{ "id": 261393, "name": "PHILIPPE OLCZYK et al., on Their Behalf and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants, v. CERION TECHNOLOGIES, INC., et al., Defendants-Appellees", "name_abbreviation": "Olczyk v. Cerion Technologies, Inc.", "decision_date": "1999-11-19", "docket_number": "No. 1 \u2014 98\u20142019", "first_page": "905", "last_page": "922", "citations": [ { "type": "official", "cite": "308 Ill. App. 3d 905" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "510 U.S. 1178", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 231972, 230117, 230567, 232297, 235152, 231921, 235953, 235225, 232027, 235228, 230653, 233534 ], "year": 1994, "pin_cites": [ { "parenthetical": "applying \"bespeaks caution\" doctrine only to allegations of forward-looking statements, but not to allegations concerning omissions of present fact" } ], "opinion_index": 0, "case_paths": [ "/us/510/1178-10", "/us/510/1178-03", "/us/510/1178-08", "/us/510/1178-04", "/us/510/1178-07", "/us/510/1178-02", "/us/510/1178-06", "/us/510/1178-05", "/us/510/1178-01", "/us/510/1178-11", "/us/510/1178-09", "/us/510/1178-12" ] }, { "cite": "520 U.S. 1103", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11654881, 11654692, 11654564, 11654724, 11654535, 11654414, 11654382, 11654770, 11654451, 11654616, 11654811, 11654492 ], "year": 1997, "pin_cites": [ { "parenthetical": "In re Stac" } ], "opinion_index": 0, "case_paths": [ "/us/520/1103-12", "/us/520/1103-08", "/us/520/1103-06", "/us/520/1103-09", "/us/520/1103-05", "/us/520/1103-02", "/us/520/1103-01", "/us/520/1103-10", "/us/520/1103-03", "/us/520/1103-07", "/us/520/1103-11", "/us/520/1103-04" ] }, { "cite": "510 U.S. 1073", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 232359, 235788, 230893, 232845, 233197, 230224, 232497, 230323, 231380, 233333, 235256, 230911 ], "year": 1994, "pin_cites": [ { "parenthetical": "\"A prospectus stating a risk that such a thing could happen is a far cry from one stating that this had happened. The former does not put an investor on notice of the latter\"" } ], "opinion_index": 0, "case_paths": [ "/us/510/1073-01", "/us/510/1073-08", "/us/510/1073-03", "/us/510/1073-09", "/us/510/1073-06", "/us/510/1073-05", "/us/510/1073-10", "/us/510/1073-02", "/us/510/1073-04", "/us/510/1073-07", "/us/510/1073-11", "/us/510/1073-12" ] }, { "cite": "524 U.S. 927", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11197890, 11198307, 11198248, 11198089, 11198189, 11197966, 11197742, 11197776, 11198030, 11197813, 11198358, 11197846, 11198141, 11197919 ], "year": 1998, "pin_cites": [ { "parenthetical": "NationsMart" } ], "opinion_index": 0, "case_paths": [ "/us/524/0927-05", "/us/524/0927-13", "/us/524/0927-12", "/us/524/0927-09", "/us/524/0927-11", "/us/524/0927-07", "/us/524/0927-01", "/us/524/0927-02", "/us/524/0927-08", "/us/524/0927-03", "/us/524/0927-14", "/us/524/0927-04", "/us/524/0927-10", "/us/524/0927-06" ] }, { "cite": "179 F.R.D. 126", "category": "reporters:specialty", "reporter": "F.R.D.", "case_ids": [ 1352250 ], "year": 1998, "pin_cites": [ { "page": "133" } ], "opinion_index": 0, "case_paths": [ "/frd/179/0126-01" ] }, { "cite": "1 F. Supp. 2d 1096", "category": "reporters:federal", "reporter": "F. Supp. 2d", "case_ids": [ 1575306 ], "year": 1998, "pin_cites": [ { "page": "1119" } ], "opinion_index": 0, "case_paths": [ "/f-supp-2d/1/1096-01" ] }, { "cite": "28 F. Supp. 2d 901", "category": "reporters:federal", "reporter": "F. Supp. 2d", "case_ids": [ 1373398 ], "year": 1998, "pin_cites": [ { "page": "923", "parenthetical": "\"[t]o state a claim under Section 11, a plaintiff must allege: 1" } ], "opinion_index": 0, "case_paths": [ "/f-supp-2d/28/0901-01" ] }, { "cite": "182 F.R.D. 364", "category": "reporters:specialty", "reporter": "F.R.D.", "case_ids": [ 348760 ], "year": 1998, "pin_cites": [ { "page": "368", "parenthetical": "\"To plead proper standing under \u00a7 11, a plaintiff may plead a purchase in the public offering itself or a purchase traceable to the offering and its Registration Statement\"" } ], "opinion_index": 0, "case_paths": [ "/frd/182/0364-01" ] }, { "cite": "25 F. Supp. 2d 61", "category": "reporters:federal", "reporter": "F. Supp. 2d", "case_ids": [ 11801596 ], "year": 1998, "pin_cites": [ { "page": "66", "parenthetical": "\" '[i]t has been the law in this Circuit for over thirty years that a plaintiff who can trace their [sic] securities to a registered offering has standing to sue under the Securities Act for a defect in that registration[ ]' [citation]\"" } ], "opinion_index": 0, "case_paths": [ "/f-supp-2d/25/0061-01" ] }, { "cite": "667 N.E.2d 1296", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1996, "pin_cites": [ { "parenthetical": "complaint dismissed where the only \"facts\" alleged by plaintiff were \"her own subjective belief' that she was the leading candidate for a job that she did not receive" } ], "opinion_index": 0 }, { "cite": "172 Ill. 2d 399", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 55991 ], "year": 1996, "pin_cites": [ { "page": "403, 408, 409", "parenthetical": "complaint dismissed where the only \"facts\" alleged by plaintiff were \"her own subjective belief' that she was the leading candidate for a job that she did not receive" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/172/0399-01" ] }, { "cite": "475 N.E.2d 3", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1985, "pin_cites": [ { "parenthetical": "allegations of fraud required knowledge of misconduct committed by the child" } ], "opinion_index": 0 }, { "cite": "130 Ill. 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The former does not put an investor on notice of the latter\"" } ], "opinion_index": 0 }, { "cite": "8 F.3d 1121", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 10514824 ], "year": 1993, "pin_cites": [ { "page": "1127" } ], "opinion_index": 0, "case_paths": [ "/f3d/8/1121-01" ] }, { "cite": "162 F.R.D. 534", "category": "reporters:specialty", "reporter": "F.R.D.", "case_ids": [ 7849804 ], "year": 1995, "pin_cites": [ { "parenthetical": "\"the inclusion of general cautionary language regarding a prediction would not excuse the alleged failure to reveal known material, adverse facts\"" } ], "opinion_index": 0, "case_paths": [ "/frd/162/0534-01" ] }, { "cite": "20 F.3d 160", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 10503549 ], "year": 1994, "pin_cites": [ { "page": "171" } ], "opinion_index": 0, "case_paths": [ "/f3d/20/0160-01" ] }, { "cite": "185 F.R.D. 313", "category": "reporters:specialty", "reporter": "F.R.D.", "case_ids": [ 749673 ], "year": 1999, "opinion_index": 0, "case_paths": [ "/frd/185/0313-01" ] }, { "cite": "178 F.R.D. 545", "category": "reporters:specialty", "reporter": "F.R.D.", "case_ids": [ 1303767 ], "weight": 2, "year": 1998, "pin_cites": [ { "page": "560" }, { "page": "556", "parenthetical": "\"I find, notwithstanding Gustafson, that \u00a7 11 extends not only to persons who buy 'in the [ojffering,' but to all persons who acquired stock traceable to a public offering conducted via a misleading registration statement\"" } ], "opinion_index": 0, "case_paths": [ "/frd/178/0545-01" ] }, { "cite": "120 F.3d 1112", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 224554 ], "weight": 2, "year": 1997, "pin_cites": [ { "page": "1123" }, { "page": "1123", "parenthetical": "applying \"bespeaks caution\" doctrine, where plaintiff failed to allege that certain statements were \"untrue when made, were later shown to be untrue, or had any impact on [defendant's] stock price when their falsity was disclosed\"" } ], "opinion_index": 0, "case_paths": [ "/f3d/120/1112-01" ] }, { "cite": "Fed. 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Pickup and Joshua Teitel-baum, individually and on behalf of all others similarly situated (collectively plaintiffs), appeal from the circuit court\u2019s dismissal of their second amended consolidated class action complaint (subject complaint) with prejudice. Plaintiffs, stockholders of defendant Cerion Technologies, Inc. (Cerion), a \u201chigh-tech\u201d manufacturer of components for computer disk drives, had filed suit against Cerion and defendants Nashua Corporation (Nashua), William Blair & Co. (Blair), David A. Peterson, Paul A. Harter, Richard A. Clark, Gerald G. Garbacz and Daniel M. Junius (collectively defendants), alleging that Cerion\u2019s representation of its business prospects in its prospectus was misleading because it failed to disclose the fact at the time of its offering that Ce-rion already \u201cwas being eliminated as a supplier by its two major customers.\u201d In dismissing the subject complaint with prejudice, the court held that defendants\u2019 prospectus \u201cbespoke caution\u201d and that plaintiffs had failed to plead facts sufficient to overcome the warnings and risk disclosures set forth in the prospectus. The sufficiency of the subject complaint under state and federal law is the crux of this appeal.\nPlaintiffs raise as issues whether: (1) the circuit court erred in dismissing the subject complaint with prejudice for failing to satisfy Illinois\u2019 fact-pleading rules; (2) the court misconstrued the \u201cbespeaks caution\u201d doctrine as applied to Cerion\u2019s prospectus; (3) alternatively, they lacked standing to bring their claims for relief under the state and federal securities laws; and (4) the court abused its discretion when it dismissed plaintiffs\u2019 subject complaint with prejudice, denying them leave to amend. The facts recited below are derived from the pleadings and attached exhibits.\nCerion, a manufacturer of aluminum disk substrates, set forth its business condition in a prospectus it prepared for the initial public offering of its common stock. Following the dissemination of that prospectus, on May 24, 1996, Cerion issued and sold 3,840,000 shares of common stock at $13 per share, yielding aggregate proceeds of more than $45 million. The stock was issued pursuant to a registration statement filed with the Securities and Exchange Commission (SEC) on the same date.\nPlaintiff Pickup purchased 1,000 shares of Cerion common stock at $19.50 per share on May 24, 1996, the date of its issuance, on the open market and 1,000 shares at $9,875 on June 12, 1996. Plaintiff Teitelbaum purchased 100 shares of Cerion common stock at $10.50 per share on June 21, 1996. Plaintiff Olczyk purchased 10,000 shares of Cerion common stock at $11,625 on June 14, 1996, 10,000 shares at $9.4875 per share on June 21, 1996; and 500 shares at $10,875 per share on July 3, 1996. Teitelbaum was the first to file suit, challenging Cerion\u2019s disclosures in its initial public offering, followed by Olczyk, who made similar allegations. The two cases were consolidated. On March 21, 1997, Teitelbaum and Olczyk, joined by Pickup, filed a consolidated amended class action complaint (amended complaint) against Cerion, Nashua, the parent corporation of Cerion at the time of the offering and principal financial beneficiary of the offering, Blair, the lead underwriter of the offering, and five officers and directors of Cerion. The amended complaint alleged that Cerion\u2019s registration statement and prospectus and the statements contained in these documents were materially false and misleading to investors in violation of the Securities Act of 1933 (Securities Act) (15 U.S.C. \u00a7 77a et seq. (1994)) and other laws, because they failed to disclose that \u201cStorMedia [, Cerion\u2019s largest customer,] was experiencing trends and changes in its own business which placed its relationship with Cerion in jeopardy and *** resulted] in a complete termination of their supply and contractual arrangements[,] *** jeopardizing Cerion\u2019s future financial results.\u201d\nDefendants\u2019 motions to dismiss the amended complaint were granted on October 9, 1997, for want of specificity, particularly the factual basis supporting the allegation that Cerion knew it was losing the business of its largest customer when its registration statement and prospectus were issued. Plaintiffs were granted leave to amend.\nOn December 5, 1997, plaintiffs filed the subject five-count second amended complaint, now alleging that certain statements and nondisclosures in the prospectus, attached as an exhibit, constituted material misrepresentations and omissions and stated claims under sections 11, 12 and 15 of the Securities Act of 1933 (counts 1, 2 and 3, respectively) and under the Illinois Securities Law of 1953 (815 ILCS 5/1 et seq. (West 1998)) (count 4) and consumer fraud law (count 5). Plaintiffs alleged that, at the time of the offering, Cerion was a manufacturer of aluminum disk substrates, the metallic platforms for thin film disks used in computer hard disk drives; in 1995, substrate sales comprised about 95% of Cerion\u2019s total sales; prior to the offering, Cerion was informed it was being eliminated as a supplier by its two major customers, StorMedia and HMT; and defendants completed the offering without disclosing these material facts in the registration statement and prospectus. Plaintiffs asserted that such omissions were material to Cerion\u2019s business and to its prospective investors because StorMedia and HMT accounted for 86% of Cerion\u2019s sales in 1995 and 84% of sales in the first three months of 1996, yet the prospectus represented that Cerion\u2019s business was rapidly expanding, so fast that Cerion \u201cmight not be able to expand fast enough to accommodate the demand for Cerion\u2019s products.\u201d\nThe subject complaint further asserted that, at the time of the offering, StorMedia was largely dependent upon purchases by another business entity, Maxtor Corporation (Maxtor) which, in 1995, comprised 45% of StorMedia\u2019s net sales. On November 17, 1995, Stor-Media had entered into a written supply agreement with Maxtor to manufacture \u201cmedia,\u201d rigid thin film magnetic discs which store information, for use in Maxtor\u2019s hard disk drives. Aluminum substrates, like those manufactured by Cerion, are the platforms for these thin film disks. On November 17, 1995, and thereafter, StorMedia\u2019s product had to be qualified by a specific date and in conjunction with other specific components so that Maxtor could provide hard disk drives that met the requirements of Maxtor\u2019s customers, and Maxtor\u2019s obligation to purchase StorMedia\u2019s media was contingent upon StorMedia\u2019s product meeting Maxtor\u2019s specifications and functional requirements. After entering into the supply agreement with Maxtor, from November 17, 1995, until at least May 24, 1996, StorMedia\u2019s media repeatedly failed to perform adequately, failed to meet Maxtor\u2019s functional requirements and failed to meet Maxtor\u2019s specifications, ultimately causing Maxtor itself to lose substantial business opportunities. Cerion received notice that it was about to lose StorMedia as a customer, due to StorMedia\u2019s inability to produce, from Cerion substrates disks, media that met industry standards and Maxtor\u2019s requirements. Prior to the offering, Cerion also was informed by its second largest customer, HMT, that it planned to reduce its orders from Cerion, because HMT would build its own substrate facility.\nPlaintiffs alleged further the prospectus did not disclose the fact that, for several months prior to the offering, StorMedia failed to fulfill its supply arrangement with Maxtor Corporation, which subsequently led to the cancellation of StorMedia\u2019s contract with Cerion, although the prospectus represented that Cerion worked in close technical collaboration with its customers, including StorMedia, throughout the lengthy sales, manufacturing and supply cycles for Cerion\u2019s products and that Cerion was refining its customer service approach to monitor product performance as Cerion\u2019s products were incorporated into the manufacturing of products by its customers. Plaintiffs charged that the facts known to StorMedia regarding its problematic products supplied to Maxtor were known to Cerion, by virtue of the sibling relationship between StorMedia and Cerion, Nashua having been the former parent of StorMedia, thereby ensuring the flow of information from StorMedia to Cerion. The prospectus also failed to warn or inform investors that HMT already had informed Cerion that it would reduce drastically its orders for media to be purchased from Cerion by virtue of its own impending manufacture of substrate discs. Yet, the prospectus stated, in pertinent part, \u201c[t]he loss of one or more of [Cerion\u2019s] customers *** could have a material adverse effect on [Cerion\u2019s] business, results of operations and financial condition.\u201d\nPlaintiffs alleged in the alternative that such statements in its prospectus about Cerion\u2019s close technical collaboration with its customers, including StorMedia and HMT, and its monitoring the performance of products throughout their subsequent life cycle were materially false and misleading if Cerion was unaware of the status of its business and did not in fact monitor the performance of its products.\nPlaintiffs asserted that the prospectus contained materially false and misleading risk disclosures that warned only generally of general market conditions, but failed to disclose what Cerion then knew specifically and materially concerning the declining market for Cerion\u2019s products and the questionable status of its supply arrangements with StorMedia and HMT. Although the prospectus warned that various events \u201ccould\u201d or \u201cmay\u201d occur, and that there could be no assurance that Cerion\u2019s business would continue in its present state, it was materially misleading to caution that unfavorable events \u201cmight\u201d happen when they already had occurred.\nBlair, which received $4,018,560 in proceeds for its role as the lead underwriter for the offering, was charged with having violated its duty to investors to perform properly an independent due diligence investigation of Cerion prior to the offering; Blair was required to conduct an investigation into the business, operations, prospects, financial condition, and accounting and management control systems of Cerion; Blair also failed to investigate the status of Cerion\u2019s business with either HMT or StorMedia prior to the offering; and, in the course of its investigation, Blair obtained, or should have obtained, knowledge of the facts alleged, if it had acted with reasonable care.\nThe subject complaint described Nashua\u2019s role in the offering as the former parent of Cerion and StorMedia. Nashua was then in default under a $20 million loan agreement, which had increased its indebtedness from $33 million in 1994 to $53 million in 1995. In 1995, Nashua reported a $2.31 loss per share and planned a public offering of Cerion stock, which would eliminate its debt. Of the 3,838,000 shares sold in the offering, Nashua sold 2,223,000 of them and Cerion the remainder. Nashua secured $26,900,250 in proceeds, plus an additional $4,018,560 through Blair\u2019s exercise of its option to purchase additional stock. Cerion realized proceeds of $19,525,350, of which Nashua received the major share.\nSix weeks after the initial public offering, after the market had closed on July 9, 1996, a Cerion press release disclosed that StorMedia had cancelled its outstanding purchase orders with Cerion due to a \u201crecent slowdown at StorMedia.\u201d In reaction to the news, the price of Cerion stock decreased from $9 per share to $4.875 per share, a 46% decline.\nOn February 18, 1998, defendants moved to dismiss the subject complaint pursuant to section 2 \u2014 615 of the Code of Civil Procedure (735 ILCS 5/2 \u2014 615 (West 1996) (section 2 \u2014 615)) on the same grounds advanced in moving to dismiss the amended complaint. Blair filed its motion separately from other defendants. Defendants also contended that plaintiffs lacked standing to pursue their securities claims because of their aftermarket purchase of Cerion\u2019s common stock and, their Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1998)) claim should be dismissed for failure to plead loss causation and because the underwriter defendants are \u201cregulated professionals\u201d exempt from the Act. On May 6, 1998, following a hearing, the circuit court granted defendants\u2019 motions to dismiss with prejudice, holding that: the subject complaint failed to satisfy Illinois\u2019 fact-pleading rules, the prospectus \u201cbespoke caution as a matter of law\u201d and the failure to disclose Cerion\u2019s loss of 86% of its business did not constitute a material misstatement. For reasons that follow, we reverse and remand.\nI\nDismissals of complaints under section 2 \u2014 615 are reviewable de novo. Peter J. Hartmann Co. v. Capital Bank & Trust Co., 296 Ill. App. 3d 593, 600, 694 N.E.2d 1108 (1998); Harris v. Chicago Housing Authority, 235 Ill. App. 3d 276, 277, 601 N.E.2d 1011 (1992). Grants of motions to dismiss require review of whether significant allegations of the complaint, if established, could entitle plaintiffs to relief. Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 86, 672 N.E.2d 1207 (1996); Peter J. Hartmann Co., 296 Ill. App. 3d at 600. No cause of action should be dismissed on the pleadings unless it clearly appears that no set of facts can be proved under the complaint entitling plaintiffs to relief. Bryson, 174 Ill. 2d at 86-87; Peter J. Hartmann Co., 296 Ill. App. 3d at 600.\nPlaintiffs contend that the circuit court erred when it dismissed the subject complaint with prejudice, finding their fact pleading insufficient to overcome that protection afforded by the \u201cbespeaks caution\u201d doctrine and the federal \u201csafe harbor\u201d provided by SEC Rule 175 (17 C.F.R. \u00a7 230.175 (1995)), which the court held also protected defendants\u2019 prospectus.\nPlaintiffs identify error in the circuit court\u2019s determination that allegations of Cerion\u2019s knowledge which they ultimately pled were inadequate. They assert that Cerion\u2019s knowledge is not an element of a claim under section 11 of the Securities Act of 1933, as. a matter of substantive law, since the issuer of securities is absolutely liable for any material misstatements in, or omissions from, the registration statement, which it is required to sign under section 11(a)(1). The Supreme Court has held that, under section 11, a plaintiff who \u201cpurchased a security issued pursuant to a registration statement *** need only show a material misstatement or omission to establish [a] prima facie case. Liability against the issuer of a security is virtually absolute, even for innocent misstatements.\u201d Herman & MacLean v. Huddleston, 459 U.S. 375, 382, 74 L. Ed. 2d 548, 555, 103 S. Ct. 683, 687 (1983).\nAdditionally, plaintiffs argue, section 12 of the Securities Act has similar minimal requirements to establish a cause of action that do not require pleading defendants\u2019 knowledge. Quoting In re Na-tionsMart Corp. Securities Litigation, 130 E3d 309, 318 (8th Cir. 1997), cert, denied, 524 U.S. 927, 141 L. Ed. 2d 696, 118 S. Ct. 2321 (1998) (NationsMart), plaintiffs maintain that \u201c[flraud and scienter are not elements of a \u00a7 12(2) claim.\u201d As a matter of substantive federal securities law, plaintiffs conclude, Cerion is absolutely liable for omitting from the registration statement the unquestionably material fact that it was about to lose over 80% of its sales by the time the registration statement became effective. The warning contained in a prospectus about problems that may adversely affect the issuer in the future does not insulate an issuer from Securities Act liability when the issuer already has encountered the material problems at the time of the offering, as alleged in the subject complaint. Walsingham v. Biocontrol Technology Inc., [Current Transfer Binder] Fed. Sec. L. Rep. (CCH) par. 90,404, at 91,829 (W.D. Pa. December 1, 1998) (\u201cbespeaks caution\u201d doctrine and safe harbor inapplicable against statements made by defendants because \u201ceach defendant already knew of the [information] but concealed such information from the public\u201d); Robertson v. Strassner, [1998 Transfer Binder] Fed. Sec. L. Rep. (CCH) par. 90,303, at 91,417 (S.D. Tex. October 7, 1998), quoting Grossman v. Novell, Inc., 120 F.3d 1112, 1123 (10th Cir. 1997) (\u201cbespeaks caution\u201d doctrine inapplicable where defendants\u2019 misstatements concerned present facts: \u201c \u2018Because several of the allegedly misleading statements referred to then-present factual conditions, or implied background factual assumptions a reasonable investor would regard the speaker as believing to be true, the \u201cbespeaks caution\u201d doctrine would be of no assistance to defendants as to those statements\u2019 \u201d); Schwartz v. Celestial Seasonings, Inc., 178 F.R.D. 545, 560 (D. Colo. 1998), motion granted, 185 F.R.D. 313 (D. Colo. 1999) (defendants\u2019 cautionary statements contained in the prospectus did not \u201cbespeak caution\u201d where the complaint alleged that \u201c[defendants misrepresented Celestial\u2019s current agreement with Perrier, identified] the factors that were not disclosed to investors at the time, and assert [ed] such factors preexisted the alleged misrepresentations\u201d); Rubinstein v. Collins, 20 F.3d 160, 171 (5th Cir. 1994), class cert, granted on remand, 162 F.R.D. 534 (S.D. Tex. 1995) (\u201cthe inclusion of general cautionary language regarding a prediction would not excuse the alleged failure to reveal known material, adverse facts\u201d).\nIn light of plaintiffs\u2019 allegation that defendants failed to disclose present facts or current conditions, the \u201cbespeaks caution\u201d doctrine simply does not apply. Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1127 (7th Cir. 1993), cert, denied, 510 U.S. 1073, 127 L. Ed. 2d 78, 114 S. Ct. 883 (1994) (\u201cA prospectus stating a risk that such a thing could happen is a far cry from one stating that this had happened. The former does not put an investor on notice of the latter\u201d) (emphasis in original); Gilbert v. First Alert, Inc., 904 F. Supp. 714, 722 (N.D. Ill. 1995), amended, 165 F.R.D. 81 (N.D. Ill. 1996), motion granted, granted in part & denied in part (N.D. Ill. March 19, 1998) (\u201ccautionary disclosures concerning the future performance of a product does [sic] not satisfy the obligation to disclose historical and current material facts\u201d).\nThe decisions in Adler v. William Blair & Co., 271 Ill. App. 3d 117, 648 N.E.2d 226 (1995), and Lagen v. Balcor Co., 274 Ill. App. 3d 11, 653 N.E.2d 968 (1995), upon which defendants rely are distinguishable. In Adler, plaintiffs challenged alleged oral misrepresentations made concerning a private placement memo. The information contained in the memo directly contradicted the oral misrepresentations allegedly made by defendants. Plaintiffs were unable to establish liability for the purported oral misstatements, given the adequacy of the written memo disclosures. In Lagen, plaintiffs claimed that defendants did not warn investors on impending real estate market decline. In contrast, plaintiffs in the present action claim that defendants failed to disclose that, prior to the offering, its two major customers currently were cancelling or significantly reducing future orders, which would have had a material impact on Cerion\u2019s future sales.\nNor is In re Stac Electronics Securities Litigation, 89 F.3d 1399 (9th Cir. 1996), cert, denied sub nom. Anderson v. Clow, 520 U.S. 1103, 137 L. Ed. 2d 308, 117 S. Ct. 1105 (1997) (In re Stac), of any support to defendants. In In re Stac, plaintiffs alleged defendants had failed to warn that a competitor could introduce a competitive product that would impact Stac\u2019s sales, which would have been beyond Stac\u2019s actual knowledge, involvement or control. Here, plaintiffs allege that Cerion knew, but failed to disclose, that its two largest customers, StorMedia and HMT, at the time of the offering, already were cancelling their orders with Cerion or arranging for a supplanting source of supply. Plaintiffs do not claim that Cerion failed to \u201cpredict\u201d some future event, namely, that its customers could cancel orders, but that defendants failed to disclose the already occurring process of cancel-ling business.\nHere, despite the circuit court\u2019s recognition that the complaint alleged material misrepresentations concerning current conditions, having stated that it was \u201cfully aware of the fact that it is the plaintiffs position here that we are dealing with present existing conditions as opposed to those things which could or might occur\u201d (emphasis added), the court applied the \u201cbespeaks caution\u201d doctrine, disregarding authorities holding otherwise. As earlier noted, the subject complaint alleged that approximately 84% of Cerion\u2019s business was in jeopardy at the time of the offering and that defendants failed to identify specifically or disclose this fundamental current problem in the prospectus. It further alleges that defendants failed to disclose information concerning StorMedia\u2019s default since April of 1995 in its supply agreements, the continuation of which ultimately resulted in StorMedia\u2019s cancellation of its orders with Cerion. The materiality of such information in determining whether an investor would purchase Cerion\u2019s stock is clear.\nCourts consistently have held that the \u201cbespeaks caution\u201d doctrine is a \u201cnarrow defense\u201d and only applies to statements concerning future plans, forecasts or projections. Harden v. Raffensperger, Hughes & Co., 65 F.3d 1392, 1404-06 (7th Cir. 1995); In re Boeing Securities Litigation, [1998 Transfer Binder] Fed. Sec. L. Rep. (CCH) par. 90,285 at 91,322 (WD. Wash. September 8, 1998) (\u201cthe bespeaks caution doctrine should be applied narrowly, and courts should dismiss claims based on the bespeaks caution doctrine only where documents containing defendants\u2019 challenged statements include enough cautionary language that reasonable minds could not disagree that the challenged statements were not misleading\u201c). (Emphasis added.)\nDefendants claim that the prospectus was \u201creplete with specific, meaningful warnings about the precarious nature of Cerion\u2019s business,\u201d that Cerion was dependent upon a small number of customers, and that Cerion did not have long-term purchase commitments. These warnings, however, did not reveal the then-present, existing fact that Cerion\u2019s two major customers, StorMedia and HMT, had cancelled their business or were eliminating Cerion as a supplier of substrates. The \u201cdisclosures\u201d or \u201ccautionary statements\u201d set forth in the prospectus offer no shield to defendants from liability for misstatements of present or current conditions, if proven, under the authorities previously cited. Defendants\u2019 prospectus falsely asserted that there was current strong demand for Cerion\u2019s products and that business was expanding so rapidly that Cerion might be unable to satisfy its customers\u2019 orders. From the foregoing, a prospective investor could assume that Cerion\u2019s business was doing so well that it may have difficulty keeping pace with its customers\u2019 orders.\nThe circuit court\u2019s dismissal was in error. The supposedly cautionary statements in the prospectus did not adequately apprise prospective purchasers that Cerion was specifically facing the substantial and significant loss of its business with StorMedia and HMT as of May 24, 1996. The \u201cbespeaks caution\u201d doctrine cannot shield defendants\u2019 statements from liability where it is alleged that defendants possessed material adverse information which they failed to disclose at the time of the offering. Plaintiffs should be allowed to try these issues beyond the pleading stage.\nII\nPlaintiffs next identify error in the circuit court\u2019s application of SEC Rule 175, the \u201csafe harbor\u201d rule, which applies to \u201cforward-looking\u201d statements. Forward-looking statements include projections, plans and statements of future economic performance. 17 C.F.R. \u00a7 230.175(c) (1999). The court\u2019s assertedly reversible error emanates from its application of Rule 175 in that the subject complaint alleged the prospectus contained misrepresentations of the current facts showing StorMedia and HMT were cancelling their business or were eliminating Cerion as a supplier of substrates.\nFederal authorities agree with plaintiffs\u2019 understanding of Rule 175. In NationsMart, plaintiffs claimed that defendants omitted certain material from the prospectus and failed to disclose material information obtained by the company prior to the offering. The district court dismissed plaintiffs\u2019 complaint, holding that plaintiffs were required to plead specific facts to overcome the Rule 175 safe harbor. The circuit court of appeals reversed in part, holding that \u201c[florwardlooking statements are not protected by Rule 175 if they are not generally believed, if they lack a reasonable basis, or if the speaker knows of undisclosed facts which seriously undermine the accuracy of the statement.\u201d (Emphasis added.) NationsMart, 130 F.3d at 316, citing In re Apple Computer Securities Litigation, 886 F.2d 1109, 1113 (9th Cir. 1989), cert, denied, 496 U.S. 943, 110 L. Ed. 2d 676, 110 S. Ct. 3229 (1990) (In re Apple). Where plaintiffs allege that a fact was known at the time the prospectus was issued, as opposed to a prediction of a future event, Rule 175 safe harbor provisions do not apply as a matter of law. Endo v. Albertine, 863 F. Supp. 708, 717-22 (N.D. Ill. 1994). See also In re Stac, 89 F.3d at 1406, quoting In re Convergent Technologies Securities Litigation, 948 F.2d 507, 515 (9th Cir. 1991), quoting In re Apple, 886 F.2d at 1115 (distinguishing between \u201c \u2018 \u201cknowing that any product-in-development may run into a few snags, and knowing that a particular product has already developed problems so significant as to require months of delay\u201d \u2019 \u201d).\nDefendants claim that plaintiffs are attempting to evade the \u201chigh pleading standard\u201d of Rule 175. The safe harbor enacted by the Private Securities Litigation Reform Act (PSLRA) (15 U.S.C. \u00a7 77z\u2014 2(c)(4) (Supp. 1998)) specifically states: \u201cEffect on other safe harbors. The exemption provided for in paragraph (1) shall be in addition to any exemption that the Commission may establish ***.\u201d (Emphasis added.) See 15 U.S.C. \u00a7 77z \u2014 2(c)(1) (Supp. 1998). Defendants\u2019 authorities do not state that Rule 175 requirements supersede those of the PSLRA. Instead, Rule 175 provisions have been incorporated into the PSLRA\u2019s safe harbor, which specifically requires identification of forward-looking statements. See also H. Bloomenthal and Holme Roberts & Owen, Securities Law Handbook \u00a7 16.03 (1999 ed.) (\u201cthe SEC\u2019s safe harbor presumably is preempted for the most part as it is difficult to comprehend how it could apply protection not available under the PSLRA\u201d).\nThe circuit court erred in holding that plaintiffs\u2019 complaint insufficiently pleaded facts necessary to overcome defendants\u2019 purported cautionary statements within the safe harbor frame of reference.\nIII\nPlaintiffs next assign reversible error to the circuit court\u2019s dismissal of the subject complaint for allegedly failing to allege facts demonstrating that Cerion \u201cknew\u201d its registration statement was false when issued.\nKnowledge of falsity is not an element of a cause of action under either section 11 (Herman & MacLean v. Huddleston, 459 U.S. at 382, 74 L. Ed. 2d at 555, 103 S. Ct. at 687) or 12(a)(2) (NationsMart, 130 F.3d at 318) of the Securities Act of 1933. The language of the statute prescribes no knowledge requirement and, indeed, the Supreme Court has construed the statutes as written. Defendants, as well, implicitly recognize that knowledge is not an element of plaintiffs\u2019 claims.\nUnder Illinois fact-pleading rules, a plaintiff is required to plead only facts that are \u201c \u2018necessary for the plaintiff to recover.\u2019 \u201d Ward v. Community Unit School District No. 220, 243 Ill. App. 3d 968, 973, 614 N.E.2d 102 (1993) (Ward), quoting People ex rel. Fahner v. Carriage Way West, Inc., 88 Ill. 2d 300, 308, 430 N.E.2d 1005 (1981). Plaintiffs were not required to plead Cerion\u2019s knowledge of the falsity of the registration statement under sections 11 and 12(a)(2); the complaint should not have been dismissed for failing to plead such knowledge.\nNotwithstanding the foregoing, the circuit court directed plaintiffs to plead Cerion\u2019s knowledge at the time of the initial public offering (IPO). Plaintiffs attempted to comply, based on their investigation and on pleadings filed in other fora which were attached to the complaint and incorporated therein. Knowledge is an ultimate fact which would have been more than adequately pled in the subject complaint under Ward, even if pleading knowledge had been required as an essential element of the claims asserted.\nThe subject complaint specifically alleges that Cerion was largely dependent upon StorMedia, accounting for approximately 47% of its business in 1995. StorMedia, in turn, substantially depended upon purchases from Maxtor. Maxtor accounted for 45% of StorMedia sales in 1995. On November 17, 1995, it is alleged, StorMedia had entered into an agreement with Maxtor. Cerion\u2019s sales to StorMedia were directly contingent upon StorMedia\u2019s success in qualifying its product by a specific date for use by Maxtor. Therefore, the subject complaint asserts Cerion understood that StorMedia\u2019s sales, and consequently Cerion\u2019s own, were contingent upon Maxtor\u2019s acceptance of StorMe-dia\u2019s products. Prior to the offering, StorMedia repeatedly failed to conform its products to Maxtor\u2019s specifications. By April of 1995, plaintiffs allege, StorMedia lacked the resources and ability to fulfill its supply obligations to Maxtor. Cerion had failed to disclose that, prior to the offering, its business arrangement with StorMedia was about to be cancelled due to the problems StorMedia was encountering with Maxtor.\nAdditionally, Cerion\u2019s registration statement and prospectus also failed to disclose that Cerion was facing material reductions for orders of its substrates because HMT, developing in-house manufacture of the product, was drastically reducing its orders, materially impacting Cerion\u2019s ultimate viability.\nThe subject complaint adequately alleged that Cerion\u2019s registration statement and prospectus misled investors as to the good standing of these two accounts. Language contained in the prospectus stating that Cerion was dependent upon a small number of customers, that it did not have long-term purchase commitments, and that there could be \u201cno assurance\u201d customers will continue to place orders with the company cannot shield defendants from liability for failing to disclose the allegedly already true circumstances that StorMedia and HMT had cancelled their business or were eliminating Cerion as a supplier.\nDefendants argue that Cerion\u2019s relationship with its customers was merely \u201ctechnical\u201d and, therefore, that it could not have been aware of StorMedia\u2019s cancellation of its order. Plaintiffs\u2019 complaint asserts, however, that the prospectus repeatedly touted the \u201cmulti-tiered\u201d \u201cclose\u201d working relationship of Cerion\u2019s sales, marketing, customer service, technical and senior management staff with those of its customers.\nDefendants\u2019 argument, that Cerion could not be aware of the scale of StorMedia\u2019s business by indicating that \u201ccustomers *** could cancel even existing orders,\u201d does not neutralize plaintiffs\u2019 allegations that Cerion, at the time of the offering, failed to disclose the evaporation of its sales to StorMedia, as well as its business relationship with HMT. It was error to dismiss the case on these pleadings.\nIV\nAs an alternative ground for affirmance, defendants claim that \u201cplaintiff purchased in the aftermarket rather than in the public offering.\u201d This issue was not a basis for the lower court\u2019s dismissal and need not be considered on appeal; had it been so, the argument fails because it ignores the allegations contained in the complaint, the language of th\u00e9 Securities Act and is contrary to governing case law.\nThe subject complaint pled that each of the three plaintiffs purchased Cerion common stock on the offering or traceable to the offering and pursuant to the prospectus. The complaint specifically pled that one of the plaintiffs, Pickup, purchased shares on the date of the offering, within minutes or, at most, hours of the first transaction in Cerion stock on May 24, 1996. The stock, which Pickup and others similarly situated allegedly purchased, could have been the same stock registered under the registration statement.\nThese allegations sufficiently established that Pickup and other class members have standing to recover under section 11 of the Securities Act. In re First Merchants Acceptance Corp. Securities Litigation, No. 97 C 2715 (N.D. Ill. November 2, 1998). Other authorities afforded section 11 protection to both IPO and aftermarket purchasers who can trace their shares to the IPO. See Barnes v. Osofsky, 373 F.2d 269, 273 (2d Cir. 1967); Harden v. Raffensperger, Hughes & Co., 933 F. Supp. 763, 766 (S.D. Ind. 1996); Lilley v. Charren, 936 F. Supp. 708, 715 (N.D. Cal. 1996); In re U.S.A. Classic Securities Litigation, No. 93 Civ. 6667 (S.D.N.Y. June 10, 1995); Kirkwood v. Taylor, 590 F. Supp. 1375, 1377-83 (D. Minn. 1984); Abbey v. Computer Memories, Inc., 634 F. Supp. 870, 875-76 (N.D. Cal. 1986); In re LILCO Securities Litigation, 111 F.R.D. 663, 671 (E.D.N.Y. 1986).\nDefendants suggest that Gustafson v. Alloyd Co., 513 U.S. 561, 131 L. Ed. 2d 1, 115 S. Ct. 1061 (1995) (Gustafson), has eliminated recovery under section 11 for all aftermarket purchasers, including those whose shares are traceable to the IPO, relying on an early line of district court cases. Gustafson did not concern a section 11 claim but merely considered whether the term \u201cprospectus\u201d in section 12(2) (not to be confused with section 12(a)(2)) prohibited a private securities purchaser from pursuing a claim pursuant to section 12(2) of the Securities Act; it did not address the standing of publicly traded securities purchasers whose stock was issued pursuant to a \u201cprospectus\u201d and \u201cregistration statement,\u201d as defined in section 11 of the Securities Act.\nFurther, the Supreme Court has found Congress intended that sections 11 and 12 protect investors who purchase stock at a price affected by misleading offering documents, \u201c \u2018although they may never actually have been seen by the prospective purchaser, because of their wide dissemination, determine the market price of the security.\u2019 \u201d Gustafson, 513 U.S. at 576, 131 L. Ed. 2d at 16, 115 S. Ct. at 1070, quoting H.R. Rep. No. 85, 73d Cong., 1st Sess. 10 (1933). Section 11 remedies are accorded \u201cto all purchasers\u201d of stock issued pursuant to a misleading registration statement \u201c \u2018regardless of whether they bought their securities at the time of the original offer or at some later date.\u2019 \u201d Barnes v. Osofsky, 373 F.2d at 273, quoting H.R. Rep. No. 85. The majority of cases after Gustafson allow application of section 11 claims to aftermarket purchases.\nThe Illinois Securities Law must be construed similarly. In Delaney v. Happel, 185 Ill. App. 3d 951, 954-55, 542 N.E.2d 46 (1989), the court extended the provisions of the act to subsequent purchasers, but not to \u201cassignees or transferees of the purchaser.\u201d The courts require that the act \u201cbe liberally construed to better protect the public from deceit and prevent fraud in the sale of securities.\u201d Hess v. I.R.E. Real Estate Income Fund, Ltd., 255 Ill. App. 3d 790, 803, 629 N.E.2d 520 (1993). Here, Pickup purchased Cerion common stock on the first day of the public offering. His having paid more per share for his stock than the initial offering price and having purchased from an underwriter other than Blair does not relieve defendants of alleged liability under the act. The alternative ground for affirmance must be reversed, as well.\nV\nThe circuit court is claimed to have committed reversible error in failing to permit plaintiffs to replead upon granting defendants\u2019 motions to dismiss. In light of our disposition of this case, we need not consider this additional ground for reversal.\nThe circuit court\u2019s order dismissing the subject complaint is reversed and remanded for the reasons set forth above.\nReversed and remanded.\nTHEIS, PJ., and HOURIHANE, J., concur.\ndefendants\u2019 additional authorities relating to the \u201cbespeaks caution\u201d doctrine are likewise distinguishable. Parnes v. Gateway 2000, Inc., 122 F.3d 539, 548-49 (8th Cir. 1997) (applying \u201cbespeaks caution\u201d doctrine where defendants provided explicit warnings directly addressing plaintiffs\u2019 claims); Grossman v. Novell, Inc., 120 F.3d 1112, 1123 (10th Cir. 1997) (applying \u201cbespeaks caution\u201d doctrine, where plaintiff failed to allege that certain statements were \u201cuntrue when made, were later shown to be untrue, or had any impact on [defendant\u2019s] stock price when their falsity was disclosed\u201d); In re Donald J. Trump Casino Securities Litigation \u2014 Taj Mahal Litigation, 7 F.3d 357, 371 (3d Cir. 1993), cert, denied, 510 U.S. 1178, 127 L. Ed. 2d 565, 114 S. Ct. 1219 (1994) (applying \u201cbespeaks caution\u201d doctrine only to allegations of forward-looking statements, but not to allegations concerning omissions of present fact); In re Syntex Corp. Securities Litigation, 95 F.3d 922, 929 (9th Cir. 1996) (applying \u201cbespeaks caution\u201d doctrine where plaintiffs failed to plead that the alleged misstatements were false when made).\nThe following language appears in the prospectus in this regard:\n\u201cExpand Manufacturing Capacity. Consistent with strong industry growth, the Company believes that potential demand for its aluminum disk substrates may exceed its current manufacturing capacity ***. The Company also plans to add a new manufacturing- facility in 1997 to meet the increasing demands of its customers while also allowing it to pursue new customer and product opportunities.\u201d (Emphasis added.)\ndefendants\u2019 reliance in this case upon a series of cases where knowledge was an essential element of the claim asserted is misplaced. These authorities include Lagen v. Balcor Co., 274 Ill. App. 3d 11, 17 (1995) (plaintiffs\u2019 fraud claims required to be pled adequately, \u201cknowledge or belief by the maker [of the statement] that the statement was false\u201d); Adler v. William Blair & Co., 271 Ill. App. 3d 117, 125 (1995); Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir. 1994) (requiring plaintiffs to establish knowledge as an essential element for a claim of fraud: \u201cScienter is a crucial element of the securities fraud claims in this case\u201d); In re Syntex Corp. Securities Litigation, 95 F.3d 922, 929, 930 (9th Cir. 1996) (applying the heightened pleading standard for fraud claims); Pesek v. Discepolo, 130 Ill. App. 3d 785, 787, 475 N.E.2d 3 (1985) (allegations of fraud required knowledge of misconduct committed by the child); Anderson v. Vanden Dorpel, 172 Ill. 2d 399, 403, 408, 409, 667 N.E.2d 1296 (1996) (complaint dismissed where the only \u201cfacts\u201d alleged by plaintiff were \u201cher own subjective belief\u2019 that she was the leading candidate for a job that she did not receive).\nIn this regard, the prospectus advises:\n\u201cThe Company\u2019s technical collaboration with its customers and suppliers during the design phase of new thin film disks facilitates customer qualification of its products and improves the Company\u2019s ability to rapidly reach cost-effective, high-volume manufacturing. In addition, the Company receives ongoing feedback on the perfor- \u25a0 manee of its aluminum disk substrates, allowing Cerion to provide better products and customer service. The Company also works with its suppliers to optimize their products\u2019 performance in the Company\u2019s manufacturing process.\u201d\nThe prospectus further represented:\n\u201cTo meet these demands, the Company uses a system of multi-tiered communication for sales, marketing and customer service. Senior management of the Company, and production, operation and engineering personnel, directly market and interact with their counterparts at the Company\u2019s customers. The Company believes that this multi-tiered approach has resulted in strong, active relationships with both customers and suppliers and has helped the Company pursue close technical collaboration with its customers during the design phase of new products and throughout the products\u2019 subsequent life cycle. To supplement its multi-tiered approach, the Company recently created the position of Customer Service Director, who is responsible for bringing coordination and timely closure to customer service issues.\u201d (Emphasis added.)\nThe cover page of the prospectus stated: \u201cPrior to this offering, there has been no public market for the Common Stock of the Company.\u201d\nSection 11 applies to purchasers who \u201cacquired the security after the issuer has made generally available to its security holders an earnings statement covering a period of at least twelve months beginning after the effective date of the registration statement.\u201d 15 U.S.C. \u00a7 77k(a)(4) (1994). Those who acquired their securities more than a year after the IPO have a cognizable claim under section 11. See also 9 L. Loss & J. Seligman, Securities Regulation 4249 (3d ed. 1992) (\u201cSuit may be brought by any person who acquired a registered security, whether in the process of distribution or in the open market\u201d) (emphasis omitted).\nSection 11 damage provisions also recognize that investors who purchased securities other than in the offering have a cognizable claim. See 15 U.S.C. \u00a7 77k(e) (1994) (damages shall be measured by \u201cthe difference between the amount paid for the security (not exceeding the price at which the security was offered to the public) and (1) the value thereof as of the time such suit was brought, or (2) the price at which such security shall have been disposed of in the market before suit, or (3) the price at which such security shall have been disposed of after suit but before judgment if such damages shall be less than the damages representing the difference between the amount paid for the security (not exceeding the price at which the security was offered to the public) and the value thereof as of the time such suit was brought\u201d); 15 U.S.C. \u00a7 77k(g) (1994) (\u201c[i]n no case shall the amount recoverable under this section exceed the price at which the security was offered to the public\u201d). Section 11 standing is not limited solely to investors who purchased on the offering, otherwise the portions of section 11(a) defining the period of presumptive reliance and references to persons who acquire the security after a year, as well as the statutory limitation on damages, would be rendered meaningless.\nIn re Fine Host Corp. Securities Litigation, 25 F. Supp. 2d 61, 66 (D. Conn. 1998) (\u201c \u2018[i]t has been the law in this Circuit for over thirty years that a plaintiff who can trace their [sic] securities to a registered offering has standing to sue under the Securities Act for a defect in that registration[ ]\u2019 [citation]\u201d); In re WebSecure, Inc. Securities Litigation, 182 F.R.D. 364, 368 (D. Mass. 1998) (\u201cTo plead proper standing under \u00a7 11, a plaintiff may plead a purchase in the public offering itself or a purchase traceable to the offering and its Registration Statement\u201d); In re MobileMedia Securities Litigation, 28 F. Supp. 2d 901, 923 (D.N.J. 1998) (\u201c[t]o state a claim under Section 11, a plaintiff must allege: 1) The plaintiffs purchased securities traceable to an effective registration statement\u201d); Schwartz v. Celestial Seasonings, Inc., 178 F.R.D. 545, 556 (D. Colo. 1998) (\u201cI find, notwithstanding Gustafson, that \u00a7 11 extends not only to persons who buy \u2018in the [ojffering,\u2019 but to all persons who acquired stock traceable to a public offering conducted via a misleading registration statement\u201d); In re Stratosphere Corp. Securities Litigation, 1 F. Supp. 2d 1096, 1119 (D. Nev. 1998); Adair v. Bristol Technology Systems, Inc., 179 F.R.D. 126, 133 (S.D.N.Y. 1998) (\u201cTo limit liability only to buyers in the IPO and not to buyers who can trace their shares to the registration statement allows the issuers to escape a margin of liability for which \u00a7 11 was drafted to cover. Defendant\u2019s argument that Plaintiffs lack standing fails in light of the statutory text and legislative history\u201d).", "type": "majority", "author": "JUSTICE HARTMAN" } ], "attorneys": [ "Miller, Faucher, Cafferty & Wexler, L.L.E, of Chicago (Marvin A. Miller, Dom J. Rizzi, and Jennifer Winter Sprengel, of counsel), for appellants.", "Sidley & Austin (Walter C. Carlson, Linton J. Childs, and Hille R. Sheppard, of counsel), and Jenner & Block, both of Chicago (Jerold S. Solovy, Ronald L. Marmer, C. John Koch, and Michael T. Brody, of counsel), for appellees." ], "corrections": "", "head_matter": "PHILIPPE OLCZYK et al., on Their Behalf and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants, v. CERION TECHNOLOGIES, INC., et al., Defendants-Appellees.\nFirst District (5th Division)\nNo. 1 \u2014 98\u20142019\nOpinion filed November 19, 1999.\nMiller, Faucher, Cafferty & Wexler, L.L.E, of Chicago (Marvin A. Miller, Dom J. Rizzi, and Jennifer Winter Sprengel, of counsel), for appellants.\nSidley & Austin (Walter C. Carlson, Linton J. Childs, and Hille R. Sheppard, of counsel), and Jenner & Block, both of Chicago (Jerold S. Solovy, Ronald L. Marmer, C. John Koch, and Michael T. Brody, of counsel), for appellees." }, "file_name": "0905-01", "first_page_order": 923, "last_page_order": 940 }