Ronconi

This case concerns sufficiency of the pleadings in a securities fraud case.

I. FACTS

The district court dismissed this case for failure to state a claim upon which relief could be granted, so we state the facts as they are stated in the complaint to determine whether the complaint states a claim upon which relief could be granted. In the context of securities litigation under the Private Securities Litigation Reform Act, 1 we may also properly consider SEC filings incorporated by reference in the complaint. 2 Nothing has been proved in this case because it was dismissed before the occasion arose for any proof, so, as in any decision reviewing a 12(b)(6) dismissal, our statement of facts should not be understood as a true description of anything that actually happened.

Larkin and the other defendants were officers and directors of Nellcor. It made medical devices for people with breathing difficulties. In May of 1995, Nellcor announced that it was making a very large acquisition, paying $475 million for a company called Puritan Bennett. Puritan Bennett had been losing money and had just laid off a sixth of its personnel. This *428 raised the obvious question of how Nellcor could…