Full opinion text
MEMORANDUM OPINION AND ORDER KYLE, District Judge. Table of Contents , Introduction 1041 Background.1042 I. Introduction.1042 II. The Parties .1042 A. Plaintiffs.1042 B. Defendants.1043 III. Factual Background.1044 A. Securities Lending.1044 B. The Stock Manipulation Scheme.1045 1. The GENI Scheme.1046 2. MJK Is Brought into the Transactions.1047 3. Fraud at Native Nations .1048 4. Deutsche Bank Lessens Its Exposure.1048 5. The GENI for ICII Switch.1049 6. Nomura Lessens Its Exposure.1050 C. The Scheme Collapses.1050 IV. Procedural Background.1051 A. The Amended Complaints.1051 1. James P. Stephenson v. Deutsche Bank AG, et al., Civ. No. 02-4845 (RHK/AJB).1051 2. Ferris, Baker Watts, Inc. v. Deutsche Bank Securities Limited, et al., Civ. No. 02-3682 (RHK/AJB).1052 3. E*Trade Securities, LLC v. Deutsche Bank AG, Civ. No. 02-3711 (RHK/AJB).1052 B. Motions Before the Court.1052 1. James P. Stephenson v. Deutsche Bank AG, et al., Civ. No. 02-4845 (RHK/AJB).1052 2. Ferris, Baker Watts, Inc. v. Deutsche Bank Securities Limited, et al., Civ. No. 02-3682 (RHK/AJB).1053 3. E*Trade Securities, LLC v. Deutsche Bank AG, Civ. No. 02-3711 (RHK/AJB).1053 Standard of Decision.1054 Analysis.1054 I. Section 10(b) of the Exchange Act of 1934 and SEC Rule 10b.1055 A. Market Manipulation.1056 B. Statements and Omissions .1057 C. Conclusion.1058 II. Section 20(a) of the Exchange Act of 1934 .1058 III. Common Law Fraud and Negligent Misrepresentation.1060 A. Common Law Fraud.1060 B. Negligent Misrepresentation .1061 IV. Section 12(a)(1) of the 1933 Securities Act.1062 A. Sellers and Solicitors.1062 B. Statute of Limitations.1064 1. One-Year Limitations Period.1064 2. Three-Year Limitations Period.1064 C. Sales and Defenses.1065 D. Conclusion.1066 V. Section 11 of the 1933 Securities Act.1066 VI. Section 9 of the Exchange Act of 1934 .1066 A. Statute of Limitations.1067 B. Substantive Challenges.1067 VII. Minnesota Prevention of Consumer Fraud Act.1068 VIII. Civil Conspiracy.1070 IX. RICO and the Reform Act.1071 X. Personal Jurisdiction.1072 XI. Federal Rule of Civil Procedure 8(a)(2) .1074 Conclusion.1075 Introduction These matters come before the Court on Defendants’ motions to dismiss. In these three related actions, Plaintiffs James P. Stephenson, as trustee in bankruptcy for MJK Clearing (“the Trustee”), Ferris, Baker Watts, Inc. (“FBW”), and E*Trade Securities LLC (“E*Trade”) have separately sued Defendants Deutsche Bank AG (“Deutsche Bank AG”), Deutsche Bank Securities, Inc. (“Deutsche Bank Securities”), Deutsche Bank Securities Limited (“Deutsche Bank SL”), Wayne Breedon, Nomura Canada, Inc. (“Nomura Canada”), Nomura Securities International, Inc. (“Nomura”), Scott Reed, RBF International, Inc. (“RBF”), Kenneth D’Angelo, Richard Evangelista, Genesislntermedia, Inc. (“GENI”), Ramy El-Batrawi, Ultimate Holdings, Ltd. (“Ultimate Holdings”), Adnan Khashoggi, Bradford Keil-ler, James Smith, and A.G. Edwards & Sons, Inc. (“A.G. Edwards”). , Plaintiffs allege Defendants perpetrated or financed “a wide-ranging and sophisticated securities loan and market manipulation scheme” (Trustee Am. Compl. ¶ 1), that “resulted in the largest failure of a U.S. brokerage firm in at least 30 years” (E*Trade Am. Compl. at 1), producing “losses totaling in excess of $100 million.” (FBW Am. Compl. ¶ 2.) As alleged by E*Trade: What makes this story shocking, even in this post-Enron era, is not the quantum of greed involved, the involvement of a headline grabbing cast of characters including the notorious Saudi arms-dealer Adnan Khashoggi, or the scent of money laundering, but rather the sheer audacity and scope of the fraud .... involving] the deliberate, orchestrated participation of at least a dozen people in manipulating, again in highly coordinated fashion, the market for the securities of at least three separate companies, over a period of two years. (E*Trade Am. Compl. at 1.) Plaintiffs assert a variety of claims against Defendants under federal and state securities law, state consumer statutes, common law, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961, ek seq. In response to Plaintiffs’ overlapping Amended Complaints-which total almost 400 pages and 1,000 paragraphs-moving Defendants have filed fifteen, sometimes du-plicative, motions to dismiss, arguing, among other things, that Plaintiffs have failed to comply with the heightened pleading requirements of the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4(b)(2) (“the Reform Act”), improperly pleaded conduct actionable as securities fraud as predicate acts under RICO, and failed to state claims upon which relief can be granted. For the reasons set forth below, the Court will grant Defendants’ motions in part, and deny them in part. Background I. Introduction In these matters, Plaintiffs allege an orchestrated scheme involving a common practice in the securities industry known as securities lending. (Trustee Am. Compl. ¶ 4.) A typical securities lending transaction involves one party, usually a broker-dealer, loaning securities to another party, usually another broker-dealer, in exchange for cash collateral that slightly exceeds the value of the securities. (E*Trade Consol. Mem. at 6.) This cash collateral is “marked to the market,” so that, as the price for a particular stock rises and falls, cash is delivered to or returned from the lender. (FBW Am. Compl. ¶ 4.) Plaintiffs allege Defendants orchestrated a sophisticated scheme in which Defendants manipulated the price of several thinly traded securities while the securities were loaned to various broker-dealers, including Plaintiffs. Because the securities were marked to the market, the rise in market price required the borrowing broker-dealers to send hundreds of millions of cash collateral upstream to the architects of the scheme. In the end, the broker-dealers were left with essentially worthless securities — causing the massive collapse of MJK Clearing, Inc. (“MJK”), a Minnesota-based broker-dealer-while the scheme’s planners ran off with the money. Plaintiffs allege that this scheme took place with the knowledge and active participation of Defendants. II. The Parties A. Plaintiffs Plaintiff James P. Stephenson is trustee in bankruptcy for the estate of MJK. (Trustee Am. Compl. at 1.) MJK is a Minnesota corporation with its principal place of business in Minnesota. (FBW Am. Compl. ¶ 36.) Prior to the events of the present lawsuit, it was registered with the Securities and Exchange Commission (“SEC”) as a securities broker-dealer under Section 15(b) of the Securities and Exchange Act of 1934 (“the 1934 Act”). (Id.) MJK is currently in liquidation proceedings in the United States Bankruptcy Court for the District of Minnesota. Plaintiff FBW is a Delaware corporation with its principal place of business in Washington, D.C. (FBW Am. Compl. ¶ 18.) FBW is a registered securities broker-dealer under Section 15(b) of the 1934 Act. (Id.) Plaintiff E*Trade is a securities broker-dealer organized as a Delaware limited liability company that has its principal place of business in California. (E*Trade Am. Compl. ¶ 21.) It is the successor in interest to E*Trade Securities, Inc., which was incorporated under California law until it merged into E*Trade effective August 30, 2002. (Id.) E*Trade’s parent company, E*Trade Group, Inc., is a public corporation whose stock trades on the New York Stock Exchange under the symbol ET. (Id.) B. Defendants Defendant Deutsche Bank AG is an international bank headquartered in Frankfurt, Germany. (Trustee Am. Compl. ¶ 15.) It is one of the largest financial service providers in the world, with more than 95,000 employees, more than 2,300 branches and office locations in more than 70 countries and nearly one trillion euros in assets. (E*Trade Am. Compl. ¶ 22.) Among its numerous activities, Deutsche Bank AG operates a worldwide securities lending business managed in New York, Hong Kong, Frankfurt, and Milan. (Id.) It also operates a branch in Canada. (Trustee Am. Compl. ¶ 15.) Defendant Deutsche Bank Securities-formerly known as Deutsche Bank Alex Brown, Inc.-is a securities broker-dealer headquartered in New York City with offices throughout the world. (Trustee Am. Compl. ¶ 27.) Deutsche Bank Securities is a subsidiary of Deutsche Bank. (Id.) As part of its broker-dealer operations, Deutsche Bank Securities conducts a securities lending business under the central control and management of Deutsche Bank. (FBW Am. Compl. ¶ 20.) Deutsche Bank SL is a Canadian broker-dealer, -with offices in various locations in Canada, that engages in securities lending and other brokerage transactions. (FBW Am. Compl. ¶ 28.) It is a wholly owned subsidiary of Deutsche Bank AG and is listed as a branch on Deutsche Bank AG’s website. (Id.) The Amended Complaints allege that Deutsche Bank SL’s securities lending activities are controlled by Deutsche Bank AG in New York and London. (Id.) Defendant Wayne Breedon is a citizen of Ontario, Canada. (Id. ¶ 20.) Prior to being placed on administrative leave in the spring of 2002, Breedon was the employee of Deutsche Bank in Toronto responsible for initiating and controlling securities lending transactions. (Trustee Am. Compl. ¶ 16.) Breedon reported to Deutsche Bank and Deutsche Bank Securities in connection with stock loan activities involving securities issued by United States corporations. (E*Trade Am. Compl. ¶ 25.) He was formerly associated with Defendant RBF. (Id.) Defendant James Smith is a citizen of New York. (FBW Am. Compl. ¶ 28.) Smith was president of Native Nations, a securities firm that is the locus of much of the trading activity disputed in these lawsuits, at the time of the relevant transactions. (Id.) Defendant RBF is a New Jersey corporation controlled by Defendant Kenneth D’Angelo. (Trustee Am. Compl. ¶30.) D’Angelo resides in Edison, New Jersey. (Id. ¶ 31.) RBF acts as a securities lending “finder” or broker. (Id.) In 1993, RBF was sanctioned by the SEC for violating tender offer rules by selling securities borrowed from Native Nations. (E*Trade Am. Compl. ¶ 29.) Defendant Richard Evangelista is also a New Jersey resident. (Trustee Am. Compl. ¶ 32.) A former senior vice president at Native Nations, Evangelista was fired in September 2001 for allegedly falsifying Native Nations’ accounts in connection with the securities loan transactions at the center of these suits. (E*Trade Am. Compl. ¶ 31.) Defendant GENI is a Delaware corporation with its registered address in Van Nuys, California. (Trustee Am. Compl. ¶ 33.) In the business of developing, among other things, Internet kiosks in shopping malls, its stock was offered to the public at $8.50 per share in the spring of 1999. (Id.) At its highest, GENI shares reached $60 per share share on a split adjusted basis. (E*Trade Am. Compl. ¶ 32.) It voluntarily delisted its stock from the NASDAQ on January 29, 2002, which now trades for pennies a share. (Id.) Defendant Ramy El-Batrawi was a resident of California until October 2001. (FBW Am. Compl. ¶ 32.) El-Batrawi was the chief executive officer, chairman of the board, and a major shareholder of GENI. (Trustee Am. Compl. ¶ 34.) His whereabouts is unknown. (Id.) Defendant Ultimate Holdings is a Bermuda investment company owned by Defendant Adnan Khashoggi. (FBW Am. Compl. ¶ 30.) Ultimate was a major GENI shareholder and provided securities for the stock loan transactions alleged in the Amended Complaints. (Id.) Defendant Adnan Khashoggi is a Saudi financier, arms dealer, and the director and president of Ultimate Holdings. (Trustee Am. Compl. ¶ 36.) Khashoggi was a central figure in the 1986 Iran-Contra scandal whereby profits from arms sales to Iran were diverted to assist Nicaraguan rebels. (Id.) He is currently a fugitive from an arrest warrant issued in Thailand arising out of the collapse of the Bangkok Bank of Commerce. (FBW Am. Compl. ¶ 35.) Defendant Bradford Keiller is a resident of Texas and Nevada. (Trustee Am. Comp. ¶ 37.) A lawyer and former strip club owner, the Complaints assert that he engaged in active day trading in order to artificially maintain the price of GENI stock. Id. Between February and September 2001, Keiller bought and sold more than $22 million worth of GENI stock and sent millions of dollars to Ultimate. (E*Trade Am. Compl. ¶ 36.) Defendant Nomura is a New York corporation with its principal place of business in New York City. (FBW Am. Compl. ¶ 24.) It is a registered securities broker-dealer under Section 15(b) of the 1934 Act. (Id.) While Nomura is being sued by FBW and E*Trade, E*Trade’s action against it has been stayed by the Southern District of New York pending the resolution of all outstanding motions in a suit between the two parties in that District. Defendant Nomura Canada is a Canadian corporation with its principal place of business in Ontario. (E*Trade Am. Compl. ¶ 26.) Among its activities is the borrowing and lending of securities. (Id.) The Amended Complaints allege Nomura supervised and managed the business activities of Nomura Canada in matters related to this action. (FBW Am. Compl. ¶ 24; E*Trade Am. Compl. ¶ 27.) Defendant Scott Reed is a citizen and resident of Ontario, Canada. (FBW Am. Compl. ¶ 25.) Reed managed Nomura Canada’s stock loan department beginning in March 2001. (E*Trade Am. Compl. ¶ 28.) Prior to joining Nomura Canada in March 2001, he managed the stock loan department at Maple Securities Canada, Ltd. (“Maple Canada”). (Id.) Defendant A.G. Edwards is a Delaware corporation with its principal place of business in St. Louis, Missouri. (FBW Am. Compl. ¶ 34.) It is a registered securities broker-dealer under Section 15(b) of the 1934 Act. (Id.) III. Factual Background A. Securities Lending Generally, broker-dealers enter into securities lending transactions for several reasons. First, such transactions provide borrowing broker-dealers with a guaranteed source of delivery for a stock “shorted” by a customer. (FBW Am. Compl. ¶ 39.) Second, they provide a means to complete a securities transaction for a borrowing broker-dealer where the customer has failed to deliver the securities. (Id.) Third, broker-dealers may borrow securities as a means of investing excess cash. (Id. ¶ 41.) Finally, these transactions can provide broker-dealers with a source of financing. (Id. ¶ 40.) Securities lending takes several forms. In “conduit transactions,” securities are borrowed and re-lent from one firm to another in a series of transactions or “loan-chains” before the borrowed stock arrives to the final end user. (Trustee Am. Compl. ¶ 44.) These conduit transactions take place for a variety of reasons, including when the lender and the end user do not have an agreement to do stock-loan business together and must route the stock through a third-party (or several third-parties) with whom both have agreements to conduct business. (Id.) The conduit broker-dealer earns money on the difference between the interest rate paid for the cash deposited as collateral and the cash received as collateral. (FBW Am. Compl. 42.) Securities transactions also occur as “run-throughs,” in which a broker-dealer who has already arranged a stock loan transaction asks a third-party broker-dealer to facilitate the transaction between broker-dealers. (E*Trade Am. Compl. ¶ 42.) Although the mechanics of these two transactions are similar, conduit broker-dealers generally have the freedom to retain the securities, rather than on-lending them, while run-through broker-dealers do not. (Id. ¶ 43.) B. The Stock Manipulation Scheme Plaintiffs allege that Defendants utilized these transactions to drive up the price of several thinly traded securities. While it is possible, in a typical market manipulation scheme, to drive up the price of thinly traded securities through phony bids, “wash sales,” and other devices, it is difficult to sell large quantities of the artificially inflated stock without significantly depressing the price. (Trustee Am. Compl. ¶ 6.) As alleged by Plaintiffs, Defendants’ scheme overcame that problem by purporting to “lend” the securities in question. (Id.) Defendants could thereby require unsuspecting broker-dealers to advance cash collateral for the securities-rather than purchasing them outright-and then require additional cash collateral as Defendants artificially raised the price of the securities marked to the market. (Id.) Moreover, by inserting solvent broker-dealers-such as Plaintiffs-into these transactions as conduits and run-throughs, Defendants were able to insulate themselves from the financial consequences when the scheme’s architects ran off with the money. Defendants relied on securities lending transactions to manipulate the supply, and thereby the price, of three securities: GENI, Imperial Credit Industries, Inc. (“ICII”), and Holiday RV Superstore, Inc. (“RVEE”). 1. The GENI Scheme The bulk of Plaintiffs’ losses occurred in GENI securities, which resulted in losses of more than $120 million dollars for MJK Clearing and $200 million for all affected broker-dealers. (Trustee Am. Compl. ¶ 49; E*Trade Am. Compl. ¶ 48.) While GENI was ostensibly an interactive technologies and Internet firm, the 1999 prospectus generated in anticipation of its initial public offering indicates that most of GENI’s revenue was derived from related party transactions. (E*Trade Am. Compl. ¶ 49.) The initial public offering was for two million shares, or approximately forty-percent of the total share volume; another three million shares, of the more than four million shares remaining, stayed in the hands of Ramy El-Batrawi, GENI’s founder. (Id.) On August 12, 1999, shortly after the public trading of GENI had begun, Deutsche Bank obtained and loaned one million shares to Deutsche Bank SL in a transaction arranged by Kenneth D’Angelo, on behalf of RBF, and Wayne Breedon, on behalf of Deutsche Bank. (Trustee Am. Compl. ¶ 51.) In return for the one million shares, Deutsche Bank advanced six million dollars of cash collateral. (Id. ¶ 52.) Less than two months later, Deutsche Bank borrowed another one million shares, this time from Native Nations. (Id. ¶ 51.) Native Nations had obtained these shares from Global Leisure, a company owned by El-Batrawi, in a transaction again orchestrated by D’Angelo. (Id.) In exchange for the shares, Deutsche Bank advanced an additional four million dollars in cash collateral. (Id. ¶ 52.) Thus, within four months of GENI’s public offering, Bree-don, D’Angelo, El-Batrawi, and Deutsche Bank controlled an amount of shares equal to the number of GENI’s available to the public. (Id.) Beginning in February 2000, El-Ba-trawi’s longtime associate, Adnan Khash-oggi, began to acquire GENI stock through his Bermuda-based entity, Ultimate Holdings. (Id. ¶ 54.) These shares, as with the previous GENI shares, were distributed through a stock loan chain from Native Nations to Deutsche Bank in transactions arranged by D’Angelo and RBF. (Id.) By February 31, 2000, Deutsche Bank was holding more than five million shares of GENI stock, out of a total of 6.4 million shares outstanding, and had advanced more than eighty-eight million dollars of cash collateral through Native Nations to El-Batrawi, Ultimate, D’Angelo, and others. (Id.) All of Deutsche Bank’s shares originated with either Ultimate or El-Batrawi and were held as collateral for loans made by Deutsche Bank to Native Nations. (FBW Am. Compl. ¶ 83.) With Deutsche Bank controlling virtually all of the publicly available GENI stock, El-Batrawi, Khashoggi, Keiller, and D’Angelo, began using the money advanced by Deutsche Bank to day-trade GENI to create the illusion of substantial market demand. (See E*Trade Am. Compl. ¶¶ 57-59.) For instance, on March 23, 2001, Khashoggi (through Ultimate) purchased approximately 60,000 shares of GENI and sold approximately 47,600 shares out of a total market volume of 158,100 shares traded. (Id. at 60.) Likewise, on July 30, 2001, D’Angelo purchased 31,500 shares of GENI and sold 12,500 shares out of a total market volume of 186,500 shares traded-about 24 percent of the total daily trading volume. (Id. at 59.) Through these transactions, Defendants artificially and substantially raised the price of GENI stock, causing those holding the loaned shares “marked to the market” to send large amounts of additional cash collateral down the chain of borrowers to El-Batrawi and Khashoggi. (Trustee Am. Compl. ¶ 8.) The manipulation of the price of GENI stock was done with the full knowledge and cooperation of Wayne Breedon at Deutsche Bank. For instance, on October 6, 2000, D’Angelo told Breedon, who initiated and controlled securities lending transactions in Deutsche Bank’s Toronto office: D’Angelo: That’s what I believe in. I don’t want to know about whatever. B-b-bah bah bah. I wanna know it’s gonna [expletive deleted] happen. [Expletive deleted]. ‘Cause in order for him to push out that eighteen and a half dollar stock, it’s gotta be eighteen and a half. Breedon: Yup. D’Angelo: So they gotta run it. Breedon: Yup. D’Angelo: I think whatever the guy’s thinking is, I could be wrong, but I think he should have started it today. I think his thinking was that on Monday there’s not going to be a helluva a lot of people around, so it’ll be easier for him to lift something with no big volume. Breedon: Yeah, that’s true. (Id. ¶ 57.) Likewise, Breedon was aware of the effect Deutsche Bank’s substantial holdings of GENI were having on the market. On January 8, 2001, Breedon and D’Angelo discussed how Deutsche Bank’s holdings were affecting short sellers: D’Angelo: You know there’s over a million shares short? Breedon: They must just, they mustn’t be shorting it just because of the FASH [Fashion Mall]. D’Angelo: Well, they’re just doing it because they’re caught now. Breedon: Yeah. D’Angleo: He’s really got them caught, in theory. Breedon: Well, yeah, I mean if there’s no bloody stock out there. D’Angelo: There’s none. We got five million and change [Deutsche Bank was holding more than 5 million GENI shares] and there’s only 6.4 million shares outstanding. Breedon: Just buy the suckers in. D’Angelo: Yep. Breedon: Keep buying them in, buying them in. (Id. ¶ 59.) 2. MJK Is Brought into the Transactions While MJK, FBW, and E*Trade were all brought into the stock loan transactions as conduits or run-throughs, MJK’s role was particularly critical, because it eventually served as a “hub” for most of the securities loan transactions. Since almost all of the broker-dealer lending chains would eventually pass through MJK, its eventual inability to return the cash collateral would prove devastating for its fellow intermediaries in the lending chains. On November 10, 2000, MJK first became involved in borrowing and re-lending GENI stock. (Id. ¶ 70.) Thomas Brooks, the head of securities lending at MJK, received a telephone call from Evangelista, a senior vice president of Native Nations, or those working at his direction. (Id.) Mr. Brooks was asked whether MJK would borrow 1,500,000 shares of GENI from Native Nations and immediately re-lend it to Maple Partners Investments, Inc. (“Maple Partners”), another broker-dealer. (Id.) This transaction was structured as a “run-through” transaction arranged by Breedon, at Deutsche Bank, and D’Angelo, at RBF. (Id.) MJK received the GENI shares and loaned them to Maple Partners, which in turn loaned them to other broker-dealers, which loaned them to Deutsche Bank. (Id.) In exchange for these shares, Deutsche Bank advanced $27 million in cash collateral, which passed through each broker dealer until it reached Native Nations. (Id.) In all likelihood, the money ended up with El-Ba-trawi and Khashoggi. (Id.) While MJK agreed to return to its counter-party, Maple Partners, the $27 million in cash it has received as collateral when MJK lent Maple Partners the GENI stock, MJK’s obligation was not dependent on its ability to receive its own collateral back from Native Nations. (Id. ¶ 71.) MJK was thus exposed to the risk it might owe $27 million dollars to Maple Partners, but be unable to collect the corresponding amount from Native Nations. (Id.) 3. Fraud at Native Nations In mid-February 2001, James Smith, the president of Native Nations, learned that its auditors had discovered that Evangelista had falsified entries in Native Nations’s books to make it appear as if Native Nations had borrowed the GENI stock from First Union Securities and other legitimate broker dealers, rather than Ultimate and El-Batrawi. (Id. ¶ 74; FBW Am. Compl. ¶ 66.) Had the transactions been reflected as the consumer transactions they were, Native Nations would have been in violation of Regulation T of the Board of Governors of the Federal Reserve System, its consumer reserve requirements under SEC rule 15c3-3, 17 C.F.R. § 240.17c3-3, and its net capital requirements under SEC rule 15c3-3, 17 C.F.R. § 240.12c3-l. (Id. ¶ 67.) To allow its auditors to certify its financial statement, Native Nations signed a form Master Securities Loan Agreement with the Khashoggi-controlled Ultimate, which confirmed that Ultimate had loaned over five million shares of GENI to Native Nations. (Trustee Am. Compl. ¶ 74.) This Agreement, however, contained substantial falsehoods, including that Ultimate was a registered broker-dealer involved in institutional stock lending, which it was not, and the transactions it had effected complied with all applicable laws and regulations. (Id.; FBW Am. Compl. ¶ 66.) Smith never reported the auditors’ discoveries to the SEC, any regulatory body, or MJK. (Trustee Am. Compl. ¶ 74.) Evan-gelista kept his job. (FBW Am. Compl. ¶ 68.) 4. Deutsche Bank Lessens Its Exposure Soon after Native Nations’ auditors found the false entries on its books and records, Deutsche Bank SL reduced its credit limits with Native Nations and began to systematically reduce its direct stock-loan position with Native Nations on GENI stock. (Trustee Am. Compl. ¶ 78.) To that end, Deutsche Bank took care to insert solvent broker-dealers into the lending chains between Native Nations and itself. (Id.) During the spring and summer of 2001, Deutsche Bank returned large quantities of stock to Native Nations, which then routed it back to itself through a variety of broker-dealers, including Wells Fargo, First Southwest Securities, Nomura, Nomura Canada, Robert W. Baird & Company, HSBC Group Canada, E*Trade, and, eventually, Fiserv. (FWB Am. Compl. ¶ 99.) In March 2001, Thomas Brooks at MJK was contacted by Breedon, D’Angelo, or their associates to discuss increasing MJK’s borrowing of GENI stock by almost a million shares. (Id.) By then, MJK’s borrowing had increased to one-and-three-quarters million shares, so that with the additional shares, MJK’s total borrowing of GENI would exceed two-and-a-half million shares. (Id.) Brooks agreed to the transaction. From March until June 2001, MJK’s borrowing of GENI shares from Native Nations continued to grow until it reached 10,111,400 shares on June 30, 2001, as adjusted for a three-for-one stock split. (Id. ¶ 81.) During this period, MJK advanced cash collateral of $192,116,600 to Native Nations. (Id.) Virtually all of it was funneled to Khashoggi and El-Ba-trawi. Scott Reed, the head of securities lending for Maple Partners’ Canadian affiliate, Maple Securities Canada (“Maple Canada”), interposed both Maple Partners and Maple Canada between MJK and Deutsche Bank in transactions involving GENI, RVEE, and ICII. For example, in the November 10, 2000 transaction that inaugurated MJK’s participation in the stock lending chains, Native Nations loaned one-and-a-half million shares of GENI to MJK, which loaned the shares to Maple Partners, which in turn loaned the shares to Maple Canada, which finally loaned the shares to Deutsche Bank. (FBW Am. Compl. ¶ 91.) In exchange for the shares, Deutsche Bank advanced $27 million in cash collateral up the lending chain to Native Nations. (Id.) Similarly, on December 19, 2000, Native Nations loaned 250,000 shares of GENI to MJK, and through MJK to Maple Partners, Maple Canada, and finally Deutsche Bank. (Id.) In return, Deutsche Bank advanced $4,500,000 in cash collateral up the chain. (Id.) As a result of those transactions, Maple Partners and Maple Canada had open positions of one-and-three-quarters million shares of GENI-a figure representing 128% of the outstanding shares in the hands of the public. (E*Trade Am. Compl. ¶ 92.) In early March 2001, Scott Reed’s superiors at Maple Canada informed him that they were concerned about the size of their position on securities borrowed through MJK and they instructed him to reduce their MJK positions by ten million dollars. (Id. ¶ 93.) Rather than acquiesce, Reed increased his positions by twenty million dollars. (Id.) He told Breedon that this would “probably get him called into the office” and began looking for other work. (Id.) On March 12, 2000, Reed resigned from Maple Canada to accept a position with Nomura Canada. (Id. ¶ 95.) Maple Partners and Maple Canada completely closed out their positions in GENI, ICII, and RVEE; Reed, however, worked quickly with Breedon and D’Angelo to reconstitute those positions with his new employer. (Id. ¶ 97.) By March 27, 2001, Nomura and Nomura Canada had borrowed and re-loaned well over two-and-a-half million GENI shares. (Id. ¶ 98.) 5. The GENI for ICII Switch In 'June 2001, D’Angelo, Breedon, and Reed decided to reorganize the structure of the lending chains that had developed with regard to ICII bonds. (Id. ¶ 99.) Because Deutsche Bank’s Canadian branch owned such a large position that it essentially “ownfed] the entire company” and would have to pay substantial non-resident taxes, Reed agreed to route the bonds to Nomura. (Id.) Reed, however, was internally warned that such a move would almost certainly be illegal. (Id. ¶ 106.) Therefore, Breedon and Reed concocted a plan by which the ICII bonds would essentially be traded for GENI stock, of which Breedon laughingly noted, “we have a ton of.” (Id. ¶ 107.) The ICII for GENI trade was implicitly premised on the fact Native Nations or MJK would be unable to return its cash collateral. (Id.) As Reed explained when asked by Nomura’s reorganization department why he was pursuing this complex stock-for-bond swap rather than simply returning the ICII bonds: “[T]he idea is they need cash.” (Id. ¶ 108.) 6. Nomura Lessens Its Exposure At that point, Nomura and Nomura Canada had exhausted their available credit with MJK. (Id. ¶ 100.) Moreover, Reed wanted to minimize Nomura and Nomura Canada’s direct position with MJK. (Id.) As Thomas Brooks of MJK testified in a related proceeding, “I can remember No-mura wanted to keep the shares on but not with [MJK] directly. At that point I needed to find somebody who [MJK] could loan it to and [Nomura] could borrow from. We decided that was E*Trade.” (Id. ¶ 101.) At Nomura’s behest, on June 21, 2001 Brooks asked Donald Santina, of E*Trade’s stock loan department, to perform a run-though, borrowing 2,455,000 post-split shares of GENI, at $17 a share, and immediately re-loaning those shares to Nomura; in exchange, E*Trade would receive and redeliver $41,735,000 in cash collateral from Nomura to MJK. (Id. ¶ 102.) E*Trade’s fee would be 12.5 basis points, calculated as the difference between the 5.125% rebate rate E*Trade charged on the cash it delivered to MJK and the 5% rate it charged Nomura. (Id.) E*Trade agreed to the deal. (Id.) Two months later, E*Trade performed a similar run-through involving 1,655,000 post-split shares of GENI and cash collateral of almost $30 million, this time between MJK and Wedbush at the behest of Deutsche Bank. (Id. ¶ 104.) Through these two transactions, Nomura and Deutsche Bank reduced their direct position with MJK by more the $70 million. C. The Scheme Collapses During the several months prior to September 11, 2001, GENI traded consistently at a price of $17 per share or greater, due in large part to the efforts of various Defendants to prop up ■ the stock price. (FBW Am. Compl. ¶ 170.) Following the September 11 attacks, the price of GENI fell precipitously, from $17 a share to $9 a share in the week after the stock markets reopened on September 17. (Trustee Am. Compl. ¶ 97.) Each broker-dealer within the lending chain was forced to mark to the market daily. (FBW Am. Compl. ¶ 172.) As the price plummeted, Deutsche Bank was thereby able to recover large amounts of cash collateral from the broker-dealers directly above it in the lending chain. (Id.) D’Angelo, Evangelista, and Smith knew that if marks were made to Native Nations, Native Nations would be unable to pay them. (Id. ¶ 173.) Accordingly, D’Angelo persuaded MJK’s Brooks not to mark Native Nations, but rather to pay downstream marks out of MJK’s own capital, and that RBF would reimburse MJK for its costs. (Id.) Accordingly, by the morning of September 21, 2001, MJK had paid downstream broker-dealers in excess of $50 million in cash collateral relating to GENI stock and $20 million cash collateral for the ICII bonds without receiving any money from Native Nations. (Id.) MJK was on the verge of financial collapse. (Id.) At Nomura Canada, Scott Reed was under substantial pressure to drastically cut his four million share position in GENI stock. (Id. ¶ 176.) Reed told Breedon that he thought he could get away with only reducing that position by half; Reed and Breedon joked that Nomura’s management would not be able to locate the stock on Nomura’s own books because of the complexity of the underlying transactions. (Id.) In order to avoid having Nomura return all of its shares, Breedon, D’Angelo and Reed formulated a plan by which they would move half of Nomura’s GENI position from Deutsche Bank Canada through Nomura Canada to MJK, and then back to Deutsche Bank from MJK through FBW and A.G. Edwards. (Id. ¶ 178.) Breedon was frantic to make sure this transfer took place and placed no fewer than 25 phone calls to both the plan participants and A.G. Edwards to ensure the stock was safely rerouted to Deutsche Bank. (Id. ¶ 182.) At this stage, however, the scheme’s collapse was inevitable. On September 25, 2001, Native Nations and MJK notified regulatory authorities that they lacked sufficient capital under federal and self-regulatory rules to continue operations and closed their doors. (Id. ¶ 185.) Broker-dealers up the lending chain felt the reverberations. Acting on the instructions of his superiors, Breedon promptly returned all the shares of GENI held that Deutsche Bank had in its possession on the morning of September 26; he was successful with regard to all shares, save for those few still held directly with Native Nations. (Id. ¶ 186.) In the end, Deutsche Bank recouped approximately $120,800,000 of the $128,300,000 it had outstanding. (E*Trade Am. Compl. ¶ 185.) In Bree-don’s words, “[0]ther people are probably stuck with it, but not us.” (Id.) Reed’s machinations of the prior week permitted Nomura and Nomura Canada to do almost as well, clearing $28 million worth of GENI positions. (Id. ¶ 187.) Intermediaries such as MJK Clearing, FBW, and E*Trade were left with millions of shares of worthless stock. As Reed said of the intermediaries, “Now they’re the one that’s going to get f — eked, right?” (Id. ¶ 186.) IV. Procedural Background A. The Amended Complaints 1. James P. Stephenson v. Deutsche Bank AG, et al., Civ. No. 02-4845 (RHK/AJB). The Trustee commenced his action as an adversarial proceeding in the United States Bankruptcy Court for the District of Minnesota. The matter was then transferred to this Court on December 19, 2002. The Trustee has sued Defendants Deutsche Bank AG, Deutsche Bank Securities, Deutsche Bank SL, Wayne Breedon, RBF, Kenneth D’Angelo, Richard Evan-gelista, GENI, Ramy El-Batrawi, Ultimate Holdings, Adnan Khashoggi, Bradford Keiller, and John Does 1-10. The Amended Complaint asserts sixteen causes of action. Counts I through X are brought under federal and state securities law and are premised on alleged fraud and manipulation in connection with securities lending transactions. (See Trustee Am. Compl. ¶¶ 149-248.) Counts XI through XIII, sometimes pleaded in the alternative and sometimes not, allege violations of RICO based on the same activity. (See id. ¶¶ 244-58.) Counts XIV, alleging common law fraud, XV, alleging violations of the Minnesota Consumer Protection Act, and XVI, alleging conspiracy, are all also premised on the securities lending transactions. (See id. ¶¶ 261-64, 268-71, 275.) The Trustee alleges damages of more than $835,000,000. (Trustee Am. Compl. 11.) 2. Ferris, Baker Watts, Inc. v. Deutsche Bank Securities Limited, et al., Civ. No. 02-3682 (RHK/AJB). FBW filed its action on September 20, 2002. FBW has sued Defendants Deutsche Bank SL, Deutsche Bank Securities, Deutsche Bank AG, Wayne Breedon, Nomura, Nomura Canada, Scott Reed, RBF, Kenneth D’Angelo, James Smith, Richard Evangelista, Ultimate Holdings, Adnan Khashoggi, Ramy El-Batrawi, and A.G. Edwards. (FBW Am. Compl. ¶ 1.) FBWs Amended Complaint asserts twenty-two causes of action. Counts I through XVI, XVIII, and XIX are brought under federal and state securities law and are premised on alleged fraud and manipulation in securities lending transactions. (See id. ¶¶ 193-284, 296-310.) Counts XVII, alleging common law fraud, and XX, alleging negligent misrepresentation, and XXI, alleging civil conspiracy, assert that the stock loan transactions were in furtherance of a common scheme and that each Defendant agreed to participate. (Id. ¶¶ 312, 319.) Finally, Count XXII, pleaded in the alternative, alleges violations of the RICO statute through a pattern of racketeering activity generated by multiple acts of wire fraud. (Id. ¶¶ 323-25.) FBW seeks damages of approximately $18 million. (Id. ¶ 1.) 3. E*Trade Securities LLC v. Deutsche Bank AG, Civ. No. 02-3711 (RHK/AJB). E*Trade commenced its action on September 25, 2002. E*Trade has sued Defendants Deutsche Bank AG, Deutsche Bank Securities, Deutsche Bank SL, Wayne Breedon, Nomura Canada, Nomu-ra, Scott Reed, RBF, Kenneth D’Angelo, Richard Evangelista, GENI, Ramy El-Ba-trawi, Ultimate Holdings, Adnan Khashog-gi, Bradford Keiller, James Smith, and John Does Nos. 2-100. (E*Trade Am. Compl. ¶ 1.) E*Trade’s Amended Complaint sets forth seventeen causes of action. Counts I through XI are brought under federal and state securities laws and premised on the alleged fraud and manipulation in securities lending transactions. (Id. ¶¶ 193-312.) Counts XII-XIV, sometimes pleaded in the alternative and sometimes not, allege violations of RICO. (Id. ¶¶ 313-327.) Counts XV, alleging common law fraud, XVI, alleging violations of the Minnesota Consumer Protection Act, and XVII, alleging civil conspiracy, are all based on the same underlying conduct. (Id. ¶¶ 329-345.) E*Trade seeks damages of approximately $20 million, in addition to any amounts it might be required to pay in related litigation. (Id. ¶ 192.) B. Motions Before the Court The Court presently has before it a multitude of Motions to Dismiss and other related Motions in these three actions. Those Motions are: 1. James P. Stephenson v. Deutsche Bank AG, et al., Civ. No. 02-4845 (RHK/AJB). • Motion by Deutsche Bank to Dismiss Counts IV, XI, XII & XIII of the Amended Complaint [Doc. No. 28]; • Motion by Defendant Wayne Breedon to Dismiss Plaintiffs Amended Complaint Pursuant to Fed.R.Civ.P. 8 and 12(f) [Doc. No. 35]; • Motion by Defendant Wayne Breedon to Dismiss Counts I, IV, VIII, IX, XII, XIII, XIV and XV of the Amended Complaint [Doc. No. 39]; • Motion by Defendant Richard Evangel-ista for Leave to File Motion Out of Time and for Order to Join Co-Defendants’ Motions [Doc. No. 61]; 2. Ferris, Baker Watts, Inc. v. Deutsche Bank Securities Limited, et at., Civ. No. 02-3682 (RHK/AJB). • Motion by Defendant James Smith to Dismiss the First Amended Complaint for Lack of Personal Jurisdiction, Failure to State a Claim on Which Relief Can Be Granted, and Failure to Plead Fraud with Particularity [Doc. No. 72]; • Motion by Defendant Wayne Breedon to Dismiss Plaintiffs Amended Complaint Pursuant to Fed.R.Civ.P. 8 and 12(f) [Doc. No. 103]; • Motion by Defendants Nomura and Nomura Canada to Dismiss the Complaint [Doc. No. 86]; • Motion by Defendant Scott Reed to Dismiss First Amended Complaint [Doc. No. 89]; •Motion by Deutsche Bank Defendants to Dismiss Count XXII of the Amended Complaint [Doc. No. 81]; ■ Motion by Defendant Wayne Breedon to Dismiss Counts I, VII, XVII, XVIII, and XXII of Plaintiffs Amended Complaint [Doc. No. 105]; • Motion to Dismiss by Defendant A.G. Edwards [Doc. No_]; • Motion by Plaintiff Ferris, Baker Watts to Strike Portions of Defendants’ Nomura, Nomura Canada and Scott Reed Reply Briefs [Doc. No. Ill]; • Motion by Defendant Richard Evangel-ista for Leave to File Motion Out of Time, and for Order to Join Co-Defendants’ Motions [Doc. No. 125]; 3. E*Trade Securities LLC v. Deutsche Bank AG, Civ. No. 02-3711 (RHK/AJB). • Motion by Defendants Deutsche Bank AG, Deutsche Securities, and Deutsche Bank SL to Dismiss Counts VII, XII, XIII, and XIV of Plaintiffs Amended Complaint [Doc. No. 71]; • Motion by Defendant Wayne Breedon to Dismiss Plaintiffs Amended Complaint Pursuant to Fed.R.Civ.P. 8 and 12(f) [Doc. No. 80]; • Motion by Defendant Wayne Breedon to Dismiss Counts I, VII, IX, X, XII, XIII, XIV, XV, and XVI of Plaintiffs Amended Complaint [Doc. No. 82]; • Motion by Defendant Nomura Canada to Dismiss the First Amended Complaint [Doc. No. 87]; • Motion by Defendant Scott Reed to Dismiss the Amended Complaint [Doe. No. 90]; • Motion by Plaintiff E*Trade to Strike Portions of Defendants Nomura, No-mura Canada, and Scott Reed’s Reply Briefs [Doc. No. 101]; • Motion by James Smith to Dismiss the Amended Complaint for Failure to State a Claim on Which Relief Can Be Granted, Lack of Personal Jurisdiction, and Failure to Plead Fraud with Particularity [Doc. No. 109]; • Motion by Defendant Richard Evangel-ista for Leave to File Motion Out of Time, and for Order to Join Co-Defendants’ Motions [Doc. No. 120], Standard of Decision “Dismissal under Rule 12(b)(6) serves to eliminate actions which are fatally flawed in their legal premises and destined to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity.” Young v. City of St. Charles, Mo., 244 F.3d 623, 627 (8th Cir.2001). A cause of action “should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff cannot prove any set of facts in support of his claim that would entitle him to relief.” Schaller Tel. Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 740 (8th Cir.2002) (internal citations omitted) (citing Kohl v. Casson, 5 F.3d 1141, 1148 (8th Cir.1993)). In analyzing the adequacy of a complaint’s allegations under Rule 12(b)(6), the Court must construe the complaint liberally and afford the plaintiff all reasonable inferences to be drawn from those allegations. See Turner v. Holbrook, 278 F.3d 754, 757 (8th Cir.2002). Analysis The Trustee, FBW, and E*Trade have “tossed everything in the kitchen, including the sink, at [Defendants],” Hunt-Golliday v. Metropolitan Water Reclamation Dist., 104 F.3d 1004, 1004 (7th Cir.1997) (Evans, J.), including: (1) Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 promulgated thereunder; (2) Section 20 of the Exchange Act of 1934; (3) Section 80A of the Minnesota Securities Act; (4) Common Law Fraud and Negligent Misrepresentation; (5) 12(a)(1) of the 1933 Securities Act; (6) Section 11 of the 1933 Securities Act; (7) Section 9 of the 1934 Exchange Act; (8) the Minnesota Consumer Fraud Act; (9) Civil Conspiracy; and (10) Racketeer Influenced and Corrupt Organizations Act (RICO). Defendants have challenged each of these causes of action on a variety of grounds, and have several more general defenses, including lack of personal jurisdiction over Scott Reed and James Smith, and failure to comply with Rule 8(a) of the Federal Rules of Civil Procedure. The Court will address each of these issues in turn. I. Section 10(b) of the Exchange Act of 1934 and SEC Rule 10b-5 The Trustee, FBW, and E*Trade have brought claims against all Defendants, save A.G. Edwards, under Section 10(b) of the 1934 Act (“Section 10(b)”), 15 U.S.C. § 78j(b), and SEC Rule 10b-5 (“Rule 10b-5”), 17 C.F.R. § 240.10b-5. (See Trustee Am. Compl. ¶¶ 149-164; FBW Am. Compl. ¶¶ 193-201; E*Trade Am. Compl ¶¶ 193-211.) Under Section 10(b), it is unlawful for any person, “directly or indirectly ... [t]o 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 [SEC] may prescribe....” 15 U.S.C. § 78j(b). Section 10(b) is not limited to a purchaser or seller of securities, but rather “reaches any deceptive device used ‘in connection with the purchase or sale of any security.’” Id. (quoting 15 U.S.C. § 78j(b)). Rule 10b-5, adopted by the SEC pursuant to its rulemaking authority, states that “[i]t 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 material fact or to omit to state a material fact necessary in order to make the statements made, in 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. Rule 10b-5 is coextensive in scope with Section 10(b). See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 214, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976); Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 173, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994). While allegations of fraud are generally subject to the pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure, certain aspects of Section 10(b) and Rule 10b-5 fall under special pleading standards of the Reform Act. Under that Act, a complaint based on statements or omissions under Rule 10b-5(b) must “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation ... is made on information and belief, the complaint shall state with particularity all facts on which the belief is formed.” 15 U.S.C. § 78u-4(b)(l). Cases, such as market manipulation cases, under Rule 10b-5(a) and (c) that are not based on statements are not subject to this requirement. In re Initial Pub. Offering Sec. Litig., 241 F.Supp.2d 281, 335 (S.D.N.Y.2003). Moreover, the Reform Act also requires that complaints alleging Section 10(b) and Rule 10b-5(b) violations “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind” respecting “each act or omission alleged to violate” these rules. 15 U.S.C. § 78u-4(b)(2) (emphasis added). Finally, it is the plaintiffs burden to “prov[e] that the act or omission of the defendant alleged to violate [Section 10(b) or Rule 10b-5] caused the loss for which the plaintiff seeks to recover damages.” 15 U.S.C. § 78u-4(b)(4). Plaintiffs have alleged that Defendants (1) engaged in market manipulation in violation of 10b-5(a) and (c), and (2) made misleading statements and omissions in violation of Rule 10b-5(b). Defendants focus almost exclusively on the sufficiency of Plaintiffs’ claim that Defendants made misleading statements and omissions. Liability under any subsection of Rule 10b-5, however, is sufficient to establish a violation of the rule, and the Court concludes Plaintiffs Rule 10b-5 claims are properly pleaded. A. Market Manipulation Plaintiffs allege that Defendants manipulated the market for GENI, HVEE, IICE securities in violation of Rule 10b-5(a) and (c). Subsections (a) and (c) forbid any person from “directly or indirectly” employing a “device, scheme or artifice to defraud,” or from engaging 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(a), (c). While Rule 10b-5(b) requires a statement or omission, “the first and third paragraphs are not so restricted.” Affiliated Ute Citizens v. United States, 406 U.S. 128, 152-53, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972). To state a market manipulation claim under Rule 10b-5(a) and (c), plaintiffs must allege: (1) that they were injured; (2) in connection with the purchase or sale of securities; (3) by relying on a market for securities; (4) controlled or artificially affected by the defendant’s deceptive and manipulative conduct; and (5) that the defendant engaged in the manipulative conduct with scienter. In re Blech Sec. Litig., 961 F.Supp. 569, 582 (S.D.N.Y.1997) (Blech II) (citing Ernst & Ernst, 425 U.S. at 199, 96 S.Ct. 1375); In re IPO, 241 F.Supp.2d at 385; In re Enron Corp. Sec., Derivative & ERISA Litig., 235 F.Supp.2d 549, 579 (S.D.Tex.2002); In re Sterling Foster & Co., Inc. Sec. Litig., 222 F.Supp.2d 289, 303-04 (E.D.N.Y.2002). Plaintiffs also must plead “loss causation” by alleging that the “act or omission of the defendant alleged to violate [Rule 10b-5] caused the loss for which the plaintiff seeks to recover damages.” 15 U.S.C. § 78u-4(b)(4) (emphasis added). While Defendants largely ignore Plaintiffs’ detailed market manipulation claims, they do argue that Plaintiffs have failed to plead scienter with the specificity required by the Reform Act. Under the Reform Act, “the complaint shall, with respect to each act or omission alleged to violate [Section 10(b) ], state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2) (emphasis added). The Court therefore views the Complaints “to determine whether they set forth facts that give a strong reason to believe that there was a reckless or intentional wrongdoing.” In re Navarre Corp., 299 F.3d 735, 745 (8th Cir.2002) (emphasis added). The Eighth Circuit has identified three methods of establishing scienter. First, scienter may be established from facts demonstrating “a mental state embracing intent to deceive, manipulate, or defraud.” In re K-tel Intern., Inc. Sec. Litig., 300 F.3d 881, 893 (8th Cir.2002) (quoting Ernst & Ernst, 425 U.S. at 193 n. 12, 96 S.Ct. 1375). Second, while allegations of negligent conduct are not sufficient, Hochfelder, 425 U.S. at 215, 96 S.Ct. 1375, conduct which rises to the level of severe recklessness may be sufficient to meet the scienter requirement. K & S P’ship v. Continental Bank, N.A., 952 F.2d 971, 978 (8th Cir.1991). Sufficient conduct is limited to “highly unreasonable omissions or misrepresentations” involving “an extreme departure from the standards of ordinary care, and ... presenting] a danger of misleading buyers or sellers which is either known to the defendant or is so obvious that the defendant must have been aware of it.” Id. (citing Woods v. Barnett Bank of Fort Lauderdale, 765 F.2d 1004, 1010 (11th Cir.1985)). Finally, a party may allege opportunity and an “unusual or heightened motive” In re K-Tel, 300 F.3d at 893. Without a showing of motive or opportunity, “other allegations tending to show scienter would have to be particularly strong in order to meet the Reform Act standard.” Florida State Bd. of Admin. v. Green Tree Fin. Corp., 270 F.3d 645, 660 (8th Cir.2001). Here, Plaintiffs have alleged facts that give rise to a strong inference that Defendants acted intentionally. The detañed, complicated scheme alleged by Plaintiffs as to each moving Defendant evinces “a mental state embracing intent to deceive, manipulate, or defraud.” In re K-Tel, 300 F.3d at 893. “Plaintiffs have satisfied the [strong inference inquiry] for a simple reason: They have alleged that [defendants] engaged in ... deliberately ülegal behavior ... [that does] not happen accidentally, negligently, or even recklessly.” In re IPO, 241 F.Supp.2d at 385. Plaintiffs have identified with precision the opportunities Defendants had to engage in the scheme, their pecuniary motive, and how the scheme was carried out. Such pleading is more than sufficient to establish scienter, even under the heightened standards of the Reform Act. Consequently, the Court finds that Plaintiffs’ market manipulation claims under Rule 10b-5(a) and (c) are properly pleaded. B. Statements and Omissions Plaintiffs have also alleged violations of Rule 10b-5(b). Under subsection (b), it is illegal “[t]o make any untrue statement of material fact or to omit to state a material fact necessary in order to make the statements made, in fight of the circumstances under which they were made, not misleading.” 17 C.F.R. § 240.10b-5(b). To state a claim under 10b-5(b), Plaintiffs must allege: (1) misrepresentations or omissions of material fact or acts that operated as a fraud or deceit in violation of the rule; (2) causation, often analyzed in terms of materiality and reliance; (3) scienter on the part of the defendants; and (4) economic harm caused by the fraudulent activity occurring in connection with the purchase and sale of a security. In re K-Tel, 300 F.3d at 888. Statements and omissions alleged to violate subsection (b) and scienter are subject to the pleading standards of the Reform Act. 15 U.S.C. § 78u-4(b)(l)-(2). Therefore, in addition to the heightened standards for scienter detafied above, the Amended Complaints must “specify each false statement or misleading omission and explain why the omission was misleading.” In re Navarre, 299 F.3d at 742. Here, Plaintiffs have properly alleged material omissions, if not statements, made in furtherance of the scheme to defraud. Whüe Defendants launch a fusülade of challenges to the sufficiency of those allegations under subsection (b), Plaintiffs’ proper allegations of market manipulation are, in fact, dispositive as to their claims of material omissions: Where a defendant has engaged in conduct that amounts to “market manipulation” under Rule 10b-5(a) or (c), that misconduct creates an independent duty to disclose. Faüure to do so thus gives rise to a violation of Rule 10b-5(b). This is so because participants in the securities markets are entitled to presume that all of the actors are behaving legally; süenee that conceals ülegal activity is therefore intrinsically misleading and (presuming the ülegality is also material) is always violative of Rule 10b-5(b). In re IPO, 241 F.Supp.2d at 381-382. This result flows from Section 10(b)’s objective “to insure honest securities markets and thereby promote investor confidence,” United States v. O’Hagan, 521 U.S. 642, 658, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997), and the Court’s ongoing obligation to construe the statute “not technically and restrictively, but flexibly to effectuate its remedial purpose,” Securities and Exchange Comm’n v. Capital Gains Research Bureau. Inc., 375 U.S. 180, 195, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963). As alleged by Plaintiffs, Defendants “have perpetrated a double fraud: they have manipulated the market and they have covered it up with ... omissions. This conduct gives rise to liability under every section of Rule 10b-5.” In re IPO, 241 F.Supp.2d at 382. Even if Plaintiffs’ market manipulation allegations were only sufficient to establish a duty to disclose the fraudulent scheme, Defendants’ arguments would still fail. While Defendants assert that they should escape Rule 10b-5 because they did not make any statements “directly” to Plaintiffs, this ignores the plain language of Rule 10b-5 premising liability on statements or omissions made “directly or indirectly.” 17 C.F.R. § 240.10b-5 (emphasis added). Likewise, Defendants’ argument that Plaintiffs have failed to plead reliance fails to acknowledge the Eighth Circuit’s holding that reliance is not an element of a Rule 10b-5 claim, but is rather a means of establishing transaction causation. See In re K-Tel, 300 F.3d at 888. Because Plaintiffs have alleged that they “would not have purchased the security but for defendant’s [fraud], or that they would have purchased it at a lower price,” Arthur Young v. Reves, 937 F.2d 1310, 1327-28 (1991), they have established transaction causation. Finally, the Court finds little to recommend the argument that the events of September 11, 2001, rather than the fraudulent scheme alleged, caused Plaintiffs’ losses. While the steep market decline accompanying the terrorist attacks helped speed the scheme’s collapse, Plaintiffs have alleged a causal “nexus between the defendants’ fraudulent conduct and the plaintiffs pecuniary loss.” Harris v. Union Elec. Co., 787 F.2d 355, 366 (1986). Thus, they have alleged loss causation. The Amended Complaints plead facts sufficient to establish a duty to disclose, a breach of that duty, transaction causation, loss causation, and scienter. The Court concludes that Plaintiffs have therefore stated a claim for material omissions under Rule 10b — 5(b). C. Conclusion Having pleaded violations of each of Rule 10b-5’s subparagraphs, Plaintiffs have stated a claim upon which relief can be granted with the specificity required by Fed.R.Civ.P. 9(b) and the Reform Act. Therefore, the Court will deny Defendants’ Motions to Dismiss, insofar as they relate to Section 10(b) or Rule 10b-5. II. Section 20(a) of the Exchange Act of 1934 FBW and E*Trade have alleged that various Defendants, including Deutsche Bank, Nomura, Nomura Canada, and Smith, are “controlling persons” under Section 20(a) of the Exchange Act of 1934, 15 U.S.C. § 78t. Section 20(a) extends liability to those persons that control violators of Section 10(b). 15 U.S.C. § 78t. As the Eighth Circuit has held, [A] control person relationship exists whenever (i) the alleged control person actually exercised control over the general operations of the primary violator and (ii) the alleged control person possessed-but did not necessarily exercise-the power to determine the specific acts or omissions upon which the underlying violation is predicated. Farley v. Henson, 11 F.3d 827, 835 (8th Cir.1993); see also Metge v. Baehler, 762 F.2d 621, 624 (8th Cir.1985). The control-person statute is “remedial and is to be construed liberally. It has been interpreted as requiring only some indirect means of discipline or influence short of actual direction to hold a ‘controlling person’ liable.” Farley, 11 F.3d at 836 (emphasis added) (citing Myzel v. Fields, 386 F.2d 718, 738 (8th Cir.1967)). Smith, Nomura, and Nomura Canada have moved to dismiss this cause of action on two grounds. First, they argue that Plaintiffs have failed to establish a primary violation of Rule 10b — 5; in other words, because there was no primary violation of the rule, moving Defendants cannot be held liable for controlling a primary violator. Second, these Defendants assert that, even if the Court finds Plaintiffs have stated Rule 10b-5 claims, the allegations regarding control are conclusory. The Court finds that control of a primary violator has been pleaded as to Nomura and Nomura Canada, but not as to Smith. As stated above, Plaintiffs have properly stated Rule 10b-5 claims against Reed and Nomura Canada, alleged to be primary violators under the control of Nomura Canada and Nomura. Smith, however, properly points out that no party has asserted claims against Native Nations, and therefore Native Nations cannot be a “person liable under [Rule 10b — 5]”. 15 U.S.C. § 78t(a) (emphasis added). While FBW has alleged that Native Nations violated Rule 10b-5 (see FBW Am. Compl. ¶¶ 218-21), it must be able to establish Native Nation’s liability to bring Smith within the ambit of Section 20(a). Because Native Nations has not b