Full opinion text
MEMORANDUM OPINION AND ORDER PALLMEYER, District Judge. Six individual plaintiffs have filed this federal securities class action lawsuit on behalf of “all those who purchased” Spie-gel, Inc. stock between February 16, 1999 and June 4, 2002 (the “Class Period”). Spiegel is an international specialty retailer that markets apparel and home furnishings to customers through catalogs, more than 550 specialty retail and outlet stores, and e-commerce sites. Defendants James R. Cannataro, Michael R. Moran, James W. Sievers, Martin Zaepfel, Michael Otto, Horst R.A. Hansen, Michael E. Criisem-ann, and Peter Müller (the “Individual Defendants”) are all current or former officers and directors of Spiegel. Defendant Spiegel Holdings, Inc. (“SHI”) is the owner of 99.9% of Spiegel’s Class B voting shares, which were not publicly traded, and Defendant KPMG LLP was Spiegel’s independent public accountant. Plaintiffs allege that Defendants engaged in a fraudulent scheme to boost product sales by issuing credit cards to high-risk creditors; securitizing the credit card receivables through phony sales to trusts, which allowed Spiegel to understate its debt by more than $3 billion and overstate its earnings by $240 million; and improperly delaying the collapse of the securitizations to hide Spiegel’s financial distress. Plaintiffs claim that these actions violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“SEA” or the “Act”), 15 U.S.C. § 78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5. Plaintiffs have asked the court to lift the mandatory discovery stay imposed under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4 et seq., a request Defendants oppose. Defendants, in turn, seek to strike or dismiss the complaint for failure to comply with the pleading requirements of Fed. R. Civ. P. 8(a) and 9(b) and the PSLRA, and for failure to state a claim. For the reasons set for here, Defendants’ joint motion to strike is granted in part and denied in part; the motions to dismiss filed by Dr. Otto, Dr. Crüsemann, Dr. Müller, and Mr. Hansen and by Mr. Zaepfel are denied; the motions to dismiss filed by Mr. Moran and Mr. Sievers, Mr. Cannataro, and KPMG are granted in part and denied in part; SHI’s motion to dismiss is granted; and Plaintiffs’ motion to modify the discovery stay is granted. PROCEDURAL BACKGROUND Spiegel’s legal problems began in or about February 2002 when the Office of the Comptroller of the Currency (“OCC”) initiated an enforcement action against First Consumers National Bank (“FCNB”), a wholly-owned subsidiary acquired by Spiegel in 1990. FCNB was a credit card bank that engaged primarily in the business of issuing general-purpose and private label credit cards to individuals interested in purchasing Spiegel merchandise. (Cmplt.1ffl 48, 49.) The OCC substantially lowered FCNB’s rating largely due to concern about “the low quality of the bank’s receivables” and “a great many deficiencies in the bank’s operations.” See S.E.C. v. Spiegel, Inc., No. 03 C 1685, 2003 WL 22176223, at *24 (N.D.Ill. Sept.15, 2003). Without admitting any wrongdoing, on May 14, 2002, FCNB signed a Stipulation and Consent to the Issuance of a Consent Order (the “OCC Consent Order”), which the Comptroller of the Currency of the United States accepted on May 15, 2002. See In the Matter of First Consumers Nat’l Bank, Enforcement Action No.2002-04, 2002 WL 1483604 (O.C.C. May 14, 2002). (See also Ex. E to Cannataro Mem.) That Order required that FCNB be liquidated by December 2002, and placed “significant restrictions” on credit for both new and existing FCNB customers. Spiegel, 2003 WL 22176223, at *24. On December 10, 2002, Peter Derrer initiated the consolidated proceedings at issue here by filing a class action lawsuit against Spiegel, SHI, Mr. Moran, Mr. Sievers, Mr. Cannataro, and Mr. Zaepfel. Louis Meeuwenberg, James W. Sampair, Jr. and Tim Martin filed three additional class action lawsuits against the same defendants on December 16, 2002, January 22, 2003, and January 27, 2003, respectively. On March 11, 2003, all four cases were consolidated before this court and Johann Oliver, Lisa Oliver, Andrew Dennore, Ronald Peters, Steven Simmons, and Dionne Tonetti were appointed lead plaintiffs pursuant to § 21D of the SEA, 15 U.S.C. § 78u-4(a)(3). Plaintiffs all claim that the high-risk credit practices Spiegel conducted through FCNB led Plaintiffs to purchase Spiegel common stock at artificially inflated prices during the Class Period. On May 12, 2003, Plaintiffs filed a Consolidated Amended Complaint, adding Dr. Otto, Dr. Crüsemann, Mr. Hansen, Dr. Müller, and KPMG as defendants. On March 7, 2003, the Securities and Exchange Commission (“SEC”) filed a civil action against Spiegel, charging that the Company violated federal securities laws by (1) failing to file its 2002 Form 10-K (due on April 1, 2002) and 2002 Form 10-Q (due in mid-May 2002); and (2) failing to disclose advice from KPMG on February 7, 2002 that the Company may not be able to continue as a “going concern”; i.e., that there was “substantial doubt about the Company’s ability to continue as a going concern.” (Ex. A to Motion to Stay, at 1; Cmplt. ¶¶ 169, 182, 198.) See also Spiegel, Docket No. 1 (N.D.Ill.2003). Without admitting any of the charges, Spiegel immediately consented to the entry of a partial final judgment of permanent injunction. On March 11, 2003, Judge James B. Zagel appointed Stephen J. Crimmins, an attorney with Piper Hamilton, LLP in Washington, D.C., as Independent Examiner to review Spiegel’s financial records “from January 1, 2000 to date” and to provide a written report of Spiegel’s financial condition and identify any material accounting irregularities. (Ex. A to Motion to Stay, at 1-2.) See also Spiegel, Docket No. 3 (N.D.Ill. Mar. 11, 2003). On March 17, 2003, Spiegel filed for Chapter 11 bankruptcy in the Southern District of New York. Several months later on August 11, 2003, Mr. Moran and Mr. Sievers moved to dismiss Plaintiffs’ complaint in this case. Rather than responding to that motion, Plaintiffs filed a second Consolidated Amended Complaint (“Complaint”) on October 31, 2003, which is currently pending before this court. The new Complaint drops the now-bankrupt Spiegel as a named defendant and incorporates findings from the Independent Examiner’s Report, which Judge Zagel ordered disclosed to the public on September 15, 2003. See Spiegel, 2003 WL 22176223. Plaintiffs also filed a motion to modify the discovery stay mandated by the PSLRA. 15 U.S.C. § 78u-4(b)(3)(B). Defendants responded with six separate motions to dismiss and a joint motion to strike the Complaint. FACTUAL BACKGROUND Spiegel is an international specialty retailer founded in 1875 that markets apparel and home furnishings to customers through catalogs, more than 550 specialty retail and outlet stores, and e-commerce sites. (Cmplt.1ffl 2, 27.) KPMG served as Spiegel’s certified public accountant responsible for auditing the company’s financial statements and issuing related opinions. (Id. ¶ 39.) SHI owns 99.9% of the Class B Voting Common Stock of Spiegel, which represents 90% of Spiegel’s ownership (the remaining 10% consists of publicly-held Class A non-voting shares). Dr. Otto and his family (the “Otto Family”) in Hamburg, Germany maintained effective control over SHI and, thus, controlled most of the company’s voting shares. In addition, after gaining control of Spiegel in 1982, the Otto Family ensured that Spie-gel’s Board of Directors was comprised of “interlocking directorships tied to other entities controlled by the Otto Family,” including Otto Versand (GmbH & Co.) (“Otto Versand”), a Hamburg-based company that is “the largest mail order group in the world,” and Otto Versand Group, among others. (Id. ¶¶ 28, 417, 418.) See also Spiegel, 2003 WL 22176223, at *3, 7. Dr. Otto is Chairman of Spiegel’s Board of Directors and also served as Chairman of Spiegel’s Board Committee (or Executive Committee) and Audit Committee. (Id. ¶29.) Mr. Moran at various times served as Spiegel’s “Chairman of the Office of the President,” Chief Legal Officer, and Principal Operating Executive Officer. He also served as a Director and as Chairman of the Board of FCNB. (Id. ¶¶ 30, 48.) Mr. Zaepfel was at various times Spiegel’s Vice Chairman, President, and Chief Executive Officer. He also served as a Director and as a member of Spiegel’s Board Committee. (Id. ¶ 31.) Dr. Criisemann is a company Director, as well as a member of Spiegel’s Board Committee and Finance Committee. He also served as a member of Otto Versand’s Executive Board, Director of Finance of Otto Versand, and Chief Financial Officer of Otto Versand Group. (Id. ¶ 32.) Mr. Hansen is a Spiegel Director and a member of the company’s Audit Committee. Prior to 1994, he also served as a member of Otto Versand’s Executive Board, the Director of Finance of Otto Versand, and Chief Financial Officer of Otto Versand Group. (CmphN 33.) Dr. Müller is similarly a Spiegel Director and member of the Audit Committee. Prior to January 1998, he served as a member of Otto Versand’s Executive Board and as Director of Advertising and Marketing for that company. (Id. ¶ 34.) Mr. Sievers at various times served as Spiegel’s “Office of the President,” Chief Financial Officer, Principal Operating Executive Officer, and Principal Financial and Accounting Officer. (Id. ¶ 35.) Mr. Cannataro was Spiegel’s Executive Vice President and Chief Financial Officer. (Id. ¶ 36.) A. Spiegel’s Credit Card Practices Spiegel has a merchandising division, comprised of its Eddie Bauer, Newport News, and Spiegel subsidiaries, and a bankcard segment, consisting primarily of the credit card operation of FCNB. With more than 500 retail stores, Eddie Bauer accounted for a majority of Spiegel’s retail store sales. Newport News and Spiegel Catalog accounted for most of Spiegel’s catalog sales revenues, and relied more heavily on credit as opposed to cash transactions. (Cmplt.1ffl 2, 3, 46-49.) On the bankcard side, FCNB issued two types of credit cards: a general-purpose MasterCard or Visa (the “FCNB Bankcard”) that could be used at various locations, and a private label Preferred Charge card (the “FCNB Preferred Card”) that could only be used at the Company’s merchant divisions. (Id. ¶¶ 48, 49.) Beginning in 1997, FCNB also issued co-branded FCNB Bankcards imprinted with the logo of one of Spiegel’s merchant divisions. (Id. ¶¶ 48, 49.) Prior to February 16, 1999, Spiegel was performing poorly due in part to increased competition for its catalog business among internet and other retailers, and declining same-store sales at Eddie Bauer. (CmpltJ 3.) To reverse these negative trends, Spiegel aggressively increased its marketing and issuance of FCNB Preferred Cards. (Id. ¶ 4.) Historically, FCNB was responsible for developing and managing Spiegel’s credit granting procedures for both FCNB Bankcards and Preferred Cards. (Id. ¶ 50.) With regard to the Preferred Cards, FCNB obtained a list of prospects from credit bureaus and evaluated those prospects using proprietary credit scoring systems developed by Spie-gel based on historical data from FCNB’s account base. (Id.) During the Class Period, however, Spie-gel started offering incentives to encourage customers to accept credit. For example, Spiegel offered FCNB Preferred Card promotional programs such as delayed billing (not charging purchases until the end of a specified period) and deferred billing (requiring no monthly payment for a specified period, and imposing no finance charge if a bill were paid in full at the end of the deferral period). (CmpM 52.) In addition, Defendants used a technique called the “net down” process to create a credit portfolio skewed towards high risk customers, who are often the best “responders” to credit card offers. Under this approach, Defendants gave FCNB a pool of prospective customers with risk levels ranging from “A” (low risk) to “F” (high risk), and FCNB had a credit bureau screen the customers to determine their eligibility for pre-approved credit. FCNB then gave Defendants the list of pre-ap-proved applicants reflecting a full range of credit risks. Defendants and Spiegel’s merchant subsidiaries, however, dropped from their catalog and mailing lists many prospective customers within the “A” and “C” risk levels (the more credit-worthy customers). As a result, the pre-approved credit solicitations went primarily to customers at the “D” through “F” risk levels, a population with substantially higher credit risk than the one pre-screened by the credit bureau for FCNB, but more likely to “respond” to the solicitations. (Id. ¶¶ 53, 55, 56.) In fact, by the spring of 2001, 62% of Spiegel’s new credit card customers were rated “E” or “F,” compared to only 31% in 1998. (Id. ¶ 339.) According to Plaintiffs, “[t]he effect was to deprive FCNB of the ability to control [FCNB’s own] risk, and instead give it to the merchants, whose primary concern was boosting their sales numbers.” (Id. ¶ 53.) This practice continued until at least April 2002 when, Plaintiffs allege, without further explanation, “Spiegel and FCNB agreed that FCNB should expect a mailed distribution that mirrors the pool of customers pre-approved for the granting of credit.” (Id. ¶ 57.) In addition to the “net down” technique, Defendants allegedly eliminated a critical monitoring process known as “back-end screening.” Back-end screening involves conducting a second credit check on a pre-approved credit prospect at the time credit is actually to be extended to determine whether the customer still qualifies. (CmpltJ 58.) Citing the Independent Examiner’s Report, Plaintiffs claim that Defendants stopped back-end screening on FCNB Preferred Card accounts during portions of 1999 and 2000, “just as Spiegel was engaged in its major acquisition of subprime customers.” (Id.) As a result, a high percentage of Spiegel customers receiving credit did not actually qualify for it, and they later accounted for a significant portion of the charge-offs of uncollectible credit card receivables Spiegel reported as late as 2002 and 2003. (Id.) Defendants further damaged Spiegel’s credit portfolio allegedly by adopting liberal “open to buy” policies relating to “the amount of credit [the company] gave to new customers and the increases in credit it gave to existing customers.” (Cmpltf 59.) In addition, Defendants authorized purchases by customers who were delinquent in their payments or had incurred debt in excess of their credit limits. Finally, Defendants followed a “recency” policy for delinquent accounts, treating them as current “provided the delinquent customer made only a minimum payment following two months of nonpayment.” (Id.) By using all of these methods, Plaintiffs claim, Defendants were able to boost sales with easy credit. (Id.) B. Spiegel’s “Return to Profitability” For a three-year period beginning in mid-1998, Spiegel seemingly turned its sales around and started posting positive sales growth. (Cmplt.1ffl 62-63.) For example, in November 2000, Defendants forecast Spiegel Catalog net sales for 2000 at $770.2 million, a 22% increase over the previous year. This gave the catalog division its first reported profit in over three years. Similarly, Defendants forecast Newport News net sales of $473 million, a 15% increase over the previous year. (Id. ¶ 63.) During 1999 and 2000, Spiegel’s merchandise revenue rose by over $419 million, and between 1998 and 2000, the company’s earnings increased from $3.3 million to over $120 million. (Id. ¶ 66.) According to Plaintiffs, Defendants accomplished this growth by lowering credit standards and extending credit to high-risk borrowers likely to make purchases. Indeed, from 1997 to 2001, Spiegel’s credit card receivables grew from $1.7 billion to over $3.5 billion. (Id.) By lowering Spie-gel’s credit standards, Plaintiffs allege, Defendants caused the company’s “top-line” revenues — particularly its catalog merchandise sales — to receive an “extraordinary boost that could only be sustained through the continuous issuance of additional credit cards to marginal and substandard credit risks, enticed to purchase goods and services on credit that they could not otherwise obtain.” (Id.) In Plaintiffs’ view, the primary beneficiary of these “artificially inflated sales” was Dr. Otto. More than half of the apparel Spiegel sold originated with Otto Ver-sand, and Spiegel bought almost all of its private label merchandise through Otto Family businesses. (CmplO 66.) Plaintiffs also claim that certain of the Individual Defendants personally profited from Spiegel’s boost in sales. Mr. Moran received a $1,711,599 bonus for 2000 and a $4,000,000 severance payment when he retired in mid-2001, both based on Spiegel’s 2000 earnings. Mr. Moran also received a $709,000 bonus for the first six months of 2001, in addition to a pro-rated portion of his $445,000 annual salary. (Id. ¶ 67, 68.) Mr. Sievers similarly received a $1,616,574 bonus for 2000 and a $4,000,000 severance payment when he retired in mid-2001, both based on Spiegel’s 2000 earnings. He was also paid a $671,000 bonus for the first six months of 2001 in addition to a prorated portion of his $445,000 annual salary. (Id. ¶ 69.) C. Spiegel’s Business Disclosures Throughout the Class Period, Defendants issued or contributed to dozens of press releases and news articles discussing Spiegel’s “targeted” and “refined” marketing strategies and programs. Plaintiffs claim that Defendants never disclosed the allegedly “artificial boost to revenue and profits resulting from defendants’ virtually extending credit to customers whom defendants knew or recklessly disregarded were unable to pay for the goods they purchased.” (Cmplt. ¶ 70.) Plaintiffs also claim that Defendants failed to disclose the deleterious impact these policies were having on the collectibility of Spiegel’s credit card assets. For example, during fiscal year 2000, 108% of the increase in merchandise sales revenue compared to the previous year was primarily attributable to purchases made through un-seasoned accounts opened by low-income, high risk borrowers who obtained credit under Spie-gel’s relaxed credit standards. (Id) D. Spiegel Securitizes its Credit Card Receivables 1. Asset Securitization Credit card securitization is a process that allows banks and other issuers of credit cards to convert their receivables into cash. (Cmplt. ¶¶ 4 n. 1, 72.) In a typical securitization, the owner of credit card receivables sells them to one or more Special Purpose Entities (“SPEs”), which commonly take the form of trusts. Investors in a securitization receive certificates or notes that give them the right to receive a certain return on their investment. The issuer of the certificates receives cash upon the sale of the receivables to the SPEs, and also retains an interest in the receivables. (Id. ¶ 72.) This “retained interest” is subordinated in favor of payment to the investors and includes only those “interests in the trust that remain after all investors are paid and all other obligations of the trust are satisfied.” (Id. ¶ 72 n. 3.) There are generally two types of retained interests: (1) a claim to excess principal receivables in the trusts; and (2) interest-only strips (“I/O strips”), representing a right to receive the interest portion of the receivables after all investors in the trust have been paid their interest. (Id. ¶ 73.) In addition to what Plaintiffs characterize as “the protection afforded by the retained interest,” investors in a securiti-zation are protected by certain “credit enhancements,” such as cash collateral accounts and insurance policies, that ensure payment of an investor’s principal and interest if the cash flow from the securitized receivables proves insufficient. (Cmplt. ¶ 72.) The trust documents also contain trust performance requirements, sometimes called “triggers” or “pay out events” which, if violated, result in trust investors receiving an immediate payout of all collected cash receipts until the obligation to them is satisfied. When such “rapid amortization” occurs, the trust no longer has the use of principal proceeds to purchase newly-generated receivables. The issuer, similarly, loses the benefit of excess cash flows, which must all go immediately to repay principal to investors. (Id.) The Spiegel trusts had eight trust triggers, including failure to make certain payments or transfers of funds, and failure of the receivables to meet certain minimum performance standards in maintaining (1) an adequate “profit ratio,” i.e., the “difference between portfolio yield and base rate” (the “excess spread trigger”); (2) a maximum level of delinquent accounts (the “delinquency ratio trigger”); and (3) an appropriate limit on defaults in the portfolio (the “default rate trigger”). (Id ¶ 72 n. 5.) 2. Spiegel’s Securitizations Spiegel first began securitizing its credit card receivables through FCNB in the early 1990s. Plaintiffs describe FCNB’s secu-ritization transactions during the Class Period as follows: A Spiegel customer using a preferred card or an FCNB bankcard at a Spiegel merchant purchases an item and creates a receivable in favor of FCNB. The merchant looks to FCNB to pay the amount of the charge, less an interchange fee. And FCNB then looks to the customer to pay principal, interest (at typical credit card rates), late fees and other charges. Rather than holding the receivables on its financial statements, FCNB sells it to an intermediary special purpose entity (“SPE”). By selling the receivable, FCNB is relieved of the obligation to maintain capital against it, as well as the obligation to fund the receivable. However, with Spiegel’s securitizations, Spie-gel remained in control over the cardholder’s account and adjust[ed] payment terms or fees. The SPE then resells the receivable to a so-called qualified special purpose entity (“QSPE”) ... structured as a common law master trust. Each QSPE sells multiple series of certificates or notes to investors at different times. Each series also assigns the retained interest to Spiegel Acceptance Corp. (“SAC”) (a wholly owned subsidiary of Spiegel) or to FCNB. FCNB then transfers part of its retained interest to Financial Services Acceptance Corporation (“FSAC”) (also a Spiegel affiliate). These retained interests generate “finance revenue” for Spiegel that essentially comes from excess cash flows after required payments to the investors in the trusts and deductions are made. (Cmplt^ 76.) See Spiegel, 2003 WL 22176223, at *49. Explaining further, Plaintiffs allege that FCNB transferred its FCNB Bankcard receivables to First Consumers Master Trust (“FCMT”) which, in turn, issued a collateral certificate representing a beneficial interest in the receivables of FCMT to First Consumers Credit Card Note Trust (“FCCCNT”). FCCCNT then sold a series of notes to investors in public offerings, collateralized by the certificates issued by FCMT and FCCCNT, and used the proceeds from the offering to retire the collateral certificates. (Cmplt.fl 227.) A similar technique was used to transfer FCNB Preferred Card receivables to Spiegel Master Trust (“SMT”) and then to Spiegel Credit Card Master Trust (“SCCMT”) which, in turn, sold a series of notes to investors in public offerings. (Id. ¶ 228.) Plaintiffs identify two public debt offerings during the Class Period: (1) the Spiegel Credit Card Master Note Trust (“SCCMNT”) Series 2000-A, issued on December 19, 2000; and (2) the SCCMNT Series 2001-A, issued on July 19, 2001. Three additional securitization transactions during that period were private placements. All told, Spiegel’s five securitization transactions in late 2000 and 2001 resulted in “financings or commitments of approximately $3.4 billion.” (Id. ¶ 77.) In Plaintiffs’ view, the offering documents used to sell these securitization investments to the public did not disclose the substantial risks to the collectibility of the credit card receivables being securitized; i.e., the focus on a subprime customer base, the use of the “net down” process, the power of merchant retailers to control the final credit granting process, and the failure to conduct back-end screening. (Cmplt.lffl 79-80.) The disclosures also failed to indicate that the series were close to violating the excess spread trigger applicable to the Spiegel trusts; i.e., the series did not have an adequate “profit ratio” or “difference between portfolio yield and base rate.” In addition, the offering documents did not disclose that the interchange fees and other charges would have to be increased to avoid a payout event in the asset-backed notes being offered for sale to the public. (Id. ¶ 80.) E. Spiegel’s Representations Regarding its Financial Condition 1. Understated Debt and Overstated Gain Plaintiffs allege that throughout the Class Period, Defendants “misleadingly represented” (1) that Spiegel’s securitization transactions constituted bona fide sales, such that the company could remove from its balance sheet its credit card receivables and the face value of any notes sold to investors; (2) that cash flows from the transferred credit card receivables were sufficient to support repayment of the certificates or notes as well as any credit card losses that might be sustained; and (3) that the sales of credit card receivables were “without recourse” so the company was not required to record any reserves for losses that might arise. (CmpltA 82.) According to Plaintiffs, Defendants structured the securitization transactions to make it appear that Spiegel had sold the credit card receivables to the SPEs in exchange for cash; in reality, however, the SPEs did not assume the risks or rewards of ownership required to treat the transfers as sales. (Id. ¶¶ 83, 215.) Those rights and burdens remained with Spiegel. (Id. ¶233.) Under such circumstances, Plaintiffs say, Generally Accepted Accounting Principles (“GAAP”) required that the financial statements of the SPEs be consolidated with those of Spiegel. Had this occurred, Spiegel “would have recorded billions of dollars in additional debt” related to the credit card receivables. (Id. ¶¶ 85, 217-222, 229.) For example, Spiegel’s 2001 Form 10-K revealed that the company’s debt had been understated by more than $3.5 billion for the nine months ended September 29, 2001. (Id. ¶ 244.) Adding to the problem, in Plaintiffs’ view, was the fact that Spiegel inaccurately calculated “hundreds of millions of dollars in gains it reported on the receivables it ‘sold’ during the Class Period” because “numerous, material internal control deficiencies existed at FCNB.” (Cmplt-¶ 236.) Spiegel allegedly used inappropriate valuation and modeling methodologies based on, in Plaintiffs’ words, “best estimates” of certain key assumptions, such as portfolio yield, charge-offs, liquidation rates, interest rates, and discount rates. Those estimates, however, were unreliable; for example, Spiegel used a finance charge rate that was too high, and charge-off and discount rates that were too low. As a result, Plaintiffs say, Defendants overstated Spie-gel’s earnings by $240 million. (Cmplt-¶¶ 86, 87, 238, 239.) “Had Spiegel given appropriate consideration to the deterioration of the receivables portfolio in determining the fair values of the retained interests,” the company would have recorded material write-offs instead of inflated gains. (Id. ¶ 88.) 2. Interchange Rate Manipulation In exchange for providing credit to Spie-gel’s merchant divisions, FCNB charged the merchants an interchange fee based on a percentage of the dollar value of the credit transactions processed by FCNB. The merchants were to pay the interchange fee to FCNB, which then transferred the fee to Spiegel Acceptance Corp. (“SAC”), a wholly owned subsidiary of Spiegel. Spiegel used the interchange fee to calculate both the amount of the finance charge collections and the overall “portfolio yield” — a “key metric used to measure the performance of the Trusts” which is reported by FCNB to note investors in Monthly Noteholder Statements. (Cmplt.lM 76, 89, 90.) By February 2001, Plaintiffs claim, the declining performance of Spiegel’s Preferred Card portfolio was threatening to violate the excess spread trigger in the trust documents and send the securitized notes into rapid amortization. (Cmplt^ 91.) To avoid this result, Mr. Moran and Mr. Sievers decided in April 2001 that the trusts would report that the merchant companies were paying a higher interchange rate to FCNB; specifically, Defendants unilaterally increased the interchange rate from 1% to 5%, retroactive to January 1, 2001. “Defendants did this by simply reflecting the accumulated amount of interchange fees calculated at 5% on the trustee servicer report filed with the SEC for April 2001, for the period January 2001 through April 2001. Spiegel did not amend prior servicer reports.” By increasing the interchange rate, Defendants “were able to report that portfolio yield was increased and subsequently the excess spread percentage was higher.” (Id. ¶¶ 92, 93.) Relying on the Independent Examiner’s Report, Plaintiffs allege that Spiegel had no basis for increasing the interchange rate because (1) Spiegel did not perform a benchmarking study; (2) Spiegel did not amend any of its operating agreements with the merchant divisions to reflect the higher interchange rate; (3) Spiegel and the merchants continued to record the interchange rate at 1% on their general ledgers; (4) contemporaneous documents show that Defendants were concerned with decreasing excess spreads in April and October 2001 but “knew or recklessly disregarded that the consequences of reaching excess spread funding triggers would require significant cash deposits to restricted cash accounts”; and (5) all financial documents except the Monthly Noteholders Statements continued-to reflect a 1% interchange rate. (Id. ¶ 94.) By using an inflated interchange rate in calculating portfolio yield and excess spread, Defendants allegedly misrepresented the financial performance of Spiegel’s trust portfolio assets for the publicly-held asset securitizations (the SCCMNT Series 2000-A and SCCMNT Series 2001-A) and for at least one of the three privately placed asset securitizations, between at least April and December 2001. (CmphN 95.) According to Plaintiffs, Defendants’ “improper manipulation of the interchange rate” delayed a pay out event under the trust agreements for nearly two years until 2003. (Id. ¶ 96.) 3. Trust Trigger Violations In addition to manipulating the interchange rate, Defendants also “knowingly or recklessly failed to disclose” that Spie-gel violated certain trust triggers associated with the portfolios, including the payment rates, delinquency ratio (measuring the aggregate amount of receivables in the Preferred Card portfolio that were more than 91 days past due), default ratio (the percentage of charge-offs in the receivable pool held in the Spiegel Master Trust (“SMT”)), and excess spread ratio. (Cmplt-¶¶ 97, 98, 256-84.) For example, Spiegel did not disclose that it violated a 4.5% payment rate trigger for the SMT 1999-A agreement in the second quarter of fiscal year 2000, which would have resulted in an automatic pay out event were it not for a waiver obtained from all certificate holders. (Id ¶¶257, 258.) During the third quarter of fiscal year 2000, Spiegel violated the default ratio pay out trigger for SMT 1999-A, but again obtained the necessary waivers to reset the trigger from 12% to 13.5%. (Id. ¶¶ 259-61.) Projecting a violation of the delinquency ratio payout trigger for the SMT 1999-B agreement in the same quarter, Spiegel similarly raised that trigger from 4.75% to 13.5% and revised the definition of delinquency to be 31 days, as opposed to 91 days, past due. (Id. ¶¶ 262, 263.) By the end of 2000, Spiegel projected a violation of the new 13.5% default ratio trigger for the SMT 1999-A agreement and did not have the necessary waivers. To address this problem, Spiegel unilaterally raised the default ratio to 17%. (Id. ¶ 265.) In October 2000, Spiegel also charged-off accounts to reduce delinquencies, thereby artificially reducing the delinquency ratio for the SMT 1999-B for the fourth quarter of 2000. (Id. ¶ 266.) Ultimately, Spiegel violated the SMT 1999-A default ratio pay out trigger in the second quarter of fiscal year 2001 and agreed to pay down the series and refinance the private placement through the issuance of a public offering. (Id. ¶ 275.) Spiegel obtained a waiver from J.P. Morgan, the Administrative Agent for the conduit banks, to avoid a payout event on the SMT 1999-B in the same quarter. (Id. ¶ 276.) In September 2001, however, Spiegel violated the delinquency ratio triggers for the SMT 1999-B and FCMT 1999-B series. (CmpMN 280.) Spiegel’s Form 10-Qs and Form 10-Ks did not fairly disclose these actual or projected trust trigger violations. Spiegel’s reporting failures were not limited to the Preferred Card SMT portfolios. As noted, Spiegel publicly offered the SCCMNT 2000-A series on December 19, 2000. By April 2001, Spiegel’s management realized that the company was in danger of violating the 3.5% excess spread funding trigger, which would have required a significant increase to the Excess Spread Restricted Cash Account from $12 million to $60 million in May 2001. (Cmplt-¶ 269.) To avoid this excess funding requirement, Spiegel increased the interchange rate from 1% to 5%. (Id. ¶¶ 92, 93, 270.) In September 2001, Spiegel projected violations of the excess spread triggers for SCCMNT 2000-A and SCCMNT 2001-A. The company increased the excess spread percentage by increasing the interchange rate from 5% to 6%, which enabled Spiegel to temporarily avoid its full cash funding obligations. (Id. ¶¶281, 282.) As with the SMT portfolios, Spiegel did not disclose the actual or projected trigger events for the SCCMNT series in its financial reports. (Id. ¶ 273.) F. Problems with FCNB Throughout the Class Period, Spiegel represented that FCNB had the requisite expertise to manage the higher risk and increased servicing requirements associated with FCNB’s sub-prime lending activities. In fact, Plaintiffs allege, Defendants knew that Spiegel’s system of internal control was completely deficient. (CmpltJ 99.) The May 15, 2002 OCC Consent Order, for example, cited FCNB’s lack of a current chart of accounts; supervisory failures to approve entries to the company’s books and records; failures to require documentary support for entries; and failures to reconcile account balances on a periodic and comprehensive basis. (Id. ¶ 99 n. 7.) See also Spiegel, 2003 WL 22176223. Contributing to the problems was the fact that FCNB was not able to make independent underwriting decisions without influence from Spiegel’s management, which was more concerned with facilitating retail sales than controlling credit risk. (Id. ¶ 101.) In Plaintiffs’ view, FCNB gave in to pressure from Spiegel management and lowered its credit underwriting standards in 1999 and 2000, becoming increasingly dependent upon high-risk credit card customers. (Id.) The OCC also found that during this time, FCNB lacked the appropriate management information systems (“MIS”) to effectively monitor the performance of its credit card receivables. (CmpltJ 102.) For example, FCNB was unable to determine the total credit risk associated with any single customer and, thus, could not generate reports that appropriately analyzed asset quality in terms of portfolio dimension, composition, and performance. (Id.) In addition, Spiegel’s own MIS and reports “failed to include adequate information relating to product profitability, account volumes, delinquencies, charge-offs, recoveries, bankruptcies, fraud, over limits, credit line increases, debt management programs, aggregation, and other key elements and assumptions that Defendants used to calculate revenues and earnings from its securitization activities.” (Id.) To illustrate the “disarray and unreliability of’ FCNB’s credit and financial MIS, Plaintiffs note that for the year ended December 30, 2000, Spiegel reported that its credit card receivables more than 60 days past due totaled $270.2 million. When Spiegel filed its financial statements for the year ended December 29, 2001, however, it reported that the actual value of credit card receivables more than 60 days past due as of December 30, 2000 was $470.9 million, 74% more than reported in the prior year’s financial statements. (CmplU 103.) Plaintiffs allege that Defendants’ “scheme to issue millions of credit cards to sub-standard credit risks[ ] caused FCNB’s credit card receivables outstanding to grow from $1.7 billion at the end of 1997 to over $3.5 billion at the end of 2001.” (CmplO 105.) As a result, Defendants needed to make Spiegel’s asset secu-ritizations look like sales transactions rather than the financing arrangements they really were. When Defendants used FCNB to fund the transactions, the OCC stepped in and directed the bank to curtail its unrestricted growth of credit receivables and to maintain certain risk-adjusted capital levels. (Id. ¶¶ 105-106.) G. Spiegel’s Financial Crisis Plaintiffs claim that Defendants’ fraudulent activities at Spiegel started to unravel in early 2002. In January 2002, Mr. Can-nataro led several other senior members of Spiegel’s management in forming what they called the “Condor Group,” which served as a “crisis management team to deal with Spiegel’s problems.” (Cmplt-¶ 168.) On February 7, 2002, KPMG wrote to Mr. Cannataro as Spie-gel’s CFO and raised the prospect that KPMG would have to issue Spiegel a going concern opinion raising “substantial doubt about the Company’s ability to continue as a going concern.” (Cmplt-¶ 169.) See Spiegel, 2003 WL 22176223, at *22 (a “going concern opinion” is “universally dreaded by corporate management”); Copy-Data Systems, Inc. v. Toshiba America, Inc., 755 F.2d 293, 299 (2d Cir.1985) (a “going concern opinion” is a “most serious qualification on a financial statement because it generally indicates an auditor’s opinion that a company is faced with a serious risk of bankruptcy, and, therefore, that valuation of its assets as part of a going concern may be incorrect”). Shortly thereafter on February 21, 2002, Spiegel “shocked the market” by announcing its plan to sell FCNB and its accrued loss in connection with that sale of $310 million. (Cmplt.1ffl 13, 170.) The February 21 press release did not mention, among other things, that KPMG had threatened to issue a going concern opinion; that Spiegel’s net loss in 2001 was understated by $190 million (48%); that Spiegel’s operating results for fiscal year 2001 showed a loss of $226 million, and not a profit of $15 million as reported in the press release; that Spiegel had violated trust triggers on its securitized credit card portfolios; that Spiegel was in the middle of a $300 million “liquidity crisis”; or that the interchange rate Spiegel reported to its securitization trustee was not the rate actually used by Spiegel merchants. (Id. ¶ 172.) Even absent these disclosures, the price of Spiegel’s common stock fell from $2.80 per share to $2.50 per share in response to the press release. (Id. ¶ 171.) On March 15, 2002, Ludwig Richter, Director of Corporate Accounting at Otto Versand, reported to Dr. Otto and Mr. Zaepfel regarding his review of Spiegel’s financial statements and a meeting he attended with KPMG in February 2002. Mr. Richter stated that KPMG’s audit opinion would likely contain a going concern qualification unless the company obtained (1) a written funding commitment to cover a projected cash shortfall; (2) an executed agreement to sell Spiegel’s credit card business; and (3) a waiver of Spie-gel’s loan covenants (already in default) or a renegotiated credit agreement. (CmpltlTO 174, 432.) 1. The March 27, 2002 Meeting in Germany On March 25, 2002, the Condor Group met to discuss a number of “life threatening” issues facing Spiegel. (Cmplt.1ffl 175, 433.) Treasurer John Steele reported that Spiegel’s investment bankers at J.P. Morgan had advised him that the company’s credit portfolio was worth only a quarter of what J.P. Morgan “originally thought.” Internal audit director Michael McKillip reported that Spiegel would have to restate the interchange rate used to calculate excess spread, which would “blow a trigger in the preferred card 2000-A and 2001-A securi-tizations trusts.” (Id. ¶¶ 168, 175.) The group agreed that Mr. Zaepfel and Mr. Cannataro, among others, should immediately travel to Germany to personally advise Dr. Otto of the situation. (Id. ¶¶ 175, 433.) The two men left the next day and met with Dr. Otto and Dr. Crüsemann on March 27, 2002. (Id. ¶¶ 176, 434.) At the meeting, Spiegel’s management gave Dr. Otto and Dr. Crüsemann a written analysis of the difficulties facing the company, including: • The OCC determined a month earlier to substantially lower FCNB’s rating. • [T]he “final draft” of the OCC’s consent order for FCNB required “significant restrictions” on credit for both new and existing FCNB customers. • [T]hese OCC restrictions on FCNB’s ability to grant credit would result in a reduction in annual net sales by the Spiegel merchant companies of between $192 million and $442 million. • J.P. Morgan concluded that it would be “very difficult” to sell the bankcard business at all ... Spiegel believed it would have to simply “walk away” from its bankcard business [which] could have a $310 million equity impact for Spiegel, and a $170 million debt impact. • J.P. Morgan also advised Spiegel that it could probably not sell its preferred card portfolio. • J.P. Morgan advised Spiegel that it would be difficult to finance new receivables off-balance sheet through a securi-tization transaction, as investors would be wary of Spiegel’s financial condition. • Without FCNB to service its credit card receivables, ... Spiegel’s merchant companies would have to pay a 6% to 12% servicing fee to a third-party servi-cer ... For each 1% increase in the fee above the existing 2% [paid to FCNB], Spiegel would suffer a $13 to $15 million reduction in EBT [earnings before taxes]. • “The Spiegel Group is in a liquidity crisis” and “will soon be illiquid.” • Spiegel was in default on its loan covenants, and its plan to restructure its finances by mid-April “is no longer possible.” ... “There is also a growing threat of an involuntary bankruptcy proceeding being filed against us by our creditors.” • “Due to the impact of OCC restrictions on our merchant businesses and significantly lower expectations for the disposition of our credit business, we cannot proceed with a credit restructuring based on the 2002 plan presented to the banks.” • Spiegel was then facing “a probable rapid amortization in our ABS financ-ings, which will divert cash flow ($60 million/month) from Spiegel to ABS investors.” • Both KPMG and Rooks Pitts [Spie-gel’s outside counsel prior to retaining Kirkland & Ellis] recently (March 2002) advised Spiegel that, in the absence of a benchmarking study to support a higher interchange rate, Spiegel would have to restate its interchange rate and excess spread calculations for 2001. Such recalculations of excess spread would cause Spiegel’s 2000-A and 2001-A series securitizations to breach their triggers, “causing both to go into early amortization.” The result would be diversion of approximately $40 million excess monthly cash flow from Spiegel to pay down these series. (Cmplt.1ffl 178, 435.) See also Spiegel, 2003 WL 22176223, at *24-26, 44. The written presentation also advised Dr. Otto and Dr. Crüsemann about their obligations under the U.S. securities laws. (Cmplt-¶¶ 179, 436.) 2. The 2001 Form 10-K Days after the March 27, 2002 meeting in Germany, Spiegel was due to file its 2001 annual report on Form 10-K. The form was already prepared and “virtually ready for filing” but after consulting with Dr. Otto, Mr. Zaepfel and Mr. Cannataro decided to file a “notification of late filing” on Form 12b-25 on April 1, 2002. (Cmplt-¶¶ 182, 438.) Spiegel gave the following reason for the delay: As has been publicly disclosed, the Registrant is not currently in compliance with its 2001 loan covenants and has reached a strategic decision to sell its credit card subsidiary, and as a result the Registrant is not in a position to issue financial statements for its 2001 fiscal year pending resolution of these issues. (Id. ¶ 183.) Spiegel also stated that “[a]s disclosed in the Company’s press release on February 21, 2002, a significant loss will be reported in the 2001 earnings statement due to the Company’s decision to sell the bank.” (Id. ¶ 184.) Plaintiffs claim that the real reason for the delay in filing the 2001 Form 10-K “was that defendants did not want to have to reveal the auditors’ ‘going concern’ audit opinion qualification on Spiegel’s 2001 financial statements.” (Id. ¶¶ 14,185,186, 297, 298.) On April 19, 2002, Spiegel issued a press release “regarding the status of several business initiatives.” (Cmplt.1fll 187, 439.) According to Plaintiffs, Spiegel “had to say something to the public that day, as that morning Nasdaq had changed Spiegel’s trading symbol from SPGLA to SPGLE, based on Spiegel’s failure to file its Form 10-K.” (Id.) Plaintiffs allege that the press release was materially false and misleading because it failed to disclose or misrepresented that (1) the OCC was discussing additional liquidity and capital requirements for FCNB, as well as restrictions on its credit granting measures; (2) a pay out event would prevent Spiegel from receiving up to $40 million per month from the trust and divert funds to the repayment of principal on the notes; and (3) Spiegel intended to create a revised business plan with financial projections significantly lower than those previously submitted to the bank group. (Id. ¶ 189.) On April 22, 2002, Spiegel requested a hearing before Nasdaq to explain why it had not filed its Form 10-K and to avoid immediate delisting. At a May 17, 2002 delisting hearing, “Nasdaq received assurances ... that the Company would file its 10-K by May 28, 2003, regardless of the status of its negotiations with its lenders.” (Cmplt.HH 192, 440.) A few days earlier on May 13, 2002, KPMG had repeated its advice to Spiegel’s Audit Committee that KPMG would have to issue a going concern opinion. (Id. ¶ 196.) On May 15, 2002, Spiegel’s outside counsel, Kirkland & Ellis, told Spiegel’s management that the SEC might initiate an enforcement action against the company if it failed to file its Form 10-K. (Cmplt.H 441.) The same day, the OCC and FCNB entered into a consent order. The consent order (1) restricted transactions between FCNB and its affiliates and required FCNB to complete a review of all existing agreements with affiliated companies; (2) required FCNB to obtain an aggregate of $198 million in guarantees through Spiegel’s majority shareholder; (3) restricted FCNB’s ability to accept, renew, or rollover deposits; (4) restricted FCNB’s ability to issue new credit cards and make line increases; (5) required FCNB to file with the OCC a disposition plan to sell, merge, or liquidate; (6) required FCNB to maintain sufficient assets to meet daily liquidity requirements; (7) required FCNB to complete a comprehensive risk management assessment; (8) established minimum capital levels for FCNB; and (9) provided for increased oversight by, and reporting to, the OCC. (Id. ¶ 197.) In mid-May 2002, Spiegel failed to file its Form 10-Q reporting on its performance during the first quarter of 2002. In its notification of late filing, Spiegel reiterated the explanation given for its failure to file the 2001 Form 10-K. (Cmplt.1l 198.) On May 29, 2002, Mr. Zaepfel sent Mr. Hansen a handwritten letter stating (in German) that Mr. Zaepfel and Dr. Otto were of the opinion that Spiegel should accept a delisting rather than file a Form 10-K with a going concern statement, “even though we know that we are not complying with the law by not filing a 10-K.” (Id. ¶ 442.) During an Audit Committee meeting on May 31, 2002, attorneys from Kirkland & Ellis again advised that Spiegel needed to file its Form 10-K, stating that failure to do so “would be breaking the law.” (Id. ¶ 443.) By June 2002, however, Spiegel still had not filed its 2001 Form 10-K. On June 3, 2002, Nasdaq delisted “the company’s Class A common stock on Nasdaq National Market System effective with the open of business on June 3, 2002, based on the company’s filing delinquencies and other public interest concerns.” (Cmplt.1l 200.) On June 4, 2002, the date the Class Period ends, Spiegel revealed that its 2001 financial statements would have a going concern qualification in the audit report. As a result, Spiegel’s stock fell by 51% to close at $0.49 on June 5, 2002. (Id. ¶¶ 15, 202.) When Spiegel finally filed its 2001 Form 10-K on February 4, 2003, it reported a loss that was more than $189 million higher than previously indicated. Spiegel also reduced its previously reported “gains on off-balance receivables” by more than $206 million. (Cmplt.lf 203.) On March 7, 2003, Spiegel issued a press release announcing that the SEC had commenced a civil proceeding against the company, alleging violations of Sections 10(b) and 13(a) of the Securities Exchange Act. Spiegel also announced that it had entered into a Consent and Stipulation with the SEC, partly resolving those claims. (Id. ¶¶ 16, 207, 296.) On March 11, 2003, Spiegel issued another press release announcing a pay out event on FCNB’s securitization transactions. As a result of that pay out event, Spiegel was unable to fund its ongoing operations and filed for bankruptcy on March 17, 2003. (Id. ¶¶ 18, 78, 208.) DISCUSSION Plaintiffs claim that Defendants violated § 10(b) of the SEA and Rule 10b-5 promulgated thereunder by engaging in a “plan, scheme and course of conduct” to deceive the investing public regarding Spiegel’s high-risk credit practices and induce Plaintiffs to purchase Spiegel common stock at artificially inflated prices during the Class Period. (CmpltJ 463.) Plaintiffs also charge that SHI and the Individual Defendants violated § 20(a) of the SEA because they acted as controlling persons of Spiegel and had the power to control the company’s decisions, “including the content and dissemination of the various statements which plaintiffs contend are false and misleading.” (Id. § 475.) Defendants have jointly moved to strike all of the allegations in the Complaint and have also filed six separate motions to dismiss. Plaintiffs object to all of the motions and ask the court to lift the PSLRA’s automatic discovery stay. The court addresses each argument in turn. I. Joint Motion to Strike Defendants first argue that the Complaint should be stricken in its entirety on procedural grounds for failing to comply with the requirements of Fed. R. Crv. P. 8(a) and (e), and for improperly relying on statements in the Independent Examiner’s Report. As explained below, the court disagrees. A. Rule 8 Rule 8 requires that a complaint set forth “a short and plain statement of the claim,” and that each averment be “simple, concise, and direct.” Fed. R. Civ. P. 8(a) and (e). “A complaint that is prolix and/or confusing makes it difficult for the defendant to file a responsive pleading and makes it difficult for the trial court to conduct orderly litigation.” Vicom, Inc. v. Harbridge Merchant Serve., Inc., 20 F.3d 771, 775-76 (7th Cir.1994). In fraud cases, however, Rule 9(b) requires plaintiffs to state “with particularity” the circumstances constituting the fraud; that is, the “who, what, when, where, how” of the fraud. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990). In addition, the PSLRA requires plaintiffs to “specify each statement alleged to have been misleading, [and] the reason why the statement is misleading.” 15 U.S.C. § 78u-4(b)(l). Defendants argue that Plaintiffs’ Complaint violates Rule 8 because it constitutes improper “puzzle pleading.” (Def. Mem., at 3.) The Fifth Circuit has described “puzzle pleading” as a “not uncommon mask for an absence of detail,” Williams v. WMX Technologies, Inc., 112 F.3d 175, 178 (5th Cir.1997), and a California court noted that “courts have repeatedly lamented plaintiffs’ counsel’s tendency to place ‘the burden ... on the reader to sort out the statements and match them with the corresponding adverse facts to solve the puzzle of interpreting Plaintiffs’ claims.’ ” Wenger v. Lumisys, Inc., 2 F.Supp.2d 1231, 1244 (N.D.Cal.1998) (quoting In re Oak Technology Sec. Litig., No. 96-20552 SW, 1997 WL 448168, at *5 (N.D.Cal. Aug.1, 1997)). Relying primarily on cases from California, Defendants describe three “hallmarks” of puzzle pleading: (1) the division of the class period into a few or several time periods in which it is alleged that the defendants made materially false statements or omissions, (2) within each time period, a series of paragraphs supposed to contain allegedly false or misleading statements (sometimes boldfaced in part) made during the period, and (3) following each series, an omnibus paragraph alleging that the statements within the time period were false or misleading when made, and setting forth a laundry list of supposedly “true facts” (usually set out in numerous subparagraphs) purporting to demonstrate just that. (Id.) (citing In re Splash Technology Holdings, Inc. Sec. Litig., 160 F.Supp.2d 1059, 1073-75 (N.D.Cal.2001)). According to Defendants, the Complaint has all of these characteristics: (1) Plaintiffs have divided the Class Period into nine time periods during which Defendants made materially false statements or omissions; (2) Plaintiffs present a series of paragraphs containing the allegedly false or misleading statements; and (3) each series is followed by an omnibus paragraph alleging that the statements were materially false and misleading when made because they failed to disclose certain adverse facts. (Id. at 4.) Plaintiffs respond that the Complaint complies with Rule 8 and clearly sets forth the allegations of fraud. In paragraphs 46-106, the Complaint describes Defendants’ schemes to defraud, such as offering credit primarily to sub-prime creditors under relaxed standards to artificially boost sales; overstating Spiegel’s gains and understating its debts; manipulating the interchange rate to avoid trust trigger violations; and hiding the fact that trust trigger violations occurred. The Complaint next lists Defendants’ false and misleading statements and explains why they are false and misleading. (Cmplt.1ffl 107-167.) Paragraphs 168-208 then identify the corrective disclosures that advised the market of the fraud. Plaintiffs also added separate sections describing Defendants’ violations of GAAP, (Id. ¶¶ 209-357), and KPMG’s role in the fraud. (Id. ¶¶ 358-416.) (See PL 12(f) Resp., at 6.) With two exceptions, discussed below, the court finds that Plaintiffs’ Complaint satisfies the procedural pleading requirements of Rules 8 and is neither unduly prolix nor confusing. Defendants complain that the Complaint is prejudicial because “the challenged allegation^] ha[ve] the effect of confusing the issues or [are] so lengthy and complex that [they] place[ ] an undue burden on the responding party.” (Def. Mem., at 6) (quoting Hoffman-Dombrowski v. Arlington Int’l Racecourse, Inc., 11 F.Supp.2d 1006, 1009-10 (N.D.Ill.1998)). Given the complexity of the allegations and Defendants’ extensive motions to dismiss, however, the claim of prejudice is not well-taken. Though the Complaint is arguably inartfully drafted in certain respects and repetitive, the court is satisfied that Defendants can fairly respond to the allegations and that there is no sufficient basis for striking the Complaint in its entirety. See Spearman Industries Inc. v. St. Paul Fire and Marine Ins. Co., 109 F.Supp.2d 905, 907 (N.D.Ill.2000) (motions to strike are “disfavored and usually denied”). B. Independent Examiner’s Report Defendants next object to Plaintiffs’ references to, and reliance upon, statements from the Independent Examiner’s Report. See Spiegel, 2003 WL 22176223. Defendants claim that Plaintiffs have violated Rule 8 by cutting and pasting into the Complaint certain self-serving portions of the Report, which addressed conduct and knowledge attributable to Spiegel, and then ascribing that same conduct and knowledge to “Defendants” generally. (Def. Mem., at 7-8.) In Defendants’ view, “it is virtually impossible to ascertain which defendants are responsible for which allegedly wrongful acts” because Plaintiffs have indiscriminately grouped them together, or merely attributed the acts to Spiegel, which is not a named defendant. (Id. at 8.) While this argument goes too far — Defendants have managed to seek dismissal of the particular allegations against them — the court does agree that Plaintiffs must specify the particular defendants responsible for each particular act and cannot simply attribute to “defendants” conduct that clearly could not encompass all Defendants in this case. (See, e.g., Cmplt. ¶ 63, alleging that “Defendants prepared and approved forecasts” for Spiegel Catalog and Newport News, and ¶ 93, charging “defendants” with “unilaterally increasing] the interchange rate,” none of which could apply to Spiegel’s auditor, KPMG). To the extent Plaintiffs attribute conduct or knowledge to Spiegel, moreover, it may not serve as a basis for imputing the same conduct or knowledge to Defendants, absent some factual support. Defendants also claim that Plaintiffs have improperly alleged facts that were merely alleged by a third party. (Def. Mem., at 12-13) (citing Geinko v. Padda, No. 00 C 5070, 2002 WL 276236, at *6 n. 8 (N.D.Ill. Feb.27, 2002)) (plaintiffs’ attorneys “cannot shirk their Rule 11 obligation to conduct an appropriate investigation into the facts ... by merely stating that ‘the SEC alleges’ certain additional facts”). In fact, Plaintiffs have done more than copy allegations from another complaint. The Independent Examiner’s Report, prepared at the direction of the court and with the consent of Spiegel and the SEC, is based on “the overall record accumulated during [the] investigation,” including (1) a review of Spiegel’s financial records “from January 1, 2000 to date”; (2) a review of more than 800,000 documents produced by Spiegel, its attorneys, FCNB, and KPMG, among others; and (3) some 51 witness interviews, including all of the Individual Defendants in this case. Spie-gel, 2003 WL 22176223, at *2, n. 1, and Appendix A and B. In addition, the Report is part of Spiegel’s public filings with the SEC; Spiegel filed it on September 12, 2003 as part of its Form 8-K. (PI. 12(f) Resp., at 12-13.) More problematic is the fact that Plaintiffs claim to be relying on the Report as the basis for allegations made on “information and belief’ in accordance with the PSLRA. (Id. at 14.) See 15 U.S.C. § 78u-4(b)(l) (“if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed”). Defendants argue that Plaintiffs never indicate in the Complaint that any allegations are made on information and belief, except in one footnote (Cmplt. ¶ 234 n. 15), and that the court therefore cannot evaluate whether the claims have merit. (Def. Reply, at 11-12) (courts have a “ ‘gatekeeping role’ to stop at the threshold unwarranted claims of falsity alleged on information and belief’). To avoid any confusion, Plaintiffs are directed to identify the allegations in the Complaint that are made on information and belief and to state the facts on which the belief is based. The court also expect