Ganino v. Citizens Util. Co.
Second Circuit
228 F.3d 154 (2000)
After fifty consecutive years of earnings and revenue growth, Citizens Utility Company (defendant) lost a major contract in 1995 and quickly signed a replacement deal with a Hungarian telephone company, receiving a large lump-sum payment; rather than recording that payment in 1995 as earned, Citizens spread it across the first two quarters of 1996, creating the appearance that its decades-long revenue growth streak had continued when it otherwise would not have. Investor Ganino (plaintiff) sued after discovering this accounting maneuver, the district court ruled for Citizens, and Ganino appealed.
Whether a company's misstatement about its earnings is material when a reasonable investor would have considered it significant enough to affect an investment decision.