reasonable inferences in favour of the plaintiff. The court could
only dismiss the action on the grounds that the plaintiff had
failed to plead material misrepresentations, i.e., that the alleged
misstatements or omissions were so obviously unimportant to
a reasonable investor that reasonable minds could not differ on
the question of their importance.
 Judge Sullivan concluded that (a) there was no misrepresentation with respect to MDC’s reporting of goodwill estimates,
which were “not matters of objective fact”; (b) there was no
material misrepresentation with respect to MDC’s reporting of
non-GAAP EBITDA, which is by definition a “non-standard”
measure; (c) the characterization of $10.5 million in payments to
Mr. Nadal as expense reimbursement rather than compensation
was neither quantitatively nor qualitatively material; and (d)
there was no material misrepresentation with respect to the
adequacy of MDC’s internal controls.
 Further, Judge Sullivan concluded that even if Mr. Nadal’s
expenses were an undisclosed form of compensation, this was not
a material misstatement. The $10.48 million in expenses were
reimbursed to Mr. Nadal over the period from 2009 to 2014, averaging approximately $2.1 million per year. Judge Sullivan held
that these payments were not quantitatively material as against
MDC’s total expenses in any given year, for example, in 2013, the
payment was 0.18 per cent of MDC’s $1.18 billion in expenses.
 The dismissal of the class action in the U.S., however, did
not bring to an end proceedings against MDC. The SEC brought
an enforcement action against MDC and some of its officers.
 In January, May and November 2017, MDC and Messrs.
Nadal and Sabatino entered into “no contest” settlements with
the SEC. They did so without admitting or denying the findings,
and with no proof by the SEC of the allegations of fact or of
alleged breaches of securities laws.
 The SEC never took issue with the timing of MDC’s disclosure of the subpoena and rather noted that MDC’s formation of
the special committee and its internal investigation were remedial acts that prompted the SEC to resolve the investigation. The
civil penalty of $1.5 million eventually paid by MDC when the
investigation was resolved in January 2017 through the MDC
settlement represented 0.1 per cent of MDC’s 2016 consolidated
revenues of $1.386 billion. The SEC concluded its investigation
without requiring any restatement in respect of the financial
statements or in respect of ICFR.
 On February 22, 2017, the appeal from Judge Sullivan’s
decision was voluntarily dismissed.