Janus Capital Group, Inc. (JCG) (defendant) created the Janus Investment Fund (JIF), a family of mutual funds legally distinct from JCG. Janus Capital Management LLC (JCM) (defendant) provided investment advisory services to JIF. All officers of JIF were officers of JCM. In accordance with legal requirements, JIF issued prospectuses for several of its funds. These prospectuses stated that market timing was not a proper practice for the funds, and implied that JCM would seek to restrict it. In September 2003, the New York State Attorney General filed a complaint alleging that JCG had made secret arrangements to allow market timing for several of the funds managed by JCM. Consequently, investors withdrew money from JIF mutual funds, causing JCG a significant loss of income. First Derivative Traders (First Derivative) (plaintiff) brought suit against JCG and JCM on behalf of other owners of JCG stock. The complaint alleged that JCG and JCM violated Securities and Exchange Commission Rule 10b-5 by issuing mutual fund prospectuses containing misleading statements. The District Court found that First Derivative failed to state a claim that JCM made the misleading statements and dismissed the complaint. The Court of Appeals for the Fourth Circuit reversed. This Court granted certiorari.