McLAUGHLIN, Circuit Judge:

In the late 1980’s a wide prosecutorial net was cast upon Wall Street. Along with the usual flotsam and jetsam, the government’s catch included some of Wall Street’s biggest, brightest, and now infamous— Ivan Boesky, Dennis Levine, Michael Milken, Robert Freeman, Martin Siegel, Boyd L. Jeffries, and Paul A. Bilzerian — each of whom either pleaded guilty to or was convicted of crimes involving illicit trading scandals. Also caught in the government’s net was defendant-appellant John A. Mul-heren, Jr., the chief trader at and general partner of Jamie Securities Co. (“Jamie”), a registered broker-dealer.

Mulheren was charged in a 42-count indictment handed-up on June 13, 1989. The indictment alleged that he conspired to and did manipulate the price on the New York Stock Exchange (the “NYSE”) of the common stock of Gulf & Western Industries, Inc. (“G & W” or the “company”) in violation of 18 U.S.C. § 371, 15 U.S.C. § 78j(b) & 78ff and 18 U.S.C. § 2, by purchasing 75,000 shares of G & W common stock on October 17, 1985 for the purpose of raising the price thereof to $45 per share (Counts One through Four); that he engaged in “stock parking” transactions to assist the Seemala Corporation, a registered broker-dealer controlled by Boesky, in evading tax and other regulatory requirements in violation of 15 U.S.C. §§ 78j(b) & 78ff and 18 U.S.C. § 2 (Counts Five through Twenty-Four); that he committed mail fraud in connection with the stock parking transactions in violation of 18 U.S.C. §§ 1341 & 2 (Counts Twenty-Five through Thirty-Nine); and that Mulheren caused Jamie to make and keep false books and records in violation of 15 U.S.C. § 78ff & 78q(a) (Counts Forty through Forty-Two).

Count Forty-One was dismissed before trial on the government’s motion. At the conclusion of the government’s case, the district court dismissed Counts Twenty-Nine through Thirty-Nine pursuant to Fed. R.Crim.P. 29. Of the remaining thirty counts, the jury returned a partial verdict of guilty on Counts One through Four. A mistrial was declared by the district court when the jury could not reach a verdict on the other twenty-six counts. On Counts One through Four, Mulheren was sentenced to concurrent terms of one year and one day imprisonment, a $1,681,700 fine and a $200 special assessment.

This appeal thus focuses solely on the convictions concerning Mulheren’s alleged manipulation of G & W common stock. The government sought to prove that on October 17, 1985, Mulheren purchased 75,-000 shares of G & W common stock with the purpose and intent of driving the price of that stock to $45 per share. This, the government claimed, was a favor to Boe-sky, who wanted to sell his enormous block of G & W common stock back to the company at that price. Mulheren assails the convictions on several grounds.

*366First, Mulheren claims that the government failed to prove beyond a reasonable doubt that when he purchased the 75,000 shares of G & W common stock on October 17, 1985, he did it for the sole purpose of raising the price at which it traded on the NYSE, rather than for his own investment purposes. Second, Mulheren argues that even if his sole intent had been to raise the price of G & W stock, that would not have been a crime because, he claims, (1) he neither misrepresented any fact nor failed to disclose any fact that he was under a duty to disclose concerning his G & W purchases; (2) his subjective intent in purchasing G & W stock is not “material”; and (3) he did not act for the purpose of deceiving others. Finally, Mulheren cites various alleged evidentiary and sentencing errors that he believes entitle him to either a new trial or resentencing.

Although we harbor doubt about the government’s theory of prosecution, we reverse on Mulheren’s first stated ground because we are convinced that no rational trier of fact could have found the elements of the crimes charged here beyond a reasonable doubt.

BACKGROUND

Reviewing the evidence “in the light most favorable to the government, and construing all permissible inferences in its favor,” United States v. Puzzo, 928 F.2d 1356, 1357 (2d Cir.1991) (citing United States v. Diaz, 878 F.2d 608, 610 (2d Cir.), cert. denied — U.S. -, 110 S.Ct. 543, 107 L.Ed.2d 540 (1989)), the following facts were established at trial.

In 1985, at the suggestion of his longtime friend, Carl Icahn, a prominent arbitrageur and corporate raider, Ivan Boesky directed his companies to buy G & W stock, a security that both Icahn and Boesky believed to be “significantly undervalued.” Between April and October 1985, Boesky’s companies accumulated 3.4 million shares representing approximately 4.9 percent of the outstanding G & W shares. According to Boesky, Icahn also had a “position of magnitude.”

On September 5, 1985, Boesky and Icahn met with Martin Davis, the chairman of G & W. At the meeting, Boesky expressed his interest in taking control of G & W through a leveraged buyout or, failing that, by increasing his position in G & W stock and securing seats on the G & W board of directors. Boesky told Davis that he held 4.9 percent of G & W’s outstanding shares. Davis said he was not interested in Boe-sky’s proposal, and he remained adamant in subsequent telephone calls and at a later meeting on October 1, 1985.

At the October 1, 1985 meeting, which Icahn also attended, Boesky added a new string to his bow: if Davis continued to reject Boesky’s attempts at control, then G & W should buy-out his position at $45 per share. At that time, G & W was, indeed, reducing the number of its outstanding shares through a repurchase program, but, the stock was trading below $45 per share. Davis stated that, although he would consider buying Boesky’s shares, he could not immediately agree to a price. Icahn, for his part, indicated that he was not yet sure whether he would sell his G & W stock.

During — and for sometime before — these negotiations, Mulheren and Boesky also maintained a relationship of confidence and trust. The two had often shared market information and given each other trading tips. At some point during the April-October period when Boesky was acquiring G & W stock, Mulheren asked Boesky what he thought of G & W and whether Icahn held a position in the stock. Boesky responded that he “thought well” of G & W stock and that he thought Icahn did indeed own G & W stock. Although Boesky told Mulheren that G & W stock was “a good purchase and worth owning,” Boesky never told Mul-heren about his meetings or telephone conversations with Davis because he considered the matter “very confidential.” Speculation in the press, however, was abound. Reports in the August 19, 1985 issue of Business Week and the September 27, 1985 issue of the Wall Street Journal indicated that Boesky and Icahn each owned close to five percent of G & W and discussed the likelihood of a take-over of the company. Mulheren, however, testify*367ing in his own behalf, denied reading these reports and denied knowing whether Boe-sky and Icahn held positions in G & W.

On October 3, 1985, two days after his meeting with Boesky and Icahn, Davis met with Mulheren. Mulheren stated that he had a group of investors interested in knowing whether G & W would join them in acquiring CBS. According to Davis, Mulheren also volunteered that he could be “very helpful in monitoring the activities of Ivan Boesky [in G & W stock;] [Mulheren] knew that [Davis] considered Mr. Boesky adversarial;” and Mulheren agreed with Davis’ unflattering assessment of Boesky. In a telephone conversation sometime between this October 3 meeting and a subsequent meeting between the two on October 9, 1985, Mulheren told Davis that he believed that Boesky did not own any G & W securities. Mulheren also said that he did not own any G & W stock either. When Davis and Mulheren met again on October 9, they spoke only about Mulheren’s CBS proposal.

In the meantime, Boesky continued to press Davis to accept his proposals to secure control of G & W. When Boesky called Davis after their October 1, 1985 meeting, Davis “told [Boesky] as clearly as [he] could again that [G & W] had no interest whatsoever in doing anything with [Boesky].” Boesky then decided to contact his representative at Goldman, Sachs & Co. to arrange the sale of his massive block of stock to G & W. Boesky advised Goldman, Sachs that G & W common stock was not trading at $45 per share at the time, “but that should it become 45,” he wanted to sell. A Goldman, Sachs representative met with Davis shortly thereafter regarding the company’s repurchase of Boesky’s G & W shares.

Sometime after the close of the market on October 16, 1985, Boesky called Davis, offering to sell his block of shares back to G & W at $45 per share. NYSE trading had closed that day at $44% per share, although at one point during that day it had reached $45. Davis told Boesky that the company would buy his shares back, but only at the “last sale” — the price at which the stock traded on the NYSE at the time of the sale — and that Boesky should have his Goldman, Sachs representative contact Kidder Peabody & Co. to arrange the transaction.1

After this conversation with Davis, but before 11:00 a.m. on October 17, 1985, Boesky called Mulheren. According to Boesky’s testimony, the following, critical exchange took place:

Boesky: Mr. Mulheren asked me if I liked the stock on that particular day, and I said yes, I still liked it. At the time it was trading at 44%. I said I liked it; however, I would not pay more than 45 for it and it would be great if it traded at 45. The design for the comment—

Defense Counsel Mr. PuCCiO: Objection to the “design of the comment.” I would ask ask only for the conversation.

A.U.S.A. Gilbert: What if anything did he say to you?

Boesky: I understand.

Shortly after 11:00 a.m. on October 17, 1985, Jamie (Mulheren’s company) placed an order with Oliver Ihasz, a floor broker, to purchase 50,000 shares of G & W at the market price. Trading in G & W had been sluggish that morning (only 32,200 shares had traded between 9:30 a.m. and 11:03 a.m.), and the market price was holding steady at $44%, the price at which it had closed the day before. At 11:04 a.m., Ihasz purchased 16,100 shares at $44% per share. Unable to fill the entire 50,000 share order at $44%, Ihasz purchased the remaining 33,900 shares between 11:05 a.m. and 11:08 a.m. at $447/s per share.

*368At 11:09 a.m., Ihasz received another order from Jamie; this time, to purchase 25,000 shares of G & W for no more than $45 per share. After attempting to execute the trade at $44%, Ihasz executed the additional 25,000 share purchase at $45 per share at 11:10 a.m. In sum, between 11:04 a.m. and 11:10 a.m., Jamie purchased a total of 75,000 shares of G & W common stock, causing the price at which it traded per share to rise from $44% to $45. At 11:17 a.m., Boesky and Icahn sold their G & W stock — 6,715,700 shares between them — back to the company at $45 per share. Trading in G & W closed on the NYSE on October 17, 1985 at $43% per share. At the end of the day, Jamie’s trading in G & W common stock at Mulheren’s direction had caused it to lose $64,406.

DISCUSSION

A convicted defendant, of course, bears “a very heavy burden” to demonstrate that the evidence at trial was insufficient to prove his guilt beyond a reasonable doubt. United States v. Carson, 702 F.2d 351, 361 (2d Cir.), cert. denied, 462 U.S. 1108, 103 S.Ct. 2456, 2457, 77 L.Ed.2d 1335 (1983). “A jury’s verdict will be sustained if there is substantial evidence, taking the view most favorable to the government, to support it.” United States v. Nersesian, 824 F.2d 1294, 1324 (2d Cir.) (citing Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942)), cert. denied, 484 U.S. 957, 108 S.Ct. 355, 98 L.Ed.2d 380 (1987) (emphasis added). Where “ ‘any rational trier of fact could have found the essential elements of the crime,’ the conviction must stand.” United States v. Badalamenti, 794 F.2d 821, 828 (2d Cir.1986) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979)) (emphasis in original).

On this appeal, however, we are reminded that “in America we still respect the dignity of the individual, and [a defendant] ... is not to be imprisoned except on definite proof of a specific crime.” United States v. Bufalino, 285 F.2d 408, 420 (2d Cir.1960) (Clark, J., concurring). To that end, it is “imperative that we not rend the fabric of evidence and examine each shred in isolation; rather, the reviewing court ‘must use its experience with people and events in weighing the chances that the evidence correctly points to guilt against the possibility of innocent or ambiguous inference.’” United States v. Redwine, 715 F.2d 315, 319 (7th Cir.1983) (quoting United States v. Kwitek, 467 F.2d 1222, 1226 (7th Cir.), cert. denied, 409 U.S. 1079, 93 S.Ct. 702, 34 L.Ed.2d 668 (1972)), cert. denied, 467 U.S. 1216, 104 S.Ct. 2661, 81 L.Ed.2d 367 (1984).

The government's theory of prosecution in this case is straightforward. In its view, when an investor, who is neither a fiduciary nor an insider, engages in securities transactions in the open market with the sole intent to affect the price of the security, the transaction is manipulative and violates Rule 10b-5.2 Unlawful manipulation occurs, the argument goes, even though the investor has not acted for the “purpose of inducing the purchase or sale of such security by others,” an element the government would have had to prove had it chosen to proceed under the manipulation statute, § 9(a)(2). 15 U.S.C. § 78i(a)(2). Mulheren was not charged with violating § 9(a)(2). When the transaction is effected for an investment purpose, the theory continues, there is no manipulation, even if an increase or diminution in price was a foreseeable consequence of the investment.

Although we have misgivings about the government’s view of the law, we will assume, without deciding on this appeal, that an investor may lawfully be convicted under Rule 10b-5 where the purpose of his transaction is solely to affect the price of a security. The issue then becomes one of Mulheren’s subjective intent. The government was obligated to prove beyond a rea*369sonable doubt that when Mulheren purchased 75,000 shares of G & W common stock on October 17, 1985, he did it with the intent to raise its price, rather than with the intent to invest. We conclude that the government failed to carry this burden.

In order to convict, the government had to demonstrate, in the first place, that Mul-heren was aware that Boesky had a stake in G & W. In proof of knowledge, the government makes three arguments.

First, the government suggests that Boe-sky himself told Mulheren of his G & W positions. Boesky, however, never so testified; and the greatest puzzle in this record is why that critical question was never directly put to Boesky.3

Second, the government relies on the speculation reported in the media, specifically the Wall Street Journal and Business Week, and the rumors floating on Wall Street that Boesky and Icahn owned substantial positions in G & W. There was no evidence, however, that Mulheren read these articles or heard these rumors. On the contrary, Mulheren flatly denied knowing of their existence. Moreover, knowledge of a rumor, particularly one on Wall Street, can hardly substitute for knowledge of a fact.

Third, the government contends that Mulheren’s knowledge of Boesky’s position is evident in the October 3, 1985 meeting between Davis and Mulheren. In that meeting, Mulheren told Davis that he knew that Davis and Boesky had an “adversarial” relationship and Mulheren “understood” Davis’ “position” and offered to help Davis “in any way he could” to “monitor” Boesky’s G & W transactions. While this evidence, taken in isolation, might create an inference that Mulheren knew of Boesky’s G & W holdings (as the source of the Boesky-Davis adversarial relationship), the rest of Davis’ testimony casts a considerable shadow on the inference. Davis went on to testify that in a telephone conversation sometime between their October 3 and October 9 meetings Mulheren stated that he did not believe Boesky owned any G & W stock at all. By this time, of course, Boesky had already told Davis (at their September 5 meeting) that he owned 4.9 percent of G & W’s outstanding shares. Given that Mulheren was at the time attempting to curry favor from Davis in connection with Mulheren’s CBS proposal, it was hardly in Mulheren’s best interest to lie to Davis by telling him that Boesky owned no shares, if in fact Mulheren knew that Boesky owned 3.4 million shares. In sum, the evidence of Mulheren’s knowledge that Boesky had an interest in G & W rests on a very slender reed.

Even were we to conclude otherwise, however, the convictions still could not be sustained. Assuming that Mulheren knew that Boesky held a substantial position in G & W stock, the government nevertheless failed to prove that Mulheren agreed to and then purchased the 75,000 shares for the sole purpose of raising the price at which G & W common stock traded.

The strongest evidence supporting an inference that Mulheren harbored a manipulative intent, is the telephone conversation between Boesky and Mulheren that occurred either late in the day on October 16 or before 11:00 a.m. on October 17, 1985. In discussing the virtues of G & W stock, Boesky told Mulheren that he “would not pay more than 45 for it and it would be great if it traded at 45.” To this Mulheren replied “I understand.” The meaning of this cryptic conversation is, at best, ambiguous, and we reject the government’s contention that this conversation “clearly conveyed Boesky’s request that the price of the stock be pushed up to $45 ... [and Mulheren’s] agreement to help.” Boesky *370never testified (again, he was not asked) what he meant by his words.4

We acknowledge that, construed as an innocent tip — i.e. G & W would be a “great” buy at a price of $45 or below — the conversation appears contradictory. It seems inconsistent for Boesky to advise, on one hand, that he would not pay more than $45, yet on the other to exclaim that it would be a bargain (“great”) at $45. The conversation does not make any more sense, however, if construed as a request for illicit manipulation. That Boesky put a limit on the price he would pay for the stock (“I would not pay more than 45 for it”) seems inconsistent with a request to drive up the price of the stock. If a conspiracy to manipulate for his own selfish benefit had been Boesky’s intent, and if Davis were poised to repurchase the shares at the “last sale,” Boesky would obviously have preferred to see Mulheren drive the trading in G & W stock to a price above $45. In this regard, it is noteworthy that there was no evidence whatever that Mul-heren knew of Boesky’s demand to get $45 per share from G & W. Moreover, during the four to six weeks preceding this conversation, Mulheren repeatedly asked Boesky what he thought of G & W — evincing Mul-heren’s predisposition (and Boesky’s knowledge thereof) to invest in the company. In fact, Mulheren took a position in G & W when he shorted a broker 25,000 shares of G & W after the market closed on October 16.

Clearly, this case would be much less troubling had Boesky said “I want you to bring it up to 45” or, perhaps, even, “I’d like to see it trading at 45.” But to hang a conviction on the threadbare phrase “it would be great if it traded at 45,” particularly when the government does not suggest that the words were some sort of sinister code, defies reason and a sense of fair play. Any doubt about this is dispelled by the remaining evidence at trial.

First, and perhaps most telling, is that Jamie lost over $64,000 on Mulheren’s October 17th transactions. This is hardly the result a market manipulator seeks to achieve. One of the hallmarks of manipulation is some profit or personal gain inuring to the alleged manipulator. See, e.g., Baum v. Phillips, Appel & Walden, Inc., 648 F.Supp. 1518, 1531 (S.D.N.Y.1986), aff'd per curiam, 867 F.2d 776 (2d Cir.), cert. denied, — U.S. -, 110 S.Ct. 114, 107 L.Ed.2d 75 (1989); Walck v. American Stock Exchange, Inc., 565 F.Supp. 1051, 1065-66 (E.D.Pa.1981), aff'd, 687 F.2d 778 (3rd Cir.1982), cert. denied, 461 U.S. 942, 103 S.Ct. 2118, 77 L.Ed.2d 1300 (1983); SEC v. Commonwealth Chemical Securities, Inc., 410 F.Supp. 1002, 1013 (S.D.N.Y.1976), aff'd in part, modified on other grounds, 574 F.2d 90 (2d Cir.1978).

Second, the unrebutted trial testimony of the G & W specialist demonstrated that if raising the price of G & W to $45 per share was Mulheren’s sole intent, Mulheren purchased significantly more shares (and put Jamie in a position of greater risk) than necessary to achieve the result. The G & W specialist testified that at the time Jamie placed its second order, 5,000 shares would “definitely” have raised the trading price from $44% to $45 per share. Yet, Jamie bought 25,000 shares.

Although there was no evidence that Mulheren received a quid pro quo from Boesky for buying G & W stock, the government, nevertheless, claims that Mul-heren had a “strong pecuniary interest” in accommodating Boesky in order to maintain the close and mutually profitable relationship they enjoyed. With this argument the government is hoist with its own petard. Precisely because of this past profitable relationship, the more reasonable conclusion is that Mulheren understood Boe-sky’s comment as another tip — this time to buy G & W stock. Indeed, there was no evidence that Boesky had ever asked Mul-heren to rig the price of a stock in the past.

None of the traditional badges of manipulation are present in this case. Mulheren conspicuously purchased the shares for Ja*371mie’s account in the open market. Compare United States v. Scop, 846 F.2d 135, 137 (matched orders through fictitious nominees), modified on other grounds, 856 F.2d 5 (2d Cir.1988); United States v. Gilbert, 668 F.2d 94, 95 (2d Cir.1981) (matched orders and wash sales)5, cert. denied, 456 U.S. 946, 102 S.Ct. 2014, 72 L.Ed.2d 469 (1982); United States v. Minuse, 114 F.2d 36, 38 (2d Cir.1940) (fictitious accounts, matched orders, wash sales, dissemination of false literature). The government argues that Mulheren’s deceptive intent can be inferred from the fact that (1) he purchased the G & W shares through Ihasz, a floor broker whom the government claims was used only infrequently by Jamie; and (2) Ihasz never informed anyone that the purchases were made for Jamie. These arguments are factually flawed.

There was no evidence that there was anything unusual about Ihasz’s execution of the trades. Oliver Ihasz testified that Jamie was a customer of his company. There was no testimony that his company was used infrequently, or that Mulheren’s request was in any way out of the ordinary. Nor is there anything peculiar about the fact that Ihasz disclosed only the name of the clearing broker and not Jamie, as the purchaser, when he executed the trade. As Ihasz testified, in an open market transaction, the only information the floor broker provides to the seller is the name of the clearing broker, not the ultimate buyer. Jamie was conspicuously identified as the ultimate buyer of the G & W securities on Ihasz’s order tickets, where it is supposed to appear.

The government also argues that manipulative intent can be inferred from the fact that Mulheren’s purchase on October 17, 1985 comprised 70 percent of the trading in G & W common stock during the period between the opening of the market and 11:10 a.m. Such market domination, the government contends, is indicative of manipulation. While we agree, as a general proposition, that market domination is a factor that supports a manipulation charge, the extent to which an investor controls or dominates the market at any given period of time cannot be viewed in a vacuum. For example, if only ten shares of a stock are bought or sold in a given hour and only by one investor, that investor has created 100 percent of the activity in that stock in that hour. This alone, however, does not make the investor a manipulator. The percent of domination must be viewed in light of the time period involved and other indicia of manipulation. Taken in this context, the cases upon which the government relies, United States v. Gilbert, 668 F.2d 94 (2d Cir.1981), cert. denied, 456 U.S. 946, 102 S.Ct. 2014, 72 L.Ed.2d 469 (1982); United States v. Stein, 456 F.2d 844 (2d Cir.), cert. denied, 408 U.S. 922, 92 S.Ct. 2489, 33 L.Ed.2d 333 (1972); In re Delafield & Delafield, [1967-69 Transfer Binder] Fed.Sec. L.Rep. (CCH) 1177, 648 (SEC 1969), are readily distinguishable.

Gilbert, for example, involved the manipulation of the shares of Conrac Corporation where, over a one-year period, the defendant’s trading constituted more than 50 percent of the overall trading. See United States v. Gilbert, [1981-82 Transfer Binder] Fed.Sec.L.Rep. (CCH) 1198, 244, at 91,602, 91,605, 1981 WL 1662 (S.D.N.Y.1981), aff'd, 668 F.2d at 95. In Stein, the manipulator’s transactions accounted for 28.8 percent of the daily exchange volume of transactions in Buckeye Corporation stock over a four month period. See Stein, 456 F.2d at 846. When domination is sustained over such an extended period of time, evidence of manipulation is strong. But, if the percentage of control be measured in terms of minutes or hours, anyone could find himself labeled as a manipulator.

In re Delafield & Delafield is the only case that gives us pause. There, the respondents entered into a consent decree with the Securities and Exchange Commission concerning allegations that they had *372manipulated the Class A common stock of the Mary Carter Paint Company by selling 17,600 shares of the stock between 2:00 p.m. and the close of the market on January 9, 1968. Respondents’ transactions represented 83 percent of the transactions in the stock during that period. Significantly, however, the sales “were effected in the name of two foreign banks to conceal the identity” of the true seller. See In re Delafield & Delafield, 1177,648 at 83,400. No such chicanery exists here. Thus, in the absence of other indicia of manipulation — and there are none — the fact that Mulheren dominated the market between 9:30 a.m. and 11:10 a.m. on October 17, 1985 (noting that Mulheren's purchases represented a small fraction of the total October 17th activity in G & W stock) carries little weight.

The government also urges that Mulheren’s manipulative intent — as opposed to investment intent — can be inferred from certain of Mulheren’s actions after his purchase of the G & W shares. For example, Mulheren sold G & W call options in the afternoon of October 17, 1985 that were designed to create a hedge in the event of a drop in the price of stock. Had Mulheren known, however, that Boesky and Icahn were going to unload 6.7 million shares of G & W stock — which had the inevitable effect of driving the price down — surely Mulheren would have had the foresight to write the options before Boesky and Icahn had a chance to sell. That Mulheren wrote the options in the afternoon suggests only that he was attempting to mitigate his losses.

Finally, the government contends that the fact that Mulheren continued to do favors for Boesky after G & W repurchased Boesky and Icahn’s shares is inconsistent with his claim that he was “duped” by Boesky into purchasing the 75,000 G & W shares. We disagree. First, the evidence of “favors” rests largely on the unproven “stock parking” charges. Second, Mulheren’s conduct after his G & W purchases is equally consistent with that of a sophisticated businessman who turns the other cheek after being slapped by the hand that usually feeds him.

We acknowledge that this case treads dangerously close to the line between legitimate inference and impermissible speculation. We are persuaded, however, that to come to the conclusion it did, “the jury must have engaged in false surmise and rank speculation.” United States v. Wiley, 846 F.2d 150, 155 (2d Cir.1988) (citing United States v. Starr, 816 F.2d 94, 99 (2d Cir.1987)). At best, Mulheren’s convictions are based on evidence that is “at least as consistent with innocence as with guilt,” United States v. Mankani, 738 F.2d 538, 547 (2d Cir.1984), and “on inferences no more valid than others equally supported by reason and experience.” United States v. Bufalino, 285 F.2d 408, 419 (2d Cir.1960). Accordingly, the judgments of conviction are reversed and Counts One through Four of the indictment are dismissed.

Mr. Justice White

delivered the opinion of the Court.

The issue in this case involves the reach and coverage of § 10 (b) of the Securities Exchange Act of 1934 and Rule 10b-51 thereunder in the context of a Delaware short-form *465merger transaction used by the majority stockholder of a corporation to eliminate the minority interest.

I

In 1936, petitioner Santa Fe Industries, Inc. (Santa Fe), acquired control of 60% of the stock of Kirby Lumber Corp. (Kirby), a Delaware corporation. Through a series of purchases over the succeeding years, Santa Fe increased its control of Kirby’s stock to 95%; the purchase prices during the period 1968-1973 ranged from $65 to $92.50 per share.2 In 1974, wishing to acquire 100% ownership of Kirby, Santa Fe availed itself of § 253 of the Delaware Corporation Law, known as the “short-form merger” statute. Section 253 permits a parent corporation owning at least 90% of the stock of a subsidiary to merge with that subsidiary, upon approval by the parent’s board of directors, and to make payment in cash for the shares of the minority stockholders. The statute does not require the consent of, or advance notice to, the minority stockholders. However, notice of the merger must be given within 10 days after its effective date, and any stockholder who is dissatisfied with the terms of the merger may petition the Delaware Court of Chancery for a decree ordering the surviving corporation to pay him the fair value *466of his shares, as determined by a court-appointed appraiser subject to review by the court. Del. Code Ann., Tit. 8, §§ 253, 262 (1975 ed. and Supp. 1976).

Santa Fe obtained independent appraisals of the physical assets of Kirby—land, timber, buildings, and machinery—and of Kirby’s oil, gas, and mineral interests. These appraisals, together with other financial information, were submitted to Morgan Stanley & Co. (Morgan Stanley), an investment banking firm retained to appraise the fair market value of Kirby stock. Kirby’s physical assets were appraised at $320 million (amounting to $640 for each of the 500,000 shares); Kirby’s stock was valued by Morgan Stanley at $125 per share. Under the terms of the merger, minority stockholders were offered $150 per share.

The provisions of the short-form merger statute were fully complied with.3 The minority stockholders of Kirby were notified the day after the merger became effective and were advised of their right to obtain an appraisal in Delaware court if dissatisfied with the offer of $150 per share. They also received an information statement containing, in addition to the relevant financial data about Kirby, the appraisals of the value of Kirby’s assets and the Morgan Stanley appraisal concluding that the fair market value of the stock was $125 per share.

Respondents, minority stockholders of Kirby, objected to the terms of the merger, but did not pursue their appraisal *467remedy in the Delaware Court of Chancery.4 Instead, they brought this action in federal court on behalf of the corporation and other minority stockholders, seeking to set aside the merger or to recover what they claimed to be the fair value of their shares. The amended complaint asserted that, based on the fair market value of Kirby’s physical assets as revealed by the appraisal included in the information statement sent to minority shareholders, Kirby’s stock was worth at least $772 per share.5 The complaint alleged further that the merger took place without prior notice to minority stockholders; that the purpose of the merger was to appropriate the difference between the “conceded pro rata value of the physical assets,” App. 103a, and the offer of $150 per share—to “freez[e] out the minority stockholders at a wholly inadequate price,” id., at 100a; and that Santa Fe, knowing the appraised value of the physical assets, obtained a “fraudulent appraisal” of the stock from Morgan Stanley and offered $25 above that appraisal “in order to lull the minority stockholders into erroneously believing that [Santa Fe was] generous.” Id., at 103a. This course of conduct was alleged to be “a violation of Rule 10b-5 because defendants employed a 'device, scheme, or artifice to defraud’ and engaged in an 'act, practice or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale *468of any security.' ” Ibid. 6 Morgan Stanley assertedly participated in the fraud as an accessory by submitting its appraisal of $125 per share although knowing the appraised value of the physical assets.

The District Court dismissed the complaint for failure to state a claim upon which relief could be granted. 391 F. Supp. 849 (SDNY 1975). As the District Court understood the complaint, respondents’ case rested on two distinct grounds. First, federal law was assertedly violated because the merger was for the sole purpose of eliminating the minority from the company, therefore lacking any justifiable business purpose, and because the merger was undertaken without prior notice to the minority shareholders. Second, the low valuation placed on the shares in the cash-exchange offer was itself said to be a fraud actionable under Rule 10b-5. In rejecting the first ground for recovery, the District Court reasoned that Delaware law required neither a business purpose for a short-form merger nor prior notice to the minority shareholders who the statute contemplated would be removed from the company, and that Rule 10b-5 did not override these provisions of state corporate law by independently placing a duty on the majority not to merge without prior notice and without a justifiable business purpose.

As for the claim that actionable fraud inhered in the allegedly gross undervaluation of the minority shares, the District Court observed that respondents valued their shares at a minimum of $772 per share, “basing this figure on the pro rata value of Kirby’s physical assets.” Id., at 853. Accepting this *469valuation for purposes of the motion to dismiss, the District Court further noted that, as revealed by the complaint, the physical asset appraisal, along with other information relevant to Morgan Stanley’s valuation of the shares, had been included with the information statement sent to respondents within the time required by state law. It thought that if “full and fair disclosure is made, transactions eliminating minority interests are beyond the purview of Rule 10b-5,” and concluded that the “complaint fail[ed] to allege an omission, misstatement or fraudulent course of conduct that would have impeded a shareholder’s judgment of the value of the offer.” Id., at 854. The complaint therefore failed to state a claim and was dismissed.7

A divided Court of Appeals for the Second Circuit reversed. 533 P. 2d 1283 (1976). It first agreed that there was a double aspect to the case: first, the claim that gross undervaluation of the minority stock itself violated Rule 10b-5; and second, that “without any misrepresentation or failure to disclose relevant facts, the merger itself constitutes a violation of Rule 10b-5” because it was accomplished without any corporate purpose and without prior notice to the minority stockholders. Id., at 1285. As to the first aspect of the case, the Court of Appeals did not disturb the District Court’s conclusion that the complaint did not allege a material misrepresentation or nondisclosure with respect to the value of the stock; and the court declined to rule that a claim of gross *470undervaluation itself would suffice to make out a Rule 10b-5 case. With respect to the second aspect of the case, however, the court fundamentally disagreed with the District Court as to the reach and coverage of Rule 10b-5. The Court of Appeals' view was that, although the Rule plainly reached material misrepresentations and nondisclosures in connection with the purchase or sale of securities, neither misrepresentation nor nondisclosure was a necessary element of a Rule 10b-5 action; the Rule reached “breaches of fiduciary duty by a majority against minority shareholders without any charge of misrepresentation or lack of disclosure." Id., at 1287. 8 The court went on to hold that the complaint, taken as a whole, stated a cause of action under the Rule:

“We hold that a complaint alleges a claim under Rule 10b-5 when it charges, in connection with a Delaware short-form merger, that the majority has committed a breach of its fiduciary duty to deal fairly with minority shareholders by effecting the merger without any justifiable business purpose. The minority shareholders are given no prior notice of the merger, thus having no opportunity to apply for injunctive relief, and the proposed price to be paid is substantially lower than the appraised value reflected in the Information Statement.” Id., at 1291.

See also id., at 1289.9

*471We granted the petition for certiorari challenging this holding because of the importance of the issue involved to the administration of the federal securities laws. 429 U. S. 814 (1976). We reverse.

II

Section 10 (b) of the 1934 Act makes it “unlawful for any person ... to use or employ . . . any manipulative or deceptive device or contrivance in contravention of [Securities and Exchange Commission rules]”; Rule 10b-5, promulgated by the SEC under § 10 (b), prohibits, in addition to nondisclosure and misrepresentation, any “artifice to defraud” or any act “which operates or would operate as a fraud or deceit.”10 The court below construed the term “fraud” in Rule 10b-5 by adverting to the use of the term in several of this Court’s decisions in contexts other than the 1934 Act and the related Securities Act of 1933, 15 U. S. C. § 77a et seq. 11 The Court *472of Appeals’ approach to the interpretation of Rule 10b-5 is inconsistent with that taken by the Court last Term in Ernst & Ernst v. Hochfelder, 425 U. S. 185 (1976).

Ernst & Ernst makes clear that in deciding whether a complaint states a cause of action for “fraud” under Rule 10b-5, “we turn first to the language of § 10 (b), for ‘[t]he starting point in every case involving construction of a statute is the language itself.’ ” Id., at 197, quoting Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 756 (1975) (Powell, J., concurring). In holding that a cause of action under Rule 10b-5 does not lie for mere negligence, the Court began with the principle that “[ascertainment of congressional intent with respect to the standard of liability created by a particular section of the [1933 and 1934] Acts must . . . rest primarily on the language of that section,” 425 U. S., at 200, and then focused on the statutory language of § 10 (b)—“[t]he words ‘manipulative or deceptive’ used in conjunction with ‘device or contrivance.’ ” Id., at 197. The same language and the same principle apply to this case.

To the extent that the Court of Appeals would rely on the use of the term “fraud” in Rule 10b-5 to bring within the ambit of the Rule all breaches of fiduciary duty in connection with a securities transaction, its interpretation would, like the interpretation rejected by the Court in Ernst & Ernst, “add a gloss to the operative language of the statute quite different from its commonly accepted meaning.” Id., at 199. But, as the Court there held, the language of the statute must control the interpretation of the Rule:

“Rule 10b-5 was adopted pursuant to authority granted the [Securities and Exchange] Commission under § 10 (b). The rulemaking power granted to an administrative agency charged with the administration of a federal statute is not the power to make law. Rather, it is ‘ “the power to adopt regulations to carry into effect the will of Congress as expressed by the statute.” ’. . . [The *473scope of the Rule] cannot exceed the power granted the Commission by Congress under § 10 (b).” Id., at 212—214.12

The language of § 10 (b) gives no indication that Congress meant to prohibit any conduct not involving manipulation or deception. Nor have we been cited to any evidence in the legislative history that would support a departure from the language of the statute.13 “When a statute speaks so specifically in terms of manipulation and deception, . . . and when its history reflects no more expansive intent, we are quite unwilling to extend the scope of the statute . . ." Id., at 214. Thus the claim of fraud and fiduciary breach in this complaint states a cause of action under any part of Rule 10b-5 only if *474the conduct alleged can be fairly viewed as “manipulative or deceptive” within the meaning of the statute.

III

It is our judgment that the transaction, if carried out as alleged in the complaint, was neither deceptive nor manipulative and therefore did not violate either § 10 (b) of the Act or Rule 10b-5.

As we have indicated, the case comes to us on the premise that the complaint failed to allege a material misrepresentation or material failure to disclose. The finding of the District Court, undisturbed by the Court of Appeals, was that there was no “omission” or “misstatement” in the information statement accompanying the notice of merger. On the basis of the information provided, minority shareholders could either accept the price offered or reject it and seek an appraisal in the Delaware Court of Chancery. Their choice was fairly presented, and they were furnished with all relevant information on which to base their decision.14

We therefore find inapposite the cases relied upon by respondents and the court below, in which the breaches of *475fiduciary duty held violative of Rule 10b-5 included some element of deception.15 Those cases forcefully reflect the principle that “[§] 10 (b) must be read flexibly, not technically *476and restrictively” and that the statute provides a cause of action for any plaintiff who “suffer[s] an injury as a result of deceptive practices touching its sale [or purchase] of securities . . ." Superintendent of Insurance v. Bankers Life & Cas. Co., 404 U. S. 6, 12-13 (1971). But the cases do not support the proposition, adopted by the Court of Appeals below and urged by respondents here, that a breach of fiduciary duty by majority stockholders, without any deception, misrepresentation, or nondisclosure, violates the statute and the Rule.

It is also readily apparent that the conduct alleged in the complaint was not “manipulative” within the meaning of the statute. “Manipulation” is “virtually a term of art when used in connection with securities markets.” Ernst & Ernst, 425 U. S., at 199. The term refers generally to practices, such as wash sales, matched orders, or rigged prices, that are intended to mislead investors by artificially affecting market activity. See, e. g., § 9 of the 1934 Act, 15 U. S. C. § 78i (prohibiting specific manipulative practices); Ernst & Ernst, supra, at 195, 199 n. 21, 205; Piper v. Chris-Craft Industries, Inc., ante, at 43 (Rule 10b-6, also promulgated under § 10 (b), is “an antimanipulative provision designed to protect the orderliness of the securities market during distributions of stock” and “to prevent stimulative trading by an issuer in its own securities in order to create an unnatural and unwarranted appearance of market activity”); 2 A. Bromberg, Securities Law: Fraud § 7.3 (1975); 3 L. Loss, Securities Regulation 1541-1570 (2d ed. 1961); 6 id., at 3755-3763 (Supp. 1969). Section 10 (b)’s general prohibition of practices deemed by *477the SEC to be “manipulative”—in this technical sense of artificially affecting market activity in order to mislead investors—is fully consistent with the fundamental purpose of the 1934 Act “‘to substitute a philosophy of full disclosure for the philosophy of caveat emptor Affiliated Ute Citizens v. United States, 406 U. S. 128, 151 (1972), quoting SEC v. Capital Cains Research Bureau, 375 U. S. 180, 186 (1963). Indeed, nondisclosure is usually essential to the success of a manipulative scheme. 3 Loss, supra, at 1565. No doubt Congress meant to prohibit the full range of ingenious devices that might be used to manipulate securities prices. But we do not think it would have chosen this “term of art” if it had meant to bring within the scope of § 10 (b) instances of corporate mismanagement such as this, in which the essence of the complaint is that shareholders were treated unfairly by a fiduciary.

IV

The language of the statute is, we think, “sufficiently clear in its context” to be dispositive here, Ernst & Ernst, supra, at 201; but even if it were not, there are additional considerations that weigh heavily against permitting a cause of action under Rule 10b-5 for the breach of corporate fiduciary duty alleged in this complaint. Congress did not expressly provide a private cause of action for violations of § 10 (b). Although we have recognized an implied cause of action under that section in some circumstances, Superintendent of Insurance v. Bankers Life & Cas. Co., supra, at 13 n. 9, we have also recognized that a private cause of action under the antifraud provisions of the Securities Exchange Act should not be implied where it is “unnecessary to ensure the fulfillment of Congress’ purposes” in adopting the Act. Piper v. Chris-Craft Industries, ante, at 41. Cf. J. I. Case Co. v. Borak, 377 U. S. 426, 431-433 (1964). As we noted earlier, supra, this page, the Court repeatedly has described the *478“fundamental purpose” of the Act as implementing a “philosophy of full disclosure”; once full and fair disclosure has occurred, the fairness of the terms of the transaction is at most a tangential concern of the statute. Cf. Mills v. Electric Auto-Lite Co., 396 U. S. 375, 381-385 (1970). As in Cort v. Ash, 422 U. S. 66, 80 (1975), we are reluctant to recognize a cause of action here to serve what is “at best a subsidiary purpose” of the federal legislation.

A second factor in determining whether Congress intended to create a federal cause of action in these circumstances is “whether ‘the cause of action [is] one traditionally relegated to state law Piper v. Chris-Craft Industries, Inc., ante, at 40, quoting Cort v. Ash, supra, at 78. The Delaware Legislature has supplied minority shareholders with a cause of action in the Delaware Court of Chancery to recover the fair value of shares allegedly undervalued in a short-form merger. See supra, at 465-466. Of course, the existence of a particular state-law remedy is not dispositive of the question whether Congress meant to provide a similar federal remedy, but as in Cort and Piper, we conclude that “it is entirely appropriate in this instance to relegate respondent and others in his situation to whatever remedy is created by state law.” 422 U. S., at 84; ante, at 41.

The reasoning behind a holding that the complaint in this case alleged fraud under Rule 10b-5 could not be easily contained. It is difficult to imagine how a court could distinguish, for purposes of Rule 10b-5 fraud, between a majority stockholder’s use of a short-form merger to eliminate the minority at an unfair price and the use of some other device, such as a long-form merger, tender offer, or liquidation, to achieve the same result; or indeed how a court could distinguish the alleged abuses in these going private transactions from other types of fiduciary self-dealing involving transactions in securities. The result would be to bring within the Rule a wide variety of corporate conduct traditionally left to state regulation. In addition to posing a *479“danger of vexatious litigation which could result from a widely expanded class of plaintiffs under Rule 10b-5,” Blue Chip Stamps v. Manor Drug Stores, 421 U. S., at 740, this extension of the federal securities laws would overlap and quite possibly interfere with state corporate law. Federal courts applying a “federal fiduciary principle” under Rule 10b-5 could be expected to depart from state fiduciary standards at least to the extent necessary to ensure uniformity within the federal system.16 Absent a clear indication of congressional intent, we are reluctant to federalize the substantial portion of the law of corporations that deals with transactions in securities, particularly where established state policies of corporate regulation would be overridden. As the Court stated in Cort v. Ash, supra: “Corporations are creatures of state law, and investors commit their funds to corporate directors on the understanding that, except where federal law expressly requires certain responsibilities of directors with respect to stockholders, state law will govern the internal affairs of the corporation.” 422 U. S., at 84 (emphasis added).

We thus adhere to the position that “Congress by § 10 (b) did not seek to regulate transactions which constitute no more than internal corporate mismanagement.” Superintendent of Insurance v. Bankers Life & Cas. Co., 404 U. S., at 12. There *480may well be a need for uniform federal fiduciary standards to govern mergers such as that challenged in this complaint. But those standards should not be supplied by judicial extension of § 10 (b) and Rule 10b-5 to “cover the corporate universe.”17

The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

So ordered.

Mr. Justice Brennan dissents and would affirm for substantially the reasons stated in the majority and concurring opinions in the Court of Appeals, 533 F. 2d 1283 (CA2 1976).

Mr. Justice Blackmun,

concurring in part.

Like Mr. Justice Stevens, I refrain from joining Part IV of the Court’s opinion. I, too, regard that part as unnecessary for the decision in the instant case and, indeed, as exacerbating the concerns I expressed in my dissents in Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 761 (1975), and in Ernst & Ernst v. Hochfelder, 425 U. S. 185, 215 (1976). I, however, join the remainder of the Court’s opinion and its judgment.

Mr. Justice Stevens,

concurring in part.

For the reasons stated by Mr. Justice Blackmun in his dissenting opinion in Blue Chip Stamps v. Manor Drug Stores, *481421 U. S. 723, 761,1 and those stated in my dissent in Piper v. Chris-Craft Industries, ante, p. 53, I believe both of those cases were incorrectly decided. I foresee some danger that Part IV of the Court's opinion in this case may incorrectly be read as extending the holdings of those cases. Moreover, the entire discussion in Part IV is unnecessary to the decision of this case. Accordingly, I join only Parts I, II, and III of the Court’s opinion. I would also add further emphasis to the fact that the controlling stockholders in this case did not breach any duty owed to the minority shareholders because (a) there was complete disclosure of the relevant facts, and (b) the minority are entitled to receive the fair value of their shares.2 The facts alleged in the complaint do not constitute “fraud” within the meaning of Rule 10b-5.

JACOBS, Circuit Judge.

This putative securities class action is brought by investors who purchased stock in Family Golf Centers, Inc. (“Family Golf’), a now-bankrupt company that was in the business of acquiring and operating golf courses. Defendants were certain officers of the company and the underwriters of a secondary offering that was used in part to finance the acquisitions. Plaintiffs appeal from a judgment entered in the United Stated District Court for the Eastern District of New York (Johnson, J.) on July 31, 2002, dismissing their action with prejudice for failure to state a claim under Fed.R.Civ.P. 12(b)(6), failure to plead fraud with sufficient particularity under Fed.R.Civ.P. 9(b), and failure to state a claim under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4 (2000).

This appeal presents an issue of first impression in this Circuit: whether the heightened pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure applies to claims brought under Section 11 and Section 12(a)(2) of the Securities Act. We conclude that Rule 9(b) applies when the claim sounds in fraud.

BACKGROUND

Family Golf, a publicly traded company since 1994, was a leading consolidator of golf centers; in 1998, it operated 119 golf facilities nationwide. Defendant Dominic Chang was chief executive officer, chairman of the board, and the largest stockholder; defendant Krishnan Thampi was president, chief operating officer, assistant secretary, treasurer, and a director; and defendant Jeffrey Key was chief financial officer (collectively, the “individual defendants”).

By 1998, the company adopted a growth strategy of acquiring large golf course operators with multiple locations. Three such acquisitions were made that year: MetroGolf in January; Eagle Quest in June; and Golden Bear in July. In connection with the financing of these acquisitions, Family Golf conducted a secondary public offering on July 23, 1998. Defendants Jeffries & Company, Inc. and Prudential Securities, Inc. (collectively, the “underwriters”) were underwriters and managers of the secondary offering. In the course of these transactions, Family Golf and its underwriters made several optimistic public statements that claimed success in the integration of newly-acquired facilities.

In February and March 1999, Family Golf announced lower than expected earnings and revenue for the fourth quarter of 1998, and its stock price soon plummeted by more than 43 percent. On August 12, 1999, it announced a net loss of six cents per share for the second quarter of 1999, and disclosed that it was in default on a number of financial obligations. The company filed for bankruptcy protection on May 4, 2000.

The plaintiffs purchased or otherwise acquired shares of Family Golf between May 12, 1998 and August 12, 1999 (the “Class Period”); a subclass purchased Family Golf stock in the secondary public offering. The initial complaint was filed in the Eastern District of New York on Feb*168ruary 16, 2000, and a Consolidated Amended Class Action Complaint was filed on July 17, 2000.1 It is alleged that the company’s finances had begun deteriorating months before the announcement of bad news and while the company and its underwriters were exuding confidence about its growth; that by September 1998, Family Golf was in a “liquidity crisis” that prevented it from making timely payments to vendors, insurers, and landlords; that the liquidity crisis “had the effect of systematically overstating [Family Golfs] publicly reported income”; and that the individual defendants and underwriters made several misrepresentations and omissions about Family Golfs financial performance and projected income to the effect that the newly-acquired golf facilities would be profitable even though they knew — or recklessly disregarded — ’that the company was having serious trouble digesting its large new acquisitions.

The complaint focuses most specifically on the following communications: (1) press releases indicating that integration of the new acquisitions was progressing smoothly; (2) a slide (entitled “Facility Economics Comparison”) that was used in connection with the secondary offering; (3) analysts’ reports (based on information provided by defendants) also noting that integration of the new acquisitions was progressing smoothly; and (4) the registration statement and prospectus for the secondary offering.

Plaintiffs undertake to plead five claims:

(1) That all defendants violated Section 11 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77k (2000), by disseminating a registration statement for the secondary public offering that contained false and misleading statements and failed to state material facts;2

(2) That the underwriters violated Section 12(a)(2) of the Securities Act, 15 U.S.C. § 771(a)(2), by soliciting the sale of shares in the secondary public offering based on a prospectus that contained false and misleading statements and failed to state material facts;3

(3) That the individual defendants were “control person[s] at Family Golf by virtue of their positions as directors and/or senior officers,” and violated Section 15 of the Securities Act, 15 U.S.C. § 77o, by “having signed the Registration Statement and having otherwise participated in the process which allowed the Offering to be successfully completed”;

(4) That the individual defendants violated Section 10(b) of the Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78j(b) (2000), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, by “engaging] in a plan, scheme and course of conduct, pursuant to which they knowingly and/or recklessly engaged in acts, transactions, practices, and courses of business which operated *169as a fraud upon plaintiffs and other members of the Class”;4 and

(5) That the individual defendants are “secondarily liable” as “controlling persons of the Company,” pursuant to Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), for the violation of Section 10(b).

Defendants moved to dismiss the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6), failure to plead fraud with sufficient particularity under Fed.R.Civ.P. 9(b), and failure to state a claim under the PSLRA. The district court (Johnson, J.) granted defendants’ motions and dismissed the complaint in its entirety with prejudice.

With regard to the claims against the individual defendants, the court ruled: that plaintiffs “fail to plead fraud with particularity on their § 10(b) and Section 11 claims” because their allegations “do not sufficiently explain how any of the statements attributed to Defendants are false or misleading,” Rombach v. Chang, No. 00-CV-0958, 2002 WL 1396986, at *4, *7, 2002 U.S. Dist. LEXIS 15754, at *11-*12, *19 (E.D.N.Y. June 7, 2002); that plaintiffs failed to plead scienter, as required by the PSLRA, id. at *9, 2002 U.S. Dist. LEXIS 15754, at *23; and that as a consequence of those rulings, the “control person” claims pleaded under Section 15 and Section 20(a) — which are predicated on a primary violation of securities law— also fall, id. at *10, 2002 U.S. Dist. LEXIS 15754, at *29-*30.

The court dismissed all claims against the underwriters on the ground that because their “optimistic remarks about [Family Golfs] acquisition of the new facilities” included “substantial cautionary language and specific risk factors,” id. at *13, 2002 U.S. Dist. LEXIS 15754, at *37, the statements were “protected by traditional ‘bespeaks caution’ doctrine and the safe harbor provided by the PSLRA,” and that therefore the “allegations fail to show that any material statements or omissions attributed to Defendants were, in fact, misleading or false.” Id.

Plaintiffs filed a timely notice of appeal to this Court. Defendant Jeffries & Company cross-appealed on the ground that the district court failed to make the Rule 11 findings required by the PSLRA, see 15 U.S.C. § 78u-4(c)(1), and that the district court erred in finding that the claims against the underwriters were not time-barred.

DISCUSSION

This Court “reviewfs] de novo a district court’s dismissal of a complaint pursuant to Rule 12(b)(6), accepting all factual allegations in the complaint as true and drawing all reasonable inferences in the plaintiffs’ favor.” Ganino v. Citizens Utilities Co., 228 F.3d 154, 161 (2d Cir.2000). “We uphold a dismissal only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id. (citation and internal quotation marks omitted). Consideration is limited to the facts alleged in the complaint and any documents attached to the complaint or incorporated by reference. See Kramer v. Time Warner Inc., 937 F.2d 767, 773 (2d Cir.1991).

*170I

The district court concluded, as to the claims against the individual defendants, that plaintiffs failed to plead fraud with particularity sufficient to satisfy the requirements of Fed.R.Civ.P. 9(b) (regarding all claims brought against the individual defendants) and of the PSLRA (regarding the claims brought under Section 10(b)). Rule 9(b) requires that “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Fed.R.Civ.P. 9(b). This Court has read Rule. 9(b) to require that a complaint “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993).

Similarly, the PSLRA, which applies in this respect only to claims brought under the Exchange Act, requires that any securities fraud complaint alleging misleading statements or omission of material fact must “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l).

As the district court observed, the particularity requirement of Rule 9(b) applies to securities fraud claims brought under Section 10(b) and Rule 10b-5. See Ganino, 228 F.3d at 168. The district court concluded that the same heightened pleading standard applies to securities claims brought under Section 11 and Section 12(a)(2) when premised on averments of fraud. We agree.

In deciding this issue, several circuits have distinguished between allegations of fraud and allegations of negligence, applying Rule 9(b) only to claims pleaded under Section 11 and Section 12(a)(2) that sound in fraud. See Shapiro v. UJB Fin. Corp., 964 F.2d 272, 288 (3d Cir.1992) (“[W]hen § 11 and § 12[ (a) ](2) claims are grounded in fraud rather than negligence, Rule 9(b) applies.”); Melder v. Morris, 27 F.3d 1097, 1100 n. 6 (5th Cir.1994) (Rule 9(b) applies when “Securities Act claims are grounded in fraud rather than negligence”); Sears v. Likens, 912 F.2d 889, 893 (7th Cir.1990) (plaintiffs “fail[ed] to satisfy this 9(b) standard” applied to their Securities Act claims sounding in fraud where “their complaint [was] bereft of any detail concerning who was involved in each allegedly fraudulent activity, how the alleged fraud was perpetrated, or when the allegedly fraudulent statements were made”); In re Stac Elecs. Secs. Litig., 89 F.3d 1399, 1404-05 (9th Cir.1996) (“[T]he particularity requirements of Rule 9(b) apply to claims brought under Section 11 when, as here, they are grounded in fraud.”). There is dicta in two other circuits along the same lines.5

The Eighth Circuit, however, has categorically held that “the particularity requirement of Rule 9(b) does not apply to *171claims under § 11 of the Securities Act, because proof of fraud or mistake is not a prerequisite to establishing liability under § 11.” In re NationsMart Corp. Secs. Litig., 130 F.3d 309, 314 (8th Cir.1997). The court reasoned that “a pleading standard which requires a party to plead particular facts to support a cause of action that does not include fraud or mistake as an element comports neither with Supreme Court precedent nor with the liberal system of ‘notice pleading’ embodied in [Fed.R.Civ.P. 8(b)].” Id. at 315. In this Circuit, the several district courts that have considered this issue have split on its resolution.6

We hold that the heightened pleading standard of Rule 9(b) applies to Section 11 and Section 12(a)(2) claims insofar as the claims are premised on allegations of fraud. By its terms, Rule 9(b) applies to “all averments of fraud.” Fed.R.Civ.P. 9(b). This wording is cast in terms of the conduct alleged, and is not limited to allegations styled or denominated as fraud or expressed in terms of the constituent elements of a fraud cause of action. Fraud is not an element or a requisite to a claim under Section 11 or Section 12(a)(2); at the same time, claims under those sections may be — and often are — predicated on fraud. The same course of conduct that would support a Rule 10b-5 claim may as well support a Section 11 claim or a claim under Section 12(a)(2). So while a plaintiff need allege no more than negligence to proceed under Section 11 and Section 12(a)(2), claims that do rely upon aver-ments of fraud are subject to the test of Rule 9(b).

The particularity requirement of Rule 9(b) serves to “provide a defendant with fair notice of a plaintiffs claim, to safeguard a defendant’s reputation from improvident charges of wrongdoing, and to protect a defendant against the institution of a strike suit.” O’Brien v. Nat’l Property Analysts Partners, 936 F.2d 674, 676 (2d Cir.1991) (internal quotation marks omitted); see also Vess v. Ciba-Geigy Corp. USA 317 F.3d 1097, 1104 (9th Cir. 2003) (“Fraud allegations may damage a defendant’s reputation regardless of the cause of action in which they appear, and they are therefore properly subject to Rule 9(b) in every case.”); In re Stac Elees. Secs. Litig., 89 F.3d at 1405 (“Rule 9(b) serves to ... prohibit plaintiffs from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis.”) (internal quotation marks and alteration marks omitted). These considerations apply with equal force to “averments of fraud” set forth in aid of Section 11 and Section 12(a)(2) claims that are grounded in fraud.

II

We next consider whether the Section 11 and Section 12(a)(2) claims asserted by plaintiffs in this case sound in negligence or in fraud. The district court concluded that the plaintiffs’ claims against the individual defendants sound in fraud and that the claims against the underwriters sound *172in negligence. Rombach, 2002 WL 1396986, at *4, 2002 U.S. Dist. LEXIS 15754, at *10 — *11. We agree.

Plaintiffs assert that their Section 11 claims “do[ ] not sound in fraud”- but the wording and imputations of the complaint are classically associated with fraud: that the Registration statement was “inaccurate and misleading;” that it contained “untrue statements of material facts;” and that “materially false and misleading written statements” were issued. A panel of the Ninth Circuit rejected a similar effort to characterize claims by the label used in the pleading: “[tjhese nominal efforts are unconvincing where the gravamen of the complaint is plainly fraud and no effort is made to show any other basis for the claims levied at the Prospectus.” In re Stac Elecs. Secs. Litig., 89 F.3d at 1405 n. 2; see also In re Ultrafem, 91 F.Supp.2d at 690-91 (applying Rule 9(b) where “plaintiffs [made] little, if any, effort to differentiate their asserted negligence claims from the fraud claims which permeate the Complaint ... [and] merely disavowed] any allegations that would make Rule 9(b) applicable ... without specifying the allegations that would support a negligence cause of action.”).

To meet the pleading standard of Rule 9(b), this Court has repeatedly required, among other things, that the pleading “explain why the statements were fraudulent.” Mills, 12 F.3d at 1175. The PSLRA imposes similar requirements to claims brought under the Exchange Act: “the complaint shall specify each statement alleged to have been misleading [and] the reason or reasons why the statement is misleading.” 15 U.S.C. § 78u-4(b)(1). We agree with the district court that the complaint does not “state with particularity the specific facts in support of [plaintiffs’] belief that [defendants’] statements were false when made,” and therefore fails the tests of Rule 9(b) and the PSLRA.7 Rombach, 2002 WL 1396986, at *4, 2002 U.S. Dist. LEXIS 15754, at *11-*12. We will address in turn each of the four categories of statements that plaintiffs allege to be “false” or “misleading.”

(A) The Press Releases. Family Golf issued six press releases between May 1998 and March 1999. Plaintiffs contend that various statements made therein were misleading because they failed to disclose or accurately represent the company’s integration and liquidity problems. They cite statements that the integration of Family Golfs new sites was “well underway” and progressing smoothly, assurances given at the same time defendants knew of problems with the integration of operations and computer systems.

Although the complaint catalogs a number of statements made by the individual defendants, nothing in the complaint explains with adequate specificity how those statements were actually false or misleading. The first two press releases in question — issued in May and June 1998 — were released a few months after Family Golfs acquisition of the MetroGolf facility in January, and before consummation of the other large acquisitions in question (Eagle Quest in late-June and Golden Bear in mid-July). These early statements concerning the integration of the facilities therefore appear to have been forward-looking. As time went on, the upbeat tone of Family Golfs press releases grew hedged and guarded. For example, the August 1998 press release stated that “to*173tal revenue for the four Eagle Quest centers decreased by 25 percent in the [second] quarter,” and that “[t]he results of the four Eagle Quest centers were significantly impacted by their shortage of working capital and lack of quality balls, hitting mats and pro shop merchandise.” The February 1999 press release stated that while the company was “optimistic” about the future performance of the newly acquired facilities, it “is clear that more than likely they [would] continue to under-perform in the near-term.” Optimism continued to abate in subsequent press releases, including a March 1999 statement that the company was “disappointed at the contribution of many of the more recently acquired sites this quarter, [but was] likewise working hard to complete the integration of [these sites].”

These statements, as the district court held, are optimistic statements protected by the “bespeaks caution” doctrine and the PSLRA’s safe harbor. Under the bespeaks caution doctrine, “alleged misrepresentations in a stock offering are immaterial as a matter of law [if] it cannot be said that any reasonable investor could consider them important in light of adequate cautionary language set out in the same offering.” Halperin v. eBanker USA.com, Inc., 295 F.3d 352, 357 (2d Cir. 2002). When there is cautionary language in the disclosure, the Court analyzes

the allegedly fraudulent materials in their entirety to determine whether a reasonable investor would have been misled. The touchstone of the inquiry is not whether isolated statements within a document were true, but whether defendants’ representations or omissions, considered together and in context, would affect the total mix of information and thereby mislead a reasonable investor regarding the nature of the securities offered.

Id.

In the PSLRA, a counterpart safe-harbor provision provides (in pertinent part) that an issuer or underwriter

shall not be liable with respect to any forward-looking statement ... if and to the extent that (A) the forward-looking statement is (i) identified as a forward-looking statement, and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement; or (ii) immaterial ....

15 U.S.C. §§ 77z-2(a) & (c)(1), 78u-5(a) & (c)(1).

The bespeaks caution doctrine does not serve if it is abused or gamed. Cautionary words about future risk cannot insulate from liability the failure to disclose that the risk has transpired. See In re Prudential Secs. Inc. P’ships Litig., 930 F.Supp. 68, 72 (S.D.N.Y.1996) (“The doctrine of bespeaks caution provides no protection to someone who warns his hiking companion to walk slowly because there might be a ditch ahead when he knows with near certainty that the Grand Canyon lies one foot away.”). Plaintiffs identify a handful of incidents in which Family Golf did not pay creditors, did not execute construction or operational projects, and had problems integrating newly acquired properties into their national system, but these allegations do not support an inference that the company was in trouble. A company that operates 119 separate facilities nationwide is bound to have problems assimilating this or that property, to have disputes over payments with vendors and landlords, and to have some bills unpaid by reason of contested amounts or spot episodes of illiquidity; the allegations in the complaint are consistent with unremarka*174ble circumstances short of financial peril or instability.8

Further, as the district court observed, expressions of puffery and corporate optimism do not give rise to securities violations. Rombach, 2002 WL 1396986, at *5, 2002 U.S. Dist. LEXIS 15754, at *13. Up to a point, companies must be permitted to operate with a hopeful outlook: “People in charge of an enterprise are not required to take a gloomy, fearful or defeatist view of the future; subject to what current data indicates, they can be expected to be confident about their stewardship and the prospects of the business that they manage.” Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1129-30 (2d Cir.1994). To succeed on this claim, plaintiffs must do more than say that the statements in the press releases were false and misleading; they must demonstrate with specificity why and how that is so. We agree with Judge Johnson’s assessment that plaintiffs fail to allege with particularity any actual falsity in defendants’ press releases.

(B) “Facility Economics Comparison” Slide. Plaintiffs allege that a slide that was prepared and used by defendants in connection with the July 1998 secondary public offering “falsely portrayed the Company’s growth and profitability by materially overstating the ‘economics’ of its ‘facilities.’ ”9 The district court observed, however, that the “slide is unclear on its face as to whether the figures represent actual historical revenues generated or projections for future earnings.” Rom-bach, 2002 WL 1396986, at *6, 2002 U.S. Dist. LEXIS 15754, at *17. The slide is undated and there is no indication of the time ‘ period to which the given data is relevant.

[8] To show that Family Golf was overstating its financial position at the time the slide was utilized, the complaint' cites 1997 revenue data for four Class II golf centers as a point of comparison. However, no source is given for this data, and it is wholly unclear why data relating to four facilities can be deemed representative of Family Golfs 115 other facilities, or material to the company’s overall financial condition. We agree with the district court that there is nothing in the complaint that links the actual and projected revenues of these four facilities to plaintiffs’ claim that the financial projections contained in the slide are false or misleading. Plaintiffs therefore do not plead fraud with the requisite particularity in relation to the “Facility Economics Comparison” slide.

(C) Analysts’ Reports. Plaintiffs allege that the individual defendants disseminated misleading earnings projections and statements about Family Golfs integration efforts to analysts, and that this misinformation found its way into several analysts’ reports. There are two ways to state a claim against corporate officers for false and misleading statements contained in an analyst report: the complaint can allege that the officers either “(1) ‘intentionally fosterjed] a mistaken belief concerning a material fact’ that was incorporated into reports; or (2) adopted or *175placed their ‘imprimatur’ on the reports.” Novak v. Kasaks, 216 F.3d 300, 314 (2d Cir.2000) (alterations in original) (quoting Elkind, v. Liggett & Myers, Inc., 635 F.2d 156, 163-64 (2d Cir.1980)). Plaintiffs’ claim is based on the active fostering of error rather than imprimatur.

Plaintiffs sufficiently allege that defendants intentionally fostered the mistaken beliefs expressed in the reports. For example, the complaint alleges that the analysts’ reports were “based on specific information from defendants” and “were derived from internal budget information furnished to the respective analysts by defendants Key and Thampi.”10 But the complaint fails to explain why the information in the analysts’ reports was, in fact, fraudulent. Like the press releases, the analysts’ reports contain financial projections and statements of guarded optimism. But, as set forth above, “puffery” or “misguided optimism” is not actionable as fraud. To meet the pleading requirement of Rule 9(b), plaintiffs cannot rest on their say-so that these statements are fraudulent; they must explain why. Having neglected to do so, they fail to plead with the requisite particularity.

(D) Registration Statement. Finally, the complaint alleges that the individual defendants issued a false or misleading registration statement in violation of Section 11 of the Securities Act. We analyze the allegations regarding the registration statement in light of the Section 10(b) claims as well, because the Section 10(b) count incorporates as though fully set forth therein the allegations contained in the Section 11 count. Plaintiffs do not identify any materially false statements in the registration statement that were false or misleading when made. Plaintiffs, rather, simply allege generally that the registration statement “failed to disclose that the [secondary] Offering was necessitated by pressure from the Company’s lenders and its deteriorating cash position, and it failed to disclose that the integration of recently acquired sites was proceeding poorly and that the Company was experiencing operation problems associated with these acquired properties.”

Such allegations, however, are undercut by the fact that the offering documents either did not omit such information or contained sufficient cautionary language to bespeak caution and trigger the safe harbor provision of the PSLRA. As the district court noted, the offering documents contained cautionary language and information about the financial risks, including:

• that the company experienced a net loss of $3.6 million for fiscal year 1997, based on historical financials consolidated to reflect the 1998 acquisitions, and a net loss of $1.7 million for the first quarter of fiscal year 1998;

• that some Family Golf facilities had “experienced losses;”

• that “no assurance” could be given that additional facilities would be “readily integrated into the Company’s operating structure;”

• that the company had lower cash reserves in 1998 than in 1997;

*176• that there existed a “need to raise substantial additional capital” for continued long-term expansion, and the caution that there was “no assurance” Family Golf would be able to raise enough;

• that the company had a $180 million debt, coupled with the admonition that there was “no assurance” the company would be able to generate sufficient cash to service that debt; and

• that the company’s past performance was “not necessarily indicative of future results.”

While some of these cautionary statements were formulaic, we conclude that as a whole they provided a sobering picture of Family Golfs financial condition and future plans.

* # * * * *

Although the allegations of the relevant claims against the individual defendants sound in fraud, they may also recite some or all of the elements of a claim for negligence. But for the fact that such a negligence claim, if properly pleaded, would be defeated in any event by the bespeaks caution doctrine, we might well affirm the dismissal with a direction to the district court to entertain a motion to re-plead in terms of negligence. Cf. Lone Star Ladies Inv. Club v. Schlotzsky’s, Inc., 238 F.3d 363, 368-69 (5th Cir.2001) (courts are not “required to sift through allegations of fraud in search of some ‘lesser included’ claim of strict liability,” and instead should dismiss and permit counsel to offer • an amended claim “that either pleads with the requisite particularity or drops the defective allegations and still states a claim”).

III

The district court also based its dismissal of the claims against the individual defendants on the failure to plead scienter. To state a claim for securities fraud, the PSLRA requires that plaintiffs “state with particularity [the] facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). In order to satisfy:this requirement, “a complaint may (1) allege facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness, or (2) allege facts to show that defendants had both motive and opportunity to commit fraud.” Roth-man v. Gregor, 220 F.3d 81, 90 (2d-Cir. 2000); see also Novak, 216 F.3d at 310.

Plaintiffs contend that the complaint pleads conscious or reckless misbehavior because (1) it alleges that Family Golf faced a liquidity crisis during the relevant period; (2) it describes examples of Family Golfs failure to pay vendors and meet financial obligations; (3) it alleges “a pervasive culture of misinformation at the Company”; and (4) it describes the individual defendants’ access to financial information and' computer systems.' However, none of these allegations suffices to demonstrate conscious or reckless misbehavior.

As this Court has observed, a “pleading technique [that] couple[s] a factual statement with a conclusory allegation of fraudulent intent” is insufficient to “support the inference that the defendants acted recklessly or with fraudulent intent.” Shields, 25 F.3d at 1129. Plaintiffs do not allege facts and circumstances that would support an inference that defendants knew of specific facts that are contrary to their public statements. Further, the allegation that defendants behaved recklessly is weakened by their disclosure of certain financial problems prior to the deadline to file its financial statements. For example, the company revealed problems with the Eagle Quest acquisition and the company’s low earnings well in advance of the dead*177line for filing its 1998 Form 10-K. See In re Nokia Corp. Secs. Litig., No. 96-CIV-3752, 1998 WL 150963, at *13 (S.D.N.Y. Apr.l, 1998) (“If anything, the fact that [defendant] voluntarily chose to issue a press release earlier than its standard year-end reporting ... undercuts the allegation that defendants were acting recklessly.”).

Plaintiffs rely chiefly on three allegations to demonstrate motive and opportunity. However, while opportunity may not be in dispute, none of these allegations adequately demonstrates motive.

(1)The complaint describes several corporate acquisitions and a secondary public offering worth nearly $100 million, which were purportedly part of an effort to “artificially inflate and maintain the market price of [Family Golf] common stock” and to “complete a previously arranged corporate acquisition of Eagle Quest and to retire debt.” However, as the district court noted, plaintiffs nowhere allege that defendants engaged in these transactions to secure personal gain. Instead, the district court found that “these steps are part of the officers’ and directors’ financial responsibilities to the Company.” Rombach, 2002 WL 1396986, at *9, 2002 U.S. Dist. LEXIS 15754, at *24. Action taken to “maintain the appearance of corporate profitability, or of the success of an investment ... does not entail concrete benefits” sufficient to demonstrate motive. Chill v. Gen. Elec. Co., 101 F.3d 263, 268 (2d Cir.1996) (internal quotation marks omitted). Even if the complaint is read to say that defendants artificially inflated Family Golfs stock price to increase their personal compensation (by undertaking the cited transactions or otherwise), the complaint would still fail to allege the requisite motive: “If scienter could be pleaded on that basis alone, virtually every company in the United States that experiences a downturn in stock price could be forced to defend securities fraud actions.” Acito v. IMC-ERA Group, Inc., 47 F.3d 47, 54 (2d Cir.1996).

(2) The complaint mentions a corporate jet that Family Golf leased from a company affiliated with defendant Chang. This fact, standing alone, is insufficient to establish motive. The nature of Chang’s “affiliation” with the jet-leasing company is unspecified, and there is no indication that he stood to profit substantially from the arrangement. This allegation does not give rise to a “strong inference of fraudulent intent.” See San Leandro Emergency Med. Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 812 (2d Cir.1996).

(3) The complaint alleges that individual defendants purchased large amounts of Family Golf stock after the price collapsed. Plaintiffs do not allege that defendants sold stock or profited in any way during the relevant period. To the contrary, defendants were among Family Golfs largest shareholders and shared the pain when the company failed. Finally, there is no explanation as to how defendants’ post-collapse purchase of Family Golf stock, which is now worthless, benefited them in any way.

In short, the complaint identifies no personal interest sufficient to establish motive, and the district court properly concluded that plaintiffs’ complaint against individual defendants must be dismissed for failure to plead scienter.

The remaining claims against the individual defendants invoke “control person” liability — one claim under Section 15 of the Securities Act, and another under Section 20(a) of the Exchange Act. Each of these claims is necessarily predicated on a pri*178mary violation of securities law. Because we have already determined that the district court properly dismissed the primary securities claims against the individual defendants, these secondary claims must also be dismissed. See SEC v. First Jersey Secs., Inc., 101 F.3d 1450, 1472-78 (2d Cir.1996) (“In order to establish a prima facie case of controlling-person liability, a plaintiff must show a primary violation by the controlled person.”); Shields, 25 F.3d at 1132 (finding no error in district court’s dismissal of Section 20 secondary liability claims where “the primary violation asserted by [plaintiff was] not adequately pleaded”).

IV

The complaint alleges that the underwriters violated Section 11 and Section 12(a)(2) of the Securities Act, both of which create liability for untrue statements of material fact in connection with the sale of securities. See 15 U.S.C. § 77k(a) (dealing with registration statements); 15 U.S.C. § 77Z(a)(2) (dealing with prospectuses). These claims are not subject to the heightened pleading requirements of Rule 9(b), because they sound in negligence: “each of the Underwriter Defendants owed to the purchasers of the shares of [Family Golf] ... the duty to make a reasonable and diligent investigation of the statements contained in the Prospectus.”11

As discussed in relation to the Section 11 and Section 10(b) claims against the individual defendants, the registration statement and prospectus in question are protected by the bespeaks caution doctrine and by the safe harbor provision of the PSLRA. See supra Part II. Accordingly, we uphold the dismissal of all counts against the underwriters.12

V

The PSLRA mandates that, at the end of any private securities action, the district court must “include in the record specific findings regarding compliance by each party and each attorney representing any party with each requirement of Rule 11(b).” 15 U.S.C. § 78u-4(c)(l); see also Simon DeBartolo Group, L.P. v. Richard E. Jacobs Group, Inc., 186 F.3d 157, 167 (2d Cir.1999) (noting that the PSLRA “functions ... to reduce courts’ discretion in choosing whether to conduct the Rule 11 inquiry at all”). And, if the court finds that any party or lawyer violated Rule 11(b), the PSLRA mandates the imposition of sanctions. See 15 U.S.C. § 78u-4(c)(2).

Neither the district court’s Memorandum and Order nor its judgment made the required Rule 11 findings. Without intimating a view as to the merits of any Rule 11 issue, we remand to the district court for compliance with the PSLRA.

CONCLUSION

For the foregoing reasons, we affirm the decision of the district court, and remand for Rule 11 findings.