Granting defendants’ motion to dismiss plaintiffs’ class action securities fraud claims, a California federal district court held that plaintiffs did not meet the heightened pleading standards of the Private Securities Litigation Reform Act because they failed to allege specific facts demonstrating that defendants acted with scienter, i.e., either intentionally or recklessly making materially false statements. Plaintiffs attempted to bolster their scienter allegations on grounds that defendants, who purportedly misrepresented their company’s financial condition during the class period, sold shares of company stock at the same time they were misleading investors. Rejecting this argument, the Court found, among other things, that the stock sales did not raise a strong inference of scienter because (i) defendants sold a relatively low percentage of their stocks, (ii) one defendant sold more stock during the months prior to the alleged fraud which reflected that his sales during the class period were not “dramatically out of line with” his prior trading practices, and (iii) no facts of any stock sales were alleged with respect to other individual defendants and corporate insiders. (In re Ditech Communications Corp. Securities Litigation, 2007 WL 2990532 (N.D.Cal. Oct. 11, 2007))