On July 28th, both the Second and Sixth Circuits affirmed the dismissal of auction rate securities ("ARS") cases brought by Ashland Inc. and its special purpose vehicle. Ashland invested in ARS offered by Morgan Stanley and Oppenheimer. After the ARS market collapsed, Ashland filed securities fraud complaints against Morgan Stanley in the Southern District of New York, and Oppenheimer in the Eastern District of Kentucky. Both district courts dismissed their respective cases and both appellate courts affirmed the dismissals. The Second Circuit held that Ashland, a sophisticated investor, could not plead reasonable reliance on Morgan Stanley's alleged misrepresentations in light of Morgan Stanley's publicly-filed statement, required by the SEC, explicitly disclosing the very liquidity risks about which Ashland claims to have been misled. The Sixth Circuit held that Ashland failed to plead a strong inference of scienter. Apart from conclusory allegations, Ashland failed to provide any facts explaining why or how Oppenheimer possessed advance, non-public knowledge that underwriters would jointly exit the ARS market and cause its collapse.