Blackstone Group, L.P. (Blackstone) (defendant) was a financial services firm with a significant corporate private equity segment. In 2003, Blackstone purchased a 23 percent interest in stock in insurance company FGIC Corporation (FGIC), which it incorporated into its private equity segment. After Blackstone purchased it, FGIC began providing insurance for collateralized debt obligations and residential mortgage-backed securities backed by subprime mortgages in the form of credit default swaps. By 2007, many subprime mortgage lenders were losing significant sums of money and had begun warning investors of future losses in the subprime market. These losses were part of a general downward trend in the real estate market. Around this time, Blackstone announced an initial public offering (IPO). Blackstone did not inform potential investors of the real estate trends affecting FGIC’s business. At the time of the IPO, Blackstone’s share of FGIC was worth $331 million, 0.4% of Blackstone’s total assets. Litwin (plaintiff) brought a putative class action suit against Blackstone, alleging that Blackstone had violated Item 303 of SEC Regulation S-K by omitting the information related to FGIC in its Registration Statement and Prospectus. Blackstone filed a motion to dismiss, arguing that any omitted information was not material and thus Litwin had not stated a claim on which relief could be granted. The district court granted Blackstone’s motion. Litwin appealed.