Dannenberg

In this case, we again consider the securities-fraud claims raised by disappointed investors in Software Toolworks, Inc., who appeal the district court’s summary judgment in favor of auditors Deloitte & Touche and *1082 underwriters Montgomery Securities and PaineWebber, Inc. We affirm in part, reverse in part, and remand.

I.

In July 1990, Software Toolworks, Inc., a producer of software for personal computers and Nintendo game systems, conducted a secondary public offering of common stock at $18.50 a share, raising more than $71 million. After the offering, the market price of Tool-works’ shares declined steadily until, on October 11,1990, the stock was trading at $5.40 a share. At that time, Toolworks issued a press release announcing substantial losses and the share price dropped another fifty-six percent to $2,375.

The next day, several investors (“the plaintiffs”) filed a class action alleging that Tool-works, auditor Deloitte & Touche (“De-loitte”), and underwriters Montgomery Securities and PaineWebber, Inc. (“the Underwriters”) had issued a false and misleading prospectus and registration statement in violation of sections 11 and 12(2) of the Securities Act of 1933…