The U.S. Court of Appeals for the First Circuit affirmed dismissal of securities fraud claims against a technology company, holding that the plaintiffs failed to establish that the failure to disclose unfavorable regulatory changes in Japan was a result of defendants' wrongful intent.

Waters Corp. manufactures and sells water treatment equipment worldwide, deriving 10% of its revenue from sales in Japan. The Japanese government eased water regulations in March 2007, reducing the demand for Waters' equipment, but company officials did not mention this development during a conference call with investors in October, stating instead that the "softness in Japan" was related to general economic conditions. When Waters missed its 2007 fourth quarter earnings forecast, company officials disclosed the Japanese government's actions and Waters' stock price dropped 20%. Investors sued the company and its directors for securities fraud under the Private Securities Litigation Reform Act (PSLRA), but their claims were dismissed by the district court.