1

 The Honorable Richard W. Goldberg, United States Court of International

Trade, sitting by designation. 

2

 The Honorable James M. Rosenbaum, United States District Judge for the

District of Minnesota.

United States Court of Appeals

 FOR THE EIGHTH CIRCUIT 

_________

No. 07-1840

_________

Cornelia I. Crowell GST Trust, *

*

Plaintiff-Appellants, * Appeal from the United States

* District Court for the District

v. * of Minnesota

*

Possis Medical, Inc., Robert * 

G. Dutcher, and Eapen Chacko, *

*

Defendant-Appellees. *

 _________

 Submitted: January 17, 2008

 Filed: March 21, 2008

 _________

Before COLLOTON and SHEPHERD, Circuit Judges, and GOLDBERG,1

 Judge. 

_________

GOLDBERG, Judge.

Appellant Cornelia I. Crowell GST Trust (“Crowell Trust”) appeals the district

court’s2

 dismissal of its class action against Possis Medical, Inc., Robert G. Dutcher,

and Eapen Chacko (collectively “Possis Medical”) for alleged securities fraud.
-2-

Crowell Trust argues that the district court erred in determining that its pleading failed

to meet the heightened pleading standards of the Private Securities Litigation Reform

Act (“PSLRA”). 15 U.S.C. § 78u-4 (2000). Alternatively, Crowell Trust argues that

the district court erred in not granting leave to amend its complaint. For the following

reasons, we affirm the district court’s dismissal.

I. BACKGROUND

Possis Medical is a corporation largely focused on the production of the

AngioJet, a non-surgical catheter system designed to remove blood clots with minimal

vascular trauma. In 2001, Possis Medical began a clinical trial (the “AiMI study”) to

determine whether the AngioJet could be utilized in a wider range of medical

procedures. During the AiMI study, Possis Medical made several public statements

regarding the study’s potentially favorable impact on company revenues. In August

of 2004, Possis Medical released the AiMI study results which did not support

expanded AngioJet usage. Upon the release of this information, the value of Possis

Medical stock dropped considerably. Based on this decline and upon the statements

made by Possis Medical, Crowell Trust attempted to bring a class action against

Possis Medical for alleged securities fraud. The district court found Crowell Trust’s

pleading insufficient and dismissed the complaint without granting leave to amend.

II. STANDARD OF REVIEW

We review de novo a district court’s dismissal of an amended complaint. See

Fla. State Bd. of Admin. v. Green Tree, 270 F.3d 645, 661 (8th Cir. 2001).

Ordinarily, the decision of whether to allow a plaintiff leave to amend a complaint is

within the district court’s discretion, however, when the court denies leave on the

basis of futility, it means the district court has reached the legal conclusion that the

amended complaint could not withstand a motion to dismiss under Rule 12(b)(6) of
-3-

the Federal Rules of Civil Procedure, and appellate review of this legal conclusion is

also de novo. See In re Senior Cottages of America, 482 F.3d 997, 1001 (8th Cir.

2007). 

III. DISCUSSION

A. Dismissal of Crowell Trust’s Complaint

To survive a Rule 12 motion to dismiss, a securities plaintiff must point to:

(1) misrepresentations or omissions of material fact or acts that operated

as a fraud or deceit in violation of the rule; 

(2) causation, often analyzed in terms of materiality and reliance; 

(3) scienter on the part of the defendants; and 

(4) economic harm caused by the fraudulent activity occurring in

connection with the purchase and sale of a security.

In re K-Tel Int’l, Inc. Sec. Litig., 300 F.3d 881, 888 (8th Cir. 2002). The district court

found that Crowell Trust’s pleading failed to establish that Possis Medical had

misrepresented a material fact or acted with the required scienter. We agree.

As for as the misrepresentation prong, Crowell Trust’s pleading did not provide

the level of detail necessary to support its allegation. “[R]ote allegations that the

defendants knowingly made false statements of material fact” alone are insufficient.

In re Navarre Corp. Sec. Litig., 299 F.3d 735, 745 (8th Cir. 2002). To meet the

heightened pleading standards, a securities plaintiff often must plead the “who, what,

when, where and how” of the misleading statements or omissions. K-Tel, 300 F.3d

at 890. Here, Crowell Trust points to the anonymous statements of three former

Possis Medical employees alleging that they were aware that the AiMI study was not

going as well as anticipated prior to the public disclosure of this information. Crowell
-4-

Trust does not allege that the executives actually making the allegedly false or

misleading statements had heard these rumors. Crowell Trust does not even allege

facts which demonstrate how the anonymous Possis Medical employees had gained

access to this information. As a result, even if we assume that the statements made

by Possis Medical did not contain sufficient cautionary language as to fall under

PSLRA’s safe harbor, nothing within Crowell Trust’s pleading provides the detail

necessary to support its allegation. 

Crowell Trust also fails to “set forth facts that give a strong reason to believe

that there was reckless or intentional wrongdoing,” or scienter, on the part of Possis

Medical. Navarre, 299 F.3d at 745 (emphasis omitted). Scienter can be established

in three ways: (1) from facts demonstrating a mental state embracing an intent to

deceive, manipulate, or defraud; (2) from conduct which rises to the level of severe

recklessness; or (3) from allegations of motive and opportunity. See K-Tel., 300 F.3d

at 893–94. The relevant inquiry is “whether all the facts alleged, taken collectively,

give rise to a strong inference of scienter, not whether any allegation, scrutinized in

isolation meets that standard.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., __ U.S.

__, 127 S. Ct. 2499, 2502 (2007). According to Crowell Trust, the anonymous

former employee testimony, the importance of the AiMI study to the company, and

a series of stock sales made by Possis Medical executives support its scienter

allegation. However, even when these factors are considered collectively, we find that

they do not establish a clear and cogent inference that Possis Medical acted with the

necessary scienter. 

First, the anonymous testimony offered by Crowell Trust does not establish

intentional or severely reckless conduct by Possis Medical. As noted, all that the

Court can infer from the proffered testimony, even accepting the allegations as true,

is that several lower level employees had heard rumors that the AiMI study was not

going as anticipated. Crowell Trust, however, fails to provide any information

regarding how employees at this level of the company would have access to the AiMi
-5-

study information. This level of detail fails to provide meaningful support to Crowell

Trust’s scienter allegation. See, e.g., Cal. Pub. Employees Ret. Sys. v. Chubb, 394

F.3d 126, 155 (3d Cir. 2004) (explaining the level of particularity necessary to support

reliance on confidential sources). 

Crowell Trust also argues that the overarching importance of the AiMI study

to Possis Medical supports an inference of scienter. According to Crowell Trust, the

fact that the AiMI study was vital to the company’s future supports an inference that

Possis Medical executives were aware of its negative results prior to making

statements discussing the study’s potentially positive impact. Some courts have found

this rationale sufficient to support an inference of scienter. See, e.g., In re Ancor

Commc’ns, Inc. Sec. Litig., 22 F. Supp. 2d 999, 1004–05 (D. Minn. 1998). In Ancor,

a securities plaintiff alleged that Ancor had committed securities fraud by overstating

its income estimates by ignoring the strong likelihood that a critical contract would

be cancelled. Id. at 1001. The Ancor court found scienter could be imputed because

not only was the contract vital to the company, but the contracting parties had been

sufficiently aware of the potential for cancellation as to include an escape clause to

accommodate such an outcome. Id. at 1005. By contrast, Crowell Trust’s claim

relates to the AiMI study, an independent clinical study conducted at several off-site

locations. No facts have been alleged related to the executives’ involvement in either

its design or ongoing administration which would support a similarly strong inference.

As such, the importance of the study to Possis Medical does little to establish scienter.

Lastly, Crowell Trust argues that a series of stock sales by Possis Medical

“insiders” establishes sufficient motive and opportunity to support the requested

inference. However, this argument also fails as “[i]nsider stock sales are not

inherently suspicious; they become so only when the level of trading is ‘dramatically

out of line with prior trading practices at times calculated to maximize the personal

benefit from the undisclosed information.’” Navarre, 299 F.3d at 747 (quoting In re

Vantive Corp. Sec. Litig., 283 F.3d 1079, 1092 (9th Cir. 2002)). Here, Crowell Trust
-6-

failed to provide information from which the Court could place the allegedly

suspicious stock sales within any meaningful context. Additionally, Crowell Trust’s

focus on these stock sales is limited as it only examines one segment of the larger

transactional history. Throughout the allegedly suspicious period, several of the

insiders’ holdings actually increased if the ownership of both stock and stock options

is considered. In considering the anonymous former employee testimony, the

importance of the AiMI study to Possis Medical, and the insider stock sales, the Court

finds that the district court did not err in dismissing Crowell Trust’s pleading for

failing to establish a false or misleading statement or scienter on the part of Possis

Medical.

B. Refusal to Grant Leave to Amend 

Generally, “parties should not be allowed to amend their complaint without

showing how the complaint could be amended to save the meritless claim.” Wisdom

v. First Midwest Bank, 167 F.3d 402, 409 (8th Cir. 1999). On appeal, Crowell Trust

has failed to demonstrate any meaningful basis upon which it could amend its

complaint to comply with the heightened securities pleading standards. Crowell

Trust’s only argument is that Possis Medical’s answer somehow admits that the AiMI

study data was received several months prior to its disclosure to the investing public.

Even accepting this admission argument, it is difficult to see how this would help

Crowell Trust’s pleading to survive a Rule 12 motion. All of the statements alleged

by Crowell Trust to be false or misleading occurred prior to the date Possis Medical

allegedly admitted to receiving the AiMI study data. All of the stock transactions

viewed by Crowell Trust as “suspicious” had already occurred as well. As Crowell

Trust did not establish how its complaint could be amended, the district court did not

err in denying leave to amend on the basis of futility. 
-7-

IV. CONCLUSION

For the reasons set forth above, the district court’s dismissal of Crowell Trust’s

cause of action is AFFIRMED.