Cooley Wins Appeal for IonQ in Securities Fraud Class Action
San Diego – April 8, 2025 – Cooley secured an appellate win on behalf of its client, IonQ, before the US Court of Appeals for the Fourth Circuit, affirming the lower court’s dismissal of a securities class action.
For the first time in the Fourth Circuit, the court resolved the issue of whether securities plaintiffs can adequately plead loss causation by relying on a self-interested short-seller report based on anonymous sources. This decision joins the US Court of Appeals for the Ninth Circuit’s approach in being skeptical toward financially motivated short-seller reports.
Cooley represents IonQ and two of its executives in a consolidated securities fraud class action. The plaintiffs alleged that IonQ and the special purpose acquisition company (SPAC) into which it merged, dMY Technology Group, misled investors about IonQ’s quantum computing technology, thereby inflating IonQ’s share price. The suit also alleged that IonQ concealed that a third party was the source of its bookings, as opposed to cloud-based customers, in an effort to maintain high share prices and further deceive investors. To support their theories of fraud, the plaintiffs principally relied on allegations from a May 2022 report by short-seller Scorpion Capital – published about six months after IonQ’s initial public offering.
This is the latest victory for IonQ, following a July 2024 denial to amend the complaint and a September 2023 dismissal with prejudice.
The Cooley securities litigation team representing IonQ was led by partners Ryan Blair and Koji Fukumura with support from David Mills, Kathleen Hartnett, Elizabeth Wright, Caitlin Munley, Linh Nguyen, Allison O’Neill, Jessica Taylor, and Vivienne Pismarov.
The case is Anthony Defeo et al. v. IonQ, Inc. et al. (No. 24-1709).
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