In Fait v. Regions Financing Trust, No. 10-2311-cv, 2011 WL 3667784 (2d Cir. Aug. 23, 2011), the Second Circuit affirmed the dismissal of claims under sections 11 and 12 of the Securities Act of 1933 for the complaint's failure to plead a materially false statement of fact. The plaintiffs claimed the issuer, a bank holding company, had overstated goodwill in connection with the acquisition of another bank. The plaintiffs also alleged the issuer understated loan loss reserves at year end 2007 in connection with its mortgage portfolio. The recorded amounts for goodwill and loan loss reserves were false and misleading, according to the complaint, because of the adverse trends in the mortgage and housing markets.

The Second Circuit found that both goodwill and the loan loss reserves were opinions and not a matter of objective fact. The goodwill amount was based on a valuation of the assets acquired, which the court determined was a subjective exercise. Similarly, the loan loss reserves were based on subjective assessments of what might not be collectible. The Second Circuit relied on the Supreme Court's decision in Virginia Bankshares v. Sandberg, 501 U.S. 1083, 1095-96 (1991), and held that opinions are actionable only if the complaint demonstrates the statements were objectively false and that the statement was disbelieved by the defendant at the time it was made. Dismissal was appropriate because the complaint had failed to allege that the defendants did not believe the statements regarding goodwill and loan loss reserves at the time they were made.