Full opinion text
OPINION AND ORDER KRAM, District Judge. TABLE OF CONTENTS I. INTRODUCTION .201 II. PROCEDURAL HISTORY OF THIS ACTION.202 III. THE PARTIES.203 IV. THE COMPLAINT.204 Y. PLAINTIFF’S SUBSTANTIVE CLAIMS.205 A. Section 11.205 B. Section 12(a)(2).205 C. Section 15.205 D. Section 13.205 E. Section 10(b).206 F. Section 14.206 G. Section 20 .206 H. 28 U.S.C. § 1658 (“Sarbanes-Oxley”).206 VI. LEGAL STANDARD FOR MOTION TO DISMISS.206 VII. APPLICABLE STATUTE(S) OF LIMITATIONS.207 A. This Action Was Filed on September 16, 2002 .207 B. Sarbanes-Oxley Applies to MSBI’s 10(b) Claims.208 VIII.AN AOL INVESTOR OF “ORDINARY INTELLIGENCE” WOULD NOT HAVE BEEN AWARE OF THE PROBABILITY THAT SHE HAD BEEN DEFRAUDED PRIOR TO JULY 18, 2002 .209 A. The Sun, Hughes and Gateway Transactions Are Insufficient To Trigger Plaintiffs Duty to Inquire.210 B. The Vendor Advertising and Equity Deals Are Also Insufficient to Trigger Plaintiffs Duty to Inquire.210 IX. THE CLAIMS AGAINST THE NEWLY-NAMED DEFENDANTS ARE TIMELY .212 X. BECAUSE THE AMENDED COMPLAINT IS TIMELY, ALLEGATIONS OF TOLLING ARE UNNECESSARY.212 XI.MSB I HAS PROPERLY PLED COMPLIANCE WITH THE STATUTE OF LIMITATIONS.212 XII. THE AMENDED COMPLAINT PLEADS ALLEGED MISSTATEMENTS WITH PARTICULARITY. DO t — i CO Overstated A & C Revenue. DO i — i B. The Sections 11 and 12(a)(2) Claims Based on the Merger Registration Statement Are Pled With Particularity.216 XIII. WITH THE EXCEPTIONS NOTED BELOW, THE SECTION 10(B) CLAIMS ARE NOT DISMISSED. ^ 03 A. MSBI May Proceed Under Rules 10b-5(a) & (c). CN B. It is Axiomatic That a Claim Under Section 10(b) Must Allege Facts Giving Rise To a Strong Inference of Fraudulent Intent CC\! 1. MSBI Has Not Adequately Pled Motive And Opportunity. GO (NJ 2. MSBI Has Satisfactorily Pled Conscious Misbehavior or Recklessness With Respect to Some, But Not All of the Defendants.219 3. MSBI Has Adequately Alleged Scienter With Respect to Corporate Defendants AOLTW and AOL .219 4. MSBI Has Adequately Alleged Conscious Misbehavior or Recklessness With Respect to Defendants Pittman, Kelly, Pace, Keller and Colburn, But Not With Respect to Defendants Schuler, Novack, Levin, Parsons, Ripp, Rindner, Berlow or Case. to CO a. Robert W. Pittman. CO CO b. J. Michael Kelly. to CO i. Kelly’s Statements Do Not Qualify for Protection Under Either the “Bespeaks Caution” Doctrine or the PSLRA Safe Harbor.222 c. Barry Schuler.223 d. Kenneth J. Novack.224 e. Gerald Levin.224 f. Wayne H. Pace.225 g. Richard Parsons.225 h. Joseph Ripp .225 i. Eric Keller.226 i. Keller Is Not Subject to Section 11 Liability227 ii. The 10(b) Claim is Timely.227 j. Steven Rindner .227 k. Myer Berlow.228 l. David Colburn.229 m. Stephen M. Case.230 XIV. THE SECTIONS 10(B) AND 14(A) CLAIMS ADEQUATELY PLEAD LOSS CAUSATION.231 XV.AOLTW’S ARGUMENTS IN SUPPORT OF DISMISSAL OF THE SECTION 14(A) CLAIMS ARE UNPERSUASIVE.232 XVI.MSBI’S CLAIMS UNDER SECTION 12(A)(2) BASED ON THE BOND OFFERINGS ARE DISMISSED AS TO AOLTW AND THE INDIVIDUAL DEFENDANTS .232 XVII.MSBI’S SECTION 11 CLAIMS BASED ON THE BOND REGISTRATION STATEMENT (COUNTS FIVE AND SIX) ARE DISMISSED AS TO AOLTW AND THE INDIVIDUAL DEFENDANTS.233 XVIII. MSBI’S SECTIONS 15 AND 20 CLAIMS FOR CONTROL PERSON LIABILITY ARE DISMISSED WITH RESPECT TO SOME, BUT NOT ALL OF THE INDIVIDUAL DEFENDANTS.233 XIX. ERNST & YOUNG’S MOTION TO DISMISS IS GRANTED IN PART AND DENIED IN PART.235 A. The Section 11 Claim Based on the Bond Registration Statement (Count 7) Is Dismissed With Prejudice.236 B. The Section 11 Claim Based on the Merger Registration Statement (Count 3) Is Timely.236 1. The Section 11 Merger Registration Claim Is Pled With Particularity.237 C. MSBI’s Section 10(b) Claim Against E & Y Properly Pleads No Class Member Who Purchased Shares Prior to August 13, 1999 Has a 10(b) Claim Against Ernst & Young. rH DO CO The 10(b) Claims Are Pled with Particularity. C<I CO CO MSBI Has Pled Facts Giving Rise To A Strong Inference that E & Y Acted With Scienter. CO to CO a. MSBI Has Not Alleged Motive and Opportunity . to CO b. MSBI Has Adequately Alleged Reckless Misbehavior by E to CO CO i. The Allegations in the Amended Complaint are Factually and Legally Distinguishable From Zucker os co ii. When Combined With the GAAS and GAAP Violations and AOLTW’s Dependence on Advertising Revenue to Meet Earnings Targets, the “Red Flags” Allegedly Ignored by E & Y Are Sufficient to Plead Scienter. o XF (M D. MSBPs Section 14(a) Claim, As Circumscribed Below, Is DO 4^ XX. MORGAN STANLEY’S MOTION TO DISMISS COUNTS FOUR AND SEVENTEEN IS GRANTED.242 A.Statements of Opinion Are Actionable Only If Both Objectively and Subjectively False.243 XXI. THE MOTION TO DISMISS OF THE BOND UNDERWRITERS AND DEFENDANT CITIGROUP IS GRANTED. to ^ A. Plaintiffs Lack Article III Standing . to ai 1. MSBI Has Not Alleged “Injury in Fact”. to en 2. MSBI Has Not Pled Facts Which Establish an Injury Under Sections 11 and 12(a)(2). CO as a. MSBI Has Not Demonstrated Losses Under Section 11(e) to as b. MSBI Has Not Stated a Claim for Damages or Rescission Under Section 12(a)(2) to as XXII. LEAVE TO REPLEAD. .247 XXIII. CONCLUSION. .248 APPENDICES. .248 Al. Section 11 . .248 A2. Section 12 . .249 A3. Section 14(a). .249 A4. Section 10(b). .249 A5. Sections 15 and 20. .249 I. INTRODUCTION On July 18 and 19, 2002, The Washington Post published a two-part article, “Unconventional Transactions Boosted Sales, Amid Big Merger, Company Resisted Dot-Com Collapse,” reporting allegations that AOL Time Warner Inc. had substantially overstated publicly reported advertising revenue. Within hours of the article’s publication, Defendant Robert Pittman, AOLTW’s Chief Operating Officer, Board member, and Head of Operations for the AOL division of the Company, resigned. On July 24, 2002, AOLTW acknowledged that the Securities and Exchange Commission (“SEC”) was investigating AOLTW’s accounting practices. Amended Complaint (“AC”) ¶ 5. On July 31, 2002, the Company confirmed that the Department of Justice (“DOJ”) had commenced a criminal investigation of AOLTW’s accounting practices. Id. On August 14, 2002, AOLTW issued a press release, along with its SEC Form 10-Q filing, in which it publicly acknowledged that advertising revenue “may have been overstated” in the amount of $49 million with respect to three transactions over a period of six quarters from 4Q 2000 to IQ 2002. Id ¶¶ 5-6. On October 23, 2002, the Company restated the financial statements of AOL and AOLTW for eight consecutive quarters (July 1, 2000 through June 30, 2002) by reducing its advertising revenue in the amount of $190 million. Along with its financial restatement, the Company’s Form 8-K filing with the SEC stated: As a result of the restatement announced on October 23, 2002 by AOL and AOL Time Warner Inc. (the “Company”), the Company’s financial statements for the affected periods should no longer be relied upon, including the audited financial statements for 2000 and 2001 contained in the Company’s annual report on Form 10-K for the year ended December 31, 2001. Id ¶ 6. On March 28, 2003, in its SEC Form 10-K filing, AOLTW reported that it may restate AOL advertising revenue by an additional $400 million for the years 2001 and 2002. Id The Company also stated that, “it is possible that further restatement of the Company’s financial statements may be necessary,” with respect to “the range of other transactions” being investigated by the SEC and DOJ. AC ¶ 6. To date, the Company has either restated, or acknowledged the possibility of restating advertising revenue in the amount of $477 million. Id ¶ 7. II. PROCEDURAL HISTORY OF THIS ACTION On July 18, 2002, the day that the first Washington Post article was published, two shareholder class action complaints were filed in this Court alleging violations of § 10(b) of the Exchange Act. See Butler Decl. Ex. 29 & 30. Those two initial class action complaints were followed by 27 similar class action complaints, including one filed by the Minnesota State Board of Investment (“MSBI”) on September 16, 2002. Butler Decl. Ex. 31. All of these putative class actions have been consolidated before this Court and the Court has appointed MSBI as the sole lead plaintiff. On April 15, 2003, MSBI filed the Amended Complaint. In addition to claims under § 10(b) of the Exchange Act asserted in prior complaints, the Amended Complaint added new claims under § 11 and § 12(a)(2) of the Securities Act, as well as § 14(a) of the Exchange Act, relating to the Merger Registration Statement and Merger Proxy. AC Counts 1-4, 14-17. The Amended Complaint also added new claims under § 11 and § 12(a)(2) relating to the Shelf Registration Statement and the Supplemental Prospectuses issued in connection with bond offerings in April 2001 and April 2002. Id. Counts 5-11. Finally, the Amended Complaint contains claims, some of which were present in prior complaints, for control person liability under § 15 of the Securities Act and § 20 of the Exchange Act. Id. Counts 12-13, 20. III. THE PARTIES The Lead Plaintiff is the Minnesota State Board of Investment. MSBI is an agency established by Article XI of the Minnesota Constitution and laws of the State of Minnesota for the purpose of administering and directing investment of all state funds and pension funds. AC ¶ 31. During the Class Period, MSBI acquired approximately 3,073,050 shares of AOL stock, exchanged approximately 2,610,780 shares of Time Warner stock for AOLTW stock pursuant to the Merger, and purchased approximately 5,769,839 shares of AOLTW stock. MSBI also purchased approximately $44,679,246 worth of AOLTW debt securities. Id. Numerous additional plaintiffs are included in the consolidated action. See AC at Exhibit C. During the Class Period, it is alleged that each additional plaintiff purchased or otherwise acquired securities of AOL or AOLTW, and suffered damages. The Amended Complaint names AOL Time Warner Inc., America Online, Inc., and Time Warner Inc. as corporate defendants. AC ¶¶ 33-35. The Amended Complaint names the following officers and directors of AOL prior to the Merger as individual defendants: Stephen M. Case, former Chairman of the Board of AOLTW; Robert W. Pittman, former Chief Operating Officer of AOLTW; J. Michael Kelly, former Chief Operating Officer of the AOL subsidiary of AOLTW and current Chairman and Chief Executive of AOL International and Web Services; David M. Col-burn, former Executive Vice-President and President of Business Affairs and Development for AOLTW; Eric Keller, former Senior Executive Vice President of Business Affairs and Development; Joseph A. Ripp, Vice Chairman of AOL; Myer Berlow, Senior Advisor to AOLTW, Barry Schuler, Chairman and Chief Executive Officer of AOL; Steven Rindner, former Senior Vice President of Business Affairs and Development for AOLTW; and Kenneth J. Novack, member of the Board of Representatives of Time Warner Entertainment. AC ¶ 36. The Amended Complaint names the following officers and directors of Time Warner prior to the Merger as individual defendants: Gerald M. Levin, former Chief Executive Officer of AOLTW; Richard D. Parsons, Chief Executive Officer of AOLTW and Chairman-Elect of the AOLTW Board of Directors; and Wayne H. Pace, Chief Financial Officer of AOLTW. The Amended Complaint names the following additional individual defendants: Paul T. Cappucio, Executive Vice President, General Counsel and Secretary of AOLTW; Miles R. Gilburne, Director of AOLTW; James W. Barge, Senior Vice President and Controller for AOLTW; Daniel F. Akerson, Director of AOTLW and member of the Company’s Audit and Finance Committee; Stephen F. Bollen-bach, Director of AOLTW and Chair of the Audit and Finance Committee; Frank J. Caulfield, Director of AOLTW; and Franklin D. Raines, Director of AOLTW and member of the Audit and Finance Committee. AC ¶ 46. The Amended Complaint names Ernst & Young LLP as a defendant. Ernst & Young is a certified public accounting firm that provided auditing and accounting services to AOL and AOLTW. Id. ¶ 46. The Amended Complaint also names underwriter defendants Morgan Stanley & Co. (“Morgan Stanley”), Salomon Smith Barney Inc. (“Salomon”), Citigroup, Inc. (“Citigroup”), Banc of America Securities LLC (“Banc of America”), and J.P. Morgan Chase & Co. (“J.P. Morgan”). Id. ¶¶ 48-62. IV. THE COMPLAINT The Amended Complaint alleges that AOL and AOLTW improperly accounted for at least 19 separate advertising transactions that impacted Advertising and Commerce (“A & G”) revenue and advertising backlog in each of 14 calendar quarters from 4Q 1998 to 2Q 2002. AC ¶¶ 140-251. The Amended Complaint alleges that, as a result of fraudulent accounting, revenue and backlog were overstated in various SEC filings, press releases and other public statements made from January 27, 1999 to July 24, 2002 (the “Class Period”). The Amended Complaint alleges that, because advertising revenue was overstated at the time of the Merger, goodwill from the AOL/Time Warner Merger was also overstated during part of the Class Period. AC ¶ 424. The Amended Complaint also alleges that certain individual defendants made misleading oral statements between October 2000 and April 2001. These statements are alleged to have been misleading because the speakers knew or were reckless in not knowing about overstated A & C revenue and backlog at the time the statements were made. Id. ¶ 330. In sum, the Amended Complaint alleges that AOLTW has overstated advertising revenue by at least $1.7 billion, causing billions of dollars in damage to investors, and amounting to “one of the largest frauds ever committed in the United States securities markets.” See Memorandum of Lead Plaintiff MSBI in Opposition to Motion to Dismiss of the AOLTW Defendants, and Separate Motions to Dismiss of Defendants Ernst & Young LLP, Stephen Case, Myer Berlow, David Colburn, Eric Keller and Steven Rindner, dated September 29, 2003, at 1 (“MSBI Opp.”). Corporate defendants AOL Time Warner, American Online, Inc. and Time Warner Inc., and individual defendants Daniel F. Ackerson, James W. Barge, Stephen F. Bollenbach, Paul T. Cappuccio, Frank J. Caufield, Miles R. Gilburne, J. Michael Kelly, Gerald M. Levin, Kenneth J. No-vack, Wayne H. Pace, Richard D. Parsons, Robert W. Pittman, Franklin D. Raines, Joseph A. Ripp, and Barry Schuler move to dismiss the Consolidated Amended Class Action complaint filed by MSBI on April 15, 2003. Defendants Stephen Case, Myer Berlow, David Colburn, Eric Keller and Steven Rindner each move, individually, to dismiss the Amended Complaint. In addition, Defendants Ernst & Young LLP, Morgan Stanley & Company and the Bond Underwriters move to dismiss. V. PLAINTIFF’S SUBSTANTIVE CLAIMS MSBI alleges violations of numerous securities laws, some of which stem from the Securities Act of 1933 (“Securities Act”) and some of which stem from the Securities Exchange Act of 1934 (“Exchange Act”). In total, MSBI alleges violations of §§ 11, 12(a) and 15 of the Securities Act of 1933 and §§ 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934. A brief description of the statutory provisions that form the bases of MSBI’s claims follows. A.Section 11 Section 11 of the Securities Act provides that any signer, director of the issuer, preparing or certifying accountant, or underwriter may be liable if “any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading....” 15 U.S.C. § 77k(a). B. Section 12(a)(2) Section 12(a)(2) of the Securities Act, previously known as Section 12(2), allows a purchaser of a security to bring a private action against a seller that “offers or sells a security ... by means of a prospectus or oral communication, which contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements ... not misleading.” 15 U.S.C. § 77Z(a)(2). C. Section 15 Section 15 of the Securities Act provides that “Every person who ... controls any person liable under section 11 or 12 [15 USCS § 77k or 77Z] shall also be liable jointly and severally with and to the same extent as the controlled person ... unless the controlling person had no knowledge of ... the existence of the facts by reason of which the liability of the controlled person is alleged to exist.” 15 U.S.C. § 77o. D. Section 13 Section 13 of the Securities Act sets forth the statute of limitations for Securities Act claims: No action shall be maintained to enforce any liability created under section 77k [Section 11] or 111(a)(2) [Section 12(a)(2) ] of this title unless brought 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 ... In no event shall any action be brought to enforce a liability created under section 77k or 111(a)(2) of this title more than three years after the security was bona fide offered to the public, or under section 77Z(a)(2) of this title more than three years after the sale. 15 U.S.C. § 77m (emphasis added). E. Section 10(b) Section 10(b) of the Exchange Act provides that “It shall be unlawful ... (a) To effect a short sale ... of any security ... in contravention of such rules and regulations as the Commission may prescribe ... (b) To use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe.” 15 U.S.C. § 78j. F. Section 14 Section 14(a) of the Exchange Act provides that “It shall be unlawful for any person, by use of the mails ... or otherwise ... to solicit or permit the use of his name to solicit any proxy or consent or authorization in respect of any security (other than an exempted security) registered pursuant to section 12 of this title.” 15 U.S.C. § 78n(a). G. Section 20 Section 20 of the Exchange Act provides that “Every person who, directly or indirectly, controls any person liable under any provision of this title ... shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.” 15 U.S.C. § 78t(a). H. 28 U.S.C. § 1658 (“Sarbanes-Ox-ley”) On July 30, 2002, in response to a wave of corporate accounting scandals that undermined the integrity of the financial markets, Congress enacted Sarbanes-Ox-ley. Section 804 of Sarbanes-Oxley lengthened the statute of limitations for private causes of action alleging securities fraud. Section 804 is entitled “Statute of Limitations for Securities Fraud,” and provides, in pertinent part: a private right of action that involves a claim of fraud, deceit, manipulation, or contrivance in contravention of a regulatory requirement concerning the securities laws, as defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. § 78c(a)(47)), may be brought not later than the earlier of— (1) 2 years after the discovery of the facts constituting the violation; or (2) 5 years after such violation 28 U.S.C. § 1658 (emphasis added). VI. LEGAL STANDARD FOR MOTION TO DISMISS When deciding a motion to dismiss, “a court must accept as true the factual allegations of a complaint.” In re IPO Sec. Litig., 241 F.Supp.2d 281, 295 (S.D.N.Y.2003). In addition, such factual allegations must be construed in the light most favorable to plaintiffs. Easton v. Sundram, 947 F.2d 1011, 1014-15 (2d Cir.1991). This is because, at the motion to dismiss stage, “the issue is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims.” Wright v. Ernst & Young LLP, 152 F.3d 169, 173 (2d Cir.1998) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1688, 40 L.Ed.2d 90 (1974)). Further, courts are required to read complaints generously, drawing all reasonable inferences from the complaint’s allegations in favor of the plaintiff. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir.1993). Accordingly, a court must deny a defendant’s motion to dismiss “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” In re Emex Corp. Sec. Litig., No. 01 Civ. 4886(SWK), 2002 WL 31093612, at *4 (S.D.N.Y. Sept.18, 2002) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). VII. APPLICABLE STATUTE (S) OF LIMITATIONS The Court must determine what statute of limitations governs each of MSBI’s securities claims. To satisfactorily resolve the statute of limitations issues, the Court must (potentially) make two determinations: 1) The date on which this consolidated class action was filed for purposes of Sarbanes-Oxley; and if that date is post-July 30, 2002, 2) The scope of Sarbanes-Oxley’s application. A. This Action Was Filed on September 16, 2002 By its terms, Section 804 applies to “all proceedings addressed by this section that are commenced on or after the date of enactment of this Act [July 30, 2002].” 28 U.S.C. § 1658(b). Thus, if this consolidated class action was commenced prior to July 30, 2002, Section 804’s expanded limitations period is inapplicable. AOLTW contends that, for purposes of determining the applicability of Section 804, this consolidated class action was commenced on July 18, 2002, the date the first of several now-consolidated class actions were filed. See Reply Memorandum of Law in Support of the AOL Time Warner Defendants’ Motion to Dismiss the Amended Consolidated Class Action Complaint, dated November 14, 2003, at 4 (“AOLTW Reply”). In response, MSBI argues that since its complaint as lead plaintiff was filed on September 16, 2002, seven weeks after the passage of Sarbanes-Oxley, that Section 804’s expanded limitations period applies. The issue of when this consolidated class action was commenced is surprisingly complex. It creates the potentially anomalous outcome of punishing plaintiffs who filed too early, a proposition counter to the basic understanding of a statute of limitations. In addition, it is highly unlikely, if not a virtual certainty, that this issue will not present itself again; in other words, there are no plaintiffs at this point who will file cases prior to July 30, 2002, and thus be outside the scope of Section 804. While it is true that in most cases, class actions or otherwise, the date of the first filing is the operative one for statute of limitations purposes, such a result in this case is both inequitable and impractical. First, from a constitutional perspective, it is hard to imagine that an overzealous and careless plaintiff, could, by filing 12 days prior to the effective date of Sar-banes-Oxley’s expanded protections for securities plaintiffs, bind an entire nation of purchasers of AOL securities to a statute of limitations that was against the interests of the entire class. Second, even if there were no potential due process problems, practically speaking, if the Court were to determine that July 18, 2002 was the operative date for statute of limitations purposes (and thus the § 10(b) claims based on oral statements made over 3 years ago were barred), no rational plaintiff would choose to remain in that class. Because the Court will not bind an entire class to a statute of limitations that is flatly contrary to its interests, and because, as a practical matter, a commencement date of July 18, 2002 would create all of the procedural headaches that the JPML was trying to avoid when it consolidated these cases, the Court finds that this consolidated class action was filed on September 16, 2002. Accordingly, Section 804 of Sarbanes-Oxley applies. B. Sarbanes-Oxley Applies to MSBI’s § 10(b) Claims Having determined that the date this action was commenced for Section 804 purposes was September 16, 2002, the Court turns to the question of whether Section 804 applies to all, some, or none of the claims asserted by MSBI. Pursuant to Section 804, the threshold requirement for the application of Sarbanes-Oxley’s expanded limitations period is that the right of action “involves a claims of fraud, deceit, manipulation, or contrivance.” If the underlying securities claim does not involve a fraud-based claim, then Section 804’s expanded limitations period is inapplicable. In its motion to dismiss the Amended Complaint, Defendant AOLTW contends that claims under §§ 11, 12(a)(2) and 15 of the Securities Act must be brought within one year of the discovery of the alleged misstatement or omission, and, in any event, within three years of the relevant public offering or sale. See 15 U.S.C. § 77m. The defendant also asserts that “a similar limitations period” applies to claims under §§ 10(b), 14(a), and 20 of the Exchange Act. AOLTW Memo at 11. Lead Plaintiff MSBI opposes AOLTW’s interpretation of the effect of Sarbanes-Oxley on the statutes of limitations in this case. MSBI contends that Sarbanes-Ox-ley expanded the statute of limitations on all its claims. There is little doubt that Section 804’s expanded statute of limitations applies to § 10(b) claims. See In re WorldCom, Inc. Sec. Litig., 294 F.Supp.2d 431, 442 (S.D.N.Y.2003). See also Merrill Lynch & Co., Inc. Research Reports Sec. Litig., 272 F.Supp.2d 243, 265 (S.D.N.Y.2003). Indeed, this is a rather non-controversial proposition; Section 804 expressly states that it applies to “claims sounding in fraud.” The question of whether Section 804 applies to MSBI’s other claims is less clear, but because MSBI concedes (See MSBI Opp. at 23, n 11) that as a practical matter, the expanded Sarbanes-Oxley statute of limitations only affects its Section 10(b) claims (and the related 20(a) control person claims), it is unnecessary to reach that question. In any event, Section 804 applies here, and MSBI’s § 10(b) claims based on alleged misstatements pri- or to July 18,1999 are timely. VIII. AN AOLTW INVESTOR OF “ORDINARY INTELLIGENCE” WOULD NOT HAVE BEEN AWARE OF THE PROBABILITY THAT SHE HAD BEEN DEFRAUDED PRIOR TO JULY 18, 2002 PosWSarbanes-Oxley, claims based on “fraud, deceit, manipulation or contrivance” must be brought within “2 years after the discovery of the facts constituting the violation” or within “5 years after such violation.” 28 U.S.C. § 1658. The two-year limitations period commences after the plaintiff “obtains actual knowledge of the facts giving rise to the action or notice of the facts, which in the exercise of reasonable diligence, would have led to actual knowledge.” Kahn v. Kohlberg, Kravis, Roberts & Co., 970 F.2d 1030, 1042 (2d Cir.1992). This type of notice is referred to as inquiry notice. A plaintiff is on inquiry notice when sufficient information is available to “suggest to an investor of ordinary intelligence the probability that she has been defrauded.” Dodds v. Cigna Sec., Inc., 12 F.3d 346, 350 (2d Cir.1993). See also Levitt v. Bear Stearns & Co., 340 F.3d 94, 101 (2d Cir.2003). Under such circumstances a duty of inquiry arises, and if the plaintiff fails to make a diligent inquiry into the possibility of fraud, the limitations period runs from the date of inquiry notice. See id. The circumstances giving rise to the duty to inquire are referred to as “storm warnings.” See Levitt, 340 F.3d at 101. The financial information that triggers the storm warnings “must be such that it relates directly to the misrepresentations and omissions the Plaintiffs later allege in their action against the defendants.” Newman v. Warnaco Group, Inc., 335 F.3d 187, 193 (2d Cir.2003). An investor does not, however, “have to have notice of the entire fraud being perpetrated to be on inquiry notice.” Dodds, 12 F.3d at 351-52. In order to trigger the duty to inquire, the wrongdoing suggested by the storm warnings “must be probable, not merely possible.” Warnaco, 335 F.3d at 193. Further, even when “storm warnings” might indicate the probability of fraud, a plaintiff is not on inquiry notice if the company’s management provides words of comfort to temper the “storm warnings.” LC Capital Partners, LP v. Frontier Ins. Group, Inc., 318 F.3d 148, 155 (2d Cir.2003). It should be noted, however, that words of comfort prevent the duty to inquire “only if an investor of ordinary intelligence would reasonably rely on the statements to allay the investor’s concern.” Id. While the question of inquiry notice is typically inappropriate at the motion to dismiss stage, if the facts needed to make the determination “can be gleaned from the complaint and papers integral to the complaint, resolution of the issue on a motion to dismiss is appropriate.” Id. at 156. However, “[defendants bear a heavy burden in establishing that the plaintiff was on inquiry notice as a matter of law. Inquiry notice exists only when uncontro-verted evidence irrefutably demonstrates when plaintiff discovered or should have discovered the fraudulent conduct.” Warnaco, 335 F.3d at 194 (quoting Nivram Corp. v. Harcourt Brace Jovanovich, Inc., 840 F.Supp. 243, 249 (S.D.N.Y.1993)). See also In re Chaus Sec. Litig., No. 88 Civ. 8641(SWK), 1990 WL 188921, at *5 (S.D.N.Y.1990). Here, AOLTW contends that, through a series of news articles, press releases, and SEC filings of transactions with Sun Mi-crosystems (“Sun”), Hughes Electronics (“Hughes”), and Gateway, as well as vendor advertising deals and advertising/equity deals generally, MSBI was on notice of the allegedly overstated A & C revenue on or before July 18, 2001. AOLTW Memo at 13. MSBI argues that its duty to inquire was triggered no earlier than July 18, 2002, when the first of two Washington Post articles was published and the SEC and DOJ began their investigations into AOLTW. MSBI Opp. at 26. Against the backdrop of this Circuit’s jurisprudence on inquiry notice, and for the reasons set forth below, the Court agrees with the plaintiff. No duty to inquire was triggered prior to the publication of the July 18, 2002 Washington Post article. A. The Sun, Hughes and Gateway Transactions Are Insufficient to Trigger Plaintiffs Duty to Inquire In its motion to dismiss, AOLTW contends that a series of transactions between the Company and Sun, Hughes and Gateway (and the accompanying press releases) from November 1998 through October 1999 were sufficient to trigger the plaintiffs duty to inquire. AOLTW claims that these press releases “make clear that AOL was investing in Hughes [and Gateway] and Hughes [and Gateway] [were] agreeing to buy advertising from AOL.” AOLTW Memo at 14-15. The Court agrees with AOLTW that the Sun, Hughes and Gateway transactions “make clear” that the companies were engaging in mutually beneficial contracts; however, the notion that 3 agreements to buy advertising (none of which so much as mention the Company’s accounting for those transactions) “suggest to an investor of ordinary intelligence the probability that she has been defrauded” is seriously off the mark. In fact, it is hard to imagine that any reasonable investor would have read the 1998 and 1999 press releases regarding these deals as anything other than the Company doing exactly what it was supposed to be doing; i.e., engaging in legitimate transactions that would ultimately create value for shareholders. B. The Vendor Advertising and Equity Deals Are Also Insufficient to Trigger Plaintiffs Duty to Inquire The defendants argue that a series of articles from April 16, 2001 through July 12, 2001 “provided notice of all of the vendor deals alleged in the Amended Complaint to have been improper.” AOLTW Memo at 15. More specifically, the defendants refer to an April 16, 2001 article in The Wall Street Journal titled “Amid Advertising Slowdown, AOL Parlays Partnerships Into Revenue,” in which one of AOL’s partners was quoted as saying, “They are getting increased revenue from us, and we’re getting better rates from them ... There is money going both ways, yes.” Id. at 15. AOLTW claims that “this article put MSBI on notice no later than April 2001 of exactly the kind of advertising deals alleged in the Amended Complaint to have resulted in overstated revenue and backlog.” Id. Again, AOLTW is correct: the April 16, 2001 Wall Street Journal article definitively put investors, including MSBI, on notice that AOLTW was entering deals and “parlay[ing] partnerships into revenue.” What befuddles the Court, however, is AOLTW’s extrapolation that “parlay[ing] partnerships into revenue” suggests to an investor of ordinary intelligence the probability that she has been defrauded. Indeed, throughout its motion to dismiss, AOLTW conflates notice of the existence of a transaction now alleged to be fraudulent with notice that such transactions were, ex-ante, being fraudulently accounted for. In addition to the April 16, 2001 Wall Street Journal article, none of the other articles/reports cited by the defendants (including those in Advertising Age, Fortune, BusinessWeek Online, Thomas Weisel Partners and the October 23, 2001 Wall Street Journal) come anywhere close to establishing the probability of fraud sufficient to trigger inquiry notice-in fact, the articles amount to little more than affirmations of AOLTW’s “continued success at signing large advertising deals.” Id. at 16. There is simply no plausible basis for holding that notice of large advertising deals, even if such deals were “unusual,” constitutes “uncontroverted evidence that irrefutably demonstrates fraudulent conduct.” MSBI’s stance, that no duty to inquire was triggered prior to July 18, 2002, best comports both with this Circuit’s precedent and common sense. On July 18, 2002, The Washington Post, a national publication with a weekly circulation of over five million, ran the first of two articles based on statements of former Company employees and confidential documents, which reported that AOLTW and AOL artificially inflated AOL’s advertising revenue. Within two weeks of The Washington Post’s article, the SEC and DOJ commenced civil and criminal investigations into AOLTW. MSBI Opp. at 26. Finally, on August 14, 2002, the Company, in an SEC filing, stated for the first time that it “may” have overstated A & C revenue by $49 million. Id. Because the duty to inquire is triggered only when the wrongdoing suggested by the storm warnings is “probable, not merely possible,” the Court finds that an investor of ordinary intelligence would not have been, and should not have been, aware of the probability that she had been defrauded until July 18, 2002, the date of publication of the first article in The Washington Post. The fact that the SEC and Justice Department did not launch investigations until 1 week and 2 weeks, respectively, after publication of this article, only bolsters this contention. Put simply, the press releases and financial articles offered by the defendants do not satisfy its “heavy burden” and hardly qualify as storm warnings; on the contrary, a reasonable investor likely would have viewed them as sunny forecasts of a bright and profitable future for AOLTW. IX. THE CLAIMS AGAINST THE NEWLY-NAMED DEFENDANTS ARE TIMELY Defendants contend that the claims against Time Warner, Akerson, Barge, Bollenbach, Cappucio, Caufield, Gilburne, Novack, Raines, Ripp and Schuler do not relate back to the first class action filed on July 18, 2002, and thus for statute of limitations purposes, claims against these defendants were commenced on April 15, 2003, when the Amended Complaint was filed. However, having found that no plaintiff was on notice of the probability of fraud at AOLTW until July 18, 2002, the claims against the newly-named defendants, filed on April 15, 2003, are timely. As such, the Court need not reach the question of whether the claims relate back to any earlier complaint. X. BECAUSE THE AMENDED COMPLAINT IS TIMELY, ALLEGATIONS OF TOLLING ARE UNNECESSARY Because MSBI’s duty to inquire did not arise until July 18, 2002, and its complaint was filed on September 16, 2002, within the statute of limitations, MSBI was under no obligation to allege investigation that would toll the statute of limitations. As such, the argument that MSBI failed to allege any inquiry that might have tolled the statute of limitations is moot. XI.MSBI HAS PROPERLY PLED COMPLIANCE WITH THE STATUTE OF LIMITATIONS Defendant AOLTW asserts that MSBI’s Securities Act claims should be dismissed for failure to plead compliance with the statute of limitations. As support for this claim, the defendants rely on In re Chaus Sec. Litig., No. 88 Civ. 8641 (SWK), 1990 WL 188921, at *5 (S.D.N.Y. Nov.20, 1990), which states that a Securities Act complaint must set forth (1) “the time and circumstances of the discovery” of the misstatement, (2) the reasons why the misstatement was not discovered earlier if more than a year has lapsed and (3) “the diligent efforts which the plaintiff undertook in making or seeking such discovery.” While the Court is unsure of the value of Chaus when a plaintiff has satisfied the statute of limitations, in the interests of thoroughness, it will apply its analysis. With respect to prong one, the Court is satisfied that MSBI has adequately plead “the time and circumstances of its discovery” of the alleged misstatements. See generally MSBI Opp. at 34-35. Because the Court has ruled that MSBI’s complaint was filed within a year of inquiry notice, prongs two and three of Chaus are inappo-site. Accordingly, to the extent that Chaus applies here, MSBI has satisfied its requirements and has properly pled compliance with the statute of limitations. XII. THE AMENDED COMPLAINT PLEADS ALLEGED MISSTATEMENTS WITH PARTICULARITY AOLTW claims that because the Amended Complaint does not plead alleged misstatements with sufficient particularity, those claims should be dismissed. Rule 9(b) of the Federal Rules of Civil Procedure states that “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Under Rule 9(b), “[t]he complaint must identify the statements plaintiff asserts were fraudulent and why, in plaintiffs view, they were fraudulent, specifying who made them, and where and when they were made.” Hollin v. Scholastic Corp., (In re Scholastic Corp. Sec. Litig.), 252 F.3d 63, 69-70 (2d Cir.2001). Similarly, the PSLRA requires a complaint alleging violations of § 10(b) or § 14(a) of the Exchange Act to “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading” and, if an allegation is made upon information and belief, “to state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l); see also Bond Opportunity Fund v. Unilab Corp., No. 99 Civ. 11074 (JSM), 2003 WL 21058251, at *3 (S.D.N.Y. May 9, 2003). Exchange Act claims that fail to satisfy these PSLRA pleading requirements must be dismissed. See 15 U.S.C. § 78u-4(b)(3)(a). Recently, the Second Circuit held that the heightened pleading standard of Rule 9(b) applies to Section 11 and Section 12(a)(2) claims insofar as the claims are premised on allegations of fraud. Rombach v. Chang, 355 F.3d 164 (2d Cir.2004). In clarifying, the court stated: Fraud is not an element or a requisite to a claim under Section 11 or Section 12(a)(2); at the same time, claims under those sections may be-and often are-predicated on fraud. The same course of conduct that would support a Rule 10b-5 claim may as well support a Section 11 claim or a claim under Section 12(a)(2). So while a plaintiff need allege no more than negligence to proceed under Section 11 and Section 12(a)(2), claims that do rely upon averments of fraud are subject to the test of Rule 9(b). Rombach, 355 F.3d at 171. As a threshold matter, and pursuant to Rombach, the Court must determine whether the Section 11 and Section 12(a)(2) claims asserted by MSBI are predicated on fraud; if they are, then the plaintiff is obligated to satisfy the heightened pleading standard. Rombach provides some guidance on this issue. In Rombach, the plaintiff asserted that its Section 11 claims did not “sound in fraud.” Id. at 171-72. The Second Circuit nonetheless found that the claims were fraud-based because “the wording and imputations of the complaint are classically associated with fraud: that the Registration statement was ‘inaccurate and misleading;’ that it contained ‘untrue statements of material facts:’ and that ‘materially false and misleading statements’ were issued.” Id. (emphasis in original). Rombach also quoted approvingly from In re Ultrafem Secs. Litig., 91 F.Supp.2d 678 (S.D.N.Y.2000), which applied Rule 9(b) where “plaintiffs [made] little, if any, effort to differentiate their asserted negligence claims from the fraud claims which permeate the Complaint ... [and] merely disavowed] any allegations that would make Rule 9(b) applicable ... without specifying the allegations that would support a negligence cause of action.” In re Ultrafem, 91 F.Supp.2d at 690-91. Here, MSBI asserts, first in the Amended Complaint, again in its Opposition Memorandum, and finally in a letter to the Court dated January 28, 2004 (“MSBI Letter”), that its Section 11 and Section 12(a)(2) claims are not based in fraud. MSBI argues that these claims are set forth in a separate “non-fraud based section of the Complaint and in separate non-fraud based counts.” MSBI Letter at 1. MSBI also states that those sections of the Complaint “do not even mention the word fraud and the Complaint specifically disavows that any of the Section 11 claims rely on allegations of fraud.” MSBI Letter at 2. Despite its disclaimer, the Court, pursuant to Rombach, finds that MSBI’s Section 11 and Section 12(a)(2) claims are fraud-based. There is no mention in any of the allegedly non-fraud based counts (¶¶ 631— 655, 680-703) of the prongs of a negligence cause of action; ie., duty, breach, causation, and damages. Indeed, the pertinent paragraphs of the Amended Complaint contain almost all of the same fraud-based buzzwords that Rombach held were sufficient to trigger the heightened pleading requirements of Rule 9(b) and the PSLRA. For example, the Amended Complaint repeatedly refers to “false and misleading statements and omissions of material fact” (AC ¶ 631), and “untrue and misleading financial statements” (AC ¶ 642). As such, the Court finds that MSBI’s Section 11 and Section 12(a)(2) claims are fraud-based, and Rule 9(b)’s heightened pleading standard applies to those claims. Accordingly, plaintiffs Section 11 and Section 12(a)(2) claims, because they “sound in fraud,” must be pled with particularity. While it is undisputed that Rule 9(b) and the PSLRA command a higher level of pleading than non-fraud claims, it is important to note that a complaint is not, and should not be, held to the same standard as would be necessary to prevail at trial. After all, “Rule 9(b) is intended to provide a defendant with fair notice of a plaintiffs claim, to safeguard a defendant’s reputation from improvident charges of wrongdoing, and to protect a defendant against the institution of a strike suit.” Acito v. IMCERA Group, 47 F.3d 47, 52 (2d Cir.1995). By contrast, Rule 9(b) is not intended to be “a vehicle by which potentially meritorious claims are to be driven out of court because the plaintiff has failed to allege facts that he can only obtain through taking discovery that he has thus far been denied.” Gibbons v. Udaras na Gaeltachta, 549 F.Supp. 1094, 1124 (S.D.N.Y.1982). A. Allegedly Overstated A & C Revenue MSBI alleges that AOLTW improperly accounted for a bundling arrangement with Gateway Computers by improperly booking revenue from the Gateway arrangement on a gross basis. AOLTW counters that MSBI’s allegation regarding the Gateway transaction is conclusory and insufficient to satisfy the heightened pleading standard of the PSLRA. Id. at 23. In the Amended Complaint, MSBI contends that on or about late 1999 or early 2000, AOL and Gateway entered into an agreement whereby each time a Gateway computer purchaser subscribed to AOL, Gateway would receive a fee or “bounty” from AOL (“Gateway Roundtrip/Free Internet Service”). AC ¶ 176. According to an April 2, 2003 Washington Post article entitled “Gateway to Amend Financial Reports-SEC Had Raised Concerns Over AOL Deal,” at the same time AOL paid a “bounty,” Gateway in turn paid AOL for providing a free year of internet service on its computers. Id. The Amended Complaint alleges that “since there was no substance to this transaction other than swapping checks, AOL should have reported the transaction at its zero value instead of improperly reporting the amounts as sales and corresponding costs of sales.” Id. According to MSBI, as a result of the transaction, AOL overstated its advertising revenue by $340 million in 2000 and $130 million in 2001. Id. ¶ 177. MSBI further alleges, with the support of an article in The Washington Post, that Gateway was forced to restate its revenue from the AOL agreement. Id. ¶ 178. In sum, the Amended Complaint contains the date of the transaction at issue, the amount of the allegedly overstated revenue, preliminary details of the accounting for the transaction, and a basis for believing the accounting may have been fraudulent. The Court concludes that this is sufficient information to satisfy Rule 9(b)’s heightened pleading requirement and thus “provide[s] the defendant with fair notice of plaintiffs claim.” Indeed, to hold otherwise would require securities plaintiffs to produce information at the pleading stage to which they have no access because of the PSLRA’s mandatory discovery stay. For the same reasons that the Gateway Roundtrip transaction is satisfactorily pled, i.e., it contains specific information regarding the amount of the transaction, its date and a preliminary explanation as to why the accounting was fraudulent, the transactions with the Golf Channel (AC ¶ 246), Homestore (AC ¶¶ 141-156, 192-199), DrKoop.com (AC ¶¶ 239-240), Gateway Inc. Stock Purchase (AC ¶¶ 200-02), Hughes Electronics (AC ¶¶ 186-191), Catalina Marketing Corporation and Telefonica SA (the “jackpotting” transactions) (AC ¶¶ 212-220), Monster.com (AC ¶¶ 209-211), Oxygen Media (AC ¶¶ 203-06), Purchase-Pro (barter arrangements and warrants) (AC ¶¶ 207-08, 232-34), Qwest (AC ¶¶ 183-185), Sun (AC ¶¶ 157-160) and WorldCom (AC ¶¶ 180-182) are also pled with particularity. With respect to the eBay transaction that MSBI contends was fraudulently accounted for (AC ¶¶ 229-230), the Court finds that this transaction is not pled with particularity. The Amended Complaint refers only to “an agreement with the internet auction company,” but makes no mention of when this agreement was consummated or what its terms were. In order to provide fair notice to the defendant, that information is required. Accordingly, the transaction between AOL and eBay is not sufficiently particularized to form the basis of any of plaintiffs claims. B. The Sections 11 and 12(a)(2) Claims Based On the Merger Registration Statement Are Also Pled with Particularity MSBI’s Section 11 and Section 12(a)(2) claims are pled with particularity. The Amended Complaint identifies the untrue AOL financial statements and AOL Time Warner pro forma financial statements, as well as AOL representations and warranties, that were incorporated into the Merger Registration Statement. See AC ¶¶ 634-655. The Amended Complaint also provides specific reasons why plaintiff believes these statements were false or misleading, including, for example, the material overstatement of AOL advertising and commerce revenue, backlog and percentage increases in year over year comparisons (AC ¶¶ 107-140, 157-160); the material overstatement of the real value and useful life of goodwill (AC ¶¶ 413-424, 447); and the misrepresentation that the financial statements were prepared in accordance with GAAP and GAAS and fairly represented the results of AOL’s operations (AC ¶¶ 264, 269, 275, 276, 283, 605-630). In sum, with respect to the claims based on the Merger Registration Statement, the Amended Complaint adequately identifies the “statements plaintiff asserts were fraudulent and why, in plaintiffs view, they were fraudulent.” See In re Scholastic Corp. Sec. Litig., 252 F.3d at 69-70. XIII. WITH THE EXCEPTIONS NOTED BELOW, THE SECTION 10(B) CLAIMS ARE NOT DISMISSED A private plaintiff may only bring suit under Rule 10b-5 for acts prohibited by the text of § 10(b). See Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 173, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994). There are three principle rules promulgated under Section 10(b): Rule-10b-5(a), 10b-5(b), and 10b-5(c). Rule 10b-5(a) prohibits any person, directly or indirectly, from employing “any device, scheme or artifice to defraud” in connection with securities purchases or sales. 17 C.F.R. § 240.10b-5. Rule 10b-5(b) prohibits misstatements and omissions in connection with securities purchases and sales. Id. Rule 10b-5(c) prohibits persons from engaging “in any act, practice or course of business which operates or would operate as fraud or deceit upon any person” in connection with securities purchases or sales. Id. A. MSBI May Proceed Under Rules 10b-5(a) and (c) In its Reply, AOLTW suggests that MSBI cannot proceed under rules 10b-5(a) and 10b-5(c) because, in order to allege a claim under those subsections that is not based on misstatements or omissions, a plaintiff must allege manipulative acts, “something it has not done.” AOLTW Reply at 22. In support of this contention, the defendants rely on Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 473-74, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977). In Santa Fe, the Supreme Court remarked that “manipulation,” for the purposes lob-5, “refers generally to practices, such as wash sales, matched orders, or rigged prices, that are intended to mislead investors by artificially affecting market activity.” Id. at 476, 97 S.Ct. 1292 (emphasis added). Here, according to the defendants, since the Amended Complaint does not allege that the Company defendants engaged in “wash sales, matched orders, or rigged prices,” plaintiff should be precluded from proceeding under Rules 10b-5(a) and (c). AOLTW Reply at 22. Defendant’s position is without merit. First, the Santa Fe list of manipulative practices is clearly not exhaustive; 10b-5(a) and (c) claims need not contain the magic words “wash sales, matched orders, or rigged prices” to be valid. Second, both 10b-5 and Santa Fe contemplate manipulation of the securities markets to be practices, acts, misstatements or omissions designed to mislead investors. If, as the 308-page Amended Complaint alleges, the defendants in fact “engaged in a systemic scheme for more than 3/6 years to inflate AOL’s reported advertising revenue by at least $1.7 billion based on various sham transactions and accounting improprieties,” then there can be little doubt that investors have been very seriously misled by the defendants’ acts. Accordingly, plaintiff is permitted to proceed under both Rules 10b-5(a) and (c). B. It is Axiomatic that a Claim Under Section 10(b) Must Allege Facts Giving Rise to a Strong Inference of Fraudulent Intent To establish liability under Section 10(b), a complaint must, as a threshold matter, allege sufficient scienter. See SEC v. U.S. Envtl., Inc., 155 F.3d 107 (2d Cir.1998). AOLTW argues that MSBI’s claims under § 10(b) of the Exchange Act should be dismissed because MSBI has, inter alia, not adequately pled scienter. MSBI disagrees, and contends that a strong inference of scienter is adequately pled on its Section 10(b) claims both against the Company and the individual § 10(b) defendants. To state a claim for fraud under § 10(b) of the Exchange Act, a complaint must allege facts giving rise to a strong inference of fraudulent intent for each defendant. See, e.g., Shields v. Citytrust Ban corp Inc., 25 F.3d 1124, 1128 (2d Cir.1994). “A strong inference of scienter may be established either (a) by alleging facts showing that a defendant had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.” Ganino v. Citizens Utils. Co., 228 F.3d 154, 168-69 (2d Cir.2000). See also Novak v. Kasaks, 216 F.3d 300, 307 (2d Cir.2000). “Although speculation and conclusory allegations will not suffice, neither [does the Second Circuit] require ‘great specificity’ provided the plaintiff alleges enough facts to support a ‘strong inference of fraudulent intent.’ ” Ganino, 228 F.3d at 169. 1. MSBI Has Not Adequately Pled Motive and Opportunity Of the two ways a plaintiff can plead scienter, the first is by adequately alleging motive and opportunity to commit fraud. A plaintiff properly pleads motive when she alleges that “concrete benefits could be realized by one or more of the false statements and wrongful disclosures alleged.” Shields, 25 F.3d at 1128. To plead opportunity, a plaintiff must allege “the means and likely prospect of achieving concrete benefits by the means alleged.” Id. Here, MSBI contends that the Amended Complaint properly pleads that the defendants, as a group and individually, had motive and opportunity to inflate AOL advertising revenue in order to effect the Merger and thereafter make the Merger appear to be a success. MSBI Opp. at 55. In contrast, AOLTW contends that the Amended Complaint does not sufficiently allege motive and opportunity with respect to any alleged misstatement for any of the AOLTW defendants. AOLTW is correct. While the Court recognizes that “in some circumstances, the artificial inflation of stock price in the acquisition context may be sufficient for securities fraud scienter,” Rothman v. Gregor, 220 F.3d 81, 93 (2d Cir.2000) (citing In re Time Warner Inc. Sec. Litig., 9 F.3d 259, 270 (2d Cir.1993)), the series of generalized allegations offered by MSBI regarding AOL’s “obsession” with consummating the Merger are simply not enough to satisfy § 10(b)’s scienter requirement. Indeed, consistent with their fiduciary obligations, it would have been quite odd if the defendants were not “obsessed” with ensuring the success of the Merger. Equally insufficient for establishing motive and opportunity is MSBI’s contention that AOL was characterized by a “culture of recklessness and greed” whereby its executives were motivated to “keep their positions of power and access to corporate riches.” AC ¶¶ 525-34, 516-517. As AOLTW points out, generalized allegations of greed and a desire for increased executive compensation could be made with respect to any large company. If such generalized allegations of greed were sufficient to satisfy Section 10(b)’s scienter requirement, then claims against any for-profit endeavor would survive the pleading stage simply by alleging that the defendant was in the business of making money — Section 10(b)’s scienter requirement surely commands more. 2. MSBI Has Satisfactorily Pled Conscious Misbehavior or Recklessness With Respect to Some, But Not All, of the Defendants Securities plaintiffs can also satisfy § 10(b)’s scienter requirement by adequately alleging strong circumstantial evidence of conscious misbehavior or recklessness. To establish strong circumstantial evidence of scienter, a plaintiff must allege facts establishing “conduct which is highly unreasonable and which represents an extreme departure from the standards of ordinary care to the extent that the danger was either known to the defendant or so obvious that the defendant must have been aware of it.” In re Carter-Wallace, Inc. Sec. Litig., 220 F.3d 36, 39 (2d Cir.2000). The inference of scienter may arise where the complaint sufficiently alleges that the defendants: “... (2) engaged in deliberately illegal behavior; (3) knew facts or had access to information suggesting that their public statements were not accurate; or (4) failed to check information they had a duty to monitor.” Novak, 216 F.3d at 311. In its opposition to the motion to dismiss, MSBI argues that the Amended Complaint adequately alleges conscious misbehavior or recklessness in “one or more” of the following ways: (1) Defendants were reckless in failing to properly monitor the accounting of AOL advertising revenue, especially in light of the SEC’s imposition of a Cease and Desist Order and Defendant Case’s promise to the public that AOL would adopt “gold-standard” accounting practices; (2) The restatement of advertising revenue and GAAP violations support a strong inference of scien-ter; (3) Defendants instilled and maintained a reckless business environment; (4) Whistleblowers, internal company reports, and emergency and regular meetings regarding inflated AOL advertising revenue provided the Defendants with notice of “the true state of AOL”; (5) The Homestore and Purchase Pro transactions show “deliberate illegal behavior”; (6) Defendants’ direct involvement in transactions for which AOL advertising revenue was improperly recorded reflects recklessness; (7) The ongoing SEC and DOJ investigations and the SEC’s unwillingness to allow the Company to sell securities pursuant to a new securities offering; (8) Individual Defendants’ continued denial of wrongdoing in light of their knowledge of improper accounting. 3. MSBI Has Adequately Alleged Scienter With Respect to Corporate Defendants AOLTW and AOL MSBI has adequately pled scienter on its § 10(b) claims with respect to AOLTW and AOL. The plaintiff has alleged that the Company had internal financial information that showed the Company was at risk to lose $108 million in fiscal year 2001 and $140 million in 2002. AC ¶ 92. Plaintiff further alleges that regular meetings and telephone conferences were held in which issues related to advertising revenue and fraudulent deals were discussed. AC ¶¶ 90-91. Plaintiff also highlights a history of accounting problems at AOLTW by pointing specifically to SEC Cease and Desist Orders. AC ¶¶ 99-106. Finally, plaintiff alleges that no officer or director of AOLTW ever conveyed any of these concerns to the public — in fact, just the opposite — the public and analysts were presented with a picture of AOL as a company “rid[ing] above the normal market dynamics.” Id. ¶ 364. Because plaintiff has alleged that AOLTW had access to information suggesting that the public statements of its officers were not accurate, because MSBI has established, vis-avis SEC Cease and Desist Orders, that AOLTW was on notice of previous accounting improprieties, and because MSBI pled allegedly fraudulent transactions with sufficient particularity, the Court is satisfied that plaintiff has adequately pled scienter with respect to AOLTW. 4. MSBI Has Adequately Alleged Conscious Misbehavior or Recklessness, i.e., Scienter, with Respect to Defendants Pittman, Kelly, Pace, Keller, and Colburn, But Not With Respect To Defendants Schuler, Novack, Levin, Parsons, Ripp, Rindner, Berlow, or Case The issue of scienter with respect to the individual defendants is more complicated. As a threshold matter, the Court must determine whether plaintiff can rely on the group pleading doctrine. Under the group pleading doctrine, the identification of the individual sources of statements is unnecessary when the fraud allegations arise from misstatements or omissions in group-published documents (e.g., prospectuses) that reflect the collective actions of various individuals directly involved in the day-to-day affairs of the corporation. In re Oxford Health Plans, Inc., 187 F.R.D. 133, 142 (S.D.N.Y.1999). While it is true, as MSBI contends, that this Court has previously indicated that “nothing in the PSLRA has altered the group pl