Scientific-Atlanta, Inc. and Motorola (defendants) engaged in several transactions with Charter Communications, Inc., a cable operator. These transactions consisted of Charter overpaying Scientific-Atlanta for equipment related to its cable business, with the agreement that Scientific-Atlanta would then use the funds from the overpayment to purchase television advertisements from Charter. Charter then used this arrangement to inflate its revenue figures and manipulate its financial documents distributed to investors. When this was discovered, Charter’s investors (Stoneridge) (plaintiffs) began a class-action suit against Scientific-Atlanta and Motorola for a violation of § 10(b) of the Exchange Act. The district court ruled in favor of Scientific-Atlanta and Motorola. The court of appeals affirmed. Stoneridge then petitioned for certiorari to the United States Supreme Court.