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, 2015 WL 3649823 (5th Cir. June 12, 2015 Owens illustrates that (i) subjective accounting principles are less likely to give rise to federal securities fraud liability than objective accounting principles, and (ii) a company can potentially mitigate the risk of federal securities fraud liability by providing adequate cautionary disclosures regarding its subjective valuation models.