978-1285770178 Case Printout Case CPC-07-06 Part 1

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U.S.,2011.
Matrixx Initiatives, Inc. v. Siracusano
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© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.18 k. In general. Most Cited Cases
To prevail on their claim that the defendant made material misrepresentations or omissions in violation of §
10(b) and Rule 10b5, plaintiffs must prove: (1) a material misrepresentation or omission by the defendant; (2) sci-
enter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance
upon the misrepresentation or omission; (5) economic loss; and (6) loss causation. Securities Exchange Act of 1934,
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.27 Misrepresentation
349Bk60.27(1) k. In general. Most Cited Cases
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.28 Nondisclosure; Insider Trading
[5] Securities Regulation 349B 60.28(13)
349B Securities Regulation
349BI Federal Regulation
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© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
170A Federal Civil Procedure
170AXI Dismissal
170AXI(B) Involuntary Dismissal
170AXI(B)3 Pleading, Defects In, in General
170Ak1772 k. Insufficiency in general. Most Cited Cases
To survive a motion to dismiss, plaintiffs need only allege enough facts to state a claim to relief that is plausible
on its face. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
[9] Securities Regulation 349B 60.45(1)
349Bk60.45(1) k. In general. Most Cited Cases
To establish liability under § 10(b) and Rule 10b5, a private plaintiff must prove that the defendant acted with
“scienter,” which is a mental state embracing intent to deceive, manipulate, or defraud. Securities Exchange Act of
1934, § 10(b), 15 U.S.C.A. § 78j(b); 17 C.F.R. § 240.10b5(b).
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
The pleading standard in the Private Securities Litigation Reform Act of 1995 (PSLRA), requiring a plaintiff in
a securities fraud action to state with particularity facts giving rise to a strong inference that the defendant acted with
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
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© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
1322 1323.
(c) Respondents have also adequately pleaded scienter, a mental state embracing intent to deceive, manipu-
late, or defraud,’ Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319, 127 S.Ct. 2499, 168 L.Ed.2d
179. This Court assumes, without deciding, that the scienter requirement may be satisfied by a showing of deliberate
recklessness. Under the Private Securities Litigation Reform Act of 1995, a complaint adequately pleads scienter
“only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing
inference one could draw from the facts alleged.” Id., at 324, 127 S.Ct. 2499. Matrixx's proposed bright-line rule
requiring an allegation of statistical significance to establish a strong inference of scienter is once again flawed. The
complaint's allegations, “taken collectively,” give rise to a “cogent and compelling” inference that Matrixx elected
not to disclose adverse event reports not because it believed they were meaningless but because it understood their
David C. Frederick, Washington, D.C., for Respondents.
Pratik A. Shah, for United States, as amicus curiae, by special leave of the Court, supporting the Respondents.
ville, NY, David C. Frederick, Counsel of Record, Scott H. Angstreich, Gregory G. Rapawy, Emily T.P. Rosen,
Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., for Respondents.
For U.S. Supreme Court Briefs, See:2010 WL 334501 (Pet.Brief)2010 WL 4477792 (Resp.Brief)2010 WL 5099373
(Reply.Brief)
adverse events. Respondents, plaintiffs in a securities fraud class action, allege that petitioners, Matrixx Initiatives,
Inc., and three of its executives (collectively Matrixx), failed to disclose reports of a possible link between its lead-
ing product, a cold remedy, and loss of smell, rendering statements made by Matrixx misleading. Matrixx contends
that respondents' complaint does not adequately allege that Matrixx made a material representation or omission or
that it acted with scienter because the complaint does not allege that Matrixx knew of a statistically significant num-
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© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.18 k. In general. Most Cited Cases
To prevail on their claim that the defendant made material misrepresentations or omissions in violation of §
10(b) and Rule 10b5, plaintiffs must prove: (1) a material misrepresentation or omission by the defendant; (2) sci-
enter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance
upon the misrepresentation or omission; (5) economic loss; and (6) loss causation. Securities Exchange Act of 1934,
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.27 Misrepresentation
349Bk60.27(1) k. In general. Most Cited Cases
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct
349Bk60.28 Nondisclosure; Insider Trading
[5] Securities Regulation 349B 60.28(13)
349B Securities Regulation
349BI Federal Regulation
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
170A Federal Civil Procedure
170AXI Dismissal
170AXI(B) Involuntary Dismissal
170AXI(B)3 Pleading, Defects In, in General
170Ak1772 k. Insufficiency in general. Most Cited Cases
To survive a motion to dismiss, plaintiffs need only allege enough facts to state a claim to relief that is plausible
on its face. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
[9] Securities Regulation 349B 60.45(1)
349Bk60.45(1) k. In general. Most Cited Cases
To establish liability under § 10(b) and Rule 10b5, a private plaintiff must prove that the defendant acted with
“scienter,” which is a mental state embracing intent to deceive, manipulate, or defraud. Securities Exchange Act of
1934, § 10(b), 15 U.S.C.A. § 78j(b); 17 C.F.R. § 240.10b5(b).
349Bk60.50 Pleading
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
The pleading standard in the Private Securities Litigation Reform Act of 1995 (PSLRA), requiring a plaintiff in
a securities fraud action to state with particularity facts giving rise to a strong inference that the defendant acted with
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
349Bk60.51 In General
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
1322 1323.
(c) Respondents have also adequately pleaded scienter, a mental state embracing intent to deceive, manipu-
late, or defraud,’ Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319, 127 S.Ct. 2499, 168 L.Ed.2d
179. This Court assumes, without deciding, that the scienter requirement may be satisfied by a showing of deliberate
recklessness. Under the Private Securities Litigation Reform Act of 1995, a complaint adequately pleads scienter
“only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing
inference one could draw from the facts alleged.” Id., at 324, 127 S.Ct. 2499. Matrixx's proposed bright-line rule
requiring an allegation of statistical significance to establish a strong inference of scienter is once again flawed. The
complaint's allegations, “taken collectively,” give rise to a “cogent and compelling” inference that Matrixx elected
not to disclose adverse event reports not because it believed they were meaningless but because it understood their
David C. Frederick, Washington, D.C., for Respondents.
Pratik A. Shah, for United States, as amicus curiae, by special leave of the Court, supporting the Respondents.
ville, NY, David C. Frederick, Counsel of Record, Scott H. Angstreich, Gregory G. Rapawy, Emily T.P. Rosen,
Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., for Respondents.
For U.S. Supreme Court Briefs, See:2010 WL 334501 (Pet.Brief)2010 WL 4477792 (Resp.Brief)2010 WL 5099373
(Reply.Brief)
adverse events. Respondents, plaintiffs in a securities fraud class action, allege that petitioners, Matrixx Initiatives,
Inc., and three of its executives (collectively Matrixx), failed to disclose reports of a possible link between its lead-
ing product, a cold remedy, and loss of smell, rendering statements made by Matrixx misleading. Matrixx contends
that respondents' complaint does not adequately allege that Matrixx made a material representation or omission or
that it acted with scienter because the complaint does not allege that Matrixx knew of a statistically significant num-

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