OPINION AND ORDER

I. INTRODUCTION

Although this case is included in the coordinated In re Initial Public Offering Securities Litigation proceedings, it arises from a very different set of allegations. Plaintiffs’ allegations are set forth at length in my Opinion of June 8, 2004.1 Familiarity with that Opinion is assumed. Essentially, plaintiffs allege that defendants, an investment bank and several issuers of securities that went public during the technology boom of the late 1990s, defrauded investors by setting their earnings estimates below their true estimates, and thereby created excitement in the marketplace when the stocks at issue beat estimate after estimate, conditioning the market to expect superior performance from those stocks and artificially inflating their prices.2 This argument, which posits that stock prices can be inflated by artificially understating earnings estimates, has been challenged by defendants in numerous motions to dismiss.3 All of those motions are resolved in this Opinion.

While defendants make several arguments in support of their contention that plaintiffs’ complaint should be dismissed, one particular argument—that plaintiffs’ causation allegations are flatly contradicted by objective fact—is pivotal. If plaintiffs fail to allege that defendants’ scheme actually caused their losses, then other questions about the sufficiency of the complaint are irrelevant.4 Accordingly, this *571Opinion will address only the threshold question of whether plaintiffs have adequately alleged causation.

II. FACTS5

A. The Parties

Plaintiffs allege that the following named plaintiffs purchased securities of various issuers in the open market during each relevant Subclass Period:6 Amy Liu purchased an undisclosed number of Commerce One securities; Antoine Kasprzak purchased 1,000 shares of Airspan Networks, Inc. (“Airspan”) securities; Robert Tenney purchased over 20,000 shares of Commerce One, Inc. (“Commerce One”) securities; Robert Tate purchased 10,000 shares of Bsquare Corp. (“Bsquare”) securities; Mary Gorton purchased 5,350 shares of CacheFlow, Inc. (“CacheFlow”) securities; Carla Kelly purchased 3,500 shares of Efficient Networks, Inc. (“Efficient Networks”) securities; Henry Cies-ielski purchased 200 shares of eMachines, Inc. (“eMachines”) securities and 45 shares of McData Corp. (“McData”) securities; Ed Grier purchased 7,900 shares of E.pi-phany, Inc. (“E.piphany”) securities; Frank Turk purchased 200 shares of Handspring, Inc. (“Handspring”) securities; Jennie Papuzza purchased 200 shares of InterNAP Network Services Corp. (“In-terNAP”) securities; Stanley Warren, as trustee for the Warren Family Trust, purchased 1,000 shares of Lightspan Partnership, Inc. (“Lightspan”) securities; Ellen Dulberger purchased 1,000 shares of Sup-portSoft, Inc., formerly Support.com, Inc. (“SupportSoft”) securities; Craig Mason purchased 500 shares of Tanning Technology Corp. (“Tanning”) securities; and Sharon Brewer purchased over 4,000 shares of Tumbleweed Communications Corp. (“Tumbleweed”) securities.7

Defendant Credit Suisse First Boston Corp. (“CSFBC”) is a Massachusetts corporation doing business as an investment bank, and was at all relevant times a registered broker-dealer and member of the National Association of Securities Dealers, Inc. (“NASD”).8 CSFBC was a lead underwriter for all of the above-named IPOs (collectively, the “Issuers”).9 CSFBC is a wholly-owned subsidiary of defendant Credit Suisse First Boston (USA), Inc. (“CSFB-USA”), a Delaware corporation, which is in turn a wholly-owned subsidiary of defendant Credit Suisse First Boston, Inc. (“CSFBI”), also a Delaware corporation.10 CSFBI is jointly owned by defendant Swiss bank Credit Suisse First Boston (“CS”) and defendant Swiss holding company Credit Suisse Group (“CSG”).11 CS is wholly owned by CSG.12 On or about November 3, 2000, CS acquired an underwriter, Donaldson Lufkin & Jenrette, Inc. (“DLJ”), which subsequently became CSFB-USA.13 “CSFB Defendants” comprises CSFBC, CSFBI, CSFB-USA, CS, and CSG.

Plaintiffs name as defendants five of the fourteen Issuers (the “Issuer Defendants”), to wit: Efficient Networks, eMachines, Lightspan, Tanning, and *572Tumbleweed. Plaintiffs do not name as Issuer Defendants the other nine Issuers managed by the CSFB Defendants, specifically Airspan, Commerce One, Bsquare, CacheFlow, McData, E.piphany, Handspring, InterNAP, and Support-Soft.14

B. The Alleged Scheme

Plaintiffs allege that, while marketing then- services to prospective Issuers, the CSFB defendants introduced a scheme called “Pop and Performance,” which is referenced by name on at least one marketing slide used by defendants.15 The “Pop”—a strong rise in share price in the aftermarket immediately following an IPO—occurred because defendants conducted each IPO at a deep discount compared to the actual expected value of the issue.16 Defendants informed certain potential purchasers of this underpricing, and those individuals immediately bought large quantities of the new issue at deeply discounted prices, causing a large price increase immediately following the offering, which attracted other purchasers to the security.17 Plaintiffs allege that the “Performance” in defendants’ formula refers to a system involving the dissemination of artificially low revenue forecasts with the knowledge that the actual revenue reports would exceed those forecasts, coupled with the dissemination of statements encouraging the public to buy each stock because of its strong revenue growth or potential for upside surprise.18 Plaintiffs allege that defendants’ conduct violated the Securities Exchange Act of 1934 (the “Exchange Act”).19

C. The Alleged False Statements

Plaintiffs attach to their complaint a thick volume compiling alleged misstatements made by defendants in connection with the revenue forecasts contained in Sales Memos and research reports issued by the CSFB defendants.20 Plaintiffs parse those misstatements into five categories: (1) “ + ESTIMATES” statements, or “Fraudulent Revenue Estimates,” which allegedly “omitted to reveal the material fact that the forecasted revenues had been artificially discounted to a substantially lower level than the actual revenues expected by [defendants];” (2) “ + SURPRISES” statements, or “Fraudulent Statements] of Surprise,” which allegedly are misleading because defendants “fully expected actual revenues to exceed the artificially discounted estimates because they had participated in a fraudulent scheme to ensure this occurrence;” (3) “ +REVISIONS” statements, or “Fraudulent Revisions of Revenue Forecasts,” which allegedly are misleading because defendants “fully expected actual revenues to exceed the artificially discounted estimates;” (4) “ + CAUTIONARY” statements, or “Fraudulent Statements] About Expected Revenue,” “which suggested that the revenue estimates might be under-estimated, or overly conservative, or likely to be beaten, of susceptible to an ‘upside surprise,’ or some other similar statement suggesting that the revenue estimates were too low;” *573and (5) “ + GROWTH” statements, also described as “Fraudulent Statements] About Expected Revenue;” which “omitted to reveal the material fact that the forecasted revenues had been artificially discounted.” 21 Plaintiffs also include alleged misstatements about IPO discounting and statements supporting defendants’ alleged belief that the securities at issue would outperform defendants’ estimates, which plaintiffs concede are “not necessarily fraudulent.”22

Plaintiffs further attach one of two labels to each of their alleged misrepresentations.23 “ + Scienter-Research” notations designate those alleged misstatements made within analysts’ reports issued by the CSFB defendants, and “ + Scienter-SalesMemo” designates statements made by the CSFB defendants “after numerous meetings with the Issuer company officers.”24 Plaintiffs also list alleged misstatements contained within each Issuer’s prospectus.25

D. Causation

Plaintiffs allege that “[t]he purposes [sic] and effect of [the alleged] scheme was to create the illusion of ever rising stock prices.”26 Investors allegedly relied on this illusion when buying their shares.27 Plaintiffs further allege that the market value of the Issuers’ securities rose during the Class Period because their companies consistently exceeded revenue forecasts, and the market was conditioned to anticipate such surprises, driving the price of shares ever higher.28 “CSFBC and the Issuer [defendants], by means of the[ir] misstatements and omissions ... manipulated the revenue forecasts of each Issuer so that the Issuer’s actual results would continually exceed the forecasts thereby increasing the ‘premium’ built into the stock price.”29

Plaintiffs allege that this scheme did not continue indefinitely; the fraud effectively ended when one of three events occurred: (1) the Issuer reported quarterly revenues that failed to exceed projected revenues; (2) the company announced prior to a full quarterly report that its revenues would not meet projected revenues; or (3) analysts revised downward their own published estimates (collectively, “Disclosing Events”).30 The occurrence of one or more Disclosing Events triggered the end of each Subclass Period.31 Plaintiffs allege that each Issuer’s stock price declined substantially after its Disclosing Event.32

III. LEGAL STANDARD

A. Standard of Review

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a motion to dismiss should be granted only if “ ‘it appears beyond doubt that the plaintiff[s] can *574prove no set of facts in support of [their] claimfs] which would entitle [them] to relief.’ ”33 The task of the court in ruling on a Rule 12(b)(6) motion is “merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.”34 When deciding a motion to dismiss, courts must accept all factual allegations in the complaint as true, and draw all reasonable inferences in plaintiffs’ favor.35 Courts generally do not consider matters outside the pleadings but may consider documents attached, to the pleadings, documents referenced in the pleadings, or documents that are integral to the pleadings.36 However, courts “may take judicial notice of well-publicized stock prices without converting the motion to dismiss into a motion for summary judgment.”37

B. Judicial Estoppel

The doctrine of judicial estoppel prevents a party from asserting a factual position in a legal proceeding that is contrary to a position previously taken in a prior legal proceeding.38 It is a “rare remedy” used to avoid inconsistent outcomes and to prevent litigants from abusing the power of the court.39 To that end, a litigant who asserts judicial estoppel must establish that: “(1) the party against whom judicial estoppel is being asserted advanced an inconsistent factual position in a prior proceeding, and (2) the prior inconsistent position was adopted by the first court in some manner.”40

C. Section 10(b) and Rule 10b-5

1. Pleading Standard

To state a prima facie case for securities fraud under section 10 of the Exchange Act41 and Rule 10b-5 promulgated thereunder, a plaintiff must allege that “‘the defendant, in connection with the purchase or sale of securities, made a materially false statement or omitted a material fact, with scienter, and that plaintiffs reliance on defendant’s action caused injury to the plaintiff.’”42 The requisite state of mind, or scienter, in an action under section 10(b) and Rule 10b-5 is “ ‘an *575intent to deceive, manipulate or defraud.’ ”43

Securities fraud actions are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b).44 In addition, a plaintiff who alleges securities fraud under section 10(b) and Rule 10b-5 must also satisfy the heightened pleading standards of the Private Securities Litigation Reform Act of 1995 (“PSLRA”).45 To plead a material misrepresentation or omission under the PSLRA “the complaint [must] specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information or belief, the complaint shall state with particularity all facts on which that belief is formed.”46 “To meet the pleading standard of Rule 9(b), this Court has repeatedly required, among other things, that the pleading ‘explain why the statements were fraudulent.’ ”47

A plaintiff may also bring a 10b-5 claim alleging “market manipulation”—a term that, in the context of the securities laws, refers “generally to practices, such as wash sales, matched orders, or rigged prices, that are intended to mislead investors by artificially affecting market activity.” 48 When a plaintiffs 10b-5 claims are based on market manipulation, the specificity requirement is relaxed to compensate for the “inherent difficulty in a plaintiff acquiring specific details on a hidden scheme at the pleading stage.”49 However, “where the complaint alleges market manipulation based upon misrepresentations and omissions, ... the requirement of particularity clearly applies.”50

2. Bespeaks Caution

Under the “bespeaks caution” doctrine, a misrepresentation or omission contained in a registration statement will be considered immaterial if the registration statement contains cautionary language sufficiently specific to render reliance on the false or omitted statement unreasonable.51 Generalized disclosures of *576amorphous risks will not shield defendants from liability; the cautionary language must be “too prominent and specific to be disregarded” and must “warn investors of exactly the risk that plaintiffs claim was not disclosed.”52 Moreover, if a party is aware of a particular problem worthy of disclosure, the party may not rely on general disclaimers to avoid liability.53 “[T]he inclusion of general cautionary language regarding a prediction would not excuse the alleged failure to reveal known material, adverse facts.”54

Cautionary language in securities offerings is just about universal. Thus, the key question a district court must decide when determining whether to grant a motion to dismiss a securities fraud complaint is whether plaintiffs have overcome the existence of such language. Plaintiffs may do this by showing, for example, that the cautionary language did not expressly warn of or did not directly relate to the risk that brought about plaintiffs’ loss.55

3. Transaction Causation and Loss Causation

To maintain a claim for securities fraud, a plaintiff must plead, among other things, both (1) that it relied upon defendant’s allegedly fraudulent conduct in purchasing or selling securities, and (ii) that defendant’s conduct caused, at least in part, plaintiffs loss.56 These two elements are known, respectively, as “transaction causation” and “loss causation.”

“Transaction causation is generally understood as reliance.”57 Under settled Supreme Court precedent, a rebut-table presumption of transaction causation may be established under the “fraud on the market” theory, even where a plaintiff was unaware of the fraudulent conduct at the time of the purchase or sale.

Succinctly put: “The fraud on the market theory is based on the hypothesis that, in an open and developed securities market, the price of a company’s stock is determined by the available material information regarding the company and its business.... Misleading statements will therefore defraud purchasers of stock even if the purchasers do not directly rely on the misstatements.... The causal connection between the defendants’ fraud and the plaintiffs’ purchase of stock in such a case is no less significant than in a case of direct reliance on misrepresentations.”58

Pleading that defendants perpetrated a fraud on the market, therefore, fulfills a plaintiffs transaction causation pleading requirement. Reliance may also be presumed in cases based on omissions if plaintiffs can show that such omissions were *577material.59

Loss causation, on the other hand, refers to the requirement that a plaintiff demonstrate that the fraudulent scheme caused her loss.60 In the case of 10b-5 actions for material misstatements or omissions, loss causation generally requires a plaintiff to show that her investments would not have lost value if the facts that defendant misrepresented or omitted had been known.61

In the Second Circuit, “in misrepresentation cases, a plaintiff must allege something more than merely artificial inflation [to plead loss causation adequately].” 62 “[T]o establish loss causation, ‘a plaintiff must allege ... that the subject of the fraudulent statement or omission was the cause of the actual loss suffered.’ ”63 Plaintiffs may do so by alleging either that “the subject of those false [statements] ... or any corrective disclosure regarding the falsity of those [statements, wa]s the cause of the decline in stock value that plaintiffs claim as their loss” or that defendants “concealed or misstated any risks associated with an investment in” the subject securities.64

In market manipulation cases, however, the plaintiffs burden is somewhat different, because of the nature of the artificial inflation caused by manipulative conduct.65

Market manipulation is a discrete act that influences stock price. Once the manipulation ceases, however, the information available to the market is the same as before, and the stock price gradually returns to its true value. For example, suppose that a bank manipu*578lates the market for a stock by engaging in ‘wash sales,’ fictitious trading for the purpose of creating a false appearance of activity. By creating an appearance of increased trading volume, wash sales may drive up the price of a security. Once the wash sales cease, ordinary trading resumes. The spectre of wash sales may continue to affect the stock price for some time as investors recall the recent increased activity and observe the higher price; over time, however, the security will fall back to its true investment value.... In market manipulation cases, therefore, it may be permissible to infer that the artificial inflation will inevitably dissipate.66

The United States Supreme Court is now considering what pleading standard should be applied to allegations of loss causation.67 The Court is reviewing a challenge to the Ninth Circuit’s relaxed standard of pleading loss causation, which that Circuit has summarized as follows: “loss causation does not require pleading a stock price drop following a corrective disclosure or otherwise. It merely requires pleading that the price at the time of purchase was overstated and sufficient identification of the cause.”68 This uncertainty notwithstanding, it is clear that, under any standard for pleading loss causation, plaintiffs must plead that securities prices were artificially inflated at the time of purchase.

IV. DISCUSSION

A. The Alleged Scheme

The parties devote dozens of pages of briefing to a relatively simple question: exactly what type of fraudulent conduct do plaintiffs allege?69 Simply put, plaintiffs seek to convince the Court that their case is about “market manipulation” rather than merely misstatements and omissions.70 Plaintiffs allege that defendants’ scheme, characterized by various misstatements and omissions,71 somehow “artifi*579cial[ly] condition[ed] the public marketplace to expect ... ‘upside surprises.’ ”72 Plaintiffs contend that this “artificial conditioning” caused artificial inflation in the Issuers’ stock prices, presumably in a manner similar to the false appearance of demand generated by more traditional manipulative practices, such as wash sales. Defendants vigorously dispute this proposition, observing that “[t]he only acts alleged to have ‘manipulated’ the Issuers’ stock prices are alleged misstatements and omissions, notwithstanding Plaintiffs’ self-serving attempt to characterize the misstatements and omissions as merely ‘ancillary’ to their case.”73

The stakes in this semantic dispute are high. If plaintiffs’ alleged losses were caused by market manipulation, rather than by misstatements and omissions, then plaintiffs face a lighter burden in pleading their claims.74 However, plaintiffs’ strenuous efforts to portray their claims as market manipulation claims are to no avail. The TAC clearly alleges numerous misstatements and omissions, but nowhere refers to the sort of conduct that rises to the standard of “market manipulation” under the securities laws.75 The “artificially conditioned” demand alleged by plaintiffs is functionally identical to the artificial demand created in a misstatement case where a defendant falsely announces positive financial results. In both types of cases, plaintiffs allege that the investing public is misled by the available information, believes that the stock is underpriced, and purchases the stock in anticipation of gains when the stock price rises.

Market manipulation cases are treated differently in large part because the method of generating demand in the marketplace is secretive and difficult for an investor to detect.76 When wash sales are used to increase trading volume and simulate greater demand for a security, investors may be misled into believing that the rest of the market has discovered some positive information, and is purchasing shares to take advantage of that implicit “good news.” The efficient market hypothesis holds that public information about a security is immediately incorporated into share prices.77 A necessary corollary of the efficient market hypothesis is that when an investor observes heightened market activity and a rise in share prices, that investor relies on market efficiency to support the assumption that new information has entered the market.78 Thus, while *580misrepresentations affect investor beliefs firsthand'—by directly injecting false information into the marketplace—market manipulation affects beliefs indirectly by creating circumstantial evidence that positive information has entered the market. When secret manipulation affects beliefs indirectly, courts understand that it may be more difficult for plaintiffs to outline the scheme with great particularity; thus, market manipulation plaintiffs are given more leeway in alleging manipulative conduct.79

Similarly, when market manipulation is the cause of artificial inflation, pinpointing a “disclosing event” at which point all the artificial inflation leaves the market price of a security is difficult. Because the initial manipulation occurred in secret, artificial inflation can be presumed to dissipate gradually as investors analyze all available information, including the return to normal levels of market activity, and come to realize that the stock is overvalued.80 This stands in sharp contrast to the method by which loss causation is shown in a misrepresentations case. In such a case, artificial inflation is presumed to dissipate when the false information is publicly corrected.81 Thus, plaintiffs must identify particular “disclosing events” that corrected the false information, and tie dissipation of artificial price inflation to those events.82

Plaintiffs’ allegations do not present the pleading difficulties present in true market manipulation cases. All of the actions that plaintiffs claim affected market beliefs took the form of publicly available statements about the Issuers’ prospects and revenues. Similarly, plaintiffs allege that the materially misleading information was corrected by “Disclosing Events,” at which point “[e]ach Issuer’s stock price suffered substantially” and “the fraudulently induced expectation of continuing upside surprises ended.”83 Thus, because plaintiffs’ allegations of fraudulent conduct and loss causation objectively rely on public statements and events, and do not rest on secret price manipulation, plaintiffs may not avail themselves of the relaxed pleading standards applied to market manipulation claims.84

*581B. The Prospectuses

While plaintiffs bring no claims pursuant to the Securities Act of 1933 (the “Securities Act”)85 for the issuance of defective registration statements, they do allege that defendants’ “Pop and Performance” scheme included the underpricing of the IPOs themselves as well as the issuance of artificially depressed earnings estimates.86 Moreover, plaintiffs allege that some of the statements in the prospectuses were materially misleading because they omitted the material fact that Defendants had purposely discounted the IPO price and made limited disclosures of that fact to select IPO investors.87

1. Judicial Estoppel

Defendants argue that because of certain representations made in plaintiffs’ submissions in connection with their motion for leave to amend, plaintiffs are judicially estopped from now relying on IPO underpricing as the basis for their claimed damages. Defendants rest their argument on the following passage from plaintiffs’ moving papers:

While it is true that Plaintiffs do provide in their Amendment references to certain background facts or adjunct activities that may be fraudulent—in particular, the deliberate under pricing of Issuer Defendants’ IPOs—those references are neither the basis for Plaintiffs’ claims of alleged fraud, nor the basis for the damages that Plaintiffs seek to recover.88

Defendants are correct. Plaintiffs may not assert any claims arising solely from the alleged underpricing of the Issuers’ IPOs.89 Indeed, plaintiffs disclaim any intent to do so.90 Plaintiffs are bound by their previous assertion that they do not seek damages arising from the alleged deliberate underpricing of the Issuers’ IPOs. Accordingly, plaintiffs may not assert claims based on the dissipation of any artificial inflation that resulted from the alleged IPO underpricing.

*5822. The Alleged Misrepresentations

The Issuers’ prospectuses each assert that the offering prices were determined after negotiations between the Issuer and the CSFB defendants, and list factors that were taken into consideration in setting the offering price.91 Plaintiffs assert that the prospectuses are materially misleading because they omit that one factor taken into account when setting the price was defendants’ scheme to artificially inflate the market through habitually discounting offering prices and earnings estimates.92 Defendants argue that such statements cannot be actionable because the prospectuses were not held out as market valuations, that IPO prices are too speculative to serve as market valuations as a matter of law and that, in any case, the prospectuses so clearly counsel against relying on their price predictions that plaintiffs are barred from relying on them under the “bespeaks caution”' doctrine.93

Defendants are correct. Every one of the prospectuses contains pages of warnings counseling investors not to rely on the offering documents as any indication of the ultimate market value of the securities.94 No reasonable investor interprets an offering price, standing alone, as a guarantee of any particular post-offering market value.95 Moreover, plaintiffs do not allege that any of the prospectuses explicitly stated that it could be construed as predicting a future market value.96 Quite the contrary. The eMachines prospectus, for example, contains the following cautionary language:

Our quarterly operating results are subject to fluctuations and seasonality that make it difficult to predict our future performance.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in eMachines will lead to the development of a trading market or how liquid that market might become. The initial public offering price for our shares has been determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the trading market.

*583We have a limited operating history upon which you can base an evaluation of our business and prospects. Our prospects must be considered in light of the risks, expenses, and difficulties encountered by companies in their early stage of development. It is likely that in some future quarter our operating results may fall below the expectations of securities analysts and investors. In this event, the trading price of our common stock may fall significantly.97

Each of the prospectuses contains similar cautionary language.98 Because, in light of these ample warnings, no reasonable investor could have interpreted the IPO offering prices to be valuations of the market value of the securities, the prospectuses’ alleged omissions of defendants’ true beliefs about market valuation are immaterial as a matter of law.99

C. Transaction Causation and Loss Causation

Every one of plaintiffs’ six claims for relief is based on plaintiffs’ allegation that “[t]he purposes and effect of [the alleged] scheme was to create the illusion of ever rising stock prices....” 100 Defendants argue, though, that “[t]he market [ ] did not react as Plaintiffs have theorized, and where, as here, the objective facts disprove the allegations, Plaintiffs are not entitled to an inference—in disregard of the objective facts—that the understatements of future earnings estimates nevertheless moved the market as alleged and inflated the share prices.”101

“Though all reasonable inferences are drawn in the plaintiffs favor on a motion to dismiss on the pleadings, ‘conclusions of law or unwarranted deductions of fact are not admitted.’ ”102 A district court may take judicial notice of well-publicized stock prices when considering a motion to dismiss.103 Such judicial notice is particularly appropriate where “the movement of [the] stock price is integral to the plaintiffs’ fraud-on-the-market theory.”104

Defendants have submitted a number of charts summarizing pertinent trading data *584for the five Issuer defendants.105 None of those charts supports plaintiffs’ theories that “[d]uring the class period, stock prices of technology IPO Stocks rose because their actual results exceeded or beat revenue forecasts,”106 or that “stock prices of technology IPO Stocks rose in anticipation of forecasts being exceeded by actual results.” 107 Efficient Networks stock, for example, declined after each of the five upside surprises alleged by plaintiffs.108 The securities of the other four Issuer defendants show no consistent pattern of price increases after an upside surprise; rather, the price of those securities fell more often than it rose after the occurrence of each upside surprise.109

If plaintiffs had alleged that defendants had misrepresented material facts about the Issuers’ prospects and that such misrepresentations had “buoyed a price that otherwise would have sunk much faster,” 110 then such observable declines would not scuttle plaintiffs’ claims. But plaintiffs’ case does not depend on the simple inflation of stock prices; rather, plaintiffs allege that stock prices rose because defendants’ conduct created “the illusion of ever rising stock prices.”111 If any investor had such an impression of the securities at issue, it must truly have been illusory, because widely disseminated trading data shows that the prices of the subject securities were anything but “ever rising.”112

As defendants note, plaintiffs’ alleged “scheme is largely (if not entirely) coun-terintuitive.” 113 Unlike most misrepresentation cases, which allege that a defendant hyped its securities or omitted to disclose potentially damaging information, plaintiffs’ case rests on the premise that defendants manipulated stock prices by artificially denigrating the prospects of the Issuers. Under plaintiffs’ theory, this understatement combined with repeated upside surprises to instill a false expectation that the securities were undervalued and would continue to produce upside surprises and price inflation. Of course, not all securities fraud cases involve hyping securities to increase market prices. Short sellers, for instance, may benefit from issuing untrue damaging information to allow them to cover their sales at a lower price, and purchasers may try to depress a price artificially so they can buy low and benefit from any price rebound. But most misrepresentation cases do at least allege that defendants misrepresented the facts in a manner that is directly related to the desired price effect—that is, if a defendant wants a stock to appreciate in value, she overstates its worth, and vice versa.

By contrast, the kind of “reverse psychology” manipulation alleged by plaintiffs here requires more than bare allegations of falsity and materiality. Plaintiffs’ allegations, which rely on the idea that re*585peated upside surprises—and investors’ anticipation of such surprises—artificially inflated stocks by creating upward price momentum, cannot be adequate if judicially noticed facts contradict the very basis for plaintiffs’ claims. Plaintiffs have made it abundantly clear that the Third Amended Complaint rests on the central allegation that defendants’ understated revenue predictions, when repeatedly disproved, created investor excitement and upward price momentum.114 Plaintiffs do not dispute the trading data submitted by defendants, but merely assert that their allegations of market inflation (which include no specific discussion of the effects of each upside surprise or conditioning statement, but merely compare the high prices of each issue during the class period to the IPO prices)115 are sufficient.116

However, plaintiffs cannot simply allege that stock prices rose at some point during the class period and infer from that activity that the alleged fraudulent activity actually caused prices to rise or caused investors to buy more shares. Where plaintiffs’ theory of causation depends not just on the content of individual misstatements creating misleading information about market value, but rather on investor beliefs caused by the confluence of depressed projections, conditioning statements, upside surprises and observed increases in stock prices, publicly available trading data directly contradicting plaintiffs’ allegations of price increases can be fatal to plaintiffs’ case. By contrast, plaintiffs’ background allegations that defendants sought to generate quick initial price increases by underpricing IPOs and selectively informing investors of the underpricing are supported by actual immediate growth in each of the Issuers’ market values immediately following their IPOs.117 However, plaintiffs cannot base their *586claims on background allegations of IPO underpricing; rather, plaintiffs must allege transaction causation in connection with their actual claims—which explicitly allege that “[t]he purposes [sic] and effect of [the alleged] scheme was to create the illusion of ever rising stock prices.” 118 Because that illusion was not achieved—as can be determined by a cursory glance at the price of the Issuers’ securities during the class period—plaintiffs cannot claim that investors chose to buy shares based on their observations of price movement that never materialized.

Plaintiffs make much of their argument that they allege a “market manipulation” case, as opposed to one based on misrepresentations. The difference between the type of causation alleged by plaintiffs here and the type that might be alleged by plaintiffs in a hypothetical market manipulation case is illustrative. In a case alleging that trading volume was artificially enhanced by wash sales or escalating purchase agreements, transaction causation springs from the trust investors have in market efficiency-—i.e., the market relies on the price and activity level of the market itself to reflect the real worth of the security. Plaintiffs, though, allege that the market relied on explicit information about the value of the security—not on the objective features of the market—to determine the market price of the Issuers’ securities. Plaintiffs thus may not rely on bare allegations that the market price was manipulated to establish transaction causation; rather, they must allege that the beliefs fostered by defendants’ alleged misstatements and omissions induced reasonable investors to purchase the Issuers’ securities. Under the peculiar allegations of this case, plaintiffs’ burden is even greater, because plaintiffs do not simply allege that the misrepresentations themselves inflated prices, but rather that a complex pattern of necessary steps—depressed projections, conditioning statements, building anticipation, publicity regarding upside surprises, and price increases before and after such surprises—combined to instill a misleading belief in investors. But plaintiffs do not allege facts supporting an inference that such price inflation ever actually happened.

Although the Supreme Court has not yet ruled on exactly what loss causation standard should be applied in the context of a motion to dismiss, no loss causation standard can be satisfied without a basic allegation that defendants’ conduct actually caused some price changes in the stock.119 Plaintiffs’ allegations, which depend on the illusion that stock prices themselves rose throughout the class periods, allege a pattern of price momentum that is flatly contradicted by actual trading data. Because plaintiffs do not allege a mechanism of artificial price inflation that survives exposure to actual trading data, they fail to allege loss causation under any standard.120

Unlike scienter, which may be pled adequately as to some defendants and inadequately as to others,121 loss causation is a global pleading requirement. Because plaintiffs do not sufficiently allege that de*587fendants’ scheme inflated prices or caused compensable losses, the complaint must be dismissed in its entirety.122 Accordingly, I need not address defendants’ other arguments.

V. CONCLUSION

For the foregoing reasons, plaintiffs’ Third Amended Complaint is dismissed with prejudice. A conference to discuss pending motions for sanctions is scheduled for 4:30 P.M. on April 12, 2005, in Courtroom 15C. The Clerk is directed to close these motions (Nos. 15, 19, 22, 24, 26 and 31 on the docket sheet).

SO ORDERED.