Opinion ID: 657170
Heading Depth: 3
Heading Rank: 2

Heading: Circumstantial evidence of conscious or reckless behavior

Text: 36 In contrast to the motive and opportunity approach, the complaint cannot be said to adequately plead scienter under the circumstantial evidence of conscious or reckless behavior approach, at least with respect to nondisclosure of the rights offering. There may be adequate allegations of scienter as to nondisclosure of difficulties in the search for strategic alliances, but we have held that the complaint alleges no actionable nondisclosure in this regard. As to the nondisclosure of the rights offering, the complaint lacks allegations that give rise to a strong inference that Time Warner began to consider the rights offering significantly before it was announced. A single mention of a newspaper report alleged to state that Time Warner has been quietly working for months on its plans for the rights offering, Third Amended Complaint p 81, is not adequate. Plaintiffs, however, have proposed to amend their complaint to supplement this necessary allegation, and this amendment may well be adequate. 7 We will leave it to the District Court to determine whether to allow plaintiffs the opportunity to amend their complaint so as to support an additional theory of scienter, and, if this opportunity is provided, to determine in the first instance whether such a theory is adequate. 8