ÿWPC2# :¤e/G†)¯:a,¸†J¦EÞ{·ÝéKQš!/Üî~v»à)Ê1…‘ °qÔ¾‘®—¼'IjÔŽ Ýau%ÚÕö()ÏOýyÄè®ÙØœíL‰ëÛ<מ¯Ÿƒºó‡ÈUã2Á&øøûêæê¢^ðòŠNõ½1®fV 1°‘ ˵I^š¤‚¤ð$– ‹…ÜÑK0(úîhé6´eÓ·ŽY–Š3ì‰Ã¦ú¸Ü£"§ôZ Ö9K‘fûR³ dkÃN¨Sðœ öÞÛò(¼àš—I.ø¯àhl“¦ŒæqzËyyLë¹/–‘kU. ÐÕý£òåÈÛ€Ìûr—¢“É!j"¢ŸŽ)Ú= P™?"Ê [Sn³LpÇ»’¿òh‘ (X@Tl¹WÀíàöÌÍG§{5R*1“C³¬VwqS{béO²,ò8CY vY[…ïÅêÍz hX®Ë /߯jñtòCÆt€[Q÷·^:²ËyéwCMÎÖ?gjù‘’ËóY:ÃtO!cñü?± '#-þj?¨ ÷pŠ¹7+.¿ªz<Ä iÙ rèZ`:¬ñ7P²îÔmµ¬vÐ^ý:/ÜÆÒ÷j÷§ÿùÞÿ/uï â9ù—#ÁB U> %A 0GG U:Ž úÈ È ^ ÂwÎ4Òæõ 0c÷bZ 0Dbbb¦E® m°NÇU 8ÉÕˆÖ^6fffÏœœœœœœœœ½kŠ(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((( B²!²!²!²!²!²!²!²!²!²!²! 0Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ï!Ö\"˜HP LaserJet 5Ü,,,,Ü0<èÀ( 9Z+&Courier RegularX(îí$¡¡Ô€XmTXXXÔ,°À`   "CG Times Bold ðÝ ƒ„Y÷$ÝÔ€Xb`XXXÔÓ  ÓòòÚ  Ú2Ú  Úóó€€Ý  ÝÔ_ÔThis€section€states:Ð ° ÐÌà8  àà ` àExcept€as€provided€in€subsection€(b),€in€any€privateÐ \¬ Ðaction€arising€under€this€title€that€is€based€on€an€.€..€Ð 2‚ Ðomission€of€a€material€fact€necessary€to€make€theÐ X Ðstatement€not€misleading,€a€person€.€.€.€shall€not€beÐ Þ. Ðliable€with€respect€to€any€forward„looking€statement,Ð ´  Ðwhether€written€or€oral,€if€and€to€the€extent€that€„„Њ ÚÐ Ð  Ðà8  àà ` à(A)€the€forward„looking€statement€is€„„Ð` °Ð Ð  Ðà8  àà0` Ð Ð àà0¸ ` Ð ` Ð à(i)€identified€as€a€forward„looking€statement,Ð 6 †  Ðand€is€accompanied€by€meaningful€cautionaryÐ  \  Ðstatements€identifying€important€factors€thatÐ â 2  Ðcould€cause€actual€results€to€differÐ ¸  Ðmaterially€from€those€in€the€forward„lookingÐ ŽÞ  Ðstatement;€orÐd´ ¸ Ð ¸ Ð  Ðà8  àà ` àà ¸ à(ii)€immaterial;€.€.€.€.Ð:Š Ð Ð  ÐÌ15€U.S.C.€ðð€78u„5(c)(1).d1s fqç0‚ ‚ÐHŠ3|x(;3fè$©©Ý ƒîí!ÝÔ€Xb`XXXÔÝ  Ý- ù-(Ã$òòÚ  Ú*Ú  Úóó- ù-ÿU‹ÿÀÀÀ<4šÛ 9Z+‹ Courier New  ËÝ ƒ„Y÷$ÝÔ€Xb`XXXÔÓ  ÓòòÚ  Ú*Ú  Úóó€€Ý  ÝÔ_ÔHon.€John€R.€Gibson,€of€the€Eighth€Circuit,€sitting€byÐ ° Ðdesignation. ~Ý ƒ„Y÷$ÝÔ€Xb`XXXÔÓ  ÓòòÚ  Ú6Ú  Úóó€€Ý  ÝÔ_ÔPlaintiffs€make€somewhat€oblique€references€to€defendants'Ð ° Ðalleged€violations€of€SEC€Regulations€S„K€and€S„X€because€of€aÐ †Ö Ðfailure€to€supplement€certain€information€which€appeared€in€priorÐ \¬ Ðfinancial€documents.€€We€find,€as€did€the€district€court,€òòseeóóÐ 2‚ ÐòòBaronóó,€285€F.€Supp.€2d€at€104€n.2,€that€plaintiffs'€allegations€asÐ X Ðto€the€event€of€default€were€not€actionable€under€the€facts€of€thisÐ Þ. Ðcase.  ,Ý ƒ„Y÷$ÝÔ€Xb`XXXÔÓ  ÓòòÚ  Ú4Ú  Úóó€€Ý  ÝÔ_ÔMoreover,€plaintiffs'€claims€that€the€leases€were€vulnerable€toÐ ° Ðacceleration€are€unavailing.€€Most€financial€instruments€areÐ †Ö Ðsubject€to€some€type€of€default€or€penalty€if€a€party€stopsÐ \¬ Ðpayment;€in€this€case,€however,€the€2000€Form€10„K€disclosed€thatÐ 2‚ ÐGCX€would€continue€to€meet€its€obligations€under€the€supervision€ofÐ X Ðthe€bankruptcy€court. ÅÝ ƒ„Y÷$ÝÔ€Xb`XXXÔÓ  ÓòòÚ  Ú3Ú  Úóó€€Ý  ÝÔ_ÔTo€the€extent€that€plaintiffs€relied€on€the€language€in€theÐ ° Ðpress€release€to€bolster€its€claim€that€GCX€violated€Section€10(b)Ð †Ö Ðand€Rule€10b„5,€that€information€is€not€considered€probative€ofÐ \¬ Ðalleged€omissions,€as€they€are€protected€by€the€statutory€safeÐ 2‚ Ðharbor€unless€the€person€making€the€forward„looking€statements,€inÐ X Ðthis€case€GCX,€had€actual€knowledge€they€were€false€or€misleading.€Ð Þ. ÐòòSeeóó€15€U.S.C.€ðð€78u„15(c)(1)(B);€òòsee€alsoóó€òòGreebelóó,€194€F.3d€at€201.€Ð ´  ÐPlaintiffs€have€made€no€allegation€that€defendants€had€actualÐ Š Ú Ðknowledge€the€statements€regarding€GCX€freeing€itself€from€theÐ ` ° Ðoperating€leases€in€bankruptcy€were€actually€false€or€misleading. ³Ý ƒ„Y÷$ÝÔ€Xb`XXXÔÓ  ÓòòÚ  Ú5Ú  Úóó€€Ý  ÝÔ_ÔSynthetic€leases€are€treated€as€operating€leases€under€GAAP.€Ð ° ÐòòSee€generallyóó€Donald€J.€Weidner,€òòSynthetic€Leases:€StructuredÐ †Ö ÐFinance,€Financial€Accounting€and€Tax€Ownershipóó,€25€J.€Corp.€L.Ð \¬ Ð445,€454„465€(providing€an€expanded€overview€of€the€relationshipÐ 2‚ Ðbetween€financial€accounting€principles€and€synthetic€leases).€Ð X ÐWhile€there€is€some€controversy€over€this€treatment,€there€is€noÐ Þ. Ðquestion€that,€under€GAAP,€the€leases€were€properly€reported. Ô+4 ' Moisakis0Moisakis .    d(J2Y÷$¤¤Ý ƒîí!ÝÔ€Xb`XXXÔÝ  ÝÓ  ÓòòÚ  Ú0Ú  Úóó€€ ÌÝ ƒ„Y÷$ÝÔ€Xb`XXXÔÓ  ÓòòÚ  Ú1Ú  Úóó€€Ý  ÝÔ_ÔThe€term€class€period€is€used,€though€the€class€was€neverÐ ° Ðcertified.Ý ƒîí!ÝÔ€Xb`XXXÔÝ  ÝÔ_ÔÔ€XÌžXXXb`ÔÔ€°Ͻ°XXÌžÔÑ€ÑÑ8€Q#XXdÈdÈ8ÑÑ  ÑÙ*ƒ!Ùà@l l ìàUnited€States€Court€of€AppealsˆÐ ° ÐÔ€„4~„°°ϽÔà@ÀÀ ìàFor€the€First€CircuitˆÐ à ÐÌÔ€„Ù}„„„4~ÔÔ€Xb`X„„Ù}ÔßA€y) °°` dE<_ ` AßÐ ` ° ÐÌNo.€03„2440Ð E • ÐÌà@l l ìàJOHN€BARON;€ALAN€Ô_ÔLAITESÔ_Ô;€AND€THEˆÐ ñ A Ðà@P P ìàJEWISH€FOUNDATION€FOR€EDUCATION€OF€WOMEN,ˆÐ Ç  ÐÌà@ˆˆìàPlaintiffs,€Appellants,ˆÐ sà  ÐÌà@tt)ìàv.ˆÐ o  ÐÌà@l l ìàRICHARD€A.€SMITH;€PETER€C.€READ;ˆÐ Ë  Ðà@P P ìàFRANCIS€E.€Ô_ÔSUTHERBYÔ_Ô;€AND€G.€GAIL€EDWARDS,ˆÐ ¡ñ  ÐÌà@ÄÄìàDefendants,€Appellees.ˆÐ M ÐÌßA€y) °°` d³E<ø` AßÐ ùI ÐÌà@œ œ ìàAPPEAL€FROM€THE€UNITED€STATES€DISTRICT€COURTˆÐ Þ. Ðà@0 0 ìàFOR€THE€DISTRICT€OF€MASSACHUSETTSˆÐ ´ Ðà@44ìà[Hon.€George€A.€Ô_ÔO'TooleÔ_Ô,€Jr.,€òòU.S.€District€Judgeóó]ˆÐ ŠÚ ÐÌßA€y) °°` d³E<5` AßÐ 6† ÐÌà@„„'ìàBeforeˆÐ k Ðà@ìàÔ_ÔTorruellaÔ_Ô,€òòCircuit€Judgeóó,ˆÐ ñA Ðà@ü ü ìàGibson,׃×Ý ƒÃÝòòÚ  Ú*Ú  ÚóóÝ  Ý×  ×€òòSenior€Circuit€Judgeóó,ˆÐ Ç Ðà@ìàand€Ô_ÔLipezÔ_Ô,€òòCircuit€Judgeóó.ˆÐ í ÐÌßA€y) °°` dE<H` AßÐ I™  ÐÌÓ  Óà  àòòJohn€F.€Ô_ÔHarnesÔ_Ôóó,€with€whom€òòÔ_ÔHarnesÔ_Ô€Keller€Ô_ÔLLPÔ_Ôóó€and€òòJoan€T.€Ô_ÔHarnesÔ_ÔóóÐ . ~" Ðwere€on€brief,€for€appellants.Ð !T# Ðà  àòòGus€P.€Ô_ÔColdebellaÔ_Ôóó,€with€whom€òòGoodwin€Procter€Ô_ÔLLPÔ_Ôóó€and€òòStuart€M.Ð Ú!*$ ÐGlassóó€were€on€brief,€for€appellees€Peter€C.€Read,€Francis€E.Ð °"% ÐÔ_ÔSutherbyÔ_Ô,€and€G.€Gail€Edwards.Ð †#Ö& Ðà  àòòRichard€J.€Ô_ÔRosensweigÔ_Ôóó,€with€whom€òòÔ_ÔGoulstonÔ_Ô€&€Ô_ÔStorrsÔ_Ô,€P.C.óó€andÐ \$¬' ÐòòThomas€J.€Ô_ÔSartoryÔ_Ôóó€were€on€brief,€for€appellee€Richard€A.€Smith.Ð 2%‚ ( ÐÌÌßA€y) °°` dàE<³'` AßÐ ´'#+ ÐÌÓ  ÓAugust€18,€2004Ð ™(é#- ÐÓP ÓÌßA€y) °°` d E<D*` AßÐ  E*•%/( ÐÔ_ÔÑ  ÑÓÓÙ*!ÙØØÑ8€Q#XXdÈXXdÈ8ÑÑ€ÑÓ*°,X°` ¨ ƒX°œX*Óà ` àò òTORRUELLA,€òòCircuit€Judgeóó.ó ó€€Plaintiffs„appellants€JohnÐ ° ÐBaron,€Alan€Laites,€and€the€Jewish€Foundation€for€Education€ofÐ xÈ ÐWomen€("plaintiffs")€appeal€the€district€court's€grant€of€a€motionÐ $t Ðto€dismiss€their€class€action€complaint€for€failure€to€state€aÐ Ð  Ðclaim€under€Fed.€R.€Civ.€P.€12(b)(6)€and€failure€to€plead€fraudÐ | Ì Ðwith€particularity€under€Fed.€R.€Civ.€P.€9(b).€€For€the€reasonsÐ ( x  Ðstated€below,€we€affirm.Ð Ô$  Ðà@ÐÐ&ìàò òI.€€òòFactsóóó óˆÐ €Ð  Ðà ` àPlaintiffs€filed€a€class€action€complaint€on€behalf€ofÐ H˜  Ðpurchasers€of€the€stock€of€GC€Companies€("GCX")€for€violation€ofÐ ôD ÐSection€10(b)€of€the€Securities€Exchange€Act€of€1934,€15€U.S.C.Ð  ð Ððð78j(b),€as€amended€by€the€Private€Securities€Litigation€ReformÐ Lœ ÐAct€of€1994€("PSLRA"),€15€U.S.C.€ðððð€78u„4„78u„5,€and€rulesÐ øH Ðpromulgated€thereunder.Ð ¤ô Ðà ` àWe€review€de€novo,€mindful€that€"the€district€court,€onÐ P  Ða€motion€to€dismiss,€must€draw€all€reasonable€inferences€from€theÐ üL Ðparticular€allegations€in€the€plaintiff's€favor,€while€at€the€sameÐ ¨ø  Ðtime€requiring€the€plaintiff€to€show€a€strong€inference€ofÐ T!¤" Ðscienter."€€òòAldridgeóó€v.€òòA.T.€Cross€Corp.óó,€284€F.3d€72,€78€(1st€Cir.Ð #P$ Ð2002)(citing€òòGreebelóó€v.€òòFTP€Software,€Inc.óó,€194€F.3d€185,€201€(1stÐ ¬$ü& ÐCir.€1999)).€€We€first€sketch€out€the€relevant€facts€as€pleaded€inÐ X&¨!( Ðplaintiffs'€complaint€and€complemented€by€the€district€court'sÐ (T#* Ðmemorandum€and€order.€€òòBaronóó€v.€òòSmithóó,€285€F.€Supp.€2d€96€(D.€Mass.Ð °)%, Ð2003).Ð \+¬&. Ðà ` àGCX€was€a€Delaware€corporation€that€publicly€traded€onÐ ° Ðthe€New€York€Stock€Exchange€("NYSE").€€Defendants„appelleesÐ \¬ ÐRichardA.€Smith,€Peter€C.€Read,€Francis€E.€Sutherby,€and€G.€GailÐ X ÐEdwards€("defendants")€were€all€former€officers€and€directors€ofÐ ´  ÐGCX€during€the€relevant€class€period.׃–×Ý ƒÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€€GCX€was€in€the€movieÐ ` ° Ðtheater€business€in€the€United€States€and€South€America€and€alsoÐ  \  Ðmanaged€an€investment€capital€portfolio.€€GCX€was€the€parentÐ ¸  Ðcompany€of€several€wholly„owned€subsidiaries,€through€which€itÐ d´  Ðconducted€its€business€operations.Ð `  Ðà ` àAfter€several€years€of€disappointing€financial€results,Ð ¼  Ðand€faced€with€market€saturation,€GCX€filed€for€Chapter€11Ð h¸ Ðbankruptcy€protection€on€October€11,€2000;€some€of€its€subsidiariesÐ d Ðfiled€for€Chapter€7€liquidation.€€A€press€release,€which€will€beÐ À Ðoutlined€in€detail€below,€accompanied€the€bankruptcy€filing.€€InÐ l¼ Ðthe€press€release€GCX€described€its€hopes€of€emerging€fromÐ h Ðbankruptcy€reorganization€revitalized€and€better€structured€toÐ Ä Ðcompete.€€This€turn€of€events€was€not€wholly€unexpected€as€theÐ pÀ  Ðcompany€had€stated€in€its€September€13,€2000€Quarterly€Report€("theÐ !l" ÐSeptember€2000€10„Q")€that€"[GCX]€is€actively€considering€all€ofÐ È"$ Ðits€strategic€alternatives,€including€additional€closing€ofÐ t$Ä& Ðâ âunprofitable€units,€sales€of€certain€of€the€company's€assets,€or€aÐ  &p!( Ðpotential€bankruptcy€restructuring,€recapitalization,€or€bankruptcyÐ ° Ðreorganization€.€.€.€."Ð \¬ Ðâ âà ` àIn€January€2001,€GCX€filed€its€Annual€Report€for€2000Ð X Ð("2000€Form€10„K")€which€will€be€reviewed€in€detail€below.€€ThatÐ ´  Ðfiling,€like€the€press€release,€anticipated€that€GCX€would€emergeÐ ` ° Ðfrom€reorganization€in€a€stronger€position.€€Contrary€to€GCX'sÐ  \  Ðexpectations,€however,€the€negotiations€between€management€andÐ ¸  Ðcreditors€did€not€go€well€and,€on€June€13,€2001,€GCX€announced€thatÐ d´  Ðit€had€signed€a€letter€of€intent€with€certain€buyers€who€wouldÐ `  Ðpurchase€all€of€GCX's€stock.€€Under€the€terms€of€the€letter€ofÐ ¼  Ðintent,€current€shareholders€would€only€receive€payment€if€theÐ h¸ Ðliquidation€of€the€investment€portfolio€yielded€more€than€$90Ð d Ðmillion.€€During€the€class€period,€the€stock€traded€at€betweenÐ À Ð$1.60€and€$3.25€per€share.€€After€the€announcement€on€June€13,Ð l¼ Ð2001,€which€marks€the€end€of€the€class€period,€GCX's€stock€priceÐ h Ðdropped€to€$0.25€a€share.Ð Ä Ðà@àà$ìàò òII.€€òòAnalysisó óóóˆÐ pÀ  Ðà ` àThe€central€issue€in€this€appeal€is€whether€theÐ 8!ˆ" Ðplaintiffs'€complaint€states€a€cause€of€action€for€materialÐ ä"4$ Ðomissions€under€Section€10(b)€of€the€Securities€Act.€€We€concludeÐ $à& Ðthat€it€does€not.Ð <&Œ!( Ðà ` àTo€state€a€claim€under€Section€10(b)€of€the€SecuritiesÐ è'8#* ÐAct,€a€plaintiff€must€allege,€òòinteróó€òòaliaóó,€that€a€defendant€"(A)Ð ”)ä$, Ðmade€an€untrue€statement€of€a€material€fact;€or€(B)€omitted€toÐ @+&. Ðstate€a€material€fact€necessary€in€order€to€make€the€statementsÐ ° Ðmade,€in€the€light€of€the€circumstances€in€which€they€were€made,Ð \¬ Ðnot€misleading."€€15€U.S.C.€ðð€78u„4(b)(1)(A)„(B).Ð X Ðà ` àSEC€Rule€10b„5,€17€C.F.R.€ðð€240.10b„5,€makes€it€unlawfulÐ ´  Ðfor€any€person,Ð ` ° ÐÓÓà8 ` àà ¨ à(a)€[t]o€employ€any€device,€scheme€orÐ  \  Ðartifice€to€defraud,€(b)€[t]o€make€any€untrueÐ â 2  Ðstatement€of€a€material€fact€or€to€omit€toÐ ¸  Ðstate€a€material€fact€necessary€in€order€toÐ ŽÞ  Ðmake€the€statements€made,€in€the€light€of€theÐ d´  Ðcircumstances€under€which€they€were€made,€notÐ :Š  Ðmisleading,€or€(c)€[t]o€engage€in€any€act,Ð `  Ðpractice€or€course€of€business€which€operatesÐ æ6 Ðor€would€operate€as€a€fraud€or€deceit€upon€anyÐ ¼  Ðperson,€in€connection€with€the€purchase€orÐ ’â Ðsale€of€any€security.Ðh¸` x` x ÐÌÓ>%ÓòòId.óó€€We€evaluate€the€allegations€in€the€complaint€with€bothÐ d Ðproscriptions€in€mind.Ð À Ðà ` àPlaintiffs€concede€that€defendants€have€not€engaged€inÐ l¼ Ðmaterial€misstatements;€thus,€to€state€a€claim€for€securitiesÐ h Ðfraud,€they€rely€on€the€material€omissions€prong€of€ðð€78u„4(b)(1).€Ð Ä ÐUnder€the€PSLRA,€a€complaint€must€identify€what€plaintiffs€believeÐ pÀ  Ðto€be€the€material€omission€and€why€that€omission€is€material.€€òòId.óóÐ !l" Ððð€78u„4(b)(1)(B).€€The€test€for€materiality,€taken€from€the€pre„Ð È"$ ÐPSLRA€case€of€òòBasic,€Inc.óó€v.€òòLevinsonóó,€485€U.S.€224,€231„32€(1988),Ð t$Ä& Ðwas€recently€summarized€as€follows:Ð  &p!( ÐÓÓà8 ` àA€fact€is€material€if€it€is€substantiallyÐ Ì'#* Ðlikely€that€the€disclosure€of€the€omitted€factÐ ¢(ò#+ Ðwould€have€been€viewed€by€the€reasonableÐ x)È$, Ðinvestor€as€having€significantly€altered€theÐ N*ž%- Ðtotal€mix€of€information€made€available.€Ð $+t&. ÐInformation€which€would€have€assumed€actualÐ ú+J'/ Ðsignificance€in€the€deliberations€of€aÐ ° Ðreasonable€shareholder€is€material.€€InÐ †Ö Ðgeneral,€the€materiality€of€a€statement€orÐ \¬ Ðomission€is€a€question€of€fact€that€shouldÐ 2‚ Ðnormally€be€left€to€a€jury€rather€thanÐ X Ðresolved€by€the€court€on€a€motion€to€dismiss.€Ð Þ. ÐThus,€we€review€the€complaint€only€toÐ ´  Ðdetermine€that€it€pleads€the€existence€of€suchÐ Š Ú Ðstatements€and€presents€a€plausible€juryÐ ` ° Ðquestion€of€materiality.Ð6 † ` x` x ÐÌÓc+ÓòòBielskióó€v.€òòCabletron€Sys.,€Inc.óó€(òòIn€re€Cabletron€Sys.,€Inc.óó),€311Ð â 2  ÐF.3d€11,€34€(1st€Cir.€2002)(quoting€òòBasicóó,€485€U.S.€at€231„Ð ŽÞ  Ð32)(internal€citations€and€quotation€marks€omitted).Ð :Š  Ðà ` àThe€complaint€focuses€on€certain€GCX€financialÐ æ6 Ðarrangements€as€well€as€the€press€release.€€Plaintiffs€allege€thatÐ ’â Ðdefendants€omitted€material€facts€from€GCX€financial€disclosureÐ >Ž Ðstatements.€€We€discuss€each€in€turn.Ð ê: Ðò òA.€€The€Press€Releaseó óÐ –æ Ðà ` àThe€press€release€issued€by€GCX€on€October€11,€2000Ð ^® Ðcontained€the€following€information:Ð  Z ÐÓÓà8 ` àà ¨ àGC€Companies,€Inc.€(NYSE:€GCX),€parentÐ ¶ Ðcompany€of€General€Cinema€Theaters,€Inc.,Ð ŒÜ  Ðannounced€today€that€GC€Companies€and€certainÐ b ²! Ðof€its€domestic€subsidiaries,€includingÐ 8!ˆ" ÐGeneral€Cinema€Theaters,€Inc.,€are€filingÐ "^# Ðvoluntary€petitions€to€reorganize€theirÐ ä"4$ Ðbusiness€under€Chapter€11€of€the€U.S.Ð º# % ÐBankruptcy€Code.€€The€Company€further€statedÐ $à& Ðthat€certain€of€its€subsidiaries€in€Florida,Ð f%¶ ' ÐGeorgia,€Louisiana,€and€Tennessee€are€filingÐ <&Œ!( ÐChapter€7€liquidation€proceedings.€€TheÐ 'b") Ðfilings€were€made€in€the€United€StatesÐ è'8#* ÐBankruptcy€Court€for€the€District€of€Delaware.€Ð ¾($+ ÐIn€its€filings,€[GCX]€will€report€total€assetsÐ ”)ä$, Ðof€$328.9€million€and€total€liabilities€ofÐ j*º%- Ðâ â$195.1€million€as€of€August€31,€2000.Ð@+&.` x` x Ðà8 ` àà ¨ àThe€Company€believes€that€Chapter€11Ð ° Ðâ âreorganization€provides€the€Company€with€theÐ †Ö Ðmost€effective€means€to€terminate€andÐ \¬ Ðrestructure€unprofitable€leases€and€positionÐ 2‚ Ðthe€Company€to€succeed€in€today's€highlyÐ X Ðcompetitive€market.ÐÞ.` x` x Ðà ` à.€.€.€.Ð ´  Ðà8 ` àà ¨ àThrough€the€Chapter€11€process,€theÐ Š Ú ÐCompany€expects€to€be€able€to€terminateÐ ` ° Ðunprofitable€leases,€reduce€the€Company'sÐ 6 †  Ðoperating€expenses€and€make€necessaryÐ  \  Ðimprovements€to€the€business€to€create€aÐ â 2  Ðstrong€competitive€future€for€[GCX].€€WhileÐ ¸  Ðthe€Company€completes€the€restructuring,€itsÐ ŽÞ  Ðoperations€are€expected€to€continue.Ðd´ ` x` x Ðà ` à.€.€.€.Ð :Š  Ðà8 ` àà ¨ àThe€Company€is€arranging€up€to€$45Ð `  Ðmillion€of€debtor€in€possession€financing€toÐ æ6 Ðprovide€the€Company€with€resources€to€fund€itsÐ ¼  Ðoperations€during€the€Chapter€11€proceedings.Ð’â` x` x ÐÌÓq2Óà ` àAfter€announcing€a€management€restructuring€whichÐ >Ž Ðincluded€the€named€defendants€in€this€action,€the€press€releaseÐ ê: Ðended€with€the€following:Ð –æ ÐÓÓà8 ` àà ¨ àForward„Looking€Statements€in€thisÐ B’ Ðpress€release€are€made€pursuant€to€the€safeÐ h Ðharbor€provisions€of€the€[PSLRA]€of€1995.€€TheÐ î> Ðwords€'expect,'€'anticipate,'€'intend,'Ð Ä Ð'plan,'€'believe,'€'seek,'€'estimate'€andÐ šê Ðsimilar€expressions€are€intended€to€identifyÐ pÀ  Ðsuch€forward„looking€statements;€however€thisÐ F –! Ðpress€release€also€contains€other€forward„Ð !l" Ðlooking€statements.€€[GCX]€cautions€that€thereÐ ò!B# Ðare€various€important€factors€that€could€causeÐ È"$ Ðactual€results€to€differ€materially€from€thoseÐ ž#î% Ðindicated€in€the€forward„looking€statements€.Ð t$Ä& Ð.€.€.€€Among€[them]€.€.€.€are:€the€overallÐ J%š ' Ðviability€of€the€Company's€long„termÐ  &p!( Ðoperational€reorganization€and€financialÐ ö&F") Ðrestructuring€plan;€.€.€.€.ÐÌ'#*` x` x ÐÌÓy<Óà ` àTo€the€extent€that€plaintiffs€seek€to€state€a€claim€underÐ x)È$, Ðthe€securities€laws€for€a€deceptive€press€release€or€as€anÐ $+t&. Ðindication€that€the€company€omitted€material€information€from€itsÐ ° Ðfilings,€we€agree€with€the€district€court€that€the€press€releaseÐ \¬ Ðcontained€forward„looking€statements,€as€so€stated€therein,€andÐ X Ðtherefore€comes€under€the€protection€of€the€statutory€safe€harbor.€Ð ´  ÐòòSeeóó€15€U.S.C.€ðð€78u„5(c)(1);׃×Ý ƒÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×€òòsee€alsoóó€òòGreebelóó€194€F.3d€at€201Ð ` ° Ð(discussing€the€safe€harbor€for€forward„looking€statements);€òòSunaóóÐ  \  Ðv.€òòBailey€Corp.óó,€107€F.3d€64,€70€(1st€Cir.€1997)(stating,€in€a€pre„Ð ¸  ÐPSLRA€case,€that€"no€reasonable€investor€would€have€read€theseÐ d´  Ðstatements,€especially€as€they€are€accompanied€by€cautionaryÐ `  Ðlanguage,€as€promises€or€guarantees€of€future€performance.").€Ð ¼  ÐThus,€none€of€the€statements€made€by€GCX€in€the€press€release,Ð h¸ Ðwhich€plaintiffs€seek€to€attribute€to€the€defendants,€areÐ d Ðâ âactionable€under€Section€10(b)€or€Rule€10b„5.€€We€therefore€affirmÐ À Ðthe€district€court's€dismissal€of€the€claims€based€on€the€pressÐ ° Ðrelease.Ð \¬ Ðâ âò òB.€€The€Synthetic€Leasesó óÐ X Ðà ` àPlaintiffs€devote€a€considerable€portion€of€their€effortsÐ Ð  Ðin€constructing€a€claim€under€Section€10(b)€and€Rule€10b„5€to€GCX'sÐ | Ì Ðuse€of€synthetic€leases€as€a€corporate€finance€tool€and€GCX'sÐ ( x  Ðdescription€of€the€leases€in€its€financial€disclosure€filings.€€GCXÐ Ô$  Ðentered€into€two€synthetic€leases€before€filing€for€bankruptcy.€Ð €Ð  ÐPlaintiffs€argue€that€GCX€omitted€material€information€from€itsÐ ,|  Ðpublic€filings€regarding€these€synthetic€leases€which€was€necessaryÐ Ø( Ðfor€the€disclosed€information€not€to€mislead€investors.Ð „Ô Ðà ` àA€synthetic€lease€is€an€arrangement€that€allows€aÐ 0€ Ðcorporation€to€finance€real€estate€ownership€while€shifting€theÐ Ü, Ðrisk€away€from€itself€should€the€deal€prove€unprofitable.€€"AÐ ˆØ Ðprimary€factor€motivating€many€synthetic€leases€is€the€off„balanceÐ 4„ Ðsheet€treatment€that€such€transactions€receive."€€H.€Peter€Nesvold,Ð à0 ÐòòWhat€Are€You€Trying€to€Hide?€Synthetic€Leases,€Financial€DisclosureÐ ŒÜ  Ðand€the€Information€Mosaicóó,€Stan.€J.€L.,€Bus.€&€Fin.€83,€93€(1999).€Ð 8!ˆ" ÐOverall,€the€off„balance€treatment€gives€the€corporation€theÐ ä"4$ Ðopportunity€to€show€a€stronger€bottom€line€in€its€financialÐ $à& Ðdisclosure€statements.€€òòId.óó€€Other€financing€advantages,€such€asÐ <&Œ!( Ðtax€savings,€can€also€make€synthetic€leases€a€good€vehicle€forÐ è'8#* Ðâ âcorporate€financing.Ð ”)ä$, Ðà ` àThe€first€synthetic€lease€at€issue€here€was€with€GeneralÐ ° Ðâ âElectric€Credit€Company€("the€GECC€lease")€and€the€second€was€withÐ \¬ ÐHeller€("the€Heller€lease").€€The€district€court€held€that€GCXÐ X Ðdisclosed€the€existence€and€the€amount€of€the€leases€in€its€2000Ð ´  ÐForm€10„K,€and€that€"a€reasonable€investor€[would€have€been]€onÐ ` ° Ðnotice€of€the€nature€of€GCX's€lease€arrangement."€€òòBaronóó,€285€F.Ð  \  ÐSupp.€2d€at€105.Ð ¸  Ðà ` àThe€2000€Form€10„K€contained€the€following€informationÐ d´  Ðregarding€the€leases:Ð `  ÐÓÓà8 ` à[GCX]€has€entered€into€$118.8€million€ofÐ ¼  Ðoperating€leases€with€a€major€financialÐ ’â Ðinstitution€under€a€lease€financingÐ h¸ Ðarrangement.€€The€receivable€due€from€theÐ >Ž Ðfinancing€institution€at€October€31,€1999Ð d Ð[sic]€of€$15.5€million€was€reclassified€toÐ ê: Ðcapital€expenditures€in€2000.€€[GCX]€hasÐ À ÐBankruptcy€Court€approval€to€make€monthlyÐ –æ Ðadequate€protection€payments€of€approximatelyÐ l¼ Ð$1.1€million,€in€respect€[sic]€of€the€leaseÐ B’ Ðfinancing€arrangement.Ðh` x` x ÐÌÓPÓPlaintiffs€argue€that€this€information€is€not€sufficient€to€meetÐ Ä Ðdefendants'€disclosure€requirements.׃×Ý ƒÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€They€allege,€òòinteróó€òòaliaóó,Ð pÀ  Ðthat€more€information€was€necessary€to€inform€investors€of€theÐ !l" Ðconsequences€of€the€leases€and€that€GCX's€failure€to€disclose€theÐ ° Ðsubsequent€claims€that€came€into€being€once€they€filed€forÐ \¬ Ðbankruptcy€constituted€a€violation€of€Section€10(b)€and€Rule€10b„5.Ð X Ðà ` àPlaintiffs'€claim€fails€because€GCX€disclosed€theÐ ´  Ðmaterial€facts€that€would€lead€a€reasonable€investor€to€make€anÐ ` ° Ðinformed€decision€regarding€the€purchase€of€stock€in€GCX.€€WeÐ  \  Ðreview€allegations€of€securities€fraud€under€the€particular€factsÐ ¸  Ðof€each€case.€€òòSeeóó€òòGreebelóó,€194€F.3d€at€196.€€First,€during€theÐ d´  Ðrelevant€class€period,€the€company€was€in€reorganizationÐ `  Ðproceedings.€€Thus,€any€reasonable€investor€was€aware€that€theÐ ¼  Ðbusiness€operations€of€GCX€were€strained€and€the€company€wasÐ h¸ Ðundergoing€substantial€changes€in€its€operations.€€Upon€evaluatingÐ d Ðthe€particular€language€of€the€2000€Form€10„K€regarding€the€leases,Ð À Ðit€is€clear€that€the€amount€of€the€liability€is€disclosed€as€is€theÐ l¼ Ðnature€of€the€transaction€and€the€accounting€change€over€to€capitalÐ h Ðexpenditure.€€Second,€and€most€important,€GCX€specified€itsÐ Ä Ðcontinuing€obligation,€as€well€as€the€amount€of€the€obligations,€asÐ pÀ  Ða€debtor„in„possession€vis„„vis€the€leases,€during€the€relevantÐ !l" Ðclass€period.׃×Ý ƒÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€€òòCf.óó€òòIn€re€Cabletronóó,€311€F.3d€at€35€(whereÐ È"$ Ðcompany's€revenues€were€materially€inflated€by€tens€of€millions€andÐ t$Ä& Ðthe€inaccuracy€in€earnings€was€derived€from€actual€fraud,€filingsÐ ° Ðwere€considered€materially€misleading).Ð \¬ Ðà ` àPlaintiffs€also€allege,€on€a€slightly€different€track,Ð X Ðthat€one€of€the€reasons€the€district€court€dismissed€their€claimsÐ ´  Ðregarding€the€synthetic€leases€was€"because€compliance€with€GAAPÐ ` ° Ðimmunized€defendants€from€liability."€We€do€not€believe€theÐ  \  Ðdistrict€court's€holding€is€susceptible€to€such€an€interpretation.€Ð ¸  ÐIn€fact,€the€district€court€stated€that€"[t]here€is€no€allegationÐ d´  Ðof€any€violation€of€generally€accepted€accounting€principles€inÐ `  Ðrespect€[to]€the€synthetic€leases."€€òòBaronóó,€285€F.€Supp.€2d€at€105Ð ¼  Ðn.3.€€We€have€previously€observed€that€a€violation€of€GAAP€in€SECÐ h¸ Ðfilings€raises€an€inference€that€the€disclosure€is€misleading€orÐ d Ðinaccurate€under€SEC€regulations.€òòSeeóó€òòIn€re€Cabletronóó,€311€F.3d€atÐ À Ð34€(citing€to€17€C.F.R.€ðð€210.4„01(a)(1)).€€In€the€same€vein€weÐ l¼ Ðhave€held€that€even€when€a€company's€disclosure€is€in€violation€ofÐ h ÐGAAP,€"some€techniques€.€.€.€might€prove€to€be€entirely€legitimate,Ð Ä Ðdepending€on€the€specific€facts."€€òòId.óó€€In€this€case,€plaintiffsÐ pÀ  Ðconcede€that€the€SEC€filings€are€in€compliance€with€GAAP.€Ð !l" ÐNevertheless,€they€argue€that€GAAP€rules€should€not€immunize€theÐ È"$ Ðdefendants€from€liability.׃$×Ý ƒÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×€€We€think€this€misses€the€centralÐ t$Ä& Ðquestion€in€this€matter€which€is€whether€the€leases€were€disclosedÐ ° Ðin€compliance€with€Section€10(b).€€All€the€material€informationÐ \¬ Ðnecessary€for€a€reasonable€investor€to€make€an€informed€decisionÐ X Ðwas€provided.Ð ´  Ðò òC.€€The€Mexican€Noteó óÐ ` ° Ðà ` àAccording€to€plaintiffs,€GCX€represented€in€its€filingsÐ ( x  Ðthat€a€$6.8€million€note€("the€Mexican€note"),€payable€inÐ Ô$  Ðconnection€with€GCX's€sale€of€its€Mexican€theater€investment,€wasÐ €Ð  Ða€GCX€asset.Ð ,|  Ðà ` àThe€existence€of€the€Mexican€note€was€disclosed€in€theÐ Ø( Ð2000€Form€10„K.€€It€stated€that€"[i]n€May€2000,€[GCX]€sold€itsÐ „Ô ÐMexican€theater€investment€for€approximately€$14.3€million€of€whichÐ 0€ Ð$7.5€million€of€the€sales€price€was€received€in€cash,€and€theÐ Ü, Ðremaining€balance€will€be€paid€in€three€installments€over€twoÐ ˆØ Ðyears."€€Plaintiffs€argue€that€defendants€were€obligated€to€stateÐ 4„ Ðthat€the€Mexican€note€was€owned€by€a€subsidiary,€not€by€GCX,€andÐ à0 Ðwas€therefore€outside€GCX's€bankruptcy€estate€during€Chapter€11Ð ŒÜ  Ðproceedings.Ð 8!ˆ" Ðà ` àThe€district€court€characterized€this€claim€as€"fatuous."€Ð ä"4$ ÐòòBaronóó,€285€F.€Supp.€2d€at€104.€€We€agree€that€plaintiffs'€claimÐ $à& Ðthat€the€disclosure€of€the€Mexican€note€in€2000€Form€10„K€was€inÐ <&Œ!( Ðviolation€of€Section€10(b)€is€a€non„starter.€€The€2000€Form€10„KÐ è'8#* Ðfor€GCX€was,€by€its€terms,€a€consolidated€return€and€includedÐ ”)ä$, Ðfinancial€data€for€both€the€parent€company€and€its€subsidiaries,€inÐ @+&. Ðcompliance€with€ðð€13€and€ðð€15(d)€of€the€Securities€Exchange€Act€ofÐ ° Ð1934.€€òòSeeóó€15€U.S.C.€ðð€78m,€ðð€78o(d);€òòsee€alsoóó€17€C.F.R.€ðð€210.3„01Ð \¬ Ð(detailing€the€SEC€regulations€for€consolidated€balance€sheets).Ð X Ðà ` àPlaintiffs€allege€that€the€possibility€that€the€MexicanÐ ´  Ðnote€would€not€be€part€of€the€bankruptcy€estate€is€a€materialÐ ` ° Ðomission€that€should€have€been€disclosed€under€the€securities€laws.€Ð  \  ÐAs€stated€above,€claims€for€securities€fraud€during€the€relevantÐ ¸  Ðclass€period€should€be€evaluated€in€the€context€of€GCX's€bankruptcyÐ d´  Ðfiling.Ð `  Ðà ` àMoreover,€GCX's€proceeds€from€the€Mexican€note€wereÐ ¼  Ðincluded€in€the€bankruptcy€estate,€as€is€evident€from€GCX'sÐ h¸ Ðbankruptcy€filings€and€the€quarterly€report€(Form€10„Q)€for€theÐ d Ðquarter€ending€on€April€30,€2001,€which€stated€that€"[GCX]€receivedÐ À Ð$6.4€million€as€payment€in€full€on€its€Mexican€note€receivable."Ð l¼ Ðà ` àWe€find€that€no€material€information€that€was€necessaryÐ h Ðfor€a€reasonable€investor€to€determine€GCX's€financial€conditionÐ Ä Ðwas€omitted€with€respect€to€the€Mexican€note.Ð pÀ  Ðò òD.€€The€South€American€Joint€Ventureó óÐ !l" Ðà ` àPlaintiffs€allege€that€defendants€omitted€the€fact€thatÐ ä"4$ Ðthe€filing€of€a€bankruptcy€petition€was€an€event€of€default€underÐ $à& Ða€loan€guarantee€made€for€a€South€American€joint€venture.€€The€loanÐ <&Œ!( Ðguarantee€by€its€terms€involved€a€two„step€process€required€toÐ è'8#* Ðtrigger€GCX's€obligations:€first,€an€event€of€default€had€to€occurÐ ”)ä$, Ðand€second,€the€loan€guarantee€had€to€be€called.€€Plaintiffs€argueÐ @+&. Ðthat€GCX's€failure€to€disclose€that€the€Chapter€11€petition€was€anÐ ° Ðevent€of€default€in€the€2000€Form€10„K€constitutes€a€materialÐ \¬ Ðomission.Ð X Ðà ` àWe€agree€with€the€district€court€that€"there€is€noÐ ´  Ðquestion€that€[GCX]€disclosed€the€fact€that€it€had€guaranteed€50%Ð ` ° Ðof€the€debt€of€the€South€American€joint€venture."€€òòBaronóó,€285€F.Ð  \  ÐSupp.€2d€at€103.€€The€2000€Form€10„K€also€disclosed€the€currentÐ ¸  Ðstatus€of€the€joint€venture€as€well€as€the€amount€of€GCX'sÐ d´  Ðguarantee€obligations.Ð `  Ðà ` àPlaintiffs€admit€that€the€default€as€to€the€SouthÐ ¼  ÐAmerican€joint€venture€was€not€a€current€default€during€theÐ h¸ Ðrelevant€class€period.€€They€argue,€however,€that€the€failure€toÐ d Ðdisclose€the€effect€of€the€bankruptcy€filing€on€the€joint€ventureÐ À Ðwas€a€material€omission.€€We€disagree.€€It€is€not€a€materialÐ l¼ Ðomission€to€fail€to€point€out€information€of€which€the€market€isÐ h Ðalready€aware.€€òòSeeóó€òòIn€re€Donald€Trump€Casino€Sec.€Litig.óó,€7€F.3dÐ Ä Ð357,€377€(3d€Cir.€1993)(no€violation€where€investors€were€notÐ pÀ  Ðinformed€of€the€weakened€economic€conditions€in€particularÐ !l" Ðgeographic€areas).€€Plaintiffs€admit€that€the€filing€of€a€voluntaryÐ È"$ Ðpetition€for€reorganization€under€Chapter€11€is€considered€aÐ t$Ä& Ðstandard€event€of€default€for€most€guarantee€obligations€in€theÐ  &p!( Ðfinancial€markets.€€In€addition,€as€plaintiffs€acknowledge,€aÐ Ì'#* Ðdefault€and€an€event€of€default€are€different€things€under€theÐ x)È$, Ðbankruptcy€code.€€òòSee€generallyóó€€òòU.S.€Fid.€&€Guar.€Co.óó€v.€òòBraspetroÐ $+t&. ÐOil€Servcs.€Co.óó,€369€F.3d€34,€51€(2d€Cir.€2004)(explaining€thatÐ ° Ðwhere€failure€to€comply€with€contract€clauses€was€event€of€defaultÐ \¬ Ðas€specified€in€contract,€the€court€must€still€examine€whetherÐ X Ðthere€was€actual€default€on€performance).Ð ´  Ðà ` àMoreover,€given€the€structure€of€the€financialÐ ` ° Ðtransaction,€the€event€of€default€did€not€materially€alter€GCX'sÐ  \  Ðfinancial€obligations.€€The€loan€still€had€to€be€called;€the€recordÐ ¸  Ðmakes€clear€that€the€company's€obligations€under€the€guarantee€wereÐ d´  Ðnot€triggered€until€it€was€called€in€January€2002,€more€than€sixÐ `  Ðmonths€after€the€end€of€the€class€period€at€issue€in€this€case,€andÐ ¼  Ðas€disclosed€in€GCX's€Quarterly€Report€(Form€10„Q)€for€the€quarterÐ h¸ Ðending€January€31,€2002.׃×Ý ƒÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×Ð d Ðò òE.€€Pleading€Fraudó óÐ À Ðà ` àThe€district€court€dismissed€the€complaint€on€theÐ ˆØ Ðalterative€grounds€that€plaintiffs€had€failed€to€plead€fraud€withÐ 4„ Ðparticularity€as€required€by€Fed.€R.€Civ.€P.€9(b).€€òòSeeóó,€òòe.g.óó,Ð à0 ÐòòAldridgeóó€v.€òòA.T.€Cross€Corp.óó,€284€F.3d€72,€78„79€(1st€Cir.Ð ŒÜ  Ð2002)(stating€that€a€complaint€must€meet€the€PSLRA€standard€forÐ 8!ˆ" Ðâ âpleading€fraud).€€Because€we€find€that€the€complaint€failed€toÐ ä"4$ Ðplead€any€material€omissions,€we€need€not€reach€the€issue€ofÐ ° Ðwhether€fraud€was€adequately€pleaded.Ð \¬ Ðâ âà@,,"ìàò òIII.€€òòConclusionó óóóˆÐ X Ðà ` àWe€therefore€affirm€the€district€court's€dismissal€ofÐ Ð  Ðplaintiffs'€complaint€for€failure€to€state€a€claim€under€SectionÐ | Ì Ð10(b)€and€Rule€10b„5€of€the€Securities€Exchange€Act.Ð ( x  Ðà ` àòòò òAffirmedóó.ó ó