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

Molasky (P) owned stock in Ancorp that was purchased at an average price of $15 per share. On March 15, 1973, trading in Ancorp shares was halted on the New York Stock Exchange, and Ancorp filed for Chapter 11 Bankruptcy. P sued a number of people for fraudulently manipulating the market for Ancorp stock and sued Peat, Marwick, Mitchell & Co. for preparing financial reports that were materially misleading in violation of section 10(b) and Rule 10b-5. A third count for a common law claim against Peat Marwick was grounded on diversity and pendent jurisdiction. Peat Marwick moved under Rule 12(b)(6) to dismiss the count regarding the financial reports for a failure to state a claim upon which relief could be granted. P had not sold its shares, and as such, it did not have a cause of action under section 10(b).

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