Note: Yuval Lapiner (Shareholder) filed a class action complaint against Camtek, Ltd. (Corporation) and four of its officers (Officers) for violating the anti-fraud provision of the U.S. Securities Exchange Act § 10(b). Shareholder alleged that Officers falsely and systematically inflated Corporation's revenue, which caused Shareholder to suffer losses when the truth about Corporation's financial status became known and its stock prices plummeted. In addition to other methods of falsely inflating Corporation's revenue, Shareholder alleged that Officers "cashed in letters of credit issued on orders of [Corporation's] products before those orders were accepted". The Corporation and Officers moved to dismiss the complaint.

After considering papers filed in connection with Corporation's motion to dismiss, the United States District Court for the Northern District of California, Chesney, J., dismissed the complaint for failure to state a claim upon which relief may be granted. Under the U.S. Private Securities Litigation Reform Act (PSLRA), where allegations are based on information and belief, plaintiffs must allege "with particularity all facts on which that belief is formed." However, "nowhere in the [complaint] does [Shareholder] state the basis for his belief" that LCs issued on orders were cashed before those orders were accepted. Because Shareholder's other allegations also failed to meet the pleading requirements of the PSLRA, the Judge dismissed the complaint, with leave to amend.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.