                           PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


FRANK NOLTE; HELEN NOLTE; LOCAL        
144 NURSING HOME PENSION FUND,
              Plaintiffs-Appellants,
                and
BILL BROOKS; CHARLES BRUENER;
CHARLES BRYANT; JAMES B. HOWARD;
AMIR NASRABADI; ROBERT NORMAN;
DAVID ONERHEIM; JACK B. PIERCE;
KUNMING QIAN; BERNARD STERN;
RAYMOND TYLER; LISA YANKOFSKY,
                         Plaintiffs,
                                                 No. 03-1612
                 v.
CAPITAL ONE FINANCIAL
CORPORATION; RICHARD D. FAIRBANK;
NIGEL W. MORRIS; DAVID M.
WILLEY; PETER A. SCHNALL,
              Defendants-Appellees.


EMILE WANICH; RHODA WANICH; THE
CHARLES H. WALSH, SR. TRUST,
                        Movants.
                                       
           Appeal from the United States District Court
        for the Eastern District of Virginia, at Alexandria.
              Claude M. Hilton, Chief District Judge.
                         (CA-02-1069-A)

                      Argued: February 25, 2004

                      Decided: December 2, 2004
2               NOLTE v. CAPITAL ONE FINANCIAL CORP.
        Before WIDENER and DUNCAN, Circuit Judges,
and William D. QUARLES, Jr., United States District Judge for the
           District of Maryland, sitting by designation.



Affirmed by published opinion. Judge Quarles wrote the opinion, in
which Judge Widener and Judge Duncan concurred.


                             COUNSEL

ARGUED: Melvyn I. Weiss, MILBERG, WEISS, BERSHAD,
HYNES & LERACH, New York, New York, for Appellants. Jordan
D. Eth, MORRISON & FOERSTER, San Francisco, California, for
Appellees. ON BRIEF: Lee A. Weiss, MILBERG, WEISS, BER-
SHAD, HYNES & LERACH, New York, New York; Steven J. Toll,
Daniel S. Sommers, COHEN, MILSTEIN, HAUSFELD & TOLL,
Washington, D.C.; Daniel W. Krasner, Gregory M. Nespole, Stacy T.
Kelly, WOLF, HALDENSTEIN, ADLER, FREEMAN & HERZ,
New York, New York, for Appellants. Melvin R. Goldman, Erik J.
Olson, Mia Mazza, MORRISON & FOERSTER, San Francisco, Cali-
fornia; Laurie A. Hand, MORRISON & FOERSTER, McLean, Vir-
ginia; James A. Murphy, LECLAIR RYAN, P.C., Richmond,
Virginia, for Appellees.


                              OPINION

QUARLES, District Judge:

   Shareholders appealed the district court’s dismissal of their securi-
ties fraud action for failure to plead fraud with particularity. Finding
no error, we will affirm.

                                   I.

  On July 19, 2002, in the Eastern District of Virginia, Robert Nor-
man filed a Class Action Complaint in which he alleged violations of
                NOLTE v. CAPITAL ONE FINANCIAL CORP.                   3
the Securities Exchange Act of 1934 (the "Exchange Act") against
Appellee Capital One Financial Corporation ("Capital One") and cer-
tain of its officers and executives. On October 1, 2002, the district
court consolidated the Norman case with 11 other pending cases in
which similar claims had been brought.

   On October 17, 2002, the Appellants filed a Consolidated and
Amended Complaint in which they alleged violations of Section 10(b)
and Rule 10b-5 of the Exchange Act against Capital One and its Chief
Executive Officer, Chief Operating Officers and Chief Financial Offi-
cer as individual defendants in Count I and a violation of Section
20(a) of the Exchange Act against the individual defendants in Count
II. In that pleading, the Appellants alleged that during the class period
Capital One maintained insufficient loan loss reserves and capital in
violation of banking guidelines, but represented to the public that it
was holding an appropriate amount of capital. The complaint cited
information from several former Capital One employees that it was
internally known at Capital One that the loan loss reserves were defi-
cient, and banking regulators had begun investigating these deficien-
cies during the class period. The Appellants also alleged that during
the class period, Capital One consistently portrayed its proprietary
information based strategy ("IBS") system as providing Capital One
with a competitive advantage, even though serious deficiencies in the
system were known to former employees.

   Appellants alleged that in various Securities and Exchange Com-
mission ("SEC") filings, Capital One made materially false and mis-
leading statements about the adequacy of its loan loss reserves and
IBS system. The appellants further alleged that the failure to disclose
material facts artificially inflated the price of Capital One securities;
when Capital One released a statement changing its financial forecast
and reporting that it was entering into a Memorandum of Understand-
ing with regulators, the Appellant shareholders suffered a financial
loss.

   On December 4, 2002, the district court granted the Appellees’
motion to dismiss and gave the Appellants 14 days in which to file
an amended complaint. On December 23, 2002, the Appellants filed
a Second Consolidated and Amended Class Action Complaint. While
the Appellees’ motion to dismiss was under consideration by the dis-
4               NOLTE v. CAPITAL ONE FINANCIAL CORP.
trict court, Appellants moved for leave to amend and supplement the
second consolidated and amended complaint.

   In their amended pleading, the Appellants alleged that Capital One
had maintained insufficient loan loss reserves and capital in violation
of banking guidelines, while it represented to the public that it was
holding an appropriate amount of capital. Appellants cited the testi-
mony of several confidential witnesses who worked for Capital One
and asserted that concerns about Capital One’s capitalization had
arisen within management while the company was still reporting that
it believed it was adequately capitalized. The Appellants also alleged
that employees were told not to cooperate with federal bank regula-
tory investigations during the class period. Appellants alleged that
Capital One’s undercapitalization was shown by a July 16, 2002 SEC
announcement that the Appellees had entered into a Memorandum of
Understanding with Federal Banking Regulators to address, among
other things, Capital One’s capitalization, loan loss allowances, and
deficiencies in Capital One’s infrastructure.

   The Appellants also alleged that Capital One consistently portrayed
its IBS system as providing a competitive advantage, even though
there were serious deficiencies in the system. In support of this allega-
tion, Appellants cited information from confidential witnesses about
instances when the system was demonstrably ineffective. Appellants
also relied upon the July 16, 2002 SEC filing in which Appellees
acknowledged serious deficiencies in Capital One’s infrastructure and
technology.

  Appellants also bolstered their assertions by noting that the individ-
ual defendants had sold their Capital One stock during the class
period.

   Appellants alleged that materially false and misleading statements
in various SEC filings and the failure to disclose material facts artifi-
cially inflated the price of Capital One securities; when Capital One
released a statement changing its financial forecast and reporting that
it was entering into the Memorandum of Understanding with regula-
tors, the Appellant shareholders suffered a financial loss.

   On April 10, 2003, the district court granted the Appellees’ motion
to dismiss the Second Consolidated and Amended Class Action Com-
                NOLTE v. CAPITAL ONE FINANCIAL CORP.                  5
plaint on the basis that the Appellants had failed to adequately plead
either falsity or scienter. This appeal followed.

                                  II.

   The court reviews the dismissal of claims pursuant to Federal Rule
of Civil Procedure 12(b)(6) de novo. Mylan Labs., Inc. v. Matkari, 7
F.3d 1130, 1134 (4th Cir. 1993).

                                  III.

   To establish liability under § 10(b) and Rule 10b-5, plaintiffs must
demonstrate that: (1) the defendants made a false statement or omis-
sion of material fact; (2) with scienter; (3) upon which the plaintiffs
justifiably relied; (4) that proximately caused the plaintiffs’ damages.
Hillson Partners Ltd. Partnership v. Adage, Inc., 42 F.3d 204, 208
(4th Cir. 1994). Pursuant to the Private Securities Litigation Reform
Act of 1995 ("PSLRA"), the complaint must aver "each statement
alleged to have been misleading, the reason or reasons why the state-
ment 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." 15 U.S.C.
§ 78u-4(b)(1) (2004). The complaint must also allege facts giving rise
to a strong inference that the defendant acted with scienter. § 78u-
4(b)(2).

   To allege a false statement or omission of material fact, "plaintiffs
must point to a factual statement or omission—that is, one that is
demonstrable as being true or false." Longman v. Food Lion, Inc., 197
F.3d 675, 682 (4th Cir. 1999). To form the basis of a cause of action,
the statement must be false, or the omission must render public state-
ments misleading. Id. (citing 17 C.F.R. § 240.10b-5).

   The false statement or omission must be material. The question of
materiality is an objective one, which examines the significance of an
omitted or misrepresented fact to a reasonable investor. TSC Indus-
tries, Inc. v. Northway, Inc., 426 U.S. 438, 445 (1976). A fact is mate-
rial if there is a substantial likelihood that it would have assumed
actual significance in the deliberations of a reasonable investor; that
6               NOLTE v. CAPITAL ONE FINANCIAL CORP.
is, the disclosure of the omitted statement or revelation of the true cir-
cumstances would have been viewed by the reasonable investor as
having significantly altered the "total mix" of available information.
Id. at 449.

   The shareholders allege that Capital One’s management lied to
investors when it opined that Capital One maintained sufficient capi-
tal and loan loss reserves, and that the company’s success was due in
part to its unique computer infrastructure.

   In Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1093
(1991), the Supreme Court held that in a securities fraud case, a state-
ment of opinion may be a false factual statement if the statement is
false, disbelieved by its maker, and related to matters of fact which
can be verified by objective evidence. Longman, 197 F.3d at 683 (cit-
ing Virginia Bankshares, 501 U.S. at 1093).

  In order to plead that an opinion is a false factual statement under
Virginia Bankshares, the complaint must allege that the opinion
expressed was different from the opinion actually held by the speaker.
Virginia Bankshares, 501 U.S. at 1093.

   The shareholders claim that Peter Schnall, a member of Capital
One’s management team, fearing that Federal Regulators would
determine that Capital One was undercapitalized, instructed employ-
ees not to cooperate with Federal Regulators. That Schnall allegedly
feared that Capital One would be deemed undercapitalized, however,
does not mean that he believed the company actually was undercapi-
talized.

   Moreover, Schnall was not alleged to have made any public state-
ments about Capital One. Therefore, as the district court explained,
for the shareholders to assert that Schnall’s behavior indicated that
management disbelieved its positive public remarks about Capital
One’s capitalization, the shareholders would have needed to have
alleged that: (1) Schnall believed Capital One was undercapitalized;
(2) Schnall informed other managers of his opinion; and (3) those
managers adopted his opinion but then publicly declared that Capital
One was maintaining sufficient capital. The complaint is devoid of
such allegations.
                NOLTE v. CAPITAL ONE FINANCIAL CORP.                   7
   The complaint also fails to allege that Capital One’s management
disbelieved its public statements about the strength of the company’s
computer system. The shareholders claim that unnamed former Capi-
tal One employees believed that the system was incapable of meeting
the demands of the company’s rapid growth and that Federal Regula-
tors were concerned about its performance. The shareholders do not
allege, however, that management was ever informed of these con-
cerns or that they had any other reason to doubt the system’s reliabil-
ity.

   Even if the complaint had alleged that Capital One’s management
disbelieved its public remarks about the state of the company, the
complaint must be dismissed because it fails to plead falsity with req-
uisite particularity. The shareholders assert that Federal Regulators
would not have required Capital One to enter into a Memorandum of
Understanding calling for increased capital and computer system
enhancement unless Capital One had been undercapitalized and using
a substandard computer infrastructure during the class period. But the
Memorandum of Understanding between Federal Regulators and
Capital One required Capital One to make prospective changes to its
business. Had Federal Regulators determined that Capital One’s past
practices were deficient, they could have applied corrective measures
retroactively and forced the company to restate its earnings to reflect
retroactive adjustments. See 12 U.S.C. § 1818(b) (2004) (empowering
Federal Regulators to take affirmative action to correct conditions
resulting from any banking violation or unsound practice). The fact
that Federal Regulators require a company to change the way it does
business in the future does not show, as a forced restatement of earn-
ings could, that the business violated federal guidelines in the past.

   Relying on the same factual allegations, the shareholders claim that
Capital One omitted from its financial statements disclosures required
by Generally Accepted Accounting Principles ("GAAP") about its
potential liabilities, including the size of its subprime portfolio, that
it was under investigation by Federal Regulators, and that its com-
puter system could not keep pace with its rapid growth.

  Although GAAP require disclosure of significant risks and
uncertainties, "[t]he disclosure requirements do not encompass risks
and uncertainties that might be associated with management or key
8               NOLTE v. CAPITAL ONE FINANCIAL CORP.
personnel, proposed changes in government regulations, proposed
changes in accounting principles, or deficiencies in the internal con-
trol structure." American Institute of Certified Public Accountants,
Statement of Position No. 94-6 § .04 (1994). The alleged investiga-
tion by Federal Regulators and problems with the computer infra-
structure plainly fall within these exceptions.

   Moreover, subprime lenders are discouraged from publicly report-
ing the size of their subprime portfolios because "there is no standard
industry-wide approach to the definitions of either ‘subprime’ or ‘pro-
gram,’ which means that the meanings of these terms are institution-
specific. Thus, the reported information will not be entirely compara-
ble from one institution to the next, leading to potential misinterpreta-
tion of the data by the public." Proposed Agency Information
Collection Activities; Comment Request, 67 Fed. Reg. 46,250, 46,253
(July 12, 2002).

  Because we find that the shareholders failed to plead falsity with
particularity as required by the PSLRA, it is unnecessary to determine
whether they adequately alleged scienter.

                                  IV.

   While its motion to dismiss was pending, Capital One announced
that a Defendant in this case, David M. Willey, its Chief Financial
Officer and Executive Vice President, was resigning from the com-
pany because he had received notice that the SEC was likely to file
a civil action against him for insider trading. The SEC had been
investigating stock trades that Willey had made in 2002 to determine
whether they were based on material non-public information regard-
ing Capital One’s negotiations with Federal Regulators. The share-
holders moved for leave to amend the complaint to allege that Willey
sold his stock in Capital One before the Memorandum of Understand-
ing was announced because he believed that the stocks’ value would
plummet after the announcement. The district court denied the motion
for leave to amend.

   We review the district court’s denial of leave to amend the com-
plaint for an abuse of discretion. HCMF Corp. v. Allen, 238 F.3d 273,
276-77 (4th Cir. 2001).
                 NOLTE v. CAPITAL ONE FINANCIAL CORP.                     9
   Federal Rule of Civil Procedure 15(a) provides that leave to amend
a pleading "shall be freely given when justice so requires." Leave to
amend should be denied, therefore, "only when the amendment would
be prejudicial to the opposing party, there has been bad faith on the
part of the moving party, or the amendment would be futile."
Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999)
(quoting Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir.
1986)) (internal quotation marks omitted).

   The fact that Willey allegedly believed Capital One’s stock value
would drop when the Memorandum of Understanding was announced
does not lead to the conclusion that Willey thought Capital One was
undercapitalized. Nor does it show that Willey, or anyone else in Cap-
ital One’s management for that matter, believed that Capital One held
insufficient loan loss reserves or lacked adequate technology. Because
the proposed amendment would not have cured the deficiencies of the
complaint, it would have been futile for the shareholders to have
amended it. Accordingly, the district court did not abuse its discretion
in denying leave to amend.*

  *While this appeal was pending, the SEC commenced a civil action
against Willey in the United States District Court for the District of
Columbia. The shareholders have asked the Court to take judicial notice
of the complaint and the facts alleged therein.
   Only indisputable facts are susceptible to judicial notice. FED. R. EVID.
201(b) (2004); see also, United States v. Ritchie, 342 F.3d 903, 908-09
(9th Cir. 2003); United States v. Burch, 169 F.3d 666, 672 (10th Cir.
1999); Taylor v. Charter Med. Corp., 162 F.3d 827, 831-32 (5th Cir.
1998); International Star Class Yacht Racing Ass’n v. Tommy Hilfiger
U.S.A., 146 F.3d 66, 70-71 (2d Cir. 1998). Although the filing of an SEC
complaint against Willey is indisputable, the facts alleged therein are not.
A court cannot take notice of (and so assume the truth of) mere allega-
tions that Capital One or its management made false statements or omis-
sions during the class period. See Colonial Penn Ins. Co. v. Coil, 887
F.2d 1236, 1239 (4th Cir. 1989) (appropriate to take judicial notice of
facts that are "relevant and critical to the matter on appeal"). We express
no opinion about the merits of the SEC pleading.
10             NOLTE v. CAPITAL ONE FINANCIAL CORP.
                                 V.

   For the reasons discussed above, the district court’s dismissal of
the shareholders’ case and denial of their motion for leave to amend
the complaint is

                                                        AFFIRMED.
