This case presents the grimly familiar picture of disappointed investors crying fraud after fortunes were lost when a promising corporation stumbled. US District Court for the District of Massachusetts, 1993 In the Xerox and Penn Central cases, public companies misstated their financial statements to support false narratives of their ability to continue generating profits. Companies also shape investor perceptions of their future performance through disclosures about their businesses, particularly with respect to important products. Just as the conglomerates of the 1970s sought to satisfy market expectations by reporting earnings increases, the computer companies of the 1980s faced pressure to successfully complete the development of new technologies. Investors were willing to pay more for a stock to take into account the possibility that a promising product would be widely embraced by consumers. However, if there was a significant setback, they could lose faith and flee the stock. Computer company stocks were thus more volatile than the stocks of companies in traditional industries.1