On January 21st, the First Circuit addressed the relationship between scienter and the materiality of an alleged omission in a class action securities fraud case. Defendants allegedly failed to disclose that regulations in an important market would lessen demand for their product. Affirming dismissal, the First Circuit held that the inferences are stronger that defendants did not knowingly or recklessly mislead investors, as defendants reasonably did not expect the regulatory change to have a significant impact on overall sales. Inter-Local Pension Fund GCC/IBT v. Waters Corp.