Full opinion text
MEMORANDUM BLAKE, District Judge. Multiple motions to dismiss are pending in these consolidated securities fraud actions transferred here by the Judicial Panel on Multidistrict Litigation. The claims arise out of an approximately $ 1.1 billion restatement of earnings, together with a $24.8 billion reduction in revenue, announced in 2003 by Royal Ahold N.V. (“Royal Ahold”), a Netherlands company heavily involved in the supermarket and food service business in the United States. A voluminous amended complaint names as defendants various Royal Ahold entities, including its Maryland-based subsidiary U.S. Food Service, Inc. (“USF”), as well as accountants, underwriters, and individuals, alleging violations of the securities laws. Preliminarily, I will state a summary of my rulings on the various motions. The Fed.R.Civ.P.12(b)(2) motions to dismiss for lack of personal jurisdiction submitted by foreign individual defendants Fahlin, Boonstra and de Ruiter will be granted. The motions to dismiss for lack of personal jurisdiction submitted by foreign individual defendants Van der Hoe-ven, Meurs, and Andreae will be denied. The Fed.R.Civ.P. 12(b)(1) motions submitted by all defendants to dismiss the claims of foreign purchasers of Royal Ahold shares on foreign exchanges for lack of subject matter jurisdiction will be denied. The global underwriter defendants’ Fed. R.Civ.P. 12(b)(1) motion to dismiss the § 11 and § 12(a)(2) claims for lack of subject matter jurisdiction will be granted. The Fed.R.Civ.P. 12(b)(6) motions submitted by all defendants to dismiss all allegations concerning conduct that predates July 30, 1999 as barred by the statute of limitations will be granted. The Fed.R.Civ.P. 12(b)(6) motions to dismiss the § 10(b) and Rule 10b-5 claims submitted by defendants Tobin, Grize, Resnick, Deloitte & Touche LLP (“De-loitte U.S.”), Deloitte & Touche Accountants (“Deloitte Netherlands”), Ahold USA and Ahold USA Holdings will be granted. The motions to dismiss the § 10(b) and Rule 10b-5 claims submitted by defendants Kaiser, Lee, Andreae, and Meurs will be denied. Van der Hoeven’s motion to dismiss the § 10(b) and Rule 10b-5(b) claims will be denied; his motion to dismiss the § 10(b) and Rule 10b-5(a) and (c) claims will be granted. Miller’s motion to dismiss the § 10(b) and Rule 10b-5(b) claims will be granted, but his motion to dismiss the Rule 10b-5(a) and (c) claims will be denied. The Deloitte & Touche LLP (“Deloitte U.S.”) Fed.R.Civ.P. 11 motion to strike certain allegations will be granted. The Royal Ahold defendants’ (along with individual defendants Van der Hoeven and Meurs) Fed.R.Civ.P. 12(f) motion to strike all allegations concerning misconduct at Ahold USA subsidiaries Tops and Giant-Carlisle and allegations concerning the realization of synergies and the integration of acquisitions will be denied; their motion to strike all allegations concerning accounting irregularities with the Argentine subsidiary Disco will be granted. The Fed.R.Civ.P. 12(b)(6) motions to dismiss the § 11 and § 12(a)(2) claims submitted by Royal Ahold, the lead underwriters, the Deloitte defendants, and the individual defendants will be granted. The plaintiffs are granted 60 days to seek leave to amend the § 12(a)(2) claims. The Fed.R.Civ.P. 12(b)(6) motions to dismiss the control person liability claims under § 20(a) submitted by defendants Miller, Resnick, Kaiser, Van der Hoeven, Meurs, Andreae, Tobin and Grize will be denied. Lee’s motion to dismiss the § 20(a) claim will be granted. All motions to dismiss the § 15 claims will be granted; the plaintiffs are granted 60 days to seek leave to amend the § 15 claims. TABLE OF CONTENTS I. Background A. Factual History B. Prior and Related Proceedings C. The Parties 1. The Plaintiffs 2. The Corporate Defendants 3. The Auditors 4. The Lead Underwriters and Global Underwriters 5. The Foreign Individual Defendants 6. The Domestic Individual Defendants II. Discussion A. Standard of Review B. Personal Jurisdiction 1. Cees Van der Hoeven, Michiel Meurs, Jan Andreae 2. Roland Fahlin 3. Cor Boonstra 4. Henny de Ruiter C. Subject Matter Jurisdiction 1. Foreign Purchasers of Royal Ahold Securities on Foreign Exchanges 2. The Global Underwriters (“Dutch Banks”) D. Statute of Limitations E. Section 10(b) and Rule 10b-5 Claims 1. Cees Van der Hoeven and Michiel Meurs 2. Jan G. Andreae 3. Mark Kaiser and Timothy J. Lee 4. James L. Miller 5. Michael Resnick 6. Robert G. Tobin 7. William J. Grize 8. The Deloitte Defendants 9. Ahold USA 10. Ahold USA Holdings F. Royal Ahold Defendants’ Motions to Strike 1. Disco 2. Tops and Giant-Carlisle 3. Statements Concerning Royal Ahold’s Integration of its Acquisitions G. Section 11 and Section 12 H. Control Person Liability Under Section 20(a) and Section 15 III.Conclusion I.BACKGROUND A. Factual History On February 24, 2003 Royal Ahold announced that it was restating its reported earnings by $ 500 million for fiscal years 2001 and 2002 due to a series of accounting inaccuracies related to promotional allowances at its U.S. Foodservice, Inc. (“USF”) division. (See Compl. ¶ 184.) The announcement also advised investors that Royal Ahold would be adjusting historical financial statements to no longer fully consolidate its joint ventures and that the company was investigating “the legality of certain transactions” at its Argentine subsidiary Disco. (Id.) The announcement caused the price of Royal Ahold common stock trading on foreign exchanges to drop 63% and the price of Royal Ahold ADRs trading on the New York Stock Exchange (“NYSE”) to fall 61%. (¶ 1.) Since the February 2003 announcement, Royal Ahold has made additional restatements of earnings totaling $ 24.8 billion in revenues and approximately $ 1.1 billion in net income. (¶¶ 1, 30.) Regulators in the United States and Europe have launched civil and criminal investigations of individuals and entities associated with Royal Ahold. Among the agencies conducting such investigations are: the United States Department of Justice, the United States Attorney’s Office for the Southern District of New York, the Securities and Exchange Commission (“SEC”), the NYSE, the National Association of Securities Dealers, the Office of the Dutch Public Prosecutor, the Euronext Amsterdam Exchange, and the Dutch Authority for Financial Markets. (¶¶ 209-228.) Investigations by these entities as well as Royal Ahold have revealed that the accounting discrepancies stemmed mainly from two company practices: (1) inflated reporting of income from vendor rebates or promotional allowances; and (2) improper attribution of revenue (or “consolidation” of revenue) by Royal Ahold from joint ventures in which Royal Ahold did not have a controlling stake. The promotional allowances problem arose primarily from Royal Ahold’s Maryland based USF. Promotional allowances, also known as vendor rebates, are payments made by manufacturers to retailers to encourage them to promote their products to consumers. Royal’ Ahold determined that USF prematurely recognized promotional allowance income in violation of U.S. and Dutch generally accepted accounting principles (“GAAP”). (¶ 39.) The forensic investigation conducted by the company also revealed that certain individuals had colluded with outside vendors to falsely inflate vendor rebate amounts. (¶ 47) (citing Royal Ahold’s 2002 Form 20-F). On May 8, 2003 Royal Ahold announced that the total income restatement attributable to USF would be $ 880 million for the period from April 2000 to December 28, 2002. (¶ 28.) In addition, on May 26, 2003 Royal Ahold announced that its investigation had uncovered $ 29 million in intentional accounting irregularities at its Tops subsidiary. (¶ 250.) On May 16, 2003 Royal Ahold announced that it would reduce its revenue totals for the last two years by the sum of $ 24.8 billion dollars to properly reflect proportionate consolidation of its joint ventures, ICA, JMR, Bompreco, Paiz Ahold, and DAIH. (¶ 248.) Previously, Royal Ahold had fully consolidated these joint ventures even though it did not control them; this practice did not comport with U.S. and Dutch GAAP. (¶ 249.) After an investigation, the company determined that so-called “control letters” purporting to grant Royal Ahold decision-making authority over the ICA, Bompreco, DAIH and Paiz Ahold joint ventures, thereby providing a basis to fully consolidate the joint ventures’ revenue, were negated by secret “side letters.” (¶ 305.) These side letters, which were concealed from the Deloitte & Touche auditors, rescinded the control letters by stating that Royal Ahold would not actually retain decision-making authority over its partners. (¶¶ 304-06.) The plaintiffs allege that Meurs, Andreae, and Fah-lin drafted and executed the conflicting side letters for the ICA joint venture. (¶¶ 338-39.) The plaintiffs contend that Royal Ahold’s improper consolidation of its joint ventures and allegedly fraudulent accounting of promotional allowance income enabled the company to maintain artificially inflated revenues and strong credit ratings. (¶ 23.) They allege that Royal Ahold senior executives repeatedly misled investors regarding the company’s financial strength in press releases, with comments such as the one made by CEO Cees Van der Hoeven in a June 7, 2001 press release: “Once again our operating companies generated excellent results in the first quarter. In the United States, both our food retail and foodservice activities boosted earnings substantially.” (¶ 579.) According to the plaintiffs, Royal Ahold’s apparent financial strength supported favorable market reviews from Wall Street analysts and kept Royal Ahold stock trading at relatively high prices. This in turn enabled the company to raise capital on domestic and foreign stock exchanges in order to fund a series of ambitious acquisitions aimed at expanding the company’s global reach. For example, Royal Ahold executed the' September 2001 Global Offering,- the offering on which plaintiffs base their § 11 and § 12(a)(2) claims, in order to fund its acquisition of Bruno’s Supermarkets and USF’s acquisition of Alli-ant Foodservice, Inc. (¶ 595.) During the claimed class period, March 10, 1998 to February 24, 2003, Royal Ahold and its subsidiaries spent billions of dollars acquiring over fifty food retail and service operations in the United States, Europe, Central and South America, and Asia Pacific. (¶¶ 131-180.) The plaintiffs allege that Royal Ahold' and the individual defendants misled investors by repeatedly overstating earnings and claiming that Royal Ahold was successfully integrating its numerous acquisitions, when in reality several of the individual defendants knew there were problems with USF’s internal controls and later the company admitted that it failed to manage adequately the integration of its many acquisitions. (See, e.g., ¶ 594.) The shareholder plaintiffs now bring suit to recover financial losses they claim are directly -attributable to the allegedly false and misleading statements made by Royal Ahold and the associated defendants during the claimed class period. B. Prior and Related Proceedings On June 18, 2003, the Judicial Panel on Multidistrict Litigation transferred twenty-one class action securities and ERISA actions to the District of Maryland. Since then, additional related actions also have been transferred here. On November 4, 2003, I entered an order consolidating the pending securities actions and appointing COPERA and Generic as lead plaintiffs. See In re Royal Ahold N.V. Securities and ERISA Litigation, 219 F.R.D. 343 (D.Md. 2003). In parallel proceedings, the SEC filed enforcement actions in the United States District Court for the District of Columbia against Royal Ahold and individual defendants Cees Van der Hoeven, Mi-chiel Meurs, Roland Fahlin, and Jan An-dreae; some of these parties have since settled with the SEC. In addition, the United States Attorney’s Office filed charges in United States District Court for the Southern District of New York against individual defendants Michael Resnick, Mark Kaiser, and Timothy Lee. Lee pled guilty to one count of conspiracy to commit securities fraud, to make false statements in filings with the SEC, and to falsify USF’s and Royal Ahold’s books and records, and to one count of securities fraud. On February 18, 2004, the lead plaintiffs filed a 430 page Consolidated Amended Securities Class Action Complaint (“Complaint”). Count I of the complaint charges Royal Ahold, Ahold USA, Ahold USA Holdings, United States Foodservice, Inc., Deloitte & Touche LLP, Deloitte & Touche Accountants, and individual defendants Cees Van der Hoeven, Michiel Meurs, Henny de Ruiter, James L. Miller, Michael Resnick, Timothy Lee, Mark Kaiser, Jan G. Andreae, Roland Fahlin, Robert G. Tobin, William J. Grize, and Cor Boonstra with violations of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 783(b), and Rule 10b-5(b), 17 C.F.R. § 240.10b-5, promulgated thereunder. Count II of the complaint charges the same defendants with violations of § 10(b) and Rule 10b-5(a) and (c). Counts III and VI of the complaint charge each of the named individual defendants with control person liability under § 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78t, and § 15 of the Securities Act of 1933, 15 U.S.C. § 77o. Count IV of the complaint charges Royal Ahold, Deloitte Netherlands, the underwriter defendants, and individual defendants Van der Hoeven, Meurs, de Ruiter, Miller, Lee, Andreae, Fahlin, Tobin, and Grize with violations of § 11 of the Securities Act of 1933, 15 U.S.C. § 77k. Count Y of the complaint charges Royal Ahold, the underwriter defendants, and individual defendants Van der Hoeven and Meurs with violations of § 12(a)(2) of the Securities Act of 1933, 15 U.S.C. § 771(a)(2). Each of the defendants filed motions to dismiss and motions to strike the various charges asserted against them. While the individual motions differ, all defendants move to dismiss claims asserted by foreign purchasers of Royal Ahold shares for lack of subject matter jurisdiction, as well as all claims predicated on conduct prior to July 30, 1999, as barred by the statute of limitations. After the issues were fully briefed, oral argument was heard on September 23, 2004. This Memorandum and Order grants in part and denies in part the motions to dismiss and motions to strike filed by the various defendants. C. The Parties 1. The Plaintiffs Plaintiffs are members of a class of persons, including both U.S. and European citizens, who purchased or acquired the common shares or American Depository Shares (“ADSs” also known as American Depository Receipts or “ADRs”) of Royal Ahold, N.V. (“Royal Ahold” or the “Company”) between March 10, 1998 and February 24, 2003 (the claimed “Class Period”), lead plaintiff COPERA (Public Employees’ Retirement Association of Colorado) purchased Royal Ahold common shares on foreign exchanges during the class period and claims losses of more than $ 16 million (¶ 55), and lead plaintiff Generic Trading of Philadelphia, LLC (“Generic”), a large institutional trading firm, purchased Royal Ahold ADRs on the NYSE and claims losses of more than $ 1.1 million. (¶ 56.) 2. The Corporate Defendants Royal Ahold N.V. (“Royal Ahold”) is a supermarket and foodservice company incorporated under the laws of the Netherlands. Through its subsidiaries, Ahold USA, Ahold USA Holdings, and U.S. Foodservice, Inc. (“USF”), Royal Ahold operates a number of chain grocery stores and food services in the United States. Royal Ahold ADRs trade on the NYSE and its common stock trades on the Euro-next exchanges of Paris, Brussels, and Amsterdam. Royal Ahold also has a secondary listing on the Swiss Exchange in Zurich. Royal Ahold and USF do not challenge the plaintiffs’ § 10(b) and Rule 10b-5 claims, but Ahold USA and Ahold USA Holdings move to dismiss the § 10(b) and Rule 10b-5 claims for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Royal Ahold moves to dismiss the § 11 and § 12(a)(2) claims and moves to strike allegations pertaining to its subsidiaries Tops and Giant-Carlisle, and its Argentine subsidiary Disco, as well as statements in the complaint regarding the integration of company acquisitions and synergies. 3. The Auditors Deloitte & Touche LLP (“Deloitte U.S.”) and Deloitte & Touche Accountants (“De-loitte Netherlands”) served as the auditors for Royal Ahold and USF. The Deloitte defendants move to dismiss the plaintiffs’ § 10(b), Rule 10b-5, § 11, and § 12(a)(2) claims. 4. The Lead Underwriters and the Global Underwriters (“Dutch Banks”) Lead underwriters ABN AMRO Rothschild, Goldman Sachs International, and Merrill Lynch International provided commercial and investment banking services to Royal Ahold and served as underwriters for the September 2001 Global Offering. The global underwriters (“Dutch Banks”) ING Bank N.V., Rabo Securities N.V., and Kempen & Co. N.V. acted as underwriters for Royal Ahold during the class period and for the September 2001 Global Offering. The underwriter defendants move to dismiss the plaintiffs’ § 11 and § 12(a)(2) claims. 5. The Foreign Individual Defendants Cees Van der Hoeven served as Royal Ahold’s Chief Executive Officer from 1993 until February 24, 2003. Michiel Meurs served as Royal Ahold’s Executive Vice President and Chief Financial Officer from 1997 until February 24, 2003. Henny de Ruiter was Chairman of Royal Ahold’s Supervisory Board from 1994 until 2003. Cor Boonstra served as a member of Royal Ahold’s Supervisory Board from 2000 until September 3, 2001. Roland Fahlin was a member of Royal Ahold’s Supervisory Board from 2001 until June 2, 2004. Jan G. Andreae was a member of Royal Ahold’s Executive Board from 1997 until February 20, 2004. Each of the foreign individual defendants moves to dismiss the claims for lack of personal jurisdiction and for failure to state a claim. 6. The Domestic Individual Defendants James L. Miller founded USF in 1989. He served as Chief Executive Officer of USF from 1994, and Chairman of the Board of Directors and President of USF from 1997, until May 13, 2003. Miller joined Royal Ahold’s Executive Board on or about September 1, 2001. Mark Kaiser served in a variety of senior sales positions at USF since 1989. He served as the Executive Vice President of Sales, Marketing and Procurement at USF from 1993 until May 9, 2003. Timothy J. Lee served as a purchasing executive for USF and worked closely with Mark Kaiser until he resigned from the company on May 9, 2003. Michael Resnick joined USF in October 2000 in a financial position and served as Chief Financial Officer of USF from 2001 to May 14, 2003. Robert G. Tobin joined Royal Ahold in 1996 and was appointed to Royal Ahold’s Executive Board in 1998. Tobin also served as President and CEO of Ahold USA until September 1, 2001. On that date he resigned from Royal Ahold’s Executive Board and joined Royal Ahold’s Supervisory Board. William J. Grize was appointed to Royal Ahold’s Executive Board and became President and CEO of Ahold USA on September 1, 2001. Each of the domestic individual defendants moves to dismiss the claims asserted against them for failure to state a claim. II. DISCUSSION A. Standard of Review “The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint; importantly, a Rule 12(b)(6) motion does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999) (internal quotation marks and alterations omitted). When ruling on such a motion, the court must “accept the well-pled allegations of the complaint as true,” and “construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States, 120 . F.3d 472, 474 (4th Cir.1997). Consequently, a motion to dismiss under Rule 12(b)(6) may be granted only when “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Edwards, 178 F.3d at 244. Securities fraud claims are subject to the heightened pleading requirements of Fed.R.Civ.P. 9(b) and the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), 15 U.S.C. § 78u-4(b)(1)(B), (b)(2) which are discussed in more detail below. See infra Part 11(E). In addition, because the court is testing the legal sufficiency of the claims, the court is not bound by the plaintiffs’ legal conclusions. See, e.g., Young v. City of Mount Ranier, 238 F.3d 567, 577 (4th Cir.2001) (noting that the “presence ... of a few conclusory legal terms does not insulate a complaint from dismissal under Rule 12(b)(6)” when the facts alleged do not support the legal conclusions); Labram v. Havel, 43 F.3d 918, 921 (4th Cir.1995) (affirming Rule 12(b)(6) dismissal with prejudice because the plaintiffs alleged facts failed to support her conclusion that the defendant owed her a fiduciary duty at common law). In considering a motion to dismiss a securities fraud complaint, “the Court is entitled to rely on public documents quoted by, relied upon, incorporated by reference or otherwise integral to the complaint, and such reliance does not convert such a motion into one for summary judgment.” In re USEC Sec. Litig., 190 F.Supp.2d 808, 813 (D.Md.2002). B. Personal Jurisdiction In federal securities actions, personal jurisdiction extends to the limits of the due process clause of the Fifth Amendment. There are two primary factors to consider in evaluating personal jurisdiction under the due process clause: (1) whether the defendant has sufficient minimum contacts with the United States and (2) whether the exercise of jurisdiction over the defendant would “offend traditional notions of fair play and substantial justice.” Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 942 (4th Cir.1994) (citing International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). The plaintiffs bear the burden of establishing personal jurisdiction for each defendant individually. Because there was.no evidentiary hearing, however, the plaintiffs are “required only to make a prima facie showing of personal jurisdiction” at this point. Harte-Hanks Direct Marketing/Baltimore, Inc. v. Varilease Tech. Fin. Group, Inc., 299 F.Supp.2d 505, 511-512 (D.Md.2004) (citing. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir.2003)). See also Mylan Laboratories Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993) (“In deciding whether the plaintiff has proved a prima facie case of personal jurisdiction, the district court must draw all reasonable inferences arising from the proof, and resolve all factual disputes, in the plaintiffs favor.”). To satisfy the minimum contacts test, a plaintiff must demonstrate that a defendant either (1) engages in systematic or continuous activities in the United States (general jurisdiction) or (2) purposefully directs his actions at the United States and the litigation arises from or is related to those actions (specific jurisdiction). Essentially, it is a question of fairness: if the defendant can “reasonably anticipate being haled into court there,” In re CINAR Corp. Sec. Litig., 186 F.Supp.2d 279, 305 (E.D.N.Y.2002) (quoting WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)), that court’s jurisdiction comports with due process. It also must be noted that “[g]reat care and reserve should be exercised when extending our notions of' personal jurisdiction into the international field.” Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 115, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (citation omitted). Each of the foreign individual defendants moves to dismiss the plaintiffs’ claims for lack of personal jurisdiction. There is no claim of general jurisdiction over the foreign defendants, who live outside the United States and work for a foreign corporation based in the Netherlands. Rather, the question is whether this forum has specific jurisdiction. The Fourth Circuit recently stated, “[i]n determining whether specific jurisdiction exists, we consider (1) the extent to which the defendant has purposefully availed [himself] of the privilege of conducting activities in the state; (2) whether the plaintiffs’ claims arise out of those activities directed at the state; and (3) whether the exercise of personal jurisdiction would be constitutionally ‘reasonable.’ •” Carefirst, 334 F.3d at 397. In interpreting these factors, many courts apply an effects test to evaluate whether a defendant’s purposeful availment is sufficient and causally related to the plaintiffs alleged injuries. “This ‘effects test’ of personal jurisdiction is typically construed to require that the plaintiff establish that: (1) the defendant committed an intentional tort; (2) the plaintiff felt the brunt of the harm in the forum, such that the forum can be said to be the focal point of the harm; and (3) the defendant expressly aimed his tortious conduct at the forum, such that the forum can be said to be the focal point of the tortious activity.” Id. at 398 n. 7 (citing IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 265-66 (3rd Cir.1998)). Before examining each foreign individual defendant’s contacts with the United States, it must be determined whether the fiduciary shield doctrine applies. That doctrine protects individuals from personal jurisdiction in a forum where their only contacts with the forum arise from acts carried out within the scope of their employment. See Birrane v. Master Collectors Inc., 738 F.Supp. 167, 169 (D.Md.1990). The foreign individual defendants rely on the fiduciary shield doctrine to contend that this court lacks personal jurisdiction because all of the allegations against them pertain to actions taken in their corporate capacity. As the Fourth Circuit has made clear, however, “the fiduciary shield rule is solely a matter of statutory construction under state law and is not required under the due process clause.” Western Contracting Corp. v. Bechtel Corp., 885 F.2d 1196, 1200 (4th Cir.1989). While a forum cannot establish personal jurisdiction over foreign defendants based solely on their status as officers in a corporation that is alleged to have committed fraud in the United States, see Columbia Briargate Co. v. First Nat. Bank in Dallas, 713 F.2d 1052, 1064-65 (4th Cir.1983), if the complaint sufficiently alleges that the defendants “had a direct personal involvement in a tort committed in the forum state,” id. at 1064, then personal jurisdiction over the defendants does not conflict with the fundamental notions of fairness required by the due process clause. This analysis comports with the Supreme Court’s decision in Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), which noted that while- personal jurisdiction over an employee is not conferred simply by the corporation’s contacts with a forum, “then-status as employees does not somehow insulate them from jurisdiction. Each defendant’s contacts with the forum State must be assessed individually.” See also SEC v. Carrillo, 115 F.3d 1540, 1547 (11th Cir.1997). Accordingly, in deciding the personal jurisdiction question, I will not simply examine acts taken by a corporation and attribute them to the corporate executives, but I will consider an individual defendant’s actions directed at the forum, even if those acts were done in that defendant’s corporate capacity. Consistent with this analysis, an individual’s status as a control person of a corporation that has jurisdictional contacts with the United States, standing alone, is insufficient to establish personal jurisdiction. Equating “the broad understanding of control person liability adopted by the Securities Act” with personal jurisdiction “impermissibly conflates statutory liability with the Constitution’s command that the exercise of personal jurisdiction must be fundamentally fair.” In re Baan Co. Sec. Litig., 245 F.Supp.2d 117, 129 (D.D.C. 2003); see also Tracinda Corp. v. DaimlerChrysler AG, 197 F.Supp.2d 86, 99 (D.Del.2002) (stating “[pjersonal jurisdiction is an independent threshold consideration to the question of liability”); In re CINAR, 186 F.Supp.2d at 306 n. 18; but see McNamara v. Bre-X Minerals, 46 F.Supp.2d 628, 636 (E.D.Tex.1999) (establishing control person liability is sufficient to establish personal jurisdiction). An individual’s status as a control person is a factor to be considered, however, in the jurisdictional analysis. Applying the above principles, United States courts frequently have asserted personal jurisdiction over individual defendants who sign or, as control persons, approve the filing or disseminating of, particular forms required by the SEC which they knew or should have known would be relied on by UjS. investors. For example, the court in In re CINAR observed that: it is perfectly reasonable to exercise jurisdiction over [the defendant] based solely on her signing the 1999 Registration Statement ... There is no clearer example of purposeful availment of the privilege of doing business in the United States than this ... [The defendant] must have known that the státement was made to comply with the laws governing securities offerings in the American markets and, as such, it would be used and relied upon by American investors. [The defendant] could have reasonably foreseen that, were there to be litigation concerning the Statement, she would be haled to court in the United States. 186 F.Supp.2d at 305-06. See also Itoba Ltd. v. LEP Group PLC, 930 F.Supp. 36, 41 (D.Conn.1996) (holding that personal jurisdiction existed over a foreign defendant who approved forms knowing they would be filed with the SEC and relied on by investors in the U.S.); Derensis v. Coopers & Lybrand, 930 F.Supp. 1003, 1014 (D.N.J.1996); Landry v.’ Price Waterhouse, 715 F.Supp. 98, 101 (S.D.N.Y.1989). 1. Cees Van der Hoeven, Michiel Meurs, and Jan Andreae The complaint alleges that defendants Van der Hoeven, Meurs, and An-dreae signed false and misleading documents on behalf of Royal Ahold that were filed with the SEC. (See, e.g., ¶¶ 73, 77, 104, 534, 636, 688.) By signing SEC filings, these three individuals directed their actions at the United States and could reasonably anticipate being haled into court here. In addition, the required nexus between the defendants’ contacts and the plaintiffs’ injuries exists because “the plaintiffs’ claims arise out of those activities directed at the [United States].’ ” Ca-refirst of Md., Inc., 334 F.3d at 397. Therefore, based on the numerous SEC filings they signed, this court finds that Van der Hoeven, Meurs, and Andreae have sufficient minimum contacts with the United States. Even though Van der Hoeven, Meurs and Andreae have sufficient minimum contacts with the United States, the court must determine whether the exercise of jurisdiction over these individuals is reasonable, Lesnick, 35 F.3d at 942, and must use particular caution before extending “personal jurisdiction into the international field.” Asahi Metal, 480 U.S. at 115, 107 S.Ct. 1026. The Fourth Circuit has explained that: “ ‘The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders’.... But, ‘[w]hen minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant.’ ” Base Metal Trading, Ltd. v. OJSC Novokuznetsky Aluminum Factory, 283 F.3d 208, 214 (4th Cir.2002) (quoting Asahi Metal, 480 U.S. at 114, 107 S.Ct. 1026). The weaker the contacts, however, the less likely it is that jurisdiction is reasonable. Ticketmaster-N.Y. v. Alioto, 26 F.3d 201, 210 (1st Cir.1994) (stating “the reasonableness prong of the due process inquiry evokes a sliding scale: the weaker the plaintiffs showing on the first two prongs (relatedness and purposeful availment), the less a defendant need show in terms of unreasonableness to defeat jurisdiction”). The plaintiffs argue that jurisdiction over the foreign individuals is reasonable because “(1) it imposes only a slight burden on the Defendants; (2) the Lead Plaintiffs and the United States have a substantial interest in keeping the litigation in the United States; (3) it is necessary for the efficient administration of justice; and (4) public policy demands it.” (See Pis.’ Opp’n to Foreign Defs.’ Motions to Dismiss at 64.) To further support their claim of reasonableness, the plaintiffs note that the burden on the foreign defendants in litigating in the U.S. is slight when compared to the harm allegedly suffered by the class. The plaintiffs also argue that the court must afford the plaintiffs’ choice of forum some degree of deference, Ticketmaster-New York, 26 F.3d at 211, and that the U.S. is- the most efficient place to litigate the dispute: the wrong occurred here, most of the plaintiff class resides in the U.S., most of the evidence and witnesses are here, U.S. law governs, and it would avoid piecemeal litigation. In response, the defendants argue that jurisdiction here is unreasonable because the burden on the defendants from litigating in the U.S. is high, the proceedings may conflict with ongoing investigations and actions in the Netherlands, and due to joint and several liability among all defendants, the plaintiffs’ ability to recover will not be affected by the absence of the foreign defendants. Even with modern advances in communications and travel, the foreign defendants are correct that the burden for them of defending litigation in the United States is significant. In this case, however, “ ‘the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant^,’” Base Metal Trading, 283 F.3d at 214 (quoting Asahi Metal, 480 U.S. at 114, 107 S.Ct. 1026), because the burden on the defendants is outweighed by the interests of the United States and the plaintiffs in resolving the dispute in American courts. While courts in the Netherlands have a strong interest in preventing fraud in the Netherlands, the United States has a similar interest in preventing fraud here, in protecting the integrity of its stock markets, in promoting investor confidence, and in providing relief under federal statutes to those harmed by securities fraud. In In re CINAR, 186 F.Supp.2d at 305, the court held that the exercise of personal jurisdiction over a foreign individual was reasonable “based solely on her signing the 1999 Registration Statement.” Likewise, in Carrillo, 115 F.3d at 1547, the court held that jurisdiction over two foreign individuals was reasonable because “[t]he record shows that [they] were primary participants in the alleged contacts with the United States.” Similarly, by signing SEC filings, Van der Hoeven, Meurs, and Andreae were primary participants in Royal Ahold’s contacts with the United States. While Royal Ahold is domiciled in the Netherlands, it has become “a primarily United States based company with 74% of its sales generated in the United States.” (¶ 57.) Consequently, in light of the defendants’ contacts with the U.S., the alleged harm that resulted to investors in the U.S., and the interests of the U.S. in enforcing its securities laws to protect investors, this court can reasonably and legitimately exercise jurisdiction over Van der Hoeven, Meurs, and Andreae. The plaintiffs’ claims are causally related to the defendants’ purposeful contacts with the United States, and jurisdiction over these individuals does not offend traditional notions of fair play and substantial justice. 2.Roland Fahlin The complaint alleges that Fahlin signed the December 29, 2000 Registration Statement. (¶¶ 103, 833.) An examination of the actual document filed with the SEC on December 29, 2000, however, demonstrates that this allegation is not correct. (See Andreae Mem., Brusca Decl. Ex. A.) The plaintiffs do not allege that Fahlin signed any other documents filed with the SEC. Consequently, SEC filings cannot be the source of personal jurisdiction over Fahlin. The most significant allegations concerning Fahlin relate to his involvement in May 2000 as a signatory on a “control” letter and a contradictory “side” letter concerning Royal Ahold’s joint venture with ICA. (¶¶ 264, 339, see infra Part 11(E)(1) and (8), which discuss the side letters in greater detail.) These, letters, sent by a foreign employee of a foreign corporation to another foreign corporation, lack a direct connection to the U.S. The eontrol/side letter scheme did have an impact in the U.S. because it allowed Royal Ahold to artificially inflate the revenue included in its financial statements, which were incorporated into Royal Ahold’s SEC filings and relied upon by American investors. Unlike Andreae, however, Fahlin signed no SEC filings. Despite the fact that Fahlin’s acts ultimately had an impact in the U.S., the U.S. cannot be fairly characterized as the focal point of either Fah-lin’s acts or the harm suffered because his allegedly fraudulent acts were directed towards the Netherlands, and globally, but not specifically towards the U.S. See Care-first of Maryland, 334 F.3d at 398 n. 7 (stating that specific jurisdiction over a foreign defendant is “typically construed to require that.. .the plaintiff felt the brunt of the harm in the forum, such that the forum can be said to be the focal point of the harm; and the defendant expressly aimed his tortious conduct at the forum, such that the forum can be said to be the focal point of the tortious activity”) (citing IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 265-66 (3rd Cir.1998)). As a result, Fahlin lacks sufficient minimum contacts with the United States for this court to exercise specific jurisdiction over him. 3. Cor Boonstra The complaint fails to allege that Boonstra had any “direct personal involvement” in acts directed at the United States; instead it attempts to establish minimum contacts by relying on concluso-ry allegations and Boonstra’s status on the Royal Ahold Supervisory Board. While the complaint states that Boonstra was a “direct and substantial participant in the fraud,” it does not offer any specific factual allegations to support this claim. (¶ 81.) The plaintiffs include Boonstra in their broad group pleadings and allege that he acted as a control person, but they, fail to note a single specific act taken by Boons-tra directed at the U.S. (¶ 824.) Consequently, this court lacks personal jurisdiction over defendant Boonstra and must dismiss all claims against him. 4. Henny de Ruiter As with Boonstra,- the plaintiffs allege that de Ruiter was a “direct and substantial participant in the fraud” without providing any factual allegations to support their claim. Unlike Van der Hoe-ven, Meurs, and Andreae, there are no supported allegations that de Ruiter signed any documents filed with the SEC. While the plaintiffs allege that de Ruiter “engaged in a $19 billion freewheeling acquisition spree... focused primarily on the United States” and orchestrated Royal Ahold’s acquisition of USF (¶¶ 13, 15), the complaint fails to offer any factual basis to support its conclusory allegations that de Ruiter personally assisted Royal Ahold in any of the alleged fraud. Personal jurisdiction over de Ruiter cannot be based solely on the fact that he was on the supervisory board of a corporation with sufficient contacts in the U.S., Colder v. Jones, 465 U.S. at 790, 104 S.Ct. 1482, which is essentially what the plaintiffs are alleging against de Ruiter. Accordingly, because there are no factual allegations that de Ruiter directed his actions towards the U.S. and that those acts are causally related to the harm suffered by the plaintiffs, the claims against him must be dismissed for lack of personal jurisdiction. C. Subject Matter Jurisdiction Plaintiffs have the burden of proving that subject matter jurisdiction exists. See Evans v. B.F. Perkins, Co., 166 F.3d 642, 647 (4th Cir.1999). In reviewing a Fed.R.Civ.P. 12(b)(1) motion, “the district court is to regard the pleadings’ allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir.1991). A court should grant a Rule 12(b)(1) motion “if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Evans v. B.F. Perkins Co., 166 F.3d at 647. When the jurisdictional facts are intertwined with questions of law, however, it may be appropriate to resolve the entire factual dispute at a later proceeding on the merits. See United States v. North Carolina, 180 F.3d 574, 580-581 (4th Cir. 1999); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982); Bryant v. Clevelands, Inc., 193 F.R.D. 486; 488 (E.D.Va.2000). The Royal Ahold defendants and the individual defendants seek to dismiss all claims asserted by foreign class members who purchased Royal Ahold shares on foreign exchanges for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). The Global Underwriter or Dutch Bank defendants contend that their involvement as underwriters in the September 2001 Global Offering did not involve any conduct or activity in the United States or with United States parties and therefore there is no basis for this court to exercise subject matter jurisdiction over the plaintiffs’ § 11 and § 12 claims asserted against them. The Securities Act of 1933 and the Securities Exchange Act of 1934 are silent as to whether they apply extraterritorially, and Congress has provided little guidance on the issue. See, e.g., Zoelsch v. Arthur Andersen & Co., 824 F.2d 27, 30 (D.C.Cir. 1987) (“If the text of the 1934 Act is relatively barren, even more so is the legislative history. Fifty years ago, Congress did not consider how far American courts should have jurisdiction to decide cases involving predominately foreign securities transactions with some link to the United States. The web of international connections in the securities market was then not nearly as extensive or complex as it has become”)- Despite the general presumption against jurisdiction unless explicitly conferred by statute, Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994), most of the federal circuits have adopted a “conduct” and “effects” framework for determining when the federal securities laws reach overseas transactions. In deciding whether the “conduct” or “effects” of the fraudulent activity support jurisdiction, courts weigh “whether Congress would have wished the precious resources of United States courts and law enforcement agencies to be devoted to [disputes arising from predominantly foreign activity] rather than leave the problem to foreign countries.” Bersch v. Drexel Firestone, Inc., 519 F.2d 974, 985 (2d Cir.1975); see also, Robinson v. TCI/US West Communications Inc., 117 F.3d 900, 906 (5th Cir.1997) (noting that the primary purpose of the federal securities laws is to protect U.S. investors and U.S. markets); Interbrew S.A. v. Edperbrascan Corp., 23 F.Supp.2d 425, 429 (S.D.N.Y.1998) (observing that “[a] proper analysis should focus on the policy considerations that led to the extraterritorial application of these laws in the first place-protecting or punishing U.S.parties and markets.”). Under the “conduct” and “effects” tests, in order for courts to exercise subject matter jurisdiction over foreign transactions, the defendant’s allegedly fraudulent conduct that contributed to the securities violation must have occurred within the United States or its overseas conduct must have caused a substantial adverse effect in the U.S. market. See, e.g., Kauthar SDN BHD v. Sternberg, 149 F.3d 659, 665 (7th Cir.1998). The Fourth Circuit has not yet adopted a conduct or effects framework in the context of the extraterritorial application of the securities laws. The defendants urge the court to exercise judicial restraint and decline to apply the conduct and effects tests adopted by other courts, but not yet recognized by the Fourth Circuit. While the Supreme Court has not commented on the conduct and effects test in the securities law arena, it recently ruled that under the antitrust laws, federal courts lack subject matter jurisdiction over foreign plaintiffs’ claims that are based solely on the foreign effect of the defendant’s conduct and independent from any domestic effect caused by the defendant’s conduct. See F. Hoffman-La Roche Ltd. v. Empagran S.A, — U.S. -, -, 124 S.Ct. 2359, 2363, 159 L.Ed.2d 226 (2004). The defendants further argue that the Hoffman-La Roche decision should be read to preclude subject matter jurisdiction in cases such as this, where foreign purchasers of securities on foreign exchanges seek a remedy under the U.S. securities laws. Wdiile the Hojf-man-La Roche case provides important guidance to federal courts about how to weigh the comity concerns implicated by the extraterritorial application of U.S. laws, I find it both legally and factually distinguishable from the present dispute. Accordingly, its holding will not be applied here to bar subject matter jurisdiction over the foreign purchasers of Royal Ahold securities. The Royal Ahold defendants also argue that general principles of comity weigh against U.S. court involvement in this case given that foreign purchasers can seek relief from European courts; indeed, Dutch authorities and the Euronext are investigating Royal Ahold and at least one Royal Ahold related judicial proceeding is underway in the Netherlands. (See Royal Ahold Defs.’ Mot. to Dismiss at 20.) Like the Netherlands, however, this court has a significant interest in the claims of the foreign purchasers, given the plaintiffs’ substantial allegations concerning Royal Ahold’s allegedly fraudulent conduct in the U.S. The complaint states that Royal Ahold’s U.S. operations accounted for 74% of the company’s total net sales in fiscal year 2002. (¶ 49) (citing Royal Ahold’s 2002 Form 20-F at 37). Further, the complaint alleges, and Royal Ahold has admitted, that the majority of the accounting problem stemmed from the improper recognition of vendor allowances by its U.S. subsidiaries, including Maryland based USF. (See, e.g., ¶¶ 3, 39.) In fact, Royal Ahold’s United States based operations accounted for $ 885 million, or 80.5%, of the company’s approximately $ 1.1 billion earnings restatement. (¶ 32.) The substantial allegations submitted by the plaintiffs concerning U.S. based securities fraud warrant scrutiny by a U.S. court, even though many of the parties to this dispute are foreign and some of the relevant conduct occurred overseas. See Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326, 1334 (2d Cir.1972) (“[WJhen ... there has been significant conduct within the territory, a statute cannot properly be held inapplicable simply on the ground that, absent the clearest language, Congress will not be assumed to have meant to go beyond the limits recognized by foreign relations law.”)- Notwithstanding the fact that the securities laws do not provide guidance as to their extraterritorial reach, seven courts of appeals and several district courts have determined that, in certain circumstances, the securities laws should apply to overseas transactions because “Congress did not mean the United States to be used as a base for fraudulent securities schemes even when the victims are foreigners.” Bersch, 519 F.2d at 987. At a minimum, where, as here, there is significant U.S. involvement alleged in an otherwise foreign transaction, it is appropriate to engage in the judicially created “conduct” and “effects” analysis to determine whether subject matter jurisdiction exists over claims brought by overseas plaintiffs as well as claims against foreign defendants. Those' courts that have applied the conduct test have formulated somewhat different standards for evaluating when foreign transactions have a sufficient nexus with the United States to justify subject matter jurisdiction by an American court. The Second, Fifth, Seventh and D.C. Circuits have applied the most stringent formulation of the conduct test. Under their standard, “a federal court has subject matter jurisdiction if (1) the defendant’s activities in the United States were more than ‘merely preparatory’ to a securities fraud conducted elsewhere, and (2) these activities or culpable failures to act within the United States ‘directly caused’ the claimed losses.” Itoba Ltd. v. Lep Group PLC, 54 F.3d 118, 122 (2d Cir.1995) (citing Bersch, 519 F.2d at 987, and Alfadda v. Fenn,. 935 F.2d 475, 478 (2d Cir.1991)). Accord Robinson v. TCI/US West Communications, 117 F.3d -900, 905-06 (5th Cir.1997) (agreeing that the domestic conduct must have been of “material” importance or “directly caused” the fraud complained of); Zoelsch v. Arthur Andersen & Co., 824 F.2d 27, 31 (D.C.Cir.1987) (same). Among these circuits, the D.C. Circuit has adopted the strictest version of the conduct test, requiring that “the domestic conduct [comprise] all the elements of a defendant’s conduct necessary to establish a violation of section 10(b) and Rule 10b — 5: the fraudulent statements or misrepresentations must originate in the United States, must be made with scienter and in connection with the sale or. purchase of securities, and must cause the harm to those who claim to be defrauded, even though the actual reliance and damages may occur elsewhere.” Zoelsch, 824 F.2d at 31 (citing IIT v. Comfeld, 619 F.2d 909, 920-921 (2d Cir.1980)). The Seventh Circuit essentially adopted the Second Circuit’s test, stating that jurisdiction is appropriate when “the conduct occurring in the United States directly causes the plaintiffs alleged loss in that the conduct forms a substantial part of the alleged fraud and is material to its success.” Kauthar SDN BHD, 149 F.3d at 667 (emphasis added). The Seventh Circuit distinguished its holding from the D.C. Circuit test by clarifying that “we do not go so far as to require that the conduct occurring domestically must itself satisfy the elements of a securities violation.” Id. In deciding what qualifies as “merely preparatory” conduct rather than that which is material and directly causes the complained of loss, the Second, Fifth, Seventh and D.C. circuits all examine where the underlying securities transaction took place, the nationality and/or domicile of the parties, and where the alleged fraudulent activity and misrepresentations occurred. The latter issue is particularly critical. For example, Second Circuit courts have at times held that the relevant conduct is the actual publication and/or dissemination of the prospectuses. See, e.g., Bersch, 519 F.2d at 987 (“The fraud, if there was one, was committed by placing the allegedly false and misleading prospectus in the purchasers’ hands. Here the final prospectus emanated from a foreign source... ”); Froese v. Staff, No. 02 CV 5744, 2003 WL 21523979 at *2, (S.D.N.Y., July 7, 2003) (“[T]he fraud itself occurred, if at all, when the allegedly fraudulent statements were conceived, engineered and published in Germany. It is these misstatements and not any activity which lead to the alleged misrepresentations which ‘directly caused’ the financial losses.”). At other times Second Circuit courts have held that the decisive factor is whether the relevant fraudulent conduct underlying the false or misleading statements took place in the United States, regardless of the fact that the false or misleading statements relied upon were issued in overseas prospectuses or press releases. See, e.g., Alfadda, 935 F.2d at 478 (reversing the district court’s ruling that there was no subject matter jurisdiction because “the fraud was perpetrated by placing the misleading prospectus in the plaintiffs’ hand outside of the United States,” holding instead that there was subject matter jurisdiction because the “conduct consummating the fraud” took place in the United States) (internal citations omitted); Cromer Finance Ltd. v. Berger, 137 F.Supp.2d 452, 480 (S.D.N.Y. 2001) (“Although the named plaintiffs are foreign citizens, and the Fund operated as an offshore-fund, the fraud was run from the United States and it was the decisions made in the United States that led directly to the investors’ losses.”). Similarly, the Second Circuit also has found that the making of SEC filings in the U.S. by a foreign corporation was not merely preparatory to the fraud, and therefore could confer subject matter jurisdiction. See Itoba Ltd., 54 F.3d at 123 (“When [SEC filings in the United States] include substantial misrepresentations, they may be a predicate for subject matter jurisdiction.”). The Fifth and Seventh Circuits emphasize where the bulk of the substantive fraudulent activity took place, rather than where the document containing the false statement was released or relied upon. See Robinson, 117 F.3d at 907 (holding that although much of the material conduct took place in England, the- fraudulent scheme was directed from the United States and the preparation and mailing of one letter in the United States which purposely undervalued the plaintiff’s stock was “more than merely preparatory-it directly triggered the injury of which [the plaintiff] now complains”); Kauthar SDN BHD, 149 F.3d at 667 (finding subject matter jurisdiction where foreign defendants had used the United States as a base of operations for their fraudulent scheme, including preparing various documents containing fraudulent misrepresentations on which the plaintiff relied). The Third, Eighth, and Ninth Circuits have relaxed this standard slightly, holding that the domestic conduct must be a “significant” contributor or “material” to the fraudulent scheme. In the most relaxed version of the conduct test, the Third Circuit found jurisdiction where “at least some activity designed to further a fraudulent scheme occurs within this country.” SEC v. Kasser, 548 F.2d 109, 114 (3d Cir.1977) (emphasis added). The Eighth Circuit relied on a Second Circuit decision to hold that jurisdiction is possible “whenever there has been significant conduct with respect to the alleged violations in the United States. And this is true even though the securities are foreign ones that had not been purchased on an American exchange.” Travis v. Anthes Imperial Ltd., 473 F.2d 515, 524 (8th Cir. 1973) (emphasis added) (citing Leasco Data Processing Equip. Corp., 468 F.2d at 1334). Finally, the Ninth Circuit held that the “conduct in the United States cannot be ‘merely preparatory’... and must be material, that is, directly cause the losses.” Grunenthal GmbH v. Hotz, 712 F.2d 421, 424 (9th Cir.1-983) (emphasis added) (citing Continental Grain (Australia) Pty. Ltd. v. Pacific Oilseeds, Inc., 592 F.2d 409, 420 (8th Cir.1979)). Under the effects test, courts have subject matter jurisdiction over foreign transactions related to securities if the transactions resulted in direct, adverse injury to specific American investors and parties within the United States. See Europe and Overseas Commodity Traders, S.A. v. Banque Paribas London, 147 F.3d 118, 128 (2d Cir.1998); Bersch, 519 F.2d at 989; Schoenbaum v. Firstbrook, 405 F.2d 200, 208 (2d Cir.1968). Allegations that the foreign conduct generally affected the U.S. market will not satisfy the effects test. See, e.g., Bersch, 519 F.2d at 989 (“[T]here is subject matter jurisdiction of fraudulent acts relating to securities which are committed abroad only when these result in injury to purchasers or sellers of those securities in whom the United States has an interest, not where acts simply have an adverse affect on the American economy or American investors generally.”). It is not necessary to satisfy both the conduct and the effects test in order to find subject matter jurisdiction; meeting just one test is enough. See Robinson, 117 F.3d at 905. At least two courts, however, have used a combination of both tests in order to decide whether it makes sense for an American court to hear the case. See Itoba Ltd., 54 F.3d at 122 (“an admixture or combination of the two [tests] often gives a better picture of whether there is sufficient United States involvement to justify the exercise of jurisdiction by an American court”); Kauthar SDN BHD, 149 F.3d at 665, n. 8 (“[s]ince the aim of this inquiry is to measure the degree of United States involvement in the transaction in question, the joint assessment of conduct and effects seems appropriate because it permits a more comprehensive assessment of the overall transactional situation”). Judge Lee of the Eastern District of Virginia recently adopted the so-called “middle ground” approach of the Seventh, Eighth and Ninth Circuits, rejecting the Third Circuit as “too lenient,” and the D.C., Second and Fifth Circuits as “too rigid.” In re Cable & Wireless, 321 F.Supp.2d 749, 762-63 (E.D.Va.2004). In his formulation of the middle ground approach, -a defendant’s United States based conduct must be “(1) significant and (2) substantial or material to the larger scheme.” Id. at 763 (citing Kasser, 548 F.2d at 114; Kauthar SDN BHD, 149 F.3d at 666-67; Travis, 473 F.2d at 524; Grunenthal GmbH, 712 F.2d at 425). I agree with Judge Lee that the Third Circuit standard is not sufficiently strict’ but the D.C. Circuit standard, with its emphasis on the conduct itself constituting a securities violation, is too strict. Of the “middle ground” circuits, I believe the Seventh Circuit’s standard as articulated in Kauthar SDN BHD, 149 F.3d at 667, best captures the competing need to be “cautious” in applying the U.S. securities laws to overseas transactions with the obligation to recognize Congress’s desire that the United States not be used “as a base for manufacturing fraudulent security devices for export, even when these are peddled only to foreigners.” Itoba Ltd., 54 F.3d at 122 (citations omitted). The, Seventh Circuit situated itself with the Second and Fifth Circuits when it determined that: federal courts have jurisdiction over an alleged violation of the antifraud provisions of the securities laws when the conduct occurring in the. United States directly causes the plaintiffs alleged loss in that the conduct forms a substantial part of the alleged fraud and is material to its success. This conduct must be more than merely preparatory in nature; however, we do not go so far as to require that the conduct occurring domestically must .itself satisfy the elements of a securities violation. Kauthar SDN BHD, 149 F.3d at 667 (emphasis added). The Kauthar standard will be applied to determine whether subject matter jurisdiction exists as to the claims of foreign purchasers of Royal Ahold shares on foreign exchanges and the § 11 and § 12 claims against the Global Underwriters. 1. Foreign Purchasers of Royal Ahold Securities on Foreign Exchanges The plaintiffs argue that subject matter jurisdiction exists for the claims of foreign purchasers of Royal Ahold shares on foreign exchanges due solely to Royal Ahold’s conduct within the United States, not because of any domestic effects. Specifically, plaintiffs allege and defendants have admitted in Royal Ahold’s 2002 Form 20-F filed with the SEC that the accounting fraud uncovered at USF as well as Tops and Giants stores in the U.S. related to “fictitious and overstated vendor allowances and -improper or premat