PUBLISH UNITED STATES CO URT OF APPEALS FOR THE TENTH CIRCUIT

__________________ _______________ WAYNE E. ANDERSON, individually and on behalf of all others similarly situated, Plaintiff, and
INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT 9 PENSION AND WELFARE TRUSTS; ARKANSAS TEACHERS RETIREMENT SYSTEM, Lead Plaintiffs-Appellants,

v. SPIRIT AEROSYSTEMS HOLDINGS, INC.; JEFFREY L. TURNER; PHILIP D. ANDERSON; ALEXANDER K. KUMMANT; TERRY J. GEORGE, Defendants-Appellees. No. 15-3142

__________________ _______________ Appeal from the United States District Court for the District of Kansas (D.C. No. 2:13- CV-02261-EFM-TJJ)

__________________ _______________ FILED United States Court of Appeals Tenth Circuit 

### July 5, 2016
Elisabeth A. Shumaker Clerk of Court2 Steven F. Hubachek, Robbins Geller Rudman & Dowd, LLP, San Diego, California (Brian O. O’ Mara, Phong L. Tran, Aust in P. Brane, Robbins Geller Rudman & Dowd LLP, San Diego, California, Norman Siegel and Steve Six, Stueve Siegel Hanson LLP , Kansas City, Missouri, Blair A. Nicholas and Benjamin Galdston, Bernstein Litowitz Berger & Grossmann LLP, San Diego, California, with hi m on the briefs) for PlaintiffsAppellants. Phillip A. Geraci, Kaye Scholer, LLP, New York, New York (Jeffrey A. Fuisz, Aaron F. Miner, and Lindsa y Moilanen, Kaye Scholer LLP, New York, New York, James D. Oliver and Toby Crouse, Foulston Siefkin LLP, Overland Park, Kansas, with him on the brief) for Defendants-Appellees.

__________________ _______________ Before TYMKOVICH , Chief Judge, LUCERO , and BACHARACH , Circuit Judges.

__________________ _______________ BACHARACH , Circuit Judge.

__________________ _______________ Spirit AeroSystems, Inc. agreed to supply pa rts for three types of aircraft manufactured by Gulfstr eam Aerospace Corporation and The Boeing Company. Th ese aircraft were the Gulf stream G280 and G650 and the Boeing 787. For these aircraft, Spirit ma naged production of the parts through three projects. Ea ch project encountered production delays and cost overruns, and Spirit periodical ly reported to th e public about the projects’ progress. In these reports, Spirit acknowledged risks but expressed confidence about its ability to meet producti on deadlines and ultimately break even on the projects. Eventu ally, however, Spirit announced on October 25, 2012, that it expected to lose hundreds of3 millions of dollars on the three projects. Spirit’s stock price fell roughly 30 percent followin g the announcement. The plaintiffs brought this action on behalf of a class of individuals and organizations that had owned or obtained Spirit stock between November 3, 2011, and Octo ber 24, 2012. (We refer to this period as the “class period.”) The named defendants are Spirit and four of its executives: 1. Mr. Jeffrey Turner, the chief executive o fficer, the president, and a director 1 2. Mr. Philip Anderson, the chief financial officer 3. Mr. Alexander Kummant, the senior vice president of Oklahoma operations 4. Mr. Terry George, the vice president over seeing the Boeing 787 project According to the plaintiffs, Spirit a nd these executives misrepresented and failed to disclose the projects’ cost overruns and production delays, violating § 10(b) of the Securities Ex change Act of 1934 and the Securities and Exchange Commission’s Rule 10b-5. 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5. 2

1 Mr. Turner has since resigned from his employment at Spirit.

2 The plaintiffs also alleged that the four executives had violated § 20(a) of the Securities Exchange Act of 1934, wh ich creates liability for “control persons.” 15 U.S. C. § 78t(a). The district court dismissed the control-person claims, and the plaintiffs did not ch allenge this ruling in their opening brief in the appeal. Inst ead, the plaintiffs waited until their reply brief to challenge dismissal of the § 20(a) claims. This was too late.4 The defendants moved to dismiss the complaint, arguing that the plaintiffs had failed to allege facts showing

 misrepresentations or omissions that were (1) false or misleading and (2) material and

 the defendants’ scienter. The district court granted the motion to dismiss, concluding in part that the plaintiffs had failed to allege facts showing scienter. 3 The plaintiffs appeal. We affirm because the plaintiffs have not alleged facts creating a cogent and compelling inference of scienter. I. The Plaintiffs’ Pleading Burden on Scienter For the plaintiffs’ claims under § 10(b ) and Rule 10b-5, scienter is an essential element. In re Zagg, In c. Sec. Litig. , 797 F.3d 1194, 1200 (10th Cir. 2015). 4 Scienter consists of “‘a ment al state embraci ng intent to

The plaintiffs waived this challenge by waiting to make it in their reply brief. Reedy v. Werholtz , 660 F.3d 1270, 1274 (10th Ci r. 2011). Therefore, we do not consider the pl aintiffs’ § 20(a) claims.

3 The district court assumed that th e plaintiffs had pleaded false and misleading statements, but the court concluded that the defendants had not made any material misrep resentations or omissions. We need not address these assumptions or conclusions.

4 The plaintiffs must also show that
1. the defendants made material misrepresentations or omissions,
2. a connection existed between the defendants’ misrepresentations or omissions and the purchase or sale of a security,5 deceive, manipulate, or defraud,’ or recklessness.” Adams v. KinderMorgan, Inc. , 340 F.3d 1083, 1105 (10t h Cir. 2003) (quoting City of Philadelphia v. Fleming Cos. , 264 F.3d 1245, 1259 (10th Cir. 2001)). Conduct is considered reckless only if the defendants (1) acted in “an extreme departure from the standards of ordinary care” and (2) presented “a danger of mislea ding buyers or se llers” that was

 known to the de fendants or

 so obvious that the defendants must have been aware of the danger. In re Level 3 Commc’ ns, Inc. Sec. Litig. , 667 F.3d 1331, 1343 n.12 (10th Cir. 2012) (quoting City of Philadelphia v. Fleming Cos. , 264 F.3d 1245, 1260 (10th Cir. 2001)). For scienter, the Priv ate Securities Litigation Reform Act of 1995 creates a heightened duty for the plaintiffs to “s tate with particularity facts giving rise to a strong inference th at the defendant[s] acted with the

3. the plaintiffs relied on the defendants’ mi srepresentations or omissions,
4. the plaintiffs suffere d economic loss, and 5. the defendants’ misrepresentatio ns or omissions caused the plaintiffs’ loss. Halliburton Co. v. Eric a P. John Fund, Inc. , __ U.S. __, 134 S. Ct. 2398, 2407 (2014). We address only the element of scienter.6 required state of mind.” 15 U.S.C. § 78u-4(b)(2)(A); see also In re Zagg , 797 F.3d at 1201-02 (discussing th e heightened duty). We consider this statutory duty through de novo review of the dismissal. In re Gold Res. Corp. Sec. Litig. , 776 F.3d 1103, 1108 (10th Cir. 2015). In conducting de novo review, we accept th e complaint’s factual allegations as true. Dronsejko v. Thornton , 632 F.3d 658, 666 (10th Cir. 2011). We then assess these allegations holistically and consider “whether all of the facts alleged, ta ken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.” In re Zagg , 797 F.3d at 1201-02 (emphasis in original) (quoting Tellabs, Inc. v. Mako r Issues & Rights, Ltd. , 551 U.S. 308, 323 (2007)). To assess the stre ngth of an inference of scienter, we compare the “inferences urged by th e plaintiff[s]” with “competing inferences rationally drawn from the facts alleged.” Tellabs , 551 U.S. at 314. An inference of fraudulent in tent must be more th an “‘reasonable’ or ‘permissible’—it must be cogent and compelling.” Id. at 324. Thus, the complaint suffices “only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” Id. With this standard in mind, we consider whether the plaintiffs adequately pleaded scienter. We conclude that they did not.7 II. The Existence of Conflicting In ferences of Innocence and Scienter The plaintiffs urge the following inference of the defendants’ scienter: The defendants knew th roughout the class peri od that the three projects were behind schedule an d were generating so much in additional costs that a loss would be inevitable. Accordingly, the defendants knew throughout the class pe riod that Spirit would need to a nnounce a forward loss 5 on the projects. Nonetheless, the de fendants waited to announce the forward loss until October 2012. The defendants argue that an innocent inference is more compelling even if we credit the allegatio ns in the complaint: Despite scheduling setbacks and cost overruns, the defendants were optimistic that the three pr ojects would meet the original cost forecasts. Near-t erm cost forecasts we re not met, but the defendants expected revenues to exceed the total costs, avoiding the need for a forward loss. Spirit eventually realized that a future loss wa s likely and promptly announced a forward loss on the three projects. Our task is to determine whether the inference arising from the plaintiffs’ scienter allega tions is cogent and compelling when compared to the defendants’ sugg ested inference. In our view, the plaintiffs’ scienter inference is not cogent and compelling. Spirit’s executives knew that Spirit had encounte red problems in containing costs and meeting producti on deadlines. A nd we can assume

5 The plaintiffs allege that a “for ward-loss charge” is an accounting term meaning that past production co sts plus estimated future production costs will exceed the total revenues estimated on a given contract. Appellants’ App’x, vol. I at 27, 91-92.8 (without deciding) that Spirit did not adequa tely communicate these problems to the public.
But why didn’t Spirit ade quately communicate these problems? The plaintiffs allege that th e Spirit executives intentionally misrepresented or recklessly ignored economic realities. Th at is possible, but it is also possible that the Spir it executives were overly optimistic an d failed to give adequate weight to financial red flag s. With these dual possibilities, the plaintiffs supply little reason to suspect malevole nce over benign optimism. See In re Level 3 Comm c’ns, Inc. Sec. Litig. , 667 F.3d 1331, 1345 (10th Cir. 2012) (holdi ng that the plaintiffs ’ scienter allegations, which were based on in consistency between th e defendants’ progress reports and internal reports, were inadequate because “the strongest inference we can draw is that defendan ts were negligent in failing to put together the pieces”); see also Plumbers & Pi pefitters Local Union 719 Pension Fund v. Zi mmer Holdings, Inc. , 679 F.3d 952, 955 (7th Cir. 2012) (“Knowing of ‘problems,’ which are common, differs fr om [specifically] knowing that a facility must be closed and some of its products recalled.”). To establish scienter, the plaintiffs rely on

 the Spirit executiv es’ motive to lie,

 information supplied by co rroborating witnesses,

 the Spirit executives’ allege d involvement in the three projects as part of the company’s “core operations,”9  a duty to disclose production delays and cost overruns,

 Spirit’s implementation of a recovery plan,

 admissions by the chie f executive officer,

 Spirit’s disclosures of risk,

 Spirit’s purported accounting violations, and

 the size of the announ ced forward loss. Together, these allegations do not cr eate a cogent, compelling inference of scienter. III. The Existence of a Po tential Motive to Lie The plaintiffs do not argue that the defendants had a particularized motive for committing se curities fraud. The district court viewed the absence of a particulariz ed motive as a factor mitigating against an inference of scienter. The court’s cons ideration of this factor was proper. The plaintiffs need not show th at the defendants acted with a particular motive. See Nakkhumpun v. Taylor , 782 F.3d 1142, 1152 (10th Cir. 2015) (“[S]cienter allegations ma y suffice even wit hout a motive.”). But “[t]he absence of a motive allegation . . . is ‘relevant.’” In re Level 3 Commc’ns, Inc. Sec. Litig. , 667 F.3d 1331, 1347 (10th Cir. 2012). On appeal, the plaintiffs argue that the defend ants were “motivated to mislead in order to buy time in th e hope that a difficult financial situation ‘would right itself.’” Appellants’ Op ening Br. at 69. This argument was not pres erved and is invalid.10 The plaintiffs did not raise this ar gument in district court, so this argument is forfeited. See Richison v. Ernest Grp., Inc. , 634 F.3d 1123, 1128 (10th Cir. 2011) (“ [I]f [a] theory . . . wasn’t raised before the district court, we usually hold it forfeited.”) . Ordinarily we can consider forfeited arguments under the pl ain-error standard. Id. But the plaintiffs do not argue plain error in the appeal. As a re sult, this argument has been waived. Id. Even if this argument had been preserved, it would not have cured the plaintiffs’ failure to adequately plead scienter. At most, the plaintiffs’ argument suggests a generalized co rporate motive; but that would not contribute to an in ference of scienter. See Level 3 Commc’ns , 667 F.3d at 1346 (“[G]eneral motives fo r management to furthe r the interests of the corporation fail to raise an inference of scienter.”); City of Philadelphia v. Fleming Cos. , 264 F.3d 1245, 1269 (10th Ci r. 2001) (“[G]eneralized motives shared by all companies and which are not specifically and uniquely related to [the defendants] in particular, are unavailing.”). Thus, the plaintiffs failed to allege facts indicating a mo tive for securities fraud, which mitigates an inference of scient er from the plaintiffs’ other factual allegations. IV. Information Furnished by Corroborating Witnesses The plaintiffs contend that corr oborating witness accounts show that the defendants knew long before Oc tober 2012 that th e projects’ costs11 would surpass revenues. We accept the truth of the witnesses’ accounts as pleaded in the complain t and do not assess the witnesses’ credibility. See Tellabs, Inc. v. Mako r Issues & Rights, Ltd. , 551 U.S. 308, 322 (2007) (we accept factual allegations in the complaint as true); Nakkhumpun v. Taylor , 782 F.3d 1142, 1152 (10th Cir. 2015) (in reviewing the grant of a motion to dismiss, we do not a ssess witness credibility). To raise an inference of scienter, th e plaintiffs point to two types of information supplied by co rroborating witnesses: 1. generalized descriptions of internal meetings, cost reports, delays, and mismanagement and 2. statements indicating that one of the defendants, Mr. George, personally directed unrealistic cost projections. The generalized descriptions of internal meetings, cost reports, delays, and mismanagement do not contribute to a cogent, compelling inference of scienter. Th e factual allegations rega rding Mr. George suggest that he had a culpable intent, but th e plaintiffs do no t tie Mr. George’s potentially culpable state of mind to any public disclosures. A. Generalized Descriptions of Internal Meetings, Cost Reports, Delays, and Mismanagement The plaintiffs contend th at Spirit’s chief executive officer and chief financial officer must have known long before October 2012 that Spirit would lose hundreds of milli ons of dollars on the th ree projects. For this12 contention, the plaintiffs point to information supplied by corroborating witnesses about

 internal meetings,

 cost reports,

 production delays, and

 mismanagement. The witnesses’ accounts do not support a scienter inference. First, the plaintiffs point to an in ternal meeting that Spirit’s chief executive officer and chie f financial officer led in mid-2011, when they allegedly admitted that one of the Gulfstream projects was “behind schedule and over budget.” Appe llants’ Openin g Br. at 55. This admission indicates that th e two executives knew in mid-2011 that production was behind schedule and that co sts exceeded projections for one of the projects. Bu t this meeting had taken place months before the class period began, as well as before the executives’ public disclosures. The plaintiffs do not id entify any particularized account showin g that the two executives knew duri ng the class period that their progress reports were inaccurate. 6 See Wolfe v. Aspe nbio Pharma, Inc. , 587 F. App’x 493,

6 The corroborating witness’s account of the mid-2011 meeting pertained to only one of th e three projects. Thus, even if this statement had shown that the two executives knew about cost overruns and production difficulties for this pr oject, the statement would not have shown knowledge of problems on the other two projects.13 498 (10th Cir. 2014) (unpub lished) (concluding that a defendant’s remarks about a company’s problems, made months before a class period, would not establish scienter du ring the class period). 7 Second, the plaintiffs point to the collect ive accounts of ten corroborating witnesses who fu rnished inform ation about
1. an internal business group that monitored the th ree projects’ losses, as well as a 2011 cost-study report prepared by this group, 2. quarterly reports comparing th e projects’ actual costs to forecasted costs, and
3. Spirit’s ongoing production de lays and mismanagement. But these accounts do not contribute to a cogent and compelling inference of scienter for three reasons:
1. The witnesses’ accounts do not a llege that the four Spirit executives actually r eceived the internal business group’s coststudy report or th e group’s regular reports regarding the projects’ losses.
2. The witness accounts do not adequa tely describe the contents of the quarterly reports allegedly sent to the Spirit executives.
3. General accounts of mismanag ement and delay do not imply that the four Spirit executives knew that the projects would fall short of long-term cost forecasts.

7 Although Wolfe is not binding, we may consider it for its persuasive value. See United States v. Austin , 426 F.3d 1266, 1274 (10th Cir. 2005) (stating that an unpublished opinion “ha[d] some pers uasive value”).14 First, Corroborating Witn ess #5 referred to a 2011 cost-study report prepared by an internal business group. This report had stat ed that Spirit could not meet cost-reduct ion goals. Appellants’ Ap p’x, vol. I at 122. In addition, Corroborating Witness #5 stated that the business group had regularly reported losses on the Gulfstream projects. Id. at 121-22. But the account by Corrobora ting Witness #5 does not establish the executives’ knowledge because

 four levels of management hierarchy separated Corroborating Witness #5 from the chief executive officer 8 and

 the witness’s allegations do not establish th at the four Spirit executives actually had seen the 2011 cost-study re port or were aware of the regularly report ed losses on th e Gulfstream projects. Second, Corroborating Wi tness #10 contributed to the preparation of quarterly cost repor ts on the three pr ojects that were ultimately furnished to Mr. Anderson and Mr. Turner. Id. at 134-35. To create an inference of scienter based on these quarterly cost reports, the plaintiffs must adequately describe the content of the reports pr ovided to Mr. Anderson and Mr. Turner. See Lipton v. Pathogenesis Corp. , 284 F.3d 1027, 1036 (9th Cir. 2002) (“[N]egati ve characterizations of reports relied on by

8 Corroborating Witness #5 reported to the direct or of supply chain management, Tulsa contracts and sourci ng, who reported to an individual that “oversaw operations,” who reported to the vice presiden t of operations for Spirit’s Tulsa facility, who repo rted to the chief executive officer. Appellants’ App’x, vol. I at 40 n.9; id. at 110-11.15 insiders, without specific reference to the contents of those reports, are insufficient to meet the heightened pleading requirements of the [Private Securities Litigation Reform Act].”). Th e plaintiffs have not identi fied the content of the quarterly cost reports. Instead, the plaintiffs rely on Corroborating Witness #10’s ro le in contributing data on procurement costs used to generate these reports. But the content of the resulting quarterly cost reports is unknown beca use (1) they we nt through numerous layers of revision before reaching Mr. Tu rner and Mr. Anderson, and (2) Corroborating Witness #10 did not purport to know how the procurement costs affected the co st forecasts for the Boeing 787 project. Corroborating Witness #10 participated in the reporting of procurement costs, but th ese reports went through numerous layers of revision before any of the data would have been seen by Mr. Turner or Mr. Anderson. For example, Corroborating Wi tness #10 furnis hed reports on procurement costs to S upply Chain Management , which approved or disapproved the report an d submitted a report on pr ocurement costs to a Supply Chain Director. If approved, the report was sent to the Controller of Spirit’s Tulsa Facility, who reported to vice presidents in the Tulsa Facility. The vice presidents provided the eventual report on procurement costs to the Finance Group, which incorporated for ecasts on internal costs such as labor and processing. The Finance Group then provided the consolidated report to Tulsa’s Vice President of Operations (Mr. Chris16 Collins). If approved, the report was forwarded to Wichita Management, which would “provide feedback” an d in “some circumstances” request Corroborating Witness #10’ s group to provide suppo rting documentation for particular costs. Appellants’ App’x, vol. I at 136. Once Wichita Management agreed with the report, it would be sent to Mr. Turner and Mr. Anderson.1718 Corroborating Witness #10 wa s able to see only a part of the cost reports’ data, which purportedly show ed “cost overruns” and “changes after changes” to engineering designs on the Boeing 787 project. See Appellants’ App’x, vol. I at 136-37. This data invo lved procurement costs. But the quarterly co st reports contained another important set of data that Corroborating Witness #10 does not allege to have seen: Spirit’s forecasts on internal costs. Id. at 135. Spirit’s Finance Group consolidat ed the informa tion supplied by Corroborating Witness #10’s group with forecasts on in ternal costs. There is nothing in the complaint to indi cate that Corrobora ting Witness #10 would have had information about the consolidation process. Id. ; see also id. at 135 (alleging that Corroborating Witnes s #10’s group was “responsible for preparin g the procurement costs”). Thus, the complaint sheds little light on wh at Mr. Turner and Mr. Ande rson would have seen if they had read the qu arterly cost reports. 9

9 Through requests for feedback, Corroborating Witness #10 may have learned about some questions involving specific costs, but this witness did not

 say whether the reques ts for feedback were ever accompanied by information about forecas ts or internal costs,

 purport to know the contents of the eventual reports submitted to Wichita Management, or19 But even if we assume that Mr. Tu rner and Mr. Anderson were aware of overruns on procur ement costs, we have no information from Corroborating Witness #10 on what the internal co sts were or how the overruns on procurement costs would ha ve affected the to tal project costs. In these circumstances, Corroborating Witness #10’s alleged knowledge of overruns on procurement costs would not contribute to an inference of scienter. Third, the plaintiffs rely on general reports of delay and mismanagement of the Gulf stream projects. Appellants’ Opening Br. at 55- 56. To the plaintiffs, thes e reports suggest that the Spirit executives must have long known that Spirit would need to take a substantial forward loss on the projects. But this inference does not follow from anything that the corroborating witn esses alleged. Only one of the corroborating witnesses work ed closely with any of the four Spirit exec utives, and this witness spoke only of general corporate mismanagement; the witness did not address whet her the executives could

 say whether any requests for fe edback had been received during the class period. In these circumstances, Corroborating Witness #10’s allegations add little to an inference of scienter. See Lipton v. Pathog enesis Corp. , 284 F.3d 1027, 1036 (9th Cir. 2002) (holding that a plain tiff alleging securities fraud by relying on a company’s internal reporting must do more than identify certain “negative” reports).20 have known that Spirit wo uld be unable to meet long-term cost forecasts.
See Appellants’ App’x, vol. I at 112 (observing a general “lack of cohesive team environment, [lack of] consistent quality control standards and [lack of] updated technology”); id. (noting broad concerns that contractors would steal tools, “creat[ing] tool shortages” that lead to delays and additional costs); id. at 113 (“Because the Gulf stream program became so delayed, Spirit had to us e a special Russian aircraft to fly the parts to the customer’s destination at a cost of almost $1 million each time . . . .”). 10 The other corroborating witnesses were furt her removed from the defendants. See, e.g. , id. at 113, 116-17, 123, 127 (four corroborating witnesses who had no alleged reporting relationship to the defendants); id. at 129, 132 (two corroborating witne sses who were sepa rated from the chief executive officer by at least four levels of management within Spirit’s hierarchy). 11 As relatively low-level employees, these witnesses could not provide evidence bearing on the executives’ mental states. See Zucco Partners, LLC v. Digimarc Corp. , 552 F.3d 981, 998 (9th Cir. 2009) (“[G]eneralized claims about corpor ate knowledge are no t sufficient to

10 These accounts are fro m Corroborating Witness #1, who reported to the vice president of opera tions for Spirit’s Tulsa facility, who in turn reported to the chief exec utive officer. Appellants’ App’x, vol. I at 111.

11 The factual allegations of the remaining witness, Corroborating Witness #3, are addressed in Part IV(B) below.21 create a strong inference of scienter, si nce they fail to es tablish that the witness reporting them ha s reliable personal knowle dge of the defendants’ mental state.”); see also In re Cabletron Sys., Inc. , 311 F.3d 11 , 31 (1st Cir. 2002) (requiring a co rroborating witness to provide a “level of specific detail” about wh at the defendants must ha ve known to create an inference of scienter). The accounts by corroborating witne sses do not contri bute to an inference of scienter. Th ese witnesses were too fa r removed from the four Spirit executives and did not provide sufficiently partic ularized accounts of what the Sp irit executives mu st have known.
B. Information Furnished by Corr oborating Witness #3 about Mr. George’s Culpability on the Boeing 787 Project For scienter, the plainti ffs rely in part on Co rroborating Witness #3’s account to establish that Mr . George (the vice presid ent overseeing Spirit’s Boeing 787 project) “p ersonally directed the reporting of inaccurate projected costs [for the Boeing 787 projec t]. . . , rejecting cost figures generated by Spirit’s functional managers.” Appellants’ Opening Br. at 56. This account creates a po tentially plausible inference of Mr. George’s scienter, but one could also infer fr om Corroborating W itness #3’s account that Mr. Geor ge was simply too optimistic a bout Spirit’s ab ility to control costs on the Boei ng 787 project. Th is inference of innocence is more compelling than an inference of Mr. George’s scienter.22 The plaintiffs point to five public statements that Mr. George made about the Boeing 787 pr oject at an investor conference in March 2012: 1. Over a fifteen-month period, Mr . George periodically met with Boeing to ensure that Spir it’s production wa s on track. 2. In these periodic meetings, Bo eing held Spirit accountable to ensure a reduction in costs. 3. Spirit would likely be able to reduce marginal costs for additional units on the Boeing 787 project. 4. Spirit was on pl an, and Mr. George expected a profit on the project’s “first [b]lock” of units. 5. Mr. George was not concerned with Spirit ’s ability to obtain parts for the project. Id. at 51, 55 (emphasis omitted). According to the plaintiffs, these statements were knowingly false and misleading based on Corroborating Witness #3’s interactions with Mr. George. Corroborating Witness #3 worked in Spirit’s finance department and consulted with Mr. George about cost forecasts fo r the Boeing 787 project. Id. at 38 n.5. Mr. George relied on Corroborating Witne ss #3 to forecast costs by collecting projections from various “Functional Managers.” Id. at 115. After reviewing these forecasts, Mr. George allegedly said that the cost projections were too high and ordered Corroborati ng Witness #3 to predict the project’s future costs at a level that Corr oborating Witness #3 regarded as unachievable. Id. at 115-16. When Co rroborating Witness #3 balked, Mr. George allegedly threatened to find managers who “could23 achieve the forecasts.” Id. at 116. Later, as Spirit wa s about to fall short of Mr. George’s required forecast, Spirit allegedly tried to “off-load some of the work to an offshore vendor.” Id. From Corroborating Wi tness #3’s accoun t, we can reas onably infer that Mr. Geor ge was too optimistic about Spir it’s ability to reduce costs on the Boeing 787 project. Bu t there is nothing in Corroborating Witness #3’s account to suggest that Mr . George knew that his statements at the March 2012 investor conference we re false or misleading. Corroborating Witne ss #3’s account has two fundamental gaps: 1. This account does not suggest that Mr. George believed his cost-control efforts were unrealistic or that he wished to intentionally mislead investors. 2. Corroborating Witne ss #3 does not say when the confrontation with Mr. George took place; we can only guess that the confrontation might have preceded Mr. George’s remarks at the investor conference. 12

12 The plaintiffs do no t argue that any inferen ce as to Mr. George’s scienter must be imputed to the ot her Spirit executives—Mr. Turner, Mr. Anderson, or Mr. Kummant. For example, the plaintiffs do not allege any particularized facts to establish a relationship between Mr. George and the other executives. According to the comp laint, Mr. George was Spirit’s vice president for the 787 Boeing project. And the complaint alleges that Mr. George directed use of certain co st figures over the protests of Corroborating Witness #3. But we do not know if Mr. George acted at the direction of another Spirit executive or if Mr. George told other executives that he had authorized us e of “inaccurate” cost fi gures. Thus, even if we inferred scienter as to Mr. George, we could not impu te Mr. George’s scienter to Mr. Turner, Mr . Anderson, or Mr. Kummant.24 In light of these gaps , we cannot plausibly in fer from Corroborating Witness #3’s account that Mr. George knowingly or recklessly misled attendees at the March 2012 investor conference. 13 V. The Executives’ Alleged In volvement in Spirit’s “Core Operations” The plaintiffs allege that Mr. Turner, Mr. Anders on, Mr. Kummant, and Mr. George were “top executiv es” who “personally monitored” the progress of the three projects. 14 Appellants’ Opening Br. at 61. Based on this involvement, the plaintiffs ask us to infer that the four Spirit executives must have known that the projects would not meet long-run cost forecasts. The allegations in the complaint do not support this inference. We cannot infer scienter based on ly on a defendan t’s position in a company or involvement with a particular project. See, e.g. , City of Philadelphia v. Fleming Cos. , 264 F.3d 1245, 1264 (10th Cir. 2001)

13 This analysis assumes, wit hout deciding, that Mr. George’s statements were material. The district court concluded that the statements were not material, characterizin g them as commercial puffery. See Grossman v. Novell, Inc. , 120 F.3d 1112, 1121-22 (1 0th Cir. 1997). We do not address that conclusion.

14 The parties dispute wh ether the three projects represented the “core” of Spirit’s business. Compare Appellants’ Op ening Br. at 61 (characterizing the three projects as “crucial” to Spir it’s business), with Appellees’ Resp. Br. at 54 n.23 (downplaying the im portance of the three projects, stating that th ey “account[ed] for less than 20% of Spirit’s revenue”). We assume, wit hout deciding, that the th ree projects involved a core part of Spirit’s business.25 (concluding that “the mere fact” that defendants “occupied senior positions in the company” was inadequate for an inference of scienter). The executives’ position s at Spirit would help establish whether they should have known that pa rticular cost projections were unrealistic. But additional particularized facts are necessary for an inference of scienter.
See S. Ferry LP, No. 2 v. Killinger , 542 F.3d 776, 784 (9th Cir. 2008) (“Where a complaint relies on allegations that management had an important role in the company but doe s not contain add itional detailed allegations about the defendants’ actua l exposure to inform ation, it will usually fall short of the [securit ies laws’ pleading] standard.”). The plaintiffs do not allege additio nal particularized facts. According to the plaintiffs, the four Spirit executives

 “were intimately involved in Spirit’s key [Boeing] and Gulfstream projects,”

 “were intensely focu sed on productivity and efficiency improvements,”

 were “proactive,”

 provided assurances of personal “vigilance” regarding the three projects,

 made on-site visits to Sp irit’s factory floors, and

 reviewed detailed cost analyses. Appellants’ Opening Br. at 61. For th ese characterizations, the plaintiffs rely on Paragraphs 54, 69, 70, 75, 76, 79, 80, 92, and 107 of the complaint. Id. ; Appellants’ Reply Br. at 21. Of th ese paragraphs, only Paragraph 6926 refers to an exec utive’s direct involvement in the projec ts: the chief financial officer, Mr. Anderson, said th at he had spent a lot of time in Spirit’s Tulsa facility, “making sure the changes [to production processes were] taking hold.” Appella nts’ App’x, vol. I at 45-46. The plaintiffs do not cite any allegations in the complain t stating that one of the four Spirit executives actually reviewed the underly ing cost data for the Gulfstream and Boeing projects. We assume, for the sake of argument , that the plaintiffs’ allegations create an inference that th e four executives were briefed on the underlying cost data while attending meetings wher e the three projects were discussed. But mere attendance at m eetings does not contribu te to an inference of scienter. See MHC Mut. Conversion Fund , L.P. v. Sandler O’Neill & Partners, L.P. , 761 F.3d 1109, 1122 (10th Cir. 2014) (“[N]oth ing in the defendants’ routine attendance at . . . meetings serves to suggest a ‘cogent’ and ‘compelling’ inference of scienter.”); In re Level 3 Commc’ns, Inc. Sec. Litig. , 667 F.3d 1331, 1344 (10th Cir. 2012) (con cluding that the fact that the defendants “monitored [a contested program] through regular meetings and reports” was insufficient to draw a “s trong inference” of the defendants’ scienter). Based on the plaintiffs’ allegations of the defe ndants’ involvement in Spirit’s core operations, we can infer only that th e four executives were overly optimistic about Sp irit’s ability to achieve the forecasted production27 schedules and cost reductions. The pl aintiffs have no t provided a good reason to believe th at the executives knew that the projects were unlikely to meet forecasts. VI. A Duty to Disclose Production Delays and Cost Overruns The plaintiffs also allege scient er based on the defe ndants’ purported duty to disclose produ ction delays and cost overruns. In our view, however, this duty would not support an inferen ce of scienter here. Liability for securitie s fraud requires the ma king of a material misrepresentation. Geman v. SEC , 334 F.3d 1183, 1192 (1 0th Cir. 2003). This requirement may be satisfied when the defend ant remains silent while owing a duty to inve stors to correct th eir misperceptions. Id. But even if a defendant incurs a duty to speak, liability under the securities laws requires scienter. Id. To establish scienter, the plaintiffs must establish that a scienter inference is more cogent and compe lling than an inference that the defendants had “not believe[d] they had a continuing duty to disclose information.” Minneapolis Firefighters’ Relief Ass’n v. MEMC Elec. Materials, Inc. , 641 F.3d 1023, 1030 (8th Cir. 2011); see also Dirks
v. SEC , 463 U.S. 646, 663 n.23 (1983) (distinguishing fraudulent intent from fraudulent conduct). The plaintiffs do not explain why the existence of a duty to disclose supports an inference that the defendants (1 ) knew that th ey need ed to disclose more or (2) were reckless in failing to disclose more. As a result,28 the defendants’ alleged du ty to disclose does not support an inference of scienter in this case. VII. The Plaintiffs’ Rema ining Factual Allegations The plaintiffs also point to

 Spirit’s recovery plan for the Bo eing 787 project,

 statements by the chief executive offi cer after Spirit announced the fo rward loss,

 Spirit’s disclosu res about risks,

 Spirit’s purported accounting violations, and

 the magnitude of the forwar d-loss announcem ent on the three projects. The plaintiffs argue that in light of the magnitude of the loss that Spirit ultimately sustained, Spir it must have ha d scienter when each of these occurrences took place. Th ese arguments amount to allegations of “fraud by hindsight,” which does no t constitute securities fraud. See In re Level 3 Commc’ns, Inc. Sec. Litig. , 667 F.3d 1331, 1347 ( 10th Cir. 2012) (“[The] defendants’ hindsigh t review . . . . contributes nothing to an inference of scienter.”). A. Spirit’s July 2012 Recovery Plan According to the plaintiffs, Spirit adopted a “recovery plan” in July 2012 to put the Boeing 787 project back on schedule . The plaint iffs argue that the existence of this plan shows that Spirit executives knew that their29 subsequent representations about the Boeing 787 project were false or misleading. Between implementing the reco very plan in July 2012 and announcing a forward lo ss on the Boeing 787 project in October 2012, Spirit executives issued multiple public statemen ts on the status on the project. The plainti ffs argue that these statemen ts in August and September 2012, summarized below, materially misr epresented the project’s progress: August 2, 2012

 Spirit is “focused on continued reliability, capability, and teamwork to align the bu siness for long-term value creation.”

 Spirit continues to see progre ss as the Boei ng and Spirit teams are focused on iden tifying and implementing improvements on cost and production for the Boeing 787 project.

 Spirit continues to improve its unit-cost performance as planned. Appellants’ App’x, vol. I at 70-71. August 7, 2012

 Spirit anticipates th at it will continue to make efficiency gains on the Boei ng 787 project. Id. at 73-74. September 12, 2012

 Spirit is doing reas onably well in meet ing the Boeing 787 plan.

 The project plan for the Boeing 787 “l ooks okay.” Id. at 74.30 September 13, 2012

 Spirit is seeing improvemen t on all of the component parts for the Boei ng 787 project.

 Spirit continues to be optim istic that it can reduce marginal costs for the Boeing 787 project. Id. at 75. The plaintiffs argue that the Sp irit executives kn ew that these statements were false or misleading because a recovery plan was already underway to bring the deli very schedule up to date with initial forecasts for the Boeing 787 project. Id. at 79. Spirit later reported that it had learned, when implementing the recovery plan, that future costs would increase dramatically if Spirit were to adhere to the required delivery schedule. We may assume, without deciding, that the statements in August and September 2012 were materially false or misleading. To infer scienter, however, we must compar e the parties’ dual expl anations for Spirit’s overly optimistic reports on the status of the Boeing 787 project. The plaintiffs attribute the statements to the executives’ reck lessness or intent to mislead investors; the defendants a ttribute the statements to an honest belief that Spirit’s recovery pl an would reduce co sts and accelerate production. The plaintiffs provide lit tle reason to quest ion the executives’ explanation.31 The eventual a nnouncement of a forw ard loss suggests that Spirit had placed too much confidence in the re covery plan. But th e same can always be said when a company delays announcement of a forward loss based on remedial efforts to increase profitability or production. We addressed an analogous i ssue in In re Zagg, In c. Sec. Litig. , 797 F.3d 1194 (10th Cir. 2015 ). There, a corporatio n allegedly failed to disclose that a chief ex ecutive officer had pledged approximately half of his shares in the corporation as co llateral in a personal margin account. 797 F.3d at 1198-99. The ch ief executive officer was eventually forced to resign, and the corporation adopte d a corrective policy restricting executives’ pledges of corporate shares. Id. at 1199. The plai ntiffs argued that adoption of the poli cy showed that the corporation had a fraudulent intent. Id. at 1203, 1205. We rej ected this argument, concluding that the new policy showed only that the corp oration had “identified a better way of doing things moving forward.” Id. at 1205. In re Zagg is instructive. Spir it’s July 2012 recove ry plan shows that Spirit identified an interi m step to reduce costs and exped ite production on the Boeing 787 project . The plaintiffs suggest that Spirit executives wanted to mislead investors. That is po ssible, but the pl aintiffs’ theory presupposes that Spirit ex ecutives knew that the re covery plan could not accomplish the plan’s stat ed objectives. There is nothing in the complaint to support that logical le ap. The stronger infere nce is that the Spirit32 executives thought that they had “ide ntified a better way of doing things.” Id. As a result, we regard the defend ants’ “innocent in ference” as more cogent and compelling than the plaintiffs’ “scienter inference.”
B. The Chief Executive Officer’s Statements Explaining the Forward Loss After Spirit announced the forward loss, Sp irit’s chief executive officer explained the forw ard loss on the three pr ojects by stating that

 the projects had progressed too slowly to meet initial cost targets,

 project costs had exceeded in itial forecasts, “particularly in [the] supply chain,”

 the complexity in growth at Spirit’s Tulsa facility had contributed to increased costs,

 Spirit had delayed implementation of some measures designed to reduce co sts for the Bo eing 787 project, and

 cost-reduction efforts for the three projects had not met projections. Appellants’ App’x, vol. I at 81-82. The chief execu tive officer added that

 he had underestimated the “organizational learning” necessary for Spirit to meet initial projec tions of the projects’ learning curves,

 Spirit could not meet cost projections for some of the projects, and

 Spirit had incurred extra costs because of production delays for required componen t parts on th e Boeing 787 project. Id. at 81-83.33 The plaintiffs argue that these stat ements show that Spirit recklessly ignored production delays and cost overruns. This argument is not supported by what the chief executive officer said. He acknow ledged that Spirit had mistakenly pr ojected Spirit’s ability to improve efficiency and that Spirit ultimately learned that it could not meet projections. But the chief executive officer did not s uggest that Spirit executives had knowingly or recklessly misevaluated earlier data. His st atements simply show that Spirit ultimately learned that it could not meet the company’s forecasts. The plaintiffs allege that

 a disconnect existed between the chief ex ecutive officer’s statements on August 7, 2012, and Spirit’s forward-loss announcement on Octo ber 25, 2012, and

 this disconnect show ed an intent to deceive investors. On August 7, 2012 , the chief executive officer stated that Spirit was meeting its cost estimates for the Boei ng 787 project and wo uld continue to do so. Id. at 73-74. Over two months late r, Spirit announced a forward loss on the Boeing 787 project , and the chief executiv e officer acknowledged that (1) Spirit could no longer meet its cost es timates and (2) Spirit had recently fallen behind on production for the wi ng componen ts on the Boeing 787 project. Id. at 80-82. The plaintiffs argue that the Oc tober acknowledgment s prove that the August prediction had been designed to mislead investors. We disagree:34 The statements were made over two months apart, and the complaint does not allege that the chie f executive officer was aw are in August 2012 that Spirit was not meetin g its cost estimates. See La. Sch. Emps.’ Ret. Sys. v. Ernst & Young, LLP , 622 F.3d 471, 484-8 5 (6th Cir. 2010) (holding that statements made after the end of the class period, recognizing that “there was a problem,” did not c ontribute to an inference of scienter because the statements did not provide a sufficient basis to a ssume that the defendant had known that events woul d turn out badly simply because they eventually did). In our view, the chie f executive officer’s st atements suggest an honest mistake in predicti ng Spirit’s futu re production and costs, not an inference of scienter. C. Spirit’s Disclo sures of Risks Throughout the class period , Spirit warned invest ors about risks from the three projects: November 2011

 Spirit’s 10-Q for the quarter ending September 29, 2011, stated that the three projects posed a signif icant risk of forward-loss charges based on cost pressures throughout 2011. Spirit explained that the next twelve to eighteen months would be cr itical, with a significant risk of forward-loss charges. February 2012

 Spirit’s 10-K for the fiscal year ending December 31, 2011, acknowledged a significan t risk of forward-loss35 charges, which depended on Spirit’s market forecast, ability to perform, achievement of forecasted cost reductions, and ability to su ccessfully resolve claims.

 Spirit’s chief executive of ficer reported that the “production side” of one Gulfstream project was “disturbed” and “over the cost forecast.” May 2012

 Spirit’s 10-Q for the quarter ending on March 29, 2012, stated that the three projects posed a risk of forward-loss charges based on ex isting cost pressure s. Spirit explained that the next year would again be critical, with a significant risk th at Spirit would need to recognize forward-losses. August 2012

 Spirit’s 10-Q for the quarter ending on June 28, 2012, stated that the three projects “continue[d] to pose a risk of additional charges [or] forward-loss.”

 Spirit’s chief execut ive officer stated th at the Gulfstream projects were “risky.” The plaintiffs argue that these warnin gs suggest a culpable mental state because the four ex ecutives must have known th at the risks had already materialized: “the more a defendant speaks about a to pic, the likelier it is that [the defendant] know s about the topic.” Appell ants’ Opening Br. at 65. We disagree. Ordinarily, a defendant’s warnings weaken an inference of scienter. Ezra Charitable Tr. v. Tyco Int’l, Ltd. , 466 F.3d 1, 8 (1st Cir. 2006). The plaintiffs argue the oppos ite, relying solely on Reese v. Malone , 747 F.3d 557 (9th Cir. 2014). In Reese , a group of shareholders sued BP for36 securities fraud after one of BP’s pi pelines leaked 200,000 gallons of oil onto the Alaskan tundra. Id. at 563. The plaintiffs alleged that BP had made false and misleading statements about company practices in an annual report post -dating the spill. Id. The Ninth Circuit Court of Appeals held that the plaintiffs’ allegations of scienter were su fficient, in part because the attention given to the spill in the annu al report underscored the importance of the oil sp ill to BP management. Id. at 579-80. But the court did not suggest that the mere existence of wa rnings established knowledge by BP management that the statements were untrue. Instead, the court inferred that the company knew that the statements were un true because (1) BP was not in compliance when publishing the fals e report and (2) the spill had been prominently discussed in the report. Id. Throughout the class period , Spirit was wo rking on multip le projects and warned of the risks th at many of them posed. For example, during the class period, Spirit warn ed about a significant ri sk of additional forwardloss charges on the Sikorsk y CH-53K helicopter pr oject and a possibility of significant cost growth and tech nical problems for the Airbus A350 XWB project. These warni ngs would not have sugg ested that the Sikorsky or Airbus projects were particularly important to Spirit executives or that Spirit executives knew that the risk s on these programs were certain to result in a forward loss . Instead, the warnings simply reflected an awareness of risks that le d Spirit to discuss the ri sks in its public filings.37 The same is true of the filings expressing potential risks fo r the Gulfstream and Boeing projec ts involved here.
D. Alleged Accounting Violations The plaintiffs argue that Spir it violated generally accepted accounting principles and internal accounting policies by delaying announcement of the forward loss. We disagree , for this argument is simply another variation of “fraud by hindsight.” Even if we assu me that Spirit had violat ed established accounting principles or internal policies, th ese violations would not have been enough to state a valid cause of action. City of Philadelphia v. Fleming
Cos. , 264 F.3d 1245, 1261 (10th Cir. 2001). “Only where su ch allegations are coupled with ev idence that the vi olations or irregularities were the result of the defendant’s fra udulent intent to mislead investors may they be sufficient to state a claim.” Id. No such evidence exists here, an d the plaintiffs do not identify particularized facts show ing that the Spir it executives had known, before Spirit publicly a nnounced the forward loss, that the th ree projects would fall behind forecasts on cost or production. The defendants’ purported accounting violations are based on “fraud by hindsight”; an d even if we assume th e existence of accounting violations, the plaintiffs have not a lleged facts indicating the executives’ knowledge, fraudulent inte nt, or recklessness.38 E. The Magnitude of the Forward Loss In October 2012, Spirit announced a forward lo ss of $434.6 million on the three projects. 15 The plaintiffs argue that because the forward loss was so large, the executives must have known long be fore October 2012 that Spirit would incur a loss. But this argument relies on hindsight review based on the size of Spirit’s eventual loss and does not include particularized allegations that the four executives knew before October 2012 that Spirit would lose money on the three projects. The loss of $434.6 m illion was undoubtedly si gnificant. And the three projects were presumably large e nough to capture the attention of the four Spirit executives. No one sugge sts otherwise. For scienter, however, the question is whether these execut ives (1) had known that their public disclosures were too encouraging or (2) had recklessly failed to heed red flags from potentially pr oblematic reports. The si ze of the loss does not suggest that the four ex ecutives knew or recklessly disregarded the risks that Spirit was eventually going to lose money on the three projects.
* * * To create a cogent, compelling infe rence of scienter, the plaintiffs point to a moti ve to lie, corrobora ting witnesses’ account s, the defendants’

15 Spirit announced a to tal forward loss of $590 m illion. But that figure included expected losses on other Spir it projects not involved in this appeal.39 involvement in Spirit’s “c ore operations,” a duty to disclose, the adoption of a recovery plan, statements by the chief executive officer, disclosures of risks, accounting vi olations, and the size of the eventual forward loss. But even when these allegati ons are considered togeth er, they do not create a cogent, compelling inference of scienter. As a result, we affirm the dismissal.15-3142, Anderson v. Spirit Aerosystems Holdings, Inc. LUCERO , J. concurring in part and dissenting in part. The majority analyzes whether defenda nts recklessly made false statements regarding Spirit’s projected ability to meet co st targets. However, plaintiffs’ argument does not rest solely on future-looking stat ements. Rather, they contend that the defendants made false statements about then-present facts. In my view, plaintiffs have adequately alleged scienter and materiality as to statements made by Jeffrey Turner and Philip Anderson regarding the existing pe rformance of Spirit’s 787 program. Accordingly, I concur in part a nd respectfully dissent in part. To plead a claim for violation of the Securities Exchange Act of 1934 § 10(b), plaintiffs must allege five elements, of which the parties focus only on the first and third: (1) the defendant made an untrue or misleading statement of material fact, or failed to state a material fact necessary to make statements not misleading; (2) the statement complain ed of was made in connection with the purchase or sale of securities; (3) the defendant acted with scienter, that is, with intent to defraud or reckle ssness; (4) the plaintiff relied on the misleading statements; and (5) the plai ntiff suffered damages as a result of his reliance. In re Zagg, Inc. Sec. Litig., 797 F.3d 11 94, 1200 (10th Cir. 2015) (quotation and emphasis omitted). To apply these factors, I think it helpful to first determine which statements plaintiffs have ad equately alleged were false before analyzing whether the defendants acted with scienter as to those statements. To demonstrate that the defendant made an untrue or misleading statement of material fact, a plaintiff must allege specific facts that contradict the defendant’s statements. See Adams v. Ki nder-Morgan, Inc., 340 F.3d 10 83, 1097 (10th Cir. 2003).2 Moreover, the statement must be shown to be false when it was made. See Grossman v. Novell, Inc., 120 F.3d 1112, 1124 (10th Ci r. 1997). Plaintiffs may not rely on a subsequent event triggering a drop in stoc k price “to say that the later, sobering revelations make the earlier, cheerier statem ent a falsehood.” Id. (quotation omitted). Relatedly, forward-looking statements coup led with meaningful cautionary statements are not actionable because a reasonable investor simply cannot suppose that the future is settled or is not subject to multiple possible outcomes. Id. at 1120. The matter before us concerns two di stinct categories of statements—those projecting future performance, and those reflec ting past performance. Plaintiffs argue, in essence, that the defendants stated both “we will be on budget” and “we are on budget.” These two statements differ ma rkedly for purposes of a secu rities fraud claim. Yet the majority opinion focuses its sc ienter analysis exclusively on the former. For example, the majority agrees with defendants that their public statements reflected “an honest belief that Spirit’s recovery plan would reduce co sts and accelerate production.” (Majority Op. 30.) The majority thus attributes the executiv es’ statements to “ben ign optimism,” (id. at 8), and “mistaken[] project[ions],” (id. at 33 ), about future performan ce. Therefore, the majority concludes the fact that the compan y “ultimately learned that it could not meet the company’s forecasts” did not demonstrate that the optimistic statements regarding those forecasts were recklessly false at the time they were made. (Id.) I agree in large measure. To the extent the plaintiffs argue that the company knew or should have known it would be unable to meet future cost fo recasts, these forward looking statements—although la ter proven overly optimistic —are not actionable because3 they reflected opinion ra ther than fact, and were not demons trably false. See In re Level 3 Commc’ns, Inc. Sec. Litig., 6 67 F.3d 1331, 1340 (10th Cir. 20 12). I also agree with the majority that plaintiffs have not stated a claim as to de fendants Alexander Kummant and Terry George. Further, I concur in the ma jority’s dismissal of the claims based on defendants’ statements regardin g two of the Spirit programs at issue: the Gulfstream G280 and G650. But I must part ways with the majority with respect to the portion of plaintiffs’ claim based on false statements made by Turn er and Anderson regard ing the then-current performance of Spirit’s 787 project. Plaintiffs have alleged specific statements by these two individuals indicating that the 787 prog ram was on budget, and alleged particular facts showing they knew such claims to be false at the time they were made. These contentions do not rely on any pr ediction as to future costs. Rather, they show that executives inaccurately depicted the project’s performance in meeting cost forecasts up to the time the statements were ma de. I would hold that these statements are actionable. As the complaint explains, Spirit adop ted a contract accounting method with respect to the 787 program. It reported a profit rate for the program based on actual historical costs plus future estimated cost s. Because the company predicted it would benefit from a “learning curve” as the projec t progressed, the average cost per unit was expected to decrease as the total number of un its produced increased. Thus, a downwardsloping “cost curve” was used to describe the average cost per unit ov er the course of the
program.4 According to confidential witness number ten (“CW10”), project leaders prepared Estimate at Completion (“EAC”) reports ea ch quarter. The EAC reports compared procurement costs actually incu rred against forecast procuremen t costs. In other words, these reports showed whether the project’s ex ternal expenses were on the cost curve and thus meeting expectations to that point or above the cost curve and thus over budget. CW10 was responsible for the EAC reports for every product delivered from Spirit’s Tulsa facility, including the 787 . He described that the EACs he prepared for the 787 program during 2011 and 2012 showed cost overruns relative to forecasts because “costs were much higher than expected.” CW10 also stated that the EAC reports were distributed to Anderson and Turner. 1 At the pleading stage, CW10’s statements are sufficient to demonstrate that: (1) Spirit reviewed actual versus forecast costs on a quarter-by-quarter basis; (2) the 787 program was not meeting quarterly forecasts; and (3) Turner and Anderson received the quarterly reports indicating the 787 program was not tracking the forecast cost curve. Despite receiving this information, Tu rner and Anderson re peatedly informed investors that 787 program cost s were declining as planned. On a November 3, 2011 conference call, Turner stated that Spirit was “tracking per pl an to identify and implement cost improvements” on the 787 project. On the same call, Anderson stated that “the

1 The majority suggests th at CW10 lacked knowledge of the details of the final reports delivered to Turner and Anderson, in part becau se the EACs went through “numerous layers of revision” before la nding on Turner’s and Anderson’s desks. (Majority Op. 15.) But if obj ections to the EACs’ contents arose during review, CW10’s team was called upon to provide evidence to support the reported costs. Thus, CW10 was aware of changes requested at higher levels, including Wichita management, the final layer before Turner and Anderson received the reports.5 curves” for the project were “on plan.” In March 2012, Anderson st ated at an investor conference that the program wa s “very much on plan and wher e we expected to be.” After releasing the company’s first quarter 20 12 results, Turner again told investors that the company “continue[s] to track per plan to identify and implement cost improvements” on the 787 project, and Anderson st ated that the project was “on plan as of the end of the first quarter here in 2012.” On August 2, 20 12, Turner publicly stat ed that “we continue to improve our unit cost performance, as pl anned.” And on August 7, 2012, Turner discussed with investors the 787’s cost curv e, stating that the company expected to “continue to track that curve” and the 787 project was “going to keep coming down the
curve.” Plaintiffs have alleged specific facts de monstrating that these statements were false at the time they were ma de. Turner’s final statemen t, in particular, cannot be dismissed as mere optimism. He specifically identified the 787 cost curve and stated that company expected to “continue” to track it. Thus, he assu red investors that Spirit had been and was presently on the curve. Spirit’s internal reports indicated that the 787 program was not in fact on the planned cost curve. 2 And as revealed in subsequent

2 The majority concludes that the compla int lacks sufficient detail about the EACs’ contents and CW10’s knowledge of, and the fi nal reports’ descriptions of, total costs. (Majority Op. 19.) As described infra, becaus e Turner and Anderson stated that the 787 project was proceeding in line w ith the projected cost curve, the question before us is whether a reasonable person would deem the in ference of scienter as to actual cost overruns “at least as compelling as any oppo sing inference.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 324 (2007). To conc lude that the final reports delivered to Turner and Anderson did not s how overruns in total costs requires an inference that the intern al costs were under budget by an amount equal to or greater than the overruns in procurement costs, and that in the third quarter of 2012 internal costs6 Securities and Exchange Commiss ion filings, Spirit implemented a cost recovery plan in late July 2012 to attempt to bring the 787 prog ram back in line with forecasts. That the company had just implemented a program to attempt to regain th e curve renders the statement that it was going to “continue to track that curve” demons trably false. Having established falsity, the plainti ffs must demonstrate materiality. A statement is material “if a re asonable investor would consider it important in determining whether to buy or sell stock. ” Level 3, 667 F.3d at 1339 (quotation omitted). We distinguish between statements that are “mat erial and those that are mere puffing not capable of objective verificati on.” Id. (quotation and ellipse s omitted). Defendants do not contest that statements as to a project’ s progress along cost projections would have been considered important by traders. Howeve r, the district court determined that none of the statements alleged in the complain t are capable of objective verification. I disagree. Through its EAC process, Spirit internally measured whether the projects were meeting quarter-by-quarter cost forecasts. Whether the projects were “on track” or “on plan” was objectively verifiab le each quarter. And Spir it’s argument that executives’ statements did not communicate anything about timing, costs, or other objective metrics is unconvincing. Unlike the “broad claims . . . regarding integration efforts and the customer experience” identified in Level 3 as immaterial, 667 F.3d at 1340, Turner and

spiked causing projected forwar d losses. That inference would not be compelling. Far more compelling is the proposition that the final reports indicate d overruns in both internal and procurement costs. Thus, the EACs sufficiently compel the inference that Turner and Anderson knew ac tual costs exceeded forecast costs on the 787 project.7 Anderson specifically identified the 787’s cost curve and unit costs as being presently in line with projections. And analysts understood the statements to mean that the company was operating with costs “at or be low projected levels.” Read in context, this inference is even more compellin g. In August 2012 Turner stated both that the 787 program would “continue to track that curve,” and that th e Gulfstream G280 and G650 projects were “very close to meeting the curves that we pl aced but are not quite meeting them yet.” These statements are not vague assurances about probable performance, they are objectively verifiable claims about a very sp ecific internal measurement. Accord id. (statements that a project was “ahead of plan” and “under budget” had a “basis in objective and verifiable fact”). Finally, the plaintiffs must show that “the defendant acted with scienter, that is, with intent to defraud or r ecklessness.” In re Zagg, 797 F.3d at 1200 (quotation and emphasis omitted). To plead scienter, plaintiffs must allege particularized facts that give rise to a strong inference that defendants acted intentionally or recklessly to mislead investors. 15 U.S.C. § 78u- 4(b)(2); Kinder-Morgan, 340 F. 3d at 1105. Recklessness is “conduct that is an extreme departure from the standards of ordinary care, and which presents a danger of misleading buyers or seller s that is either known to the defendant or is so obvious that the actor must have been aware of it.” City of Philadelphia v. Fleming Cos., 264 F.3d 1245, 1260 (10t h Cir. 2001) (quotations omitte d). “[D]ivergence between internal reports and external statements on the same subject and disregard of the most current factual information before making statem ents can be factors supporting scienter.” Level 3, 667 F.3d at 1345 ( quotations omitted). And plaintiffs must show that “a8 reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference.” Tellabs, 551 U.S. at 324 (2007). But the inference that the defendant acted with scienter does not need to be irrefutable. Level 3, 667 F.3d at 1343. CW10 stated that the quarterly cost repor ts for each project—which incorporated the EACs during 2011 and 2 012 showing cost overruns for the 787 program—were distributed to Turner and Anders on. Thus, taking the facts in the complaint as true, these defendants received quarterly reports demonstr ating that the 787 pr oject was not meeting the forecast cost curve. They nevertheless repeatedly inform ed investors that the project was proceeding along the cost curve as planned. Even assuming Turner and Anderson failed to read those reports and did not have actual knowledge of the cost overruns, it would be an extreme departure from the sta ndards of ordinary care to leave project reports unopened while simultaneously assuring investors that the projects were on plan. The far more likely inference is that Turner and Anderson did review the reports before making the relevant statements. In that case, they intentionally lied to investors about the status of the 787 project. This inference is further bolstered by the fact that the 787 program was important to Spirit’s overall bottom line. See Reese v. Malone, 747 F.3d 557, 575 (9th Cir. 2014) (alleged false statements concerning core op erations contribute to an inference of scienter). Although Spirit ma intains that the core of its business was its manufacturing operations for existing Boeing models, the co mpany acknowledged in February of 2012 that a “significant” portion of future reve nues would be derived from new development9 programs, “most notably the [Boeing] 787.” Th at project was expected to provide twenty percent of total revenue by 2014. Although not dispositive, several other fa ctors contribute to the inference of scienter as well. We have previously e xplained that the “magnitude of the alleged falsity” strengthens the inferen ce of scienter. Kinder-Morgan, 340 F.3d at 1106. Spirit’s cost overruns on the 787 project resu lted in forward-losses of $184 million, approximately one quarter of reported earnings across 2010- 2011. Although the “desire to protect one’s own position” is not alone a sufficient basis to infer scienter, it was certainly present here. See Pirraglia v. No vell, Inc., 339 F.3d 11 82, 1191 (10th Cir. 2003). By misleading investors about the status of the 787 project, Anderson and Turner sought to obtain additional tim e to correct their failures on that project. Individuals frequently attempt to “conceal[] bad news in the hope that it will be overtaken by good news . . . like embezzling in the hope that winning at the track will enable the embezzled funds to be replaced before th ey are discovered to be missi ng.” Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d 702, 710 (7th Cir. 2008). Considering “all the allegations holistically,” Tellabs, 551 U.S. at 326, I conclude the plaintiffs have demonstrated falsity, materi ality, and scienter as to statements made by Turner and Anderson regardin g the progress of the 787 project. The parties do not argue the remaining prongs of the § 10(b) test, and the district court did not consider them. Thus, I would reverse in part the district cour t’s dismissal for failure to state a claim, and remand for further proceedings.