In Morgan Stanley, plaintiffs brought a putative securities fraud class action alleging that Morgan Stanley and six of its officers and former officers made material misstatements and omissions in an effort to conceal Morgan Stanley's exposure to and losses from a proprietary subprime mortgage trade. Plaintiffs alleged that Morgan Stanley's failure to disclose that subprime mortgage trade (and the risk of loss attendant thereto) in its Form 10-Q and Form 10-K filings was a violation of a disclosure requirement in Item 303, and as such, constituted an actionable omission under Section 10(b) and Rule 10b-5. Item 303 of Regulation S-K requires companies to disclose on their quarterly filings any "known trends, or uncertainties that have had, or might reasonably be expected to have, a material favorable or unfavorable material impact" on the company's revenue, operating income or net income.