company's control environment but i believe the report of the audit committee that hangar itself commissions to look into the circumstances surrounding the financial activities that led to the restatement of rights the clearest answer and so if i could ask the court to turn to the report falsifying different answer results so at page four of the audit committee report and i mean the top of the page under where it says quarter end adjustments to management estimates and certain a in the second paragraph so these are adjustments to particular estimates which the committee found that the specific amount piercer have been determined by former management without timely or appropriate analysis in some cases for management recorded adjustments to estimates for the analyses relating to those estimates have been completed in other cases after seeing the impact a particular assumptions are analyses relating to estimates for management  assumptions or analyses a matter which allowed the company to counter act or mitigate what otherwise would have been an adverse impact on the company's reported finance results and then two paragraphs down it concludes with regard to this these practices in the middle of that paragraph particular adjustments to particular management estimates were undertaken for the purpose of enhancing the company's reported financial results and says it is more likely than not the not undertaken for the purpose of inappropriately enhancing the company's reported finance results so these are other findings are not describing mismanagement but intentional acts to falsify the results and importantly the report specifies it notes more likely than not that certain former employees and officers including in some instances the former chief financial officer there's no dispute that that's macquarie engaged in inappropriate historical accounting practices cases where an inappropriate time to set at the top by management unwittingly whether it's through incompetence or mismanagement and that they're not aware of the kind of decisions that are done because of th of this report what that meant was require others of the reality of the company's financial status that they needed to manipulate numbers in order to but there's a difference between saying these are targets that we want to hit and saying whether or not we hit them make it just just prepare reports and make it look like we risk two different things right and then when you look at the report it's clear that what what mchenry was doing and it was based he was signing financial statements on behalf of the company knowing that he had manipulate these numbers and clearly when you look at the five and a half years of restatements and ninety five million dollar overstatement e the inference of plausible inference of intentionally creating these results is at least as equal to the inference of mismanagement and that's results which supports the inference that he knew what the other two were doing they set the tone themselves and then the the officers involved in actually engaged in the financial accounting practices manipulating these results and then there's and there was a setting up of these every quarter and overstating income every quarter there's again it's at least plausible and just as plausible that they knew what was going on to her that this is just mismanagement  were and i just read a couple of examples but they were intentionally manipulating numbers and it's an enhanced financial results and with a contingency reserve they would wait till the end of the month see where the targets were in their life move this money around like well the evidence of what the purpose was was either direct or conclusive it was more likely than not and that they were undertaking these practices for the purpose of in a properly enhancing the but if any one or more of the individual defendant i have committed them what you accuse them of with that automatically makes the some of the arguments because as your honor indicated the company would be on the hook for any of the three if they have like really going forward we submit judge parks got it right this court should affirm dismissal and as you know reading the opinion he had one paragraph on the audit committee report in council in opposition spent the whole time about the audit committee report invited to court to look at that report i think do the same because what he didn't explain is some other things in the report the entire report committee is in the subject of his counsel indicated quarter end adjustments and estimates in a coon's this is a subject which the report itself indicated offers wide latitude for management judgment so what is indicated in the report is that some management meaning mr mchenry and to whatever ever extent mr kerr on the top of the top were dealing with estimates in accruals which offered them wide latitude of judgment and they had a target of trying to hit numbers but there is nothing in the report and nothing in the complaint that indicates any red flags or any knowledge that any of these people were violating gap or doing anything intentionally wrong other than operating in an area that afforded them judgment and they were making their judgments with a target of meeting or exceeding numbers which in hindsight the audit committee decided that was inappropriate but there is nothing in the report and nothing in the complaint that says they knew at the time that what they were doing was wrong or severely reckless or intentionally misleading there's nothing in their there's nothing that they were hiding numbers from monitors or doing anything that was top that they try to equate that to a culture of fraud for the entire five and a half year class period without a judge sparks noted timing any particular which they were required to do by the way under the p s l or a in the circuits authority is to tight each that must be enough for c enter and it's not under the law it should have been a jumping off point for plaintiff to do their own investigation to plead a proper claim that's essentially what judge marks was saying i gave you a roadmap the last time i dismissed the case now you come here and use this audit committee summary report and you haven't tied anything to any of the faults or misleading statements to any particular with the adequate see enter in as a problem  there's nothing in the report about him other than exonerated him so i'd like to move past that and maybe go to what your honor question was and what is tone at the top what does that mean it is derived from  accounting framework for internal control for financial reporting it is a term that is used for control environment and what what they were saying well what they're not saying when you say inappropriate tone at the top is not intentional misconduct it could be it could be no misconduct at all to be misjudgments could be aggressiveness could be negligence but sometimes it could be misconduct but there's nothing in the report here that indicates anything other than mismanagement because the subject matter we're not talking about the tickler accounts that are that are hard numbers that don't under gap don't allow for management judgment all of these areas allow for management judgment and in hindsight the audit committee decided that and even though they admitted the evidence was not conclusive or direct and none of the witnesses said that this is what they were doing but the audit when he said in our view in hindsight it's more likely than not that date exercised their judgment in a way that we view as inappropriate in hindsight plaintive to use that as a securities fraud basis just doesn't meet the test they should have done their own investigation found confidential witnesses or so whatever they did to plead a proper claim the only issue in the audit committee summer before that shows anything about intentional fraud is an employee who actually fabricated records and when the audit committee found intentional fraud they called it out so plain as want to plead a claim against him they would have to show that he made a statement about the issue of the records he falsified that would that would be that would meet the test for securities fraud case not but not what they currently plea and that's the reason not only mr sawyer and mr mchenry to mr kerr should be dismissed whatever you want to use but it's of matia of you know we have in hindsight we have looked at some of this we think this was inappropriate management judgment so how does a plane is supposed to nudge that beyond management judgment or statute that congress road which calls for particularized facts and the statements that mr love read into the record a few minutes ago are not particular facts they are conclusions congress knows the difference between facts and conclusions and they made a legislative judgment to require facts and this court has been forced that over the past twenty years in the south and securities case on page three eighty three there is a vivid description of bad tone at the top there is a much more particularized description in that case of a revenues and this court held in southland that that did not suffice to support the strong inference of c enter because it was not linked to specific misstatements it didn't show specific actions  at specific times before specific statements and this court again and again and again has given effect to the plain language that congress rode by requiring that kind of specificity one there's nothing inherently wrong or suspicious about executives selling stock number two the fact that it's over a lengthy class period weighs against any strong inference of c enter from from those sales and by executive approaching retirement are fully expected and natural it's a natural thing to expect as executive winds down their career plus a deeper act occurre declaration that it was over the full for your class period and this also does doesn't resemble the type of pump and dump case where a stock sale by executives could potentially inhance an inference fraud there's no allegation that there was some huge fact that wasn't disclosed by the company and you had executives dumping large amounts of stock right before that fact was about to come out this case just doesn't fit that paradigm that all this is a slow burning restatement that wasn't announced until years later and it just doesn't fit that sort of acute pump and dump type of fact pattern that courts usually insist on in finding a strong inference of c enter from executive sales so this is the look at the stock sales holistically with everything else and the mere fact that executives sell stock even in large amounts over a lengthy period of time it just does not support with congress as the supreme court has required is a cogent and compelling inference of see enter as the court held in the central laborers case where they would you recognize we would submit the court here should draw the same inference that there were ten b five one plans involve that were part of the record there that the record also indicates that these many of these stock sales were to settle taxes that accrue when you s overwhelm any any kerr the c e o for a very brief period less than a year of the mitchell period of the class he was not involved in was even present during the vast majority if not all of the alleged misstatements the medicare issues the ja implementation and even the false of the cation of documents if you strip away the generic allegations which were improper goup pleading there's really been virtually nothing about mr kirk in fact there are really only four allegations about mr kirk and we can in those dark one that he was the c e o and therefore he had knowledge about the information too that he signed the financial reports in the so electrical workers and abrams that simply being the c e o doesn't create an inference that you know information is false and they allege no such red flags that would establish that again the same rule again by th assigning of the documents again we have an independent electrical workers central central laborers of this court which again simply alleging signing of documents doesn't create a cogent and compelling inference which the court clearly had the right to consider that really brings you to really the only allegation that is exists as to mr kirk and that allegation is he is the a what a committee says in the plaintiffs allege in their complaint that he was responsible for an inappropriate on top there is no case that stands for the proposition that an allegation in appropriate tone at the top by itself is sufficient and in the unreported decision in the in new jersey in hanger the court so held the four circuits so held that in matrix again there is no allegation i think was interesting when  both the matrix decision and the decision in hertz stands for the proposition that toward the top along is insufficient in fact if you read the cases which are cited by the plaintiffs i think it clearly establishe executive was fired after the announcement of the statement and there's a fair inference if you're fired maybe you did something wrong in tomsk or the executives sold ninety two percent of their stock to another executives sold matrix so that it's clear and in fact in the case in luna which they rely on if you actually do to prove my point two of the defense the c f o's in which there are not those additional allegations of being fired and of selling context of inappropriate financial accounting activities that were more likely than not enhancing the company's reports what the committee is in context saying there is yes there is wide latitude for  tone and then after he retired resigned as c e o he still remains the the the chairman of the board of directors and so even though his primary liability with wood and when he left