Full opinion text
HARMON, District Judge. ROADMAP MEMORANDUM AND ORDER RE MERRILL LYNCH AND DEUTSCHE BANK ENTITIES I. Merrill Lynch 827 A. Motion for Clarification.827 B. Motion to Dismiss Exchange Act Claims.827 1. Primary Violator.827 2. Loss Causation.830 II. Deutsche Bank Entities.832 A. Summary of Allegations and Arguments .832 1. Exchange Act Claims.832 2. 1933 Act Claims.839 B. Court’s Rulings.843 1. Exchange Act Claims.843 (a) Pleading Sufficiency.843 (b) Statute of Limitations.843 (i) Sarbanes-Oxley Act.844 (ii) Continuing Violation Theory .844 (iii) Period of Repose and Tax Scheme Claims.848 (iv) Relation Back and Equitable Tolling/Estoppel Doctrines.849 2. 1933 Act’s § 12(a)(2) and § 15 Claims.859 (a) Standing.859 (b) Private or Public Offerings.859 III. Order.866 MEMORANDUM AND ORDER With respect to Lead Plaintiffs initial Consolidated Complaint (instrument #441), in the Court’s memorandum and order, entered on December 20, 2002 (# 1194), the Court granted Deutsche Bank AG’s first motion to dismiss all claims against it. The Court also found that Lead Plaintiff had not met the pleading requirements imposed by the PSLRA in its allegations against Merrill Lynch & Co., but denied Merrill Lynch’s motion to dismiss and ordered Lead Plaintiff to amend its pleadings to address with adequate particularity the Nigerian barge transaction and/or the transactions with Enron North America involving a complex set of bogus power trades in the Midwest, both of which fit the pattern of fraud previously pleaded by Lead Plaintiff. Both transactions occurred in 1999. After the Court had resolved all motions to dismiss the First Consolidated Complaint, on May 14, 2003 Lead Plaintiff filed its First Amended Consolidated Complaint (# 1388), with amended allegations against Merrill Lynch & Co. and claims against newly added Merrill Lynch, Pierce, Fen-ner and Smith (collectively, “Merrill Lynch”). The First Amended Consolidated Complaint also asserted claims against Deutsche Bank AG once again, but added as new Defendants Deutsche Bank Securities, Inc., DB Alex. Brown LLC, and Deutsche Bank Trust Company Americas (collectively “the Deutsche Bank Entities”). With respect to all these Defendants, pending before the Court in the above referenced cause are Merrill Lynch’s motion to dismiss the amended complaint (# 1499); Merrill Lynch’s motion for clarification of the Court’s June 27, 2003 order concerning the PSLRA stay (# 1556); and the Deutsche Bank Entities’ motion to dismiss (# 1620). Against Merrill Lynch, the First Amended Consolidated complaint asserts claims for violation of § 10(b), 15 U.S.C. § 78¡j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, and for control person liability under § 20(a), 15 U.S.C. § 78t(a), of the Securities Exchange Act of 1934 (“the 1934 Act”). The amended complaint also charges the three “surviving” Deutsche Bank Entities (Deutsche Bank AG, Deutsche Bank Securities Inc., and Deutsche Bank Trust Company) with violations of § 10(b) and § 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. It further asserts that Deutsche Bank AG and Deutsche Bank Securities Inc. f/k/a Deutsche Banc Alex. Brown violated § 12(a)(2) and § 15 of the Securities Act of 1933 (“the 1933 Act”). I. Merrill Lynch A. Motion for Clarification As a threshold matter, the Court grants Merrill Lynch’s motion for clarification. The Court concurs that because the Court has not yet ruled that Lead Plaintiff has adequately stated a claim against Merrill Lynch or the Deutsche Bank Entities, the discovery stay under the Private Securities Litigation Reform Act (“PSLRA”) is still in effect as to these Defendants. Accordingly, the Court now reviews their motions to dismiss the claims against them in the First Amended Consolidated Complaint. B. Motion to Dismiss Exchange Act Claims against Merrill Lynch The Court hereby incorporates into this memorandum and order the factual allegations and applicable law set out in the Court’s previous memoranda and orders addressing motions to dismiss in Newby. Merrill Lynch essentially makes two arguments in its motion to dismiss pursuant to Fed. Rules of Civil Procedure 12(b)(6) and 9(b): (1) that Lead Plaintiff has not and cannot allege facts showing that Merrill Lynch was a primary violator of § 10(b) and Rule 10b — 5; and (2) that Lead Plaintiff has failed to allege loss causation arising from the challenged Nigerian barge transaction and the power swaps in 1999, as required under § 10(b) and Rule 10b-5. 1. Primary Violator First, insisting that Lead Plaintiff has failed to plead a primary violation of the securities laws by Merrill Lynch, Merrill Lynch argues that the allegations only amount to, if anything, mere aiding and abetting of securities fraud, not cognizable as a primary violation of § 10(b) and Rule 10b-5. Merrill Lynch points to a recent complaint (Ex. B to Declaration of Stephen M. Loftin (# 1500)) filed by the SEC against Merrill Lynch and four of its former employees charging them only with aiding and abetting securities fraud violations. Merrill Lynch maintains that Lead Plaintiffs claims are barred by the Supreme Court’s decision in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, 511 U.S. 164, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994). Furthermore Merrill Lynch contends that it had no special business relationship with Enron or its shareholders regarding the transactions at issue, that Merrill Lynch did not create, structure or direct any purported misstatements, and that any injury suffered by plaintiffs was caused by Enron’s alleged misstatements about its financial status. In the same vein Merrill Lynch insists that it never directed or contrived the Nigerian barge investment nor the power swaps in 1999, which it maintains were merely normal business deals with nothing illegal involved, that it never engaged in a manipulative or deceptive act, and that it never participated in recording these challenged transactions in Enron’s books or reviewing the correctness of Enron’s accounting. Indeed, Merrill Lynch argues that the transactions targeted in the complaint did not directly affect the market for Enron securities until after Enron’s purported misrepresentations of them. Quoting In re Homestore.com, Inc. Sec. Litig., 252 F.Supp.2d 1018, 1040 (C.D.Cal.2003) as its authority, Merrill Lynch insists it cannot be charged as a primary violator of § 10(b): [O]f the many participants in a “scheme,” there may be primary violators and secondary violators. Those who actually “employ” the scheme to defraud investors are primary violators, while those who merely participate in or facilitate the scheme are secondary violators. In the present case, the primary architects of the scheme are the officers of Homestore who designed and carried out the schemes to defraud. The Court holds that other actors, such as AOL and its employees who actively participated in the triangular transaction scheme, did not “employ” the scheme to defraud investors, and are therefore secondary violators. Therefore, they are “aiders and abettors” within the meaning to Central Bank. Merrill Lynch urges that if there was a scheme to defraud, Enron alone is responsible because it designed the transactions, employed the scheme, and misrepresented its financial situation. Second, Merrill Lynch contends that Lead Plaintiff has failed to allege loss causation, a requisite element for a claim under § 10(b). Merrill Lynch argues that because the Nigerian barge transaction and the power swaps were not known to the public until April and August of 2002, respectively, five and nine months after the Class Period ended on November 27, 2001, and long after the price of Enron securities had collapsed, Lead Plaintiff cannot plead or prove that the plaintiffs’ losses were caused by these two transactions, nor that any conduct by Merrill Lynch caused plaintiffs any pecuniary loss. Loss causation is an element of a claim under § 10(b), 15 U.S.C. § 78u-4(b)(4) (“In any private action arising under this chapter, the plaintiff shall have the burden of proving that the act or omission of the defendant alleged to violate this chapter caused the loss for which the plaintiff seeks to recover damages.”). See Huddleston v. Herman & MacLean, 640 F.2d 534, 549 (5th Cir.1981), aff'd in part, rev’d in part on other grounds, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983). Instead, insists Merrill Lynch, actions contrived and directed by and misrepresentations made by Enron, not Merrill Lynch, caused the Plaintiffs’ alleged injury, if any. In acknowledging the wide spectrum of judicial opinions regarding § 10(b) and Rule 10b-5, this Court has rejected the narrow construction of the statute and of primary violations employed by Home-store.com and refers the parties to its extensive discussion in # 1194. Moreover, as explained in that memorandum and order, a misrepresentation need not have been made because the statute also applies to conduct, here the alleged substantial, active role in major fraudulent transactions with no legitimate business purpose, but designed to deceive investors in and central to a scheme and course of business operating to present a falsely inflated image of Enron’s financial strength. After reviewing the First Amended Consolidated Complaint and all submissions relating to Merrill Lynch’s motion to dismiss (# 1499), i.e., # 1500, 1501, 1574, 1575, 1601, 1617, 1685, and 1720, the Court finds that Lead Plaintiff has adequately stated a claim with particularity, giving rise to a strong inference of scienter, against Merrill Lynch under §§ 10(b) and 20(a) of the 1934 Act. Lead Plaintiff has alleged with specificity that Merrill Lynch “directly or indirectly” employed a scheme to defraud and engaged in acts, practices, and a course of business over the Class Period, as well as issued numerous analysts’ reports and recommendations containing false and misleading statements about Enron’s financial condition, as part of the purported Ponzi scheme that was intended to and did operate as a fraud or deceit upon investors in connection with the purchase of Enron securities, including the plaintiff class. Lead Plaintiffs new and specific allegations regarding the Merrill Lynch’s deceptive conduct in the Nigerian barge deal (purchasing Nigerian barges from Enron to create sham earnings of over $12 million in return for a secret, oral side agreement with Andrew Fastow that Enron would repurchase them within six months so there would be no risk, but only a lucrative profit for Merrill Lynch). Moreover, Lead Plaintiff alleges that notes were written by and warnings made to Merrill Lynch’s Commitment Committee by James Brown, head of Merrill Lynch’s Structured Finance Group, reflecting concerns about the “reputational risk” of the deal, as well as internal communications in the company. Such allegations support a strong inference that Merrill Lynch knew the Nigerian barge deal was a phony transaction created to manipulate Enron’s income statements in return for Merrill Lynch’s lucrative 15% return. Lead Plaintiff has also provided copies of a letter agreement between the Department of Justice/Enron Task Force and Merrill Lynch reflecting Merrill Lynch’s acceptance of responsibility for the Nigerian barge transaction and cooperation with the government, and of the indictment of Merrill Lynch employees Daniel Bayly, James A. Brown and Robert S. Furst for their role in the transaction inter alia. # 1685. Exs. C & D. In the same vein the alleged bogus future power swaps were from incomplete power plant construction projects, incapable of producing energy (again with a clandestine agreement to cancel the transactions after Enron’s 1999 earnings report) and no energy ever changed hands. In addition the complaint points out that Merrill Lynch sought and obtained a statement from Enron’s Chief Accounting Officer, Richard Causey, that Enron had not relied on Merrill Lynch for account advice regarding these transactions. All these facts constituted conduct purportedly designed to mislead potential investors and the market generally about Enron’s ■ financial integrity. Although Merrill Lynch argues its actions were not unlawful and that they were merely business transactions later misrepresented by Enron in its financial statements, the factual allegations suggest knowingly deceptive conduct, concealed for unlawful purpose^), which included misleading Enron investors whose money was needed to perpetuate the Ponzi scheme and Merrill Lynch’s “money tree.” Sham business transactions with no legitimate business purpose that are actually guaranteed “loans” employed to inflate Enron financial image are not above-board business practices. This Court disagrees with Merrill Lynch’s contention that the alleged “ ‘deception’ did not occur until Enron allegedly misreported” the transactions. # 1501 at 16. These newly alleged transactions are not to be viewed in isolation. Lead Plaintiffs complaint has alleged an ongoing scheme in which Merrill Lynch participated in a substantial way over years. Not only do the particularities of alleged Nigerian barge deal, which purportedly was approved by top executives on Merrill Lynch’s Commitment Committee despite warnings from James Brown, and the power swaps in 1999 imply deception of Wall Street and the public at large by Merrill Lynch and give rise to a strong inference of scienter, they also cast a long shadow over Merrill Lynch’s ongoing, substantial participation in the alleged Ponzi scheme. Merrill Lynch purportedly actively engaged in the scheme to defraud not only in 1999, but from early in the Class Period when it participated in establishing and funding LJM2 at a critical accounting time, despite red flags identified in the complaint and known to Merrill Lynch. Its participation resulted in dubiously enormous financial returns for Merrill Lynch officers who personally invested in it, as well as lucrative earnings for the company. The concealed pattern of manipulation (including unlawful SPEs, off-the-books transactions without any legitimate economic purpose to inflate Enron’s earnings and conceal its debts, sham hedging, guaranteed “loans” or disguised sales, etc.,) that characterized the alleged Ponzi scheme, repeated in the Nigerian barge and sham power swaps transactions, created a highly inaccurate public picture of Enron’s financial condition; the success of the alleged deceptive scheme, buttressed by purported misrepresentations about Enron in Defendants’ analysts’ reports and recommendations, attracted investors and caused their loss when the bubble burst and the fraudulent scheme was exposed. Indeed, when this Court ordered Lead Plaintiff to replead its claims against Merrill Lynch, it did so because the Nigerian barge transaction and the power swaps fit the pattern that the original consolidated complaint had alleged; such parallels imply a deliberate, unified scheme to defraud. 2. Loss Causation As for Merrill Lynch’s causation challenge, there are two aspects of causation that must be alleged under § 10(b): transaction causation and loss causation. Emergent Capital Investment Manage ment, LLC v. Stonepath Group, Inc., 343 F.3d 189, 196-97 (2d Cir.2003). Like reliance, transaction causation refers to the causal link between the defendant’s misconduct and the plaintiffs decision to buy or sell securities.... It is established simply by showing that, but for the claimed misrepresentations or omissions, the plaintiff would not have entered into the detrimental securities transaction.” ... Loss causation, by contrast, is the causal link between the alleged misconduct and the economic harm ultimately suffered by the plaintiff. .. We have often compared loss causation to the tort law concept of proximate case, “meaning that the damages suffered by plaintiff must be a foreseeable consequence of any misrepresentation or material omission.” .... Similar to loss causation, the proximate cause element of common law fraud requires that plaintiff adequately allege a causal connection between defendants’ nondisclosures and the subsequent decline in the value of the [the] securities .... Of course, if the loss was caused by an intervening event, like a general fall in the price of Internet stocks, the chain of causation will not have been established. But such is a matter of proof at trial and not to be decided on a Rule 12(b)(6) motion to dismiss, [citations omitted] Id. at 197. See also Caremark Inc. v. Coram Healthcare Corp., 113 F.3d 645, 648 (7th Cir.1997) (“To plead transaction causation, the plaintiff must allege that it would not have invested in the instrument if the defendant had stated truthfully the material facts at the time of sale. To plead loss causation, the plaintiff must allege that it was the very facts about which the defendant lied which caused its injuries.”). In the Fifth Circuit, the plaintiff must prove loss causation by showing that “the untruth was in some reasonably direct, or proximate, way responsible for his loss. The causation requirement is satisfied in a Rule 10b-5 case only if the misrepresentation [or omission] touches upon the reasons for the investment’s decline in value.” Huddleston, 640 F.2d at 549; see also Nathenson v. Zonagen, Inc., 267 F.3d 400, 413 n. 10 (5th Cir.2001) (defendants’ actions need only “touch[] upon the reasons for the investment’s decline in value.”). In Broudo v. Dura Pharmaceuticals, Inc., 339 F.3d 933, 938 (9th Cir.2003), petition for cert. filed, 72 U.S.L.W. 3451 (March 8,2004)(No. 03-932), the Ninth Circuit observed, “This ‘touches upon’ language is admittedly ambiguous.... Our cases have held ... that: ‘[i]n a fraud-on-the market case, plaintiffs establish loss causation if they have shown that the price on the date of purchase was inflated because of this misrepresentation.’ [F]or a cause of action to accrue, it is not necessary that a disclosure and subsequent drop in the market price of the stock have actually occurred, because the injury occurs at the time of the transaction [emphasis in text; citations omitted].” In accord, Gebhardt v. ConAgra Foods, Inc., 335 F.3d 824, 832 (8th Cir.2003) (“[Plaintiffs were harmed when they paid more for the stock than it was worth.”); Suez Equity Investors, L.P. v. Toronto-Dominion Bank, 250 F.3d 87, 97-98 (2d Cir.2001) (“[Plaintiffs may allege ... loss causation by averring ... that the defendants’ misrepresentations induced a disparity between the transaction price and the true ‘investment quality’ of the securities at the time of the transaction.”). Indeed, the Seventh Circuit has pronounced that loss causation is a “practical requirement” that “ought not place unrealistic burdens on the plaintiff at the initial pleading stage.” Caremark Inc. v. Coram Healthcare Corp., 113 F.3d 645, 649 (7th Cir.1997). “It does not require ... that the plaintiff plead that all of its loss can be attributed to the false statement of the defendant.” Id. Viewing the pleading in a light most favorable to Lead Plaintiff, the Court finds that the first amended consolidated complaint does allege the requisite loss causation between plaintiffs’ alleged economic loss and the acts, misrepresentations, omissions, and/or concealment of the realities underlying the sham financial reports and image of success projected by Enron and co-Defendants. Not only does the complaint allege that the fraud artificially inflated the value of Enron securities, indeed of the corporation itself, but there is no showing that the plaintiffs’ loss was the result of external market forces such as recession, a volatile market, a fall in prices in energy trading generally or any “intervening” factor. Instead the plaintiffs have adequately pleaded that their loss was directly and foreseeably caused by Defendants’ alleged fraudulent practices at Enron, including Merrill Lynch’s Nigerian barge transaction and bogus power trades involving Enron North America, the nonexistence of the reported influx of cash, and the all too real, increasing, but hidden, debt as Defendants’ deceptive scheme allowed them to create the illusion of a growing and profitable company while grabbing high fees based on fraudulent business deals with no legitimate purpose other than to “cook the books” and appropriate money from deceived investors. Nonexposure of Enron’s deceptive business practices and the concealment of its actual financial condition directly and foreseeably induced the plaintiffs to purchase the securities at a highly inflated price until the Ponzi scheme bubble inevitably broke. Once the fraud began to be disclosed, the swift drop in the market price of Enron securities reflected the real financial condition of this empty house of cards and revealed the disparity between the plaintiffs’ purchase price and the actual value of the securities when they were bought. While information about Merrill Lynch’s individual role in the Nigerian barge transaction and the sham power swaps may not have been made public until long after the Enron bankruptcy, that fact does not relieve Merrill Lynch of responsibility for Enron’s collapse; Merrill Lynch’s alleged substantial participation in the deceptive business practices contributed to the artificial inflation of the price of the securities and thereby was a direct and major cause of plaintiffs’ financial loss, according to the amended complaint. In sum, the Court denies Merrill Lynch’s second motion to dismiss. II. Deutsche Bank Entities The Court has similarly reviewed the Deutsche Bank Entities’ motion to dismiss (# 1620) claims in the First Amended Consolidated Complaint, pursuant to Federal Rules of Civil Procedure 12(b), 9(b) and 15, against all three for violation of § 10(b) and § 20(a) (control person liability) of the 1934 Act and against Deutsche Bank Securities Inc. and Deutsche Bank AG for violations of § 12(a)(2) and § 15 (control person liability) of the 1933 Act. It has also reviewed related filings (# 1620, 1621, 1707, 1751, 1883, and 1887). A. Allegations and Arguments 1. Exchange Act Claims According to general allegations in Lead Plaintiffs new pleading, which were in large part previously asserted in the First Consolidated Complaint and dismissed as insufficient by the Court, Deutsche Bank provided substantial commercial lending and banking and investment services to Enron, helped structure and finance LJM2 and advise on additional transactions that falsified the company’s financial statements relating to that SPE, aided Enron in falsifying its financial statements and misrepresenting its financial condition to the public, and issued throughout the Class Period falsely positive securities analyst reports, including a number identified by date, about Enron’s success and prospects for more. Deutsche Bank also served as underwriter for billions of dollars of Enron and Enron-related securities, for which it allegedly issued false and misleading Registration Statements and Prospectuses (again based on Enron’s inflated financial picture that the Deutsche Bank Entities purportedly played a major role in creating). The Court previously found that such allegations were insufficient to state a claim against Deutsche Bank, AG under § 10(b) and derivatively under § 20(a). The new pleading, drawing on revelations in recent reports issued by Congressional investigators and Enron’s Bankruptcy Examiner, Neal Batson, adds to previous charges new § 10(b) claims against Deutsche Bank as a primary violator based on six structured tax deals (“STDs”), i.e., fraudulent tax schemes knowingly devised, structured, promoted to Enron as a method to generate accounting income, and executed by Deutsche Bank and its Bankers Trust Division (“Bankers Trust”), purportedly without a valid business purpose, but solely to mislead investors by fraudulently, materially, and artificially inflating Enron’s financial results and allowing Enron to avoid paying federal income tax in 1996, 1997, 1998, 1999 and 2001. The STDs allowed Enron to recognize present earnings from future speculative tax savings, in the words of Neal Batson’s Third Report, App. G at 3-4, “in an erroneous and misleading manner as pre-tax income,” without ever disclosing the origins of the earnings to investors or the IRS. According to the amended complaint, these STDs were in deliberate violation of the “business purpose” tax law, which requires that a transaction have a valid business purpose other than generating tax savings. The amended complaint at 531, ¶ 797.6, asserts that the flaunting of the “business purpose” rule was included in the opinion letters documenting the Bankers Trust transactions. As put by John Buckley, chief tax counsel to the Democratic members of the Committee on Ways and Means and former chief of staff to the Joint Committee on Taxation: “All of these transactions have no real business purpose, unless you believe it’s to artificially create income to report to shareholders.” Moreover these tax structures have been under investigation and negatively criticized by Congressional committees and Enron bankruptcy Examiner Neal Batson, as described in the amended complaint. Lead Plaintiff argues, “Artificial inflation of financial results cannot reasonably be a valid business purpose under the federal income tax laws as written by Congress.” # 1707 at 17. The complaint focuses on six of these tax transactions (Projects Steele, Teresa, Cochise, Tomas, Renegade and Valhalla) in some detail. It alleges the basic functions of each, identifies specific amounts of money fraudulently infused into Enron’s financial reports by each and the amounts earned by Deutsche Bank in creating and carrying out the projects, points to opinion letters from law firms relating to each Project and charges each scheme with an actual purpose of inflating Enron’s financial reports, references tax and accounting standards that were purportedly violated, and explains how Bankers Trust functioned as a primary actor in each scheme, without all of which the tax savings and financial statement benefits claimed would have been impossible. The Amended Complaint at ¶ 797.5 identifies as the “investment bankers who were the architects for Bankers Trust/Deutsche Bank’s tax wing in Enron’s house of cards ... largely former Andersen personnel, who had worked in its New York office,” specifically Managing Director Thomas Finley, Vice Presidents Brian McGuire and William Boyle, and Manuel Schneid-man. Moreover the complaint asserts that Bankers Trust “clearly knew that Enron’s financial results were artificially inflated by these tax schemes — which is evident from the way each transaction was structured,” as described in greater detail in the Complaint. For instance, with respect to Project Steele, the complaint alleges that not only did Bankers Trust “clearly know that a huge portion of Enron’s reported financial income was from an undisclosed taxation scheme and not from ordinary business operations,” but “Project Steele included an ‘unusual provision nullifying the deal’ if it had to be disclosed,” obviously because if the IRS learned about the scheme, “it would almost certainly challenge the transaction.” The Deutsche Bank Entities argue that the fact they had presented the tax schemes to the Federal Reserve and the IRS for review undermines Lead Plaintiffs allegations that these transactions were fraudulent. In response, Lead Plaintiffs amended complaint, quoting Batson’s reports and the Joint Committee on Taxation’s Report (“JCT”), asserts that there “is no indication that the bank regulators ever reviewed or approved the proposed tax or accounting consequences of these structures,” that much of the information was never seen by the IRS, that the IRS’ review was very narrow and circumscribed, and that the schemes were so complex as to “raise[] serious concerns about the ability of the IRS to ever find out about these transactions.” Obviously there are fact issues here that cannot be resolved at a motion-to-dismiss stage of the litigation, during which the Court views Lead Plaintiffs allegations as true. The “surviving” Deutsche Bank Entities, i.e., Deutsche Bank AG, Deutsche Bank Trust Company Americas, and Deutsche Bank Securities Inc., have moved to dismiss the § 10(b) claim for failure to satisfy the heightened pleading standards of the PSLRA and Fed.R.Civ.P. 9(b), and for failure to plead with specificity the elements of such claim, including scienter as to each entity, transaction causation (reliance, i.e., that the fraud precipitated the investment decision), and loss causation. Lead Plaintiff responds that it has adequately pleaded reliance under the fraud-on-the-market doctrine, accepted by the Fifth Circuit, by pleading that the STDs “operated to present a falsely positive picture of Enron’s financial condition ... thereby artificially inflating the value of Enron’s publicly traded securities” and that plaintiffs relied on . these market prices. # 1707 at 26, citing # 1388 at ¶¶ 797, 799, 983-984. It has also asserted that Deutsche Bank made materially false and misleading statements or omissions in analyst reports and offering documents, on which plaintiffs relied. This Court concurs that Lead Plaintiff has adequately pleaded reliance under § 10(b). Moreover, regarding loss causation, Lead Plaintiff points out that while plaintiffs’ damages were allegedly “caused by an assortment of conduct that violated § 10(b),” Deutsche Bank does not have to be “the sole reason for the artificial inflation and subsequent decline in Enron’s share price,” but according to the complaint was “a primary participant in the fraudulent scheme that caused plaintiffs’ losses.” # 1707 at 27-28, citing Caremark, Inc. v. Coram Healthcare Corp., 113 F.3d 645, 649 (7th Cir.1997)(Loss causation “does not require ... that the plaintiff plead that all of its loss can be attributed to the false statement of the defendant.”). Given the light burden of pleading loss causation at this stage, discussed supra, the Court concurs that Lead Plaintiff has met that standard. See Broudo v. Dura Pharmaceuticals, Inc., 339 F.3d at 938 (“ ‘[i]n a fraud-on-the market case, plaintiffs establish loss causation if they have shown that the price on the date of purchase was inflated because of this misrepresentation.’ ... [F]or a cause of action to accrue, it is not necessary that a disclosure and subsequent drop in the market price of the stock have actually occurred, because the injury occurs at the time of the transaction [emphasis in text; citations omitted].”); Gebhardt v. ConAgra Foods, Inc., 335 F.3d 824, 832 (8th Cir.2003) (“[Plaintiffs were harmed when they paid more for the stock than it was worth.”); Suez Equity Investors, L.P. v. Toronto-Dominion Bank, 250 F.3d at 97-98 (“[PJlaintiffs may allege ... loss causation by averring ... that the defendants’ misrepresentations induced a disparity between the transaction price and the true ‘investment quality’ of the securities at the time of the transaction.”). The Court finds that Lead Plaintiff has adequately alleged loss causation in asserting that the price of Enron’s publicly traded securities were artificially inflated during the Class Period, when they purchased their Enron securities, in part because of the STDs, which did not provide Enron with any actual cash flow; Lead Plaintiff alleges that the STDs recorded at least on paper approximately $446 million income from 1997 and 2001, which affected the valuations of Enron securities. # 1388 at 532, ¶ 797.10. Deutsche Bank Defendants insist that the new allegations about the tax schemes do not set forth sufficient facts to demonstrate that they were fraudulent to satisfy Rule 9(b)’s particularity requirement; instead Lead Plaintiff relies on claimed summaries of the Bankruptcy Examiner’s Second Reports and the JCT report. The Examiner’s Third Report, insist Defendants, undermines the claim that the tax schemes were fraudulent by showing they were arm’s length business transactions. In particular Deutsche Bank argues that Lead Plaintiffs new claims fail to meet the “creator test” adopted by this Court because the complaint only asserts that the Deutsche Bank Entities engaged in customary, arm’s-length business transactions in these tax structures. Deutsche Bank Entities also insist that these new claims based on the tax schemes against all Deutsche Bank Entities are time-barred and that the § 10(b) claims now also asserted against Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc. do not “relate back” under Fed. R. of Civ. P. 15(c). Deutsche Bank Entities also maintain that none of the § 10(b) claims meets the particularity requirements for pleading and that the § 12(a)(2) claim fails because the First Amended Consolidated Complaint does not allege that the offering memoranda contained material misstatements or omissions and because the statute does not apply to private placements. Thus the complaint also fails to state a claim for derivative control person liability under § 20(a) of the 1934 Act and § 15 of the 1933 Act. ABC Arbitrage Plaintiffs Group v. Tchuruk, 291 F.3d 336, 348 n. 123 (5th Cir.2002). Deutsche Bank Entities point out that Project Teresa closed in March 1997, Steele in October 1997, Tomas in September 1998, Renegade in December 1998, Cochise in January 1999 and Valhalla in May 2000. They contend that the closing of each project triggered the period of repose. The Amended Consolidated Complaint was not filed until May 14, 2003, over three years after Lam/pf’s three-year period of repose would have expired as to these projects. Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 364, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991)(“Litigation instituted pursuant to § 10(b) and Rule 10b-5 ... must be commenced within one year after the discovery of the facts constituting the violation and within three years after such violation.”). Moreover, Defendants contend, even if the Court should find that the STD claims “relate back” with respect to the newly added entities to the previous [First Consolidated] complaint, filed on April 8, 2002, the claims as to all Projects except Valhalla, which did not close until May 2000, would be time-barred by the three-year statute of repose period. Furthermore, Defendants insist, the claims against newly added Defendants Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc. under § 10(b) and/or § 12(a)(2) had to have been, but were not, brought within one year of discovery. Jensen v. Snellings, 841 F.2d 600, 606 (5th Cir.1988)(Section 10(b) limitations period is triggered when plaintiffs have knowledge of “facts which, in the exercise of due diligence, would have led to actual knowledge [of the violation].”) Section 13 of the 1933 Act, 15 U.S.C. § 77m, provides that a claim based on § 12(a)(2) must be commenced “within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence.” Topalian v. Ehrman, 954 F.2d 1125, 1134-35 and n. 23 (5th Cir.1992), cert. denied, 506 U.S. 825, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992). Indeed, the Deutsche Bank Entities argue that the complaint, itself, is the best evidence of the expiration of the statute of limitations for claims brought under all the statutes as to the newly added Defendants because it identifies October 16, 2001 as the date on which Enron disclosed $1 billion in charges and a reduction of shareholders’ equity by $1.2 billion, followed by media disclosures, in turn followed by plaintiffs’ filing of their first complaint in this securities fraud action on October 22, 2001; nevertheless, argue Deutsche Bank Entities, Plaintiffs waited until May 14, 2003, nineteen additional months after the first complaint was filed, to add Deutsche Bank Trust Company Americas and Deutsche Bank Securities, Inc. They further contend that Plaintiffs chose not to take advantage of the eight-month period between the filing of their first consolidated complaint and the Court’s December 2002 ruling on motions to dismiss, during which they could have amended as a matter of course pursuant to Fed.R.Civ.P. 15(a). They maintain that Plaintiffs were aware of the facts and circumstances surrounding the tax schemes by May 22, 2002, when the Washington Post published a detailed article about the very tax transactions named in the Amended Complaint. April Witt and Peter Behr, Enron’s Other Strategy: Taxes; Internal Papers Reveal How Complex Deals Boosted Profits by $1 Billion, Washington Post, May 22, 2002, republished, 2002 WL 20711256. Another article was published in the Washington Post on January 21, 2003 about the STDS: Peter Behr and Carrie Johnson, Enron Probes Now Focus on Tax Deals: Bankr.Examiner To File RepoH Today; Congressional Investigation Nears Completion, now available at 2003 WL 2369941. Furthermore, insist Deutsche Bank Defendants, there is no “relation back” applicable to the addition of Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc. in the First Amended Consolidated Complaint because the first consolidated complaint, at ¶¶ 83(i), 71, 107, and 648, mentioned that Deutsche Bank Trust Company Americas, formerly known as Bankers Trust Company, was part of Deutsche Bank and it referred to Deutsche Bank Alex. Brown, now known as Deutsche Bank Securities Inc. In sum, charge the Deutsche Bank Entities, “[P]laintiffs made a strategic decision not to name [Deutsche Bank Trust Company Americas and Deutsche Bank Securities, Inc.] in the Newby Complaint, not to add them as defendants as a matter of course prior to December 19, 2002, and not to request leave to amend as to either thereafter with respect to the [Six Structured Transactions].” # 1621 at 10. They did not make a mistake about the identity of these two entities. Deutsche Bank Entities also maintain that the challenged tax transactions were legitimate and were designed to comply with the tax laws and accounting standards (GAAP), as even critics agree. Moreover, they contend, the bankruptcy Examiner concluded that Valhalla was beneficial to Enron and did not involve any questionable accounting. They argue that the fact that the tax deals were structured to provide accounting and tax benefits to Enron does not make them illegitimate or lacking in a valid purpose. In its opposition, Lead Plaintiff contends that they did not comply with GAAP and cites the Enron bankruptcy Examiner’s identical conclusion as to the Steele, Cochise, Teresa and Tomas Projects. # 1707 at 15 & n. 11. Moreover, even if they were in compliance, Lead Plaintiff argues that they were still fraudulent because they concealed from investors what was going on underneath Enron’s financial statements to artificially inflate Enron’s financial results. The Court finds that these are factual issues not appropriately resolved in a motion to dismiss, where the standard requires the Court to view alleged facts in a light most favorable to Lead Plaintiff. 2. 1933 Act Claims Against Deutsche Bank Entities The claims against the Deutsche Bank Entities under § 12(a)(2), and derivative claims under § 15 (control liability), arise from Deutsche Bank’s participation as underwriter/initial purchaser of certain Enron Securities, including the following: (1) In January 1997, 6 million shares of 8-1/2% Enron capital preferred shares at $25 per share; (2) in February 1999, 27.6 million shares of Enron common stock at $31.34 per share; (3) in February 2001, $1.9 billion Enron Zero Coupon convertible bonds; and (4) on June 9, 1999 38.5 million shares of Azurix IPO at $19 per share. According to the complaint, Deutsche Bank served the same role for Enron-related Foreign Debt Securities offerings with purportedly false and misleading Offering Memoranda, relating to which Deutsche Bank failed to make reasonable investigation: (1) $1,400,000,000 8.31% Senior Secured Notes due in 2003, issued on 9/23/99 by Osprey Trust and Osprey I, Inc.; (2) $500,000,000 8% Enron Credit Linked Notes due in 2005, issued by Enron Linked Notes Trust on 8/17/00; (3) $750,000,000 7.9% Senior Secured Notes due in 2003 and Euros 315,000,000 6.375% Senior Secured Notes due in 2003, issued on 9/28/00 by Osprey Trust and Osprey I, Inc.; and (4) $475,000,000 6.31% Senior Secured Notes due in 2003 and Euros 515,000,000 6.19% Senior Secured Notes due in 2003, issued by Marlin Water Trust II and Marlin Water Capital Corporation II on 7/12/01. With respect to the newly added § 12(a)(2) claims, the Deutsche Bank Entities contend that Lead Plaintiff fails to identify material misstatements or omissions in the Offering Memoranda. Furthermore, relying on Gustafson v. Alloyd Co., Inc., 513 U.S. 561, 576-78, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995), Defendants urge that the statute does not apply to private placements, as this Court has previously held. Defendants contend that the offerings in dispute were not made pursuant to a prospectus and were not public. They have cited a recent unpublished opinion in which the district court found that the offering memorandum on its face had language which demonstrated that it was a private placement, and not offered pursuant to a “prospectus,” but instead was an unregistered offering pursuant to Rule 144A and Regulation S. State of Alaska Dept. of Revenue v. Ebbers (In re Worldcom, Inc. Sec. Litig.), 294 F.Supp.2d 431 (S.D.N.Y.2002), attached as Ex. A to # 1861. The Court, noting that the Alaska Plaintiffs conceded they were “qualified institutional investors” as defined by 17 C.F.R. § 230.144A and Rule 144A, which “governs ‘private resales of securities to institutions’ and defines the ‘qualified institutional buyer[s]’ authorized to purchase in a private placement.’ ” Id. at 454. Lead Plaintiff in opposition argues that under Fifth Circuit law, whether there is a public offering is a question of fact that must be examined under the circumstances of each ease, with the burden of proof on Deutsche Bank Entities. Hill York Corp. v. Am. International Franchises, Inc., 448 F.2d 680, 687 (5th Cir.1971); Doran v. Petroleum Management Corp., 545 F.2d 893, 899 (5th Cir.1977). Lead Plaintiff insists that Deutsche Bank Entities cannot prove their affirmative defense because the smallest offering underwritten by them was $500 million, which by itself qualifies each offering as a public sale. SEC v. Murphy, 626 F.2d 633, 646 (9th Cir.1980) (“Without question [a sale of $7.5 million in securities] is a sizeable offering, and it is one we are inclined to consider as public .... ”). Furthermore, argues Lead Plaintiff, the securities underwritten by Defendants were offered to a large number of investors. Nor, Deutsche Bank Entities insist, does Lead Plaintiff state a claim for control person liability under § 15 of the 1933 Act or § 20(a) of the 1934 Act because it has failed to allege facts beyond a defendant’s position or title to show that the defendant had actual power or control over the controlled person. See this Court’s December 12, 2002 memorandum and order (# 1194) at 64-67. The Court disagrees with Defendants and finds that if Lead Plaintiff has stated a claim for liability under § 10(b) of the 1934 Act and/or § 12(a)(2) of the 1933 Act, it has sufficiently stated a claim for control person liability. As pointed out in its memorandum (# 1707 at 35), the complaint alleges that Deutsche Bank AG is a integrated financial services institution composed of divisions and subsidiaries including Deutsche Bank Securities Inc. and Deutsche Bank Trust Company Americas, the later two are wholly owned and controlled subsidiaries of Deutsche Bank AG through which Deutsche Bank AG conducts its business affairs and all of whose stock is directly or indirectly owned by Deutsche Bank AG, and that Deutsche Bank completely directs and controls the subsidiaries’ business operations inter alia by ownership and selection and appointment of their offices and, where necessary, their directors. Lead Plaintiff argues that Sarbanes-Ox-ley’s extended limitations period applies to the claims against newly added Defendants Deutsche Bank Trust Company Americas and Deutsche Bank Securities, Inc. in the Amended Consolidated Complaint, since these claims were commenced by the new complaint after the Act’s enactment. The Court has previously rejected this argument. # 1999 at 33-56. Lead Plaintiff alternatively argues that even if the Court finds the extended limitations inapplicable, the filing of the tax claims against the new entities nevertheless satisfies the one-year statute of limitations. Deutsche Bank has itself stated that Plaintiffs were aware of the facts and circumstances surrounding the tax structure at least as long ago as May 22, 2002 ; the amended complaint was filed on May 14, 2003, within a year of the date it was put on notice. Lead Plaintiff further insists the claims also fall within the Lampf three-year period of repose because the Deutsche Bank Entities’ argument that the tax Projects “closed” more than three years before the First Amended Consolidated Complaint was filed ignores the amended complaint’s allegations of the Deutsche Bank Entities’ ongoing, active, primary participation in these Projects, which inflated Enron’s earnings subsequently over a period of years and continuously paid the Deutsche Bank Entities fees for their work, indeed through the Class Period. In other words, Lead Plaintiff looks not to the date each scheme was structured or “closed,” but to the ongoing acts to effectuate the scheme by Defendants leading to fraudulent results within the Class Period, i.e., it seeks application of a “continuing violation theory” to the Ponzi scheme. For example, according the latest complaint, Cochise, like Project Steele, involved the transfer of mortgage-backed securities and other assets from Deutsche Bank to an Enron affiliate, with both Enron and Bankers Trust improperly sheltering taxable income through deductions for losses involving the same assets. As the first stage of the project, Enron purchased two airplanes from Deutsche Bank for $46.7 million in January 1999, which Deutsche Bank repurchased on June 28, 2000 for $36.5 million, and which Enron bought back one month later through an Enron subsidiary, Oneida. When Enron fraudulently sold the planes back to Deutsche Bank on June 28, 2000, which act was within three years of the filing of the First Amended Complaint and thus within the period of repose under § 10(b), Enron reported the full proceeds as net income, in violation of GAAP, as was found by the bankruptcy Examiner, 3rd Report, App. G at 54. Moreover, pursuant to a shareholder agreement, Deutsche Bank became a partner with Enron in a fraudulent Deutsche Bank entity called Maliseet to further Project Cochise through acts as late as January 28, 2001. Cochise artificially inflated Enron’s earnings by $27.7 million in 1999, $50.3 million in 2000, and 23.2 million in 2001 (for a total of $101 million during 1999-2001). This inflated income was reported in Deutsche Bank’s analyst reports and Enron’s financial statements. As with the other STDs, an opinion letter from an established law firm made clear that the purpose of the transaction was inflating Enron’s financial statements. Similarly the amended complaint asserts that Project Steele also allowed Enron and Deutsche Bank to claim a tax deduction for the same group of mortgage-backed securities. Enron and Bankers Trust used a new partnership, ECT Partners, jointly owned by Enron and Bankers Trust, to which Bankers Trust transferred money-losing securities. (Deutsche Bank purchased a 5% preferred ownership interest in ETC. to achieve the inflated Enron financial statements.) According to the complaint, the Internal Revenue Code prohibits a company from buying another entity, in this case Enron and Bankers Trust, merely to acquire its tax deductions. The complaint charges that Enron claimed the deal was not for tax avoidance, but for “obtain[ing] financial income” benefits, in other words “to inflate earnings,” both illicit purposes according to Lead Plaintiff. Project Steele purportedly provided $65 million in net earnings to Enron from 1997 through 2001. B. Court’s Rulings 1. Exchange Act Claims (a) Pleading Sufficiency under § 10(b) After reviewing all of the circumstances alleged in the First Amended Consolidated Complaint, buttressed substantially by the detailed claims relating to the STDs, the Court finds that if the claims based on the STDs were not time-barred, Lead Plaintiff has adequately and particularly stated a claim against the Deutsche Bank Entities as secondary actors committing primary violations of § 10(b) and Rule 10b-5, including facts giving rise to a strong inference of scienter on their part. It has asserted that the six distinct STDs, each described in some detail, violated GAAP by serving solely to falsely report inflated income for Enron; violated Rule 10b-5 in deceiving investors by misleading the public, which had no way to know that the purported pre-tax earnings income came from potential benefit of speculative future tax deductions based on hidden STDs; and violated the Tax Code and the business purpose rule in order to fraudulently inflate financial results. It also, throughout the Class Period, issued analyst reports with strong “Buy” recommendations and laudatory statements about the company despite its knowledge that the financial reports were false, in substantial part because of the undisclosed STDs. (b) Statute of Limitations for § 10(b) Claims re Tax Schemes and Added Entities Nevertheless, because the Court finds that the claims based on the STDs are time-barred, the Court finds that the pleadings, without those claims, are insufficient to raise the requisite strong inference of scienter and to state a claim against the Deutsche entities under § 10(b). Because the time bar of limitations reduces the number of viable claims to just a single STD, again, without the pattern of tax schemes, the pleadings fail to meet the requirements of the PSLRA. There are insurmountable challenges under the applicable period of repose and statute of limitations for both the § 10(b) claims, and therefore the derivative § 20(a) control person claim, based on the STDs. Because of the limitations bar, the Court concludes that Lead Plaintiff has failed to state a claim against the Deutsche Bank Entities under these two statutes. (i) Sarbanes-Oxley Act The Court hereby incorporates the law relating to statutes of limitations applicable to claims under § 10(b) and § 20(a) of the 1934 Act and to § 11, § 12(a)(2), and § 15 of the 1933 Act, which it set out in its February 25, 2004 memorandum and order (# 1999) at 24-63, regarding the Imperial Employees Retirement System’s motion to intervene. As noted, the Court has previously rejected the argument that the extended statute of limitations in the Sarbanes-Ox-ley Act applies to both § 10(b) and § 12(a)(2) claims in the Newby class action for reasons that apply here. Thus the Court holds that the one-year/three-year limitations period set out in Lampf applies to the § 10(b) and derivative § 20(a) claims asserted here, while the one-year/ three-year periods of § 13 applies to Lead Plaintiffs claims under the 1933 Act. (ii) Continuing Violation Theory Lead Plaintiff has also argued that even if the close date of each STD project constituted a securities violation, the close was “part of a continuing conduct that violated § 10(b) throughout the Class Period” and which was not apparent until much later in the scheme. Lead Plaintiff maintains that the “STDs did not end at the purported ‘close’ date of the transactions,” which referred merely to “the signing of documents forming a partnership or some other entity in which Enron and Deutsche Bank called themselves investors”; instead “[i]n each STD, Deutsche Bank continued to play a significant role in carrying out the transaction over a period of several years” and the STDs “inflated Enron’s financial statements after they ‘closed.’ ” Moreover, Deutsche Bank continued to receive fees and issue false and misleading analyst reports while underwriting Enron and Enron-related securities offerings and participating in LJM2. # 1707 at 7-8. Lead Plaintiff contends that the “ ‘close’ of the transactions was a part of continuing conduct that violated § 10(b) repeatedly throughout the Class Period.” Id., citing Huckabay v. Moore, 142 F.3d 233, 239 (5th Cir.1998); SEC v. Ogle, No. 99 C 609, 2000 WL 45260, *4-5 (N.D.Ill. Jan.11, 2000) (applying continuing violation theory to § 10(b) action seeking equitable remedies of accounting, disgorgement and injunction in addition to civil penalties because the SEC was unable “to detect discrete violations until the alleged scheme was well underway” and because the charged market manipulation was ongoing). Lead Plaintiff urges that there was no securities violation until Enron’s financial results were inflated by the STDs, specifically by Deutsche Bank’s conduct after the “close” date. # 1707 at 8 (“If Deutsche Bank did not carry out the transactions after the transactions were conceived and documented, Enron’s financial statements would not have been affected.”). The “continuing violation” doctrine arose in the context of Title VII employment discrimination cases, 42 U.S.C. § 2000e et seq., as an equitable exception to the statute’s brief period for filing charges with the EEOC, which is shorter than that allowed under Lampf, 501 U.S. at 364, 111 S.Ct. 2773 (“Litigation instituted pursuant to § 10(b) and Rule 10b-5 ... must be commenced within one year after discovery of the facts constituting the violation and within three years after such violation)” or under Sarbanes-Oxley for § 10(b) claims. Unlike § 10(b) and § 12(a)(2), Title VII has no statute of repose that provides an arbitrary and final cut-off, but only a statute of limitations, which is subject to equitable considerations. The continuing violation theory relieves a plaintiff of establishing that all of the complained-of conduct occurred within the actionable period if the plaintiff can show a series of related acts, one or more of which falls within the limitations period.... The core idea [of the continuing violations theory,] however, is that [e]quitable considerations may very well require the filing periods not begin to run until facts supportive of a Title VII charge or civil rights action are or should be apparent to a reasonably prudent person similarly situated. The focus is on what effect, in fairness and logic, should have alerted the average lay person to act to protect his rights. At the same time, the mere perpetuation of the effects of time-barred discrimination does not constitute a violation of Title VII in the absence of independent actionable conduct occurring within the statutory period.... Thus, a plaintiff can avoid a limitations bar for an event that fails to fall within the statutory period where there is “[a] persistent and continuing system of discriminatory practices in promotion or transfer [that] produced effects that may not manifest themselves as individually discriminatory except in cumulation over a period of time.” [citations omitted] Messer v. Meno, 130 F.3d 130, 134-35 (5th Cir.1997), cert. denied sub nom. Texas Educ. Agency v. Messer, 525 U.S. 1067, 119 S.Ct. 794, 142 L.Ed.2d 657 (1999). See also Waltman v. International Paper Co., 875 F.2d 468, 474 (5th Cir.1989)(the continuing violation equitable exception to limitations arises “ ‘[w]here the unlawful employment practice manifests itself over time, rather than as a series of discrete acts.’ ”). Moreover, the Fifth Circuit has stated, Although there is no definitive standard for what constitutes a continuing violation, the plaintiff must demonstrate more than a series of discriminatory acts. He must show an organized scheme leading to and including a present violation, ... such that it is the cumulative effect of the discriminatory practice, rather than any discrete occurrence, that gives rise to the cause of action [citations omitted]. Huckabay, 142 F.3d at 239. Traditionally in Title VII cases three factors for the court to consider in determining whether there is a continuing violation are (1) whether the alleged acts consist of the same type (a pattern) of discrimination outside and inside the limitations period that would support a valid connection or were substantially different, (2) whether the acts are recurring or more like isolated incidents and (3) whether the act has a degree of permanence that would awaken an employee to a duty to assert his rights. Id. at 239. Unlike securities claims, the time for filing charges with the EEOC in an employment discrimination action has long been viewed as not jurisdictional and as “subject to equitable doctrines such as tolling or estoppel.” Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 393, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982); National R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002). Few courts have addressed whether or not the continuing violation doctrine applies to securities fraud cases under the one-year/three-year limitations provisions for claims under § 10(b) under Lampf and for claims § 12(a)(2) through § 13. As the only federal appellate court that has done so, the Fourth Circuit, based on the language in Lampf stating that equitable tolling does not apply to the period of repose for claims under § 10(b), has rejected the continuing violation doctrine’s application to securities fraud claims. Caviness v. Derand Resources Corp., 983 F.2d 1295, 1301-02 (4th Cir.1993). Rebuffing the plaintiffs’ argument that “the running of [the] limitations period is tolled by fraudulent concealment and that defendants should be equitably estopped from relying on plaintiffs’ failure to establish the limitation requirements,” the panel concluded that such equitable tolling would “ignore the plain meaning of the language [of § 13] that says ‘in no event’ may an action be filed more than three years after the sale and defeat the very purpose of the statute of repose.” Id. at 1301. “It would also render meaningless the discovery standard that is applied to the one-year limitation provision.” Id. The Fourth Circuit also relied on the Supreme Court’s determination in Lampf that the one-year period “by its terms, begins after discovery of the facts constituting the violation, making tolling unnecessary.” Id. See also de la Fuente v. DCI Telecommunications, Inc., 206 F.R.D. 369, 385-86 (S.D.N.Y.2002), citing SEC v. Caserta, 75 F.Supp.2d 79, 89 (E.D.N.Y.1999), and SEC v. Schiffer, 97-CV-5852 (RO), 1998 WL 226101, *3 (S.D.N.Y. May 5, 1998). This Court finds its rationale persuasive. The only case this Court has found recognizing the application of the continuing violation theory in a securities fraud action was cited by Lead Plaintiff. SEC v. Ogle, No. 99 C 609, 2000 WL 45260, *4-5 (N.D.Ill. Jan.11, 2000). Nevertheless, this Court finds its conclusion unconvincing because the court ignored the existence of the statute of repose, which the Lampf court emphasized serves as a final cutoff. Moreover, even if the continuing violation doctrine were applicable to securities violations in Newby, in a 5-4 decision authored by Justice Clarence Thomas, the United States Supreme Court has recently constricted the scope of the doctrine. National R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002). In National R.R. Passenger Corp. the high court examined and rejected the Ninth Circuit’s rule that a plaintiff can establish a continuing violation and thereby recover for discriminatory acts outside of the statutory period by (1) showing “a series of acts one or more of which are within the limitat