This section contains the nature of the case and procedural background.

D sells products and services for funerals, including burial plots and related products. D is required by state law to hold in trust a percentage of proceeds from customers who purchase funeral products and services prior to their death. These 'pre-need sales' are released to D when the services are finally delivered to the customer-that is, upon the customer's death. Under Generally Accepted Accounting Principles (GAAP), pre-need sales may not be represented as current revenue. D executed successful acquisitions of death-care properties, which in turn increased its pre-need sales. These pre-need sales were held in trust. As pre-need sales grew, so too did a substantial disparity between D's overall sales and its accessible cash - cash that would have otherwise been used for quarterly investor distributions. To provide its shareholders with all the data, D issued non-GAAP financials to its investors that represented pre-need sales as a portion of present-day current revenue along with its standard GAAP reports. D borrowed cash to distribute to investors the proceeds of preneed sales in the same quarter the sale was made, rather than waiting until the cash was released from the trust. D then used proceeds from equity sales to pay down the borrowed cash that funded distributions to investors while pre-need sales remained in trust. Cash distributions were funded by borrowed cash, that borrowed cash was paid down through equity proceeds, and equity proceeds were continuously attracted through growing pre-need sales and cash distributions. On September 2, 2016, D announced that it would restate about three years of previously-reported financial statements. Under GAAP regulations, D was temporarily prohibited from selling units and receiving corresponding equity proceeds. Ps allege that this prohibition caused D's October 27, 2016 unit distribution to fall by nearly half. D blamed the distribution cut on salesforce issues. The news hit and D's unit price dropped by 45%. Ps filed suit on November 21, 2016, alleging violations of section 10(b) and Rule 10b-5. Ps claimed that D made false or misleading statements, with scienter, which Ps relied on to their financial detriment. D filed a motion to dismiss which was granted for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), and for failure to satisfy the heightened pleading standards of the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u-4. Ps appealed.

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