Full opinion text
MEMORANDUM OPINION ELLIS, District Judge. The central question presented in these threshold dismissal motions in this securities fraud class action is the unresolved question of the meaning to be given to the state-of-mind pleading requirements of the Private Securities Litigation Reform Act of 1995 (“PSLRA” or the “Act”): Specifically at issue are the meaning of the PSLRA’s requirement that a complaint in a securities fraud action must allege sufficient facts giving rise to a “strong inference” of scienter and whether the Consolidated Amended Class Action Complaint (“Complaint”) in this case meets that standard. Aso at issue are questions as to (i) the materiality of the Complaint’s allegations; (ii) whether a plaintiff must allege facts showing “culpable participation” on a defendant’s part to state a claim for secondary “control group” liability under Section 20(a) of the Exchange Act; and (iii) the meaning of the contemporaneity requirement of Section 20A of the Exchange Act for insider trading liability. I.Factual Background This securities class action is brought by, and on behalf of, investors in securities of MicroStrategy between June 11, 1998 and March 20, 2000 (the “Class Period”), asserting claims against Defendant Mi-eroStrategy, Inc. (“MicroStrategy” or the “Company”); Defendants Michael Saylor, Sanju Bansal, Mark S. Lynch, Stephen S. Trundle, Ralph Terkowitz, and Frank A. Ingari (collectively “the Individual Defendants” and, along with MicroStrategy, the “MicroStrategy Defendants”); and Defendant PricewaterhouseCoopers (“PwC”) under Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended by the PSLRA, and under Rule 10b-5 promulgated thereunder. 15 U.S.C. §§ 78|j(b), 78t(a), 78t-l; 17 C.F.R. § 240.10b~5..0 Plaintiffs allege that on June 11, 1998, when MicroStrategy announced its Initial Public Offering (“IPO”) of 4,000,000 shares of common stock, Defendants knowingly and purposefully, or recklessly, implemented and executed throughout the Class Period a “massive fraud on the investing public” in the form of a scheme artificially to distort the price of MicroStrategy securities. . Allegedly at the heart of this fraudulent undertaking was the repeated inflation of revenues and earnings for the Company, which was accomplished through the improper recognition of revenues from software licensing and servicing contracts in violation of Generally Accepted Accounting Principles (“GAAP”) and declared MicroStrategy accounting policies. (Complaint ¶ 2.) As a result, the MicroStrategy Defendants — with the consent and cooperation of PwC, the Compa1 ny’s auditor — presented investors with a false and misleading picture of MicroStra-tegy’s financial condition and apparent growth. The allegations in the Amended Complaint (“Complaint”) and public documents relied on by, and integral to, the Complaint further disclose the following about the MicroStrategy Defendants and PwC, respectively. MicroStrategy was founded in 1989 and is a developer and marketer of “e-business” software and related services that facilitate the transaction of business through electronic • and wireless media. MicroStrategy' software allows companies to retrieve raw data and to turn that data into useful information. The Company also provides, inter alia, installation, maintenance, and consultation services to its clients. (¶ 25.a.) Since its inception, Mi-croStrategy’s business has evolved from a focus on stand-alone software license and maintenance components to the provision of “multiple software products and services for use by the customers and very large numbers of customers’ end users, ... often involving] significant implementation and other consulting work which extend! ] over periods of time.” This evolution of the Company’s business has allowed Mi-croStrategy to receive revenues from multiple sources, including product license fees, product support fees, and royalties from various sources. (¶ 25.b.) The Individual Defendants are, and during the Class Period were, senior executives and/or directors of MicroStrate-gy: Defendant Saylor, a co-founder of Mi-croStrategy, was the President and Chief Executive Officer of the Company; Defendant Bansal was the Executive Vice President and Chief Operating Officer; Defendant Lynch was the Vice President, Finance, Chief Financial Officer, and Principal Financial and Accounting Officer of MicroStrategy; Defendant Trundle was the Senior Vice President of MicroStrate-gy, Technology; and Defendants Terkow-itz and Ingari were Directors of MicroS-trategy and members of MicroStrategy’s Audit Committee. (¶ 20.) These Defendants allegedly prepared, reviewed, executed, and/or disseminated, and thereby controlled the content of, the Company’s filings with the Securities and Exchange Commission (“SEC”), press releases, and other public representations. (¶¶ 21(a) — (f).) By virtue of their positions, the Individual Defendants also allegedly had access to material, adverse nonpublic information regarding MicroStrategy’s sales transactions, revenue recognition, and financial condition. (Complaint ¶ 111.) The Complaint alleges that, throughout the Class Period, Defendants materially misrepresented MicroStrategy’s revenues and earnings in violation of GAAP. Plaintiffs point to the Company’s press releases and SEC filings concerning revenues and earnings for fiscal years 1997, 1998, and 1999 and for seven of eight interim quarters in 1998 and 1999, and to statements by Defendant Saylor that routinely highlighted “increased revenues” over consecutive periods, as providing MicroStrategy investors with the false impression that the Company’s earnings and revenues were consistently increasing throughout the Class Period when, in fact, they were not. Plaintiffs also point out that, during the Class Period, MicroStrategy purportedly recognized and reported its earnings and revenues in conformance with the strictures of GAAP and the Company’s declared revenue recognition policies, which stated, for example, that “[p]roduct license revenues are generally recognized upon the execution of a contract and shipment of a related software product, provided that no significant vendor obligations remain outstanding and the resulting receivable is deemed collectible by management.” (¶ 27.) But, according to the Complaint, MicroStrategy’s statements did not accurately portray the Company’s financial status, and — contrary to the representations and filings made by the Defendants — the statements did not conform with either GAAP or MicroStrategy’s own revenue recognition policies: MicroStrategy reported increasing revenues and earnings which were achieved primarily by improperly recognizing revenues on purported contracts prior to agreements being finalized and/or when the agreements were subject to significant contingencies or yet-to-be-fulfilled obligations by the Company. Such practices violated [GAAP]. (¶6.) During this period, MicroStrategy’s stock — the initial offering price for which was $12 per share in June 1998 — rose significantly in price, reaching a Class Period high of $813 in March 2000. (¶¶ 9, 26.) Moreover, each of the Individual Defendants during this period made private sales of stock, with aggregate proceeds of more than $90 million, and MicroStrategy and certain of the Individual Defendants, through various public offerings of MicroS-trategy stock, received, in the aggregate, proceeds in excess of $80 million. (¶¶26, 40.) Furthermore, the Company announced on February 24, 2000, its intention to sell 6.5 million shares of stock, including 1.6 million shares owned by Defendant Saylor, in an effort to raise nearly $1 billion. (¶ 58.) On March 6, 2000, Forbes magazine published an article questioning the timing of MicroStrategy’s recognition of revenues on three contracts. The article pointed out that these contracts were not announced until after certain quarters had closed, but that the contracts were treated as if completed during those quarters. (¶ 55.) Then, on Monday, March 20, 2000, MicroS-trategy announced that it would have to restate two years of its previously reported financial reports. By the end of that day, the price of MicroStrategy stock had fallen to $86.75, having closed at $226.75 on Friday, March 17, 2000. (¶ 14, 58.) On April 13, 2000, the Company filed its SEC Form 10-K for the year ending on December 31, 1999. In this filing, MicroS-trategy formally restated its previously reported revenues and earnings for the years ending on December 31, 1998, and December 31, 1999. On April 13, MicroS-trategy also announced its intention to restate and adjust downward its reported revenues for the year ending on December 31, 1997. Then, on May 30, 2000, the Company filed its Amended Form 10-Q/As for the second and third quarters of 1999. These filings contained restated financials for years 1997 through 1999. These restatements revealed the extent of the discrepancy between MicroStrategy’s previously reported financial figures and the actual ones. Specifically, the Complaint alleges that: • MicroStrategy reported revenues of $23.8 million for the second quarter of 1998. These revenues constituted a 100% increase over the same quarter in the previous year. The Company also reported net income of $942,000, or $0.03 per share — a 672% increase over the same quarter in the previous year. The subsequent restatement revealed that the reported net income of $942,000 should have been reported as • a net loss of $1.1 million, and that the reported earnings per share of $0.03 should have been reported as a loss of $0.04 per share. (¶¶ 3, 32, 34.) • MicroStrategy reported revenues of $27 million for the third quarter of 1998, an 83% increase over the same quarter in the previous year, and net income of $1.9 million, or $0.05 per share on a diluted basis — a 297% increase over the same quarter in the previous' year. (¶¶ 3, 35, 37.) • The Company reported revenues of $35.7 million in the fourth quarter of 1998, a 90% increase over the same quarter in the previous year,, and net income of $2.8 million, or $0.07 per share on a diluted basis — a 436% increase over the same quarter in the previous year. These figures were later restated to a net loss of $3 million, or $0.08 per share. (¶ 3, 38.) • MicroStrategy reported that, for the 1998 fiscal year, it had revenues of $106.4 million — a 98.7% increase over the 1997 fiscal year — and net income of $6.2 million, or $0.16 per share on a diluted basis ($0.08 per share on a 2-for-1 stock split adjusted basis) — as compared to the previous year’s net income of $0.1 million. Earnings for the 1998 fiscal year were later restated to a loss of $0.03 per share (on a 2-for-1 stock split adjusted basis). (¶¶ 3, 39, 41.) • The Company reported that, for the first quarter of 1999, revenues had increased 80% to $35.8 million and that net income had increased 243% to $1.9 million, or $0.05 per share on a diluted basis. The earnings figures were later restated to reflect a net loss of $3.8 million, or a $0.10 loss per share. (¶¶ 3, 44.) • For the second quarter of 1999, Mi-croStrategy reported revenues of $45.6 million, a 92% increase from the same quarter in the previous year, and net income of $3.2 million, or $0.08 per share on a diluted basis — a 241% increase over the prior year’s comparable period. The restatement later revealed that the Company had a net loss of $3 million and no earnings in this quarter. (¶¶ 3, 46.) • MicroStrategy reported for the third quarter of 1999 that its revenues amounted to $54.6 million and that its net income totaled $3.8 million — or $0.09 per share on a diluted basis — a 102% and a 97% increase, respectively, from the third quarter of 1998. These figures later were restated to reflect a net loss of $12.8 million, or a $0.33 loss per share. (¶¶ 3, 48.) • For the fourth quarter of 1999, the Company reported revenues of $69.4 million, a 94% increase from the fourth quarter of 1998, and net income of $3.8 million, or $0.09 per share on a diluted basis — compared to net income of $2.8 million, or $0.07 per share diluted, over the same quarter in 1998. Earnings were later restated to reflect net losses of $17.2 million, or a $0.41 loss per share. (¶¶ 3, 51.) • MicroStrategy reported, for the year ended December 31, 1999, that its revenues were $205.3 million, a 93% increase from 1998 revenues of $106.4 million, and that its net income was $12.6 million, or $0.29 per share on a diluted basis ($0.15 per share on a 2-for-1 stock split adjusted basis) — as compared to $6.2 million, or $0.16 per share on a diluted basis for 1998 ($0.08 per share on a 2-for-l stock split adjusted basis). Earnings later were restated to reflect a net loss of $33.7 million, or a $0.44 loss per share on a 2-for-l stock split adjusted basis. (¶¶ 3, 51.) During the Class Period, MicroStrategy engaged PwC, an accounting firm, to provide independent auditing and accounting services. (¶ 24.) The Complaint alleges that PwC’s participation was crucial to the creation of all of MicroStrategy’s filings. Specifically, PwC allegedly worked closely with MicroStrategy to produce its quarterly financial reports and issued unqualified audit reports on the Company’s 1997,1998, and 1999 year-end financial statements, opining that those statements — pursuant to audits it purportedly conducted in accordance with Generally Accepted Auditing Standards (“GAAS”) — conformed with GAAP and fairly represented MicroS-trategy’s financial position. (¶¶ 7, 24, 27, 41, 43, 52, 128-130.) In fact, the Complaint alleges, the reports violated GAAP and PwC’s audits of these reports violated GAAS. (¶¶ 131-35.) The Complaint alleges that, during the Class Period, PwC also served as MicroS-trategy’s partner in marketing and installing software systems, assisting the Company in at least 24 deals. (¶ 146.) This arrangement, the Complaint alleges, allowed PwC to collect fees from licenses it sold to customers and from consulting services it provided: Not only did PWC act as a reseller of MieroStrategy products, at a profit, but in many other instances, PWC acted as a marketer for MieroStrategy, encouraging clients to purchase MieroStrategy products such as its “Electronic Customer Relationship Management System” (“eCRM”), and then worked with the clients and MieroStrategy as a systems integrator, receiving substantial consulting fees as a result. (¶¶ 8,145,146.) The MieroStrategy Defendants and PwC have filed respective motions to dismiss the Complaint, pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state claims under Section 10(b) (and Rule 10b-5 promulgated thereunder), Section 20(a), and Section 20A of the Exchange Act upon which relief could be granted. Specifically, the Mi-eroStrategy Defendants move: (i) to dismiss Plaintiffs’ claim under Section 10(b) and Rule 10b-5 for failure to comply with the scienter pleading requirements of the PSLRA; (ii) to dismiss the same claim for failure to plead materiality; (iii) to dismiss Plaintiffs’ claim under Section 20(a) of the Exchange Act for failure to allege a primary violation of the securities laws, to allege that Defendants Saylor, Bansal, Lynch, and Trundle are “control persons,” and to allege that these Defendants culpably participated in any violation; and (iv) to dismiss Plaintiffs’ claim under Section 20A of the Exchange Act for failure adequately to allege a primary violation of the securities laws, to allege contemporaneous trades by Named Plaintiff Vera Schwartz and Defendants Ingari and Trundle, and to allege that a damages remedy is available under Section 20A. PwC moves to dismiss Plaintiffs’ Section 10(b) and Rule 10b-5 claim for failure to comply with the scien-ter pleading requirements of the PSLRA. The issues raised by Defendants’ motions are each considered in the following order. First considered are the respective motions of the MieroStrategy Defendants and PwC to dismiss Plaintiffs’ Section 10(b) and Rule 10b-5 claims for failure to meet the heightened scienter pleading requirements of the PSLRA, followed by the MieroStrategy Defendants’ materiality argument for dismissal. Next is the motion to dismiss Count II of the Complaint for failure to state a claim for control group liability under Section 20(a) of the Exchange Act. Finally taken up is the motion to dismiss Count III of the Complaint for failure to state a claim for secondary insider trading liability under Section 20A of the Exchange Act. . II. Applicable Rules and Principles A. Motions to Dismiss In considering a motion to dismiss a complaint for “failing] to state a claim upon which relief can be granted,” a court must construe the complaint in the light most favorable to the plaintiffs, read the complaint as a whole, and take the facts asserted therein as true. Fed.R.Civ.P. 12(b)(6); see Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Higgins v. Medical College, 849 F.Supp. 1113, 1117 (E.D.Va.1994). All reasonable inferences must be made in favor of the nonmoving party, and “a count should be dismissed only where it appears beyond a reasonable doubt that recovery would be impossible under any set of facts which could be proven.” America Online, Inc. v. GreatDeals.Net, 49 F.Supp.2d 851, 854 (E.D.Va.1999) (citing Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992)); see Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A motion to dismiss tests only “the sufficiency of the complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses,” Republican Party, 980 F.2d at 952, and a motion to dismiss should not be- granted unless the court “could not grant relief under any set of facts that the plaintiff could prove consistent with his allegations in fhe complaint,” Carter Machinery Co., Inc., v. Gonzalez, No. 97-0332-R, 1998 WL 1281295, at *2, 1998 U.S.Dist. LEXIS 8106, at *5 (W.D.Va.1998) (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984)). B. The Scienter Pleading Standard of the PSLRA To establish liability under Section 10(b) of the Exchange Act and under Rule 10b-5, a plaintiff must allege that “(1) the defendant made a false statement or omission of material fact (2) with scienter (3) upon which the plaintiff justifiably relied (4) that proximately caused the plaintiffs damages.” Phillips v. LCI Int’l, Inc., 190 F.3d 609, 613 (4th Cir.1999); accord Hillson Partners Ltd. Partnership v. Adage, Inc., 42 F.3d 204, 208 (4th Cir.1994); Malone v. Microdyne Corp., 26 F.3d 471, 476 (4th Cir.1994). Because such claims necessarily involve allegations of fraud, a plaintiff must meet, the requirement of Rule 9(b) of the Federal Rules of Civil Procedure that “the circumstances constituting fraud ... be stated with particularity” in the complaint. Fed.R.Civ.P. 9(b). The PSLRA further requires that the complaint “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, ... state with particularity all the facts on which that belief is formed.” 15 U.S.C. § 78u-4(b); see In re Criimi Mae, Inc. Sec. Litig., 94 F.Supp.2d 652, 657 (D.Md.2000) (“Particularity of pleading is required with regard to the time, place, speaker and contents of the allegedly false statements, as well as the manner in which the statements are false and the specific facts raising an inference of fraud.”). Finally, the PSLRA requires a plaintiff in a securities fraud case to “state with particularity facts giving rise to a strong inference that defendant acted with the required state of mind” in the complaint. 15 U.S.C. § 78u-4(b)(2) (emphasis added). A complaint that fails to comply with these requirements must — on any defendant’s motion — be dismissed. See 15 U.S.C. § 78u-4(b)(3)(A). The PSLRA itself does not define what pleaded facts are sufficient to give rise to a “strong inference” of scienter, and the Fourth Circuit has not yet decided the issue. Since the passage of the PSLRA, courts addressing the “strong inference” requirement have split generally into three groups, each interpreting the “strong inference” standard differently. Approximately half of the courts to address the “strong inference” standard — -including the Second, Third, and Fifth Circuits' — have held that the PSLRA incorporates the Second Circuit’s pre-PSLRA jurisprudence, which not only established the “strong inference standard,” but also promulgated two tests that, if met, would per se raise a “strong inference” of scienter. Specifically, these courts have held that, as was true in the Second Circuit before the passage of the PSLRA, a plaintiff may plead a “strong inference” of scienter by proceeding under one of two approaches: “The first approach is to allege facts establishing the motive to commit fraud and an opportunity to do so. The second approach is to allege facts constituting circumstantial evidence of either reckless or conscious behavior.” In re Time Warner Inc. Sec. Litig., 9 F.3d 259, 268-69 (2d Cir.1993) (summarizing Second Circuit pre-PSLRA pleading tests); see In re Carter-Wallace, Inc. Sec. Litig., 220 F.3d 36 (2d Cir.2000) (applying the same tests). A second group of courts — including the First, Sixth, and Eleventh Circuits — has interpreted the PSLRA as incorporating the Second Circuit “strong inference” standard, but has held that allegations of motive and opportunity are never enough by themselves to create a “strong inference” of scienter. Still another group of courts — chiefly the Ninth Circuit — similarly has interpreted the PSLRA to have borrowed the “strong inference” standard from the Second Circuit, but also has held that the PSLRA eliminated both the “motive and opportunity” test and nondeliberate recklessness as a possible substantive ground for securities fraud liability. These courts have held that a plaintiff “must allege specific facts that constitute circumstantial evidence of conscious behavior by defendants” and cannot merely rest on allegations of motive and opportunity or nondeliberate recklessness. The task at hand is not to choose among these three lines of authority; indeed, none of the three approaches is wholly persuasive. Rather, the task at hand is one of statutory construction — namely, to construe the PSLRA and elucidate its heightened pleading requirement. To this end, the analysis properly begins with the text of the PSLRA, for “in any case of statutory construction, [the] analysis begins with ‘the language of the statute.’ And where the statutory language provides a clear answer, it ends there as well.” Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999) (quoting Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475, 112 S.Ct. 2589, 120 L.Ed.2d 379 (1992)); see also United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (“[W]here ... the statute’s language is plain, the sole function of the courts is to enforce it according to its terms.”) (quotation omitted). The PSLRA’s text clearly and simply requires a court in a securities fraud case to determine if the allegations in the complaint raise a “strong inference” that the defendant acted with “the requisite state of mind” and on its face neither incorporates nor rejects formal per se tests for meeting this standard. Thus, the “strong inference” standard — unadorned by any judicially crafted per se tests' — is the ultimate and sole threshold requirement for securities fraud plaintiffs to survive motions to dismiss for failure to plead scienter. And, it is the meaning of the phrase “strong inference,” therefore, that must be ascertained. In this regard, the phrase must be given its plain meaning, because “[i]n the absence of an indication to the contrary, words in a statute are assumed to bear their ‘ordinary, contemporary, common meaning.’ ” Walters v. Metropolitan Educ. Enters., Inc., 519 U.S. 202, 207, 117 S.Ct. 660, 136 L.Ed.2d 644 (1997) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 388, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993)). An inference, by definition, results from “arriving at an opinion or coming to accept a probability on the basis of available evidence, which may be slight,” or “attaining to a fact, truth, or belief after ordered consideration following through with necessary consequences of evidence weighed or facts observed.” That the PSLRA speaks of inferences is reasonable, if not necessary, given that “it is seldom if ever possible to prove the state of a defendant’s mind by direct evidence,” and that, accordingly, “finders of fact have almost always had to rely on circumstantial evidence to determine intent.” AUSA Life Ins. Co. v. Ernst & Young, 991 F.Supp. 234, 247 (S.D.N.Y.1997). Thus, where a complaint does not allege facts directly showing that the defendant acted with the requisite state of mind, the court must take the factual allegations in the complaint and determine, through a deductive process, if it can be strongly inferred from them that the defendant acted with such a state of mind. This process involves essentially three steps. First, the reviewing court must identify the factual allegations that, taken as true, are relevant to proving (by inference or circumstantially) the defendant’s state of mind. This is not the 'end of the endeavor, however, for it is also necessary to identify appropriate inferences from these alleged facts. The difficult second task is to assign probative weight to each fact and inference as it relates to proving state of mind. This is done by an appeal to logic, common sense, and human experience. The enterprise, moreover, entails a holistic examination of the interactions among all facts, for it is by examining how these facts combine that a fact-finder ultimately assesses whether a particular state of mind has been established under the applicable standard of proof. As a result of this holistic analysis, otherwise-unremarkable facts may take on added significance when combined with each other, having what might be termed a synergistic effect on probative value. In other words, as the Supreme Court has noted, it is a “simple fact of evidentiary life” that “individual pieces of evidence, insufficient in themselves to prove a point, may in cumulation prove it. The sum of an evidentiary presentation may well be greater than its constituent parts.” Bourjaily v. United States, 483 U.S. 171, 179-80, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987). The third step, then, is to determine whether, in the light of logic, common sense, and human experience, these potentially synergistic combinations of facts and inferences — what in the vernacular of the law is called “the totality of the circumstances” — raise a “strong inference” that a defendant acted with the requisite state of mind. In this regard, the final step is assessing whether this inference is “strong” — that is, whether it is “[persuasive, effective, and cogent,” “compelling,” or “capable of making a clear or deep impression ... on the mind.” To recapitulate, on a motion to dismiss, a court applying the “strong inference” standard of the PSLRA must take the factual allegations in the complaint as true, draw whatever inferences regarding the defendant’s state of mind are supported by these allegations, and determine whether these inferences individually or cumulatively provide a strong — or “persuasive” and “cogent” — inference that the defendant possessed the requisite state of mind. In doing so, a court should not consider each relevant factual allegation' solely in isolation — though some allegations by themselves may suffice to raise a strong inference of the requisite state of mind— but rather, as a part of the overall factual picture painted by the complaint. If the totality of the circumstances alleged raises a “strong inference” of the requisite state of mind, it is immaterial whether plaintiffs satisfy their burden by “pleading motive and opportunity, conscious misbehavior, recklessness, or by impressing upon the Court a novel legal theory.” In re Health Mgmt., Inc. Sec. Litig., 970 F.Supp. 192, 201 (E.D.N.Y.1997). Finally, as the inference required by the PSLRA relates to the “requisite state of mind,” it is important to be clear as to what is meant by this phrase. Importantly, the PSLRA, on its face, does not purport to change thé pre-PSLRA substantive state of mind requirement for securities fraud liability." As one court put it, “Section 21D(b)(2) [of the PSLRA] is a provision addressing only pleading standards; nothing in the language of that provision purports to alter bases for substantive liability.” Malin v. Ivax Corp., 17 F.Supp.2d 1345, 1357 (S.D.Fla.1998). Indeed, although the Fourth Circuit has not yet decided which approach — if any — is appropriate under the PSLRA’s “strong inference” standard, it has noted that “[tjhe PSLRA did not change the standard of proof a plaintiff must meet or the kind of evidence a plaintiff must adduce to demonstrate scienter at trial in a securities fraud case.” Phillips, 190 F.3d at 620. It is clear, therefore, that the substantive state-of-mind standard for securities fraud liability was unaffected by the PSLRA’s passage, for the Act merely establishes a uniform rule as to the procedural sufficiency of pleadings in private securities fraud cases and requires that a plaintiff allege enough facts to raise a “strong inference” that the defendant possessed the “requisite” state of mind, as has been defined by the courts independent of the PSLRA. In this regard, it is necessary to inquire into the “state of mind” that the Exchange Act requires, for only then can it be determined whether a complaint complies with the PSLRA — namely, whether the facts the complaint alleges collectively raise a “strong inference” that this requirement is met. On defining the contours of the required state of mind for securities fraud liability, courts have long followed the Supreme Court’s holding that scienter, or “a mental state embracing intent to deceive, manipulate, or defraud,” is required. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n. 12, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). And, although the Supreme Court left open the question of whether recklessness suffices for scienter and securities fraud liability, every circuit to consider the question prior to the PSLRA’s passage had held that recklessness suffices to establish liability. Courts in this circuit have joined those in other circuits and have long endorsed recklessness as a substantive basis for scienter. A finding of recklessness, however, must be based on “an act ‘so highly unreasonable and such an extreme departure from the standard of ordinary care as to present a danger of misleading the plaintiff to the extent that the danger was either known to the defendant or so obvious that the defendant must have been aware of it.’ ” Phillips, 190 F.3d at 621 (quoting Hoffman v. Estabrook & Co., 587 F.2d 509, 517 (1st Cir.1978)). Thus, it is settled that “ ‘[rjeekless’ in this context is viewed as a lesser form of intent, rather than merely a greater degree of ordinary negligence,” and that simple negligence will not suffice. In re Criimi Mae, 94 F.Supp.2d at 660; see, e.g., In re Comshare, Inc. Sec. Litig., 183 F.3d 542, 550 n. 7 (6th Cir.1999); In re CIENA Corp. Sec. Litig., No. Civ. A. JFM-98-2946, 2000 WL 683810, at *6 (D.Md. May 15, 2000). In any event, these considerations compel the conclusion that recklessness suffices as a substantive basis for securities fraud liability under Section 10(b), as amended by the PSLRA, and Rule 10b-5. To recapitulate briefly, the proper application of the PSLRA’s new heightened pleading requirements requires a court, on a threshold dismissal motion, to assess the totality of the circumstances as alleged in the complaint and determine if those alleged circumstances support a strong — ie., cogent and persuasive — inference that a defendant acted intentionally, consciously, or recklessly. This approach rejects the Second Circuit’s formalistic, pre-PSLRA per se “motive and opportunity” test, as the text of the Act says nothing about formal per se tests; on the other hand, it does not preclude consideration of motive and opportunity in the ultimate determination of whether the complaint, as a whole, raises a “strong inference” of the requisite fraudulent intent, as it remains unmodified by the PSLRA. Thus, allegations of motive and opportunity are relevant, though not necessarily sufficient, to establishing a strong inference of scienter. In the end, however, the task at hand is to determine whether the allegations in a complaint, when taken collectively, raise a cogent and persuasive — i.e., strong — inference that the defendant acted intentionally, consciously, or recklessly. III. Section 10(b) and Rule 10b-5 A. Scienter 1. Count I: MicroStrategy Defendants The Complaint’s scienter allegations against the MicroStrategy Defendants are founded on the following alleged facts: (1) MicroStrategy’s acknowledgment of the need to restate its financials to comply with GAAP, in light of (a) the magnitude and pervasiveness of the restated financial reports, (b) the simplicity of the accounting principles violated in this ease, and (c) the importance of the contracts involved (¶¶ 98-99, 103-06); (2) statements made by Defendant Saylor in various interviews published in newspapers and magazines (¶¶ 100-02); (3) actions taken and statements made by the Defendants in connection with the Company’s March 20, 2000, restatement announcement (¶¶ 59-60, 107); and (4) Defendants’ motivation and opportunity (a) to meet Wall Street estimates, (b) to portray the Company favorably to creditors, and (c) to profit from insider sales and other offerings (¶¶ 108-10). The task at hand, therefore, is to determine whether these allegations, individually or collectively, give rise to a “strong inference” of scienter. a. MicroStrategy’s GAAP Violations and Restatement of Financials The Complaint first alleges that, because GAAP requires a restatement of previously reported financials only when the facts that necessitated the restatement were in existence at the time the financials originally were issued, [b]y acknowledging the need to restate prior financials, defendants have effectively admitted that the Company’s improper recognition of revenue was therefore known or recklessly disregarded at the time all of the foregoing fraudulent financial statements were originally released, and that the originally issued financial statements were materially misleading. (¶ 98.) In this regard, the Complaint further details numerous specific GAAP violations that Defendants committed by virtue of their' allegedly improper recognition practices. (¶¶ 67-69, 71.) For example, the Complaint - alleges that Defendants’ accounting practices ran counter to APB Opinion No. 28, which states that “[r]eve-nue from products sold or services rendered shall be recognized as earned during an interim period on the same basis as followed for the full year.” (¶ 67.) And, the Complaint specifically points to three contracts to which MicroStrategy misapplied GAAP principles. (¶¶ 72-80.) To begin with, the fact that a restatement of financials occurred is not suf-fícient to raise a strong inference of scien-ter, for it is settled that “scienter requires more than a misapplication of accounting principles,” and “[m]ere allegations that statements made in one report should have been made in earlier reports, do not make out a claim of securities fraud.” . This general rule states the sensible and otherwise unremarkable proposition that the inferences that may be drawn for or against scienter from the mere fact that a company misapplied GAAP and accordingly had to restate its financials are in equipoise, and, therefore, that such allegations by themselves cannot give rise to a “strong inference” of scienter. . But this is not to say that a misapplication of accounting principles or a restatement of financials can never take on significant inferential weight in the scienter calculus; to the contrary, when the number, size, timing, nature, frequency, and context of the misapplication or restatement are taken into account, the balance of the inferences to be drawn from such allegations may shift significantly in favor of scienter (or, conversely, in favor of a nonculpable state of mind). Nor does the rule stand for the proposition that scienter cannot be inferred at all from such allegations and that the allegations are, therefore, irrelevant to the issue of scienter. Such a proposition ignores the value of relevant circumstantial evidence as it relates to a defendant’s state of mind. To put it differently, while it is true that it cannot be strongly inferred from bare allegations of a GAAP violation or a restatement of financials that a defendant acted recklessly, consciously, or intentionally, it is not true that nothing can be inferred from those facts at all or that “[s]pecific attributes of a GAAP violation may give rise to a stronger, or weaker, inference of scienter.” The mere fact that there was a restatement or a violation of GAAP, by itself, cannot give rise to a strong inference of scienter; the nature of such a restatement or violation, however, may ultimately do so. Thus, were the misapplication of GAAP and the acknowledged need to restate Mi-croStrategy’s financials the only factual allegations in the Complaint pointing to scienter, the Complaint would fail, for, as shown above, these allegations are not, by themselves, sufficient to satisfy Plaintiffs’ PSLRA pleading burden. In this case, however, the Complaint goes well beyond merely alleging that MicroStrategy misapplied accounting principles and that, consequently, the Company had to restate its financials. It does so by alleging in some detail the magnitude of the restated finan-cials and the pervasiveness and repetitiveness of MicroStrategy’s GAAP violations; the simplicity of the accounting principles violated in this case; and the importance of the contracts involved. This contextual background serves to amplify the inference of scienter to be drawn from MicroStrate-gy’s GAAP violations and restatement of financials. According to the Complaint; by violating GAAP, MicroStrategy, in SEC filings and registration statements and other public statements, was able falsely to report for fiscal years 1997, 1998, and 1999 and for seven of eight interim quarters in 1998 and 1999 that the Company operated at a profit, when, in fact, it operated at a loss. By virtue of these violations, Mi-croStrategy reported aggregate “record” net income of $18.9 million for 1997, 1998, and 1999, when, in fact, the Company incurred a net loss for those years of more than $86 million. (¶¶ 3, 99.) In addition, the Company overstated its revenues over the same period by a total of $66 million. (¶ 3.) The magnitude of these misstatements are, as Plaintiffs contend, “breathtaking” and plainly lend inferential weight to the bare facts that MicroStrategy violated GAAP and consequently had to restate its financials for those years. In this'regard, a number of courts have held that “significant overstatements of revenue ‘tend to support the conclusion that defendants acted with scienter.’ ” Chalverus v. Pegasystems, Inc., 59 F.Supp.2d 226, 234 (D.Mass.1999) (quoting Marksman Partners v. Chantal Pharm. Corp., 927 F.Supp. 1297, 1314 (C.D.Cal.1996).) Put differently, “[w]hile alleging a misapplication of Generally Accepted Accounting Principles standing-alone is insufficient, such allegation when combined with a drastic overstatement of-financial result? can give rise, to a strong inference of scienter .... [and] the totality and magnitude of the .;. accounting violations [may] constitute strong circumstantial evidence of reckless or conscious misbehavior.” Carley Capital Group v. Deloitte & Touche, 27 F.Supp.2d 1324, 1339-40 (N.D.Ga.1998); see also, e.g., In re Baan Co. Sec. Litig., 103 F.Supp.2d 1, 21 (D.D.C.2000) (“[T]he magnitude of the [GAAP] error can play a role” in inferring scien-ter.). Indeed, common sense and logic dictate that the greater the magnitude of a restatement or violation of GAAP, the more likely it is that such a restatement or violation was made consciously or recklessly. This, of course, is a matter of degree, but it cannot be gainsaid that some violations of GAAP and some restatements of financials are so significant that they, at the very least, support the inference that conscious fraud or recklessness as to the danger of misleading the investing public was present. Cf. In re Oxford Health Plans Inc. Sec. Litig., 51 F.Supp.2d 290, 294 (S.D.N.Y.1999) (“[Plaintiffs allege ‘in your face facts,’ that cry out, ‘how could [defendants] not have known that the financial statements were false.’ ”) (citation omitted). In this case, the alleged GAAP violations and the subsequent restatements are of such a great magnitude — amounting to a night-and-day difference with regard to MicroStrategy’s representations of profitability — as to compel an inference that fraud or recklessness was afoot. The Complaint also alleges that the GAAP rules and MieroStrategy accounting policies violated in this case are not complex, as they reduce, in essence, to the simple principle that “revenue cannot be recognized for unexecuted contracts and/or where there are significant obligations and/or contingencies relating to such contracts.” (¶ 105-06.) Yet, the Company, in the face of GAAP and its own publicly acknowledged policy of not recognizing revenues from an arrangement until “evidence of the arrangement is provided ... by a contract signed by both parties,” nevertheless recognized revenues from contracts before they were executed. (¶ 72.) MieroStrategy, moreover, failed to apply “contract accounting” principles and “percentage of completion” methodology to arrangements of which “significant production, modification, or customization of software” was an integral part, though SOP 97-2, Plaintiffs contend, clearly so mandates. (¶¶ 77-78.) The inference invited by the large magnitude of the misstated financials and the repetitiveness of the GAAP violations takes on added significance if, as the Complaint alleges, the violated GAAP rules and Company accounting policies are, in fact, relatively simple. This is so because violations of simple rules are obvious, and an inference of scienter becomes more probable as the violations become more-obvious. Put another way, if the GAAP rules and MicroStrategy accounting policies Defendants are alleged to have violated are relatively simple, it is.more likely that the Defendants were aware of the violations and consciously or intentionally implemented or supported them, or were reckless in this regard. See, e.g., In re Baan, 103 F.Supp.2d at 21 (“[V]iolations involving the premature or inappropriate recognition of revenue suggest a conscious choice to recognize revenue in a manner alleged to be improper, and may therefore support a strong inference of scienter.”); Chalverus, 59 F.Supp.2d -af 234 (“Courts also have held that ‘violation of a company’s own policy supports an inference of scienter.’ ”) (quoting Provenz v. Miller, 102 F.3d 1478, 1490 (9th Cir.1996)). To be sure, the application of accounting principles often involves details and minutiae, but the accounting principle violated here boils down to the well-worn adage, “Don’t count your chickens before they hatch.” These common-sense observations compel the conclusion that the alleged simplicity of the GAAP rules violated here are relevant and contribute probative weight to an inference of scienter. Finally, the Complaint in some detail alleges that MicroStrategy, through improper revenue recognition practices, violated GAAP and its own accounting policies with respect to three of its most important contracts. ■ First, Plaintiffs point to MicroStrategy’s multimillion dollar contract with NCR Corporation (“NCR”). According to the Complaint, this contract was a significant factor in the Company’s reported results for the third quarter of 1999 — accounting for approximately 50% of MicroStrategy’s reported license revenues for that quarter and for all of the revenue and earnings growth the Company purportedly saw for that quarter — and was characterized as a “watershed event” in Mi-croStrategy’s history by analysts. A spokesperson and a vice-president from NCR, however, have stated that the agreement was not finalized until the fourth quarter of 1999 and that NCR had no “contractual rights” with respect to the transaction until the fourth quarter; accordingly, no revenues from the contract should have been recognized, if at all, until the fourth quarter (and not the third quarter) of 1999. MicroStrate-gy’s early recognition of revenues from this transaction alone allowed MicroStra-tegy to report a profit of $0.09 per share, rather than the approximately $0.30 loss per share that it would have had had it followed GAAP. (¶¶ 5, 73.) Second, the Complaint also points to contracts between MicroStrategy and Exchange Applications Inc. (“Exchange”) and Primark, which collectively accounted for approximately 25% of the revenue that the Company reported for the fourth quarter of 1999. MicroStrategy allegedly improperly recognized approximately $14 million from the Exchange contract in the fourth quarter of 1999, when, in fact, the contract was not executed by both parties until after the fourth quarter and the fiscal year closed on December 31, 1999. In addition, the Company recognized at least $5 million in revenue from its arrangement with Pri-mark in the fourth quarter of 1999 even though Primark did not report the contract as executed until the first quarter of 2000. But for these two instances of improper recognition of revenues, the Complaint alleges, MicroStrategy would have reported substantial losses for the quarter, instead of the $3.76 million in net income that the Company reported. (¶¶ 3, 74-76.) It would strain credulity to conclude that no probative value at all attaches to MicroStrategy’s failure to apply to three of the most important contracts in its corporate life the GAAP and Company policy that revenues from contracts should not be recognized until the contracts are executed. To the contrary, “[p]roblems with a transaction with a major impact on revenues are more likely to help support a strong evidence of scienter,” and, here, the significance of the NCR, Exchange, and Primark contracts to MicroStrategy certainly makes less credible the inference that the Defendants were not aware of or did not recklessly disregard the accounting irregularities relating to these contracts. Greebel v. FTP Software, Inc., 194 F.3d 185, 206 n. 18 (1st Cir.1999); see, e.g., In re Aetna Inc. Sec. Litig., 34 F.Supp.2d 935, 953-54 (E.D.Pa.1999) (finding a strong inference that defendants/officers had conscious knowledge of misrepresentations and omissions concerning financial impact and success of integration with acquired company from their high-level executive positions and the significance and importance of the acquisition); Chalverus, 59 F.Supp.2d at 228-29. Moreover, that these accounting irregularities involved contracts signed at or near the end of fiscal years and quarters further casts the suspicious nature of MicroStrategy’s GAAP violations in bold relief, for “[d]rastic overstatements of revenue are particularly suspect when the transaction occurs at a suspicious time, such as the end of a fiscal quarter or year.” Chalverus, 59 F.Supp.2d. at 234. In sum, these further allegations shed light on otherwise inferentially ambiguous (though not barren) allegations that there were GAAP violations and restatements of financials. An analysis of MicroStrategy’s GAAP violations and restatement of finan-cials, when viewed in light of the magnitude of the overstatements, the nature of the accounting principles violated, and the importance of the contracts to which these principles were applied compels the conclusion that Plaintiffs, with these factual allegations, shift the balance of inferences to be drawn from MicroStrategy’s GAAP violations and subsequent restatements in favor of scienter. It is not necessary to determine whether such a shift is strongly in favor of scienter, however, as the Complaint contains yet additional factual allegations relevant to .the inquiry that must, therefore, be considered. b. Statements by Michael Saylor Plaintiffs also allege that statements made by Defendant Saylor in various interviews published in newspapers and magazines lend further weight to the inference that Defendants were aware of, or reckless as to, the improper accounting practices at issue. (¶¶ 100-02.) The Complaint excerpts an interview of Saylor with a reporter of the Washington Post in June 1999: “In the public world there’s a difference between 11:59 and 12:01, the last day of March. There’s a tangible difference,” Saylor said. “One of them is, you go to jail if the thing gets signed at 12:01.... ” One of them is, the stock is up $500 million. And the other one is, you’ve just torched the life and livelihood of a thousand families. “Would you sacrifice a thousand people’s lives for one minute of integrity, or would you, like, put the clock back?” It was a dilemma he now had to “deal with ... every quarter,” he said. (¶ 100.) These statements, as Plaintiffs contend, are probative of a cavalier and manipulative attitude toward disclosure requirements on the part of the President and Chief Executive Officer of MicroStra-tegy, if not the Company and its officers and directors generally. These statements at the very least provide further context to MicroStrategy’s revenue recognition practices and are, therefore, not without probative value. First, these statements were made by the Company’s top officer and principal shareholder, and it is a fair inference to draw that these statements relate not only to Saylor’s personal views, but also to his conduct of official duties at MicroStrategy and to accounting practices at the Company. Second, Saylor’s statements are particularly probative, as they tend to show a particularized awareness of the importance of timing in accounting for contract revenues. Indeed, that Saylor chose to characterize the choice as one between “put[ting] the clock back” and “the stock is up $500 million,” on the one hand, and “one minute of integrity” while “torching] the life and livelihood of a thousand families” and “sacrificing] a thousand people’s lives,” on the other, provides a valuable insight into Saylor’s state of mind. Saylor’s statements, when combined with MicroStrategy’s GAAP violations and restatements viewed in context, contribute significant weight to an inference of scien-ter in this case. Again, however, it is not necessary to assess the strength of these inferences at this juncture, for there is more — the Complaint contains additional factual allegations probative of scienter. c. The March 20, 2000, Restatement Announcement and Subsequent Correction The Complaint further alleges that the actions taken and statements made by the Defendants in connection with the Company’s March 20, 2000, restatement announcement further evidence their fraudulent intent. (¶¶ 59-60, 107.) Specifically, the Complaint alleges that in Mi-croStrategy’s March 20, 2000, press release, in which it announced its intention to restate its financials, the Company attributed the restatement to a decision to “conform to the most recent statement of the Securities and Exchange Commission and the accounting profession regarding revenue recognition in the software industry” and focused on SEC Staff Accounting Bulletin 101, which was issued in December 1999. This statement, argue Plaintiffs, “gave the false impression that the restatement was due to recent changes in GAAP interpretations by the SEC, rather than the Company’s and PWC’s recent and purposeful (or, at the very least, reckless) violation of long-standing GAAP pronouncements.” (¶ 59.) In addition, the Complaint alleges that, prompted by the SEC to disclose the true reason for the restatements, MicroStrategy the following day “reversed itself and conceded in a press release that the restatements had been compelled by a need to conform with GAAP pronouncements that had been in effect since 1997.” (¶60 (emphasis in original).) These allegations, taken as true at this stage, are probative of scienter. A fair inference to be drawn from the fact that MicroStrategy originally cited a different — if not an outright false and misleading — reason for its need to restate its fi-nancials is that, faced with the public revelation of its irregular accounting practices, the Company was seeking to conceal a conscious or reckless practice of violating GAAP and falsely reporting financial figures. And, insofar as such attempts at covering-up the truth are probative of a culpable state of mind, Mi-croStrategy’s contention that “any alleged mistakes in the press release’s citations to accounting releases in explaining the restatement cast no light about what defendants knew at the time the original financial statements were issued” is simply unpersuasive. Thus, these allegations further tip the balance of inferences regarding the Defendants’ states of mind in favor of scienter. d. Motive and Opportunity As discussed above, under the pre-PSLRA jurisprudence of the Second Circuit, allegations that a defendant had the motive and opportunity to commit securities fraud per se raised a strong inference of scienter. Since the PSLRA’s passage, courts have split on whether pleading motive and opportunity per se suffices . to raise a strong inference of scienter. The better rule, however — the one compelled by the PSLRA’s language — is that allegations of motive and opportunity are relevant, though not necessarily sufficient, to establishing a strong inference of scienter. This is so because these formalistic categories of “motive” and “opportunity” are insufficiently sophisticated to distinguish between (i) general motives and opportunities possessed by every officer and director — which, while relevant, are by themselves inferentially ambivalent and therefore not supportive of a strong inference of scienter — and (ii) specific motives and opportunities to commit fraud — which may contribute more significantly to such an inference. Indeed, that courts recognizing the per se “motive and opportunity” test find it necessary to qualify its application with the common-sense rule that “a generalized motive, one which could be imputed to any publicly-owned, for-profit endeavor, is not sufficiently concrete for purposes of inferring scienter,” demonstrates that, ultimately, these formal categories are of little help. Chill, 101 F.3d at 268 (emphasis added). Thus, the task at hand is not to pigeonhole factual allegations in the Complaint into the discrete and isolated categories of “motive” and “opportunity,” but rather to determine whether the relevant allegations of motive and opportunity in the Complaint are sufficiently concrete to contribute to a strong inference of scienter to be drawn from the totality of the circumstances. It is doubtless true that key directors and officers have the ability to manipulate their company’s stock price, and Defendants do not dispute that they had the opportunity to commit fraud in this case. Plaintiffs allege in the Complaint that the Individual Defendants were among Mi-crostrategy’s most senior executive officers charged with conducting the day-today affairs of the Company; that some of the Individual Defendants were also members of the board of directors’ audit committee, which met periodically during the Class Period; and that the positions of the Individual Defendants provided them with direct access to confidential, nonpublic information concerning the Company, including, in particular, the Company’s sales and accounting information. (¶¶ 20, 93, 111, 116-18.) The key question, therefore, is whether the Complaint pleads facts indicating a specific motive that is, in turn, more probative than not of scienter. There is no dispute that allegations pertaining to motivation that are applicable to every corporation or corporate officer cannot, by themselves, raise a strong inference of scienter. This is so because an inference based on a general motive shared by all corporate officers and directors is no more probative of sciénter than of other less-culpable states of mind; therefore, “[t]o find such bare allegations sufficient ... would unfairly infer an intent to defraud based on the position an individual held with a company.” In re Stratosphere Corp. Sec. Litig., 1 F.Supp.2d 1096, 1116 (D.Nev.1998). But, a more particularized motive to commit fraud, one tied to specific circumstances, is not so inferentially ambiguous, and a showing of “ ‘concrete benefits that could be realized by one or more of the false statements and wrongful nondisclosures alleged’ ” may provide the necessary added inferential weight to tilt the balance in favor of scienter. Phillips, 190 F.3d at 621 (quoting Shields v. Citytrust Bancorp. Inc., 25 F.3d 1124, 1130 (2d Cir.1994) and Zeid v. Kimberley, 973 F.Supp. 910, 923 (N.D.Cal.1997)). Thus, for example, allegations of insider trading may strengthen an inference of scienter where “the trades were unusual in their timing or amount.” In re Orbital Sciences Corp. Sec. Litig., 58 F.Supp.2d 682, 686 (E.D.Va.1999); cf. Greebel, 194 F.3d at 198 (“[M]ere pleading of insider trading, without regard to either context or the strength of the inferences to be drawn, is not enough.”) (emphasis added). In this case, the Complaint alleges that Defendants’ opportunity and motivation (i) to profit from insider sales by the Individual Defendants, (ii) to meet Wall Street estimates and thereby profit from MicroS-trategy’s IPO and other secondary offerings, and (in) to portray the Company favorably to creditors and to meet specific credit agreements with lenders in themselves raise, or with their other allegations contribute to raising, a strong inference of scienter. (¶¶ 108-10.) Whether these allegations succeed will be discussed in turn. i. Insider Sales The Complaint alleges that the Individual Defendants were motivated to commit the alleged fraud because “they were able to handsomely benefit from the resulting inflation of MicroStrategy’s stock price.” Plaintiffs allege that the Individual Defendants “reaped over $90 million from sales of substantial portions of their holdings during the Class Period,” and that the magnitude and timing of these sales of stock — independent of any sales in the context of an offering — by themselves raise a strong inference or are probative of scienter. (¶ 110.) See Phillips, 190 F.3d at 622 (“To support a claim of motive based on the benefit a defendant derives from an increase in the value of his holdings, a plaintiff must demonstrate some sale of ‘personally-held stock’ or ‘insider trading’ by the defendant.”) (quoting Marksman, 927 F.Supp. at 1312). It is settled that a “mere pleading of insider trading, without regard to either context or the strength of the inferences to be drawn, is not enough.” Greebel, 194 F.3d at 198; see Maldonado v. Dominguez, 137 F.3d 1, 9-10 (1st Cir.1998). However, it is equally well-settled that “[s]ales of stock by corporate insiders can suffice to establish scienter if the trades were unusual in their timing or amount.” In re Orbital, 58 F.Supp.2d at 686 (emphasis added); see also In re Apple Computer Sec. Litig., 886 F.2d 1109, 1117 (9th Cir.1989); In re Comshare, 183 F.3d at 553. In this reg