Full opinion text
OPINION AND ORDER WILLIAM C. CONNER, Senior District Judge. Plaintiff Securities and Exchange Commission (the “SEC”) brings this action against defendants Joseph S. Kemprowski, Peter R. Mantia, Victor Herman and Robert Kuhn, alleging that defendants, in violation of federal securities laws and SEC rules and regulations were (1) involved in the dissemination of false statements in press releases and SEC filings, (2) engaged in accounting fraud and (3) improperly trading in the securities of Solucorp Industries Ltd. (“Solucorp” or the “Company”). On March 17 through March 25, 2003, this Court conducted a bench trial. For the reasons that follow, we enter judgment in favor of plaintiff. Pursuant to Fed. R. Civ. P. 52(a), we set forth below our findings of fact and conclusions of law. FINDINGS OF FACT I. Solucorp Industries Ltd. Solucorp is a Yukon Territory corporation. During the period July 1995 through mid-September 1996, the Company was headquartered in Saddlebrook, New Jersey. The Company relocated its headquarters to West Nyack, New York on or about September 15, 1996. (Statement of Agreed Facts (“SAF”) ¶¶ 2-3.) Its principal business is environmental remediation, including developing and licensing of products for use in environmental clean-ups. (Id. ¶ 2.) Solucorp owns a United States patent for its Molecular Bonding System (“MBS”), a chemical process of remediat-ing soils by removing heavy metals such as lead, mercury, chromium and arsenic. Solucorp’s securities traded on the Vancouver Stock Exchange (“VSE”) until December 1995, when the VSE suspended trading. Solucorp delisted its securities from the VSE on August 6, 1996, after an eight-month trading suspension. Solu-corp’s securities began trading on the National Association of Securities Dealers (“NASD”) Over-the-Counter Bulletin Board (“OTCBB”) on August 6, 1996. So-lucorp registered its securities with the SEC under Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 781 (g) ], effective February 20, 1998. The SEC suspended trading in Solucorp’s securities on May 1, 1998 pursuant to Section 12(k) of the Exchange Act [15 U.S.C. § 781 (k)]. (SAF ¶ 2.) In the last few years since Solucorp came under investigation by the SEC, the Company lost service contracts and could not borrow money. Most employees left the Company because they were not getting paid and Solucorp has been reduced to four employees. (Trial Tr. at 122, 936, 937, 985, 992.) Solucorp’s revenues have been inadequate to cover its expenses and the Company used its stock during this period to finance operations. (Pinsky 11/7/02 Dep. at 24-26, 150-51, 153, 159-61; Zheng 7/20/01 Dep. at 121; PI. Trial Exs. 79 at SOL5548-52, 300 at 25, 403B at 256-57; Trial Tr. at 33-35, 40-41, 179-80; Janis Dep. at 51, 57-58, 60.) According to defendants, the Company has prospects of getting substantial revenue through a licensee that is active, doing work at the Boston artery and another highway and working on projects in Italy and Providence, Rhode Island. (Trial Tr. at 993, 995, 1053.) In addition, the Company is working to develop its Integrated Fixation System product line, which includes products pertaining to the decontamination of lead paint and batteries. (Id. at 1051.) II. Joseph S. Kemprowski Kemprowski, age 55, worked early in his career in compliance at the New York Stock Exchange (“NYSE”), and worked his way up to a supervisor of four others who together conducted reviews of a quarter of the NYSE member firms. (Id. at 931.) From October 1988 to March 1990, Kemprowski served as a president of Cambridge Consulting (“Cambridge”), a consulting firm with two other employees that he founded. (Id. at 846, 848.) Cambridge functioned as a public relations firm, which issued press releases for small businesses, including public companies. (Id. at 847, 848.) As Kemprowski described it: “Well, we basically turned into a [public relations] firm.... The idea was to talk up the Company to people interested in getting involved by buying stock in the Company.” (Id. at 848.) Cambridge marketed the stock of its clients, including World Tec, which later changed its name to Solucorp. (Id. at 848, 850-51.) According to Kem-prowski, World Tec changed its name to Solucorp because World Tec had been getting “bad press” and had developed a reputation due to numerous trading halts that it had experienced. (Id. at 851.) Cambridge changed its name to EPS Environmental, Inc. (“EPSE”), when it ceased its public relations business due to problems with the SEC. Kemprowski served as its president and chief executive officer (“CEO”). Subsequently, EPSE became the chief operating subsidiary of World Tec, and later Solucorp. (Id. at 850-52.) In November 1994, following its discovery of Kemprowski’s 1983 guilty plea, the VSE requested that Kemprowski resign as officer and director of Solucorp. (Id. at 854-56; Kemprowski Answer to ¶ 13 of the Complt. (¶ 14 of the 2d Am. Complt.).) In response, Kemprowski resigned as an officer and director of Solucorp, but retained his. position as president, CEO and chairman of EPSE. (Trial Tr. at 855-56.) In December 1994, the SEC sanctioned Kemprowski and Cambridge for distributing materially false and misleading information concerning the assets and future revenues of a client, Astro Enterprises, and for acting as an unregistered broker. The conduct at issue occurred in 1988 and 1989. The SEC ordered Kemprowski to cease and desist from committing or causing future violations of the anti-fraud provisions [Section 17(a) of the Securities Act [15 U.S.C. § 77q(a) ] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b) ] and Rule 10b-5 [17 C.F.R. § 240.10b-5] promulgated thereunder] and broker-dealer provisions of the federal securities laws; barred him from association with any broker, dealer, municipal securities dealer, investment adviser or investment company with a right to reapply after five years; and ordered him to disgorge his ill-gotten gains of $135,000, payment of which was waived by the SEC based on the sworn financial representations of Kemprowski. The matter was settled without Kemprow-ski admitting or denying the SEC’s charges. In the Matter of Joseph Kemprowski and the Cambridge Consulting Co., Admin. Proc. File No. 3-8569, Ex. Act Rel. No. 35058, 1994 WL 684628 (December 9, 1994). (PI. Trial Ex. 202; Trial Tr. at 860-62.) In December 1995, the VSE notified So-lucorp and Kemprowski that it was requiring Solucorp to sever all relations with Kemprowski. The VSE’s action followed its discovery of the 1994 administrative proceeding instituted by the SEC against Kemprowski. (PI. Trial Exs. 427, 428, 429.) Kemprowski formally resigned as an officer and director in May 1996. (PI. Trial Exs. 214, 215, 216, 217; Trial Tr. at 853-54, 856.) According to Kemprowski, since that time he has operated under a consultant agreement with Solucorp. He claims to have acted only in the capacity of a consultant to Solucorp, his only client, advising Mantia on contract issues that arose. (Trial Tr. at 326, 863.) Kemprow-ski maintains that he had no authority to sign contracts that bound Solucorp or to sign or issue press releases or to make financial disclosures for the Company, that he reported to Mantia, and had no authority to instruct Mantia to do anything. Kemprowski admits to having a forceful personality and an influence, but claims to exercise no control over the Company or its management and to have no involvement with Solucorp’s accounting decisions. (Id. at 930, 941-42.) He describes himself as someone who is a “key member of Solucorp’s personnel” who “may conceive [of projects] on his own with the concurrence of senior management” and “often acts as the leader of the Solucorp effort” with respect to projects. (PL Trial Ex. 89 at 9.) Plaintiff claims that Kemprowski was acting as a consultant in name only and that Kemprowski was in fact a de facto officer of Solucorp. In support of this contention, plaintiff directs our attention to the following facts: Kemprowski continued to occupy the largest office in the Saddlebrook, New Jersey corporate headquarters even after his November 1994 resignation as an officer of Solucorp. (Trial Tr. at 928; Pl. Trial Ex. 400 at 98.) Since the Company relocated to West Nyack, New York in September 1996 Kemprowski has occupied one of So-lueorp’s corner offices, with defendants Mantia, Herman and Kuhn occupying the other corner offices. Kemprowski’s office was the largest of the four corner offices, and the only one of the four to have a private bathroom and an adjoining office for his own secretary, one of only two at the Company. (Pl. Trial Exs. 99, 99A; Trial Tr. at 15, 260-62, 928; E. Kemprow-ski Dep. at 47-48.) Solucorp paid for Kemprowski’s office and secretary. (Trial Tr. at 970.) At trial, when explaining why he had the largest office, Kemprowski described himself as the “founder” of Solu-corp, and testified that because he was the one who was responsible for raising money for the Company, “how could they not turn around and say, ‘Okay. Take this office?’ ” (Id. at 929-30.) Kemprowski’s office had monitors on which he observed trading in securities (id. at 15, 16), including, according to Herman, transactions in Solucorp securities. (Id. at 881; Pl. Trial Ex. 402 at 216-17.) In April and July 1998 Kemprowski told Lawrence Kreisler, a potential business partner, that his motivation in “making a market” in Solucorp securities, was to maintain the per share price at $10 so as to induce a third party to acquire Solucorp. Kemprow-ski claimed to effect trading through Vancouver, in apparent reference to brokerage accounts maintained with Vancouver brokerages. (Trial Tr. at 33-35, 47-48, 881-82.) Kemprowski had been one of Solucorp’s highest paid personnel. (Pl. Trial Exs. 218, 229, 237, 517B at 222, 225-27, 239; Trial Tr. at 638-40.) He was granted approximately 720,000 stock options during the period June 1997 through February 1998 — more than any other Solucorp officer or director, other than his wife, Arle Pierro, who was a director of the Company at the time. (Pl. Trial Exs. 79 at SOL5530-34, SOL5565, SOL5598, 403 at 70-71.) At trial, Mantia testified that Kemprowski and his wife, Pierro, could get any amount of options they desired or required. (Trial Tr. at 1092-93.) Kem-prowski, with his wife, also continued to borrow from the Company, owing Solucorp $72,664 as of June 30, 1996 (Pl. Trial Ex. 159 at 299); $110,127 as of June 30, 1997 (Pl. Trial Ex. 159 at 300); $474,318 as of December 31, 1997 (Pl. Trial Ex. 161); and $257,939 as of December 31, 1998. (Pl. Trial Exs. 234, 402 at 71-72.) Kemprowski maintains that he invested the proceeds from the exercise of his options in the Company. On being asked why the Company does not simply sell shares directly from the treasury to the public to raise funds, he claimed that the exercise of options was intended to benefit the Company as well as reward the individual. (Pl. Trial Ex. 401A at 189.) Until August 1997, Kemprowski continued to use a corporate credit card provided to him by Solucorp. In August 1997, the cards for all Solucorp officers were cancelled due to delinquent payment. (Trial Tr. at 262, 270; PI. Trial Ex. 248.) In addition, Solu-corp continued to pay the automobile insurance on Kemprowski’s Mercedes Benz up through at least 1998. (Trial Tr. at 266, 270; PI. Trial Exs. 229 at 2, 403A at 219.) One trial witness, David Porteous, described Kemprowski as a “forceful consultant” and described Solucorp as “Joe’s baby.” (Trial Tr. at 111.) When asked to explain why he had described Kemprowski as a “forceful consultant,” Porteous, in part, said, “He’s a man of strong opinions and a big voice and commanding presence, and if he thought I was doing something stupid, he wasn’t diplomatic in saying so. If he thought Pete was letting the ball drop on something, he would certainly— you could hear him several rooms away.” (Id. at 111-12.) At trial Kemprowski acknowledged that he was a “forceful consultant” and explained: “I am a forceful personality. And I’m even more forceful if I think there’s a bunch of people that I’ve got to figure out how to pay who aren’t bringing in money to the Company. So I could yell, I could rant if I wanted to, because what were you going to do? Throw me out? I mean, you couldn’t throw me out. I was the only guy bringing money in, they weren’t.” (Id. at 941-42.) In December 1997, Kemprowski introduced himself to Kreisler as Solucorp’s CEO and chief operating officer. (Id. at 5, 9-11.) Based on observations over a nine-month period, which included several meetings and negotiations with Kemprow-ski and other Solucorp personnel, Kreisler concluded that “Kemprowski was Solucorp ... [and] that nobody did anything either in the field or in the office that he did not direct or approve.” (Id. at 52.) Kreisler observed that even Solucorp’s president, Peter Mantia, would first have to check with Kemprowski before responding to questions. (Id. at 35-36, 52.) Similarly, Glenn Ohlhauser, the engagement partner with Solucorp’s outside auditor, testified that Mantia and Herman told him on occasion that they had to review matters with Kemprowski before they could be completed. It also was Ohlhauser’s observation that Kemprowski was involved in the Company’s management during 1997 and 1998. (Id. at 170-71.) Other third parties have addressed Kemprowski as the CEO and/or chairman of the Company. For example, Martin E. Janis, the head of a public relations firm that was retained in January 1997 by Solu-corp (Janis Dep. at 7-8), consistently addressed Kemprowski as the Company’s CEO. The first letter agreement relating to the firm’s retention was addressed to and signed by Kemprowski as the CEO. (PI. Trial Ex. 404; Janis Dep. at 20-22.) Although Mantia added his signature (PI. Trial Ex. 404 at 3), Janis continued to address Kemprowski as the CEO in correspondence. (PI. Trial Exs. 220, 221.) For example, in June 1997, following a meeting with Kemprowski, Mantia and Spartz, Janis addressed a memorandum to Kemprow-ski as CEO. The memo summarized Janis’ understanding of the parties’ discussions and thanked him for arranging the meeting. (PI. Trial Ex. 221; Janis Dep. at 55-57.) Other Solucorp business partners also have addressed Kemprowski as CEO. For example, one party seeking to do remediation work jointly with Solucorp in Poland wrote to Kemprowski in January 1996, addressing him as chairman. (Pl. Trial Ex. 52.) Also the managing director of a firm licensed by Solucorp to use the MBS process in the United Kingdom regarded Kemprowski to be a “director” of Solucorp, as he did Mantia. (Beech Dep. at 6, 71-73.) Plaintiff further maintains that Kem-prowski made efforts at times to hide his role as a de facto officer of Solucorp with the complicity of Mantia, among others. For example, Solucorp’s outside counsel, Bernard Pinsky, had no inkling of Kem-prowski’s continued involvement in the Company, or of the benefits he continued to receive. According to plaintiff, Pinsky should have been informed of this given that he represented the Company before the VSE concerning the VSE’s demand that Kemprowski sever all ties with Solu-corp. (Pinsky 11/7/02 Dep. at 77-80, 93-99, 114-15; PI. Trial Ex. 43.) Instead, when he advised Mantia and Spartz that the VSE would “insist on knowing that Joe is really gone,” they misled him into believing that Kemprowski no longer maintained an office at Solucorp’s headquarters. (Pinsky 11/7/02 Dep. at 152-56; Pinsky 11/8/02 Dep. at 203, 211-12.) Pin-sky confirmed his misunderstanding in a May 1996 memo to Mantia and Spartz in which he declared, “Joe is now out of the Company.” (Pinsky 11/7/02 Dep. at 154-55.) However, they apparently failed to correct him. Pinsky subsequently represented Kem-prowski, at the Company’s behest, in response to inquiries by the British Columbia Securities Commission (“BCSC”) in March 1998 about Kemprowski’s continued role at Solucorp and EPSE. (Pinsky 11/8/02 Dep. at 206-11.) The BCSC had come into possession of one of Kemprow-ski’s business cards that identified him as the CEO and chairman of EPSE. (Pinsky 11/8/02 Dep. at 210-11, 213-17; PI. Trial Ex. 228.) Kemprowski told Pinsky that the business card was an old one, and that he no longer handed out business cards with that designation. (Pinsky 11/8/02 Dep. at 217.) Kemprowski further informed Pinsky that he was not acting as an employee of Solucorp, that there were no employee deductions taken for him, and that he did not receive benefits or insurance from the Company. (Id. at 217-18.) Pinsky conveyed Kemprowski’s explanation of the business card to the BCSC in a letter dated March 26, 1998. (Id. at 219-21; PI. Trial Ex. 440.) Plaintiff suggests that, contrary to Kem-prowski’s representations, there are indications that Kemprowski was passing out the business card long after he had purportedly resigned as an officer from EPSE. For example, the card gives EPSE’s address as 250 West Nyack Road, West Nyack, New York, and bears a New York telephone number. (PI. Trial Ex. 228.) Solucorp and EPSE did not move to this address until mid-September 1996— approximately four months after Kem-prowski’s purported resignation from EPSE. (SAF ¶ 3; PI. Trial Ex. 217.) During his testimony in November 2002, Pin-sky denied knowing that Solucorp continued to provide Kemprowski with various perquisites. (Pinsky 11/8/02 Dep. at 212-13.) Pinsky testified that Solucorp’s provision of these benefits to Kemprowski was not consistent with his understanding that Kemprowski was a “consultant.” (Id. at 212-13.) In March 1998, Kemprowski was responding to the BCSC’s inquiries about his continued role with Solucorp and EPSE. Around that time, KBF presented Kem-prowski with a contract for his signature. (Trial Tr. 26-27.) The signature line identified Kemprowski as CEO of Solucorp. Kemprowski refused to sign the contract, directing that Mantia’s name and title be substituted for his. Kemprowski did not deny that he was Solucorp’s CEO, but maintained that it was Solucorp’s policy to have the president sign any contract. Accordingly, the signature page was changed and Mantia signed the contract instead of Kemprowski. Immediately thereafter, Kemprowski “backed out” of a group photograph taken to memorialize the signing of the contract. (Id. at 26-29.) Later, on July 14, 1998, Kemprowski explained to KBF’s board that he was not formally the chairman of the board or CEO of Solucorp but was merely “making a market” in So-lucorp stock. (Id. at 44, 46.) III. Peter R. Mantia Mantia, age 55, has been the president and a director of Solucorp since February 1995. (SAF ¶ 5.) Between 1965 and 1979, Mantia worked his way up from a mail clerk to a senior buyer at Sears, Roebuck & Co. (“Sears”). (Trial Tr. at 983-84.) In 1979, when Sears moved its offices from New York to Chicago, Mantia left the Company and joined BMW North America (“BMW”) as a senior buyer responsible for purchasing of goods and services; he worked for BMW until 1994. (Id. at 984-85.) In December 1994, Mantia joined Solucorp as its chief operating officer. (Id. at 984-85.) Upon being hired, Mantia received options to purchase 225,000 shares of Solucorp stock. However, he was only allowed to use 25,000 of them. The rest were taken over by Solucorp’s principals who split it up among themselves. (Id. at 1085-86, 1090-91, 1094.) In February 1995, Mantia became a director and was promoted to president of the Company. (SAF ¶ 5.) Prior to the commencement of this case, Mantia had not been accused of or found to have violated the securities laws. (Trial Tr. at 986.) Before joining Solucorp, Man-tia had no experience in running a public company, no experience in the issuance of press releases and no experience with respect to the financial disclosures of a public company. (Id. at 986.) Additionally, prior to joining Solucorp, he had no experience working in the environmental remediation industry. (Id. at 987.) When Man-tia joined the Company in 1994, the MBS technology was proven in the lab, but not field-proven. (Id. at 985.) Mantia’s job was to take the lab-proven technology and get it to the field. (Id.) In early 1995, Solucorp was still a research and development Company; it did not have any equipment or contracts and was trying to become an operating entity, although no one was interested in being the first to use the technology. (Id. at 988, 1043^4.) The Company’s first project was in June 1995, and based on his confidence in and need to prove the technology, Mantia offered to do the project for free if the soil was not cleaned. (Id. at 1002-03.) That project was successfully completed. (Id. at 1003.) In the context of this underfunded start-up company, Mantia was busy trying to demonstrate the technology, including finding sources of supply for chemicals and working with the engineers. (Id. at 997.) He spent only 5 to 10 percent of his time on administrative matters. (Id. at 998.) Mantia learned soon after joining the Company of its prior regulatory problems with the VSE. He consulted with the Board of Directors, and they agreed that the Company would search for a new law firm to assist it in regulatory matters. (Id. at 999.) Mantia did not draft any of the press releases issued by Solucorp. (Id. at 1047.) According to Mantia, there was not a core group at Solucorp that wrote or reviewed press releases. (Id. at 686.) In 1997, in an effort to improve the Company’s system for the review of press releases, Mantia adopted a procedure that required physical sign-offs by people at the Company who were involved in drafting the press release and providing information. (Id. at 1049.) He wanted to see a document (e.g. a buck slip) bearing the initials of the people involved indicating that they had reviewed the press release. (Id.) IV. Victor Herman Herman, age 61, is a certified public accountant (“CPA”). During the relevant period, he was the chief financial officer of Solucorp’s chief operating subsidiaries from September 1995 until his resignation in early 1999. Beginning with the quarter ending December 31, 1995, Herman was responsible for preparing the financial statements of the holding company, Solu-corp, and signed quarterly filings with the SEC in 1998 as Solucorp’s chief financial officer and principal accounting officer. (SAF ¶ 6; Trial Tr. at 433-35; PI. Trial Exs. 302 at 118, 303 at 196; 402 at 12, 57-58.) At the time he became the chief financial officer of Solucorp’s chief operating subsidiaries, including EPSE, in September 1995, Herman had approximately thirty years of experience in accounting. During the 1960s he had worked on the audit staff of Arthur Young. Since then, with a number of companies, he has held financial executive positions, including internal Audit Manager and Senior Vice President of finance, before joining EPSE. (Trial Tr. at 434-35, 479.) Herman is retired and currently lives in Florida. He is currently unemployed and does no consulting work. He has no intention of working again. (Id. at 479-80.) V. Robert Kuhn Kuhn, age 48, was the senior vice president of Sales and Marketing at Solueorp from August 1994 until his resignation in the fall of 1999. (SAF ¶7; Trial Tr. at 404-05; PI. Trial Ex. 400A.) Kuhn’s prior background involved advertising and sales at large companies. (PL Trial Ex. 400 at 11-12, 18.) Based on Kuhn’s large company experience, he realized that Solueorp lacked a reliable means of tracking business information. (PL Trial Ex. 400 at 17-19, 23-24, 26-28, 31.) As a result, Kuhn instituted surveys that tracked the status of all potential work as well as reports tracking monthly sales and profit forecasts. (Id.) Kuhn kept apprised of all active and potential contracts and was the most knowledgeable person at the Company as to such matters. (Id. at 19, 193-95). According to Kuhn, the public disclosure of information concerning the Company’s activities was not part of his job function. Kuhn’s involvement in press releases consisted of turning over to management contracts or proposals which formed the basis of press releases drafted by others. (Trial Tr. at 337, 341, 390.) Kuhn resigned his position at the Company in or about July 1999. (SAF ¶ 7.) At the time of trial he was employed as a Marketing Sales Manager for Nielsen Bainbridge in New Jersey, a privately held wholesale company in the picture frame industry. (Trial Tr. at 373-74.) Kuhn has not been involved in any aspect of his current employer’s financial reporting, accounting or press releases. (Id. at 374.) In 24 years of employment, Kuhn has no prior history of securities fraud or regulatory violations or complaints. (Id. at 372.) VI. Solucorp’s Press Releases and Publications Personnel at the Company’s headquarters in New Jersey and, after September 1996, New York offices controlled the dissemination of press releases and filings with regulatory entities. (Pl. Trial Exs. 400 at 15, 143-45, 154-55, 194, 401A at 10-77, 402 at 12, 57-58, 403A at 20-23,101-02; Pl. Trial Exs. 510, 517B at 30-56; Trial Tr. at 463; Pinsky 10/13/98 Tr. at 27, 29, 31, 107.) It was Solucorp’s policy to publish press releases to announce significant events. (Trial Tr. at 339, 561; Pl. Trial Ex. 517A at 27-29.) A. IEM/Sealand, Inc. Contract In a July 6, 1995 press release, Solucorp announced that it had received a “purchase order from IEM/Sealand, Inc. to remediate a minimum of 15,000 tons of heavy-metal-contaminated soils in Waterbury, Connecticut” utilizing MBS. The release further stated that the “purchase order contracts for the remediation of 15,000 tons of soil ... and including disposal will result in revenues of $74,000 per day for a minimum 25-day remediation period resulting in total revenues of $1.85 million [Cdn.] ...(SAF ¶8(8); Pl. Trial Ex. 1.) The Company had relied on the estimate of the general contractor for the amount of contamination in the ground, and also sent two people out to the site for an examination of the contamination in the ground. (Trial Tr. at 1004.) The field engineers confirmed the amount of soil claimed by the general contractor. (Id. at 1005.) In fact, under the terms of its written contract with IEM/Sealand, dated July 3, 1995, Solucorp could anticipate at most $684,000 (U.S.) for remediating 15,200 tons of soil. Moreover, the contract expressly stated that the quantity of soil ultimately remediated was not guaranteed. (Pl. Trial Ex. 2 at SOL1430.) The contract further expressly provided that “IEM SEALAND Corporation [was] to provide transportation and disposal of treated soils.” (Id.; Pl. Trial Ex. 3.) Solucorp had an oral assurance that IEM/Sealand anticipated putting the transportation and disposal work (“T & D”) out to bid at a later date and, if Solucorp’s bid was competitive, Solucorp would be awarded the contract. (Pl. Trial Ex. 400 at 44-50, 54-55, 62, 157.) Kuhn, who negotiated the IEM/Sealand contract (Trial Tr. at 329), testified that he told Mantia, based on verbal assurances from Brian Mackenzie of IEM/Sealand, that So-lucorp would be doing the T & D, but that the award of the contract was contingent on Solucorp’s price being competitive, indicating that the contract had not yet been awarded. (Pl. Trial Ex. 400 at 157.) A1 Ludwig, another Solucorp employee involved with the operations at IEM/Sea-land, also testified that, from his discussions with Kuhn, he understood that Solu-corp was definitely going to do the T & D work at the site. (Ludwig Tr. at 106.) Although Kuhn submitted proposals to IEM/Sealand for the T & D work in July and August 1995 (Pl. Trial Exs. 4, 5, 6)— after the issuance of the July 6, 1995 press release — Solucorp never did obtain a contract to do T & D work at the Waterbury, Connecticut site. (Pl. Trial Exs. 7, 8 at SOL1447, 9, 13, 400 at 62-70; Trial Tr. at 415-20.) Solucorp completed its remediation of soil at the Waterbury, Connecticut site on October 5, 1995. Total tonnage remediat-ed was 3,854. (SAE ¶ 8(b).) Kuhn and the rest of Solucorp management knew by October 5, 1995 the total tonnage treated on the project. (Pl. Trial Exs. 400 at 78, 517A at 259-61.) Solucorp announced in an October 5, 1995 press release that it had “successfully completed” its remediation project for IEM/Sealand in Connecticut. (SAF ¶ 8(c); Pl. Trial Exs. 10, 11, 12; Pinsky 10/13/98 Tr. at 66-70.) The October 5, 1995 press release did not disclose, however, that Solucorp had remediated only 3,854 of the initially announced 15,000 ton minimum and would not receive the $1.85 million (Cdn.) previously announced nor the $1.2 million (Cdn.) for T & D services. (PI. Trial Exs. 400 at 58, 78, 517A at 259-61, 517B at 50.) Mantia reviewed the press release before it was disseminated, relying upon information provided by individuals directly involved with the IEM/Sealand operations. (Trial Tr. at 1004-05.) B. NHD, Inc. Contract Solucorp announced in an October 11, 1995 press release that it had “signed a contract with LCM Corporation ... to remediate ... 4,000 tons of copper bottom ash ... which will result in revenues of $626,400 (Cdn.) [approximately $460,000 U.S.] to the Company.” (SAF ¶ 9(a); PI. Trial Ex. 14.) In fact, $626,400 (Cdn.) was the maximum amount payable to the general contractor, NHD, Inc., not to Solu-corp. (PI. Trial Exs. 400 at 146-50, 517B at 60-64, 70.) Further, the general contract provided for a range of 1,300 to 4,000 tons of soil to be remediated, and the general contractor told Kuhn that it expected only 3,000 tons actually to be reme-diated. (PI. Trial Ex. 400 at 145.) Under the terms of its subcontract, Solucorp stood to earn only $71,500 (U.S.) to $220,000 (U.S.), depending on total tonnage remediated. (Not denied in Kem-prowski, Mantia, Herman and Kuhn Answers to ¶ 22(b) of the Complt.) (¶ 24(b) of the 2d Am. Complt.; PI. Trial Exs. 14, 16, 17, 400 at 145-48, 150-53, 258.) Solucorp ultimately remediated only 1,500 tons and earned $111,000 (Cdn.) (approximately $82,000 (U.S.)) in revenue. (PI. Trial Ex. 9 at 6.) Kuhn negotiated Solucorp’s subcontract. (SAF ¶ 9(c); Trial Tr. at 329; PL Trial Ex. 5,15,17, 400 at 150-51.) However, he did not draft, edit or disseminate the October 11, 1995 press release. (Trial Tr. at 389.) He was not the person from Solucorp responsible for issuing press releases, and he was not involved in the calculation of revenue estimates set forth in the press release. (Id. at 390.) He first learned of the error when he was subpoenaed by the SEC. (Trial Tr. at 390.) James Spartz of Solucorp reviewed for accuracy, signed and ordered the dissemination of the October 11, 1995 press release. (SAF ¶ 9(d).) C. Puerto Rico Contract In 1995, Solucorp opened an office in Puerto Rico to develop new business and to undertake an environmental training program in conjunction with its Environmental Training Institute (“ETI”), which Solucorp had purchased from its employee, Ludwig. (Ludwig Tr. at 9, 11-12, 63, 65-66.) Felix Gonzales, a well-regarded ETI instructor, was chosen to operate the Company’s Puerto Rico office. (Id. at 11, 74-75.) Solucorp announced in an October 31, 1995 press release that it had received “its first contract from its office in San Juan, Puerto Rico for $850,000 for Occupational Safety and Health Training of 2000 students in Puerto Rico with The School of Engineers, Department of Continuing Education, San Juan, Puerto Rico.” (SAF ¶ 10(a).) It was the responsibility of Ludwig, a Solucorp vice president, to supervise the Puerto Rico operations. (Trial Tr. at 582.) Gonzales reported to Ludwig. (Id.) However, Ludwig was “stretched” and not able to properly perform his supervisory responsibilities. (Ludwig Tr. at 93-95.) In or about late October 1995, Mantia received, by fax, a copy of the contract executed by Gonzales on behalf of ETI and by Felix Lopez of The School of Engineers. (Trial Tr. at 539.) Solucorp later received a small payment in connection with that contract. See Defs. Trial Ex. R (check for $4,150). Plaintiff argues that there was never a Puerto Rico contract because Solucorp has been unable to locate a signed agreement despite an extensive search in which, according to Mantia, the “whole Company was looking for the contract” in response to an SEC investigative subpoena issued in 1998. (Trial Tr. at 544-45, 547.) In or about late June 1996, Gonzales disappeared and stole all of the equipment and records from Solucorp’s office in Puer-to Rico. (Id. at 483, 546.) Solucorp filed a police report and retained counsel in Puer-to Rico but was unsuccessful in recovering any of its property or in locating Gonzales. (Id. at 546, 583, 585.) Solucorp was unable to locate the original or any copy of the executed contract, which was acknowledged in the Company’s 8-K filing in March 1999. (Trial Tr. at 574-75; Defs. Trial Ex. B at 6.) Mantia did not draft the October 31, 1995 press release concerning the Puerto Rico contract. (Trial Tr. at 1047.) However, Mantia reviewed and signed the press release based upon his review of the contract that had been received from Gonzales. (Id. at 539.) D. IDM Environmental Corp. Contract 1. Background In June 1995, the University of California (the “University”), as administrator of cleanup operations at Los Alamos National Laboratory (“LANL”), awarded Basic Ordering Agreements (“BOA”) to four companies, including IDM Environmental Corp. (“IDMC”) (PI. Trial Exs. 33, 34, 35, 400 at 104, 137; Capote Dep. at 21-22, 39-40; John Tuohy Dep. at 25-27.) Under a BOA, each BOA recipient became part of a pre-selected pool of contractors who were permitted to submit bids to perform work as may be needed by LANL. No work was assigned, or monetary amount fixed, until LANL issued a task order defining the scope of work and compensation to be paid to the contractor. Task orders would be awarded after competitive bidding amongst the BOA recipients. (Tuohy Dep. at 27-28; Capote Dep. at 37-40, 42-43, 45, 60-61.) Prior to the award of the BOAs, LANL published a solicitation for bids in the December 1994 Commerce Daily Report (PL Trial Ex. 33), a standard industry publication. (Tuohy Dep. at 24-25; Capote Dep. at 18-19.) In this notice, the government announced that it planned on issuing at least three BOAs for LANL work and notified potential BOA recipients that it anticipated, subject to funding, awarding an aggregate of $5 million in task orders each year (roughly $1-$1.5 million per BOA recipient). The government expressly reserved the right to issue no task orders and guaranteed no minimum revenues. The solicitation notice also advised that the BOA would be for a one-year term subject to four successive one-year terms at LANL’s election. In addition, the notice warned that all task orders would be awarded after competitive bidding amongst the BOA holders. (PI. Trial Ex. 33.) Pursuant to the notice, a total of four BOAs were awarded, including one to IDMC. (PL Trial Exs. 34, 400 at 104, 137; Tuohy Dep. at 25-27; Capote Dep. at 21-22, 36.) Thereafter, IDMC proposed a joint venture with Solucorp pertaining to the use of the Company’s MBS process. On or about September 7, 1995 IDMC and Solucorp entered into a Joint Marketing and Operations Agreement (the “Agreement”) to cross-market Solucorp’s MBS remediation process. (Defs. Trial Ex. U.) Pursuant to the Agreement, profits were to be shared equally. (Id. at 2.) The Agreement was executed by Mantia on behalf of Solucorp. (Id. at 8.) Anticipating that soil remediation would be part of the decommissioning activities, IDMC entered into an addendum to the Agreement with Solucorp. The addendum provided that IDMC “will contract” with Solucorp for $50 million in LANL services, during the term of the BOA through December 1997. (PI. Trial Ex. 31.) The addendum was subject to the completion of pilot tests, treatability studies, government funding limitations and “compliance with individual task orders generated by LANL during the term of the agreement.” (Id.) Kemprowski and Spartz worked on the addendum with IDMC. (PI. Trial Ex. 517A at 156-57.) The addendum was executed on behalf of IDMC and by Spartz, on behalf of the Company. A second copy of the addendum was executed by Mantia. (Defs. Trial Ex. Y.) 2. November 22,1995 Press Release Background Mantia and others at Solucorp, including Spartz, had conversations with Jose Capote of IDMC, who represented that Solucorp would be doing $50 million of work at the site. (Trial Tr. at 672, 1006.) On November 22, 1995, the same day that the Agreement addendum was entered into, IDMtí issued a press release announcing “that it has signed a $50 million contract ... with Solucorp” to use Solu-corp’s MBS technology at the LANL site. (Defs. Trial Ex. Z.) In its release, IDMC stated that the $50 million contract with Solucorp was pursuant to the previously issued five-year task order contract between. IDMC and the LANL. (Id.) IDMC was comfortable with the $50 million figure and believed it to be a reasonable estimation based on the budget allocation at LANL, verbal representations made by LANL staff and the fact that the BOA was applicable throughout the site complex. (Capote 01/19/99 Tr. at 123-24; Harrigan 12/29/98 Tr. at 61 (James Harri-gan of IDMC believed that $50 million was a realistic figure based on his understanding of the scope of the work available at LANL).) Solucorp received a copy of IDMC’s press release on November 22 (Trial Tr. at 672; Defs. Trial Ex. AA), and sent the document over to Bernard Pin-sky, the Company’s outside counsel for regulatory matters, and Steve Pacquin, the “compliance guy” whose job responsibility was to assist the Company in its regulatory affairs and assess the accuracy of press releases. (Trial Tr. at 672, 676, 1007; Pacquin Tr. at 37.) A shareholder of both IDMC and Solucorp called to inquire about the IDMC press release, which raised alarms that the information about the project had to be disclosed promptly by Solucorp. (Trial Tr. at 1008.) Pinsky made the determination that Solu-corp should send out a similar press release. (Id.) Spartz testified that he prepared a fax cover sheet to Pinsky and Pacquin enclosing the draft of the Solu-corp press release for review by Pinsky and Pacquin. (Defs. Trial Ex. BB; Trial Tr. at 672.) On the second page of the enclosed proposed press release, Spartz wrote the word “approved” and initialed the document, meaning that as far as he was concerned, it was approved for Pac-quin to put it on his letterhead and send it out. (Defs. Trial Ex. BB; Trial Tr. at 677-78.) Spartz approved the press release because it was similar to the IDMC contract; IDMC had put out its press release first and Solucorp had made their changes and sent it to Pinsky and Pacquin. (Trial Tr. at 678.) Pacquin and Pinsky reviewed the press release for accuracy. (Pacquin Tr. at 63-65, 67-69; Pinsky 10/13/98 Tr. at 182.) Solucorp announced in a November 22, 1995 press release that IDMC had issued to it a “$50 million U.S. contract [with profits to be shared equally] ... for utilization of the MBS soil remediation technology at the Los Alamos National Laboratory (LANL) site in New Mexico, USA. IDMC is under a task order contract ... with the U.S. Department of Energy ... for dismantling, demolition and remediation at the Los Alamos site.” The release further stated that IDMC had elected to use MBS at the LANL site through December 1997, and “[ajctivities at the LANL site are scheduled to commence the first quarter of 1996.” (SAF ¶ 11(a); PI. Trial Exs. 30, 517A at 160-61, 210.) The press release failed to disclose that Solu-corp’s right to receive the $50 million was subject to the condition that IDMC first be awarded $50 million in task orders on the project. Solucorp never did any work at LANL. Solucorp contacted IDMC regularly, almost daily, looking for samples. (Trial Tr. at 680.) When Solucorp tried to contact LANL personnel directly to find out about the status, IDMC strongly objected and threatened to sue for tortious interference if Solucorp did so again. (Id. at 1019-20.) Mantia learned at his investigative testimony in 1998 with the SEC that IDMC no longer had a contract with LANL, (id. at 1010) and thereafter Solucorp put out a press release that the project was can-celled. (Id. at 1010-11.) 3. Quarterly Filings In quarterly filings for the quarters ending December 31, 1995, March 31, 1996 and June 30, 1996, made with the BCSC on May 29, June 12, and October 31, 1996, and in its 1996 Annual Report filed on November 15, 1996 with the BCSC, Solu-corp stated that it had been included by IDMC in a $50 million contract. (SAF ¶ 11(c); PI. Trial Exs. 38-41.) Herman drafted the text in each of the aforementioned public filings. (Trial Tr. at 483-84, 486; PI. Trial Ex. 402 at 96, 114.) He did this by extracting the text from the Company’s November 22, 1995 press release and inserting it into the first of the quarterly reports, and then carrying that text over into successive quarterly reports. (PI. Trial Ex. 402 at 105-06.) Herman testified that at the time- he drafted the text in the quarterly filings, and 1996 Annual Report, he did not believe that the contract addendum (PI. Trial Ex. 31) supported Solucorp’s claim that it had been issued a $50 million contract. (PI. Trial Ex. 30.) This is because IDMC’s commitment as described in the addendum was prospective in nature and the addendum lacked essential contract terms. (PI. Trial Ex. 402 at 105-08, 199.) Herman testified that it was not a contract, explaining: “I don’t really have all the basic terms of an agreement ... it doesn’t really tell me that much ... it doesn’t really have that much teeth in it_” (PI. Trial Ex. 402 at 105, 199.) Herman testified that he repeatedly asked Kuhn for a copy of the contract. (Id. at 106-07.) Kuhn told Herman that the purported $50 million contract was still in negotiation (id:), Herman proceeded to reiterate Solucorp’s claim of a $50 million contract in its quarterly filings and 1996 Annual Report. (Id. at 93-95,106-07,116, 199.) Herman also continued to represent in each filing that the $50 million contract was expected to take two years to complete, without any regard to the fact that the parties’ contract addendum, by its terms, was due to expire in December 1997. (Id. at 96-97.) Solucorp mailed the quarterly filings and 1996 Annual Report to its shareholders, including shareholders in the United States. Mantia signed these documents. (SAF ¶ 11(c); PI. Trial Exs. 38-41; Trial Tr. at 1015.) Events since November 22, 1995 cast doubt on whether Solucorp would ever perform any work on the project. Several months after the LANL project was announced, IDMC experienced financial problems due to an industry wide lack of government funding of environmental remediation projects. (Pl. Trial Ex. 517B at 243-44.) After six months to a year passed, with the December 1997 expiration date of the addendum approaching, Solu-corp questioned internally whether the work would ever come to fruition. (Pl. Trial Ex. 400 at 112-13,137-38.) By early 1998, Kuhn removed the LANL project from his monthly financial reports because a business decision was made that revenues were unlikely to be generated by the LANL project that year. (Pl. Trial Ex. 400 at 106-08,116.) E. Poland Contracts 1. Background Solucorp securities traded on the VSE until December 1995, when the VSE suspended trading due to concerns about, among other things, Solucorp’s accounting treatment of a third-party contract in its 1995 year-end financial statements. (Pin-sky. 11/7/02 Dep. at 77-80; Pl. Trial Exs. 428, 429.) At the outset of the trading halt, Pinsky sent a memo concerning the trading suspension to the Company for distribution to its directors. (Pinsky 11/7/02 Dep. at 99-100; Pl. Trial Ex. 430.) In the memo, Pinsky commented that a long suspension, which in this case he anticipated could be seven to eight weeks, posed certain risks, such as a lower post-suspension trading price and resulting shareholder lawsuits, particularly in the event the Company restated its financial statements. (Pinsky 11/7/02 Dep. at 99-102, 109-10.) The trade halt in this instance lasted eight months. While Pinsky dealt with the BCSC and VSE, the Company explored the possibility of trading on another exchange. (Pinsky 11/7/02 Dep. at 103-04, 111-12.) Solucorp then sought a market maker to make a market in Solucorp securities on the NASD OTCBB. The market maker, M.H. Meyerson & Co., Inc., submitted an application to the NASD in March 1996. (Admitted in Kuhn Answer to ¶ 26(a) of the Complt. ¶ 28(a) of the 2d Am. Complt.; not denied in Kemprowski, Mantia and Herman Answers to ¶ 26(a) of the Complt. ¶ 28(a) of the 2d Am. Complt.; Pl. Trial Ex. 54.) In anticipation of Solucorp securities beginning to trade on the NASD OTCBB, or resumption of trading on the VSE (Pinsky 11/7/02 Dep. at 97, 124, 126-27), Solucorp issued its third press release of the 1996 calendar year on April 17,1996 (Pl. Trial Ex. 51), followed immediately by other releases. The releases were disseminated on the instructions of Kemprowski. (Pl. Trial Exs. 56, 211-13; E. Kemprowski Dep. at 30-42, 36-37, 41, 43, 50-51.) Kuhn was the person at Solucorp responsible for projects in Poland, in particular projects known as the Katowice project and the Tarnowskie Gory project. The projects were announced in a Solucorp press release, dated April 17, 1996. (Pl. Trial Ex. 51.) 2. April 17,1996 Press Release The April 17, 1996 press release announced that the United Nations (“UN”) and the European Union (“EU”) had “budgeted approximately $345,000 from their general fund to the Company” for testing of Solucorp’s MBS in Poland. (SAF ¶ 12(a); Pl. Trial Ex. 51.) In fact, the budgeted amount was for the testing of three different technologies (one of which was MBS) and Solucorp would receive no more than $127,000. (Trial Tr. at 392.) Solucorp reiterated this erroneous claim in a quarterly report filed with the BCSC on May 29, 1996. (SAF ¶ 12(b); Pl. Trial Ex. 58 at 4 of Schedule C.) Solucorp further announced in the same April 17, 1996 press release concerning Poland, that MBS would be utilized for an on-site hazardous waste cleanup for the UN and a separate remediation project on a 25-acre industrial site for the EU. Solu-corp did not disclose that immediate authorization was anticipated with respect to pilot projects only, and whether the EU and UN proceeded with full-fledged cleanups was contingent on the availability of funds. (SAF ¶ 12(c); Pl. Trial Exs. 51, 52, 400 at 160, 171-72, 177-78, 182, 186, 187, 188.) Kuhn was Solucorp’s representative in Poland. (Pl. Trial Ex. 400 at 158-59; Trial Tr. at 329.) Kuhn received an update on the Tamowskie Gory project on or about March 12 (Trial Tr. at 392; Defs. Trial Ex. HH) and the next day Kuhn sent a handwritten memorandum to Mantia reflecting that Haskoning (the Company’s contact in Poland) was “confident in getting the project and funding,” (Defs. Trial Ex. II (bottom of first page)). Kuhn had letters from AG Environmental indicating that it expected the work to go forward. (Trial Tr. at 425.) Kuhn acknowledged involvement in drafting certain portions of the April 17, 1996 press release. (Id. at 397-98.) The April 17, 1996 press release was issued during the period for which the VSE had suspended trading in Solucorp stock — from December 1995 to August 6, 1996. (Pl. Proposed Findings of Facts ¶ 1. ) F. $300 million IDMC Contract On August 2, 1996, in anticipation of commencing trading on the NASD OTCBB, Solucorp mailed a letter to shareholders describing business developments over the course of the preceding eight months. (SAF ¶ 13(b); Pl. Trial Exs. 59, 60, 79 at SOL5487.) The letter reported that, “Solucorp has received a joint contract with IDMC Environmental to provide up to $300 million, over 10 years, of heavy metal remediation services in one of the largest military base cleanups ever contracted.” (SAF ¶ 13(c); Pl. Trial Ex. 59 at NASD83.) However, Solucorp had not received such a contract. (SAF ¶ 13(d); Trial Tr. at 551.) More than three years later, So-lucorp issued a press release and Form 8-K dated March 18, 1999, stating that it “does not know of any such $300 million contract.” (SAF ¶ 13(d); Pl. Trial Ex. 89 at 6; Kemprowski, Mantia, Herman and Kuhn Answers, Ex. A at 5.) Solucorp further explained in its Form 8-K that “[t]he Company assumes that the $300 million figure was a typographical error made during drafting.” (SAF ¶ 13(d); Pl. Trial Ex. 89 at 6.) Mantia reiterated at trial that it was a typographical error, maintaining that it should have read “$30 million” instead of “$300 million,” although he still could not identify the purported military base cleanup at issue. (Trial Tr. at 551-52.) Mantia did not draft but read and signed the August 2, 1996 letter to shareholders and caused it to be disseminated. (SAF ¶ 13(e); Trial Tr. at 548, 550-51; Pl. Trial Ex. 59.) Before signing the August 2, 1996 letter to shareholders, he circulated it to others at Solucorp, including Kuhn and Kemprowski, but no one questioned it. (Trial Tr. at 550, 552.) In a press release dated August 5, 1996, which Mantia also signed, the Company offered to make available a copy of the newsletter to anyone interested in obtaining a copy. (Pl. Trial Ex. 60.) Solucorp’s outside counsel filed the newsletter with the BCSC on August 12, 1996. (Pl. Trial Ex. 61.) On August 6, 1996, four days after the August 2, 1996 press release, and after an eight-month trading suspension, Solucorp delisted its securities from the VSE and began trading on the NASD OTCBB. (SAF ¶ 13(a); Pl. Trial Ex. 60.) Solucorp shares commenced trading on the NASD OTCBB at $7.50 and declined to $2.00 per share by late November 1996 (Pl. Trial Ex. 88), at which point, as described in further detail below, the Company issued a press release and filed an Annual Report with the BCSC. G. Doe Run Contract On or about August 2, 1996, Solucorp entered into two agreements with Doe Run Resources Corporation (“Doe Run”). The first agreement provided for the leasing of certain equipment by Solucorp to Doe Run. (Defs. Trial Ex. RR.) The second agreement provided for the remediation of soil at Doe Run’s facility in Missouri. (Defs. Trial Ex. QQ.) On November 27, 1996, Solucorp issued a press release announcing that its completion of testing at the Doe Run’s Lead Recycling Facility “provides remediation revenues of $1.68 million per year for three years and machinery leasing revenues of $180,000” under remediation and machinery leasing agreements with Doe Run. (SAF ¶ 14(a); Pl. Trial Ex. 62.) Thus, according to the press release, the total revenue anticipated under the two agreements was $5.22 million over three years. (Pl. Trial Ex. 62.) Pursuant to the leasing agreement, So-lucorp was to receive payments of approximately $165,000 over three years. Pursuant to the remediation agreement, Solucorp was to receive payments of approximately $1.6 million over three years. (SAF ¶ 14(b); Pl. Trial Exs. 63-65, 400 at 144; Trial Tr. at 562.) Accordingly, Solu-corp’s machinery-leasing agreement with Doe Run provided for Solucorp to receive only $55,000 per year. (Pl. Trial Ex. 64.) Under the terms of its amended remediation contract with Doe Run, Solucorp anticipated receiving approximately $525,000 per year. (Pl. Trial Exs. 65, 66, 400 at 144, 402 at 210.) Thus, under the written contracts, Solucorp anticipated receiving $580,000 per year, not $1.68 million per year. (Trial Tr. at 557.) According to defendants, this was an inadvertent error, that does not appear anywhere else in Solucorp’s disclosure documents, and was corrected in the March 1999 Form 8-K report. (Defs. Trial Ex. B at 7.) Mantia read the November 27, 1996 press release, circulated it to others at Solucorp, signed the press release and ordered its dissemination. (SAF ¶ 14(c); Trial Tr. at 554-55; Pl. Trial Ex. 62.) Kuhn was the primary business contact between Doe Run and Solucorp. (Pl. Trial Ex. 517A at 69.) H. Scotland Contract On October 30, 1995, Solucorp and John Beech Remediation Ltd. (“Beech”) entered into a licensing agreement (the “Beech Agreement”). (Defs. Trial Ex. LL.) Beech was a company located in the United Kingdom involved in the demolition business. (Trial Tr. at 1013.) The Beech Agreement provided Beech with an exclusive marketing license for use of Solucorp’s MBS process in exchange for royalty fees and other payments to Solucorp. (Defs. Trial Ex. LL.) Beech was awarded a contract by the City of Glasgow to carry out remediation trials for a site in the city of Glasgow. (Trial Tr. at 1014; Defs. Trial Exs. MM, NN.) Sixteen technologies were tested at the site under the auspices of Dames & Moore, a very large international consulting firm in the environmental business. (Trial Tr. at 1015.) The report from Dames & Moore recommended Solucorp’s MBS technology for cleanup of the soils. (Id.) In the “Message to Shareholders” in its 1996 Annual Report, filed with the BCSC on November 15, 1996 and disseminated to shareholders, Solucorp stated that a licensee had announced two contracts to perform services in Scotland and Portugal beginning in January 1997 which “will generate a minimum royalty income [for Solu-corp] of between $10.0 and $14.0 million.” The same claim was reiterated in the “Corporate Profile.” (SAF ¶ 15(a); PI. Trial Ex. 40 at 1, 3.) Both the “Message to Shareholders” and “Corporate Profile” were placed at the front of the 1996 Annual Report. (PI. Trial Ex. 40 at 1, 3.) Of the $10 to $14 million in royalties, approximately $9 to $13 million was attributable to the licensee’s contract in Scotland. (SAF ¶ 15(b); PI. Trial Ex. 71.) In its 1996 Annual Report, Solucorp failed to disclose that the licensee had not yet been awarded a contract to provide services in Scotland beyond performing tests for 18,-000 pounds sterling [approximately $30,000 U.S.]. (PI. Trial Exs. 67-70, 400 at 200-01; Beech Dep. at 32-35, 70-71, 93-100.) So-lucorp also failed to disclose in its 1996 Annual Report that whether the licensee ultimately secured a remediation contract in Scotland was dependent on, among other things, the availability of funding. (Beech Dep. at 71, 77-79, 83-86; Pinsky 10/13/98 Tr. at 52-53; PI. Trial Ex. 69.) On March 18, 1999, in a press release and Form 8-K filed with the SEC, Solu-corp disclosed that no remediation contract had yet been awarded due to a lack of funding. (PI. Trial Ex. 89 at 7; Kemprow-ski, Mantia, Herman and Kuhn Answers, Ex. A at 4.) Mantia signed the Message to Shareholders (SAF ¶ 15(c); PI. Trial Ex. 40 at 3) and caused it to be disseminated with the Annual Report (PI. Trial Ex. 401C at 477, 484-85, 489-92.) I. China Contracts 1. Background Smart International Ltd. (“Smart”) is a closely-held Hong Kong based company. Smart was one of two companies headed by Q.B. Zheng. (Zheng 11/30/98 Tr. at 6-7.) From January 1997 through November 1998, Q.B. Zheng’s son, Li Zheng, acted as a translator for his father and transmitted material back and forth between Solucorp and Smart. (Zheng 11/30/98 Tr. at 8, 22.) Following his father’s death in early 2000, Li Zheng became the head of both companies. (Zheng 7/20/01 Dep. at 21-23, 117.) Smart was formed in 1997 for the purpose of producing calcium sulfide, the principal ingredient in the MBS process, for Solucorp, which was its only customer through at least July 2001. (Zheng 7/20/01 Dep. at 62; PI. Trial Ex. 134.) Production started in or about March 1997. (Zheng 11/30/98 Tr. at 14-15, 18-19.) Smart subsequently entered into an agreement pursuant to which Solucorp licensed Smart to use Solu-corp’s MBS remediation process in China. During 1997 and 1998, Solucorp issued a series of press releases regarding the licensing arrangements with Smart and purported environmental remediation projects in China which Smart had contracted to perform. With respect to press releases relating to China, John Van Duzen would take the information supplied through Li or Q.B. Zheng and report it to Mantia or Spartz, not Kemprowski. (Trial Tr. at 1136-37.) Information for press releases relating to China came from Q.B. Zheng, by his son Li, usually to Van Duzen or Mantia. (Trial Tr. at 65, 68.) The information was often vague and confusing. (Trial Tr. at 68, 130.) This was apparently by design at the Chinese end of the operation because a lot of the projects were in provinces or towns run by military generals who, as a matter of saving face, did not admit to the extent of their environmental problems. (Trial Tr. at 131-32.) 2. June 4, 1997 Agreement in Principle Solucorp and Smart entered into an agreement on June 4,1997 regarding Solu-corp’s licensing of Smart to use Solucorp’s proprietary MBS process in China. (PI. Trial Ex. 78.) Solucorp announced in a press release dated June 5, 1997, that Smart, a privately-held Hong Kong company, had signed an exclusive, five-year licensing agreement for the right to produce, market and apply MBS in China. Solucorp also announced that Smart would pay a $2 million license fee during the first year of the license. (SAF ¶ 16(a); PL Trial Ex. 77.) According to plaintiff, the June 5, 1997 release failed to disclose that the entire agreement was preliminary, and payment of the initial license fee was contingent on, among other things: (1) Smart conducting a market survey in China to determine whether a market existed to support payment of the fee; and (2) Smart securing remediation jobs using MBS from which it could finance the fee or, alternatively, on Solucorp securing remediation jobs using MBS that would require it to purchase chemicals from Smart, thus providing Smart with funds to pay the license fee. Defendants argue that the contingencies in the agreement related to payments after the first year and were inapplicable to the payment of the initial license fee, which all parties considered to be a firm agreement. (Defs. Trial Ex. SS.) 3. Reservoir and Battery Plant Contracts in China Solucorp announced in a press release dated December 12, 1997 that Smart and Solucorp had been “rewarded with two major contracts” in China. The contracts related to projects described more fully in a November 20, 1997 press release. One project involved designing a system at a plant in China for “full implementation by Mareh-April 1998,” which “Solueorp-Smart estimate[d] ... will result in revenues of $400,000 per month once the system is operational.” The other project involved the “testing and associated operations for remediation” of irrigation fields that was “valued in excess of U.S. $125 million [and], will take two years to complete.” Solucorp further stated that, “[f]unding for this vast [second] project is established, and revenues will commence in the first quarter of 1998.” (SAF ¶ 17(a); PL Trial Exs. 80, 81.) Plaintiff claims that Kemprowski knew, or was reckless in not knowing, that the November 20 and December 12, 1997 press releases were materially false and misleading when issued. Kemprowski acknowledged during investigative testimony in 1998 that he provided certain information regarding the Chuan Shan reservoir and Gui Zhou battery plant projects for inclusion in the November 20, 1997 press release. (Pl. Trial Ex. 403C at 255-56, 258-59.) Memos dated November 17 and 18, 1997 from Spartz and David Porteous, respectfully, were directed to Solucorp’s outside public relations firm, summarizing information about the two projects obtained from Kemprowski, who was then in China. (PI. Trial Exs. 85, 86.) With respect to the December 12th press release, Kemprowski testified at trial: “there’s a good possibility that I saw this press release before it was issued, because it does involve China.” (Trial Tr. at 955.) Kem-prowski was aware of the projects because Van Duzen reported back to the Company about the contracts; however, Kemprow-ski was not kept apprised of the contracts on a daily,