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This appeal presents questions concerning the pleading requirements under the Private Securities Litigation Reform Act of 1995, the PSLRA. The Alcatel Plaintiffs Group filed this putative class action after a precipitous drop in the stock price of Alcatel SA. The amended complaint alleged that Alcatel misrepresented its financial condition by covering up problems associated with its German subsidiary Alcatel SEL, intentional overstatements of its 1997 financial results, and contract losses in Southeast Asia and Europe. Those were assertedly part of a series of financial set-backs concealed in order to artificially inflate the price of Alcatel American Depository Shares (“ADSs”) and to avoid compromising a $4.4 billion stock-for-stock acquisition of DSC Communications, a Texas company.

The district court held that the majority of allegations of the amended complaint were not pleaded with sufficient particularity to meet the requirements of the PSLRA. It further concluded that the remaining alleged misrepresentations were immaterial as a matter of law. Plaintiffs appeal, contending that the standard applied by the district court was too onerous and that its complaint should be reinstated. For the reasons stated herein, we agree in part, but nevertheless conclude that the sufficiently particular allegations do not state a claim.


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