Law360, New York (July 30, 2015, 9:51 AM EDT) -- The Fifth Circuit recently affirmed a district court's dismissal of a federal securities fraud class action on the basis that the plaintiffs had failed to adequately plead facts establishing that the defendants, the executives of a failed bank, were severely reckless in their overvaluation of the bank's portfolio of mortgage-backed securities. See Owens v. Jastrow, No. 13–10928, ___ F.3d ___, (5th Cir. June 12, 2015). Owens illustrates that (1) violations of subjective accounting principles are more likely to be dismissed on scienter grounds than violations of objective accounting principles, and (2) a company can potentially mitigate the risk of federal securities fraud liability by providing adequate cautionary disclosures regarding its internal valuation models....