                       FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 RETAIL WHOLESALE &                             No. 14-16433
 DEPARTMENT STORE UNION
 LOCAL 338 RETIREMENT                            D.C. No.
 FUND,                                      3:12–cv–04115–JST
          Plaintiff-Appellant,

                  v.                              OPINION

 HEWLETT-PACKARD CO. and
 MARK A. HURD,
       Defendants-Appellees.

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

              Argued and Submitted July 7, 2016
                  San Francisco, California

                       Filed January 19, 2017

  Before: Marsha S. Berzon and N. Randy Smith, Circuit
  Judges and Dana L. Christensen,* Chief District Judge.

              Opinion by Chief Judge Christensen



    *
      The Honorable Dana L. Christensen, Chief District Judge for the
U.S. District Court for the District of Montana, sitting by designation.
2        RETAIL WHOLESALE V. HEWLETT-PACKARD

                            SUMMARY**


                          Securities Fraud

   The panel affirmed the district court’s dismissal of a
securities fraud action alleging violations of the Securities
Exchange Act of 1934.

    Shareholders of Hewlett-Packard Company alleged that
the company CEO and chairman violated the corporate code
of ethics after publicly touting the business’s high standards
for ethics and compliance. The panel held that the
shareholders failed to state a claim for securities fraud
because they failed to sufficiently allege that the defendants
made a material misrepresentation or misleadingly omitted a
material fact.


                             COUNSEL

Ira M. Press (argued), Mark A. Strauss, and Thomas W.
Elrod, Kirby McInerney LLP, New York, New York; for
Plaintiff-Appellant.

Marc J. Sonnenfeld (argued), Karen Pieslak Pohlmann, and
Laura Hughes McNally, Morgan Lewis & Bockius LLP,
Philadelphia, Pennsylvania; Thomas M. Peterson and Joseph
E. Floren, Morgan Lewis & Bockius LLP, San Francisco,
California; Robert E. Gooding, Morgan Lewis & Bockius


    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
        RETAIL WHOLESALE V. HEWLETT-PACKARD                 3

LLP, Irvine, California;         for   Defendant-Appellee
Hewlett-Packard Company.

Lawrence D. Lewis (argued), Dwight L. Armstrong, and
Keith Paul Bishop, Allen Matkins Leck Gamble Mallory &
Natsis LLP, Irvine, California; Amy Wintersheimer Findley,
Allen Matkins Leck Gamble Mallory & Natsis LLP, San
Diego, California; for Defendant-Appellee Mark V. Hurd.


                         OPINION

CHRISTENSEN, Chief District Judge:

    In 2010, Defendant-Appellee Mark Hurd resigned from
his position as CEO and Chairman of Defendant-Appellee
Hewlett-Packard Company (“HP”). During the course of an
investigation prompted by allegations of sexual harassment,
HP discovered that Hurd had misrepresented his relationship
with a former independent contractor, Jodie Fisher. Hurd had
not been forthcoming about the personal nature of his
relationship with Fisher; in fact, he had doctored expense
reports to prevent its discovery and lied to investigators.
Immediately following Hurd’s resignation, the price of HP
stock dropped, resulting in an alleged loss of $10 billion. In
this putative class action lawsuit, HP shareholders allege
violations of the Securities Exchange Act of 1934. The
shareholders purchased HP stock between November 13,
2007, and August 6, 2010 (“the Class Period”) and held
shares as of August 6, 2010.

    This Court has not decided when a high-ranking
employee’s violation of a business’s ethical code may give
rise to a cause of action under § 10 and Rule 10–b of the
4       RETAIL WHOLESALE V. HEWLETT-PACKARD

Securities Exchange Act of 1934. Here, the issue is relatively
narrow—whether shareholders may bring a claim for
securities fraud when a CEO and Chairman violates the
corporate code of ethics after publicly touting the business’s
high standards for ethics and compliance. Retail Wholesale
& Department Store Union Local 338 Retirement Fund
(“Retail Wholesale”), lead plaintiff in the putative class
action, claims that security fraud arises from the conflict
between Hurd’s unethical behavior and HP’s promotion of
business ethics. Defendants argue that Retail Wholesale
failed to sufficiently allege that Defendants had made a
material misrepresentation or misleadingly omitted a material
fact. Affirming the district court below, we hold that Retail
Wholesale has failed to state a claim under the Securities
Exchange Act of 1934.

    This Court reviews de novo a district court’s dismissal for
failure to state a claim under Federal Rule of Civil Procedure
12(b)(6). In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d
694, 700–01 (9th Cir. 2012). In addition to the plausibility
pleading standard applicable to all complaints, Retail
Wholesale’s fraud allegations must satisfy the particularity
standard of Federal Rule of Civil Procedure 9(b), as well as
the heightened pleading standard for securities fraud created
by the Private Securities Litigation Reform Act of 1995
(“PSLRA”), 15 U.S.C. § 78u–4. Id. at 701. Under the
PSLRA, plaintiffs must, among other requirements, “specify
each statement alleged to have been misleading [and] the
reason or reasons why the statement is misleading.” 15
U.S.C. § 78u–4(b)(1)(B).
         RETAIL WHOLESALE V. HEWLETT-PACKARD                          5

I. FACTUAL AND PROCEDURAL HISTORY

    A. Facts

        The Triggering Event: Mark Hurd’s Sexual
        Harassment Scandal

    In the fall of 2007, Jodie Fisher began working part-time
for HP as an independent contractor.1 Fisher’s contract
required her to introduce significant clients to Hurd at HP
events held at hotels throughout the world. She worked in
this capacity for approximately two years.

    In the summer of 2010, about nine months after Fisher
stopped contracting with HP, Fisher’s attorney, Gloria Allred,
sent a letter to HP’s Board of Directors. Asserting claims of
discrimination against both Hurd and HP, Allred alleged that
Hurd had sexually harassed Fisher. In addition to the
harassment allegations, Allred wrote that Hurd had given
Fisher confidential information about an impending merger.

    HP’s Board promptly launched an investigation. Initially,
Hurd lied to the Board about the nature and scope of his
relationship with Fisher and about his familiarity with
Fisher’s prior work in adult films. The investigation revealed
that Hurd and Fisher spent more time together during HP
events than Hurd had represented. It also uncovered that
Hurd doctored expense reports on several occasions, claiming
that he had eaten dinner with his bodyguard when he had in


    1
       Because Retail Wholesale appeals from the district court’s order
granting Defendants’ motion to dismiss, the facts are taken from
Plaintiffs’ complaint and are assumed to be true. Zucco Partners, LLC v.
Digimarc Corp., 552 F.3d 981, 989 (9th Cir. 2002).
6       RETAIL WHOLESALE V. HEWLETT-PACKARD

fact dined alone with Fisher. At least twice, Hurd expensed
meetings with Fisher when there had been no nearby HP
event. Some time before the investigation concluded, Hurd
admitted that he and Fisher had a “very close personal
relationship.” Without having interviewed Fisher or her
attorney, the investigating law firm did not find evidence of
sexual harassment or insider trading, but it concluded that
Hurd falsified expense reports and lied about his relationship
with Fisher.

    Hurd resigned from HP shortly after the investigation
concluded. In a press release, HP acknowledged Hurd’s
knowing violation of HP’s code of conduct, confirming that
sexual harassment allegations had been made and that an
investigation found unethical behavior. Hurd was quoted as
saying, “As the investigation progressed, I realized that there
were instances in which I did not live up to the standards and
principles of trust, respect and integrity that I have espoused
at HP and which have guided me through my career.”
Immediately following Hurd’s resignation, the price of HP
stock dropped, resulting in an alleged loss of $10 billion to
HP’s stockholders.

       Background: HP’s 2006 Ethics Scandal

    A few years earlier, in 2006, a major scandal erupted
when a whistleblower informed several government agencies
that HP had hired detectives to monitor the phone records and
email accounts of HP directors, HP employees, and
journalists to find the sources of leaks of company
information to the press. Criminal charges were brought
against HP’s then-Chairwoman and General Counsel.
Although Hurd had been CEO throughout this time, having
taken the position in 2005, he was found free from
        RETAIL WHOLESALE V. HEWLETT-PACKARD                  7

wrongdoing. The scandal had the effect of bolstering his
reputation for integrity. Following the then-Chairwoman’s
departure, HP integrated the roles of Chairman and CEO and
named Hurd as the company’s first joint Chairman and CEO.
Under Hurd’s leadership, HP’s shares remained buoyant
during the 2006 scandal, dipping only for a brief time during
which Hurd’s own involvement in the monitoring was
questioned.

     Apparently as a result of the 2006 scandal, HP intensified
its promotion of ethical behavior within the company. With
Hurd at the helm, HP reinforced the importance of its
corporate code of ethics, the Standards of Business Conduct
(“SBC”). Through congressional testimony, press releases,
investor briefings, and public letters to employees, Hurd took
many opportunities to proclaim HP’s integrity and its
intention to enforce violations of the SBC. HP, its
stockholders, and Wall Street insiders viewed Hurd as one of
HP’s most valuable assets, seeing his leadership as the 2006
scandal’s silver lining.

    Shareholders filed multiple derivative claims in the wake
of the 2006 scandal, all of which were settled together in
2007. HP made some promises regarding business ethics as
part of the settlement, including: appointing a “Lead
Independent Director,” tasked with implementing and
enforcing the SBC; appointing a “Chief Ethics and
Compliance Officer” to report SBC violations; appointing an
“Ethics and Compliance Committee” to oversee HP’s policies
and procedures regarding compliance and ethics; improving
ethics and compliance training programs; and strengthening
the SBC, particularly in regard to whistleblowing.
8       RETAIL WHOLESALE V. HEWLETT-PACKARD

       Defendants’ Statements Regarding Business Ethics

    Hurd led the charge to strengthen and ensure compliance
with the SBC. After HP redoubled its commitment to
corporate ethics and before Allred’s letter triggered the
investigation into Hurd’s relationship with Fisher, HP revised
the SBC. Hurd wrote the introductory message, describing
the importance of ethics and entreating HP’s employees to
“commit together, as individuals and as a company, to build
trust in everything we do by living our values and conducting
business consistent with the high ethical standards embodied
within our SBC.”

    Many of Defendants’ representations regarding ethics and
compliance were made outside of the Class Period. The 2006
scandal predated the Class Period, as did the strongest
statements made by Hurd and HP allegedly elevating the
importance of the SBC. For example, Retail Wholesale
points to a letter sent to employees, statements made during
press conferences, and congressional testimony, all of which
occurred during 2006. It was during this time that
Defendants suggested having implemented a zero-tolerance
policy for SBC violations, informing employees that: “Any
violations of our standards are unacceptable to Hewlett-
Packard and we will take appropriate action.”

    The complaint alleges fewer instances of representations
made during the Class Period. Most notably, the SBC itself
was updated and released, including Hurd’s prefatory
message. Concurrently with the release of the updated ethical
code, HP published the SBC on the investor-relations portion
of HP’s website. Additionally, during this time, HP
restructured its internal organization, creating procedures and
positions designed to improve compliance and ethical
        RETAIL WHOLESALE V. HEWLETT-PACKARD                   9

conduct, and HP’s Chief Ethics and Compliance Officer
stated that ethics and compliance were a “competitive
advantage” for HP.

    The SBC includes several provisions inconsistent with
Hurd’s relationship with Fisher and its cover-up. Retail
Wholesale draws attention to particular provisions within the
SBC, all of which are stated affirmatively and in the present
tense. For example, HP states in the SBC that “[w]e maintain
accurate business records” and “create business records that
accurately reflect the truth of the underlying transaction or
event.” The SBC contains similarly worded statements
regarding: honesty; cooperation with investigators; using
good judgment; reporting misconduct; treating others with
respect; avoiding unlawful discrimination; refusing to tolerate
harassment; preserving assets; avoiding conflicts of interest;
providing gifts appropriately; preventing insider trading; and
protecting confidential information.

     During the Class Period, HP also asserted that the strength
of its business was tied to retaining executives such as Hurd.
In its 10–K and 10–Q filings with the SEC, HP included a
risk factor: “The failure to hire executives and key employees
or the loss of executives and key employees could have a
significant impact on our operations.”

    B. Procedural History

   Cement & Concrete Workers District Council Pension
Fund initiated this putative class action in the summer of
2012, and filed its First Amended Complaint (“FAC”) later in
2012.     Plaintiffs claimed that Defendants committed
securities fraud in violation of the Securities Exchange Act of
1934. Upon motions to dismiss for failure to state a claim
10      RETAIL WHOLESALE V. HEWLETT-PACKARD

filed by Defendants HP and Hurd, the district court dismissed
the FAC without prejudice, determining that the Plaintiffs had
failed to adequately allege materiality and falsity.

    Retail Wholesale filed the Second Amended Complaint
(“SAC”) shortly after the court’s first order granting
dismissal. HP and Hurd again moved to dismiss for failure to
state a claim, and the district court again granted their motion,
this time with prejudice, finding that any further amendments
would be futile. As in its first order, the district court
determined that Retail Wholesale’s claims could not survive
because materiality and falsity had not been alleged. Retail
Wholesale timely appealed.

II. DISCUSSION

    Section 10(b) of the Securities Exchange Act of 1934
prohibits the use of “any manipulative or deceptive device or
contrivance” related to the purchase or sale of securities when
the use violates the regulations promulgated by the Securities
and Exchange Commission (“SEC”). 15 U.S.C. § 78j(b).
Under the operative regulation, Rule 10b–5, it is unlawful for
any person “[t]o make any untrue statement of fact or to omit
to state a material fact necessary in order to make the
statements made, in the light of the circumstances under
which they were made, not misleading.” 17 C.F.R.
§ 240.10b–5(b).

    To be viable, a claim brought under § 10(b) and Rule
10b–5 must contain six essential elements: “(1) a material
misrepresentation or omission by the defendant; (2) scienter;
(3) a connection between the misrepresentation or omission
and the purchase or sale of a security; (4) reliance upon the
misrepresentation or omission; (5) economic loss; and (6)
        RETAIL WHOLESALE V. HEWLETT-PACKARD                11

loss causation.” Matrixx Initiatives, Inc. v. Siracusano, 563
U.S. 27, 37–38 (2011) (quoting Stoneridge Inv. Partners,
LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 157 (2008)).
Our discussion focuses on the first element—whether there
was a material misrepresentation or omission—as that factor
is the issue most hotly contested by the parties, and its
resolution is dispositive of the case.

    An actionable material misrepresentation or omission has
two components. First, under the PSLRA and the Federal
Rules of Civil Procedure, plaintiffs must allege a
misrepresentation or a misleading omission with particularity
and explain why it is misleading.                  15 U.S.C.
§ 78u–4(b)(1)(A)–(B); Fed. R. Civ. P. 9(b). Second, applying
an objective standard, that misrepresentation or omission
must have been material to investors.              15 U.S.C.
§ 78u–4(b)(1)(A)–(B).            The materiality of the
misrepresentation or an omission depends upon whether there
is “a substantial likelihood that [it] would have been viewed
by the reasonable investor as having significantly altered the
‘total mix’ of information made available” for the purpose of
decisionmaking by stockholders concerning their
investments. Basic Inc. v. Levinson, 485 U.S. 224, 231–32
(1988) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S.
438, 449 (1976)).

    Retail Wholesale has raised two theories in support of its
argument regarding this element. First, it asserts that there
were material misrepresentations—specifically, that
Defendants’ public statements about business ethics,
particularly the SBC itself, were material representations
made demonstrably false by their inconsistency with Hurd’s
conduct. Second, it argues that there were material
omissions, contending that Defendants misled investors by
12      RETAIL WHOLESALE V. HEWLETT-PACKARD

failing to meet a duty owed to investors to disclose Hurd’s
unethical behavior. Because neither Defendants’ statements
nor their omissions were misleading, both theories fail.

     A. Material Misrepresentation

    Retail Wholesale argues that the SBC, bolstered by
Defendants’ express promotion of corporate ethics, gives rise
to a finding of material misrepresentation. Its claim is based
in three factual allegations: (1) HP and Hurd actively
promoted the SBC and stated that HP had zero tolerance for
SBC violations; (2) Hurd’s SBC violations led to his
resignation; and (3) Hurd’s resignation caused HP’s stock
price to drop. The Court cannot agree that, under the facts
alleged in the complaint, Defendants’ representations about
ethics were materially misleading.

    Like the district court below, some courts that have
considered whether a corporate code of ethics may give rise
to a § 10 and Rule 10b–5 claim have found that the claim
failed for lack of materiality, never reaching falsity, see
Nathanson v. Polycom, Inc., 87 F. Supp. 3d 966, 976–77
(N.D. Cal. 2015), or reaching falsity only after first finding a
lack of materiality, see In re Yum! Brands, Inc. Sec. Litig., 73
F. Supp. 3d 846, 864–65 (W.D. Ky. 2014). Others have
analyzed falsity first and not considered materiality after
determining that no misleading representation or omission
was made. See City of Roseville Emps.’ Ret. Sys v. Horizon
Lines, Inc., 686 F. Supp. 2d 404 (D. Del. 2009); Andropolis
v. Red Robin Gourmet Burgers, Inc., 505 F. Supp. 2d 662,
685–86 (D. Colo. 2007). Where a complaint arises from “soft
information,” such as representations of compliance, the
Sixth Circuit applies a wholly different analysis, considering
scienter alongside materiality to determine whether a
         RETAIL WHOLESALE V. HEWLETT-PACKARD                           13

representation is an actionable misrepresentation. See In re
Omnicare, Inc. Sec. Litig., 769 F.3d 455, 470–73 (6th Cir.
2014).

    The Ninth Circuit has not addressed how to determine
whether statements made in or about an ethical code are
actionable representations if the ethical code is violated. We
approach this issue here by first analyzing falsity, to
determine whether an ethical code and statements made about
the code contain any misrepresentations of fact, and then, if
there was a misrepresentation, determining its materiality—
that is, its significance to stockholder decisionmaking.2

         1. Objective Falsity

    “[A] statement is misleading if it would give a reasonable
investor the ‘impression of a state of affairs that differs in a
material way from the one that actually exists.’” Berson v.
Applied Signal Tech., Inc., 527 F.3d 982, 985 (9th Cir. 2008)
(quoting Brody v. Transitional Hosps. Corp., 280 F.3d 997,
1006 (9th Cir. 2002)). To be misleading, a statement must be
“capable of objective verification.” Or. Pub. Emps. Ret.
Fund v. Apollo Grp. Inc., 774 F.3d 598, 606 (9th Cir. 2014).
For example, “puffing”—expressing an opinion rather than a
knowingly false statement of fact—is not misleading. Id.; see
also Lloyd v. CVB Fin. Corp., 811 F.3d 1200, 1206–07 (9th
Cir. 2016); In re Cutera Sec. Litig., 610 F.3d 1103, 1111 (9th
Cir. 2010).

    Defendants made no objectively verifiable statements
during the Class Period. As one court has aptly written, a

     2
       There may be instances in which another order of decision is more
efficient. We do not mean to prescribe any particular sequence of analysis.
14      RETAIL WHOLESALE V. HEWLETT-PACKARD

code of conduct is “inherently aspirational.” Andropolis, 505
F. Supp. 2d at 686. Such a code expresses opinions as to
what actions are preferable, as opposed to implying that all
staff, directors, and officers always adhere to its aspirations.
See id.

    Similarly, Hurd’s comments prefacing the SBC are not
objectively verifiable. In the 2008 preface to the SBC, Hurd
stated, in part,

           We want to be a company known for its
       ethical leadership . . . .

           We know actions speak louder than
       words. We must make decisions and behave
       in ways that we can be proud of, that reflect
       our commitment to doing the right thing.

       ....

       . . . Let us commit together, as individuals and
       as a company, to build trust in everything we
       do by living our values and conducting
       business consistent with the high ethical
       standards within our SBC.

The aspirational nature of these statements is evident. They
emphasize a desire to commit to certain “shared values”
outlined in the SBC and provide a “vague statement[] of
optimism,” not capable of objective verification. See Or. Pub.
Emps., 774 F.3d at 606.

   A contrary interpretation—that statements such as, for
example, the SBC’s “we make ethical decisions,” or Hurd’s
        RETAIL WHOLESALE V. HEWLETT-PACKARD                 15

prefatory statements, can be measured for compliance—is
simply untenable, as it could turn all corporate wrongdoing
into securities fraud. See, e.g., Santa Fe Indus. v. Green, 430
U.S. 462, 478–89 (1977) (holding that the Securities
Exchange Act is limited in scope to its textual provisions and
does not conflict with state law regarding corporate
misconduct, particularly corporate mismanagement). Indeed,
at oral argument, Retail Wholesale conceded that the SBC in
and of itself could not support its claim and acknowledged
that it has been unable to locate a case from any jurisdiction
in which a court found alleged noncompliance with an ethical
code actionable.

    Nor does the context, as Retail Wholesale argues,
somehow make the SBC and related representations capable
of being objectively false. The case that comes closest to
supporting Retail Wholesale’s context argument, Omnicare,
decided by the Sixth Circuit, involved not a code of ethics but
rather a Form 10–K annual report to the SEC. 769 F.3d at
463–64. According to the Omnicare complaint, the
defendants, a pharmaceutical care provider and its current and
former employees, conducted internal audits revealing
pervasive Medicare fraud. Id. at 462, 479. The audits were
consistent with the defendants’ recent history of non-
compliance, including conduct leading to a $98 million
settlement with the government. Id. at 478. After the audits,
the defendant certified in its Form 10–K that it was in
material compliance with state and federal law. Id. Although
the language in the Form 10–K was vague and boilerplate, the
Sixth Circuit determined that the complaint did not fail for
lack of falsity or materiality. Id. at 478–80.

   Retail Wholesale argues that, similar to the Omnicare
context, the context in this case surrounding the adoption and
16      RETAIL WHOLESALE V. HEWLETT-PACKARD

promotion of the SBC transforms what would otherwise be
aspirational into statements capable of objective verification.
We disagree, in part because context more appropriately
factors into the question of whether an alleged
misrepresentation was material to investors, not into whether
a statement itself could be a misrepresentation. See Matrixx,
563 U.S. at 43–47.

    Even if background facts were relevant to whether a
statement is amenable to falsity, the totality of the statements
made within the Class Period leads only to the proposition
that business ethics are important to HP. We note that the
case may have been closer had Hurd’s sexual harassment and
false expenses scandal involved facts remotely similar to
those presented by the 2006 scandal, as the ethical code could
then have been understood as at least promising specifically
not to do what had been done in 2006. Here, however, the
context does not make HP’s promotion of business ethics any
less subjective or vague. Further, Retail Wholesale cites to
no case law suggesting that context may operate to allow a
plaintiff to import an out-of-Class-Period statement into the
Class Period. The strongest statement alleged in the
complaint—the suggestion of a zero tolerance policy for SBC
violations—was made outside of the Class Period.

    In sum, we conclude that as there was no statement during
the Class Period that was capable of being objectively false,
there was no affirmative misrepresentation.

       2. Materiality

    Additionally, although the threshold for a showing of
materiality is lower than that for falsity, we agree with the
reasoning of the district court that any affirmative
        RETAIL WHOLESALE V. HEWLETT-PACKARD                 17

misrepresentation could not have been material. It cannot be
said that there is “a substantial likelihood” that the SBC and
related representations “altered the ‘total mix’ of information
made available” for use in stockholder decisionmaking.
Basic, 485 U.S. at 231–32. Not only was there nothing
unusual about the promotion of business ethics at HP, but the
substance and online publication of the SBC were mandated
by the SEC. 17 C.F.R. § 229.406(a). In fact, the ethical
issues most relevant to this litigation—conflicts of interest,
disclosure, internal handling of violations—are directly
addressed by SEC regulations. Id.

    Although materiality is generally an issue of mixed fact
and law, best left to the fact-finder, Matrixx, 563 U.S. 45–48,
a standard that is too low would “bury the shareholders in an
avalanche of trivial information—a result that is hardly
conducive to informed decisionmaking.” TSC Indus., 426
U.S. at 448–49. It simply cannot be that a reasonable
investor’s decision would conceivably have been affected by
HP’s compliance with SEC regulations requiring publication
of ethics standards.

    Further, Retail Wholesale’s contention that a slump in
HP’s stock indicates materiality is not well-taken.
“[E]vidence of stock price movements provides no rational
basis for determining whether [a product’s] risks were
adequately conveyed to the public.” In re Apple Comput.
Sec. Litig., 886 F.2d 1109, 1116 (9th Cir. 1989). As this
Court recently noted, a change in stock price, such as that
following Hurd’s resignation, would factor into reliance, a
different prong of the § 10(b) and Rule 10b–5 analysis, and
“[a]bsent an actionable misstatement, reliance does not come
18       RETAIL WHOLESALE V. HEWLETT-PACKARD

into play.” Police Ret. Sys. of St. Louis v. Intuitive Surgical,
Inc., 759 F.3d 1051, 1060 (9th Cir. 2014).3

   In sum, the representations made in and about the SBC
were not material to stockholder decisionmaking.

     B. Materially Misleading Omission

    As an alternative theory, Retail Wholesale argues that
Defendants’ failure to disclose material facts—namely, the
facts concerning Hurd’s noncompliance with the SBC—is
actionable. We disagree. Just as there was no statement
capable of being factually misleading, there was no omission
that could have been actionable as misleading.

    Absent a duty to disclose, an omission does not give rise
to a cause of action under § 10(b) and Rule 10b–5. Basic,
485 U.S. at 239 n.17. “[Section] 10(b) and Rule 10b–5(b) do
not create an affirmative duty to disclose any and all material
information.” Matrixx, 563 U.S. at 44. An actionable
omission claim arises only when disclosure is “necessary . . .
to make the statements made, in light of the circumstances
under which they were made, not misleading.” 17 C.F.R.


     3
       Although we do not reach the issue, having failed to find an
actionable misstatement, we note that we are somewhat perplexed by
Retail Wholesale’s argument that it was the falsity of the SBC that led to
their damages. To the contrary, it appears that HP’s ethics and
compliance policies worked. Hurd did not live up to HP’s standards; HP
became aware of Hurd’s ostensible misconduct; HP quickly launched an
investigation, confirming the misconduct; and Hurd resigned. In fact,
given Retail Wholesale’s position that Hurd’s resignation triggered the
decline in stock value, it’s entirely possible that the strength—as much as
the weakness—of the SBC factored into Retail Wholesale’s claimed
damages.
        RETAIL WHOLESALE V. HEWLETT-PACKARD                 19

§ 240.10b–5(b). In other words, a duty to provide
information exists only where statements were made which
were misleading in light of the context surrounding the
statements.

    Here, there was no duty to disclose because HP’s and
Hurd’s failures to speak did not “affirmatively create an
impression of a state of affairs that differs in a material way
from the one that actually exists.” Brody, 280 F.3d at 1006.
As noted, the SBC, and the statements within the Class Period
promoting it, were transparently aspirational. The promotion
of ethical conduct at HP did not reasonably suggest that there
would be no violations of the SBC by the CEO or anyone
else. Nor did Hurd’s own statements warrant that he had
been personally compliant or that he personally would
comply with the SBC in the future.

    The analysis would likely be different if HP had
continued the conduct that gave rise to the 2006 scandal while
claiming that it had learned a valuable lesson in ethics.
However, that is not the case here. Although the facts reflect
misbehavior by the corporation’s highest executive in
violation of its ethical code, the fact that HP and Hurd
enhanced and touted the SBC does not, without more,
transform the misbehavior into an actionable material
omission under the securities laws.

    Because the affirmative statements did not create an
impression of full compliance, HP and Hurd had no duty to
disclose Hurd’s misuse of CEO authority and misbehavior in
violation of the SBC.
20       RETAIL WHOLESALE V. HEWLETT-PACKARD

III.     CONCLUSION

    The complaint does not give rise to an actionable claim
for securities fraud. This is not to say that Hurd’s conduct
was consistent with the general ethical values espoused
within the SBC and related statements. Indeed, Hurd did not
demonstrate the “uncompromising integrity” asked of him by
the SBC. However, there was no fraud. The statements made
were aspirational, and neither Hurd nor HP warranted total
compliance with the SBC. Nor did Hurd, personally, attest to
stockholders that he was not behaving as it turned out he was.
In short, there were no material misrepresentations or
actionable material omissions. Further, even if the complaint
adequately alleged the existence of a misrepresentation or a
misleading omission, it would not have been actionable, as it
was immaterial.

       AFFIRMED.
