Hertzberg

This case arises out of alleged misstatements and omissions contained in Appellee Dignity Partners, Inc.’s (“Dignity’s”) registration statement filed with the Securities and Exchange Commission for an initial public offering of Dignity common stock. Dignity was in the business of buying the rights to life insurance proceeds from people with AIDS, paying a lump sum up front, and taking over the responsibility for paying the premiums. Shortly after the offering, the fact that AIDS patients were living longer than expected because *1078 of new AIDS treatments became public knowledge. As a result of the longer lives of the insured, Dignity posted huge losses, and the stock plummeted.

Plaintiffs/appellants Hertzberg, Derosa, and Feinman (“Hertzberg”) are investors who purchased Dignity stock on the open market more than 25 days after the initial offering but before the news of the longer life expectancy or large losses became public knowledge. They brought a class action for several violations of the securities laws by Dignity, including violation of Section 11 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77k (“Section 11”). Hertzberg claims that Dignity knew of the…