Camden, NJ – A federal judge has dismissed a shareholder lawsuit accusing Exscientia P.L.C. of violating securities laws by failing to disclose alleged sexual misconduct by its former CEO and chairman.
Chief U.S. District Judge Renée Marie Bumb ruled that the claims brought by investors Frank Campanile and Robert Sullivan could not proceed because the company’s public statements about ethics and inclusion amounted to “inactionable puffery.”
The decision ends, at least for now, a high-profile attempt to turn allegations of workplace misconduct into a federal securities fraud case.
Shareholders alleged concealment of misconduct
The plaintiffs had claimed that former CEO Andrew Hopkins engaged in inappropriate relationships with two subordinates and that then-chairman David Nicholson failed to act after learning of the allegations. They argued that Exscientia’s public statements about its code of conduct and commitment to diversity were misleading because the company did not disclose the executives’ conduct.
According to the complaint, the company’s silence on the internal issues inflated stock prices and misled investors about Exscientia’s leadership integrity and governance practices.
Court finds aspirational statements not material
Judge Bumb disagreed, finding that corporate language about “commitment” and “inclusivity” reflects aspirational goals rather than factual guarantees that could form the basis of securities fraud.
“These statements are not measurable,” Bumb wrote. “To hold a company liable for failing to live up to its stated aspirations could turn all corporate wrongdoing into securities fraud.”
Dismissal without prejudice
The ruling dismissed the lawsuit without prejudice, allowing the investors the option to amend and refile their claims. However, the opinion leaves little room for revival unless plaintiffs can show that Exscientia made specific, factual misrepresentations tied directly to the alleged misconduct.
Broader implications for corporate disclosure
The case underscores how difficult it is for investors to transform workplace scandals into securities law violations. Under federal law, companies are only required to disclose information that materially affects investors’ decisions, not every instance of internal misconduct.
Exscientia, a U.K.-based artificial intelligence drug discovery firm, has faced scrutiny over its leadership turnover in recent years but has not been accused of broader financial mismanagement.
The judge’s ruling leaves the case dismissed but not forgotten.