In Re Read-Rite Corp. Securities Litigation

Defendants’ motion to dismiss, heard June 7, 1999, argues that Plaintiffs in this consolidated class action have failed to meet the heightened pleading standard set by the Private Securities Litigation Reform Act of 1995. For the reasons stated below, the motion is granted.

I. Overview

Plaintiffs allege that defendant Read-Rite, along with individual defendants, violated various securities laws by making false and misleading statements in connection with the transfer of publicly traded securities. The class of plaintiffs who purchased Read-Rite stock during the period from April 19, 1995, through January 22, 1996, aré referred to herein as the “Ferrari Plaintiffs.” Ferrari Plaintiffs allege that Defendants’ false representations served to prop up stock prices until a damaging price correction following Read-Rite’s January 22 announcement that earnings per share and revenue were below forecast. “Nevius Plaintiffs”, that is, those plaintiffs who purchased stock during the period from March 2, 1996, through June 2, 1996, allege a similar pattern of conduct. Plaintiffs’ allegations and theories are described more particularly in the Court’s Order of August 17, 1998 granting…