                     United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                     ___________

                                     No. 05-1974
                                     ___________

In re: Charter Communications, Inc., *
Securities Litigation,                           *
------------------------------------------------ *
                                                 *
Stoneridge Investment Partners, LLS, *
                                                 * Appeal from the United States
        Plaintiff - Appellant,                   * District Court for the
                                                 * Eastern District of Missouri.
        v.                                       *
                                                 *
Scientific-Atlanta, Inc; Motorola, Inc., *
                                                 *
        Defendants - Appellees.                  *
                                                 *
                                          ___________

                              Submitted: December 12, 2005
                                 Filed: April 11, 2006
                                  ___________

Before LOKEN, Chief Judge, WOLLMAN and RILEY, Circuit Judges.
                             ___________

LOKEN, Chief Judge.

      This is a securities fraud class action by Stoneridge Investment Partners on
behalf of those who purchased Charter Communications, Inc., stock between
November 8, 1999 and August 16, 2002. Plaintiffs alleged that Charter -- one of the
nation’s largest cable television providers -- engaged in a “pervasive and continuous
fraudulent scheme intended to artificially boost the Company’s reported financial
results” by deliberately delaying the disconnecting of customers no longer paying
their bills, improperly capitalizing labor costs, and entering into sham transactions
with two equipment vendors that improperly inflated Charter’s reported operating
revenues and cash flow. Named as defendants were Charter; ten Charter executives
during all or part of the class period; Arthur Andersen, LLP, Charter’s independent
auditor during the class period; and the two equipment vendors, Scientific-Atlanta,
Inc., and Motorola, Inc. (collectively, “the Vendors”).

       Relying on Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S.
164 (1994), the district court1 granted the Vendors’ motion to dismiss plaintiffs’
claims under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b),
and the SEC’s implementing regulation, Rule 10b-5, 17 C.F.R. § 240.10b-5. The
court then denied plaintiffs’ motions to reconsider the dismissal and to grant leave to
file an amended complaint. Stoneridge appeals. We have jurisdiction because the
district court entered a separate final judgment under Rule 54(b) of the Federal Rules
of Civil Procedure. We affirm.

                                          I.

       1. The Standard of Review. Plaintiffs’ sixty-eight-page complaint is factually
detailed, as it must be to satisfy the heightened pleading requirements of the Private
Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4(b). Our de novo review
accepts the facts as alleged in the complaint and draws all reasonable inferences in
favor of Stoneridge in deciding whether the complaint satisfied these pleading
requirements. See In re Navarre Corp. Sec. Litig., 299 F.3d 735, 740-48 (8th Cir.
2002).




      1
       The HONORABLE CHARLES A. SHAW, United States District Judge for the
Eastern District of Missouri.

                                         -2-
       2. The Scheme Alleged. At the time in question, Charter delivered cable
services through set-top boxes installed on customers’ TV sets. Charter purchased the
set-top boxes from third-parties, including the Vendors. In August 2000, although
Charter had firm contracts with the Vendors to purchase set-top boxes at a set price
sufficient for its present needs, Charter agreed to pay the Vendors an additional $20
per set-top box in exchange for the Vendors returning the additional payments to
Charter in the form of advertising fees.

       Plaintiffs alleged that these were sham or wash transactions with no economic
substance, contrived to inflate Charter’s operating cash flow by some $17,000,000 in
the fourth quarter of 2000 in order to meet the revenue and operating cash flow
expectations of Wall Street analysts. Charter accomplished the deception with
fraudulent accounting by improperly capitalizing the increased equipment expenses
while treating the returned advertising fees as immediate revenue. Plaintiffs alleged
that the Vendors entered into these sham transactions knowing that Charter intended
to account for them improperly and that analysts would rely on the inflated revenues
and operating cash flow in making stock recommendations. Plaintiffs did not allege
that the Vendors played any role in preparing or disseminating the fraudulent financial
statements and press releases through which Charter published its deception to
analysts and investors.

       3. The Governing Law. Section 10(b) makes it unlawful, directly or indirectly,
“[t]o use or employ, in connection with the purchase or sale of any security . . . any
manipulative or deceptive device or contrivance in contravention of such rules and
regulations as the [SEC] may prescribe.” 15 U.S.C. § 78j(b). Rule 10b-5 provides:

      It shall be unlawful for any person, directly or indirectly . . . (a) [t]o
      employ any device, scheme, or artifice to defraud, (b) [t]o make any
      untrue statement of a material fact or to omit to state a material fact
      necessary in order to make the statements made, in light of the
      circumstances under which they were made, not misleading, or (c) [t]o

                                         -3-
      engage in any act, practice, or course of business which operates or
      would operate as a fraud or deceit upon any person in connection with
      the purchase or sale of any security.

17 C.F.R. § 240.10b-5.

       In Central Bank, the Supreme Court confirmed that § 10(b) prohibits only
“manipulative or deceptive” devices or contrivances, and that private plaintiffs “may
not bring a [Rule] 10b-5 suit against a defendant for acts not prohibited by the text of
§ 10(b).” 511 U.S. at 173. In earlier cases, the Court held that “deceptive” conduct
involves either a misstatement or a failure to disclose by one who has a duty to
disclose. See Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 474-75 & n.15 (1977);
Affiliated Ute Citizens of the State of Utah v. United States, 406 U.S. 128, 153-54
(1972); accord United States v. O’Hagan, 521 U.S. 642, 653-655 (1997).
“Manipulative,” as used in the securities context, is a “term of art”and refers to illegal
trading practices such as “wash sales, matched orders, or rigged prices, that are
intended to mislead investors by artificially affecting market activity.” Santa Fe, 430
U.S. at 476-77, citing Ernst & Ernst v. Hochfelder, 425 U.S. 185, 199 & n.21 (1976),
and Piper v. Chris-Craft Indus., Inc., 430 U.S. 1, 43 (1977).

       Based upon these earlier cases and the text and legislative history of the 1934
Act, the Court in Central Bank rejected the contrary position of the SEC and held that
Rule 10b-5 does not reach those who only aid or abet a violation of § 10(b):

            As in earlier cases considering conduct prohibited by § 10(b), we
      again conclude that the statute prohibits only the making of a material
      misstatement (or omission) or the commission of a manipulative act. . . .
      The proscription does not include giving aid to a person who commits a
      manipulative or deceptive act.




                                           -4-
511 U.S. at 177. However, the concluding section of the Central Bank majority
opinion added an important caveat:

      The absence of § 10(b) aiding and abetting liability does not mean that
      secondary actors in the securities markets are always free from liability
      under the securities Acts. Any person or entity, including a lawyer,
      accountant, or bank, who employs a manipulative device or makes a
      material misstatement (or omission) on which a purchaser or seller of
      securities relies may be liable as a primary violator under 10b-5,
      assuming all of the requirements for primary liability under Rule 10b-5
      are met.

Id. at 191 (emphasis in original). This is one of many cases that have tested the
boundaries of that caveat.

       4. The District Court’s Decision. In a thorough Memorandum and Order, the
district court concluded that Central Bank, as uniformly applied by a number of our
sister circuits, precludes plaintiffs’ claims against the Vendors as nothing more than
claims they aided and abetted Charter in committing § 10(b) violations:

             The Court concludes plaintiffs’ claims against [the Vendors] are
      claims for aiding and abetting. Plaintiffs do not assert that [the Vendors]
      made any statement, omission or action at issue or that plaintiffs relied
      on any statement, omission or action made by either of them. Plaintiffs
      also do not allege that [the Vendors] were responsible for, or were
      involved with the preparation of Charter’s allegedly false or misleading
      financial statements; Charter’s allegedly improper internal accounting
      practices; or the allegedly false or misleading public statements made by
      Charter and its former executives. Plaintiffs also do not allege that any
      of the allegedly misleading statements listed in the amended complaint
      were made, seen, or reviewed by [the Vendors]. Instead, plaintiffs
      contend that [the Vendors] are liable to Charter’s investors on the basis
      that they engaged in a business transaction that Charter purportedly
      improperly accounted for.

                                         -5-
            Nor can [the Vendors] be held liable for any purported omissions
      as plaintiffs have not alleged that [the Vendors] had any duty to
      Charter’s investors. . . . The Court can find no precedent for the
      conclusion that business partners, such as [the Vendors], made false and
      misleading statements by virtue of engaging in a business enterprise with
      a company such as Charter, the entity purported to have made the
      statements at issue.

       Plaintiffs then filed motions for reconsideration and for leave to amend their
complaint, citing additional cases and pleading additional facts. The district court
denied both motions, concluding that the additional citations were unpersuasive and
the proposed amendment would be futile because it merely reiterated the prior
allegations with additional particularity.

                                          II.

       On appeal, Stoneridge argues that plaintiffs properly alleged a primary violation
of the securities laws within the meaning of Central Bank because the Vendors
violated Rule 10b-5(a) and (c) by participating in a “scheme or artifice to defraud” and
by engaging in a “course of business which operates . . . as a fraud or deceit.” The
argument emphasizes that Rule 10b-5(a) and (c) are broadly worded and, unlike Rule
10b-5(b), do not require proof of a fraudulent misrepresentation or failure to disclose.
The argument depends on the assertion that Central Bank’s analysis did not affect the
scope of primary liability under subparts (a) and (c), relying primarily on a recent
district court decision, In re Parmalat Sec. Litig., 376 F. Supp. 2d 472, 492-503
(S.D.N.Y. 2005).

       Like the district court, we reject Stoneridge’s narrow interpretation of Central
Bank. We conclude that Central Bank and the earlier cases on which it relied stand
for three governing principles: (1) The Court’s categorical declaration that a private
plaintiff “may not bring a 10b-5 suit against a defendant for acts not prohibited by the


                                          -6-
text of § 10(b),” 511 U.S. at 173, included claims under Rule 10b-5(a) and (c), as well
as Rule 10b-5(b). (2) A device or contrivance is not “deceptive,” within the meaning
of § 10(b), absent some misstatement or a failure to disclose by one who has a duty
to disclose. See Santa Fe, 430 U.S. at 474-75. (3) The term “manipulative” in § 10(b)
has the limited contextual meaning ascribed in Santa Fe, id. at 476-77.2 Thus, any
defendant who does not make or affirmatively cause to be made a fraudulent
misstatement or omission, or who does not directly engage in manipulative securities
trading practices, is at most guilty of aiding and abetting and cannot be held liable
under § 10(b) or any subpart of Rule 10b-5. Accord Fidel v. Farley, 392 F.3d 220,
235 (6th Cir. 2004); Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194,1204-06 (11th Cir.
2001); Wright v. Ernst & Young LLP, 152 F.3d 169, 175 (2d Cir. 1998), cert. denied,
525 U.S. 1104 (1999); Anixter v. Home-Stake Prod. Co., 77 F.3d 1215, 1225-27 (10th
Cir. 1996); In re Software Toolworks, Inc. Sec. Litig., 50 F.3d 615, 628 n.3 (9th Cir.
1994); In re Dynegy, Inc. Sec. Litig., 339 F. Supp. 2d 804, 914-16 (S.D. Tex. 2004);
In re Homestore.com, Inc. Sec. Litig., 252 F. Supp. 2d 1018, 1040-41 (C.D. Cal.
2003).

       In this case, the focus of plaintiffs’ § 10(b) and Rule 10b-5 claims was
deception -- they alleged a “continuous course of conduct” in which Charter allegedly
“made and/or failed to correct public representations which were or had become
materially false and misleading regarding Charter’s financial results and operations.”
Indeed, eighteen pages of the amended complaint alleged in fifty detailed paragraphs
the fraudulent financial reports and press releases published by Charter during the
class period. However, neither Motorola nor Scientific-Atlanta was alleged to have


      2
       We agree with then-district judge Patrick Higginbotham that the Supreme
Court in Santa Fe intended to limit § 10(b) claims of unlawful manipulation (as
opposed to deception) to “transactions in the [securities] marketplace, the effects of
which were to prevent the market price from accurately reflecting the market’s
unimpeded judgment of the stock’s value.” Hundahl v. United Benefit Life Ins. Co.,
465 F. Supp. 1349, 1360 (N.D. Tex. 1979).

                                         -7-
engaged in any such deceptive act. They did not issue any misstatement relied upon
by the investing public, nor were they under a duty to Charter investors and analysts
to disclose information useful in evaluating Charter’s true financial condition. None
of the alleged financial misrepresentations by Charter was made by or even with the
approval of the Vendors. Accordingly, the district court properly dismissed the claims
against the Vendors as nothing more than claims, barred by Central Bank, that the
Vendors knowingly aided and abetted the Charter defendants in deceiving the investor
plaintiffs.

       Like the district court and the court in In re Homestore.com, 252 F. Supp. 2d
at 1041, we are aware of no case imposing § 10(b) or Rule 10b-5 liability on a
business that entered into an arm’s length non-securities transaction with an entity that
then used the transaction to publish false and misleading statements to its investors
and analysts. The point is significant. To impose liability for securities fraud on one
party to an arm’s length business transaction in goods or services other than securities
because that party knew or should have known that the other party would use the
transaction to mislead investors in its stock would introduce potentially far-reaching
duties and uncertainties for those engaged in day-to-day business dealings. Decisions
of this magnitude should be made by Congress.

                                          III.

       Finally, Stoneridge argues that the district court abused its discretion in denying
plaintiffs’ post-dismissal motions to reconsider the dismissal order and to grant
plaintiffs leave to amend the complaint. A district court has broad discretion to
reconsider an order granting dismissal or summary judgment, but “[a] motion to alter
or amend judgment cannot be used to raise arguments which could have been raised
prior to the issuance of judgment.” Hagerman v. Yukon Energy Corp. 839 F.2d 407,
414 (8th Cir.), cert. denied, 488 U.S. 820 (1988). Here, plaintiffs argued that the
district court overlooked or misapplied prior decisions from district courts in other

                                           -8-
circuits. The district court briefly reviewed those cases and concluded it “is not
inclined to reach a different result.” Denial of the motion to reconsider on this ground
was not an abuse of discretion. Indeed, we agree with the court’s analysis of those
non-controlling cases.

       The district court denied the post-dismissal motion to amend because the
proposed pleading would be futile -- the additional allegations as to the Vendors’ role
and knowledge set forth in the proposed amended complaint did not cure the flaws in
plaintiffs’ § 10(b) theory. Denial of a motion to amend on this ground, particularly
a motion filed after the district court’s final ruling, is not an abuse of discretion. See,
e.g., Grandson v. Univ. of Minn., 272 F.3d 568, 575 (8th Cir. 2001), cert. denied, 535
U.S. 1054 (2002).

      The Final Judgment of the district court dated February 15, 2005, is affirmed.
                     ______________________________




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