Because Dynegy supplied investors with financial information from which investors could draw their own conclusions about whether Dynegy Holdings was solvent, the 10(b) Defendants had no duty to use the term “insolvent” when describing the financial condition of Dynegy Holdings at the time . . . .
Judge Koeltl also rejected this theory because the alleged scheme, even if true, would operate only to defraud creditors, not shareholders:
The plaintiffs have also failed to allege scienter because they have failed to allege that the 10(b) Defendants intended through their alleged omissions to defraud Dynegy’s shareholders . . . .
According to the plaintiffs, the 10(b) Defendants’ failure to disclose that Dynegy Holdings was allegedly insolvent . . . was intended to enable Dynegy to execute [a particular restructuring transaction] and, in turn, to extract concessions from creditors . . . . However, Dynegy’s apparent desire to capture value for its shareholders, at the expense of the creditors of Dynegy Holdings, does not constitute intent to defraud Dynegy shareholders such as the plaintiff . . . .