or Procedures The remainder of plaintiffs’ evidence consists of specific examples of calculations and procedures that allegedly violated GAAP. The court first addresses one alleged “known” misrepresentation, then turns to the allegations as to numerous “reckless” misrepresentations. 1. Allegedly Known Violation: Southern California District Inventory Ernst’s draft summary of findings for the Southern California District, issued at the close of FY97, stated that there was a “need for an adjustment” with respect to approximately $2.8 million of missing or unreconciled inventory. Pis. Ex. 21 at 1. The report warned of an “increased risk of material misstatem ther Ernst knew that there were inventory problems. See Stamatio v. Hurco Companies, Inc., 892 F.Supp. 214, 218 (S.D.Ind.1995) (<HOLDING>). Rather, the relevant inquiry is whether Ernst
holding that allegations that defendants designed and implemented improper accounting practices failed to state claim for securities fraud in absence of allegations of particular facts demonstrating how defendants knew of scheme at time they made their statements of compliance that they knew the financial statements overrepresented the companys true earnings or that they were aware of a gaap violation holding analysts statements insufficient to satisfy particularity requirements because plaintiffs failed to identify with specificity the statements made by a particular defendant or describe how those statements were false or misleading holding that defendant could not be liable for distributing defamatory statements unless it knew or had reason to know of statements holding that even if defendants knew that the company had inventory problems  that fact standing alone does not show that defendants knew that the statements in their prospectus or other representations were materially false or misleading at the time the material statements were made holding that statements not protected where the defendants had no basis for their optimistic statements and already knew allegedly that certain risks had become reality