The opinion of the court was delivered by: MARVIN E. ASPEN
MARVIN E. ASPEN, Chief District Judge:
Plaintiffs William Gilbert, Joan Behl, Lewis Bair and Seth Blate bring this putative class action complaint against defendants First Alert, Inc., Malcolm Candlish, Gary Lederer, David Harkins, Scott Schoen, Anthony Dinovi, Thomas H. Lee and the Thomas H. Lee Company ("THL Co."). They allege that First Alert committed a fraud on the market when it disseminated false information concerning its products in late 1994 in an effort to boost product sales and allow certain individual defendants to sell their stock at a profit. Presently before us is plaintiffs' motion for class certification and defendants' motion to dismiss the complaint. For the reasons set forth below, we certify the proposed class and deny defendants' motion to dismiss.
Defendant First Alert manufactures safety devices such as smoke alarms and carbon monoxide detectors. After the tragic death of tennis star Vitas Gerulaitis in September 1994 from carbon monoxide poisoning, the company began an aggressive marketing campaign for its carbon monoxide detectors. Obviously the campaign and accompanying press coverage was successful, because within two weeks after Gerulaitis' death First Alter stock had risen from $ 13.125 per share to $ 20 per share.
Second, plaintiffs assert that the discussion of "Risk Factors" in the Prospectus was too vague and overgeneralized, given that defendants knew of specific problems that hampered their product's effectiveness and undermined the company's ability to compete in the carbon monoxide detector market. These defects included the inability to quickly and easily reset the detector, the absence of a digital read-out, and over-sensitivity to carbon monoxide. In addition, plaintiffs contend that defendants downplayed an ongoing investigation by the Consumer Products Safety Commission ("CPSC") into its detectors, a fact which they claim raised serious doubts about the quality of defendants' product.
On November 10, 1994, only two days after the effective date of the Prospectus, the defendants announced that they were withdrawing the offering due to "misinformation relating to the effectiveness and market potential of its carbon monoxide detectors." Amended Complaint P 68. The next month, First Alert offered all purchasers of its carbon monoxide detectors a full refund because of high sensitivity levels. In response to these events plaintiffs filed this class action lawsuit, alleging violations of Sections 10(b) and 20 of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t, and S.E.C. Rule 10b-5 promulgated thereunder, 17 C.F.R. P 240.10b-5.
Plaintiffs have moved for certification of a class of all persons who purchased First Alert common stock from October 12, 1994 through November 10, 1994, inclusive, and suffered damages because of their purchase. Rule 23 of the Federal Rules of Civil Procedure establish a two-step analysis to determine if a class action is proper. The court first determines whether the proposed class meets the four preliminary requirement of Rule 23(a):
(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
Fed. R. Civ. P. 23(a). If these preliminary requirements are satisfied, the court must then decide if the putative class qualifies under one of the three subsections of Rule 23(b). In the instant case, plaintiffs argue that certification is proper under Rule 23(b)(3) because "questions of law or fact common to the members of the class predominate over any questions affecting individual members, and  a class action is superior to other available methods for the fair and efficient adjudication of the controversy."
In evaluating a motion for class certification, the allegations made in support of certification are taken as true, and we do not examine the merits of the case. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78, 40 L. Ed. 2d 732, 94 S. Ct. 2140 (1974); In re Bally Mfg. Sec. Corp. Litig., 141 F.R.D. 262, 267 (N.D. Ill. 1992), aff'd, Arazie v. Mullane, 2 F.3d 1456 (7th Cir. 1993). The burden of showing that the class certification requirements have been met rests with the party seeking certification, in this case the plaintiffs. General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 161, 72 L. Ed. 2d 740, 102 S. Ct. 2364 (1982); Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). In general, "securities fraud cases are uniquely suited to class action treatment since the claims of individual investors are often too small to merit separate law suits. The class action is thus a useful device in which to litigate similar claims as well as an efficient deterrent against corporate wrongdoing." Ridings v. Canadian Imperial Bank of Commerce Trust Co. (Bahamas), Ltd., 94 F.R.D. 147, 150 (N.D. Ill. 1982).
Defendants do not contest the numerosity of the proposed class. Excluding shares owned by the defendants, First Alert had more than four million shares of common stock outstanding at the time of the alleged misstatements, which were publicly listed and traded on the NASDAQ system. Although it is not known exactly how many persons would fall into the class, we are driven by common sense to conclude that the class "is so ...