Full opinion text
OPINION SWEET, District Judge. LaBranche & Co., LLC (“LaBranche LLC”), LaBranche & Co., Inc. (“LaBranche & Co.”), George M.L. LeBranche, IV (“M.LaBranche”), Spear, Leeds & Kellogg Specialists LLC (“Spear Leeds LLC”), Spear, Leeds & Kellogg, LP (“Spear Leeds LP”), Goldman Sachs & Co., Inc. (“Goldman Sachs & Co.”), The Goldman Sachs Group, Inc. (the “Goldman Sachs Group”), Van der Moolen Specialists USA, LLC (“VDM Specialists”), Van der Moolen Holding, NV (“VDM Holding”), Fleet Specialist, Inc. (“Fleet Specialist”), FleetBoston Financial Corp. (“FleetBoston Corp.”), Bank of America Corp. (“Bank of America”), Quick & Reilly, Inc. (“Quick & Reilly”), Bear Wagner Specialists LLC (“Bear Wagner LLC”), Bear Stearns & Co., Inc. (“Bear Stearns & Co.”), SIG Specialists, Inc. (“SIG Specialists”), Susquehanna International Group, LLP (“SIG LLP”), Susquehanna Financial Group, LLP (Susquehanna), and Performance Specialist Group, LLC (“Performance Specialist”) (collectively, the “Specialist Defendants”) have moved pursuant to Rules 12(b)(6) and 9(b), Fed.R.Civ.P., to dismiss Plaintiffs’ Consolidated Complaint (“the Complaint”). Defendant New York Stock Exchange (“NYSE”) has moved to dismiss the Complaint pursuant to Rule 12(b)(6). Lead Plaintiffs California Public Employees’ Retirement System (“CalPERS”) and Empire Programs, Inc. (“Empire”) (collectively, the “Plaintiffs”) have moved to modify the discovery stay set forth in Section 21D(b)(3)(B) of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), 15 U.S.C. § 78u-4(b)(3)(b). For the reasons set forth below, the motions to dismiss of the Specialist Defendants are granted in part and denied in part. The motion of NYSE to dismiss is granted. To the extent that claims have not been dismissed with prejudice, leave is granted to replead within thirty (30) days of the entry of this opinion. Prior Proceedings On October 17, 2003, this action was initiated by Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust, which filed a complaint (03 Civ. 8521) on behalf of itself and all others similarly situated. On November 11, 2003, Empire filed its complaint (03 Civ. 8935). On December 16, 2003, CalPERS filed its complaint (03 Civ. 9968). On March 16, 2004, Rosenbaum Partners, LP filed a complaint (04 Civ.2038) in its individual capacity. By Opinion dated May 27, 2004, the above-referenced actions were consolidated for all purposes under docket number 03 Civ. 8264, CalPERS and Empire were appointed as lead plaintiffs, and lead counsel was selected. See Pirelli Armstrong Tire Corp. v. LaBranche & Co., Inc., 229 F.R.D. 395 (S.D.N.Y.2004). A Consolidated Complaint (the “Complaint”) was filed on September 17, 2004. On November 16, 2004, the Specialist Defendants moved to dismiss the Complaint pursuant to Rules 9(b) and 12(b)(6), Fed.R.Civ.P. On November 17, 2004, the NYSE moved to dismiss the Complaint pursuant to Rule 12(b)(6). Pursuant to a briefing schedule agreed to by the parties, these motions were heard and marked fully submitted on April 13, 2005. A motion to modify the PSLRA discovery stay was filed by the Plaintiffs on October 1, 2004. This motion was heard and marked as fully submitted on November 17, 2004. The Parties CalPERS is the largest public employee retirement system in the United States, with assets of over $166 billion and nearly 1.4 million beneficiaries, including active and retired public employees. CalPERS is alleged to have purchased and/or sold almost three billion shares of NYSE-listed stock between October 17, 1998 and October 15, 2003 (the “Class Period”). Empire is a New Jersey corporation that has its principal place of business in Saddle River, New Jersey. Empire is alleged to have purchased and/or sold over four billion shares of NYSE-listed stock during the Class Period. The NYSE is a not-for-profit corporation organized under the laws of New York State. Pursuant to the Exchange Act, it is registered with the SEC as a national stock exchange. Each of the specialist firms and their individual employee specialists are members of the NYSE. LaBranche LLC, is a registered broker-dealer with the SEC and an NYSE member organization. LaBranche LLC is the largest NYSE specialist firm, serving as a specialist for more than 600 companies listed on the NYSE. During the Class Period, LaBranche LLC accounted for about 29% of the annual trading volume on the NYSE. The parent company of La-Branche LLC is LaBranche & Co. M. LaBranche is the Chairman, President, and CEO of LaBranche & Co., and he has served as a LaBranche LLC specialist since 1977. During the Class Period, he served as a Special Governor of the NYSE, in which capacity he was charged with overseeing the trading activities of the specialist firms, and he was a member of the NYSE Market Performance Committee. Spear Leeds LLC is an NYSE specialist firm and a registered broker-dealer. Spear Leads LLC is a subsidiary of parent company Spear Leads LP, which is a wholly owned subsidiary of the Goldman Sachs Group. Spear Leeds LLC is the second largest specialist firm on the NYSE, serving as a specialist for the stocks of more than 550 NYSE-listed companies and accounting for about 20% of the annual trading on the NYSE during the Class Period. Spear Leeds LLC is affiliated with Goldman Sachs & Co., which is a member firm of the NYSE. VDM Specialists is an NYSE specialist firm responsible for trading in the stocks of more than 370 public companies listed on the NYSE. During the Class Period, VDM Specialists accounted for about 12.5% of the annual trading volume on the NYSE. Van der Moolen Holding is the parent company of VDM Specialists. Fleet Specialist is an NYSE specialist firm that is responsible for trading in more than 430 NYSE-listed companies. It accounted for some 18% percent of the NYSE’s annual trading volume during the Class Period. Since April 1, 2004, the parent company of Fleet Specialist has been Bank of America. Prior to that time, Fleet Specialist’ parent company was FleetBoston Corp., which merged with Bank of America. Quick & Reilly is a member of the NYSE and an affiliate of Fleet Specialist and Bank of America. Prior to its merger with Bank of America, FleetBoston Corp. was the parent of Quick & Reilly. Bear Wagner LLC is a member of the NYSE and a registered broker-dealer that operates as an NYSE specialist. Bear Wagner LLC acts as specialist for more than 340 NYSE-listed stocks and accounted for some 16% of the NYSE’s annual trading volume during the Class Period. Bear Stearns & Co. is a member of the NYSE and is the broker-dealer affiliate of Bear Wagner LLC. SIG Specialists is a member of the NYSE and a wholly owned subsidiary of SIG LLP. SIG Specialists is a registered broker-dealer that operates as an NYSE specialist firm. SIG Specialists is responsible for trading in more than 150 NYSE listed stocks and accounted for some 3% of the NYSE trading volume during the Class Period. Susquehanna, a member organization of the NYSE, is affiliated with SIG Specialists and SIG LLP. Performance Specialist, a member of the NYSE, is a registered broker-dealer that operates as a NYSE specialist. Performance Specialist is responsible for the trading of more than 165 NYSE-listed stocks. During the Class Period, it accounted for some 1.5% of the NYSE’s annual trading volume. The Action This is a securities class action brought on behalf of public investors who purchased and/or sold shares listed on the New York Stock Exchange (“NYSE”) during the Class period, for which specialist firms were responsible for maintaining the trading market. The Consolidated Complaint (the “Complaint”) alleges that Defendants violated the Securities Exchange Act of 1934 (the “Exchange Act”) and violated the fiduciary duty owed to the class members, and/or aided and abetted the breach of such duty. Count One of the Complaint asserts that all Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. Count Two asserts that all Defendants violated Section 20(a) of the Exchange Act. Count Three asserts that NYSE violated Section 6(b) of the Exchange Act. Count Four asserts that all Defendants breached the fiduciary duty owed to the Plaintiffs and/or aided and abetted the breach of such duty. Count Five asserts that Spear Leeds LP, Goldman Sachs & Co., Quick & Reilly, Bear Stearns, and Susquehanna breached fiduciary duties owed to the Plaintiffs. The Role Of The NYSE Specialist The Complaint involves allegations that the specialist firms of the NYSE violated their legal duties to investors, thereby causing injury. In order to assess the sufficiency of these allegations, an understanding of the function and obligations of the specialist firms is necessary. The purchase and sale of securities on the NYSE must be carried out by a specialist who works on the floor of the exchange. Each security listed for trading on the NYSE is assigned to a particular specialist. To execute purchases and sales of a particular security, buyers and sellers must present their bids to buy, and offers to sell, to the specialist assigned to the security. These orders could be brought to a specialist in one of two ways. First, the order could be conveyed orally and in person to the specialist by a floor broker on the floor of the exchange. Second, an order could be transmitted to the specialist electronically using the NYSE’s Super Designated Order Turnaround System (“Super DOT”). Orders transmitted over the Super DOT system would appear on a special computer screen often referred to as the “display book.” Each specialist has a computerized “display book” screen at his or her trading post. After receipt of an order, a specialist could execute the order in two different manners. Generally, orders were executed in the “agency” or “broker” manner, in which the specialist was required to match any open orders to buy from one investor with an open order to sell from another investor within the same price range. Specialists generally received no compensation for filling orders on an agency basis. Second, specialists were permitted to execute, in certain limited circumstances, trades on a “principal” or “dealer” basis, when required to do so to maintain a fair and orderly market. In such circumstances, such as if there were no matching orders to sell and orders to buy, the specialist was permitted to execute an investor’s order to buy stock by selling the stock from the specialist’s proprietary account, or “inventory” of stock, to the investor. Additionally, the specialist was permitted to execute an investor’s order to sell stock by buying that stock and holding the stock in the investor’s inventory. A respected treatise provides the following description of the duties performed by the NYSE specialist: The specialist firm occupies a unique dual role in the operation of the New York Stock Exchange, which is also the case with the other securities exchanges. First, a specialist firm acts as a “broker’s broker,” maintaining a “book” on which other brokers can leave customers’ “limit orders” (i.e., orders to buy or sell at a price at which they cannot currently be executed). Second, a specialist acts as the exclusive franchised dealer, or “market maker” in its assigned stocks, buying and selling shares from other brokers when there are no customer orders on its book against which they can be matched. The functions of the specialist can be illustrated by the following example. A firm is the specialist in an actively-traded stock, in which the market is $40 to $40.10. This means that customer orders are on the specialist’s book to buy specified numbers of shares at $40 or less, and other orders are on his book to sell at $40.10 or more (for historical reasons, shares formerly were quoted in halves, quarters and eighths, rather than cents but now are traded in decimals). A broker who comes to the specialist with an order to sell “at the market” will sell to the customer with the first buy order on the book at $40, and a broker who comes with a market order to buy will buy from the customer with the first sell order on the book at $40.10. The specialist acts solely as a subagent, receiving a portion of the “book” customer’s commission to his broker. Now assume the same firm is also the specialist in an inactively traded stock. The only orders on the book are an order to buy at $38 and an order to sell at $42. If the specialist acted solely as agent, a broker who came in with a market order to sell would receive $38, and another broker who came in an hour later with a market order to buy would pay $42. The report of these two trades on the “tape” would indicate the stock had risen 4 points, or 10%, in an hour. The exchange therefore imposes an obligation on the specialist to maintain an “orderly market” in his assigned stocks, buying and selling for his own account to even out swings which would result from buyers and sellers not appearing at his post at the same time. In this case he might make his market at $40 to $40.25, trading for his own account as long as necessary, but yielding priority to customers’ orders on his book whenever they provide as good a price to the party on the other side. In essence, exchange trading and the specialist system is based on a “continuous two-way agency auction market” in which the firms acting as specialists “are responsible for the quality of the markets” for the securities in which they specialize. The specialist’s obligation is also phrased in terms of the duty to maintain a fair and orderly market. The SEC has explained that a fair and orderly market is one that is not marred by manipulation or deception and characterized by reliable price continuity. Specialists on an exchange are viewed as having two primary duties: to secure the best execution of orders with “minimal dealer intervention” and at the same time to manage supply and demand imbalances. Specialists carry out these obligations by participating in the market both as a broker or agent in acting as an intermediary between two matching orders and also as a dealer or principal when there is no available counter party to the transaction. Thus, specialists should not interposition themselves between matching offsetting orders. In other words, specialists may obtain the best execution by matching transactions and crossing customer orders. In fact, it is the specialist’s obligation to do so if possible. 4 Thomas Lee Hazen, Law of Securities Regulation § 14.11[1][C] (5th ed.2005). NYSE Rules Governing the Conduct of Specialists NYSE Rule 104 places a negative obligation on specialists by prohibiting a specialist from trading for his own account unless it is reasonably necessary to maintain a fair and orderly market. Rule 104 states in relevant part: “No specialist shall effect ... purchases or sales of any security in which such specialist is registered ... unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market.” NYSE Rule 92, as amended, provides that “no member or member organization shall cause the entry of an order to buy (sell) any Exchange-listed security for any account in which such member or member organization ... is directly or indirectly interested (a ‘proprietary order’), if the person responsible for the entry of such order has knowledge of any particular unexecuted customer’s order to buy (sell) such security which could be executed at the same price.” Rule 92 also applies to the specialist buying or selling a security while holding an unexecuted customer market buy or sell order, as well as to circumstances where the specialist holds unexecuted customer limit orders at a price that could be satisfied by the proprietary transaction effected by the specialist. NYSE Rule 123B (Exchange Automated Order Routing Systems) requires specialists to cross orders received over the DOT system. Rule 123B(d) states in relevant part: “a specialist shall execute System orders in accordance with the Exchange auction market rules and procedures, including requirements to expose orders to buying and selling interest in the trading crowd and to cross orders before buying or selling from his own account.” NYSE Rule 401 requires NYSE member organizations to “adhere to the principles of good business practice in the conduct of his or its business affairs.” Similarly, NYSE Rule 476(a)(6) provides sanctions if NYSE member organizations engage in conduct “inconsistent with just and equitable principles of trade.” Pursuant to NYSE Rule 476(a)(7), member organizations must also refrain from engaging in “acts detrimental to the interest or welfare of the Exchange.” NYSE Rule 342 provides that “[e]aeh office, department or business activity of a member or member organization ... shall be under the supervision and control of the member or member organization establishing it and of the personnel delegated such authority and responsibility.” The Allegations The following facts are drawn from the Complaint and do not constitute findings of the Court. Seven specialist firms — LaBranche LLC, Spear Leeds LLC, Van der Moolen Specialist, Fleet Specialist, Bear Wagner LLC, SIG Specialists, and Performance Specialist — handle the trading in stocks for all of the NYSE’s more than 2,800 listed companies. The approximate share of the NYSE annual trading volume handled by each of these defendants during the Class Period is as follows: Firm % NYSE Annual Volume LaBranche LLC 29% Spear Leeds LLC 20% VDM Specialists 12.5% Fleet Specialist 18% Bear Wagner LLC 16% SIG Specialists 3% Performance Specialist 1.5% The stock of each of the approximately 2,800 companies listed on the NYSE is assigned by the NYSE to one of these seven specialist firms. Only one specialist can be designated for a given stock listed on the NYSE, although a given specialist firm may handle more than one stock. It is alleged that the Specialist Defendants engaged generally in the following illegal practices: (1) interpositioning (see Compl. ¶¶ 76-82 (defining interpositioning as “taking advantage of the spread between the bid and offer prices by buying stock from one public investor, and then selling it to another, locking in a guaranteed, riskless profit”)); (2) trading ahead (see id. ¶¶ 83-90 (defining trading ahead as filling public orders from a specialist’s own firm accounts ahead of orders received from customers)); (3) freezing the book (see id. ¶¶ 91-104 (defining freezing the book as improperly facilitating proprietary trading by freezing the NYSE Display Book and thereby halting customer interaction and trading)); (4) manipulating the tick (see id. ¶¶ 105-09 (defining manipulating the tick as asking or signaling a member in the crowd to purchase part of a public offer so that the specialist could then, under NYSE rules, engage in proprietary trading)); and (5) falsifying trade reports (see id. ¶¶ 110-26 (describing how certain specialist firms falsified NYSE-mandated weekly reports concerning proprietary trading)). A. The SEC/NYSE Investigation On March 30, 2004, the Securities and Exchange Commission (“the SEC”) announced that: (1) pursuant to Section 15(b)(4) and 21C of the Exchange Act, it had instituted administrative and cease- and-desist proceedings against LaBranche LLC, Spear Leeds LLC, VDM Specialists, Fleet Specialist, Bear Wagner LLC, SIG Specialists, and Performance Specialist; and (2) these seven firms had all settled the SEC and NYSE investigations. Pursuant to this settlement, the specialist firms agreed to pay more than $240 million in penalties and disgorgement. The allegations with respect to each of the Specialist Defendants are summarized below. 1. LaBranche LLC The SEC and NYSE determined that between January 1999 and 2003, La-Branche LLC engaged in interpositioning, trading ahead, and non-execution of limit orders. Such practices resulted in customer disadvantage of $41,646,440. Of this total, $8,689,574 of customer disadvantage was the result of interpositioning, $30,969,236 was the result of trading ahead, and $1,987,630 was the result of non-execution of limit orders. The SEC and NYSE determined that some 41% of LaBranche LLC’s customer disadvantage from interpositioning occurred in just six stocks — Nokia, Lucent Technologies Inc., Morgan Stanley, Tyco International Ltd., Compaq Computer Corp., and Merck & Co. Inc. Furthermore, it was determined that the interpositioning violations with respect to certain transactions in these stocks were done by certain LaBranche LLC specialists with scienter. The SEC and NYSE determined that certain senior executives at LaBranche LLC knew about the illicit trading because certain of the LaBranche LLC specialists who were engaged in such interpositioning in these six stocks were senior executives at LaBranche LLC, including managing directors, post managers, and a floor captain, some of whom had supervisory responsibility for LaBranche LLC’s trading activities on the NYSE floor. The SEC and NYSE observed that between January 2000 and July 2003, the NYSE issued five separate fines to La-Branche LLC or certain of its specialists for instances of trading ahead. Furthermore, the NYSE issued an 2001 examination report to LaBranche LLC that noted a “multitude” of instances in which a La-Branche LLC specialist had traded ahead of customer orders. In February 2003, the NYSE issued LaBranche LLC an admonition letter for excessive freezing of the Display Book in late 2002. Based on these determinations (which were neither admitted nor denied), La-Branche LLC agreed to pay $41,646,440 in disgorgement and $21,872,320 in civil penalties. 2. Spear Leeds LLC The SEC and NYSE determined that from January 1999 through 2003, Spear Leeds LLC engaged in interpositioning, trading ahead and intentional non-execution of limit orders and that such practices resulted in customer disadvantage of $28,776,072. Of this total, $8,309,962 of customer disadvantage was the result of interpositioning, $19,430,004 was the result of trading ahead, and $1,036,106 was the result of non-execution of limit orders. The SEC and NYSE determined that some 76% of Spear Leeds LLC’s customer disadvantage from interpositioning occurred in just six stocks — AOL Time Warner, International Business Machines Corporation, Micron Technology, Inc., American International Group, Inc., Tera-dyne, Inc., and Verizon Communications Inc. The interpositioning violations with respect to certain transactions in these six stocks were done by certain Spear Leeds LLC specialists with scienter. The SEC and NYSE determined that certain Spear Leeds LLC senior executives knew about the illicit trading because certain of the specialists who were engaged in some of the most egregious cases of improper conduct were among the most senior executives at Spear Leeds LLC, including managing directors and team captains. In June 2002, the NYSE issued a $1,000 fine to a Spear Leeds LLC predecessor because five of its specialists had specialists traded ahead. The SEC and NYSE determined that between 1999 and 2003, trading ahead of unexecuted limit orders by Spear Leeds LLC caused $1,036,106 in customer disadvantage. Based on these determinations (which were neither admitted nor denied), Spear Leeds LLC paid $28,776,072 in disgorgement and $16,496,406 in civil penalties. 3. VDM Specialists The SEC and NYSE determined that from January 1999 through 2003, VDM Specialists engaged in interpositioning, trading ahead, and intentional non-execution of limit orders and that such conduct resulted in $34,926,613 of customer disadvantage. Of this total, $14,629,743 of customer disadvantage was caused by interpo-sitioning, $19,209,087 was the result of trading ahead, and $1,087,783 was the result of non-execution of limit orders. The SEC and NYSE determined that some 80%- of VDM Specialists’ customer disadvantage from interpositioning occurred in just six stocks — Nortel Networks Corporation, Pfizer Inc., Hewlett-Packard Company, Time Warner Inc., The Walt Disney Company, and Eli Lilly & Co. In-terpositioning in Nortel Networks alone accounted for some 29% of this disadvantage. The SEC and NYSE determined that the interpositioning in these six stocks was done with scienter. The SEC and NYSE determined that certain members of VDM Specialists’ management committee engaged in inter-positioning in one or more of the six stocks listed above, and these members of the management committee had the supervisory responsibility for the firm’s trading operations on the NYSE floor, including supervising a floor captain who himself engaged in such interpositioning in one or more of the six stocks. The NYSE and SEC observed that in 2001, the NYSE had provided VDM Specialists with an examination report showing that the firm had traded ahead and disadvantaged customer orders. In 2002, the NYSE provided VDM Specialists with an examination report that identified additional instances of trading ahead. Senior management at VDMS received these reports and reviewed them with NYSE staff. Based on these determinations (which were neither admitted nor denied), VDM Specialists agreed to pay $34,926,613 in disgorgement and $22,748,491 in civil penalties. 4. Fleet Specialist The SEC and NYSE determined that from January 1999 through 2003, Fleet Specialist engaged in interpositioning, trading ahead and intentional non-execution of limit orders, and that such practices resulted in $38,013,594 of customer disadvantage. Of this total, $9,797,398 of customer disadvantage was caused by in-terpositioning, $26,969,830 was caused by trading ahead, and $1,246,366 was caused by non-execution of limit orders. Some 80% of Fleet Specialist’ customer disadvantage from interpositioning occurred in just six stocks — General Electric Company, Goldman Sachs Group Inc., Applera-Celera Genomics, JP Morgan Chase & Co., Charles Schwab Corp., and Johnson & Johnson. General Electric Company alone accounted for more than 61% of this customer disadvantage. The SEC and NYSE determined that these interpositioning transactions were done with scienter. The SEC and NYSE determined that in 2001 and 2002, senior managers at Fleet Specialist received internal reports of specific instances of improper conduct by certain specialists. The SEC and NYSE observed that in February 2002, the NYSE had issued an admonition letter to Fleet Specialist noting that between October 2000 and April 2001, certain of its specialists had effected transactions for Fleet Specialist’ dealer account while in possession of previously entered agency orders on the same side of the market, resulting in inferior price executions of such agency orders. Based on these determinations (which were neither admitted nor denied), Fleet Specialist agreed to pay $38,013,594 in disgorgement and $21,083,875 in civil penalties. 5.Bear Wagner LLC The SEC and NYSE determined that from January 1999 through 2003, Bear Wagner LLC engaged in interpositioning, trading ahead, and intentional non-execution of limit orders and that such conduct resulted in $10,724,903 of customer disadvantage. Of this total, $2,074,303 of customer disadvantage was caused by interpo-sitioning, $8,085,348 was caused by trading ahead, and $565,252 was caused by the non-execution of limit orders. Some 68% of Bear Wagner LLC’s customer disadvantage from interpositioning occurred in just six stocks — Texas Instruments Inc., Motorola Inc., Merrill Lynch & Co. Inc., Citigroup Inc., EMC Corp./Massachusetts, and Corning Inc. The SEC and NYSE determined that these interposi-tioning transactions were done with scien-ter. The SEC and NYSE noted that a February 2002 examination by the NYSE identified several instances where a Bear Wagner LLC specialist appeared to have traded ahead of an executable customer order. A December 2002 examination by the NYSE identified 33 additional instances where Bear Wagner LLC specialists appeared to have traded ahead of executable customer orders. Based on these determinations (which were neither admitted nor denied), Bear Wagner LLC agreed to pay $10,724,903 in disgorgement and $5,534,543 in civil penalties. 6. SIG Specialists The SEC and NYSE determined that from January 1999 through 2003, SIG Specialists engaged in interpositioning, trading ahead, and the non-execution of limit orders and that such conduct resulted in $2,045,571 of customer disadvantage. Of this total, $282,983 of customer disadvantage was caused by interpositioning, $1,684,525 was caused by trading ahead, and $78,063 was caused by the non-execution of limit orders. Some 86% of SIG Specialists’ customer disadvantage from interpositioning occurred in just six stocks- — Analog Devices, Inc. (“ADI”), Solectron Corp., Ensco International Inc., Lexmark International, Inc., Calpine Corp., and L-3 Communications Holdings, Inc. ADI alone accounted for more than 32% of SSI’s overall customer disadvantage from interpositioning. The SEC and NYSE determined that certain of these interpositioning transactions were done with scienter. Based on these determinations (which were neither admitted nor denied), SIG Specialists agreed to pay $2,045,571 in disgorgement and $988,018 in civil penalties. 7. Performance Specialist The SEC and NYSE determined that from January 1999 through 2003, Performance Specialist engaged in interpositioning and trading ahead that resulted in $1,491,171 of customer disadvantage. Of this total, $140,488 of customer disadvantage was caused by interpositioning, $1,283,098 was caused by trading ahead, and $67,585 was caused by non-execution of limit orders. Some 78% of Performance Specialist overall customer disadvantage from inter-positioning occurred in just six stocks— Sony Corp. (“SNE”), Safeguard Scientifics, Inc., CBS Corp., Illinois Tool Works, Infinity Broadcasting Corp., and GTE Corp. SNE alone accounted for more than 34% of this customer disadvantage from inter-positioning. The SEC and NYSE determined that these interpositioning transactions were done with scienter. The SEC and NYSE noted that certain of the specialists who were engaged in such interpositioning in these six stocks were also senior executives with supervisory responsibilities for PSG’s trading activities on the NYSE floor. Based on these determinations (which were neither admitted nor denied), SIG Specialists agreed to pay $1,491,171 in disgorgement and $680,761 in civil penalties. B. Allegations Contained In The April 2005 Indictments In April 2005, a grand jury in this district handed down criminal indictments against certain current and former individual specialists at the NYSE alleging violations of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. § 240.10b-5. Since the information contained in these indictments can be judicially noticed by this Court, see Ives Labs., Inc. v. Darby Drug Co., 638 F.2d 538, 544 n. 8 (2d Cir.1981), these materials will be considered in connection with this motion. See Kramer v. Time Warner Inc., 937 F.2d 767, 773 (2d Cir.1991). 1.LaBranche LLC (United States v. Deboer (05 Crim. 396)) The above-referenced indictment alleges that from March 2000 through April 2003, LaBranche LLC specialist Freddy DeBoer (“DeBoer”) caused 7,710 instances of inter-positioning, which resulted in profits of $770,000. During this same period, De-Boer is alleged to have engaged in 11,620 instances of trading ahead, which resulted in $3,280,000 in customer harm. Such conduct is alleged to have included trades that involved shares of Nokia Corporation, Lehman Brothers Holdings, Inc., and Cel-estica Inc. 2. Spear Leeds LLC (United States v. Johnson (05 Crim. 392)) The above-referenced indictment alleges that from October 2000 through April 2003, Spear Leeds specialist Robert A. Johnson, Jr. (“Johnson”) caused over 6,390 instances of interpositioning, which resulted in illegal profits of $350,000. During this same period, Johnson is alleged to have engaged in 4,740 instances of trading ahead, which resulted in more than $380,000 in customer harm. Such conduct is alleged to have included trades that involved shares of Verizon Communications, Inc. and Bell Atlantic. 3. VDM Specialists (United States v. Bongiorno et al. (05 Crim. 390)) The above-referenced indictment alleges that between January 1999 and April 2003, VDM specialists Joseph Bongiorno (“Bon-giorno”), Patrick McGagh (“McGagh”), Michael Hayward (“Hayward”), Michael Stern (“Stern”), Richard Volpe (“Volpe”), Robert Scavone (“Scavone”), and Gerard Hayes (“Hayes”) engaged in a scheme to trade ahead of customer orders and also to interposition proprietary trades between such orders. The specific allegations with respect to each of these VDM specialists are summarized below. Instances of Instances of And Interpositioning And Trading Ahead And Improper Profits Resulting Customer Specific Stocks Specialist Derived Harm Refei’enced Bongiorno 15,620 instances ($1,380,000) 8,630 instances ($1,360,000) Hewlett-Packard Company_ McGagh 21,290 instances ($3,430,000) 4,200 instances ($1,240,000) Nortel Networks Corp.; Pfizer Inc. Hayward 5,210 instances ($690,000) 5,000 instances ($1,190,000) Apache Corp.; SPX Corporation; Time Warner Inc. Stern 3,980 instances ($400,000) 5,250 instances ($630,000) Duke Energy Corp.; Kohls Corp.; Eli Lilly and Company Volpe 13,730 instances ($790,000) 5,270 instances ($600,000) The Walt Disney Company; Pfizer Inc. Scavone 3,710 instances ($197,000) 4,540 instances ($330,000) Eli Lilly and Company Hayes 2,280 instances ($150,000) 5,710 instances ($570,000) International Paper Co.; The Walt Disney Co. 4. Fleet Specialist (United States v. Foley (05 Crim. 391); United States v. Murphy (05 Crim. 397); United States v. Hunt (05 Crim. 395); and United States v. Finnerty (05 Crim. 393)) The above-referenced indictments allege that from January 1999 to April 2003, Fleet Specialist Donald R. Foley, II (“Foley”), Thomas J. Murphy, Jr. (“Murphy”), Scott G. Hunt (“Hunt”), and David Finnerty (“Finnerty”) engaged in separate schemes to trade ahead of customer orders and also to interposition proprietary trades between such orders. The allegations with respect to each of these Fleet Specialist are summarized in the following table. Specialist Instances of Interpositioning And Improper Profits Derived Instances of And Trading Ahead And Resulting Customer Harm Specific Stocks Referenced Foley 3,710 instances ($310,000) 8,910 instances ($1,800,000) Chase Manhattan Bank; JP Morgan Chase Murphy 3,160 instances ($140,000) 6,560 instances ($590,000) Johnson & Johnson; Electronic Data Systems_ Hunt 1,910 instances ($150,000) 6,120 instances ($940,000) The Goldman Sachs Group, Inc.; Cardinal Health Inc. Finnerty 25,850 instances ($4,360,000) 15,380,000 ($5,000,000) General Electric Company; Apple-Celera Genomics; PE Biosystems 5. Bear Wagner LLC (United States v. Fee (05 Crim 398); United States v. Delaney (05 Crim. 394)) The above-referenced indictments allege that between November 2000 and April 2003 Fleet Specialist Kevin M. Fee (“Fee”) and Frank A. Delaney, IV (“Delaney”) engaged in separate schemes to trade ahead of customer orders and also to interposition proprietary trades between such orders. The allegations concerning these two specialists are summarized in the table below. Specialist Instances Of Interpositioning And Improper Profits Derived Instances Of And Trading Ahead And Resulting Customer Harm Specific Stocks Referenced Fee 1,150 instances ($170,000) 1,310 instances (740,000) Texas Instruments Inc. Delaney 2,030 instances ($180,000) 1,510 instances ($390,000) Merrill Lynch & Co., Inc.; Bank One C. Allegations Concerning NYSE Plaintiffs assert that the NYSE and the Specialist Defendants worked together to engage in a scheme to defraud investors who traded on the NYSE. Plaintiffs contend that the NYSE actively participated in this scheme by working with the specialists to engage in improper trading activity and to evade the regulatory scrutiny that would have prevented such conduct. It is alleged that NYSE knew that the Specialist Defendants were violating the Exchange Act and NYSE’s rules by trading ahead and interpositioning. It is further alleged that NYSE deliberately failed to oversee its exchange or discipline its member for rules violations. Instead, NYSE allegedly exercised its regulatory authority over the Specialist Defendants in a constrained manner. More specifically, NYSE officials are alleged to have tipped off the Specialist Defendants about impending investigations, thereby permitting the Specialist Defendants to conceal their illegal trading practices. It is also alleged that NYSE officials falsified trading data by approving trade records that they knew to be false. The NYSE Division of Market Surveillance allegedly helped the Specialist Defendants identify incriminating documentation and advised them how to alter data in order to hide evidence of wrongdoing. The Complaint also alleges that NYSE made statements that created the “public impression that the NYSE was overseeing and operating its exchange in accordance with laws, regulations and its own rules.” (Compl.¶ 139.) These statements, which are catalogued in Appendix 2 below, are alleged to be false and misleading. The Complaint alleges that NYSE’s conduct was motivated by the direct financial interest of NYSE and its top executives. The alleged components of this direct financial interest include higher trading volume and increased trading fee revenue for NYSE, higher market value for seats on the NYSE, increased NYSE enterprise value, increased NYSE listings, and increased levels of compensation for NYSE senior executives. The NYSE announced on April 12, 2005 that it had entered into a settlement agreement with the SEC, consenting to various remedial undertakings and an order of censure by the SEC, without admitting or denying any factual allegations. Standards A. Rule 12(b)(6), Rule 9(b), and the PSLRA Defendants have moved for dismissal of the Complaint pursuant to Fed.R.Civ.P. 12(b)(6), 9(b), and the PSLRA. In considering a motion to dismiss pursuant to Rule 12(b)(6), the Court construes the complaint liberally, “accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the plaintiffs favor.” Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir.2002) (citing Gregory v. Daly, 243 F.3d 687, 691 (2d Cir.2001)). On a Rule 12(b)(6) motion to dismiss, “mere conclusions of law or unwarranted deductions” need not be accepted. First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 771 (2d Cir.1994). Furthermore, the truth of factual allegations that are contradicted by documents properly considered on a motion to dismiss need not be accepted. See e.g., Rapoport v. Asia Elecs., Holding Co., 88 F.Supp.2d 179, 184 (S.D.N.Y.2000). The following materials may be considered on a Rule 12(b)(6) motion: (1) facts alleged in the complaint and documents attached to it or incorporated in it by reference, (2) documents “integral” to the complaint and relied upon in it, even if not attached or incorporated by reference, (3) documents or information contained in defendant’s motion papers if plaintiff has knowledge or possession of the material and relied on it in framing the complaint, (4) public disclosure documents required by law to be, and that have been, filed with the Securities and Exchange Commission, and (5) facts of which judicial notice may properly be taken under Rule 201 of the Federal Rules of Evidence. In re Merrill Lynch & Co., Inc., 273 F.Supp.2d 351, 356-57 (S.D.N.Y.2003) (footnotes omitted). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir.1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). In other words, “ ‘the office of a motion to dismiss is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.’” Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of New York, 375 F.3d 168, 176 (2d Cir.2004) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir.1980)). Dismissal is only appropriate when “it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him or her to relief.” Sweet v. Sheahan, 235 F.3d 80, 83 (2d Cir.2000); accord Eternity Global Master Fund, 375 F.3d at 176-77. A claim under section 10(b) sounds in fraud and must therefore meet the pleading requirements of Rule 9(b), Fed. R.Civ.P. See, e.g., In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 69-70 (2d Cir. 2001). Such a claim must also satisfy certain requirements of the PSLRA. See 15 U.S.C. §§ 78u-4(b)(1) & 78u-4(b)(2); see generally Novak v. Kasaks, 216 F.3d 300, 306-07 (2d Cir.2000) (setting forth the heightened pleading standards of the PSLRA that must be met by a plaintiff who alleges securities fraud under Section 10(b) and Rule 10b—5); Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1127 (2d Cir. 1994) (stating that “[securities fraud allegations under § 10(b) and Rule 10b-5 are subject to the pleading requirements of Rule 9(b)”). Rule 9(b) provides that “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally.” Fed.R.Civ.P. 9(b). The Second Circuit “has read Rule 9(b) to require that a complaint [alleging fraud] ‘(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.’ ” Rombach v. Chang, 355 F.3d 164, 170 (2d Cir.2004) (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993)). In particular, the plaintiff must allege facts that “give rise to a strong inference of fraudulent intent.” Novak, 216 F.3d at 307. The Second Circuit has stated that this scienter requirement can be satisfied: “ ‘either (a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.’ ” Acito v. IMCERA Group, Inc., 47 F.3d 47, 52 (2d Cir.1995) (quoting Shields v. City-trust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994)). Rule 8’s general pleading requirement and Rule 9(b)’s particularity requirement must be read together. See Ouaknine v. MacFarlane, 897 F.2d 75, 79 (2d Cir.1990) (stating that “Rule 9(b) ... must be read together with Rule 8(a) which requires only a ‘short and plain statement’ of the claims for relief’); Credit & Fin. Corp. v. Warner & Swasey Co., 638 F.2d 563, 566 (2d Cir.1981) (same); In re Initial Pub. Offering Sec. Litig. (“IPO”), 241 F.Supp.2d 281, 327 (S.D.N.Y.2003). These two rules have been read together to mean that a plaintiff need not plead evidentiary details. See, e.g., id. The Second Circuit has stated that it does “not require the pleading of detailed evidentiary matter in securities litigation.” Scholastic, 252 F.3d at 72. Courts of this district have stated that “the application of Rule 9(b) ... must not abrogate the concept of notice pleading.” IPO, 241 F.Supp.2d at 327 n. 46. B. Section 10(b) and Rule 10b-5 Section 10(b) of the Exchange Act provides in pertinent part as follows: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange- (b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 15 U.S.C. § 78j. Rule 10b-5 provides in pertinent part as follows: . It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240.10b-5. “The language of Section 10(b) and Rule 10b-5 does not explicitly create a private right of action. In fact, the legislative history fails to indicate whether Congress even contemplated creating such a right.... Nevertheless, courts long have held that a private right of action was indeed created.” Ontario Public Service Employees Union Pension Trust Fund v. Nortel Networks Corp., 369 F.3d 27, 31 (2d Cir.2004). To state a claim under Section 10(b) and Rule 10b-5 a plaintiff must plead that the defendant: “(1) made misstatements or omissions of material fact; (2) with scienter; (3) in connection with the purchase or sale of securities; (4) upon which plaintiffi ] relied; and (5) that plaintiffs] reliance was the proximate cause of [the] injury.” In re Livent, Inc. Sec. Litig., 78 F.Supp.2d 194, 213 (S.D.N.Y.1999). C. Section 20(a) Section 20(a) provides as follows: Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable ... to the same extent as such controlled person ... 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). In order to plead control person liability under Section 20(a), a plaintiff must “allege a primary § 10(b) violation by a person controlled by the defendant and culpable participation by the defendant in the perpetration of the fraud.” Suez Equity Investors, L.P. v. Toronto-Dominion Bank, 250 F.3d 87, 101 (2d Cir.2001) (holding that plaintiffs had stated a Section 20(a) claim against defendant bank where it was alleged that: (1) the person who had committed the alleged violation of Section 10(b) was an officer of the bank, and (2) the officer was responsible for the bank’s relationship with a venture whose securities were the subject of the alleged Section 10(b) violation). D. Section 6(b) Section 6(b) of the Exchange Act provides in pertinent part that: An exchange shall not be registered as a national securities exchange unless the Commission determines that— (1) Such exchange is so organized and has the capacity to be able to carry out the purposes of this chapter and to comply, and ... to enforce compliance by its members ... with the provisions of this chapter, the rules and regulations thereunder, and the rules of the exchange. :¡í * * * * (5) The rules of the exchange are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.... (6) The rules of the exchange provide that ... its members and persons associated with its members shall be appropriately disciplined for violation of ... the rules of the exchange.... 15 U.S.C. § 78f(b). E. Common Law Breach of Fiduciary Duty Under New York law, the elements of a fiduciary duty claim are: (1) the existence of a fiduciary relationship, and (2) a breach of the duty arising from that relationship. See, e.g., Official Comm, of Asbestos Claimants of G-I Holding, Inc. v. Heyman, 277 B.R. 20, 37 (S.D.N.Y.2002). A fiduciary relationship may be found “when one [person] is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation.” Flickinger v. Harold C. Brown & Co., 947 F.2d 595, 599 (2d Cir.1991) (citation omitted). A claim for aiding and abetting a breach of fiduciary duty requires the plaintiff to prove “(1) the existence of a violation committed by the primary (as opposed to the aiding and abetting) party; (2) ‘knowledge’ of this violation on the part of the aider and abettor; and (3) ‘substantial assistance’ by the aider and abettor in achievement of the violation.” Briarpatch Ltd. L.P. v. Geisler Roberdeau, Inc., No. 99 Civ. 9623, 2002 WL 31426207, at *7 (S.D.N.Y. Oct.30, 2002). Discussion A. The Claims Against NYSE Are Dismissed With Prejudice NYSE has sought dismissal of the claims against it on the grounds that claims arising from NYSE’s allegedly improper exercise of its regulatory authority are barred by a doctrine of absolute immunity. Plaintiffs argue that NYSE is not shielded by immunity for knowingly operating its auction market in a fraudulent manner. 1. The Section 6(b), 20(a), 10(b) Fraudulent Scheme, and State Law Aiding and Abetting Breach of Fiduciary Duty Claims NYSE is registered with the SEC as a national securities exchange pursuant to Section 6 of the Exchange Act. See 15 U.S.C. § 78f. As such, it is a self-regulatory organization (“SRO”) within the meaning of the Exchange Act. See 15 U.S.C. § 78e(a)(26). The Exchange Act delegates to NYSE, as an SRO, the authority to regulate its members and to enforce its members’ compliance with the Exchange Act, the rules and regulations thereunder, and NYSE rules. See 15 U.S.C. § 78s(g)(l). The Exchange Act provides the SEC with broad and exclusive authority to oversee: (1) NYSE’s compliance with the Exchange Act, the rules and regulations thereunder, and its own rules; and (2) NYSE’s enforcement of its members compliance with these provisions. See 15 U.S.C. §§ 78s(g)(l) and 78s(h)(l). The Exchange Act also empowers the SEC to take adverse action against NYSE should it fail to fulfill these duties, including such far-reaching measures as a revocation of NYSE’s registration as an SRO, suspension for a period of up to 12 months, and censure. Id. The Second Circuit has held that “the NYSE, when acting in its capacity as a[n] SRO, is entitled to immunity from suit when it engages in conduct consistent with the quasi-governmental powers delegated to it pursuant to the Exchange Act and the regulations and rules promulgated thereunder.” D’Alessio v. New York Stock Exch., Inc. 258 F.3d 93, 106 (2d Cir.2001) (affirming dismissal of tort and contract claims asserted against NYSE by stock broker who alleged that he had been wrongly prosecuted and suspended from trading on the NYSE); see also DL Capital Group, LLC v. Nasdaq Stock Market, Inc., 409 F.3d 93, 97 (2d Cir.2005) (holding Nasdaq absolutely immune from suit challenging manner in which Nasdaq publicly announced suspension or cancellation , of trades); MFS Sec. Corp. v. New York Stock Exch., Inc., 277 F.3d 613, 617 (2d Cir.2002) (holding NYSE immune from contract claim by securities firm that had been stripped of its NYSE membership); Barbara v. New York Stock Exch., Inc., 99 F.3d 49, 50 (2d Cir.1996) (holding NYSE “absolutely immune from damages arising out of performance of its federally mandated conduct of disciplinary proceedings”). In so holding, the D’Alessio court reasoned that the NYSE, as an SRO, “stands in the shoes of the SEC in interpreting the securities laws for its members and in monitoring compliance with those laws.... [Therefore,] [t]he NYSE should be entitled to the “same immunity enjoyed by the SEC when it is performing functions delegated to it under the SEC’s broad oversight authority.” D’Alessio, 258 F.3d at 105; see also DL Capital, 409 F.3d at 97 (noting that “because the NYSE performs a variety of regulatory functions that would, in other circumstances, be performed by [the SEC] ... the NYSE should ... out of fairness be accorded full immunity from suits for money damages). In D’Alessio, it was alleged that in order to generate revenue from trading practices that it knew to be illegal, the NYSE had: (1) disseminated interpretations of federal securities law and NYSE rules that it knew to be false; (2) failed to properly monitor the trading practices of floor brokers; and (3) provided false information to the SEC and the United States Attorney’s Office. Id. at 106. The D’Alessio court determined that: [t]he NYSE’s alleged improper interpretation of the type of conduct prohibited under section 11(a) falls within the NYSE’s “quasi-public adjudicatory” duties. Similarly, the NYSE acted in its adjudicatory capacity when it determined that [plaintiff] D’Alessio was guilty of violating section 11(a) and various rules of the NYSE and suspended him from further trading on the NYSE floor. Because these actions “share the characteristics of the judicial process,” Barbara, 99 F.3d at 59 (quotation marks omitted), the NYSE is entitled to immunity from suit for claims based on these actions. In charging D’Alessio with misconduct and referring his case to the United States Attorney’s Office and the SEC, the NYSE exercised its authority pursuant to its “quasi-prosecutorial” function. Finally, any malfeasance on the part of the NYSE in failing to monitor D’Alessio’s and other floor brokers’ compliance with the prohibition under section 11(a) plainly falls within the scope of the quasi-governmental duties delegated to the NYSE under the Exchange Act. Id. at 106 (emphasis added). Here, Plaintiffs’ allegations that NYSE deliberately failed to supervise and discipline the specialist firms (see, e.g., Compl. ¶¶ 5, 8, 188, 193, 227, 228) are indistinguishable from those dismissed in D’Ales-sio. Plaintiffs argue that the two cases are distinguishable on the grounds that in the present case, it is alleged that NYSE’s misconduct was motivated by non-regulatory business considerations (i.e., the desire to maximize the compensation of NYSE executives and the revenues of NYSE members) that were not present in DAlessio. This argument ignores the fact that the DAlessio complaint alleged that the NYSE’s misconduct had been motivated, at least in part, by an interest in the substantial fees earned by the NYSE and by a desire to increase NYSE’s daily volume of trading activity. Id. at 98. As in DAlessio, the NYSE’s alleged misconduct falls within the scope of its quasi-governmental authority. Plaintiffs also attempt to distinguish the Second Circuit’s prior decisions concerning the absolute immunity of SRO’s on the grounds that those cases involved suits by current or former members of the NYSE and not those brought by customers of the exchange. However, as stated by the DAlessio court, NYSE’s entitlement to immunity hinges solely on whether the alleged conduct giving rise to the claim was quasi-governmental in nature. Id. at 106. Neither the nature of the plaintiffs relationship with the SRO nor the nature of the plaintiffs claims are relevant to this analysis. As the Second Circuit recently reaffirmed: “This Court has never suggested that the identity of the plaintiff is what drives the absolute immunity analysis. Rather, we have made clear that it is the SRO’s function as a quasi-governmental authority that entitles it to absolute immunity.” DL Capital, 409 F.3d at 99 (citing DAlessio at 104-05) (emphasis in original). Finally, it should be noted that the Second Circuit’s recognition of this absolute immunity was motivated, in large measure, by an interest in ensuring that the “ ‘exercise of [SROs’] quasi-governmental functions would [not] be unduly hampered by disruptive and recriminatory lawsuits.’ ” Id. at 105 (quoting D'Alessio v. New York Stock Exch., Inc., 125 F.Supp.2d 656, 658 (S.D.N.Y.2000)). Based on the foregoing, it is determined that NYSE has absolute immunity with respect to Plaintiffs’ Section 6(b), Section 20(a), Section 10(b) fraudulent scheme, and state law fiduciary duty claims, all of which are based on NYSE’s failure to adequately monitor the conduct of the Specialist Defendants. Therefore, these claims are dismissed with prejudice with respect to NYSE. 2. The Section 10(b) Fraudulent Statement Claims Plaintiffs have also alleged that statements by NYSE concerning NYSE’s duties to its customers were false and misleading in violation of section 10(b). Some of these statements appear primarily promotional in nature. (See, id. ¶¶ 140-43, 145, 147 150-53). Such statements would not appear to be protected by NYSE’s absolute immunity for quasi-governmental functions. However, Plaintiffs lack standing to assert a Section 10(b) claim based on the statements identified in the Complaint. The Second Circuit has held that standing to assert a fraudulent misrepresentation claim pursuant to Section 10(b) and Rule 10b-5 is limited to plaintiffs “ ‘who have at least dealt in the security to which the prospectus, representation, or omission relates.’ ” Ontario Pub. Serv. Employees Union Pension Trust Fund v. Nortel Networks Corp., 369 F.3d 27, 32 (2d Cir.2004) (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 747, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975) (applying Bimbaum v. Newport Steel Corp., 193 F.2d 461 (2d Cir.1952))), cert. denied sub nom. Visnic v. Nortel Networks Corp., 543 U.S. 1050, 125 S.Ct. 919, 160 L.Ed.2d 771 (2005). Here, the representations at issue do not relate to any particular security, or to any security purchased or sold by any of the Plaintiffs. Rather, the alleged misstatements all concern NYSE’s capacity to operate an efficient securities market. Under Nortel, Section 10(b) confers no standing on Plaintiffs to challenge statements such as these, i.e., statements by a non-issuer about a non-issuer. See Nortel, 369 F.3d at 33. Citing Blue Chip Stamps, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539, Plaintiffs argue that in order to have standing under Section 10(b) and Rule 10b-5, they merely must be purchasers or sellers of the securities that are the subject of the action. This argument was considered and rejected by the Nortel court, which stated: [Plaintiffs] claim that they have met the Blue Chip Stamps standing requirements because they purchased the security at issue in their lawsuit. They base this argument on the references in Section 10(b) and Rule 10b-5 to fraudulent conduct “in connection with the purchase or sale of any security.” 15 U.S.C. § 78j(b), 17 C.F.R. § 240.10b-5 (emphasis added). In plaintiffs’ view, the word “any” indicates that the intent of Congress and the SEC was to create universal standing for purchasers of securities, allowing anyone who made use of the markets to sue under Rule 10b-5. They further argue that this interpretation is consistent with the Supreme Court’s understanding that Congress intended Section 10(b) to be interpreted flexibly to protect against the ever-evolving nature of securities fraud. Affiliated Ute Citizens v. United States, [406 U.S. 128, 151, 92 S.Ct. 1456, 31 L.Ed.2d 741] (1972). Plaintiffs assume that the phrase “any security” includes securities of any company affected in some way by the misrepresentation and not just securities of the company that makes the material misstatements. However, in our view, the phrase indi