Sparling

ORDER AND AMENDED OPINION

ORDER

The attached amended opinion is substituted for the original opinion filed on February 2, 2005, slip op. page 1385 and appearing at 397 F.3d 704 (9th Cir.2005). With these amendments, Daou’s petition for panel rehearing is denied and plaintiffs’ “Motion to Amend Opinion to Conform with Controlling Precedent” is moot.

OPINION

Plaintiffs, a class of former Daou Systems, Inc. (“Daou”) investors who purchased Daou common stock between February 13, 1997 and October 28,1998, allege that defendants Daou, Chief Executive Officer and Chairman of the Board Georges Daou (“G. Daou”), President and Director Daniel Daou (“D. Daou”), Chief Financial Officer and Senior Vice President Fred McGee, Chief Operating Officer and Executive Vice President Robert McNeill, and Director John Moragne systematically and fraudulently violated the Generally Accepted Accounting Principles (“GAAP”) in order to artificially inflate the price of Daou’s stock. Plaintiffs also allege that they incurred substantial personal losses due to their respective purchases of Daou stock at fraudulently inflated prices. The district court, on several occasions, determined that plaintiffs had…