Costco Investors Lose Bid to Revive Suit Over Internal Controls

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Costco Wholesale Corp. investors who say the company misled them about internal control issues lost their bid for a new chance at their would-be class suit, according to a brief Ninth Circuit opinion released Tuesday.

The district judge was right to throw out the case because the investors didn’t raise a strong inference that the members-only wholesaler acted deliberately recklessly, dooming their securities fraud allegations, the U.S. Court of Appeals for the Ninth Circuit said in the unpublished ruling.

The investors based some of their allegations on information from confidential witnesses, but the witnesses “failed to make sufficiently particularized allegations” …