1 (Slip Opin i o n) OCTOBER T ERM, 20 10 Sy llabu s
N O TE : Wh er e it i s feas ibl e , a s y llab u s (h ead n ot e) wil lbe rel e as ed , as is bein g d o n e incon n ecti onwithth is cas e , a tth e ti meth e op in i o n is is s u ed

. Th e s y ll abu s con s titu tes n o p a rt of th e op in i o nof th eC o u r t bu t h a s be en pre p are dbyt h e Re po rte ro f De ci sio n s fo r t h e co nveni e nce of t h e reade r
. Se e United Statesv. Detroit Timbe r& Lumb er Co., 200U. S

. 3 21, 337

. 

# SUPREME CO URT O FTHE UNI TED STATES

Sy llabu s 

### MATRIXX INITIATIVES, INC., ET AL



### . v . SIRA CUSAN O ET AL



### . CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
No. 09–1 15 6. Ar g u ed Janu a r y10, 2011 —Dec ided M a r c h22, 2011 Respon den t s f iled th is sec u r i ties fr au d c l ass ac tion , alle gi n gth at peti

tioners (herei nafter Matrixx) violat ed §10(b) of the Securities Ex

c h an g eAc t of 19 34 an d Se c u r i ties an d Ex c h an g eCommis s ionRu l e 10b –5 byfaili n gto disc lose r e por t s of a possi ble lin k betweenM a trixx’s leading product, Zica m ColdReme dy , an d loss of smell (an o s mia), r e nder ingstate m ents made byM a tr ix xmislea di ng
. M a tr ix x mov e d to dis m iss the c o m p laint, ar g u ingthat r e spon dents hadnot pleaded the el ement of a material mi ss tat e ment oromis sion and th e element of scienter. TheDi strictCour t gr anted the motion, but the Nint hCircuitrevers ed. It held t h a tt h e Dis t rictCourterred in re quiring an all e gation of s t a t istica l s i g n ific anc eto es tab l i s h ma ter i al

ity, concluding instead th atthe complain t ade q uately alleged infor

mation linkin gZic a m and anosmia th at would have b een s i gnifica n t to a r e ason abl e in v e stor

. It also h e ld th at M a tr ix x ’ s wi th h o ldin gof in for m ationab ou t r e por t s of adv e r s e effects an d abou t pen d in glaw

su its byZ i c a m u s er s g av e r i se to a str o n gi n fer e nc e of sc i e n t er
. Held: Respon den t s h av es t a t ed ac l aim u n d er§10(b) a n d Ru le 10 b– 5.

Pp. 8–22.

(a) To prevail on their claim, re spondents must prove, a s relevant h e r e , a mater i al m i sr epr e se n t ationorom ission byM a t r ix xan d sc i

enter. See Sto n eri dge Inv est m e nt Part ne rs , LLC v. Sci e ntific-Atla n ta, Inc. , 552 U. S. 148, 15 7. M a tr ix xc o n t en ds th at th eyfai l ed to plead these required elements bec a use theydid not alleg etha tthe r e por t s Ma t r ixx receiv ed reflect e d s t at ist i ca lly s i gnificant evidence that Zi

c a m c a u s ed an osmia. Pp. 8– 9.

(b) Respon den t s h av eadequ a telypleaded mater i a lity

. Pp. 9–19.

(1) Under Basic Inc. v. Levinson , 485 U. S. 224, § 10(b)’ s mater i a l

-2 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Sy llabu s ity requirement is sa tisfie dwhen th ere is “ ‘a subst a nt ial l i kelihood that the disc lo sur eof the omitted fa ct would have been vi ewed by the
r e ason able in v e storas h av i n gsig n ific an tlyalter e d th e “ t otalmix” o f in for m ationm a de av ail ab l e.’ ” Id. , at 231

– 232. Th e Cou r t dec lin ed to adopt a bright-line rule for determining materia lity in Basic , observ

in gth at “[a]n yappr oac hth atdesig n ates a s i n gle fac torocc u rr en c eas always deter m inative of a ninhere nt ly f a ct -s pecific finding s u c ha s mater i a lity , must nec e ssa r ilybe ov erinclusive or underinclusive.” Id. , at 236. H e r e , M a tr ix x’ s br igh t -lin e r u le—th a t adv e r s e ev en t r e por t s r e g a r d inga phar mac e utic al c o mpany ’ s pr oduc ts ar e not mate

ria lab s e nta sufficientnumb e r of s u ch re port s t oest ablis h as t a t is ti

cally significant risk that t h e pr oduct is causing the e v ents—would “artificia lly exclud[e]” information that “would otherwise be consid

er ed sig n ific an t to [a r e aso n able investor’s] trading decision.” Ibid

. Matrixx’s pre m ise that sta t istica l si gnificance is the only reliable in

dication of causation is flawed. Both medical experts and the Food
a n d Drug Adminis t ration rely on evidence other than stati s tically sig n ific an t dat ato establi s hanin fer e nc e of c a u s ation

. It th u s stan ds to r e asonth at r e ason able in v e stor s would act on such e vidence. Be

ca us e a dvers e report s ca n t a ke m a ny form s , a s s e ss ing t h eir m a t e ria l

ity is a fact-s pecific inquiry, requ iring co nsideration of their source , content, and context. The qu estion is whether a reaso na b leinvestor would have vi ewed the nondisclosedinformation “ ‘as h aving signifi

c a ntlyalter e d the “tota l mix” of infor m ation made av ail able.’ ” Id., at 232. So meth i n gmor eth an th e mer eex i s ten c e of adv e r s e ev en t r e por t s is n eede dto sa tisfyth at s t andar d , b u t that so met h ingmor eis not lim ited to st ati s tica l s i gnificance and can come from the source, c o n t en t, an d con t ex t of th e repor t s. Pp. 9–16. (2) Applying Basic ’s “ t o t a l mix” s t a n da rd here, res p onde nt s a d e quatelyple a d e d ma ter i ali t y
. The c o mpla int’ s al leg a tio n s suffic et o “raise a reaso n able expecta t ion thatdisc overy will reveal evidence” sati sfy i ngthe mater i al ityr e quir ement, Bell Atlant ic Corp. v. Twombly , 550 U. S. 54 4, 55 6, an d to “al l o [w] the c o ur tto dr aw th e r e ason able in fer e n c e th at th e defen d an t is liable,” Ashcroftv. Iqbal , 556 U. S. ___, ___. Assumi ng the co mplaint’s allega tio n s to be true, Ma t r ixx receiv ed report s fromm e dica l expert s a n d res e a rchers t h a t plau si blyin dic a ted a r e liab l e c a u s al lin kbetweenZ i c a m an d an os mia

. Cons umers likely wou l d have viewe dZica m’s ris ka s s u b s ta n tial ly outweighing its benefit. Vi ewing the complaint’s allegation s a s a w h ole, th e c o mplain ta lleg e s fac t s su g g e stin gasig n ifi c an t r i sk t o the c o mmer c i al v i abil i tyof M a tr ix x ’ s leading product. I tis subs tan

tial lylikelyth at a r e ason ab l ein v e stor wo uld have viewed this infor

mation “ ‘ a s hav i ngsig n ificantly alter e d the “tota l mix” of infor m a tion made a v ailab l e.’ ” Basic , supra, at 2 32. A ssu min gth e3 Cite as: 56 3 U

. S. ____ (2011) Sy llabu s

c o mplaint’ s all e g a tions to be tr ue, M a tr ix x told the mar k et tha tr e v e n u e s wer eg o i n gto r i se 50 an d th en80 per c e n t wh en it h a d in for m a tion indicating a significant risk t oit s lea d ing reve nu e-genera t i ng product. It al so publicly dismi s s e d report s linking Zica ma n d a n os mia an d s t a t ed th at zin cgl u c on ate’ s safetywas well establish e d , when it had e v idence of a b i olog ical link between Zicam’s key ingre

dien t an d an osmiaan d h a dc o n d u c te d n ostu d ie s to di spr o v eth a t lin k. Pp. 16–19.

(c ) Respon dents h av ea l so a d equ a te ly ple a ded scienter, “ ‘a menta l sta t e em br ac i n gintent to d e c e iv e, manipulate, ordefr a u d,’ ” Tellabs, Inc. v. Mak o r Issu es & Ri gh ts, Lt d. , 551 U. S. 308, 31 9

. Th is Cou r t assume s, with out dec i ding , that th e scienter requirement may be sat

isfied by asho w ing of delibe r ate re c k lessn ess. Un derth e Pr iv ate Se

c u r i ties Litig a tionRefor mAc t of 1995, a c o mplain t adeq u a telyplead s scienter “only if a reasonabl e personwoul d deem the inference o f sci

enter cogent and at lea s t as compelling as any opposing i n ference one could draw from the facts alleged.” Id. , a t324. M a tr ix x ’ s pr oposed bright-line rul erequiring a nallegati on o f sta t is tical si gnificance to
es tab l is h as t ronginfere nc e of s c ie nter i s once again flawed. The
c o mplaint’ s a l l e g a tions, “tak e n c o llec t iv ely , ” giv er i se to a“c og ent and compelling” inference that Matrixx elected not to dis c lose adverse eventreport s notb e ca us e it b e lieve dtheywer emeaningl ess but be

cause it understood their l i k e ly effect on the market. Id., at 32 3, 32 4. “[A] r e asonab l eper s on” would deem the infer e nc e that M a tr ix xac ted with delibera t e recklessness “a t le as t a s co mpelling a s any [plausib le] oppos i ng infer e nce.” Id

. , at 324. Pp. 19–2 2. 585 F. 3d 11 67 , affir m ed.

S OTOMAYOR , J

. , delivered theopinion fora una nimous Court._________________

_________________ 1 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt

NOTIC E : Th is op i n ionis subjec t to f o rma lrevi si onbef o r e publicat ioninth e p r eli m in ary p rin t of th e U n it edS t at es R e p o rts

. R e ad ers ar e r e qu es ted to n o tif yth e R e p o rt e rof D e c i s i on s , Su p r em e C o u rt of th e U n ited St at es , Wa s h

ington, D. C. 2054 3, of any typ o gra p hical or other f o rmal err o rs , in or der th atc o rr ect i on sm a y b e mad eb e f o r e th ep r e lim in aryp rin t go es t o p r es s
. 

# SUPREME CO URT O FTHE UNI TED STATES

No. 09–1 15 6 

### MATRIXX INITIATIVES, INC., ET AL 

### ., PETITI ONERS v. JAMES SIRAC USA N O ET AL



### . ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE NINT H CIRCUIT [M ar c h22, 2011] 

### J USTICE 

### S OTOMAYOR

### d e livered theopinion of t h e Court. This case p r esents the questionwhether a plaintiff can state a claim for securities fr aud u n der §10(b) of the Securities Exch ange Act of 1934, 48 S t at. 891, as amended, 15 U. S. C. §78j (b), and Se curities and Exchan ge Commission (SEC) Rule 10b–5, 17 CFR §240.1 0b–5 (2010), based on a pharmaceutical company’s failu re to disclose reports of adverse events associated with a product if the reports do not disclose a statistically significant number of advers e events. Respondents, plaintiffs ina securities fraud class action, allege that pet i tioners, Matrixx Initi a tives, Inc., and three o f its executi v es (collectively Matri x x), failed to disclose reports of a possible link betwee n its leadin g product, a cold remedy, and loss of smell, rendering statements made by Matrixx misleading. Ma tri xx contends that respondents’ co mplaint does not adequately allege that Matrixx made a material representation or omission or that i ta cted with s c ienter bec ause the complaint does not allege t hat Matrixx knew of a statistically significant number of adverse events requiring disclosure. We conclude that the materiality of adverse event reports canno t2 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### be reduced to a bright- line rule. Although in many cas e s reasonable investors would not co nsider reports of adverse events to be material information, respondents have al

leged facts plausibly s u ggesting that reasonab le investor s would have viewed these particular reports as material. Respondents have als o alleged f a cts “givin g rise to a strong inference” that Ma trixx “ a cted with the required state of mind.” 15 U. S. C. A. §7 8u–4(b)(2)(A) (Feb. 20 11 Supp.). We therefore hold, in agre ement with the Court o f Appeals for the Ninth Circuit, that respo n dents have stated a claim under §1 0(b) and Rule 10b–5. I A Through a wholly owned subsidiary, Matrixx develops, manufactures, and ma rkets ov er-the-counter pharmaceutical produc ts. Its core brand of products is called Zicam. All of the products sold under the name Zicam are used to treat the co mmon cold and associated sympto ms. At the time of theevents in question, o n e of Matri xx’s products was Zicam Cold Remedy, which came in s e veral forms including nasal spray and gel. T h e active ingredient in Zicam Cold Remedy was zinc gluconate. Respondents allege that Zicam Cold Remedy accounted for approximately 70 percent of Matrixx ’s sales. Respondents initiated this securities fraud class actio n against Ma trixx on behalf of individuals wh o purchased Matrixx securities between Octob e r 22, 2003, and February 6, 2004

. 1 

### The action principally arises o u t of statements that Matrixx ma de during t h e class peri od relating to revenues and p r odu ct safet y
. Respondents claim tha t Matrixx ’s statements were misl eading in light of reports that Matri xx had received, but did not disclose, ab ou t

——————

1 Ac c o r d ingto the c o mplaint, M a tr ix xsec u r i ties wer etr aded on the NASDAQ Nat i on al M a r k et. App. 99a.3 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### consumers who had lo st their sense of smell (a condition called anos m ia) after using Zicam Cold Remedy. Respondents’ consolidated am ended complaint alleges the foll owing facts, which the co urts below properly as sumed to b e true. See Ashcroftv. Iqbal , 556 U. S. ___, ___ (2009) (s lip op., at 14). In 1999, Dr. Alan Hirsch, neurological director of the Smell & Ta ste Treatment and Research Foundation, Ltd., called Matrixx’s custo m er service line after discoveringa possible lin k between Zicam nasa lgel and a loss of smell “in a cluste r of his patients.” App. 67a–68a. Dr. Hi rschtold a Matrixx employee that “previous studies had demonstrated that intran a sal application of zinc could b e problematic.” Id. , at 68a. He also told the employee about at least one of his patients who did not have a cold and who developed anosmia after using Zicam. In September 2002, Timothy Clarot, Matrixx’s vice president for researchand devel o pment, called Miriam Linschoten, Ph.D., at the University of Colo rado H e althSciences Center after receiving a complaint from a person Linschoten was treating wh o had lost her sense of smell after using Zicam. Clarot informed Linschoten that Matrixxhad received similar complaints from other cu stomers. Linschoten drew Clarot’s attention to “previous studies linki ng zinc sul f ate to loss of smel l.” Ibid. C l a r o t gave her the impress i on that h e had not heard of the studies. She asked Clarot whether Matrixx had done an y studies of its own; he responde d that it had n o t but that it had hired a consultant to review the product. Soon thereafter, Linschoten sent Clarot abstracts of the studies she had mentioned. Research from th e 1930’s and 1980’s ha d confirmed “[z]inc’s toxi city.” Id. , at 69a. Clarot called Linschoten to ask whether she would be willi ng to participate in ani mal studies that Matri xx was planning, but s h e declined because her focus was human research. By Septem ber 2003, one of Linsc h oten’s colleagues at4 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### the University of Color a do, Dr. Bruce Jafek , had observe d 10 patients suffering from anosmia after Zicam use. Linschoten and Jafek planned to present their findings at a meeting of the American Rhinologic Society in a poster presentation entitled “Zicam ®

### Induced Anos mia.” Ibid. (internal quotation marks omitte d). The American Rh inologic Society postedtheir abst r act in a dv ance of th e meeting. The presenta tion described in detaila 55-yearold man with previou s ly normal taste and smell who experienced severe burning inhis nose, followed immediately by a l o ss of smell, after using Zicam. Italso reported 10 other Zicam users with similar s y mptoms.

Matrixx learned of the doctors’ planned presentation. Clarot sent a letter to Dr. Jafek warning him that he did not have permission touse Matrixx’s name or the names of its produ cts. Dr. Ja fek deleted the references to Zica m in the post er before p r esenting i tto the American Rhinologic Society. The following month, two plaintiffs commenced a product liability lawsuit against Matri xx alleging that Zi cam had damaged their sense of smell. By the end of the class period on February 6, 2004, nine plaintiffs had filed four lawsuits. Respondents allege tha tMatrixx made a seri es of publ ic statements that were misleading in light of t h e foregoin g information

. In October 2003, after they ha d learned of Dr. Jafek’s study and after Dr. Jafek had presented his findings to the American Rhinologic Society, Matrixx stated that Zicam was “ ‘poised for growth in the upcoming cough and cold season’ ” and that the compan y had “ ‘ver y strong momentum.’ ” 2 

### Id. , at 72 a–74a. Ma trixx furth e r

——————

2 At or al ar g u men t , c o un sel forth e Un ited S t ate s , wh ic hs u bmitte d an amicus curiaebr ief insu ppor tof r e spon den t s, su g g e sted th at so me of these sta t eme n ts migh t qua lifyas nona ctionable “puffery.” Tr . of Ora l Ar g
. 51–5 2. Th is qu est i onis n o tbefor e u s , as M a tr i x xh a s n o t ad

vanced s u c ha nargu ment.5 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### expressed its expecta tion that rev e nues would “ ‘be u p i n excess of 50% and tha t earnings, per share for the full year [would] be in the 25 to 30 cent range.’ ” Id. , at 74a. In January 20 04, Matrixx raised its revenue guidance, predicting anincrease in revenues of 80 percent and earnings per share in the 33-to-38-cent range. In its Form 10–Q filed with the SEC in Nove mber 2003, Zicam warned of the potential “ ‘material adverse effect’ ” that could result from product liability claims, “ ‘w hether or not proven to be valid.’ ” Id. , at 75a–76a. I tstated tha t product liability actions could materially affect Matri xx’s

“ ‘product branding and goodwill,’ ” leading to reduced customer acceptance. 3 

### Id. , at 76 a. It did not disclose, however, th at two plaintiffs had a l ready sued Matrixx fo r allegedly causing them to lose theirsense of sm ell. On January 30, 2004, Dow Jone s Newswire s reported that the Food and Dru gAdministration (FDA) was “ ‘look

ing into co mplaints that an over-the-counter common-cold medicine m anufacture d by a unit of Matrixx Initiatives, Inc. (MTXX) may be causing so me users to lose their sense of smell’ ” i nlight of at least three product liability lawsuits. Id. , at 79a–80a. Matrixx’s stock fell from $13.55 to $11.97 per share after the report. In respons e , on Febru

ary 2, Matri xx issued a press releas e that stated: “All Zicam products are manufactured an d marketed ac cor d ing to F D A guidelines for homeopathic medicine. Our prim ary concern is the h e alth andsafety of our customers and the distribution of factual information about our products. Matri xx believes statements alleging that intran a sal Zicam products caused anosmia (loss of smel l) a r e completely un­

——————

3 Respon den t s also alleg eth at M a tr ix x fal s ely r e por t ed its f i n a n c ial results in the Form 10 –Q byfailing to res e rve for or disclose potenti a l liab ility, in violation of Generally Accepted Accounting Principles. The Court of Appeals did not re ly on these allegations.6 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### founded and misleadin g
. “In no clinical trial of intranasal zinc glucon ate gel products has there b e en a singlereport of l o st or diminished ol factory function (senseof smell). Rather, the safety a n d efficacy of zinc gluc onate for th e treatment of symptoms related to the common c o ld have been well establishedin two double-blind, placebocontrolled, randomized clinical trials. In fact , in neither stud y were there any reports of anosmia related to the useo f this compound. The overall inci dence ofadverse events associated with zinc gluconate was extremely low, with no st atistically significant difference between the adverse event rates for the treated and placebo sub s ets. “A multitude of environmental a n d biologicinfluences are k n own to affect the sen s e of smell

. Chief among them is the c o mmon cold. As a result, the population most likely to use cold remedy products is already at increased risk of developing anosmia

. Other com m on causes of olfactory dysfunctio ninclude age, nasal and sinus infections, head trau m a, anatomical obstructions, and environmental irritants. ” Id. , at 77a–78a (internal quotationmarks omitted). The day after Matrixx issued this press relea s e, its stock price bounced back to $ 13.40 per share. On February 6, 2004, the end of the class period, Goo d Morning America, a nationally broadcast morning news program, hi ghlighted Dr. Jafek’s findings. (The complaint does not allege that Matrixx learned of th e news story before its broadcast.) T h e program reported th at Dr. Jafek had discovered more th an a dozen patients suffering fro m anosmia af ter using Zicam. It also noted that four lawsuits had been filed ag ainst Matrixx. The price of Matrix x stock plum meted to $9.94 per share that same day. Zica m again issued a press release largely repeating its February7 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### 2 statement. On Februa ry 19, 2004 , Matrixx fi led a Form 8–K with the SEC stating that i thad “ ‘convened a two-day meeting of physicians and scientists to review curren tinformation on smel ldi sorders’ ” in response t o Dr. Jafek ’s presentation. Id. , at 82a. According to the Form 8

– K, “ ‘In th e opinion of the panel, there is in sufficient scientific evidence at th is time to determine if zinc gluco nate, when used as recommended, affects a p e rson’s ability to smell.’ ” Ibid. A few weeks later, a reporter quoted Matrixx a s stating tha tit would begin conducting “ ‘ani mal and h u man studies to furthercharac terize these post-marketin g complaints.’ ” Id. , at 84a. On the basis of these allegations, respondents claimed that Matri xx violated §10(b) of the Securities Exchange Act and SEC Rule 10b–5 by making untrue statements of fact and failing to disclose ma terial facts necessary tomake the statements not misleading in an effort to maintain artificially high pr ices for Matrixx securit i es. B Matrixx mo ved to dism iss respond e nts’ complaint, arguing that they had faile d to plead the elem ents of a mate

rial misstatement or omission an d scienter. The District Court g r an ted the motion to dismiss. Relying on In re Car t er- Wall ace, Inc., Securi ties Li tiga tion , 220 F. 3d 3 6 (CA2 2000), it held th at respondents had n o t alleged a “statistically significa n t cor r elation between the use of Zicam and anosmia so as to ma ke failure to public[ly] disclose complaints and the Un iversity of Colorado study a material omission.” App. to Pet. for Cert. 50a. The District Courtsimilarly agreed tha trespondents had not stated wit hparticularity facts giving rise to a stron g inference of scienter. See 15 U. S. C. A. §7 8u–4(b)(2)(A) (Feb. 2011 Supp.). It noted that the complaint failed to allege that Matrixx disbelieved its statements about Zi­8 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### cam’s safety or that any of thedefendants profited or attempted to profit f r om Matri xx’s public statements. App. to Pet. for Cert. 52a. The Court of Appeals reversed. 585 F. 3d 1 167 (CA9 2009). Noting that “ ‘[ t]he determination [of materiality] requires delicate asses sments of the inferences a “reasonable shareh older” would draw fro m a given s e t of facts a n d the significance of those inferences to him,’ ” id. , at 117 8 (quoting Basic Inc. v. Levinson , 485 U. S. 224, 236 (1988); some inter nal quotation marks omitted; alterations in original), the Court of Appeals held thatthe DistrictCo ur t had erred in requiring an allegation of statis tical significance to establish materiality. Itconcluded, to the contrary, that the complaint adequately alleged “information regarding the possible link betwe e n Zicam and anosmia” that would have been significant to a reasonable investor. 585 F. 3d, at 1179, 1180. Turning to scienter, the Court of Appeals concluded that “[w]ithh olding reports of adverse effects of and lawsuits concer ning the product responsible for the com p any’s remarkable sales increase is ‘an extre me departure f r om the standards of ordinary c a re,’ ” givin g rise to a strong inference of scienter. Id. , at 1183. We granted certiorari, 560 U. S. ___ (2010), a n d we now affirm. II Section 10(b) of the S e curities Exchange Act makes it unlawful for any perso nto “use or employ, in connection with the pu rchase or sale of any security . . . any manipulative or de ceptive dev i ce or contr i vance in c o ntravention of such rules and regu lations as the Commission ma y prescribe as necessary or approp riate in the public interest or for the protection of investors.” 15 U. S. C. §78j(b). SEC Rule 10b–5 implements this provisionby makin g it unlawfulto, among other thin gs, “ma k e any untrue statement of a material fact or to omit to state a material9 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### fact necess ary in or der to ma ke t h e statements made, i n the light of the circu mstances under which they were made, not misleading. ” 17 CFR §240.10b–5(b). We have implied a p r ivate cause of action from the text and purpose of §10(b). See Tellabs, Inc. v. Makor Issues & Rights , Ltd. , 551 U. S. 308, 318 (2007). To prevail on their claim that Matrixx m a de material misreprese ntations or omission s in violation of §10(b) and Rule 10b–5 , responden t s must prove “(1) a material mis

representation or omis sion by the defendant; (2) scienter; (3) a connection between the mis r epresentation or omis

sion and t h e purchase or sale of a security; (4) relianc e upon the misrepresentation or om ission; (5) e c onomic los s ; and (6) loss causation.” S t onerid ge Inve stme nt Pa rtn ers , LLC v. Scientific-A tlan ta, Inc. , 55 2 U. S. 148, 157 (2008). Matrixxco ntends tha trespondents have f a iled to plead both the ele m ent of a material misrepresentation or omi s sion and the elementof scie nter because they have not alleged that the reports rece ived by Matr ixx reflecte d statistically significant evid ence t hat Zicam caused anosmia. We disagree. A We first consider Matrixx ’s ar gument th at “advers e event repor t s thatdo not reve al a statistical l y significant increased riskof adverse events fr om product use are n o t material information.” Brief for Petitioners 17(capitalization omitted). 1 To prevail on a §10(b) claim, a pla i ntiff must show that the defendant made a statement that was “ m i sleadin g

as to a materi al fact.” 4 

### Basic , 485 U. S., at 238. In Basic , we

——————

4 Underthe Pr iv ate Sec u r i ties Li tig a ti on Refor mAc t of 19 9 5 (PSLRA), wh ena plain t iff’ s c l aim is b a se d onalleg e d misr epr e sen t a tions or omissions of a mate rial fa ct, “the complaint sha ll specify each10 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### held that this materiality requirement is sat i sfied whe n there is “ ‘a substantial likelihood that the disclosure of the omitted fact would have been viewed by th e reasonable investor as having significantly altered the “total mix” of informationmade available.’ ” Id

. , at 231–232 (quoting TSC Industries, Inc. v. North w ay, Inc. , 426 U. S. 438, 449 (1976)). W e were “careful not to set too low a standard of materiality,” for fear that man a gement would “ ‘bury the shareholders in an avalanch e of trivial information

. ’ ” 485 U. S., at 231 (quoting TSC Industries , 426 U. S., at 448–449). Basicinvol v ed a claim that the defendant had made misleading statements denying that it wa s engaged in merger neg o tiations when it was, in fact, conducting p r eliminary negotiations. See 485 U. S., at 2 27–229. The defendant urged a b r ight-line rule that preliminary merger neg o tiations are material only once t h e parties t o the negotiations reach an agreement in principle. Id. , at 232–233. We obs e rved that “[a]ny approach that designates a single fact or occurrence as always determinative of an inherently fact-s p ecific finding such as materiality, must neces s arily be ov erincl usive or underinclusive.” Id. , at 236. W e thus rejected the defendant’s proposed rule, explaining that it wo uld “artifici ally exclud[e] from the definition of materiality in formation concern i ng merge r discussions, which would otherwise be con s idered significant to the trading decision of a reasonab le investor. ” Ibid. Like the defendant in Basic , Matrixx urges us to adopt a bright-line rule that reports of adverse event s 5

### associated

—————— statement alle ged to have be en misl e a ding, [and] the reason or reasons wh yth e state m en t is mis l ea din g .” 15 U. S. C. §78u–4(b)( 1 ).

5 Th e FDA defin e s an“[a]dv er se dr u gex per i en c e ” as “[ a]n yadv e r s e event associ ated with the u s e of adrug in huma n s , whether or not
c o n s ider ed dru gr e lated.” 21 CFR § 3 1 4 .80(a) ( 201 0)

. Feder a l la w im pos e s cert a i n ob liga t ions on pha r m a ceut ica l m a nufa c turers t oreport11 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### with a ph armaceutical company’s products cannot be material absent a sufficient number of such reports to establish a statistically signific ant risk tha t the producti s in fact caus ing the events. 6 

### Absent statistical significance,Matrixx argues, adverse event reports provide only “anecdotal” evidence that “the user of a drug experienced an adverse event at some point during or follo wing the use of that drug.” Brief for Petitioners 17. Accordingl y, it contends, reasonable investors would not consider such reports relevant unless they are statistically significant because onl ythen do they “re flect a scientifically reliabl e basis for inferring a potential causal link between produ ct use and the adverse event.” Id. , at 32. As in Basic , Matrixx ’s c a tegorical r u le would “artificially exclud[e]” i n formation that “would otherwise be considered significant to the trading decision of a reasonab le investor.” 485 U. S., a t236. Matrixx’s a r gu ment rests on the premise that statistical si gnificance is the only reliabl e indication of causation. This premise is fl awed: As the SEC points out, “medical researchers . . . consider multiple

—————— adverse events to the FDA. Duringt h e cl a s s period, ma nufa c t u rers o f over-the-co unt er drugs s u c h a s Zica m Cold Remedy ha d no ob liga t ion to report adverse events to the FDA. In2 0 0 6 , Con gr e ss e n ac ted legi sl ation to r e quir e manufac tur e r s of ov er-the-counter dr u g s to report any “serious adverse event” to the FDA with in15 bu sin e ss day s
. See 2 1 U. S. C. §§379aa(b), (c ).

6 “A studythat is st ati s tic a llysig n ificant has results that a r e unlikely t ob et h e res u ltof ra ndome rror
. . . .”Fe dera l J u dicia lCent er, Reference Manual on Scientific Evidence 354(2d e d . 2 000 ). To te stfo r significance, aresearche rde velops a “null hypothesis”—e.g. , th e asser tion that ther e is no r e latio n ship betweenZ i c a m u s e an d an osmi a. See id. , at 122. Th e r e sear c h er th enc a lc u l ates th e pr obabil i t yof obtain in g the observed data (or more extreme da ta) if the null hypothesis is tru e (called the p -va l ue )

. Ibid. Sm all p -values are evidence that the nul l hypothesis is incorrect. See ibid. Fina lly, t h e res e a rche rcom p a r es t h e p -value to a preselected value ca lled the s i gnificance le vel. Id. , at 123. If the p -value is below the preselected value, the difference is deemed “s ignifica nt.” Id. , at 124.12 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### factors in assessing causation.” Brief for United States as Amicus Cu riae12. Statistically significant data are not always available. For example, when an adverse event issubtle or rare, “an inability to obtain a data set of appropriate quality or quanti t y ma y preclude a finding of sta t istical significance.” Id. , at 15; see also Brief for Medical Researchers as Amici Curiae11. Moreover, ethical considerations may prohibit researchers fro m conducti ng randomized clinical trials to confirm a suspected causal link for the purpose of obtaining statistically significant data. See id. , at 10–11. A lack of statistically significant data does not mean that medical experts have no reliab le bas is for inferring a causal link between adru gand adverse eve n ts. As M a trixxitself concedes, medical experts rely on other evidence to establish an in ference of causation. See Brief fo r Petitioners 44–45, n. 2 2

. 7

### We note that courts frequently permit expert testimony on causation basedon evidence other than statistical significance. See, e.g. , B estv. Lowe’s Home Ce nters, Inc. , 563 F. 3d 171 , 178 (CA6 2009); We st

berryv. Gi s laved Gum m i AB , 178 F. 3d 257, 263–264 (CA4 1999) (citing cases); Wellsv. Or th o Pharmace utical Cor p
. , 788 F. 2d 741, 744–745 (CA11 19 86). We need not consider whether the expe rt testimony was prope r ly admitted in those cases, and we do not atte mpt to define here wh at constitutes reliable evidence of causation. Itsuffices to

——————

7 Matrixx and its amicilist as r e lev a nt fac t or s the str e ngth of the
assoc i ationbe tweenth e dr u gan d th e adv e r s e effec t s; a tem p or al relationship between exposure an d the adverse event; consistency
ac r o ss stu d ie s; biologic al plau si bili ty ; con s ider ation of alter n ativ e explanations; specificity ( i.e. , whether thespecific chemical is a ssociated wi th the specific dise ase); th e dose-response relatio n ship; and the
c lin ic al an d pa th ologic al c h ar ac ter i stic s of the event. Brief for Petitioner s 44– 45, n

. 2 2 ; Br ief forCon s u m erHe althcare Produ c ts Ass n . et al. as Amici Curiae 12– 13. Th ese fac t or s ar e si milarto the fac t or s the FDA
c o n s ider s intakin gac tionag ain s t ph ar m a c e u t ic al pr odu c ts. See infra , at 13 –1 4.13 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### note that, as these courts have r e cognized, “medical professionals and researchers do not limit the data they consider to the results of random ized clinical trials or t o statistically significant evidence.” Brief for Medical Researchers as Amici Curiae31. The FDA si milarly does not limit the evidence it considers for purposes of as sessing causation and ta king regula

tory action to statistic a lly si gnificant data. In assess in g the safety risk posed by a produ ct, the FDA consider s factors suc has “st r ength of the association,” “temporal relationship of produc t use and the event,” “consistency of findings across available data sources,” “evidence of a dose-respon s e for the effect,” “biologic plausibility,” “seriousness of the event rel a tive to the disease b e i n g treated,”“potential to mitigate the risk in the population,” “feasibility of further study using observational or controlle d clinical stu d y designs,” and “degree of benef i t the product provides, including availability of other therapies.” 8

### F D A , Guidance for Industry: GoodPharmacovigilance Practices and Pharmacoepidemiologic Assessment 18 (2005) (capitalization omitted), http://www.fda.go v/downloads/ RegulatingInformation/Guidances/UCM12683 4.pdf (all Internet mate rials as visited Mar. 17 , 2011, and available in Clerk of Court’s case file); see also Brief for United State s as Amicus Curiae19– 20 (same); FDA, The Clinical Impact of Adverse Event Reporting 6 (1996) (simila r), http://www.fda.gov/downloads/safet y/MedWatch/UCM168 5 05.pdf. It “does not ap ply anysingle metric for determin

ing when a dditional inquiry or action is neces s ary, and it certainly does n o t ins i st upon ‘s tatistical significance.’ ” Brief for Un ited States as Amicus Curiae19. Not only does the FDA rely on a wide range of evidence of causation, it sometimes acts on the basis of evidence that sugges t s, but does not prove, causation. For example,

——————

8 See also n

. 7, supra
.14 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### the FDA requires manufacturers of over-the-counter dru g s to revise their labeling “to in clude a warning as s oon a s there is rea s onable evidence of anassociationof a s e riou s hazard with a drug; acausal relationship need not have been proved.” 21 CFR §201.80(e). More g e nerally, the FDA may make regulatory de cisions against drugs basedon postmarketing evidence that gives rise to only a suspicion of causation. See FDA, The Clinical I m pact of Adverse Even t Reportin g , supr a , at 7 (“[A]chieving certain proof of causality through po stmarketing surveillance i s unusual. Attaining aprominent degree of suspicion is much more likely, and may be considered a sufficient basis for regulatory decision s” (footnote omitted)). 9 

### This case p r oves the p o int. In 20 09, the FDA issued a warning letter to Matrixx stating that “[a] significant and growing bo dy of evidence substantiates that the Zicam Cold Remedy intranas al products may pose a serious risk to consumers who use them.” App. 270a. The letter cited as evidence 130 reports of an osmia the FDA had received, the facttha tthe FDA had receive dfew repor t s of anosmia associated with other intranas al cold remedies, and “evidence in t h e publish e d scient ific literature that various salts of zinccan damage olfactory function in animals an d

——————

9 S ee als o GAO, M. Cros s eet al., Drug Saf e ty: Improvement Needed in FDA’s Postmarket Decisi on-mak ing a n d Overs i ght Process 7 (GAO

– 06– 40 2, 200 6) (“If FDA h a s i n for m ationth at a dr u gonth e mar k et ma y pose asig n ific ant health r i s kto c o ns umers, it weighs the effect of the adverse events against the benefit of the drug to determine what
ac tion s, if an y , ar e war r a n t ed. Th is decision-making pro c ess is comple x a n d encom p a s s e s m a ny fa ctors , s u ch a s t h e m e dica l im port a n ce a n d utility of the drug, the drug’s extentof usage, the s e verity of the disease being treated, the drug’s e ffic a c yin tr eatingthis diseas e, and the av ailabi lityof otherdrug s to tr eat the same disor d er”), http://www .ga o .gov/new .items /d06402. pdf; Federal Judicial Center, supran
. 6, at 33 (“[ R]iskas s e ssor s maypa yh eed to an yev iden c eth at point s t oaneed for ca ut ion , ra t h erth an asse ss th e lik elihood that a causal relatio n ship in a specific case is more likely than not”).Cite as: 56 3 U

. S. ____ (2011) 15 Opinion of theCourt 

### humans.” data. Ibid. It did not cite statistically significant
Given that medical professionals and regulato rs act on the basis of evidence of causation that is not statistically significant, it stands to reason that in certain cases rea

sonable investors would as well. As Matrixx acknowledges, adv e rse event reports “ a ppear in many form s, including d i rect compl a ints by u s ers to ma nufacturers , reports bydoctors about repo rted or obse rved patie n t reactions, more detailed case reports published by doctors in medical journals, or larger s c ale published clinical studies.” Brief for Peti tioners 17. As aresult, assessing the materiality of adverse event reports is a “f act-specific” inquiry, Ba sic , 485 U. S., at 236, that requires consider ation of the source, content, and context of the reports. This is not to say tha t statistical significance (or the lac k thereof) is irrelevant—only that it is not dispositive of every case. Application of Ba sic ’s “total mix” standard does no t mean that pharmaceutical manufacturers must disclose allre ports of adverse ev ents. Adverse event reports are daily events in the pharm a ceutical industry; i n 2009, the FDA entere d nearly 500,000 such reports into its reporti ng system, see FDA, Reports Received and Reports En tered in AERS by Ye ar (as of Mar. 31, 2010), http://www.fda.gov/Dru gs/Gui danceComplianceRegulatory Information /Surveillance/ Adverse D rug E ffects / ucm070434. h t m
. The fact that a user of a drug has suffered a n adverse event, standing alone, does notmean th at the drug caused that event. See FDA, An nual Adverse Drug Experience Repor t : 1996, p. 2 (1997), ht tp://dru gan d devicelaw.net/Annual%20Adverse %20Drug%20Experience %20Report%201996.pdf. The question rema ins whether a reasonabl e investor wo uld have viewed the nondisclosed information“ ‘as ha ving si gnificantlyalter e d the “tot a l mix” of info rmation made available.’ ” Basi c , 485 U. S., a t16 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### 232 (quotin g TSC Ind u stri es , 426 U. S., at 449; emphas is added). Fo r the reaso n s just stated, the mer e existence of reports of adverse events—whichsays nothing in and of itself abou twhether the drug i s causing the advers e events—will not satisfy this standard. Something more isneeded, but that something more is not limited to statistical significance and c an come fr om “the source, conte n t, and contextof the reports,” supr a , at 15. This contextual inquiry ma y reveal insome cases that reasonable investors would have viewed reports of adverse events as material even t h ough the reports didnot provide statistically significant evidence of a causal lin k. 10 

### Moreover, it bears emphasis that §10(b) and Rule 10b– 5(b) do not create an a ffirmative duty to disclose any an d all materia linformati o n. Disclosure is req u ired unde r these provisions only when necessary “to mak e . . . statements made, inthe light of the cir c umstances under which they were made, not misleading. 17 CFR §240.10b–5(b);
see a l so Basic , 485 U. S., at 239, n. 17 (“Silence, absenta duty to disclose, is not misleadin gunder Rule 10b–5”)

. Even with respect to information that a reasonable investor might c o nsider material, companies can control wh at they have to disclose u n der these provisions by controlling what they s a y to the market.2 Applying Bas i c ’s “totalmix” stan dard in thi s case, weconclude that respondents have adequately pleaded materiality. Th is is not a case about a handful of anecdotal

—————— 10 We not et h a tour con c lus i on a ccord s with views of the SEC, as expressed in an amicus curiae brief filed in this case. See Brief for U n ited States as Am icus Curiae11–12; see a l so TSC Indust r ie s, Inc

. v. North

way, Inc

. , 426 U. S. 438, 44 9, n

. 10 (1976 ) (“[T]h e SEC’ s v i ew of th e proper balance between the need to in su r eadequ a te disc losu r ean d th e need to avoid the adverse consequenc es of setting too l o w a threshold for civil liabili ty is entitled t oconsideration”).17 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### reports, as Matrixx su ggests. As suming the complaint’s allegations to be true, as we mu st, Matrix xreceived information that plausibly indi cated a reliable causal link between Zicam and anosmia. That information inclu d ed reports fro m three medical professionals and researcher s about more than 10 patients who had lost their sense of smell afterusing Zic a m. Clarot told Lins choten tha t Matrixx ha d received additionalreports of anosmia. (Inaddition, during the class period, nine plaintiffs commenced four product liability lawsuits against Matrixx alleging a c ausal link between Zic a m use and anosmia.) 11 

### Further, M a trixx kne wthat Linschoten and Dr. Jafe kh a d presented their findings about a causal link between Zicam and anosmia to a national medical co nference devoted to treatment of diseases of t h e nose
. 12 

### Their presen

tation descr ibed a patient who ex p e rienced severe burnin g in his nos e , followed immediately by a loss of smell, aft e r using Zicam—suggesting a temporal relation ship between Zicam use a n d anosmia

. Critically, both Dr. Hirsch and Linschoten had also drawn Ma trixx’s a tten t ion to previous studies that had demonstrated a biological causal link betwee n intranasa l application of zinc and anosmia. 13 

### Before his conversation

——————

11 It is unclea r whether thes epla i ntiffs were the s a me individua l s whos e s y mptoms were repor t ed by the medical professio n als.

12 M a tr ix xc o n t en ds th atDr . Jafek and Lin s choten’s stud y was not
r e liable bec a u s e theydidnot suffic i entlyr u le out the c o mmon c o ld a s a cause for thei r patients’ anosmia. We note that the c o mplaint a lleg e s tha t , in one ins t a n ce, acons umer who did not have acold los this s e nse of s m ell a f t e r us ing Zica m
. More im port a n t l y, t os u rvive am o t i on to dismi ss, r e s p o n den t s n eed o n lyalleg e“en o u ghfac t s to sta t e a c l ai m to relief thatis p l ausib l e on i t s face.” Bell Atlantic Corp. v. Twombly , 5 50 U. S. 544, 5 7 0 (20 07). Fo rall th e r e as on s we state inth e opin ion , r e spon den t s’ alleg a tion s pl a u siblysu g g e st th at D r
. Jafek an d Lin s c h oten ’ s c o n c lu si on s w e r ebas ed onr e liabl e evidence of a causal link betweenZ i c a m an d an osmi a.

13 M a tr ix x c o ntends that thes e stud ies are not reliable evidence of18 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### with Linschoten, Clarot, Matrixx ’s vice president of research and developmen t, was seemingly unaware of these studies, and the complaint suggests that, as of the clas s period, Matrixx had not conductedany research of its ow n relating to anosmia. See, e.g. , App. 84a (referencing a press repor t , issued after the endof the clas s period, noting that M a trixx said it would begin conducting “ ‘anima l and human studies to further characterize these pos t

marketing complaints’ ”). Accordi n gly, it can reasonably be inferred from the complaint that Matrixx h a d no basis for rejecting Dr. Jafe k ’s findings out of hand. We believe that these allegations suffice to “raise a reasonable expectation that di scovery will reveal evidence” satisfying t h e materiality require ment, BellAtlantic Corp.
v. Tw ombly , 550 U. S. 544, 556 (2 007), and to “allo[w] the court to dra wthe reasonable infer e nce that the defenda n t is liable forthe misconduct alleged,” Iqbal , 556 U. S., at ___ (slip op. , at 14). The information provided to Matrixx by medical experts revealed a plausible cau s al relation

ship between Zicam Cold Remedy and anosmia. Consumers lik ely would have viewed the riskassociated with Zicam (possible l o ss of smell) as substantially outweighing the benefit of using the product (alleviating cold s y m p toms), particularly in light of the existence of many alter

native prod ucts on the market. I m portantly, Zicam Col d Remedy allegedly accounted for 70 percent of Matrixx ’s sales. View ing the alle gations of the complai n t as a whole,

—————— ca us a t ion b e c a us e the s t udies us ed zinc sulfate, whereas the active ingredient in Matrixx is zinc gluc onate. Respondents’ complaint, howeve r, a lleges tha tthe studies conf ir med the tox i c i tyof “zinc

. ” Ap p. 68a. M a tr ix xfu r t h e r c o n t en ds th at stu d ies r e lat i n gto fishc a n n o t reliab l y prove ca us a t ion wit hres p ec t to humans. The c o mplain t referen c es s e v e ra l s t udies , however , on l yo n e of which involved fish. I n any event, the existence of the stud i e s sugges t s apl aus ib l e bi ol ogi c al lin k between zin can d an os mia, wh ic h, in combinationwith the o t her alleg a tion s, is suffic i ent to surv iv e a motion to dismis s.19 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt 

### the complai n t alleges f a cts sugges t ing a significant risk to the commercial viabilit y of Matrixx’s leading product. It is substantially likely that areasonable investor would have viewed thi s information “ ‘as ha ving significantly altered the “total mix” of information made available.’ ” Bas i c , 485 U. S., at 232 (q uoting TSC Industries , 426 U. S., a t449). Ma trixx told th e market th at revenues were going to rise 50 and then 80 percent. Assuming the complaint’s allegations to be true, however, Matrixx ha d informationindicating a signific ant risk to its l e ading revenue-generating product. M a trixx also stated th at reports indi cating that Zicam caus ed anosmia were “ ‘com

pletely unfounded and misleading’ ” and that “ ‘the safety and efficacy of zinc gl uconat e for the treatment of symptoms related to the co mmon cold have been well established.’ ” App. 77a–78 a. Importa ntly, however, Matrixx had evidence of a biological linkbetween Zicam’s k e y ingredient and anosm ia, and it had not conducted an y studies of its own to disprove that l i nk. In fact, as Matrixx later revea l ed, the sci e ntific evid ence at th at time wa s
“ ‘insufficient . . . to dete rmine if zin cgluconate, when used as recommended, affects a person’s ability to smell.’ ” Id. , at 82a. Assuming the facts to be tru e, these were material fact s “necessary in order to make the statements made, in the light of the circumsta n ces under which they were made, not mislea ding.” 17 CFR §240. 10b–5(b). We therefore affirm the Court of Appeals’ holding that respondents adequately pleaded the elementof a material misrepresentation oromission. B Matrixx al so argues that respondents failed to allege facts plausibly suggest ing that it acted with the required level of scienter. “To estab lish liability under §10(b) and Rule 10b–5, a priva t e plaintiff must prove tha tthe defen­20 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### dant acted with scienter, ‘a mental state emb r acing inten t to deceive, manipulate, or defraud.’ ” Tellabs , 551 U. S., at 319 (quoting Ern s t & Erns tv. Hochfelder , 425 U. S. 185, 193–194, a n d n. 12 (1 976)). We have not decided whether recklessness suffices to fulfill the scienter requiremen t

. See Tellab s , 551 U. S., at 319, n. 3. Because Matrixx does not challen g e the Court of Appeals’ holding that th e scienter requirement may be sa tisfied by a showing of “deliberate recklessness,” see 585 F. 3d, at 11 80 (internal quotation marks omit ted), we assume, without deciding, that the sta n dard a p plied by the C o urt of Ap p e als is sufficient to establish scienter. 14 

### Under the PSL RA, aplaintiff must “stat e with par

ticularity f a cts givingrise to a s trong inference that the defendant acted withthe requir e d state of mind.” 1 5 U. S. C. A. §78u–4(b)(2)(A) (Feb. 2 011 Supp.). This standard requir e s courts to take into a ccount “plausible opposing inferen c es.” Tellabs , 551 U. S., at 323. A complaint adequately pleads scienter under the PSLRA “only if a reasonable person would deem the inference of sciente r cogent and at least as comp elling as any opposing inference one could draw fr om the facts alleged.” Id. , at 324

. In making this determination, the court must review “all the allegations holi stically.” Id. , at 326. The absence of a motive allegation, though relevant, is not dis p ositive. Id. , at 325. Matrixx argues, in summary fa shion, that because respondents do not allege thatit knew of statistically significant evidence of causation, there is no basis t oconsider the inference that it acted recklessly or knowingly to be at least as compelling as the alternative infer­

——————

14 Under the PSLRA, if the alleged mi ss t a tement oro m iss i on is a “forward-looking statement, ” the requir ed level of scienter is “actua l kn owledg e.” 15 U. S. C. §7 8u–5(c )(1 )(B). M a tr ix xhas not ar g u ed that the state m ents or omissions here are “fo r ward-looking statement[ s].”21 Cite as: 56 3 U

. S. ____ (2011) Opinion of theCourt



### ences. “Rather,” it argues, “the most obvious inferenc e is that petitioners did not disclose t h e [reports] simply because petitioners believed theywere far too few . . . t o indicate anything mea n ingful about adverse reactions to use of Zicam.” Brief for Petitioners 49. Matrixx ’s pro

posed bright-line rule requiring an allegation of statistical significance to establis h a strong inference of scienter is just as flawed as its approach to materiality. The inference that M a trixxacte d rec k lessly (or intentionally, forthat matte r) is at lea s t as compelling, if n o t more compelling, than the inferenc e that it si mply thought the reports did not in dicate anything meaningful about adverse reactions. According to the complaint, Matrixxwas sufficiently concerned about the information it received that it informed Linschoten that it had hired a consultant to review the produc t, asked Linschoten to participate in animal studies, a n d convened a panel of physicians and scientists in response to Dr. Jafek’s pre s entation. It successfully prevente d Dr. Jafek from using Zicam’s name in his presentation on the ground that he needed Matrixx’s permission to do so. Most s i gnificantly, Matrixx iss u ed a press release that suggested that studies had confirmed that Z i cam does not cause a n osmia when, in fact, it h a d not cond ucted anystudies relating to anos

mia and the scientific evidence at that time, according to the panel of scientist s , was insufficient to determine whether Zicam did or did not cause anosmia. 15

——————

15 One of Matrixx’s amiciar g u es that“the mostc o g e nt infer e nc e r e ga rding Ma t r ixx’s s t a t e of m i nd is t h at it d e layed releasi n g info rmatio n regarding ano s mia comp lain ts in orde r to provide itself an opportunity t oca refully re view a ll evidence rega rding a n y link b e t w een Zica ma n d anosmia. ” Brief for Washington Legal F o undation as Am icus Cu riae 26. We do not doubt that thi s maybe the most c o g e nt infer e nc e i nsome ca s e s
. Here, howeve r, t h e m i s l ea dingna t u re of Ma t r ixx’s pres s relea s e is sufficient to render the inference of scienter at lea s t as compelling as the inference s u ggested by am i c u s
.22 MATRIXX INITIATIVE S, INC. v. SIRACU SANO Opinion of theCourt 

### These alleg a tions, “taken co llectively,” give rise to a “cogent and compelling” infere nce that Matrixx elected no t to disclose the reports of adverse events not because it believed th ey were meaningless b u t because it understood their lik ely effect on the mark et. Tellabs , 551 U. S., at 323, 324. “[A] reasonable person” would dee m the inference that Matrixx ac t e d with deliberate recklessness (or even intent) “at least a s compellin g as any op posing infer

ence one could draw fr om the facts alleged.” Id. , at 324

. We conclude, in agreement with t h e Court of Appeals, that respondents have adequately pleaded scienter. Whethe r respondents can ultimately prove their allegations an d establish sc ienter is an altogether different question. * * * For the reasons stated, the judgment of the Court of Appeals for the Ninth C i rcuit is Affirmed.