Fecht

Plaintiffs appeal the district court’s dismissal of their securities fraud action on the grounds that it failed to meet the requirements of Fed.R.Civ.P. 12(b)(6) and 9(b). We review the district court’s dismissal de novo, Wool v. Tandem Computers Inc., 818 F.2d 1433, 1439-40 (9th Cir.1987), and reverse and remand to the district court.

*1080 I

Over the course of two days in early April, 1992, the price of the stock of The Price Company (“Company”) fell from $45 per share to $32 per share. The decline occurred immediately after the Company announced a drop in its net income for the first quarter of 1992, the first year-to-year earnings decline in the Company’s history. On the day following the announcement, plaintiffs filed this class action seeking damages for violations of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), Rule 10b-5 promulgated by the Securities and Exchange Commission (“SEC”), and various California laws prohibiting fraud.

In their second amended complaint (“Complaint”), plaintiffs allege that prior to the April 2 announcement, the Company and three of its top-ranking officers intentionally misrepresented the financial condition of…