultimately unable to pay tuition. Apollo also allegedly hid the
fact that it had created an incentive system for recruiters that
made misconduct inevitable because the recruiters were
focused on getting as many students as possible.

    The Plaintiffs’ omissions theory fails to state a claim
because the Defendants clearly disclosed material
information to investors. See Desai v. Deutsche Bank Secs.
Ltd., 573 F.3d 931, 939 (9th Cir. 2009) (“As for omissions,
the term generally refers to the failure to disclose material
information about a company, as opposed to affirmative
manipulation.”). Investors knew that they were investing in
Apollo and its University of Phoenix program, an institution
whose business model relied on recruiting students for profit.
Public filings, readily available to Apollo’s investors,
revealed that Apollo was spending money every year on
marketing, which was used to advertise to and recruit students
for the University of Phoenix. Apollo’s public filings made
clear that it targeted individuals unable to attend traditional
colleges and universities. Apollo also disclosed its enrollment
numbers and withdrawal rates.
                  OPERF V. APOLLO GROUP                      15

    C. Scienter

     We can affirm the dismissal of Plaintiffs’ claims in Count
I, III, and IV of the Amended Complaint based solely on the
Plaintiffs’ failure to allege specific facts to show a material
misstatement or omission. Even if the Plaintiffs had
adequately alleged a claim on misstatement or omission
grounds, however, they did not adequately plead scienter.
This is an independent basis on which to affirm the district
court’s decision.

    A defendant who makes misrepresentations or omissions
“either intentionally or with deliberate recklessness” acts with
scienter. In re Daou Sys., Inc., 411 F.3d 1006, 1015 (9th Cir.
2005).

        Under Tellabs and Ninth Circuit law, we
        conduct a two-part inquiry to determine
        whether scienter has been adequately pled:
        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.

N.M. State Inv. Council v. Ernst & Young LLP, 641 F.3d
1089, 1095 (9th Cir. 2011) (internal citations omitted).

    Where, as here, the Plaintiffs seek to hold individuals and
a company liable on a securities fraud theory, we require that
16               OPERF V. APOLLO GROUP

the Plaintiffs allege scienter with respect to each of the
individual defendants. See Glazer Capital Mgmt., LP v.
Magistri, 549 F.3d 736, 743–44 (9th Cir. 2008). We may,
however, impute scienter to individual defendants in some
situations, for example, where we find that “a company’s
public statements [are] so important and so dramatically false
that they would create a strong inference that at least some
corporate officials knew of the falsity upon publication.” Id.
at 744.

    Employing a holistic review, we conclude that the
Plaintiffs do not allege sufficient facts to establish a claim
that the Defendants either did not know or were consciously
reckless of their deceptive recruitment practices. The
Plaintiffs rely on statements by various anonymous
employees and executives who suggest that they personally
witnessed faulty recruiting or attended meetings where
Apollo representatives discussed marketing to unfit students.
The Plaintiffs do not provide specificity about these meetings
and do not discuss what made students unfit. Instead, the
Plaintiffs rely on generalizations about groups of people, such
as the homeless or veterans, who were supposedly unreliable
students. At best, the Plaintiffs’ allegations reveal isolated
instances of faulty recruitment, rather than widespread
deception, which would be necessary to establish fraudulent
intent or reckless ignorance based on a holistic analysis. See
N.M. State, 641 F.3d at 1095. The Plaintiffs’ statements also
do not sufficiently allege the individual Defendants acted
with scienter.

     D. Loss Causation

   “To prove loss causation, [the Plaintiffs] must
demonstrate a causal connection between the deceptive acts
                 OPERF V. APOLLO GROUP                      17

that form the basis for the claim of securities fraud and the
injury suffered by the [Plaintiffs].” Ambassador Hotel Co.,
Ltd. v. Wei-Chuan Inv., 189 F.3d 1017, 1027 (9th Cir. 1999).

    The Plaintiffs’ Amended Complaint fails, whether we
apply Rule 8(a) or Rule 9(b). The Plaintiffs do not allege
specific statements made by the Defendants that were made
untrue or called into question by subsequent public
disclosures. Although the Plaintiffs point to several public
disclosures, we analyze a few illustrative examples below. On
January 7, 2010, Apollo disclosed in a press release that a
review by the Department of Education had “expressed a
concern that some students enroll and begin attending classes
before completely understanding the implications of
enrollment, including their eligibility for student financial
aid.” It is unclear what claims made by the Defendants were
invalidated by this statement. An expression of concern,
moreover, does not constitute a corrective disclosure and a
public admission of Apollo’s alleged fraud. In similar
circumstances, we recently held that a company’s
announcement of an internal investigation, by itself, does not
“reveal fraudulent practices to the market” and therefore is
insufficient to establish loss causation. See Loos v. Immersion
Corp., 762 F.3d 880, 890 (9th Cir. 2014).

    Similarly, the Plaintiffs claim that, in the beginning of
August 2010, the Government Accountability Office issued
a report that discussed for-profit education and conduct by
Apollo schools. The GAO report purportedly “revealed a
systemic practice of manipulative and deceptive recruitment
practices within Apollo’s industry.” This report focused on
the for-profit education industry as a whole, rather than
Apollo and the University of Phoenix. The Plaintiffs do not
specify which of the Defendants’ statements were made
18               OPERF V. APOLLO GROUP

untrue by the GAO report. As a result, the Plaintiffs have not
adequately alleged that there was a causal connection
between the public information contained in the GAO Report
and subsequent market activity.

    While their appeal was pending, the Plaintiffs submitted
a First Circuit case, Massachusetts Retirement System v. CVS
Caremark Corporation, as supplementary authority for their
loss causation claim. 716 F.3d 229 (1st Cir. 2013). In CVS
Caremark, investors on a conference call with a high-level
CVS executive asked him about the integration of CVS and
Caremark after a merger. The executive disclosed that the
company had lost a major contract as a result of “service
issues” and that the company was facing challenges after the
merger. Id. at 235. The First Circuit concluded that the
disclosure by the executive was sufficient to establish loss
causation, especially where analysts had already expressed
concerns about CVS’ ability to integrate Caremark. Unlike
the present case, CVS Caremark involved a specific statement
made by a high-level executive about the exact fact that had
been misrepresented in the past, the successful integration of
the two companies. CVS Caremark does not help the
Plaintiffs plead a loss causation claim.

III.   Count II

    In Count II of the Amended Complaint, the Plaintiffs
allege the Defendants made misstatements and omissions
about Apollo’s financial condition and overstated tuition
revenues and receivables attributable to students. The
Plaintiffs allege that, by publicly counting tuition expected
from Title IV students as part of its revenue, Apollo made
fraudulent misstatements and omissions in violation of
Section 10(b) and Rule 10b-5.
                 OPERF V. APOLLO GROUP                      19

    Because the Plaintiffs’ allegations do not plausibly
establish a misstatement or omission, we hold that the district
court correctly dismissed Count II of the Amended
Complaint. See Stoneridge Inv. Partners, LLC v. Scientific-
Atlanta, 552 U.S. 148, 157–58 (2008). The Plaintiffs’
allegations in Count II also do not establish scienter and loss
causation, which are independent bases on which to dismiss
the Plaintiffs’ claims. We do not address those requirements
here because the factual analysis is similar to that contained
in Part II of this opinion.

   A. Misstatement and Omission

    The Plaintiffs do not allege a misstatement related to
Apollo’s accounting of Title IV funds. Businesses have some
discretion in making accounting estimates. “Generally
accepted accounting principles [] tolerate a range of
reasonable treatments, leaving the choice among alternatives
to management.” Thor Power Tool Co. v. C. I. R., 439 U.S.
522, 544 (1979) (internal quotation marks omitted). “The case
law indicates, therefore, that although overstatement of
revenues in violation of GAAP may support a plaintiff's claim
of fraud, the plaintiff must show with particularity how the
adjustments affected the company's financial statements and
whether they were material in light of the company’s overall
financial position.” In re Daou Sys., Inc., 411 F.3d 1006,
1018 (9th Cir. 2005).

    On the one hand, the Plaintiffs do show that many of
Apollo’s students were funded by Title IV of the Higher
Education Act and that, when students left the University,
Apollo was required by law to return to the federal
government Title IV funds. However, Apollo retained
discretion to set its refund policy and made no fraudulent
20               OPERF V. APOLLO GROUP

representations regarding its accounting. See United States
Department of Education and Federal Student Aid Handbook,
Vol. 5, at 5–3 (2012) (“The Return of Title IV Funds (Return)
regulations do not dictate an institutional refund policy.”).
Although students may not have been able to pay the
remainder of their tuition out-of-pocket, under the federal
guidelines in place at the time, Apollo could charge for the
remaining tuition owed by the student. Id. Apollo, in turn,
could use the expected tuition revenue from withdrawn
students as part of its accounting. Apollo did not make a
misrepresentation by including this revenue in its public
filings.

     The Plaintiffs’ allegations also do not establish an
omission theory. Apollo disclosed to its investors the
difficulty of collecting tuition from withdrawn students. In
2006, Apollo publicly stated that “[m]anagement is
committed to remediating the control deficiencies that
constitute the material weaknesses described herein by
implementing changes to our internal control over financial
reporting.” Apollo’s financial statements for the Class Period
included increasing amounts of bad debt reserves to take into
account the challenges of collecting revenue from withdrawn
students. Apollo disclosed that increases in its bad debt
expense were partially attributable to uncollectible student
tuition. The Plaintiffs’ Amended Complaint admits that
“Apollo eventually recorded allowances for doubtful accounts
with respect to its receivables from withdrawn students.”
Accordingly, the Plaintiffs do not adequately allege the
specific errors made by the Defendants in accounting, and
therefore, the district court correctly dismissed this claim.
                 OPERF V. APOLLO GROUP                       21

IV.     Counts V and VII

    The Plaintiffs also argue that certain individual
Defendants sold Apollo stock while in possession of material,
non-public information in violation of sections 10(b) and 20A
of the Securities and Exchange Act and SEC Rule 10b-5.

    The alleged material, non-public information is the same
information at issue in the Exchange Act claims, namely that
Apollo’s public filings contained statements that were false
and misleading. We hold that the Plaintiffs have not
adequately alleged that the Defendants made misstatements
or omissions. Therefore, the Plaintiffs have not adequately
alleged that the Defendants were in possession of material,
non-public information.

V. Count VI

    Count VI of the Amended Complaint alleges that certain
individual Defendants violated section 20(a) of the Exchange
Act because they were controlling persons who had direct and
supervisory involvement in day-to-day operations of Apollo.
As controlling persons, the individual Defendants would be
jointly and severally liable for the institution’s violations of
the Securities and Exchange Act.

    We hold that the Plaintiffs cannot establish control person
liability because they have not adequately alleged violations
of section 10(b) and Rule 10b-5.

VI.     Conclusion

  The district court properly dismissed the Plaintiffs’
Amended Complaint for failure to state a claim. The
22                OPERF V. APOLLO GROUP

Plaintiffs do not state enough specific facts to plausibly allege
that the Defendants violated Securities and Exchange Act
10(b) and SEC Rule 10b-5. We affirm the decision of the
district court. All outstanding motions filed by Plaintiffs-
Appellants and Defendants-Appellees are denied. Each party
shall bear its own costs on appeal.

     AFFIRMED.
