adequately pled that the defendant's statements were materially false and that the penance knew their statements were false when they were made but dismissed the complaint on see enter grounds before turning to how this holding this country to this cases i would like to highlight for the court the strongest allegations in support of the this records finding of defendants knowledge and this comes from a separate patent infringement trial that occurred right at the start of the class period against synopsis ment company that made a competing emulator allowed it to lure intel away from mentor and not only that began competing with all of mentors other customers forcing them to lower its prices which as the executive testified very dramatically changed the competitive landscape as the court below found finding that the fenice did not challenge you to below or before this court the fans knew before the class period that mentor had lost virtually all of intel's business to its competitor as a result mentor had to lower its prices to its other customers and quote an actual awareness of a risk that synopses would constitute a significant competitive threat to mentor but despite this knowledge the finns conceal these adverse events to investors and to the public both in its risk warnings which are merely state of time is that statement referring to the statement you just read that circumstance with the period it's a period from before the before the class period and onward that that synopsis was a competitive threat to mentor because it took intel's business for the forseeable future and it competed with all of mentors other customers because synopses had a much larger sales force but white didn't mentor disclose the loss of its largest customer and tell in february of two thousand and fifteen in february it noted that yes that it lost it it did not say either that or ration percent there's a that's the end of your class period right yes i mean the so it wasn't as if when this disclosure we've lost our largest customer immediately calls the price drop no it didn't do it immediately and part of that is because of the long sales cycles of the emulator it's a over two year process where you have technical review and negotiations and manufacture so even if you're booking business very early revenue doesn't the impact of bookings doesn't really come to fruition till the end of the process i guess risks that they did not disclose to the public and the fact that it didn't show up in revenues until later they knew that because of the long visibility and their their access to feedback and so they knew these were going to be problems as well as they were already lowering their prices they were already losing customers to synopsis but less am i right the for the entire fiscal year two thousand and fifteen and for the st three quarters of fiscal year two thousand and sixteen mentor was meeting or exceeding its revenue projections was yes again it's where's the fraud and the answer of that so they even though they were meeting their projections at that point they knew these problems were happening down the road and they concealed and they knew there was this was going to be this big problem that this record found that they knew when defense not object to those findings that they knew the problems with cadence they knew the problems the synopses not just losing intel but losing  market share the threat to their other customers they knew about the semiconductor consolidations which were impacting contracts that they had to renew at a lower rate early in the press they knew this because of announcements consolidation of their major i b m of their major contracts and so even though things were seem like they were going fine they knew this was going to be problems down the road or maybe they were just overly optimistic that the future would be like this but that that's report found was that they were that even though they knew of these adverse circumstances that were going to hit them and they were already having them that they didn't have to tell the public that because they figured it was going to be ok down the road  that they can't that's not the law that can't be the law that's what judge posner said intel abs on the th circuit that the fact that a gamble concealing bad news in the hope it will be overtaken by good news fails is still reckless this court in sh confident they were ultimately this was all going to work out and so they didn't disclose this dispute because of their optimism and the court found that spiking up the mystic defendants intentionally withheld information that was material to the market's assessment of whether the truck would be testimony from mentors executives that synopses was having this devastating impact on them it changed the competitive landscape they were losing customers they lost their major customer and their risk warning was we were talking about statement this is made throughout the class period we're talking statement four thousand eight hundred and twenty six and thirty four ok take one of them and show me ok it's rather exact same risk warnings that competitors may acquire competing companies offering competing products which could adversely impact their ability to compete and again as to just report found fence not object to they had actual awareness of a risk that would constitute a significant competitive threat so here they're talking about hypothetical they admitted much later that these consolidations always affected their their revenue growth and that the knowledge in the industry analysts already while they were at the defense were asked questions fact that was known yet i mean for example these these food and drug cases where they were implying are saying that we're going to get f d a approval and i didn't know they knew they didn't have it or there's this case i guess of what  malone which is this th circuit two thousand and fourteen where the executive says all the pipeline leak was just what it meant low manageable corrosion right when they actually had a report that there was a high corrosion right but i mean do you have anything like here what you're smoking gun where a statement was made by malone executive in fact right then and there they had to know that was a totally false so the testimony that mentor executives testified in synopsis in the synopsis case that it's not this was a direct competitor that was taking their now i took their major and later customer but were taking other customers and then in january they said the fed and said mentor has an advantage because there are only essentially two competitors for any nation products us and cadence emitting synopses all together that synopsis was their major competitor they did not disclose what was going on not just that they took intel but that they were forced to lower the as they testified under oath purports to lower their prices to their other customers that's not just because it was larger sales force was taking business away from but to get other customers and here they're saying we're in good overcome these problems can excuse their misstatement knowing misstatements of the present facts and present risks so this isn't a case where they're making optimistic statements and it's like well they had a re basis for that opinion that's not what this is about this is about risk warnings opinions and statements of current fact in which as a district court found and again i keep repeating myself the fenice did not dispute they made materially false statements they knew talk about here there are eleven that are forward looking with regard to those the argument is the risk warnings which we've been talking about were not meaningful because they talked about risks as hypotheticals had already occurred and secondly they knew those statements were fal materially false statements no i don't concede that there are materially false statements what i can because the quality of the statements just as your honor just pointed out is very different than a statement for example saying we have an f d a approved product and it turns out you don't have an f d a approved product the statements here were really mostly in response to questions for example tell us how you're doing in the competitive environment and then there was a discussion a rather fulsome discussion in each of those situations noticing my clock is not i defendants knew that they were making false statements but then somehow got around to saying that there was not a strong inference of saying there that really is not what happened in the district court the district court quite clearly if you look at the ruling  came to the conclusion that the defendants new information that would have been material to investors but there was no finding by the district court based on the allegations of these that the defendants knew that they were making false statements and that's a very significant difference because the law in this circuit and the law in many other circuits is very clear that knowledge of material information which has not been disclosed is not tantamount to knowing that you are concealing or a strong inference of so answer in fact in the right jewel case in which your honor judge by as was on the court said even assuming that the defendant had knowledge of detailed clinical results at the time the allegedly false statements were made such an allegation does not support a strong inference of science and it's even more so in this case where you can say the defendant something and they didn't disclose it but if you really look at the types of statements that are being challenged here these are not black and white statements and they're not being challenged as being black and white false you know that the sk green when everybody knows the sky is blue these are statements about general analyses of how the market was doing how the competitive landscape where we just heard counsel argue about the synopsis trial and what was revealed or what came out in that trial that about mentors position that was described at the trial and then he says later on they gave one they gave it so took one position at the at the respond to that so it's a several ways to respond to that your honor i think with the plaintiffs certainly that what point of cited is that when they were asked who the competitors were all they said was cadence and mentor and actually that's not that's not true but so many of these statements when i've gone back and looked at the context of the statements you find that things which were not alleged in the complaint but are in the record here don't don't satisfy that so if you look at b this is the statement  supplemental evidentiary record which is directly on point about this pages forty three to forty five i'll just read very quickly that the defendant was this in this case it was mr hinckley at a conference and he was we're the market share leader in four of the top ten categories synopsis is the leader in three and cadence is in two and then they go and then he goes on he died down to fight the big three in who the competitors are very fulsome discussion and then we get to the quote we have some advantages today when he's talking about market leadership and one particular area there are for all intents and purposes two competitors ourselves and cadence see see what's going on he said that we're looking at who are the market leaders there are three of us competing in various different markets and then he goes to talk about one of those verticals and it says this is what we are cadence and mentor it's really similar in a way i was thinking about this on the way down you know if you ask me who are the leading contenders to be the the airline the best service portland i would say alaska airlines and delta and if i said that it would mean that i was telling you that united or american airlines don't exist just this is what i was talking about at the time and that's precisely what we have here the fact that the the the company very fully identified the loss of intel quite early in fact they mention it i think three or four times in one particular interview they raised it on their own and they didn't say that it got the synopsis ok question why didn't they say they've got the synopsis interesting lee at the time they in a patent infringement trial in which they were proving and ultimately did prove that synopsis was infringing on their device and that in fact they had entered they had one over intel using that infringing device which ultimately they got an injunction against synopses using ok they didn't mention when they were talking to analysts that it was some novices who had won the intel although they were very fulsom about losing until obviously the market knew that there were three competitors it's obvious that the market could understand that it was either synopsis or cadence the question is if this court believes that maybe that disclosure should have been better if this court believes that maybe in the course of suing synopsis to try to keep them from infringing and competing with infringing and that they really should have identified synopsis and it's an approach that that's in a critique but it doesn't speak of senator and that's really what we're dealing in this case let me ask you this that it's clear that the law to apply here i guess it's in this verify own holdings case from two thousand and twelve and what it would a reasonable person deem the inference of see enter at least as strong as any opposing inference that's the legal test right but the district court didn't phrase it that way did it i'm looking at page forty four of the district court opinion  is the magistrate judge actually right however likewise as previously i find that the non culpable alternative inference more compelling the inference of c enter but this was a he granted summary judgment here so i mean is it is applying states the right legal standard it doesn't apply now why should we say ooh that's a terrible error and we've got to reverse so i think because i think that's really not what's going on here in the district court or the magistrate in this instance was saying ok i have i am charged under the private securities litigation reform act of looking at this and it's actually very unique to securities or the area rather than the rest of civil litigation in the federal courts so i have to make a that i'm supposed to do and this is what i and i conclude from this complaint it's really not a an evidentiary feel so you're really saying he's really saying even though it is i that i find no reasonable person yes and in fact that's what he that's what he must have been saying because that is the standard and he did apply the correct standard and for for a court to say this is what i but this is what i found after reviewing the record extensively is tantamount to saying i find that the standard has not been met so  you know what we're what's really remarkable in this case and again we don't concede falsity we never have below we don't hear the only problem is and we haven't raised it in our briefing simply because the dispositive issue here santer and that's really what we're what we're discussing here and what's really remarkable here is that i'll say the quality of the disclosures of the fulsome this of the disclosures so if you have an injury record which talks about i mean there are three sickly you know three big categories of factual statements which are factual areas which are being challenged cadence the synopsis intel connection and the m n a activity i will tell you in one second your honor i get the names of the products confused yes cadence was a lady who i'm glad i have my little cheat sheet here and they didn't introduce it intil right at the end now they the company the potential introduction of the product at any impact mentor's results until at the end of that class period when they said immediately when they said you know what we are seeing a lot of the market freezing up because now cadence introducing this product ok but other than that there's no specifics about how it how it affected mentor so what did mentor do when they were asked about the cadence product that was going to be introduced they added a risk warning which is entirely appropriate thing to do you know the courts criticize companies for having risk warnings which never changes are boilerplate that's not what happened here mentor said ok well cadence is kind of stirring up the market a little bit with a potential new product let's put a risk warning in there which says that when other competitors are talking about introducing a new product that could have as a risk to us that can have an impact on our results because there was no other way to quantify what was going on that's actually what they should have done and what else did they do they said you know what we think we have a better product and cadence but this isn't a direct quote but this is a quote we're always wary of cadence and they could come up with a product which could impact which could which could impact us so basically they did with they should have done with respect to synopsis let me just say and i said this a moment ago so i won't repeat it but it was clear as day that synopsis was a competitor they came out and they said in the in the record that i just read to you you said there are three competitors synopses cadence and mentor there was no  well to two responses around a number one is a risk factor could be a risk factor even though there are certain aspects of it which tyria lie using now in this record there was not there had not been the introduction of the factor but there could be other competitors who are also potentially you know it's just like every every company has a risk warning a high tech company has a risk warning saying we could be involved in patent litigation or people could could challenge our ip in this and the company had one of those in this case too and it was in the middle of ip litigation just because they were in the middle of patent litigation doesn't mean that risk goes away is a risk that risk is still a very accurate risk either in the case with set ups this or in many other  version i think it was within that time period that there would mentor was discuss seing how they do one year at a time and it was in that year in that period where they were disclosing and while where they  they open about it i mean in the evidence here you record supplemental ever evidentiary record pages seventy eight through eighty three i'll just read a few of the ways that they were open they just said this guidance this is for  year two thousand and fifteen x includes no emulation product revenue from our historically largest emulation customer and then they say we because we are making up for a loss in some of the momentum we still believe that we will have overall growth but will be swimming uphill why because they lost intel and then mr ries goes on to say we're currently only forecasting this coming year we have no indications of growth from the largest customer sort of growth has to come from other sources he was as forthcoming as you possibly could and i think he was discussing intel in the year in which the impact it and as your honor pointed out that was three quarters before there dr let me also say that with respect to what's really remarkable with respect to the the disclosure with respect to m and a i don't have time to read into the record a point pointed out here on it but  there was just real fulsome disclosure and it wasn't a black and white disclosure it wasn't a sky is blue or red disclosure it was here's what we think happens when there's a consolidation in the industry and it went on and on for pages raised by the company itself so with all of that quality of disclosure i'll say with the fact that the trading is definitely the trading of stock which is referenced by the plan is definitely is not within the parameters of what this quarter many of the court is indicative of santer and the fact that they were not really concealing things but will simply disclosing i don't think there's a strong inference of santer and i think this court can come to that conclusion as well so the fenice now say the statements were not materially false i think it's important to point out that that the district court's findings falsity materiality and they kno omitted false statements were called by defendants to be adopted in their entirety well you know mitt false statements you can make false they knowingly omitted material facts that made their statement through all the the knowledge that defendants had and the statements that were false including the risk warnings and this is in their in their earlier findings recommendations cathal keeps material emissions knowingly material emissions and under this court's holdings in quality systems which regenerated the holdings in recent online earlier cases knowing access to disputed facts raises  burson talks about contemporaneous knowledge of their statements are false raises a strong inference of c enter a none of these cases and none of this court's cases hold that that can be excused by optimism hoping that eventually good news will overtake that so is your argument that once the district court found that there were no mean a state with some material fact it had to say that no inference was so knowing knowing information and making a false statement so call you said that year your statement was knowing omission of material facts raises a strong in france of center yes some a asking you what support what case support do you have to support your argument that this was a legal error and the rd the rd case i would point to silicon graphics were highly unreasonable a mission which presents a danger of us leaving investors magistrate judge's opinion is not quite what you say is that i read says that a finder of fact could reasonably find on the basis that it was false they're just saying that's within the range of what a jury could find but material facts right and that's an em forensic could be drawn out and what the court have occurred by saying that that's not enough force the answer because they were somehow optimistic down the road that things are going to work out and there's a disconnect to me because versus arena pharmaceuticals that case they that defendants failed to disclose a dispute with the f d a with regarding this rat study they were confident the f d a was going to approve the drug