The Second Circuit affirmed the district court’s dismissal of all U.S. law claims with prejudice

On June 9, 2026, the United States Court of Appeals for the Second Circuit affirmed the dismissal of a putative securities class action against Davis Polk’s client Perion Network Ltd. and several of its current and former senior officers.  This appellate victory spells the end of major litigation against Perion.

Perion is an Israeli technology company that provides search advertising and online display advertising services.  Through its search advertising business, it directs user traffic from partners’ online products, including browser extensions and desktop and mobile apps, to partner search engines.  In mid-2024, Perion’s largest search engine partner abruptly changed its search traffic quality standards to exclude many of Perion’s sources of search traffic, leading to a marked decline in search advertising revenues.  

Following a drop in Perion’s stock price, a group of shareholders filed claims for securities fraud, alleging that the company and several senior executives made misleading public statements about the quality of Perion’s search traffic.  Judge Valerie Caproni of the Southern District of New York granted Davis Polk’s motion to dismiss the claim, agreeing that most of Perion’s statements were not alleged to be misleading as a matter of law, and that the plaintiffs had failed to adequately plead that Perion and its executives had the requisite intent to pursue a claim for securities fraud.  Judge Caproni also declined to exercise supplemental jurisdiction over similar claims by the plaintiffs under Israeli law.  

The plaintiffs appealed and the Second Circuit heard oral argument on the appeal on May 15.  In its June 9 order, it affirmed the district court’s judgment dismissing the U.S. law claims with prejudice, for substantially the same reasons provided by Judge Caproni.  In doing so, the Court of Appeal ended this two-year-old litigation.

The Davis Polk team included partners Edmund Polubinski (who argued the appeal) and Dana M. Seshens, counsel Patrick W. Blakemore and associates Esther C. Townes, Natalie Denby, Cindy Wu, Gordon J. Milne and Ben Roebuck.  Members of the Davis Polk team are based in the New York and Washington DC offices.

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