Full opinion text
OPINION AND ORDER SCHEINDLIN, District Judge. Gabriel Capital, L.P. (“Gabriel Capital”) and Ariel Fund Ltd. (“Ariel Fund”) (collectively “plaintiffs”) are suing defendants NatWest Finance, Inc. (“NatWest Finance”), NatWest Capital Markets Limited (“NatWest Capital”), National Westminster Bank PLC (“NatWest Bank”), McDonald Investments Inc. (“McDonald”), and Steel Dynamics Inc. (“SDI”) for securities fraud arising from plaintiffs’ purchase of certain debt securities (the “Note” or “Notes”). Plaintiffs allege that defendants violated section 10(b) of the Securities and Exchange Act of 1934 (the “1934 Act”), 15 U.S.C. § 783(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, by making or participating in the making of untrue statements and by omitting material facts in order to induce plaintiffs to purchase the Notes. In addition, plaintiffs allege that NatWest Bank is a controlling person within the meaning of section 20 of the 1934 Act, 15 U.S.C. § 78t(a), with respect to the activities of NatWest Finance and NatWest Capital. Finally, plaintiffs allege that, through the same conduct, defendants committed common law fraud, conspired to commit fraud, and aided and abetted fraud, all in violation of New York law. On May 8, 2000, this Court denied a motion to dismiss filed by NatWest Finance and McDonald and granted in part and denied in part a motion to dismiss filed by SDI. See Gabriel Capital, L.P. v. NatWest Finance, Inc., 94 F.Supp.2d 491 (S.D.N.Y.2000) (the “Opinion”). On May 30, 2000, plaintiffs filed their second amended complaint (the “SAC”). In the SAC, plaintiffs attempted to cure the deficiencies in their allegations against SDI and added claims against two new defendants — NatWest Capital and NatWest Bank. SDI, NatWest Capital and NatWest Bank all have moved to dismiss the SAC pursuant to Fed.R.Civ.P. 9(b) and 12(b)(6). This case illustrates the tension between the heightened pleading requirements in securities fraud cases and the realistic limitations on the ability of plaintiffs to make specific factual allegations prior to the opportunity to obtain full discovery. Plaintiffs have filed a 61-page complaint containing a wealth of detailed allegations. While the length of a complaint alone is no guarantee of its adequacy, this complaint provides sufficient detail to state the claims it purports' to plead. Common sense requires that courts remember the purpose of a pleading — to state a claim and provide adequate notice of that claim. A pleading is not a trial and plaintiffs are not required to marshal their evidence and sustain a verdict at this stage. To require further pleading by these plaintiffs would be a misguided exercise. As the sheer weight of this Opinion makes clear, I have studied plaintiffs’ allegations and defendants’ arguments in great detail. Plaintiffs have plead facts sufficient to establish each and every element of their claims and placed defendants on reasonable notice of those claims. This case now warrants full discovery. I. BACKGROUND A. Facts Because the Opinion exhaustively summarized the allegations in the Amended Complaint, see Opinion, 94 F.Supp.2d at 495-98,1 will discuss only those portions of the SAC relevant to the pending motions. All facts alleged in the SAC are assumed to be true. See Harris v. City of New York, 186 F.3d 243, 247 (2d Cir.1999) (“On a motion to dismiss under Rule 12(b)(6), the court must accept as true the factual allegations in the complaint, and draw all reasonable inferences in favor of the plaintiff.”). 1. General background Nakornthai Strip Mill Public Company Limited (“NSM”) owns a steel mill near Chonburi, Thailand. See SAC ¶ 9. In 1995, John W. Schultes, then an employee of U.S. Steel, persuaded Sawasdi Horrun-gruang, the Chairman of the Board of Directors of NSM, to construct a mini-mill (the “Mini-Mill”) at the same site. See id. The design of the Mini-Mill was experimental, incorporating new and unproven technology. See id. NSM initially obtained financing for the Mini-Mill from Horrungruang and a group of Thai banks. See id. ¶ 10. When those sources of financing dried up, due in part to an economic downturn in Thailand in 1997, Schultes approached defendant McDonald, an investment bank with particular expertise in the steel industry. See id. McDonald agreed to help NSM raise funds in the United States. See id. The SAC states that “McDonald, in turn, approached defendant NatWest to become the lead underwriter on the NSM expansion project financing.” Id. ¶ 11. 2. The various NatWest defendants The SAC uses “NatWest” to refer collectively to NatWest Finance, NatWest Capital, and NatWest Bank. See id. ¶ 6(f). NatWest Bank, an English corporation with its principal place of business in London, is engaged in a variety of banking, financial and related activities in numerous countries, including the United States. See id. ¶ 6(a). NatWest Bank, acting directly and through its agents and subsidiaries, served as lead underwriter of the Note offering. See id. NatWest Capital, an English corporation with its principal place of business in London, is a subsidiary of NatWest Bank. See id. ¶ 6(b). The SAC alleges, on information and belief, that NatWest Capital “has no on-going or regular business operations, but is a corporate form used by NatWest Bank from time to time to engage in high yield financing transactions and other capital market activities.” Id. NatWest Bank “used [NatWest Capital] to pose as an ‘initial purchaser’ of the Notes and provided (or was prepared to provide) the funds to [NatWest Capital] for this purpose.” Id. NatWest Finance, a Delaware corporation with its principal place of business (prior to April 1999) in New York, is a wholly-owned subsidiary of NatWest Group Holdings Corporation (“NatWest Group Holdings”). See id. ¶ 6(c). Nat-west Group Holdings, in turn, is a wholly-owned subsidiary of NatWest Bank. See id. NatWest Bank and its subsidiaries are organized into six main business sectors, one of which is NatWest Markets. See id. ¶ 6(d). NatWest Finance is one of the businesses in NatWest Markets, which NatWest Bank describes as its corporate and investment banking arm. See id. In connection with the Note offering, Nat-West Bank “used [NatWest Finance] to assist it in performing an investigation of the creditworthiness of NSM, and to market and sell the Notes to the plaintiffs and other investors.” Id. According to plaintiffs, NatWest Finance is a mere conduit for — and functions solely to achieve the purposes of — Nat-West Bank. See id. ¶ 6(e). NatWest Finance did not have the authority on its own to act as the underwriter of the Notes, nor did it have sufficient capital to purchase the Notes. See id. NatWest Finance ultimately received approval to act as an underwriter from the Director of NatWest Bank’s Group Risk Department and the Chief Operating Officer of Nat-West Bank, who also has the title of Chief Executive of Group Operations. See id. In giving its approval, NatWest Bank “limited the aftermarket trading permitted in the Notes and required that the bonus pool for the personnel involved in the transaction be reduced by any losses incurred in the Note transaction.” Id. The SAC alleges that, in connection with the marketing, sale and underwriting of the Notes, NatWest Finance, NatWest Capital and NatWest Bank “operated as a single integrated enterprise and their business operations were so intermingled as to substantially disregard the corporate separation between these entities.” Id. ¶ 6(f). The materials presented by NatWest when it initially offered its services to NSM referred interchangeably to “NatWest High Yield Group,” “NatWest Markets,” “Gleacher NatWest,” and “NatWest Group,” which was described as “ ‘one of the largest and best capitalized [sic] financial institutions in the world.’ ” See id. In addition, an August 5, 1997 engagement letter to NSM was sent on behalf of “Gleacher NatWest Inc. and its affiliates.” Id. Three weeks later, NatWest Capital sent a letter to NSM indicating that it was “highly confident of [its] ability to sell or place $350 million” of the Notes. Id. Finally, David Wheeler, one of the principal actors in the relevant transactions, represented to plaintiffs that he was an agent of NatWest Finance but was identified on his business card as the Senior Vice President of Investment Banking for NatWest Bank. See id. Similarly Max Holmes, who identified himself as a Managing Director of NatWest Finance, signed an acknowledgment at the closing on behalf of NatWest Capital. See id. 3. Alleged misrepresentations concerning SDI’s role NatWest and McDonald worked together to market the Notes to institutional investors, including plaintiffs. See id. ¶ 11. As part of this marketing effort, NatWest and McDonald prepared an Offering Memorandum and slides that were shown during “road shows.” See id. In mid-to-late February 1998, Robert Sherman, an agent and employee of NatWest, contacted Thomas Mullen, an agent and employee of plaintiffs, seeking an opportunity to pitch the Notes. See id. ¶ 13. Mullen referred Sherman to Jack Mayer and Selin Cebeci, representatives of plaintiffs, who agreed to meet with Sherman and other representatives of NatWest, McDonald, and NSM. See id. a. The road shows On or about February 23, 1998, Mayer and Cebeci met with Schultes (representing NSM), Sherman, Wheeler and Ponte Singh (representing NatWest), and Gary Heasley (representing McDonald). See id. ¶ 14. At this meeting (the “February 23 Road Show”), defendants displayed a series of slides used at other road shows, describing, discussing, and elaborating on the information contained therein. See id. ¶ 16. The Opinion details the allegedly fraudulent statements concerning the Mini-Mill made by defendants at the February 23 Road Show. See Opinion, 94 F.Supp.2d at 496-97. Defendants also discussed the role of SDI at the Mini-Mill during the February 23 Road Show. See SAC ¶ 17. They described the pre-eminent position of SDI in the mini-mill industry and the key role played by Keith Busse, the CEO of SDI, in starting up and managing that company. See id. In addition, plaintiffs were given a copy of a magazine article entitled “Hot Metal Man,” which described Busse as the person who had developed the mini-mill concept and made it successful. See id. Wheeler, Schultes and Heasley told plaintiffs that Busse had participated in other road shows and was available by telephone if plaintiffs wanted to speak directly with him. See id. Finally, Wheeler, Schultes and Heasley reiterated to plaintiffs a number of statements made by Busse at other road shows, attributing those statements to Busse and/or SDI. See id. The SAC provides specific examples of these statements. See id. b. SDI’s actual role The SAC alleges that, through its comments at other road shows and its representations communicated to plaintiffs at the February 23 Road Show, SDI misled investors as to its actual role in the Mini-Mill and its assessment of the Mini-Mill’s capability. See id. ¶ 12(k). In November 1997, SDI made clear to NatWest and McDonald that it could assume only a limited role in helping NSM’s management. See id. ¶ 12(o). At a meeting of SDI’s board of directors on November 12, 1997, Stickler, Heasley, Wheeler, Holmes, and Schultes all acknowledged that SDI: (1) would not have a significant manpower commitment; (2) would not have a permanent or semi-permanent presence in Thailand; and (3) would have a limited, technical and advisory relationship with NSM. See id. ¶ 12(p). On November 18, 1997, counsel for McDonald forwarded to counsel for SDI a draft management agreement entitled the “Management and Technical Assistance Agreement.” See id. ¶ 12(q). Counsel for SDI responded that the word “management” in the title was an overstatement of SDI’s role and sought to have the title changed to “Advisory Services Agreement.” See id. ¶¶ 12(r)-(s). In January 1998, counsel for McDonald told counsel for SDI that it was 'too late to change the name of the agreement because of the many references to the “Management and Technical Assistance Agreement” in the Offering Memorandum. See id. ¶ 12(t). The preliminary Offering Memorandum was produced in February and the final Offering Memorandum was produced in March, with the name of the agreement changed to “Management Advisory and Technical Assistance Agreement.” See id. ¶¶ 12(u)-(v). The terms of the Management Advisory and Technical Assistance Agreement (the “SDI Agreement”), which were being negotiated as the road shows took place, contradict the representations being made by Busse. See id. ¶ 12(w). In particular, the SDI Agreement contains the following provisions: Nothing in the agreement shall be deemed to constitute either party as a “joint venturer or partner of the other Party.” SDI did not. intend “to maintain any regular staff presence or any other permanent or semi-permanent presence or establishment at NSM’s plant in Thailand .... ” The agreement stated that “SDI does not know whether, and has made no representations to NSM, express or implied, to the effect that SDI Technology or SDI’s techniques and culture are appropriate for or best suited to NSM’s needs.” The agreement stated that no one would make any misleading statement “regarding the relationship between SDI and NSM, or state, suggest or imply that SDI manages NSM, exerts management influence or control over NSM, [or] supervises the operations of NSM ...” The agreement provided that “SDI has undertaken no independent study or analysis of NSM’s proposed operations, or of its Mill, its proposed Products, its technology and equipment, its management structure, the nature of its workforce, its labor relations, the sources and nature of its raw materials, its markets, its transportation system, or the impact of its Thai culture, legal system, or tax laws upon its proposed business or upon Mill operations.” Id. The SAC alleges that NatWest, McDonald and SDI misrepresented SDI’s role in the Mini-Mill because they knew that they would not be able to obtain additional financing if NSM’s management was in control of the project. See id. ¶¶ 12(i)-(j). “Busse was aware that SDI’s involvement was critical to the success of the offering and knew or should have known that his comments on SDI’s role in the management of NSM and its review of the Mill would be repeated by the other defendants at the road shows Busse did not attend.” Id. ¶ 12(j). Similarly, Busse acquiesced after his suggested changes to the title of the SDI Agreement were rejected, even though he knew that the other defendants wanted to keep the original title in order to mislead potential investors. See id. ¶ 12(r). c. The Offering Memorandum NatWest and McDonald prepared an Offering Memorandum for prospective investors. See id. ¶ 11. The Offering Memorandum contained a description of SDI’s role at the Mini-Mill and a summary of the SDI Agreement. See id. ¶ 12(x). The SAC alleges that “SDI participated in drafting and editing these portions of the Offering Memorandum, and permitted them to convey a misleading impression of SDI’s role.” Id. Counsel for SDI reviewed drafts of the Offering Memorandum and submitted extensive handwritten notations and editorial comments. See id. Some of SDI’s comments were incorporated into the Offering Memorandum and others were not. See id. SDI also was given the opportunity to review the Offering Memorandum before it became final. See id. ¶ 12(y). “Through this process, SDI caused the Offering Memorandum to mislead the plaintiffs about the actual level of involvement that SDI intended to have with NSM.” Id. d. The slides NatWest and McDonald also prepared a series of slides that were shown to prospective investors during the road shows. See id. ¶ 11. The SAC alleges that these slides contained the following misrepresentations made by SDI: “NSM will be the most advanced, and one of the lowest costs flat-rolled steel production companies in the world;” “As a managing owner, [SDI] will have the second largest equity stake in NSM with a 10% ownership position;” “SDI will provide managerial and technical support under a 10-year Management Agreement;” and “Concept and operating assumptions verified by [SDI].” Id. ¶ 12(j). In their brief in opposition to SDI’s motion to dismiss, plaintiffs allege for the first time that Busse reviewed the slides. See Plaintiffs’ Memorandum of Law in Opposition to Defendant Steel Dynamics, Inc.’s Motion to Dismiss the Second Amended Complaint (“PI. SDI Opp. Mem.”) at 2-3. 4. Sale of the Notes and its aftermath After reviewing and relying upon the written materials provided to them, as well as the oral representations made by defendants, “plaintiffs together purchased $15.5 million in principal value of 12% NSM Senior Steel Mortgage Notes due 2006.” SAC ¶ 18. This purchase took place on or about March 2,1998. See id. On August 24, 1998, SDI’s counsel, Robert S. Walters, sent a memorandum to NSM regarding serious problems with the Mini-Mill (the “Walters Memo”). See id. ¶ 19. The Opinion discusses in detail the contents of the Walters Memo. See Opinion, 94 F.Supp.2d at 497-98. SDI did not send the Walters Memo to plaintiffs or other purchasers. See SAC ¶ 19. On September 24, 1998, Enron Corp. presented a report to the NSM Management Company and the NSM Board (the “Enron Report”). See id. ¶ 21. The Enron Report “documented the substantial use of proceeds [from the offering] in ways not disclosed in the Offering Memorandum and a substantial shortage of funds necessary to complete the DRI and Finishing Facilities.” Id. The Enron Report was not provided to plaintiffs or other investors. See id. Soon after the Enron Report, NSM’s Board asked for and received Schultes’ resignation. See id. NSM bondholders were subsequently notified of this resignation in a conference call. See id. ¶ 22. On October 13, 1998, SDI invited bondholders to attend a meeting at its headquarters. See id. Selin Cebeei and Burton Weinstein participated by telephone on behalf of plaintiffs. See id. At that meeting, Busse “provided information to the investors which revealed that the defendants’ representations made prior to the offering were false and misleading.” Id. The SAC details the statements made by Busse at the October 13 meeting: NSM Management Company did not have complete control of NSM’s operations. “Not only did they not understand resource costs, or buy them in the right quantity, they had no financial controls.” Id. ¶ 22(a). SDI never intended to play a significant role in the management of NSM. “I think most of you probably recognize that for legal and [inaudible] and some other reasons, SDI’s role in this transaction was really that of an advisor, and most specifically, I think, that of a technical advisor.” Id. ¶ 22(b). SDI had not verified the design of the Mini-Mill or its operating assumptions. See id. ¶ 22(c). The Hot Mill was not complete and through start-up and was not ready to begin commercial operations. “It can’t operate. It doesn’t have bricks and mortar, so to speak. It doesn’t have the daily ingredients to operate a mill.” Id. ¶ 22(d). The Hot Mill was not producing and had not produced quality steel. See id. ¶ 22(e). The offering did not provide NSM with sufficient capital to complete the DRI and Finishing Facilities and to operate the Mini-Mill, a fact known at the closing. See id. ¶ 22(f). In a letter dated December 30, 1998, Busse notified NSM and NSM Management Company that SDI was terminating its licensing and advisory agreements with NSM (the “Busse Letter”). See id. ¶23. In his letter, Busse “noted that SDI had found a ‘far less complete mill, with serious design flaws, without the wherewithal to complete the project as represented and, even if completed as represented, without the capacity to produce the output upon which the financial projections were predicated.’ ” Id. (quoting Busse Letter). Busse did not circulate his letter to plaintiffs or other NSM bondholders. See id. “Since December 1998, the mill has been shut down; efforts to construct the DRI facilities have been abandoned; there are insufficient funds remaining to complete construction of the DRI and Finishing Facilities; a default has been declared by the bondholders; and there are no present restructuring plans or any realistic prospects for restructuring.” Id. ¶ 24. B. Procedural History On November 5, 1999, plaintiffs served an Amended Complaint on defendants NatWest Finance, McDonald and SDI. On May 8, 2000, this Court denied a joint motion by NatWest Finance and McDonald to dismiss the Amended Complaint. See Opinion, 94 F.Supp.2d at 500-OS. In that same Opinion, SDI’s motion to dismiss plaintiffs’ claims against it for federal securities and common law fraud, as well as conspiracy to commit fraud, was granted but its motion to dismiss plaintiffs’ claim for aiding and abetting fraud was denied. See id. at 508-12. Finally, plaintiffs were granted leave to amend the dismissed claims. See id. at 510-11. On May 30, 2000, plaintiffs filed the SAC, which contains three changes relevant to the pending motions. First, plaintiffs attempted to cure the deficiencies in their claims against SDI. Second, plaintiffs added two new defendants — NatWest Capital and NatWest Bank — and alleged that those defendants acted as a single integrated enterprise with existing defendant NatWest Finance. Third, plaintiffs stated a claim against NatWest Bank as a controlling person within the meaning of section 20 of the 1934 Act, 15 U.S.C. § 78t(a), with respect to the activities of NatWest Finance and NatWest Capital. SDI, Nat-West Capital and NatWest Bank now move to dismiss the SAC pursuant to Rules 9(b) and 12(b)(6). II. DISCUSSION Dismissal of a complaint for failure to state a claim pursuant to Rule 12(b)(6) is proper only where “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Harris, 186 F.3d at 247; see also Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir.1998) (“The task of the court in ruling on a Rule 12(b)(6) motion is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.”) (quotation marks and citation omitted). Thus, to properly rule on such a motion, the court must accept as true all material facts alleged in the complaint and draw all reasonable inferences therefrom in the nonmovant’s favor. See Harris, 186 F.3d at 247. Nevertheless, “[a] complaint which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6).” De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir.1996) (quotation marks and citation omitted). A. Motion to Dismiss Filed by SDI 1. Section 10(b) claim Section 10(b) of the 1934 Act states: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange ... [t]o use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 15 U.S.C. § 78j(b). Rule 10b-5 sets forth specific practices that are considered “manipulative or deceptive.” See 17 C.F.R. § 240.10b-5. Among other things, Rule 10b-5 provides that “[i]t shall be unlawful ... [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 the light of the circumstances under which they were made, not misleading.” 17 C.F.R. § 240.10b-5(b). To state a claim under section 10(b) and Rule 10b-5, plaintiffs must allege that in connection with the purchase or sale of securities: (1) defendants made a false material misrepresentation or omitted to disclose material information; (2) defendants acted with scienter; and (3) plaintiffs detrimentally relied upon defendants’ fraudulent acts. See Press v. Chemical Investment Services Corp., 166 F.3d 529, 534 (2d Cir.1999). Securities fraud actions are subject to the heightened pleading requirements of Rule 9(b): In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally. Fed.R.Civ.P. 9(b); Chill v. General Electric Co., 101 F.3d 263, 267 (2d Cir.1996) (“[T]he actual fraudulent statements or conduct and the fraud alleged must be stated with particularity.”)- In addition, securities fraud actions are governed by the Private Securities Litigation Reform Act of 1995 (“PSLRA”), which contains its own heightened pleading requirements. The PSLRA states, in relevant part: (1) Misleading statements and omissions In any private action arising under this chapter in which the plaintiff alleges that the defendant - (A) made an untrue statement of a material fact; or (B) omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances in which they were made, not misleading; the complaint shall 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, the complaint shall state with particularity all facts on which that belief is formed. (2) Required state of mind In any private action arising under this chapter in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall, with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind. 15 U.S.C. § 78u-4(b); see Press, 166 F.3d at 537-38 (explaining that the PSLRA “heightened the requirement for pleading scienter to the level used by the Second Circuit”). Under the heightened pleading requirements of Rule 9(b) and the PSLRA, plaintiffs must allege the first two elements of a securities fraud claim'—fraudulent acts and scienter—with particularity. See Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1127-28 (2d Cir.1994) (heightened pleading requirement for fraudulent acts); Press, 166 F.3d at 537-38 (heightened pleading requirement for scienter). a. Material misrepresentations i. February 23 Road Show Plaintiffs’ original § 10(b) claim against SDI was dismissed because plaintiffs had failed to allege that any misrepresentations made at the February 23 Road Show were attributed to SDI when they were communicated to plaintiffs. See Opinion, 94 F.Supp.2d at 508-10 (“The problem for plaintiffs is that the Amended Complaint does not allege that the misrepresentations were attributed to SDI at the time of their dissemination.”). The Opinion cited the following passage from Wright v. Ernst & Young LLP, 152 F.3d 169, 175 (2d Cir.1998): [A] secondary actor cannot incur primary liability under the Act for a statement not attributed to that actor at the time of its dissemination. Such a holding would circumvent the reliance requirements of the Act, as reliance only on representations made by others cannot itself form the basis of liability. Thus, the misrepresentation must be attributed to that specific actor at the time of public dissemination, that is, in advance of the investment decision. (quotation marks and citation omitted). In the SAC, plaintiffs have cured the deficiencies identified in the Opinion by specifically alleging that the representatives at the February 23 Road Show “reiterated to the plaintiffs’ representatives statements made by Busse at the prior road shows, and attributed them to Busse and/or SDI.” SAC ¶ 17. In addition, plaintiffs have satisfied the requirements of the PSLRA by identifying a number of specific statements made by Busse and repeated by the participants at the February 23 Road Show: In particular, Wheeler, Schultes and Heasley told plaintiffs that SDI had placed its imprimatur on the NSM project, and that SDI had said that the NSM mill was ‘first class;’ that the technology being used was in essence SDI technology plus certain state-of-the-art technological advances over SDI’s current process and equipment; that SDI would be actively involved; and that SDI had committed to having a presence in Thailand and participating in the management of the plant. Id. Finally, plaintiffs allege that “[e]ven though Busse did not make the above misrepresentations directly to the plaintiffs, Busse and SDI knew or should have known that these misrepresentations would be communicated by the other defendants to the plaintiffs, and attributed to Busse and SDI.” Id. Nevertheless, SDI makes a number of arguments as to why the misrepresentations alleged by plaintiffs are not actionable. First, SDI argues that the statement that the NSM mill was “first class” is too vague to be actionable. The Second Circuit has recognized that vague expressions of optimism can be “too indefinite to be actionable under the securities laws.” In re IBM Corporate Securities Litigation, 163 F.3d 102, 108 (2d Cir.1998); see also San Leandro Emergency Medical Group Profit Sharing Plan v. Philip Morris Companies, Inc., 75 F.3d 801, 811 (2d Cir.1996) (company’s statements that it was “optimistic” about future earnings and “expected” its product to do well “cannot have misled a reasonable investor ... and cannot constitute actionable statements under the securities laws.”). The “first class” statement, however, represents SDI’s opinion of the Mini-Mill at that time, not an expression of optimism about its future. “[A]n opinion may still be actionable if the speaker does not genuinely and reasonably believe it or if it is without a basis in fact.” In re IBM, 163 F.3d at 109. The SAC repeatedly alleges that SDI had serious concerns about the Mini-Mill prior to March 1998. See SAC ¶¶ 12(k), 12(y), 28(a), 28(i). Thus, plaintiffs have alleged that SDI did not genuinely or reasonably believe that the Mini-Mill was “first class” when it made that statement. Cf. In re IBM, 163 F.3d at 109 (granting summary judgment in favor of defendants because “there is no evidence in the record to support a finding that these statements were made in bad faith or that the speakers did not genuinely and reasonably believe that they were accurate.”). Second, SDI argues that the statement that the Mini-Mill was employing “in essence SDI technology plus certain state-of-the-art technological advances” is not actionable because it is too vague and plaintiffs have failed to allege that it is untrue. The SAC states: “Busse, CEO of SDI, recognized prior to the offering and advised NSM, but failed to advise the plaintiffs or other investors, that the mill was not based on commercially proven technologies, but instead was a grand experiment.” SAC ¶ 28(a). The SAC then lists a number of examples of experimental technology at the Mini-Mill. See id. The addition of the phrase “in essence” does not render this allegedly false statement too vague to be actionable. SDI contends that neither statement is actionable because they are contradicted or clarified by unchallenged statements in the Offering Memorandum. The “bespeaks caution” doctrine, however, does not apply where a defendant knew that its statement was false when made. See Milman v. Box Hill Systems Corp., 72 F.Supp.2d 220, 231 (S.D.N.Y.1999) (“[N]o degree of cautionary language will protect material misrepresentations or omissions where defendants knew their statements were false when made.”); see also Ruskin v. TIG Holdings, Inc., 98 Civ. 1068, 2000 WL 1154278, at *7 (S.D.N.Y. Aug.14, 2000) (“[Cjautionary language does not protect material misrepresentations or omissions when defendants knew they were false when made.”) (quotation marks and citation omitted). Because plaintiffs allege that SDI knew its misrepresentations were false when made, see SAC ¶¶ 12(k), 12(y), 28(a), 28(i), the “bespeaks caution” doctrine provides no relief for SDI. Alternatively, SDI contends that the alleged misrepresentations were not material because they would not have been “viewed by the reasonable investor as having significantly altered the total mix of information made available.” Simon De-Bartolo Group, L.P. v. Richard E. Jacobs Group, Inc., 186 F.3d 167, 172 (2d Cir.1999) (quotation marks and citation omitted). Plaintiffs argue that the alleged misrepresentations by SDI, which developed the mini-mill concept, played a significant role in their investment decision. See PL SDI Opp. Mem. at 6-7 (“Given SDI’s status as the world’s leading mini-mill operator — headed by the person who almost single-handedly changed the landscape of the steel industry with the mini-mill concept— it is not surprising that SDI’s pronouncements were instrumental in convincing Gabriel to buy the bonds and makes them actionable.”). At this stage, I cannot conclude that no reasonable investor would have been influenced by the alleged misrepresentations. See Simon DeBartolo, 186 F.3d at 172 (“The determination of materiality is a mixed question of law and fact that generally should be presented to a jury.”) (quotation marks and citation omitted). Third, SDI argues that the statements that it “would be actively involved” in the Mini-Mill and “had committed to having a presence in Thailand and participating in the management of the plant” are not actionable because plaintiffs have failed to allege that those statements are untrue. In fact, SDI contends that it was actively involved, did have a presence in Thailand and did participate in the management of NSM. Plaintiffs allege, in essence, that the statements were untrue because SDI intended to play a much smaller role in the Mini-Mill than the statements at issue would indicate. See SAC ¶¶ 12(k) (“SDI and the underwriter defendants had agreed that SDI would have an extremely limited role in the NSM project and would have no management responsibilities whatsoever.”); 22(b) (“Busse revealed that SDI had never intended to play a significant role in the management of NSM: T think most of you probably recognize that for legal and [inaudible] and some other reasons, SDI’s role in this transaction was really that of an advisor, and most specifically, I think, that of a technical advisor.’ ”). The parties dispute the role SDI intended to play and actually played in the Mini-Mill. Because this factual dispute cannot be resolved at this stage in the proceedings, plaintiffs’ allegations are sufficient to survive a motion to dismiss. See Harris, 186 F.3d at 247 (“On a motion to dismiss under Rule 12(b)(6), the court must accept as true the factual allegations in the complaint, and draw all reasonable inferences in favor of the plaintiff.”). Fourth, SDI argues that the statement that it had placed its “imprimatur” on the NSM project is too vague to be actionable. In response, plaintiffs argue that “the complaint now details statements made by Busse about SDI’s role in the management of NSM and SDI’s review of the Mill that were part and parcel of SDI’s plan to create the appearance that SDI had given NSM its stamp of approval and would actively manage the facility.” PL SDI. Opp. Mem. at 7. As explained in the Opinion and reemphasized above, however, plaintiffs may only base their claim against SDI on statements made to them and attributed to SDI. See Opinion, 94 F.Supp.2d at 508-09 (“[A] defendant does not have to make a misrepresentation directly to a plaintiff, so long as the defendant knows or should know that the misrepresentation will be communicated to the plaintiff. Nevertheless, the party communicating the misrepresentation must attribute that misrepresentation to the defendant.”) (citations omitted). Plaintiffs have identified specific statements made to them and attributed to SDI at the February 23 Road Show, and I have concluded that those statements are actionable. But plaintiffs cannot use their “imprimatur” allegation as a vehicle for holding SDI liable for statements made by Busse at road shows not attended by plaintiffs. See SAC ¶ 12(z) (“Busse’s appearance at numerous road shows, the slides exhibited at road shows, Busse’s comments regarding his own purported review of the plant and his favorable assessment of it compared to SDI, and the reiteration of those comments to prospective investors (including the plaintiffs) at the road shows he did not attend, falsely led investors to believe that SDI had put its ‘stamp of approval’ on NSM and had a valid basis for doing so, when neither was the case.”). Because plaintiffs’ “imprimatur” allegation is an impermissibly vague catch-all, it cannot survive a motion to dismiss. ii. Slides Although plaintiffs identify specific slides that allegedly misrepresented SDI’s role, see SAC ¶ 33(c), those slides cannot form the basis of a § 10(b) claim against SDI. Plaintiffs allege in their opposition brief that SDI reviewed the slides, see PI. SDI Opp. Mem. at 2-3, but that allegation is insufficient. See Opinion, 94 F.Supp.2d at 510 (“At most, the Amended Complaint alleges that SDI knew that NatWest and McDonald would make misrepresentations to plaintiffs about its role in the Mini-Mill. What the Amended Complaint fails to allege is that the misrepresentations communicated to the plaintiffs by NatWest and McDonald were SDI’s misrepresentations.”). Plaintiffs do not allege that the misrepresentations on the slides were attributed to Busse, or that NatWest and McDonald were mere conduits for SDI, or that SDI actually participated in the drafting of the slides. See Opinion, 94 F.Supp.2d at 508-10 (explaining methods by which a party can be held liable for a misrepresentation not made directly to plaintiff). Rather, plaintiffs allege that NatWest and McDonald “prepared slides which were used at each road show and which contained ... representations made by Busse.” SAC ¶ 12(j). If the misrepresentations were not attributed to Busse when they were communicated to plaintiffs, even if Busse had made those statements on some prior occasion, SDI cannot be held liable to plaintiffs for those slides under § 10(b). See Wright, 152 F.3d at 175 (“[Rjeliance only on representations made by others cannot itself form the basis of liability.”) (quotation marks and citation omitted). As demonstrated above, plaintiffs know how to allege that misrepresentations were attributed to SDI. See SAC ¶ 17 (“Wheeler, Schultes and Heasley reiterated to the plaintiffs’ representatives statements made by Busse at the prior road shows, and attributed them to Busse and/or SDI.”). They have failed to make such allegations concerning the slides, iii. Offering Memorandum Plaintiffs also allege that SDI is responsible for material misrepresentations in the Offering Memorandum concerning its role in the Mini-Mill because “SDI participated in drafting and editing these portions of the Offering Memorandum, and permitted them to convey a misleading impression of SDI’s role.” SAC ¶ 12(x). SDI argues that plaintiffs have failed to identify any allegedly untrue statements regarding SDI’s role. “To state a claim with the required particularity, a complaint must: (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Stevelman v. Alias Research Inc., 174 F.3d 79, 84 (2d Cir.1999) (quotation marks and citation omitted). Plaintiffs have identified two specific statements in the Offering Memorandum, drafted in part by SDI, which SDI itself thought were misleading: A section of the draft Offering Memorandum entitled “Description of Project Participants” began with a description of SDI. In its review of the draft, “SDI circled the phrase ‘Project Participants’ and wrote the following: “Misleading! SDI is not a ‘participant.’ ” The Offering Memorandum was never changed. A section of the draft Offering Memorandum entitled “Description of Material Agreements” summarized the SDI Agreement. SDI’s comments on this section stated: “Nothing here about operating the Mill. Should be added.” In the final Offering Memorandum, however, “nothing was added to clarify that SDI had no responsibility for operating the mill, permitting the continued perpetration of the misleading impression that SDI would have direct management responsibility.” SAC ¶ 12(x). SDI argues that those statements are neither misleading nor material in the context of the Offering Memorandum as a whole. Those arguments, however, cannot be resolved at this stage of the proceedings. “The determination of materiality is a mixed question of law and fact that generally should be presented to a jury. The total mix of information available and the relevant circumstances must be considered.” Press, 166 F.3d at 538 (citations omitted); see also Geiger v. Solomon-Page Group, Ltd., 933 F.Supp. 1180, 1184 (S.D.N.Y.1996) (“The question of materiality may be decided as a matter of law on a motion to dismiss if the alleged omission is so obviously unimportant to a reasonable investor that reasonable minds could not differ on the question of its importance.”) (quotation marks and citation omitted). Drawing all reasonable inferences in plaintiffs’ favor, the alleged misrepresentations regarding the SDI Agreement and its role in the Mini-Mill might have been misleading and material. In addition, plaintiffs make a more general allegation concerning SDI’s failure to disclose material information in the Offering Memorandum: In addition to drafting and editing portions of the Offering Memorandum, SDI also requested and was given the opportunity to review and comment on the Offering Memorandum before it became final. Through this process, SDI caused the Offering Memorandum to mislead the plaintiffs about the actual level of involvement that SDI intended to have with NSM. In particular, SDI did not disclose that it had rejected an active management role in NSM; that it had strictly limited the scope of its services to be advisory only; that it did not intend to be involved in the day-to-day operations or management of the plant; that it had contractually disclaimed any such responsibilities; that it was not a ‘managing owner’ as stated in the slides; that it was not a ‘strategic equity investor’ as the slides purported; that it had not verified the concept and operating assumptions of the Mill as the slides represented; that Busse’s alleged ‘review’ of the plant had occurred in May 1997, at the very early stages of construction and months before the plant was completed or operational; that notwithstanding this limited review, Busse and SDI had significant concerns about the design and operating assumptions for the project; and that SDI had contractually disavowed any review or analysis of the design or operating assumptions. SAC ¶ 12(y). In essence, plaintiffs seek to hold SDI liable for not using the Offering Memorandum to correct statements made by Busse and others at road shows not attended by plaintiffs. As I have emphasized repeatedly, however, statements made by SDI at road shows not attended by plaintiffs cannot support a claim against SDI, unless those statements were communicated to plaintiffs and attributed to SDI before they purchased the Notes. See Opinion, 94 F.Supp.2d at 508-10. Plaintiffs have sufficiently alleged that some of SDI’s misrepresentations were communicated to them and attributed to SDI at the February 23 Road Show. See supra Part II.A.l.a.i. If plaintiffs can demonstrate that specific portions of the Offering Memorandum were misleading because of those misrepresentations, then they can hold SDI liable for failing to correct those sections of the Offering Memorandum. See 17 C.F.R. § 240.10b-5 (“It shall be unlawful ... to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.”). They cannot, however, hold SDI liable for failing to use the Offering Memorandum to correct misrepresentations not made to them before they purchased the Notes. b. Scienter Because plaintiffs have sufficiently alleged that SDI made several material misrepresentations, the next question is whether plaintiffs pleaded scienter with sufficient particularity. In order to satisfy this requirement, plaintiffs must allege facts that give rise to a strong inference of fraudulent intent. The requisite strong inference of fraud may be established either (a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness. Acito v. IMCERA Group, Inc., 47 F.3d 47, 52 (2d Cir.1995) (quotations marks and citations omitted). i. Motive and opportunity The Second Circuit recently summarized the relevant standard: Motive would entail concrete benefits that could be realized by one or more of the false statements and wrongful non-disclosures alleged. Opportunity would entail the means and likely prospect of achieving concrete benefits by the means alleged. Novak v. Kasaks, 216 F.3d 300, 307 (2d Cir.2000), petition for cert. filed, (Sept. 19, 2000) (No. 00-432). Plaintiffs contend that SDI had three motives to commit the alleged fraud: (1) an annual fee of $2,000,000 and a one-time fee of $1,300,000; (2) a 10% shareholder interest in NSM; and (3) a license to use the Mini-Mill’s experimental technology. See SAC ¶ 46. SDI argues that none of these motives are sufficient because the receipt of fees alone is inadequate and because the other two motives could not be achieved by participating in a fraud. If the entire Mini-Mill was a sham, SDI’s 10% interest would be worthless and it never would have had the opportunity to see the experimental technology in action. See Shields, 25 F.3d at 1130 (“In looking for a sufficient allegation of motive, we assume that the defendant is acting in his or her informed economic self-interest.”). On a motion to dismiss, however, the court must draw all reasonable inferences in the nonmovant’s favor. See Harris, 186 F.3d at 247 (“The district court should grant such a motion only if, after viewing plaintiffs allegations in this favorable light, it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”). Plaintiffs argue that they are “not alleging that SDI knew that [the Mini-Mill’s] prospects were doomed. [Plaintiffs are] alleging that SDI knew that there were questionable aspects of the mill’s design, that the technology was largely unproven, and that disclosing those facts to investors would have doomed the offering — thereby preventing SDI from earning millions of dollars and otherwise benefitting from NSM’s grand experiment with other people’s money.” PI. SDI Opp. Mem. at 17 n. 11; see also id. at 16 (“In effect, SDI was to get the benefit of a half-billion-dollar investment in new, unproven technology on someone else’s nickel.”). Under plaintiffs’ theory, SDI would receive concrete benefits by misrepresenting the state of the Mini-Mill, even if it turned out to be a failure, and had the opportunity to make such misrepresentations at the road shows. See Novak, 216 F.3d at 307-08 (“[Plaintiffs had to allege that defendants benefit-ted in some concrete and personal way from the purported fraud.”). Accordingly, plaintiffs have sufficiently plead motive and opportunity. ii. Conscious misbehavior or recklessness The Second Circuit has stated: [R]eckless conduct is, at the least, conduct which is highly unreasonable and which represents an extreme departure from the standards of ordinary care ... to the extent that the danger was either known to the defendant or so obvious that the defendant must have been aware of it. An egregious refusal to see the obvious, or to investigate the doubtful, may in some cases give rise to an inference of ... recklessness. Chill, 101 F.3d at 269 (quotation marks and citations omitted). Recently, however, the Second Circuit noted that “these general standards offer little insight into precisely what actions and behaviors constitute recklessness sufficient for § 10(b) liability.” Novak, 216 F.3d at 308. The court then explained: [Securities fraud claims typically have sufficed to state a claim based on recklessness when they have specifically alleged defendants’ knowledge of facts or access to information contradicting their public statements. Under such circumstances, defendants knew or, more importantly, should have known that they were misrepresenting material facts related to the corporation. Id. Plaintiffs’ allegations satisfy that standard. Taking the facts alleged in the SAC as true, SDI represented that the Mini-Mill was “first class” despite its serious concerns, stated that the Mini-Mill was employing “in essence SDI technology plus certain state-of-the-art technological advances” despite its knowledge that the Mini-Mill was based on experimental technology, and vastly overstated its intended role in the management and day-to-day operations of the Mini-Mill. See SAC ¶¶ 12(k), 12(y), 28(a), 28(i). Those facts are sufficient to plead scienter based on recklessness. See In re Carter-Wallace, Inc. Securities Litigation, 220 F.3d 36, 40 (2d Cir.2000) (“It is sufficient for appellants to allege ‘defendants’ knowledge of facts or access to information contradicting their public statements.’ ”) (quoting Novak, 216 F.3d at 308); see also Opinion, 94 F.Supp.2d at 505-06 (collecting cases where plaintiffs successfully alleged conscious misbehavior or recklessness). SDI argues that its disclosure of problems at the Mini-Mill, first to NSM in August 1998 and then to bondholders in October 1998, negate any evidence giving rise to a strong inference of fraudulent intent. In support, SDI cites Griffin v. McNiff, 744 F.Supp. 1237 (S.D.N.Y.1990), aff'd, 996 F.2d 303 (2d Cir.1993), in which the court granted a motion to dismiss by an accounting firm that had withdrawn its reports and tax opinions in an allegedly fraudulent scheme. In Griffin, however, the court specifically noted that the accounting firm had no knowledge of the alleged fraud when it issued its reports and tax opinions: [A]t best, the Second Amended Complaint alleges that Price Waterhouse became aware of these deficiencies in January of 1983. Subsequently, Price Waterhouse acted to inform the general partners of its concern, withdraw its reports and tax opinion letters, and ensure that the investors were notified of the reasons behind its withdrawal. These allegations simply do not support a strong inference of scienter. If anything, they indicate exactly the opposite: that Price Waterhouse did not know of the alleged wrongdoing during the offerings of the partnerships. Id. at 1250. In this case, by contrast, plaintiffs allege that SDI knew about problems at the Mini-Mill when it made its misrepresentations. Cf. id. at 1249 (“Plaintiffs, rather than providing facts to buttress their allegations of scienter, allege facts which substantially undercut the strength of any inference of scienter that might be drawn from Price Waterhouse’s conduct”). Nevertheless, SDI contends that plaintiffs have failed to offer an explanation of its disclosures that supports a strong inference of fraudulent intent. See Memorandum of Law in Support of Defendant Steel Dynamics, Inc.’s Motion to Dismiss Plaintiffs’ Second Amended Complaint at 17 (“It is nonsense for plaintiffs to contend that, a few short months after the close of the NSM offering, [SDI] first accused itself of committing securities fraud in a non-privileged memorandum to NSM’s counsel, and then revealed the facts underlying its securities fraud to all of the bondholders during a meeting at [SDI’s] own corporate headquarters.”). Clearly, one reasonable inference to draw from SDI’s disclosures is that SDI lacked any fraudulent intent and, upon learning of the problems at the Mini-Mill, promptly disclosed them to NSM and then to the bondholders. Plaintiffs argue, however, that SDI made its disclosures in an effort to distance itself from the fraudulent scheme. See PI. SDI Opp. Mem. at 15 n. 10 (“An equally plausible argument — and one Gabriel believes to be the case — is that once the fraud began to unravel, SDI embarked on a scheme to distance itself from the problem by appearing to be an innocent player.”). This is another reasonable inference to be drawn from the facts alleged in the SAC. Because every inference must be drawn in plaintiffs’ favor, the motion to dismiss must be denied. See Press, 166 F.3d at 538 (“The Second Circuit has been lenient in allowing scienter issues to withstand summary judgment based on fairly tenuous inferences.”). c. Conclusion Plaintiffs have cured the deficiencies identified in the Opinion and sufficiently stated a § 10(b) claim against SDI. As a result, SDI’s motion to dismiss must be denied. 2. State law claims Plaintiffs’ common law fraud claim against SDI was dismissed because plaintiffs had failed to adequately plead their federal securities fraud claim. See Opinion, 94 F.Supp.2d at 511. Because plaintiffs have cured the deficiencies in the federal securities fraud claim, their common law fraud claim also survives. See Scone Investments, L.P. v. American Third Market Corp., No. 97 Civ. 3802,1998 WL 205338, at *10 (S.D.N.Y. Apr.28, 1998) (“[T]he elements of common law fraud are essentially the same as those which must be pleaded to establish a claim under § 10(b) and Rule 10b-5.”). In addition, SDI argues that plaintiffs’ claims for conspiracy to commit fraud and aiding and abetting fraud should be dismissed because plaintiffs failed to allege scienter. As explained above, however, plaintiffs’ allegations of scienter are sufficient. See supra Part II.A.l.b. SDI’s motion to dismiss plaintiffs’ state law claims for common law fraud, conspiracy to commit fraud and aiding and abetting fraud is therefore denied. B. Motions to Dismiss Filed by Nat-West Bank and NatWest Capital Plaintiffs seek to hold both NatWest Bank and NatWest Capital liable under § 10(b) for the allegedly fraudulent acts of NatWest Finance, either because NatWest Finance was the agent of NatWest Bank or because the corporate veils of NatWest Finance and NatWest Capital should be pierced. Both NatWest Bank and Nat-West Capital argue that neither agency nor veil-piercing liability is viable after Central Bank of Denver, N.A. v. First Interstate Bank, 511 U.S. 164, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994), and that plaintiffs have failed to plead the elements of each theory. In addition, plaintiffs allege that NatWest Bank is liable as a controlling person under § 20(a) for the primary violation committed by NatWest Finance. Because plaintiffs’ three theories of liability — agency, veil-piercing and controlling person — raise some common issues and because the arguments of NatWest Bank and NatWest Capital substantially overlap, I will consider both motions in a single section. 1. Section 20(a) claim Section 20(a) states: Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. 15 U.S.C. § 78t(a). “In order to establish a prima facie case of liability under § 20(a), a plaintiff must show: (1) a primary violation by a controlled person; (2) control of the primary violator by the defendant; and (3) that the controlling person was in some meaningful sense a culpable participant in the primary violation.” Boguslavsky v. Kaplan, 159 F.3d 715, 720 (2d Cir.1998) (quotation marks and citation omitted). Plaintiffs have satisfied the first element by stating a Rule 10b-5 claim against NatWest Finance. See Opinion, 94 F.Supp.2d at 500-08. “Control over a primary violator may be established by showing that the defendant possessed ‘the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.’ ” S.E.C. v. First Jersey Securities, Inc., 101 F.3d 1450, 1472-73 (2d Cir.1996) (quoting 17 C.F.R. § 240.12b-2). To survive a motion to dismiss, a plaintiff need only plead facts supporting a reasonable inference of control. See Mishkin v. Ageloff, 97 Civ. 2690, 1998 WL 651065, at *26 (S.D.N.Y. Sep.23, 1998) (requiring only a reasonable inference of control); In re Health Management, Inc. Securities Litigation, 970 F.Supp. 192, 205 (E.D.N.Y.1997) (same). Plaintiffs have satisfied their burden. The SAC pleads sufficient facts to support a reasonable inference that NatWest Bank had the power to direct the management or policies of NatWest Finance. See SAC ¶¶ 6(a)-(e). Noting that the meaning of the third element — culpable participation — is “less than clear,” plaintiffs argue that “any requirement to plead ‘culpable participation’ must equate with something less than allegations of knowledge or participation in the fraud, or even that the defendant failed to maintain or enforce reasonable internal controls.” Plaintiffs’ Combined Memorandum in Opposition to Motions of Defendants National Westminster Bank PLC and NatWest Capital Markets Limited to Dismiss at 23-24. NatWest Bank, on the other hand, urges this Court to apply the same standard for culpable participation under § 20(a) as for scienter under § 10(b). See Reply Memorandum of Law in Support of Defendant National Westminster Bank PLC’s Motion to Dismiss Second Amended Complaint at 5-6 (“[T]o allege culpable participation, a complaint must plead specific facts demonstrating a ‘strong inference’ that a defendant intentionally or knowingly took affirmative steps in furtherance of the primary fraud.”) (quoting 15 U.S.C. § 78u-4(b)(2)). The Second Circuit has not addressed this issue, other than to state that “a determination of § 20(a) liability requires an individualized determination of a ... defendant’s particular culpability.” Boguslavsky, 159 F.Sd at 720. Because the culpable participation element requires plaintiffs to prove the controlling person’s state of mind, it is subject to the PSLRA’s heightened pleading standards. See 15 U.S.C. § 78u-4(b)(2) (“In any private action arising under this chapter in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall,'with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.”). In order to survive a motion to dismiss, therefore, plaintiffs must state with particularity facts giving rise to a strong inference that NatWest Bank in some meaningful sense culpably participated in NatWest Finance’s primary violation. See Mishkin, 1998 WL 651065, at *23 (“[B]ecause a section 20(a) plaintiff must ultimately establish a defendant’s state of mind, the PSLRA requires a plaintiff, at the pleading stage, to allege particular facts that give rise to a ‘strong inference’ of the requisite state of mind.”); see also Ruskin v. TIG Holdings, Inc., 98 Civ. 1068, 2000 WL 1154278, at *7 (S.D.N.Y. Aug.14, 2000) (ho