Full opinion text
OPINION McKELVIE, District Judge. This is a securities class action. The dispute arises from the corporate restructuring and subsequent bankruptcy of the Cole Taylor Financial Group (“CTFG”) in 1997 and 1998. In 1981, Irwin Cole and Sidney Taylor formed CTFG as a holding company for a group of commercial banking institutions. It remained a private corporation until 1994 when the company made an initial public offering of its stock. In 1997, at the time of the corporate restructuring, CTFG operated as a holding company for three wholly owned subsidiaries: Cole Taylor Bank, a commercial bank based in Chicago, Illinois; Reliance Acceptance Corporation (“RAC”), a finance company specializing in subprime auto loans based in San Antonio, Texas; and CT Mortgage Company, Inc., a mortgage company that provided subprime residential real estate loans. On February 12, 1997, after a vote of the shareholders, CTFG spun off Cole Taylor Bank and CT Mortgage Company and retained control of RAC. On February 9, 1998, less than a year later, CTFG filed for bankruptcy protection in Delaware. In early 1998, shareholders of CTFG filed a number of class action lawsuits in the Western District of Texas, the Northern District of Illinois, and Delaware Chancery Court against officers, directors, accountants, financial advisors, subsidiaries of CTFG, and other entities formed in the split-off transaction, alleging violations of § 10(b), § 14(a), and § 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78n(a), and 78t(a), as well as various state law claims. On September 4, 1998, David Allen, the estate representative of the chapter 11 estate of CTFG and its subsidiaries, filed two adversary bankruptcy proceedings in the United States Bankruptcy Court for the District of Delaware asserting state law fraudulent transfer claims, fiduciary duty claims, professional malpractice claims, and related common law claims against many of defendants named in the Texas and Illinois lawsuits. On March 12, 1999, a number of defendants in the adversarial proceedings moved to withdraw the reference to the bankruptcy court and on June 23, 1999 moved to consolidate the cases. On July 15, 1999 the court granted the motion to consolidate and on July 22, 1999 granted the motion to withdraw the reference to bankruptcy court. On December 9, 1999, the Judicial Panel on Multidistrict Litigation transferred the Texas and Illinois lawsuits to this court to consolidate discovery and other pre-trial matters with the adversarial proceedings in the bankruptcy. In early 2000, defendants moved to dismiss the securities class action complaint pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(6) and § 21D(b) of the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4(b)(1, 2). On April 19, 2000, this court denied defendants’ motions to dismiss. See Graham v. Taylor Capital Group, Inc. (In re Reliance Securities Litigation), 91 F.Supp.2d 706 (D.Del.2000). Since that opinion, a number of defendants have moved separately for summary judgment. This is the court’s decision on those motions. I. FACTUAL AND PROCEDURAL BACKGROUND The court draws the following facts from the pleadings and publicly filed documents, as well as the depositions, affidavits, and answers to interrogatories filed by the parties in support of their motions. Summary judgment is proper if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.Pro. 56(c). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). There is a genuine issue as to a material fact “if a reasonable jury could return a verdict for the nonmoving party.” Id. A. CTFG and The Subsidiaries In the early 1980’s, Irwin Cole and Sidney Taylor formed CTFG as a banking and consumer loan business. By the time of the split-off transaction, CTFG operated solely as a holding company through its wholly owned subsidiaries: Cole Taylor Bank, Reliance Acceptance Corporation, and CT Mortgage Company, Inc. In 1994, CTFG made an initial public offering of its stock. The Cole and Taylor families remained the largest shareholders, each retaining 25% of the outstanding shares. Cole Taylor Bank is a commercial bank, based in Chicago, with a record of sustained profitability, but slow growth. Irwin Cole and Sidney Taylor purchased Cole Taylor Bank in 1969 as Main State Bank. In 1978, Irwin Cole and Sidney Taylor purchased Drovers National Bank and in 1984, CTFG became the holding company for the two banks. By 1992, CTFG had purchased four additional suburban Illinois banks and merged all of the individual institutions into Cole Taylor Bank. In 1997, the bank operated through ten branch offices and provided a full range of commercial and consumer banking services to individuals and companies around Chicago, Illinois. In 1992, CTFG incorporated Reliance Acceptance Corp. as a wholly owned subsidiary. RAC commenced operations in January 1993. It purchased and serviced sales finance contracts in connection with the sale of automobiles. Principally, RAC purchased subprime loans, loans in which the borrowers had substandard or nonexistent credit histories. RAC bought the loans at a discount from the car dealers. On September 80, 1996, the Finance Company operated through 47 branch offices in 16 states and had approximately 400 full time employees. CT Mortgage Company was formed in 1995. It provided residential loans in the subprime market. CTFG’s board took affirmative steps to provide oversight of the financial reports of the subsidiary companies. CTFG had an Internal Audit Department that examined the policies and procedures in place at CTFG and its subsidiaries. This department produced periodic reports on its findings. Maria Tabrizi served as the head of CTFG’s Internal Audit Department. CTFG also established an Audit and Examining Committee, which consisted of three outside directors. Tabrizi served as the committee’s secretary. The committee’s charter states that it “is responsible to the Board of Directors to ensure that the financial reports of the Corporation and its subsidiaries are prepared and reviewed with sufficient competence as to give every reasonable assurance that they accurately reflect the results of the business conducted.” The committee was to meet no less than semiannually with financial management, and annually with outside auditors to review financial reports prior to their release. The Taylor family, co-founder Sidney Taylor and his sons Jeffrey and Bruce Taylor, managed the day-to-day operations of CTFG and helped govern the subsidiaries. Sidney Taylor served as a director and the chairman of the board’s Executive Committee. He also served as a director for both the bank and the auto loan subsidiary. Jeffrey Taylor served as the chairman of CTFG’s Board of Directors, a member of the board’s Executive Committee, and the chief executive officer of CTFG. He also served as the chairman of the bank and as a director of the auto loan subsidiary. Bruce Taylor seived as president of CTFG and as a member of the board’s Executive Committee. He also served as the president and chief executive officer of Cole Taylor Bank and as a director and chief executive officer of the auto loan subsidiary. While less active in the day-to-day operations of CTFG, members of the Cole family also participated in the governance of the company and the auto loan subsidiary. Co-founder Irwin Cole served as a director and vice chairman of the Executive Committee of CTFG and a director and vice chairman of the board of the subprime lender. Irwin’s daughter, Lori Cole, was a director of both CTFG and RAC prior to the corporate restructuring. Thomas Barlow served as the president, chief executive officer and a director of CTFG after the split-off from February 1997 through May 6, 1997. Prior to that he served as president, chief executive officer, and as a director of RAC. Melvin Pearl joined CTFG’s Board of Directors in 1984. He served on the board of RAC from 1994 to 1996. After the reorganization, Pearl left positions at CTFG and at RAC, and became a director of Cole Taylor Bank. Howard Silverman was a director of CTFG and the chairman of the Board of Directors of RAC from its inception. Solway Firestone is a certified public accountant. He served on CTFG’s Board of Directors and on the Audit and Examining Committee before the restructuring. After the split-off, Firestone served as chairman of the Audit and Examining Committee and as a member of the newly formed Financial Oversight Committee. Dean Griffith became a director of CTFG in 1989. He served on CTFG’s Audit and Examining Committee from 1995 until the reorganization. Ross Mangano became a director of CTFG in 1993. He served as a member of the Audit and Examining Committee until the split-off and thereafter as a member of the Financial Oversight Committee. William Race served as chief financial officer of CTFG from 1990 until August 31, 1995. From August 31, 1995 until December 31, 1995, Race served as an executive vice president at CTFG. Race also served as a director of CTFG and after the split-off as a member of the Audit and Examining Committee and the chairman of the Financial Oversight Committee. Christopher Alstrin replaced Race- as CTFG’s chief financial officer on September 1, 1995. Alstrin served until the split-off transaction at which time he left CTFG and became as the chief financial officer of Cole Taylor Bank. Michael Bernick served as CTFG’s treasurer until the close of the split-off transaction. He then served as CTFG’s chief financial officer until March 13,1997. James Dolph replaced Bernick as chief financial officer of CTFG after the close of the split-off transaction on March 13, 1997. B. RAC’s Business RAC purchased and serviced subprime automobile loans from automobile dealers. RAC purchased these loans directly from automobile dealerships at a price discounted from the loan’s face value. RAC funded its activities through a combination of bank debt, advances from CTFG, and commercial paper. RAC had a $150 million secured revolving line of credit with a consortium of financial institutions. The line was structured to allow RAC to draw under the facility or to issue commercial paper. Beginning in 1994, RAC reported record net income gains in every reporting period through and including the third quarter of 1996. Plaintiffs contend this income growth rate came as a result of two corresponding actions, RAC taking on ever-riskier loans and RAC’s failure to increase its loan loss reserves. Plaintiffs contend that RAC did not properly estimate the amount of its portfolio that would be recovered and failed to provide an adequate loan loss reserve on their balance sheet. Thus, according to plaintiffs, RAC and CTFG overstated their income for "the years 1993-1996. Because loan portfolios and loss reserves are integral to this opinion, the court sets out a general description of these accounting principles. Under generally accepted accounting principles (“GAAP”), a company is required to recognize all losses that are probable and can be reasonably estimated as of the date of its financial statements. Thus, RAC’s management was required to estimate the amount of its loan portfolio on which a probable loss had been incurred as of the date of the financial statements. A finance company classifies a loan as a loss when it has become impaired, that is, when the company reasonably believes that the borrower will stop paying the loan according to its terms, and when the borrower actually stops payment. Thus, RAC had to estimate periodically which loans were impaired and the total amount that it could recover on impaired loans. A finance company cannot report the value of a loan portfolio on a balance sheet at a number greater than the estimated collectible portion of the loans. In other words, if a loan portfolio has a face value of $100 million, but is only 75 percent collectible, a finance company may not report the portfolio at more than $75 million. Under GAAP, a company should establish sufficient loan reserves to cover the amount of its probable losses that have occurred and can be reasonably estimated. “The reserve is established by a debit to an expense account called the loan loss provision, with a corresponding credit to the loan loss reserve.” Shapiro v. UJB Fin. Corp., 964 F.2d 272 (3d Cir.1992) (quoting American Bankers Association, Banking Terminology 215 (1989)). The American Institute of Certified Public Accountants’s Audit and Accounting Guide— Audits of Finance Companies § 2.04 states: A finance company should maintain a reasonable allowance for credit losses applicable to all categories of receivables through periodic charges to operating expenses. The amount of the provision can be considered reasonable when the allowance for credit losses, including the current provision, is adequate to cover estimated losses in the receivable portfolio. RAC included its reserves in its financial statements as part, of the non-refundable dealer discount, that is, the difference between the loan’s face value and the amount RAC paid to the dealer for the loan. (For example, if a loan had a face amount of $10,000 and RAC paid $9,000 for the loan, the $1,000 difference is the non-refundable dealer discount.) RAC charged losses from uncollectible loans against its loss reserves. Because RAC’s portfolio consisted of thousands of homogeneous and relatively small loans, RAC could not know which of these loans were impaired or the amount of the resulting impairment. As opposed to some lending institutions that can set loss reserves by analyzing each of the loans in a portfolio, RAC had to make accounting estimates to set its reserve rates. C. RAC’s Growth and the Split-off Transaction From its inception in 1993, RAC grew rapidly. Each fall the Federal Reserve Bank would review the overall financial condition of CTFG and each of its subsidiaries. On November 7, 1994, the Federal Reserve Bank issued its Combined Report of Inspection and Examination of Cole Taylor Financial Group for the period ending June 30, 1994. The report noted that RAC “was profitable in its seventh month of operation” and that “[e]arnings significantly exceeded the budget.” The report further noted, in a section titled “Future Prospects,” “while representing a small fraction of total consolidated holding company assets, [RAC] has become a substantial contributor to corporate profitability.” RAC’s growth fueled CTFG’s financial' expansion. On 'March 14, 1995, CTFG issued its 1994 Annual Report. In a letter accompanying the report, Jeffrey and Bruce Taylor wrote, “[Cole Taylor Financial Group] continued its transformation into a truly diversified financial service company in 1994. Our finance subsidiary contributed significantly to earnings in only its second year.” Further, the letter stated ' that RAC “achieved tremendous growth in its second year in operation, reporting net income of $4.3 million in 1994, up from $198,000 in 1993.” The annual report noted, “[RAC] has achieved this impressive level of success by adhering to its fundamentals: hiring experienced managers; consistently applying its high underwriting standards; and responding quickly to clients’ needs.” Along with these claims, the Annual Report noted the importance of maintaining “disciplined adherence to underwriting standards” in the subprime market. KPMG audited the consolidated balance sheet and consolidated statements of income for CTFG and its wholly owned subsidiaries for the years 1994, 1995, and 1996. KPMG issued audit reports in each of these years. According to plaintiffs, the January 24, 1995 report, which is representative of the other reports, stated: We have audited the accompanying consolidated balance sheet of Cole Taylor Financial Group and its wholly owned subsidiaries (“the Company”) as of December 31, 1994, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the year then ended.... We conducted our audit in accordance with generally accepted auditing standards .... We believe that our audit provides a reasonable basis for our opinion. In our opinion, the 1994 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cole Taylor Financial Group, Inc. and its wholly owned subsidiaries as of December 31, 1994, and the results of their operations and their cash flow for the year then ended in conformity with generally accepted accounting principles. On March 29, 1995, CTFG filed its 1994 Form 10-K with the Securities Exchange Commission. This document was signed by defendants Jeffrey Taylor, Bruce Taylor, Sidney Taylor, Race, Irwin Cole, Race, Firestone, Griffith, Mangano, and Silver-man. The Form 10-K reported a fourth straight year of record earnings and income for CTFG and its subprime finance subsidiary. The Form 10-K documented RAC’s increase in gross receivables from $24.4 million at year-end 1993 to $126.7 million at year-end 1994. RAC reported a loan loss reserve of $5.35 million for 1994. In the Form 10-K, CTFG noted: The allowance [for loan losses] is maintained by management at a level considered adequate to cover losses that are currently anticipated based on past loss experience, general economic conditions, information about specific borrower situations ... and other factors and estimates which are subject to change over time.... These estimates are reviewed periodically and, as adjustments become necessary, they are reported in income through the provision for loan losses in the periods in which they become known. The adequacy of the allowance for loan losses is monitored by the internal loan review staff and reported to management and the Board of Directors. The plaintiffs contend that despite this statement, RAC did not maintain appropriate levels of loan loss reserves and therefore materially overstated RAC’s and CTFG’s income. In the Forms 10-Q filed throughout 1995, CTFG continued to document RAC’s growth.- In the first quarter, RAC’s net income grew from $369,000 to $1.7 million. Gross finance receivables increased from $42 million at the end of the first quarter of 1994 to $155 million a year later. In the second quarter of 1995, RAC’s net income grew from $660,000 at the end of the second quarter in 1994 to $2.1 million at quarter’s end 1995, gross finance receivables grew from $65 million to $202.1 million over the same period. In the third quarter, RAC’s net income grew from $1.5 million at the end of the third quarter in 1994 to $2.7 million in 1995, gross receivables increased from $96.6 million at quarter’s end to $256.4 million. In 1995, CTFG officers and directors touted the strength of RAC’s loan portfolio. On June 21, 1995, CTFG issued a press release quoting William S. Race, CTFG’s chief financial officer, as stating “ ‘we have been able to maintain both margins and the high quality of receivables.’ ” On the same date, plaintiffs allege, Bruce Taylor made a presentation to institutional investors, portfolio managers, analysts, and brokers. According to plaintiffs, Taylor stated that he expected RAC to continue to achieve strong growth, that RAC adhered to strict underwriting practices, and RAC had strict procedures in place to assure that it maintained a high quality loan portfolio. Despite CTFG’s and RAC’s success, substantial disagreements developed between the Cole family and the Taylor Family regarding the strategic direction of the company. The Cole family proposed a number of transactions for restructuring the company that the Taylor Family resisted. The Cole family, at its own expense, engaged Sandler O’Neill Corporate Strategies to evaluate the options. In August 1995, a special committee of CTFG’s directors determined that the dispute between the Coles and the Taylors was disrupting the management and performance of the company. On August 3, 1995, the Audit and Examining Committee discussed a summary of the audit reviews of RAC’s branch reports for the period April 1, 1995 through June 30,1995. The audit report states that 37% of the branch reports - had incomplete or inaccurate credit investigations or verifications, 26% of the branch reports demonstrated that -the branch had exceeded its loan cap/approval authority, and 15% of the branch reports reflect that the branch had shown poor loan judgment. In a category called, “Other Deficiencies,” the audit report states that 48% of the branch reports demonstrated that the branches are in noncompliance with RAC collection procedures, 37% of the branches were poorly organized, and 33% of the branches gave inadequate training to its employees. According to the minutes,- Firestone, Griffith, and Mangano, attended the committee meeting. Plaintiffs contend that committee members passed information discussed at the Audit and Examining Committee meetings to the rest of the board. In September 1995, CTFG’s Board of Directors voted to retain the Chicago Corp. (subsequently renamed ABN AMRO, Inc.), which had a long-standing relationship with CTFG, to provide advice regarding the company’s strategic options for corporate restructuring. On November 2, 1995, the Audit and Examining Committee again discussed issues related to RAC’s branch offices. According to the meeting minutes, the committee reviewed the Corporate Level Audit Report. Plaintiffs contend that the report disclosed that 62% of the branch reports contained inaccurate or incomplete credit investigations, 54% of the branch reports reflected that funding deposits were not met, and 62% of the branch reports disclosed inaccurate or incomplete repossession records. On November 3, 1995, CTFG publicly announced the retention of Sandler O’Neill and ABN AMRO (collectively, the “Financial Advisors”) to identify potential candidates to acquire all or part of CTFG. As part of their engagement contracts, ABN AMRO and Sandler O’Neill agreed to provide opinions about whether a proposed acquisition or combination was fair to CTFG. Both agreements contained clauses permitting CTFG to publish the Financial Advisor’s opinions in a proxy statement in connection with any transaction. On November 6, 1995, the Federal Reserve Bank of Chicago issued its Report of Inspection and Examination of Cole Taylor Financial Group for the period ending June 30, 1995. According to plaintiffs each of the directors and officers of CTFG received a copy of this report. The cover letter accompanying the report states: “The overall financial condition of the organization is considered satisfactory.... However, the liquidity position of the bank and the funding practices of the nonbank subsidiary [RAC] are two areas which need to be addressed by management.” Although the report gave RAC a satisfactory overall rating, the Federal Reserve Board disclosed that RAC’s asset quality was “deteriorating.” The report stated: A significant portion of [RAC’s] portfolio is not considered seasoned and the deterioration is expected to continue as bad credits continue to surface with the seasoning of the portfolio. As of June 30, 1995, past due receivables represented 1.3% of gross receivables, a significant increase compared to 0.6% a year ago. As of June 30, 1995, repossessions represent 1.3%, compared to 0.8% for June 30, 1994, also indicating a substantial increase.... The increase is largely attributed to the continued seasoning of the portfolio. Despite the increase, management believes that [RAC’s] delinquencies and repossessions compare favorably to the industry.... [RAC’s] management is comfortable that the dealer loss reserve of 5.7% of contract receivables is adequate protection for future losses. However, given the rising delinquencies and repossessions, and the high proportion of unseasoned credits, management is urged to review the adequacy of the dealer loss reserve to absorb potential losses. Failure to maintain an adequate loan loss reserve may leave earnings subject to greater fluctuations should losses continue to rise. The report went on to warn, “it is critical that [RAC] maintain sound underwriting policies and procedures, given that customers have unfavorable credit histories and that the credits ... entail significant risks of default and may increase collection expense.” Further, the author noted, “[s]uc-cess in the sub-prime market relies largely on strict credit discipline, experienced senior officers and branch managers, a low cost, ... operation and an effective collection effort.” On January 30, 1996, CTFG issued a press release again reporting record net earnings. CTFG’s net income increased from $17.8 million in 1994 to $23.7 million at year end 1995. RAC’s year end net income grew from $4.3 million in 1994 to $9.6 in 1995. RAC’s gross receivables grew from $126.7 million in 1994 to $315.9 million in 1995. In light of the disagreements between the Coles and the Taylors, on January 31, 1996, the Taylor Family proposed a split-off transaction in which, immediately after the transfer of certain automobile loan assets and cash from Cole Taylor Bank to another subsidiary of CTFG, the Taylor Family would exchange its existing shares of common stock in CTFG, as well as certain additional shares of common stock, for all of the outstanding common stock of the bank. The Coles resisted this proposal. On April 1, 1996, CTFG filed its 1995 Form 10-K. The 1995 Form 10-K made the same assurances regarding the loan loss reserves as the 1994 Form 10-K. The company noted that the allowance for loan loss reserves was “adequate” and adjusted as the necessary. In 1995, RAC recorded a $12.7 million loan loss reserve. On April 19, 1996, the Taylor family submitted an improved written split-off proposal to the board, increasing the number of shares of CTFG’s common stock that would be exchanged for bank stock, and changing the assets that would be transferred from the bank to cash and accounts receivable. Concurrently, the Financial Advisors identified a third party interested in acquiring the Cole Taylor Bank. The CEO of the third party, however, declined to proceed with the transaction absent unanimous consent of CTFG’s Board of Directors. After Jeffrey Taylor indicated to the CEO that he did not support the sale of the bank to a third party, the CEO stated to the board that he would not submit a bid on the bank as long as the Taylors’ split-off transaction was under consideration. In conjunction with the split-off transaction proposed by the Taylor Family, the Financial Advisors each reviewed the audited financial statements and other financial data for CTFG and discussed CTFG’s financial status with management. The Financial Advisors told the board that the value of the consideration to be received under the Taylor Family proposal was approximately equal to the consideration dis-. cussed by the third party interested in acquiring Cole Taylor Bank. The Financial Advisors noted that the risk that the Taylor Family proposal would not be consummated was greater than that of the third party’s proposed acquisition, because the Taylor Family would be required to obtain a favorable tax ruling, and would need to raise additional capital. The Financial Ad-visors noted, however, that the Taylor proposal was not subject to due diligence. On May 14, 1996, CTFG filed its first quarter Form 10-Q. CTFG disclosed continued growth based primarily on RAC’s expansion. RAC’s net income increased over the first quarter numbers of the previous year, from $1.7 million in 1995 to $3.6 million in 1996. RAC’s gross finance receivables increased over the past year from $155 million to $377 million. The Form 10-Q also contained a statement regarding a change in RAC’s policy for setting the loan loss reserve levels: Effective January 1, 1996, [RAC] adopted the practice of accumulating loss data on individual pools of loans (based on the month of origination) and allocating portions of the dealer discount representing nonrefundable dealer reserves to cover such anticipated losses. To the extent [RAC] realizes loss experience by pool greater than that initially established, a loan loss reserve will be established by charges to operating expense. According to plaintiffs, notwithstanding this new policy, RAC maintained inadequate loan loss reserves. On June 12,1996, the Board of Directors held a special meeting for the purpose of considering the proposed transaction with the Taylor family. On this date, the Financial Advisors each rendered a written opinion to the board. After reviewing the terms of the split-off agreement; the audited and unaudited financial statements for CTFG and its subsidiaries for 1995 and the first quarter of 1996; financial forecasts for CTFG and the subsidiaries; historical reported price and trading activity for CTFG stock, including a comparison of similar companies; the terms of other similar business combinations; current market activity; the views of management; and other material; ABN AMRO and San-dler O’Neill stated in separate opinion letters, “the Consideration to be received [by CTFG] pursuant to the Agreement is fair from a financial point of view, to the non-Taylor Family shareholders of the Company.” The board approved the terms of the transaction and authorized its execution by a unanimous vote of the directors present. On June 13, 1996, CTFG issued a press release announcing an agreement by which the Taylor family would receive Cole Taylor Bank and CT Mortgage Company from CTFG. In return the Taylor Family would give CTFG between 4 and 4.5 million shares of CTFG stock and Cole Taylor Bank would transfer between $82 and $98 million in cash and approximately $30 million in receivables. According to plaintiffs, at that time, the Taylor family owned approximately 3.7 million shares and expected to obtain the remainder from other executives who desired to participate in the transaction. On August 14, 1996, CTFG filed its second quarter Form 10-Q. RAC’s net income grew from $3.6 million to $4.1 million from the previous year. Gross finance receivables grew from $202.1 million to $316 million. In a press release issued the next day, Barlow commented that “We have a strong reserve position and we continue to monitor our static pool loss history to ensure the adequacy of our reserves.” On October 10,1996, CTFG filed a Form 8-K, signed by then-chief financial officer Christopher Alstrin. This form contained financial statements for the years 1993 to 1995, as well as audit reports prepared by KPMG. CTFG stated in its filing that RAC’s “nonrefundable dealer discount [for credit losses] is adequate to absorb possible losses on credits that may become uncollectible.” CTFG invited its shareholders to vote upon the proposed split-off transaction, and disseminated a Proxy Statement, dated October 15, 1996, to its shareholders. The Proxy Statement contained in full the fairness opinions prepared by the Financial Advisors. The Proxy Statement disclosed that the members of the Cole and Taylor families, as well as the other executive officers and directors of CTFG, all intended to vote in favor of the split-off. Collectively, these individuals held approximately 55% of the outstanding stock of CTFG. Since a simple majority of the shares was necessary to approve the split-off, the Proxy Statement recited that: The affirmative votes of the Taylor Family, the Cole Family and the other executive officers and directors of the Company will, collectively, be sufficient to approve the Share Exchange Agreement and the Split-Off Transactions and the amendment to the Company’s Certificate of Incorporation to effect the Name Change, regardless of the votes of any other stockholders. On October 16, 1996, the Federal Reserve Bank issued its annual report on the financial situation of CTFG for the period ending June 30, 1996. Although stating that “asset quality remain[ed] adequate,” the report noted that the portfolio continued to mature and deteriorate stating, “as of June 30, 1996, delinquencies and repossessions represented 4.4% of net finance receivables compared with 3.8% reported at June 30, 1995.” Plaintiffs contend that the problem was actually worse than reported in that the examiners did not know the true state of RAC’s portfolio because RAC did not charge off a loan until it was at least six months past due. That is, according to plaintiffs, even if a loan purchased in January 1996 immediately defaulted, it would not have been charged off by June 30, 1996. Thus, plaintiffs contend given the seasoning of the portfolio, a greater number of loans should have been charged off than were reported. The Federal Reserve Bank report also noted that internal reports from CTFG rated several branches “unsatisfactory ... due to numerous exceptions created by high employee turnover over the past twelve months.” However, the report observed that according to RAC management “overall employee turnover was reduced from 104% in 1995 to an annualized 74% in 1996 with a more significant decline in turnover at the manager level.” Despite these positive trends, the Federal Reserve Bank recognized that changes in RAC’s accounting methodology were necessary to adequately reflect the “deficiency balances on repossessions, the direct expense rather than the capitalization of costs relating to repossessed autos, and a better methodology in determining the adequacy of the dealer discount for potential loan losses.” And, although KPMG and RAC’s management indicated their satisfaction with “the level of the dealer discount for each pool of receivables,” the Federal Reserve Bank remained concerned. The report noted that “the adequacy of the dealer discount for the 1993 to 1995 pool is questionable.” In light of the charges offs and high volume of receivables relative to the level of the dealer discount for the pool, the Federal Reserve Bank required CTFG management to “submit the monthly dealer discount analysis for the 1993 to 1995 pool to the Federal Reserve within 30 days of each month end.” On November 15, 1996, CTFG’s shareholders voted in favor of the split-off transaction. On November 18,1996, Michael Bernick, the chief financial officer of RAC, wrote a memo to Howard Silverman that stated, “there may be a loan loss provision taken in the fourth quarter, possibly a substantial amount, if the 1993-1995 static pool losses do not improve.” Silverman testified at his deposition that he circulated this memo to Race, Firestone, and Manga-no. On December 23, 1996, Firestone called a special meeting of the Audit and Examining Committee. According to the minutes, the purpose 'of the special meeting was to ensure that the committee would follow up on the issues raised in the November 18, 1996 Bernick memo and to make sure that no action or public disclosure was necessary prior to the end of the year. In attendance at the meeting were Firestone, Mangano, Alstrin, Race, Silver-man, and Jeffrey Taylor as well as representatives of KPMG. On January 29, 1997, the press reported that Mercury Finance, a subprime automobile lender that was also founded by Sil-verman, had been fraudulently overstating its net income for the past several years. In the wake of this news, CTFG’s stock price fell from $29 per share on January 29 to $17-3/4 on February 7,1997. On February 7, 1997, CTFG announced to the financial press that “[preparation for the split-off transaction has caused the Company to take additional time, beyond the time historically taken, 'to prepare and issue its 1996 financial statements.” On February 12, 1997, CTFG announced the close of the transaction. Two days later, on February 14, 1997, CTFG issued a press release announcing that “it would make significant provisions for credit losses for the fourth quarter of 1996,” and that CTFG “expects to report a loss for the fourth quarter of 1996.” On March 3, 1997, CTFG issued a press release stating that these credit losses totaled $18 million. Barlow, CTFG’s president and chief executive officer, stated in the press release that “[w]e have taken the necessary steps to ensure that the reserves in our existing portfolio are adequate and that we control the amount of credit losses.” On March 13, 1997, one month after the close of the split-off transaction, Dolph became the Chief Financial Officer of CTFG. On March 31, 1997, CTFG filed its 1996 Form 10-K with the SEC stating that “the nonrefundable dealer discount and allowance for credit losses are sufficient to cover existing estimated losses.” Dolph claimed in his deposition that he did not assist in the preparation of the 1996 Form 10-K. Further, he stated that he only signed the document at the request of CTFG’s counsel, and that he did so after checking with management and KPMG to ensure that they were comfortable with the analysis and projections in the document. Dolph testified in his deposition that after beginning his work at CTFG he discovered the underestimates in CTFG’s loan loss reserves by performing the industry standard evaluative technique, static pool analysis. According to Dolph, he built the static pool analysis from scratch. Dolph contends that as a result of his findings, RAC increased its reserves from $11 million to $33 million in the first quarter of 1997. On May 7, 1997, CTFG issued a press release announcing that it was reporting a loss of $9.9 million for the first quarter, attributable to a provision for credit losses of $22.2 million in the quarter. The Form 10-Q for the first quarter noted the increased provision for credit losses and stated, “the Company does not currently know if further reserves for credit losses will be necessary.... There can be no assurance that future special provisions may not be necessary, and if so, earnings would be adversely affected.” In the first quarter Form 10-Q, CTFG also announced Barlow’s resignation as president and chief executive officer. Sil-verman, who assumed Barlow’s positions, stated in the press release that CTFG was in default on some of its covenants to its lenders. CTFG’s stock dropped 26% that day from $9.00 to $6.625. The next day, the Chicago Sun-Times reported that Sil-verman “insisted Reliance’s balance sheet remains sound,” and that “Silverman stressed his company’s woes do not involve financial fraud or mismanagement.” Dolph further stated that after filing the first quarter Form 10-Q, he continued to investigate the practices of the company. He claims that in the second quarter of 1997, he discovered that RAC’s branch offices did not follow the proper procedures for underwriting, deferment, due date changes, and repossessions. As he learned of this noncompliance, Dolph testified that he again increased the estimates for loan loss reserves. In the second quarter, RAC increased reserves for credit losses to $60.9 million. On August 14, 1997, CTFG issued a press release reporting a loss of $40.2 million for the second quarter ending June 30, 1997, attributable in part to the $60.9 million provision for credit losses. CTFG filed its second quarter Form 10-Q the same day, disclosing that CTFG would severely curtail further 1997 operations because it “will probably have to use virtually all of its net cash flow to pay down its revolving credit agreement to $200 million.” The second quarter Form 10-Q also addressed the credit loss changes. It stated: The additional provision taken in the second quarter of 1997 was necessitated by significant increases in the Company’s credit losses in the second quarter of 1997 and the Company’s analysis of these losses employing a static pool reserve analysis, which is contained in this report.... The additional provisions taken during the second quarter significantly increased the Company’s coverage ratio for credit losses.... Management is actively addressing the issue of the Company’s increased credit losses with a view toward significantly lowering such losses in the near term.... The Company is seeking to lower credit losses through changes in personnel, policies, and actual practices. On November 14, 1997, CTFG issued a press release announcing a loss of $12.8 million for the third quarter, attributable in part to a $10 million provision for credit losses. CTFG filed its Form 10-Q for the third quarter the same day, and announced that “[i]f the Company is not able to sell, merge or recapitalize itself in the near term, resorting to federal bankruptcy protection is very likely.” On February 9, 1998, CTFG filed a petition for relief under chapter 11 of the United States Bankruptcy Code in the District of Delaware. D. Summary of RAC’s Growth In sum, RAC’s loan portfolio grew from $24 million in 1993 to almost $400 million in 1996. At the same time, the percentage rate of net charge-offs to average finance receivables increased from 0.48% in 1993, to 0.92% in 1994, to 3.02% in 1995, and to 10.83% in 1996. Delinquent receivables and repossessions as a percentage of gross receivables and repossessions increased from 0.47% in 1993, to 1.23% in 1994, to 2.27% in 1995, to 2.88% in 1996. The loss rate for RAC’s loans increased annually, from 4.5% in 1993, to 9.9% in 1994, to 20.3% in 1995, to 25.3% in 1996. During this same time period, plaintiffs allege RAC’s loan loss reserves dropped from 6.18% of its total loans in 1993 to 4.08% by 1996. E. Procedural Background Beginning in January 1998, CTFG shareholders filed nine different lawsuits in the United States District Court for the Western District of Texas against officers, directors, accountants, financial advisors, subsidiaries of CTFG, and other entities formed in the split-off transaction. That case is presently captioned Sabbia v. Reliance Acceptance Group, Inc., C.A. No. 99-859-RRM. On February 2, 1998, CTFG shareholders filed a-lawsuit against similar defendants in the United States District Court for the Northern District of Illinois in the case presently captioned Graham v. Taylor Capital Group, Inc., C.A. No. 99-858-RRM. The plaintiffs in the Texas lawsuits and the Illinois suit assert securities law claims and supplemental state law claims against the defendants. The Illinois plaintiffs amended their complaint on March 20, 1998, adding the Financial Advisors as defendants. On March 11, 1998, a group of putative lead plaintiffs in the Texas litigation, consisting of Michael Sabbia, Darius Antia, Michael Havrilesko, Bank West Financial Corp., Walter W. Goldberg IRA Rollover, and Michael Wien (collectively, “the Sabbia Group”), filed a motion in the Texas court to be appointed lead plaintiffs. On April 7, 1998, the Sabbia Group filed a motion in the Illinois court to be appointed lead plaintiffs in that case. On June 1, 1998 and June 9, 1998, the Texas court ordered the consolidation of the nine lawsuits. On June 29, 1998, upon consideration of competing motions for appointment of lead plaintiffs, the Texas court' appointed the Sabbia Group lead plaintiffs in its court. The court found that the Sabbia Group had the largest financial interest in the litigation, and that they satisfied the other requirements imposed by Fed.R.Civ.P. 23 for appointment as lead plaintiffs. On the same date, the Texas court approved the Sabbia Group’s choice of David B. Kahn & Associates, Ltd. and Milberg Weiss Bershad Hynes & Ler-ach LLP as co-lead counsel. After being appointed lead plaintiffs in the Texas litigation, the Sabbia Group argued to the Illinois court that they should be appointed lead plaintiffs in the Illinois case to permit a unified lead plaintiff structure in both cases. On July 16, 1998, the Illinois court appointed the Sabbia Group lead plaintiffs and approved their choice of David B. Kahn & Associates, Ltd. and Milberg Weiss Bershad Hynes & Ler-ach LLP as co-lead counsel. Beginning in August 1998, a number of defendants in the Texas litigation moved to transfer the case to the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a). Other defendants in the Texas lawsuit moved for coordination or consolidation of the Texas and Illinois actions pursuant to 28 U.S.C. § 1407. On August 18, 1998, the Sabbia Group filed a consolidated amended complaint in Illinois. This consolidated amended complaint is the focus of this Opinion, and the court will discuss its contents in greater detail below. On August 21,' 1998, the Sabbia Group, on behalf of the Sabbia plaintiffs, filed a consolidated amended complaint in the Texas litigation. On September 4, 1998, David Allen, the estate representative of the chapter 11 estate of Reliance Acceptance Group, Inc. and its subsidiaries, filed two adversary bankruptcy proceedings in the United States Bankruptcy Court for the Distinct of Delaware against many of the defendants named in the Texas and Illinois lawsuits. Allen asserts state law- fraudulent transfer claims, fiduciary duty claims, professional malpractice claims, and other related common law claims. On March 12, 1999, a number of the defendants in these adversary bankruptcy proceedings moved in the United States District Court for the District of Delaware to withdraw the reference to the Bankruptcy Court and on June 23, 1999 moved to consolidate the adversary proceedings. On July 15, 1999, the District Court granted the motion to consolidate the cases, and on July 22, 1999, the District Court granted the motion to withdraw the reference to the Bankruptcy Court. The consolidated adversary bankruptcy proceedings are presently captioned Allen v. Taylor, C.A. No. 99-146-RRM. On November 3, 1999, the Illinois court ordered the dismissal without prejudice of the consolidated amended complaint in the Graham cáse with respect to defendants Tinberg and Dougherty. On December 9, 1999, the Judicial Panel on Multidistrict Litigation ordered the transfer of the Texas and Illinois lawsuits to the United States District Court for the District of Delaware to consolidate pretrial proceedings with the adversarial bankruptcy proceedings. Centralizing pre-trial proceedings in this court, the Panel ruled, was necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings, and to conserve the resources of the parties, their counsel and the judiciary. In early 2000, deferfdants moved to dismiss the second amended complaint pursuant to Fed.R.Civ.P. 4(m) for failure to serve process within 120 days, Fed. R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted, and Fed.R.Civ.P. 9(b) and § 21D(b) of the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4(b)(1, 2), for failure to plead fraud with specificity. On April 19, 2000, this court denied defendants’ motions. On October 31, 2000, the court granted plaintiffs’ motion for class certification. The court defined the class as (1) all pur•chasers of the common stock of CTFG/Re-liance during the period between March 14, 1995 and November 14, 1997, inclusive; (2) all persons who had a right to vote at CTFG’s annual meeting on November 15, 1996 to approve the split-off pursuant to the Proxy Statement dated October 16, 1996; and (3) all members of RAC’s ESOP and the 401(k)/profit sharing plan as of the November 15, 1996 shareholder meeting. Excluded from the class are the defendants, members of the defendants’ immediate families, and any entity controlled by CTFG or any such excluded person or which is a parent or subsidiary of such an entity. Since denying the motions to dismiss, defendants have moved for summary judgment that they are not hable under sections 10(b), 14(a), or 20(a) of the Exchange Act and did not breach fiduciary duties under Delaware law by failing to disclose material facts necessary for the shareholders to make informed investment decisions. F. The Complaint The present opinion concerns defendants’ motions for summary judgment on claims in the consolidated amended complaint filed in case in the Illinois court on August 16, 1998. Plaintiffs assert five counts against defendants. Count I of the complaint alleges that a number of the individual officers and directors of CTFG, namely, Jeffrey Taylor, Bruce Taylor, Sidney Taylor, Irwin Cole, Lori Cole, Barlow, Silverman, Dolph, Alst-rin, Bernick, Race, Mangano, Firestone, Pearl, Griffith, and CTFG’s auditor, KPMG, are liable under section 10(b) of the Exchange Act of 1934, 15 U.S.C.A. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, for knowingly or recklessly making public statements containing material misrepresentations regarding the financial condition of CTFG. Count II alleges that Jeffrey Taylor, Bruce Taylor, Sidney Taylor, Irwin Cole, Lori Cole, Mangano, Firestone, Pearl, Griffith, Barlow, Silverman, Alstrin, Ber-nick, Race, Richard Tinberg, Adelyn Dougherty, KPMG, and the Financial Ad-visors are liable under section 14(a) of the Exchange Act, 15 U.S.C.A; § 78n(a), and Rule 14a-9 promulgated thereunder, 17 C.F.R. § 240.14a-9, for knowingly or recklessly making material misstatements in the October 1996 Proxy Statement. Count IIP alleges that Jeffrey Taylor, Bruce Taylor, Sidney Taylor, Irwin Cole, Lori Cole, Mangano, Firestone, Pearl, Griffith, Barlow, Silverman, Alstrin, Ber-nick, and Race are vicariously liable .under section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), for violations of the securities laws by persons they controlled. Count IV alleges that Taylor Capital, Tinberg, Dougherty, Jeffrey Taylor, Bruce Taylor, Sidney Taylor, Irwin Cole, Lori Cole, Mangano, Firestone, Pearl, Griffith, Barlow, Silverman, Alstrin, Bernick, and Race breached their fiduciary duties to plaintiffs under Delaware law by failing to disclose material facts necessary for shareholders to make informed investment decisions. Count V alleges that Jeffrey Taylor, Bruce Taylor, Sidney Taylor, Taylor Capital, and Cole Taylor Bank breached their fiduciary duties arising under ERISA when they engaged in self-dealing by acquiring Cole Taylor Bank for inadequate consideration. Plaintiffs seek compensatory damages. G. Motions for Summary Judgment Irwin Cole, Lori Cole, Dolph, Race, Firestone, Mangano, Griffith, Pearl, and KPMG have moved for summary judgment that they did not make materially false or misleading statements in connection with the purchase or sale of a security under section 10(b) of the Exchange Act. Irwin Cole, Lori Cole, Barlow, Race, Firestone, Mangano, Griffith, Pearl, KPMG, and the Financial Advisors have moved for summary judgment that they did not make false or misleading statements as to any material fact in connection with the solicitation of a proxy under section 14(a) of the Exchange Act. Irwin Cole, Lori Cole, Race, Firestone, Mangano, and Griffith have moved for summary judgment that they are not liable as control persons under section 20(a) of the Exchange Act. Irwin Cole, Lori Cole, Race, Mangano, Firestone, Griffith, and Pearl have moved for summary judgment that they did not breach any fiduciary duty owed to the shareholders under state law. Sidney Taylor, Jeffrey Taylor, Bruce Taylor, Alst-rin, and Pearl moved for summary judgment that they cannot be sued by both the shareholder plaintiffs in a class action and the company via the estate representative for the same breach, involving the same claim, the same harm, and the same damages. II. DISCUSSION The court will apply Third Circuit law to resolve questions of federal law raised in defendants’ motions to dismiss. See Menowitz v. Brown, 991 F.2d 36, 40 (2d Cir.1993) (“[A] transferee federal court should apply its interpretations of federal law, not the constructions of federal law of the transferor circuit.”). Summary judgment is appropriate where there is not sufficient evidence to lead a reasonable jury to find for the non-moving party. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505. A party seeking summary judgment bears the initial burden to demonstrate the portion of the record which establishes the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). After that, a court may enter summary judgment against a nonmoving party “who fails to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Id. at 322-323, 106 S.Ct. 2548. A. Motions for Summary Judgment Under Section 10(b) Section 10(b) of the Exchange Act prohibits fraud in connection with the purchase or sale of securities. The statute states: “It shall be unlawful for any person, directly or indirectly ... (b) to use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe.” 15 U.S.C. § 78j(b). The Supreme Court described this section “as a catchall clause to enable the Commission to deal with new manipulative (or cunning) devices.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 203, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976) (quotations omitted). Rule 10b-5, promulgated under section 10(b) states: It shall be unlawful for any person, directly or indirectly ... (a) To employ any device, scheme, or artifice to defraud, (b) To 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, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240.10b-5. To state a claim under section 10(b) and Rule 10b-5, a private plaintiff must demonstrate: (1) a misrepresentation or omission of a material fact in connection with the purchase or sale of a security; (2) scienter on the part of the defendant; (3) reliance on the misrepresentation; and (4) damage resulting from the misrepresentation. See Newton v. Merrill, Lynch, Pierce, Fenner, & Smith, Inc., 135 F.3d 266, 269 (3d Cir.1998). A fact is material if “if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to [act].” Basic Inc. v. Levinson, 485 U.S. 224, 108 S.Ct. 978, 983, 99 L.Ed.2d 194 (adopting the section 14(a) standard of materiality from TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). To meet the scienter prong, a plaintiff must show that the defendant made a deliberate or reckless misrepresentation. See Ernst & Ernst, 425 U.S. at 193, 96 S.Ct. 1375; Newton, 135 F.3d at 272-72. 1. Did defendants make misstatements or omissions of a material fact? a. Outside directors Plaintiffs argue that defendants, as members of CTFG’s board, made fraudulent or misleading statements by approving SEC documents that overstated the income and net worth of RAC and CTFG by materially undervaluing RAC’s loan loss reserve. Lori Cole, Irwin Cole, Race, Firestone, Mangano, and Griffith argue that their approval of publicly disclosed SEC documents does not constitute a statement under section 10(b) of the Exchange Act. That is, these defendants contend that plaintiffs cannot attribute to them statements found solely in documents CTFG filed with the SEC. Defendants made this same argument in support of their motions to dismiss. There, plaintiffs argued that because each of the directors served on committees responsible for' the financial oversight of CTFG, they should be held liable for misstatements in the SEC documents. See Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1440 (9th Cir.1987) (“In some cases of corporate fraud where the false or misleading information is conveyed in prospectuses, registration statements, annual reports, press releases, or other ‘group-published information,’ it is reasonable to presume that these are the collective actions of the officers.”). Defendants argued that outside, non-managing directors, that do not participate in the preparation of SEC documents, should not be liable under the group published doctrine for misstatements or misrepresentations contained in the documents. That is, the outside directors contend that the group published doctrine does not apply unless plaintiffs could show that the directors had day-to-day operational involvement or a special relationship with the company with respect to allegedly misleading statement. See In re GlenFed, Inc. Sec. Litig., 60 F.3d 591, 593 (9th Cir.1995) (affirming the dismissal of complaint against outside directors where no particularized involvement in the company’s operations was alleged). In light of the directors’ positions, the court denied defendants’ motion to. dismiss and gave plaintiffs the opportunity to take discovery to determine the role that those defendants played in the company and the extent to which those defendants had knowledge of the alleged inadequacy of the loan loss reserves. See In re Reliance Sec. Litig., 91 F.Supp.2d at 720. Irwin Cole, Lori Cole, Race, Firestone, Mangano, and Griffith have renewed this argument in their motions for summary judgment. According to Irwin and Lori Cole, they did not breach a duty under Rule 10b-5 because neither of them made a false or misleading statement and plaintiffs cannot maintain a claim for aiding and abetting a violation of Rule 10b-5. Race, Firestone, Mangano, and Griffith contend that they did not participate in the day-today affairs of the company and had no operational responsibilities. Therefore, they contend that a signature on SEC filings does not make them liable for the contents of the document. Plaintiffs argue that Irwin Cole signed CTFG’s 1994 Form 10-K, Lori Cole signed the 1995 and 1996 Forms 10-K, and that Jeffrey Taylor and James Kaplan signed the Proxy Statement on behalf of all of the directors. Further, according to plaintiffs, the Proxy Statement incorporated by reference CTFG’s 1995 and 1996 Forms 10-K and Forms 10-Q from the first and second quarter of 1996. According to plaintiffs, these documents contained false and misleading statements that overstated RAC’s income and net worth by understating its loan loss reserves. Consequently, plaintiffs contend, those documents overstated the value of RAC. Thus, plaintiffs argue that by signing these documents, Irwin Cole and Lori Cole are hable as the primary violators, rather than as aiders or abettors. See Howard v. Everex Sys., Inc., 228 F.3d 1057, 1061-62 (9th Cir.2000) (finding that “a corporate official ... who, acting with scienter, signs a SEC filing containing misrepresentations ‘make[s]’ a statement so as to be liable as a primary violator under § 10(b)”). Plaintiffs also argue that Firestone, Mangano, and Griffith all expressly admitted in deposition testimony that as members of the Audit and Examining Committee they provided oversight on audit and control matters and ensured that the financial reports of CTFG were prepared to accurately reflect the results of business conducted. Race served as both a member of the Audit and Nominating Committee and as Chairman of the Finance Oversight Committee of CTFG. According to plaintiffs, Race therefore had an additional responsibihty to oversee the preparation and accuracy of CTFG’s financial reports. Thus, plaintiffs argue these defendants do not fall under the exception to the group pubhshed doctrine articulated by the Ninth Circuit in In re GlenFed, Inc. Sec. Litig. In Howard, the Ninth Circuit found that an officer who signs an SEC filing makes a statement under section 10(b), even if the officer ,did not participate in the drafting of the document. See Howard, 2