Full opinion text
OPINION SWEET, District Judge. Pursuant to Fed.R.Civ.P. 9(b) and 12(b)(6) and the Private Securities Litigation Reform Act (“PSLRA”), defendants LaBranche & Co. Inc. (“LaBranche & Co.”), LaBranche & Co. LLC (“LaBranche LLC”), G. Michael LaBranche (“M.LaBranche”), William J. Burke, III (“Burke”), James G. Gallagher (“Gallagher”), Alfred O. Hayward, Jr. (“Hayward”), Robert M. Murphy (“Murphy”), S. Lawrence Prendergast (“Prendergast”), George E. Robb, Jr. (“Robb”), and Harvey S. Traison (“Traison”) (collectively “the Defendants”) have moved to dismiss the Corrected Consolidated Class Action Complaint (“the Complaint”) filed by lead plaintiffs Anthony Johnson, Clyde Farmer, Edwin Walthall, Donald Stahl, and the City of Harper Woods Retirement System (the “Plaintiffs”) individually and on behalf of all others similarly situated. The Defendants have also moved for reconsideration of this Court’s Memorandum Opinion of August 27, 2004, In re LaBranche Sec. Litig., 333 F.Supp.2d 178 (S.D.N.Y.2004). The Plaintiffs have moved for an order compelling discovery from the Defendants. For the reasons set forth below, Defendants’ motion to dismiss the Complaint is granted in part and denied in part. Plaintiffs are granted leave to replead within thirty (30) days of entry of this Opinion. In light of the disposal of the Defendants’ motion to dismiss the Complaint, Defendants’ motion for reconsideration of the August 27, 2004 memorandum opinion and Plaintiffs’ motion to compel discovery are both denied as moot. Prior Proceedings This action was initiated on or about October 16, 2003. Pursuant to an opinion of this Court dated March 22, 2004, related actions were consolidated with the first-filed case, lead plaintiff was appointed, and lead plaintiffs choice of lead counsel was approved. See Sofran v. LaBranche & Co., Inc., 220 F.R.D. 398 (S.D.N.Y.2004). On July 12, 2004, Plaintiffs filed the Corrected Consolidated Class Action Complaint (“the Complaint”). Pursuant to a Memorandum Opinion dated August 27, 2004, the Court lifted the automatic stay on discovery imposed by 15 U.S.C. § 78u-4(b)(3)(b). See In re LaBranche Sec. Li-tig., 333 F.Supp.2d at 184. On September 13, 2004, Defendants moved for reconsideration of the August 27, 2004 Memorandum Opinion, and this motion was heard on October 13, 2004. On December 8, 2004, Defendants’ motion to dismiss the Complaint pursuant to Fed.R.Civ.P. 9(b) and 12(b)(6), which had been filed on August 16, 2004, was heard and marked as fully submitted. On May 4, 2005, the Plaintiffs motion to compel discovery, which was filed March 17, 2005, was heard and marked as fully submitted. The Parties The Plaintiffs purchased the publicly traded common stock of LaBranche & Co. between August 19, 1999 and October 15, 2003 (“the Class Period”). LaBranche & Co. is a corporation organized and existing under the laws of Delaware with its principal place of business at One Exchange Plaza, New York, New York. LaBranche & Co. is a holding’ company that is the sole member of La-Branche LLC. LaBranche LLC is a limited liability company and is the specialist subsidiary of LaBranche & Co. It has its principal place of business at 14 Wall Street, New York, New York. LaBranche LLC is the subsidiary through which LaBranche & Co. conducts equity specialist operations on the New York Stock Exchange (“NYSE”) and the American Stock and Options Exchange (“Amex”). M. LaBranche has been Chief Executive Officer (“CEO”), Chairman, and President of LaBranche & Co. since the company’s initial ■ public offering (“IPO”) in August 1999. M. LaBranche has served as Chairman of the Management Committee of LaBranche LLC since 1996, as a member of the Management Committee of LaBranche LLC since 1988, and as a specialist with LaBranche LLC since 1977. During the Class Period, he also served as Governor of the NYSE and as a member of the NYSE’s Market Performance Committee. Murphy became a member of La-Branche & Co.’s Board of Directors and CEO of LaBranche LLC on March 16, 2001. During the Class Period, Murphy served as Vice Chairman and Director of the NYSE. Hayward has been a Director and Executive Vice President of LaBranche & Co. since the company’s IPO. He has been a specialist with LaBranche LLC since 1983, and he as served as a member of the Management Committee of LaBranche LLC since 1994. He sits on the NYSE Arbitration Board. Gallagher was a Director and Executive Vice President of LaBranche & Co. from August 1999 until his retirement in January 2003. He was a member of the Management Committee of LaBranche LLC from 1998 to January 2003. Burke was Secretary of LaBranche & Co. during the Class Period. He has been Director of Business Development of La-Branche LLC since October 1999, and he was Director of Risk Management of La-Branche LLC from August 1999 to January 2003. Traison has been LaBranche & Co.’s Senior Vice President and Chief Financial Officer (“CFO”) since March 2000. Trai-son was a Director of LaBranche & Co. from March 2000 until January 2003. Prendergast has been a Director of La-Branche & Co. and the company’s Executive Vice President of Finance since the company’s IPO. Robb became a Director of LaBranche & Co. on March 16,2001. The Action The Complaint alleged that LaBranche & Co failed to disclose and misrepresented the following adverse facts, among others that: (1) LaBranche LLC specialists wrongfully engaged in the illegal practice of “trading ahead” at the NYSE, which involved wrongfully trading on nonpublic information in order to increase the firm’s proprietary trading revenue; (2) LaBranche LLC engaged in illegal “inter-positioning” by causing or allowing its traders to put its own interest ahead of investors by ignoring one investor order while in the process of interacting with another investor, thereby creating illegal profits; (3) and LaBranche & Co., throughout the Class Period, improperly recognized revenue from its scheme in violation of Generally Accepted Accounting Principles (“GAAP”). As a result of the failure to disclose these adverse facts, LaBranche & Co. is alleged to have materially overstated and artificially inflated its earnings, net income, and earnings per share, thereby causing its common stock to trade at an artificially inflated price. Count One of the Complaint alleges that the LaBranche LLC, LaBranche & Co, and certain of the Individual Defendants thereby violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), see 15 U.S.C. § 78 et seq., and Rule 10b-5 promulgated thereunder. See 17 C.F.R. § 240.10b-5. Count Two of the Complaint alleges that the Individual Defendants violated Section 20(a) of the Exchange Act by exercising control over LaBranche & Co. See 15 U.S.C. § 78t(a). Facts The following facts are drawn from the Complaint and do not constitute findings of the Court. The NYSE and the United States Securities and Exchange Committee (“SEC”) investigations that brought LaBranche LLC’s alleged improper trading practices to the attention of the investing public are described in Subsection A. The alleged false and misleading statements are described in Subsection B. Certain allegations relating to scienter are described in Subsection C. A. The Alleged Improper Conduct By LaBranche Specialists and Others On August 19, 1999, LaBranche & Co. went public with an IPO of 11,5000,000 shares of common stock priced at $14 per share. On January 13, 2003, the NYSE notified LaBranche & Co. that its Division of Market Surveillance (“DMS”) had opened an investigation of LaBranche LLC in connection with the activities of individual specialists on the floor of the NYSE. On April 16, 2003, LaBranche & Co’s common stock closed at $17.73 per share. On April 17, 2003, The Wall Street Journal reported that certain specialist firms were under investigation. See Kate Kelly & Susan Craig, Big Board Is Probing Specialists For Possible “Front-Running”, Wall St. J., Apr. 17, 2003, at Al. That same day, NYSE issued a one-paragraph statement disclosing that it had begun an investigation of trading abuses by several NYSE specialist firms. Also that day, LaBranche & Co. issued a press release containing the following alleged misstatement: Our specialists have always focused on putting the customers first, as proved by the superior price improvement that our specialists provide to our customers on a daily basis. LaBranche has always been committed to the regulatory framework of the NYSE and has responded promptly to any area of regulatory concern. The April 17, 2003 closing price of La-Branche & Co. common stock was $16.49 per share. On April 18, 2003, The Wall Street Journal reported that LaBranche LLC and other specialist firms were the subject of an investigation by the NYSE into whether they were providing inferior stock-execution quality to certain customers. See Kate Kelly & Susan Craig, NYSE Probe Reaches 5 of 7 Specialist Firms—“Front-Running” Investigation Involves Biggest Companies, Wall St. J., Apr. 18, 2003, at Cl. That day, Bloomberg News reported that the SEC had begun an investigation of LaBranche and other NYSE specialist firms. See Eleanor Wason, SEC Probing NYSE’s Surveillance of Trading Activities, WSJ Says, Bloomberg News, Apr. 18, 2003. In the April 18, 2003 edition of The Washington Post, defendant M. La-Branche was quoted as saying “We work diligently to make sure our customers are getting the best prices available.... It is our duty to make sure their interests are protected.” Philip Boroff (Bloomberg News), Specialist Firms Scrutinized By NYSE, Wash. Post, Apr. 18, 2003, at E2. The April 21, 2003 closing price of La-Branche & Co. common stock was $16.29. On April 22, 2003, The Wall Street Journal reported that compliance officers of six of the seven NYSE specialist firms, including LaBranche LLC, had met on March 20, 2003 to discuss concerns about front-running. See John Hechinger, et al., NYSE Probe Involves Dozens Of Stock Issues—Disclosure Of March Meeting Of Big Board Specialty Firms Reveals Scope of Investigation, Wall St. J., Apr. 22, 2003, at C1. According to the article, “A number of firms attending the meeting had been asked to give testimony at the NYSE in the inquiry.” Id. On July 25, 2003, LaBranche & Co. disclosed that the NYSE Division of Enforcement had served LaBranche LLC with a charge memorandum due to its failure to produce email sent and/or received by La-Branche LLC employees (including specialists) in January 2002. On August 27, 2003, LaBranche & Co. disclosed that an NYSE hearing panel had determined that LaBranche LLC had failed to cooperate with the ongoing NYSE investigation, and LaBranche LLC was ordered to turn over the January 2002 email. On September 22, 2003, The Wall Street Journal reported that the SEC had intensified its inquiry into LaBranche and other NYSE specialist firms. See Kate Kelly, Susanne Craig & Deborah Solomon, SEC Intensifies Inquiry at NYSE Of Trading Firms—Move Comes as Big Board Names Reed Interim Chief; Regulatory Role Questioned, Wall St. J., September 22, 2003, at Al. The article stated that the SEC investigation, which had initially focused on whether specialist traders had engaged in front-running, had been expanded to examine whether specialist traders had engaged in a second form of improper conduct, which the article characterizes as “trading ahead.” Id. That day, LaBranche & Co. common stock closed at $16.05. On October 1, 2003, LaBranche & Co. issued a press release stating, in pertinent part, that: [r]ecent media reports indicate that there is confusion about the scale of the investigation. After conferring with the NYSE, LaBranche estimates the activity under review would amount to a very small fraction of its trading revenues, substantially less than one percent. La-Branche said that it believes this would be the case for any period being reviewed to date by the NYSE and covers trading in all LaBranche Specialist stocks. While LaBranche takes every transaction seriously, it believes that the activity under review is statistically insignificant relative to its trading volumes. LaBranche also believes that the distraction caused by the investigation is disproportionate to its scope and looks forward to its resolution. (Press Release, LaBranche & Co. Inc. Investor Relations, “LaBranche & Co. Provides Anticipated Third Quarter Results; Comments on NYSE Investigation,” (Oct. 1, 2003) (available at http://www.la-branche.com/newsinfo.html)). It is alleged that this statement was materially false and misleading. On October 16, 2003, the NYSE issued a press release stating, in pertinent part, that: The New York Stock Exchange Enforcement Division has informed five specialist firms that it has determined to bring disciplinary action against them. The actions will allege failure to comply with fundamental Exchange auction market rules and policies and applicable securities regulations during a three-year period from Jan. 1, 2000 through Dec. 31, 2002. The Exchange will also seek substantial fines and improvements in the self-monitoring and compliance practices of specialist firms, as well as reimbursement of potential investor losses. Additionally, the Exchange announced that it is implementing systems software at the point-of-sale to deter similar conduct in the future and to further enhance the Exchange’s market surveillance efforts. (Press Release, NYSE, “NYSE Informs Specialist Firms of Planned Disciplinary Action — Systems Software Being Implemented to Deter Improper Trading” (Oct. 16, 2003) (available at http://www.nyse.com/audience/me-dia.html)). The above-described press release identified the following two forms of alleged misconduct by the specialist traders: In some situations the specialist had customer buy and sell orders on the electronic order book that should have been crossed and executed with or against each other, but instead the specialist traded for the firm account with each order to the disadvantage of the customers. In other situations, the electronic order book contained a customer order that could have been executed against a second order, but instead the specialist traded for the firm account with the second order, to the disadvantage of the customer order already on the book. (Id. (footnotes added)). That day, La-Branche & Co. common stock closed at $11.26 per share. On October 21, 2003, LaBranche & Co. announced that in the third quarter of 2003, it had generated $70.9 million in revenue. (See 10/21/03 Form 8-K, Ex. 99.1, at 1). In the third quarter of 2002, LaBranche & Co. had generated $118.3 million in revenue. (See id.). LaBranche & Co. also announced that it had suspended its dividend. On January 23, 2004, LaBranche issued a press release announcing that: it has received a “Wells Notice” from the staff of the Securities and Exchange Commission notifying LaBranche that the staff is considering recommending that the Commission bring a civil enforcement action against LaBranche and its NYSE Specialist subsidiary, La-Branche & Co. LLC, for possible violations of securities laws and NYSE rules in the course of its Specialist trading activity. (Press Release, LaBranche & Co. Inc. Investor Relations, “LaBranche & Co. Receives Wells Notice’ From the SEC” (Jan. 23, 2004) (available at http://www.la-branche.com/newsinfo.html)). LaBranche & Co. also announced that it had received a similar notice from the NYSE. On January 28, 2004, LaBranche & Co. announced its 2003 financial results. The company stated: For the year ended December 31, 2003, revenue was $306.0 million compared to $452.8 million for the year ended December 31, 2002. Net loss available to common stockholders was $139.6 million, or $2.34 per diluted share, for the year ended December 31, 2003 compared to net income available to common stockholders of $80.3 million, or $1.34 per diluted share, for the year ended December 31, 2002. (Press Release, LaBranche & Co. Inc. Investor Relations, “LaBranche & Co. Reports Fourth Quarter and Full Year 2003 Results” (Jan. 28, 2004) (available at http://www.labranche .com/newsinfo.html)). On March 30, 2004, the SEC filed an order making findings and imposing remedial sanctions and a cease-and-desist order pursuant to Sections 15(b)(4) and 21C of the Securities Act of 1934. See Order Instituting Administrative And Cease-And-Desist Proceedings, Exchange Act Release No. 49,500, 82 SEC Docket 1903, 2004 WL 626573 (Mar. 30, 2004) (the “SEC Order”). The SEC Order provided a useful summary of a specialist’s responsibilities and obligations: 4. In the NYSE’s continuous two-way agency auction market, specialist firms are responsible for the quality of the markets in the securities in which individual specialists are registered. A specialist is expected to maintain, insofar as reasonably practicable, a “fair” and “orderly” market. A “fair” market is free from manipulative and deceptive practices, and affords no undue advantage to any participant. An “orderly” market is characterized by regular, reliable operations, with price continuity and depth, in which price movements are accompanied by appropriate volume, and unreasonable price variations between sales are avoided. 5. Specialists have two primary duties: performing their “negative obligation” to execute customer orders at the most advantageous price with minimal dealer intervention, and fulfilling their “affirmative obligation” to offset imbalances in supply and demand. Specialists participate as both broker (or agent), absenting themselves from the market to pair executable customer orders against each other, and as dealer (or principal), trading for the specialists’ dealer or proprietary accounts when needed to facilitate price continuity and fill customer orders when there are no available contra parties to those orders. 6. Whether acting as brokers or dealers, specialists are required to hold the public’s interest above their own and, as such, are prohibited from trading for their dealers’ accounts ahead of pre-existing customer buy or sell orders that are executable against each other. When matchable customer buy and sell orders arrive at specialist’s trading posts — generally either through the NYSE’s Super Designated Order Turnaround System (“DOT”) to an electronic display book (the “Display Book”) or by floor brokers gathered in front of the specialist’s trading posts (“the crowd”)— specialists are required to act as agent and cross or pair off those orders and to abstain from participating as principal or dealer. (SEC Order ¶¶ 4-6, 2004 WL 626573, at *2). The SEC Order also provided a useful summary of the alleged conduct that gave rise to this action: 7. During the period January 1999 through 2003, LaBranche breached its duty to refrain from dealing for its own account while in possession of executable buy and sell customer orders. Instead, LaBranche effected improper proprietary trades at the expense of customer orders. 8. Through the Display Book, the specialist reports trade executions electronically, and can view all the incoming DOT market and limit orders on both sides of the market. Executable buy and sell customer orders can appear on the Display Book at the same time. In such instances, specialists should simply “pair off’ or cross the buy and sell orders. In numerous instances, however, La-Branche specialists improperly chose not to “pair off’ or cross these buy and sell orders with each other. Sometimes, La-Branche specialists effected proprietary trades with orders that arrived electronically through the DOT system to the Display Book. At other times, La-Branche specialists effected improper proprietary trades with orders that came in from the crowd. In either case, the disadvantaged order was a DOT order visible on the Display Book that the LaBranche specialist should have paired with the other order, instead of filling that other order through a proprietary trade. (Id. at *3 (footnote omitted)). More specifically, the SEC Order determined that LaBranche engaged in the following three categories of improper trading practices. 1. Interpositioning With respect to interpositioning, the SEC Order stated that “[a]t times from January 1999 through 2003, certain LaBranche specialists bought stock for the firm dealer account from the customer sell order, and then filled the customer buy order by selling from the dealer account at a higher price — thus realizing a profit for the firm dealer account.” (Id. at *3). The SEC Order found that between 1999 and 2003, interpositioning by LaBranche LLC disadvantaged customers in the amount of $8,689,574. (See id.). In particular, the SEC order focused on interpositioning by LaBranche LLC in a small number of stocks. The SEC order stated: 13.LaBranche’s improper interposi-tioning transactions, in particular, were heavily concentrated in a few stocks traded by a small number of specialists. Specifically, from . 1999 through 2003, 40.69% of LaBranche’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. 14. The interpositioning violations with respect to certain transactions in the six stocks listed above were done by certain LaBranche specialists with scienter. In such instances, certain LaBranche specialists disadvantaged a market buy order (i.e., a purchaser) and/or a sell order (i.e., a seller) because the specialist sold to the purchaser at one price and then bought from the seller at a lower price (or, alternatively, the specialist bought from the seller at one price and then sold to the purchaser at a higher price) instead of matching the purchaser and seller at a better market price for each. 15. Certain senior executives at La-Branche knew about the illicit trading because certain of the LaBranche specialists who were engaged in such inter-positioning in these six stocks were senior executives at LaBranche, including managing directors, post managers, and a floor captain, some of whom had supervisory responsibility for LaBranche’s trading activities on the NYSE floor. (Id. at *5). 2. Trading Ahead With respect to trading ahead, the SEC Order stated that: LaBranche specialists sometimes filled one agency order through a proprietary trade for the firm’s account— and thereby improperly “traded ahead” of the other agency order. As a consequence, the customer order that was traded ahead of was disadvantaged by being executed at a price that was inferi- or to the price received by the dealer account. Unlike “interpositioning,” the “trading ahead” violations did not necessarily involve a second specialist proprietary trade into the opposite, disadvantaged agency order. From January 1999 through 2003, trading ahead by certain LaBranche specialists resulted in customer disadvantage of $30,969,236. (Id. at *4). 3. Unexecuted Limit Orders With respect to unexecuted trade orders, the SEC Order stated that: LaBranche specialists traded ahead of executable limit orders — ie., they improperly effected proprietary trades with customer orders that they should have paired with marketable limit orders. Unlike the “trading ahead” violations described just above, in these instances the disadvantaged limit orders were never executed, but rather were cancelled by the customer before receiving an execution. Between 1999 and 2003, trading ahead of unexecuted limit orders by La-Branche caused $1,987,630 in customer disadvantage. This measurement is determined based on the difference between the price at which the order should have been executed and the price at the time of cancellation. (Id. at *5). The SEC Order determined that from 1999 through 2003, the above-described categories of conduct — ie., interposition-ing, trading ahead, and unexecuted trade orders — resulted in customer disadvantage of $41,646,440. (See id. at *3). La-Branche LLC consented to the SEC Order without admitting or denying the findings contained therein. (See id. at *1). Pursuant to the SEC Order, LaBranche LLC agreed to pay a civil penalty in the amount of $21,872,320 and to disgorge $41,646,440. (See id. at *11). In addition to the conduct identified in the SEC Order, the Plaintiffs allege that LaBranche LLC specialists would periodically freeze the Display Book orders, thereby preventing DOT orders from reaching the floor and being executed. While the Display Book was frozen, La-Branche LLC specialists would complete their own proprietary trades by either trading ahead or interpositioning and then restart the Display Book and complete the public investors’ orders. Plaintiffs allege that the above-described conduct violated the following NYSE rules governing the conduct of specialists: Rule 92 (“Limitations on Members’ Trading Because of Customers’ Orders”), Rule 104 (“Dealings by Specialists”), Rule 123B (“Exchange Automated Order Routing Systems”), Rule 342 (“Offices — Approval, Supervision and Control”), Rule 401 (“Business Conduct”), Rule 476(a)(6) (“conduct or proceeding inconsistent with just and equitable principles of trade”), and Rule 476(a)(7) (“acts detrimental to the interest or welfare of the Exchange”). C. Allegations Relating To Scienter The Plaintiffs allege scienter on the part of the Individual Defendants based on the fact that many of them had overlapping responsibilities with LaBranche LLC and LaBranche & Co. during the Class Period. Furthermore, M. LaBranche, Murphy, and Hayward also held leadership positions with the NYSE. The following table summarizes the positions that each Individual Defendant is alleged to have held during the Class Period. Defendant LaBranche LLC Duties LaBranche & Co. Duties NYSE Duties M. LaBranche Chairman of Management Committee (since 1996) Member of Management Committee (since 1988) Specialist (since 1977) CEO, Chairman, President (since August 1999) Governor Member of NYSE Market Performance Committee Murphy CEO (03/16/01 to 11/03) Director (03/16/01 to 11/03) Vice Chairman Director Hayward Member of Management Committee (since 1994) Specialist (since 1983) Director (since August 1999) Executive Vice President (since August 1999) Member of NYSE Arbitration Panel Trustee of Buttonwood Association Trustee of NYSE Gratuity Fund Former NYSE Floor Official Former Chairman of NYSE Allocation Committee Gallagher Member of the Management Committee (1998 to January 2003) Director (08/99 to 01/03) Executive Vice President (08/99 to 01/03) Burke Director of Business Development (October 1999) Director of Risk Management (08/99 to 01/03) Secretary Traison Senior Vice President (since March 2000) Chief Financial Officer (since March 2000) Director (03/00 to 01/03) Prendergast Director (since 08/99) Executive Vice President (since 08/99) Robb Director (since March 16, 2001) The Plaintiffs also allege scienter on the part of the Individual Defendants based on the fact that they owned shares of La-Branche & Co. during the Class Period. LaBranehe & Co’s Proxy Statements offer the following useful snapshot of ownership of common stock by the Individual Defendants: 2002 2003 2004 of 3/22/02)_(as of 3/21/03)_(as of 3/19/04) NAME # OF % # OF % # OF % _SHARES_SHARES_ SHARES_ M. LaBranehe 3,834,327 6.5 4,001,094 6.7 4,067,761 6.7 Gallagher_2,368,767_40_0_*_*_* Robb_2,256,141 3.8_*_*_*_* Hayward_1,974,734 3.4 1,956,468 3.3 1,966,468 3.3 Murphy_1,505,000 2.5 1,515,000 2.5_*_* Burke__*_*_*_700,800_1.2% Prendergast_207,000_•_207,000_•_207.000_■ Traison_39,333_•_72,666_•_106,000_•_ Ml 12,188,392 20.7 8,457,892 13.9 7,063,034 11.6% officers and directors_____ (04/15/02 Proxy Statement, at 2; 04/16/03 Proxy Statement, at 3; 04/12/04 Proxy Statement, at 3). Furthermore, the Plaintiffs allege that M. LaBranehe, Hayward, and Gallagher had the power to vote 52.9% of LaBranehe & Co.’s common stock. As stated in the April 16, 2003 Proxy Statement: Each of our managing directors at the time of our initial public offering in August 1999 entered into a stockholders’ agreement pursuant to which he or she agreed to vote his or her shares as determined by a majority of Messrs. LaBranche, Hayward and James G. Gallagher, a former director and executive officer of the Company who retired in January 2003. Messrs. LaBranche, Hayward and Gallagher beneficially own an aggregate of 8,037,662 shares of common stock, constituting approximately 13.2% of the outstanding shares of our common stock. As a result of the stockholders’ agreement, Messrs. La-Branche, Hayward and Gallagher, acting together as a group, may be deemed to beneficially own ah aggregate of 32,235,-551 shares of common stock (including the 8,037,662 shares beneficially owned by them individually), constituting approximately 52.9% of the outstanding shares of our common stock. Each of Messrs. LaBranche, Hayward and Gallagher disclaims beneficial ownership of any and all shares of common stock held by any person or entity other than him. (04/16/03 Proxy Statement, at 3 n. 1). The Complaint alleges that LaBranche & Co.’s senior executives' — e.g., Burke, Gallagher, Hayward, M. LaBranche, Murphy, and Prendergast — received incentive-based cash and equity bonus compensation that was directly linked to the Company’s overall performance, profit margins, and earnings per share, and that the Company derived 82 percent of its annual revenue from specialist trading for LaBranche & Co.’s own accounts. Plaintiffs allege that the Defendants were motivated to inflate the value of La-Branche’s common stock by a desire to acquire other specialists firms during the Class Period using as few shares as possible in order to avoid undue dilution of company stock. It is alleged that during the Class Period, LaBranche & Co. acquired ten other specialist firms and used its stock to fund many of these acquisitions. It is alleged that these acquisitions had the effect of doubling LaBranche & Co.’s share of the specialist industry, as measured by NYSE trade volume. In 1998, LaBranche LLC acted as specialist for approximately 14.2% of the dollar volume traded on the NYSE. By 2002, La-Branche LLC acted as specialist for some 27.2% of the dollar volume traded on the NYSE. These acquisitions occurred at time of industry-wide consolidation. It is alleged that during the Class Period, the total number of NYSE specialists firms dropped from 25 in 1999 to seven in 2003. It is alleged that Burke, Gallagher, and Hayward sold significant holdings of La-Branche common stock during the Class Period. Gallagher allegedly sold 130,000 shares, generating proceeds of $3,016,767. Hayward allegedly sold 51,600 shares, generating proceeds of $1,554,634. Furthermore, it is alleged that Burke sold 101,420 shares and Hayward sold 312,429 shares pursuant to a 2002 forward contract with a Delaware trust. Finally, the SEC Order contains allegations that in January 2000, the NYSE fined LaBranche LLC $1,000 for some eighteen instances of trading ahead; that in 2001, the NYSE issued an examination report which noted instances in which a LaBranche specialist traded ahead in two stocks; that between August 2002 and July 2003, the NYSE fined four La-Branche specialists $1,000 each for trading ahead; and that in February 2003, the NYSE issued LaBranche an admonition letter for excessively freezing the Display Book. Standards Plaintiffs have alleged that Defendants’ conduct gives rise to liability pursuant to Sections 10(b) and 20(a) of the Exchange Act. 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)). However, “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 “[sjecurities 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 v. Kasaks, 216 F.3d 300, 307 (2d Cir.2000). 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. Citytrust 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 63, 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. DISCUSSION I. Plaintiffs’ Section 10(b) Claim Count One of the Complaint asserts that LaBranche & Co., LaBranche LLC, Burke, Gallagher, Hayward, M. La-Branche, Murphy, and Traison violated Section 10(b) of the Exchange Act and Rule 10b-5. Section 10(b) 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 cause of action under Section 10(b) and Rule 10b-5 promulgated thereunder, 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 plaintiff[] relied; and (5) that plaintiff[’s] 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). A. Plaintiff’s Section 10(b) Claim Is Dismissed As To Individual Defendants Who Did Not Make The Alleged False Statements Defendants’ argue that each defendant can only be held liable pursuant to Section 10(b) and Rule 10b-5 for those statements actually made by that defendant. i. The Complaint States A Rule 10(b) Misrepresentation Claim Against LaBranche LLC Defendants assert that LaBranche LLC cannot be subject to primary liability for statements made by LaBranche & Co., its corporate parent. The Defendants cite two cases from this district to support its proposed per se rule that a subsidiary cannot be subjected to primary liability for statements made by its parent. In re Sotheby’s Holdings, Inc., No. 00 Civ. 1041(DLC), 2000 WL 1234601, at *5-6 (S.D.N.Y. Aug.31, 2000); Thomson Kernaghan & Co. v. Global Intellicom, Inc., Nos. 99 Civ. 3005(DLC), 99 Civ. 3015(DLC), 2000 WL 640653, at *4-5 (S.D.N.Y May 17, 2000). The Plaintiffs counter that to hold LaBranche LLC liable for the misstatements in LaBranche & Co’s public filings and press releases, all that needs to be alleged is that “defendants were the original and knowing source of a misrepresentation and that defendants knew or should have known that misrepresentation would be communicated to investors.... ” In re Kidder Peabody Sec. Litig., 10 F.Supp.2d 398, 407 (S.D.N.Y.1998). The resolution of this issue hinges in large measure on the application of the Supreme Court’s holding in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994). As stated by the Second Circuit, [i]n Central Bank, the Supreme Court held that private civil liability under § 10(b) applies only to those who “engage in the manipulative or deceptive practice,” but not to those “who aid and abet the violation.” [511 U.S. at 167, 114 S.Ct. 1439]. The Court observed that “[a]iding and abetting is a method by which courts create secondary liability in persons other than the violator [or violators] of the statute.” Id. at 184, 114 S.Ct. 1439 (quotation marks omitted) (emphasis added). SEC v. U.S. Envtl. Inc., 155 F.3d 107,110-111 (2d Cir.1998). In the wake of Central Bank, the Second Circuit adopted a bright-line rule that in order to state a Section 10(b) misrepresentation claim, the plaintiff must allege that the defendant made a false or misleading statement. See Wright v. Ernst & Young LLP, 152 F.3d 169, 175 (2d Cir.1998) (affirming dismissal of 10b-5 claim against a company’s auditor for approving false and misleading financial figures that were subsequently disseminated by the company) (quoting Shapiro v. Cantor, 123 F.3d 717, 720 (2d Cir.1997)). The Wright court stated that while the plaintiff need not allege that the defendant directly communicated the misrepresentation to investors, it is necessary that “the misrepresentation ... be attributed to [the defendant] at the time of public dissemination, that is, in advance of the [plaintiffs] investment decision.” Id. This bright-line public attribution rule notwithstanding, a subsequent Second Circuit panel held that under proper circumstances, a defendant can be held liable pursuant to Section 10(b) for a false and misleading statement even if the statement at issue was not attributed to the defendant at the time of its public dissemination. See In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 75-76 (2d Cir.2001) (holding that a complaint properly pled primary violation of Section 10(b) by a company’s vice president where facts were alleged demonstrating: (1) that the company had disseminated false and misleading statements to its investors, (2) that the defendant had primary responsibility for the company’s communications with investors and securities analysts, and (3) that the defendant was “involved in the drafting, producing, reviewing and/or disseminating of false and misleading statements”). The Scholastic decision does not refer to Wright, and no subsequent Second Circuit panel has attempted to synthesize the two decisions. In the absence of guidance from the Second Circuit, some district courts have taken the position that Scholastic did not significantly alter the public attribution rule articulated in Wright. See, e.g., In re Parmalat Sec. Litig., 376 F.Supp.2d 472 (S.D.N.Y.2005) (stating that the Scholastic court “did not question, let alone purport to set aside, the attribution rule set forth in Wright ... ”) Other courts have adopted the view that Scholastic relaxed Wright’s public attribution requirement. See, e.g., SEC v. Pimco Advisors Fund Mgmt. LLC, 341 F.Supp.2d 454, 466 (S.D.N.Y.2004). A useful synthesis of Wright and Scholastic can be found in In re Global Crossing, Ltd. Sec. Litig., 322 F.Supp.2d 319, 330-32 (S.D.N.Y.2004). The Global Crossing court stated: [A] plaintiff may state a claim for primary liability under section 10(b) for a false statement (or omission), even where the statement is not publicly attributed to the defendant, where the defendant’s participation is substantial enough that s/he may be deemed to have made the statement, and where investors are sufficiently aware of defendant’s participation that they may be found to have relied on it as if the statement had been attributed to the defendant. Id. at 332 (citing In re Lernout & Hauspie Sec. Litig., 230 F.Supp.2d 152 (D.Mass. 2002)). Pursuant to Wright, Scholastic, and Global Crossing, dismissal of Plaintiffs’ Section 10(b) misrepresentation claim against LaBranehe LLC is not warranted. Plaintiffs contend that even though La-Branche & Co. did not clearly attribute the alleged misstatements to LaBranehe LLC, LaBranehe LLC may be held primarily liable for the statements disseminated by LaBranehe & Co. where it is shown that it was “the original and knowing source of a misrepresentation and that [it] knew or should have known that the misrepresentation would be communicated to investors.” In re Kidder Peabody Sec. Litig. 10 F.Supp.2d 398, 407 (S.D.N.Y.1998) (holding that a corporate subsidiary could be held primarily liable under Section 10(b) for statements made by the corporate parent where it was alleged that the subsidiary was the “original and knowing source” of the misstatements). The facts at issue here closely mirror those the Kidder Peabody court confronted. As in Kidder Peabody, “there is no dispute that [LaBranehe LLC] provided [LaBranehe & Co.] with financial data on a quarterly basis and that the data was incorporated in [LaBranehe & Co.’s] financial statements and quarterly and annual reports.” Id. at 407. When LaBranehe & Co. reported LaBranehe LLC’s principal trading revenues, it was the “mere” conduit through which the information was disseminated. Id. It should be noted that Kidder Peabody was decided prior to Wright and Scholastic, and as such, its continued viability has been called into question. It is determined, however, that regardless of the weight that should be accorded Kidder Peabody, Plaintiffs have adequately pled a Section 10(b) claim against LaBranehe LLC in accordance with Wright, Scholastic, and Global Crossing. LaBranehe LLC made material misstatements attributable to it at the time of dissemination upon “which a purchaser or seller of securities relied.” Central Bank, 511 U.S. at 191, 114 S.Ct. 1439. As in In re Van Der Moolen, La-Branche LLC is the subsidiary through which LaBranehe & Co. conducts all of its specialist operations on the NYSE. (See Compl. ¶ 3). Under the circumstances, the misstatements — namely quarterly and annual reporting of principal trading revenues and profits for LaBranehe & Co.’s specialist activity — could have come only from LaBranehe LLC. In other words, when LaBranehe & Co. disseminated financial information to the public regarding its specialist operations, it related only to the activity of LaBranehe LLC and could have been provided only by LaBranehe LLC. Additionally, because LaBranehe & Co. referred only to the activity of La-Branche LLC in reporting its specialist earnings, investors may be deemed to have been “sufficiently aware of [La-Branche LLC’s] participation that they may be found to have relied on it as if the statements] had been publicly attributed to [it].” Global Crossing, 322 F.Supp.2d at 332. Under these facts, it is reasonable to infer that LaBranche LLC’s financial data were incorporated directly into La-Branche & Co.’s public statements regarding the earnings of its specialist operations. Therefore, even though LaBranche & Co. failed to explicitly identify La-Branche LLC as the source of the information concerning revenue and earnings of its specialist operations, the misrepresentations may be constructively attributed to LaBranche LLC. See id. at 333 n. 14 (noting that a rule of constructive attribution comports with the Second Circuit’s emphasis on reliance). To hold otherwise would enable parent companies to create subsidiaries under which all of its business would be conducted and then to shield the subsidiaries from section 10(b) liability by disseminating the subsidiary’s false information. See id. at 333 (holding that the “strict requirement of public attribution would' allow those primarily responsible for making false statements to avoid liability by remaining anonymous and thus would place a premium on concealment and subterfuge rather than on compliance with the federal securities laws.” (internal quotations and citations omitted)). For the reasons set forth above, Plaintiffs have adequately alleged that La-Branche & Co.’s misstatements regarding the earnings and revenue of its specialist operations may be attributed to La-Branche LLC. ii. Plaintiffs Properly Rely on Group Pleading Defendants argue that many of the alleged misstatements upon which plaintiffs base their Section 10(b) claims were made by only one or a few defendants, and that Plaintiffs improperly rely on “group pleading” to attribute these statements to all of the defendants named in their Section 10(b) claim. Based on analogous facts, Defendants in the In re Van Der Moolen N.V. Sec. Litig. derivative action asserted the same defense. For the reasons set forth in In re Van Der Moolen N.V. Sec. Litig., No. 03 Civ. 8284, slip op. p. 20-22, the Defendants argument fails. Plaintiffs have properly relied on group pleading. iii. Plaintiffs’ Section 10(b) Claims Are Dismissed For Periods When Individual Defendants Were Not Directors of LaBranche & Co. or La-Branche LLC Defendants argue that Plaintiffs’ Section 10(b) claims asserted against Gallagher, Murphy, and Traison should be dismissed for periods during which they were not directors or officers of LaBranche & Co. or LaBranche LLC. See, e.g., In re Flag Telcom. Holdings, Ltd. Sec. Litig., 308 F.Supp.2d 249, 266 n. 7 (S.D.N.Y.2004). Plaintiffs do not contest this issue. Therefore, with respect to Gallagher, Plaintiffs’ Section 10(b) claim is dismissed as to any statements that were made after he retired from LaBranche & Co. in January, 2003. (See Compl. ¶ 26). With respect to Murphy, Plaintiffs’ Section 10(b) claim is dismissed with respect to any statements made prior to March 16, 2001, the date on which he first became a La-Branche & Co. Director and CEO of La-Branche LLC. (See Compl. ¶ 23). With respect to Traison, Plaintiffs’ Section 10(b) claim is dismissed as to any statements made prior to March 2000, the date on which he first became a Senior Vice President, CFO and a Director of LaBranche & Co. (See Compl. ¶ 28). B. Plaintiffs Have Properly Alleged Scienter 1. Plaintiffs Have Adequately Alleged That LaBranche & Co. Had Motive To Commit Fraud The Defendants do not dispute in this case that the Individual Defendants, who were officers and/or directors of La-Branche & Co., had opportunity to commit fraud. However, they maintain that Plaintiffs have failed to properly allege that defendants had motive to commit fraud. The Second Circuit has stated that: [sufficient motive allegations “ ‘entail concrete benefits that could be realized by one or more of the false statements and wrongful nondisclosures alleged.’ ” Novak, 216 F.3d at 307 (quoting Shields, 25 F.3d at 1130). Motives that are generally possessed by most corporate directors and officers do not suffice; instead, plaintiffs must assert a concrete and personal benefit to the individual defendants resulting from the fraud. Novak, 216 F.3d at 307-08. Insufficient motives, we have held, can include (1) the desire for the corporation to appear profitable and (2) the desire to keep stock prices high to increase officer compensation. Id. (citing cases). On the other hand, we have held motive sufficiently pleaded where plaintiff alleged that defendants misrepresented corporate performance to inflate stock prices while they sold their own shares. Id. (citing cases). Kalnit v. Eichler, 264 F.3d 131, 139 (2d Cir.2001). Plaintiffs have identified three alleged concrete benefits that the publication of the alleged misstatements provided to the defendants: (1) compensation from employment contracts that disproportionately emphasized earnings performance; (2) profit from unusual stock sales; and (3) protection of stock positions against the dilutive effect of stock-for-stock mergers. i. The Allegations Concerning The Individual Defendants’ Desire To Increase The Value Of Their Bonuses Are Not Sufficient To Allege Motive To Commit Fraud Plaintiffs argue that motive to commit fraud has been alleged based on allegations that the Individual Defendants received “generous” cash and equity bonuses. With respect to cash bonuses, the Complaint alleges that in 2000, M. La-Branche received some $3.45 million, Gallagher received $1.08 million, and Hayward received $1.95 million. With respect to equity bonuses, the Complaint alleges that in 2001, Traison received stock options with a potential value of $5.3 million, and Murphy received options with a potential value of $47.8 million. Plaintiffs argue that the sheer magnitude of the compensation at issue here is sufficient to make these allegations analytically distinct from those that the Kalnit court determined were inadequate as a matter of law to establish motive and opportunity. See Kalnit, 264 F.3d at 139 (stating that “ ‘incentive compensation can hardly be the basis on which an allegation of fraud is predicated.’ ” (quoting Acito, 47 F.3d at 54)). In support of this proposition, Plaintiffs have cited only one case from this Circuit: In re Computer Assocs. Class Action Sec. Litig., 75 F.Supp.2d 68, 74 (E.D.N.Y.1999). The Computer Associates court held that motive to commit fraud had been properly pled where it was alleged that three defendants would be granted over $1.15 billion of company stock if the company’s common stock traded at or above a specified price for a minimum of 60 days during any 12 month period prior to March 2000. See id. at 74. The court reasoned that this “mammoth grant incentive” combined with the timing of the alleged misstatements, and the subsequent large and unexpected drop in the value of the company’s stock were sufficient to allege motive to commit fraud. See id. There are no such mammoth sums of money at issue here to justify carving out an exception to the rule stated in Kalnit. Therefore, it is determined that the allegations concerning the bonuses received by the Individual Defendants are inadequate to satisfy the scienter requirement. 11. The Allegations Concerning Unusual Stock Sales By Insiders Are Not Sufficient To Adequately Plead Motive To Commit Fraud Plaintiffs allege that Defendants were motivated to commit fraud in order to facilitate insider trading. The Complaint alleges that Burke and Hayward sold 101,-420 and 312,429 shares of LaBranche & Co. common stock, respectively, pursuant to a January 18, 2002 registration statement. It is alleged that at the time, La-Branche & Co. common stock was trading at $33.74. The Complaint further alleges that in November and December of 2002, Hayward and Gallagher sold significant shares of their LaBranche & Co. holdings. Hayward is alleged to have sold some 51,-600 shares, thereby generating $1.55 million in proceeds. Gallagher is alleged to have sold some 130,000 shares, generating $3.01 million in proceeds. Furthermore, it is alleged that late 2002 sales by Hayward and Gallagher were made at a time that the Individual Defendants would have known that the NYSE had begun investigating various specialist firms — a fact that was allegedly not then known by the investing public. The mere allegation of insider sales during the Class Period does not, without more, properly allege motive. Instead, Plaintiffs must further allege adequately that the insider sales were “unusual.” See Acito, 47 F.3d at 54; In re Hudson Techs., Inc. Sec. Litig., No. 98 Civ 1616(JGK), 1999 WL 767418, at *9 (S.D.N.Y. Sept. 28, 1999). The Second Circuit has stated that: [i]nsider sales have been found unusual based on a variety of factors, including [1] the amount of profit from sales, see In re Oxford Health Plans, Inc. Securities Litigation, 187 F.R.D. 133, 140 (S.D.N.Y.1999) ($78 million profit from sale of 1.2 million shares during the class period is “massive by any measure”) [;] ... [2] the portion of stockholdings sold, see [Stevelman v. Alias Research Inc., 174 F.3d 79, 85 (2d Cir.1999) ] (president and CEO of company sold 40 percent of his stock holdings in company while making optimistic statements about company’s financial position) [;][3] the change in volume of insider sales, see In re Quintel Entertainment Inc. Securities Litigation, 72 F.Supp.2d 283, 296 (S.D.N.Y.1999) (sales by corporate insiders represented 156 percent increase over total insider sales for fourteen months prior to start of class period) [;] and [4] the number of insiders selling, see San Leandro, 75 F.3d at 814 (company officer’s $2 million profit from company stock sales did not suffice to prove motive, because no other company executives sold their shares during the relevant period). Rothman v. Gregor, 220 F.3d 81, 94 (2d Cir.2000); see also Scholastic, 252 F.3d at 74-75. Plaintiffs have alleged that the following proceeds were generated by the stock sales at issue: $3.42 million for Burke, $3.02 million for Gallagher, and $12.09 million for Hayward. However, they have not made allegations with respect to: (1) the portion of stockholdings sold by each Individual Defendant, (2) any relevant change in volume of insider sales during the Class Period, or (3) the total numbers of insiders selling. Rather, the Plaintiffs merely assert that the trades of Burke, Gallagher, and Hayward were suspicious because: (1) the Defendants had not sold stock before the Class Period, and (2) the “vast proportion” of these sales were made at a time that the NYSE was preparing an investigation of the specialist firms, a fact that then was known to LaBranche & Co. insiders but not the investing public. The first argument — i.e., that there were no stock sales prior to the commencement of the Class Period — fails: As Plaintiffs acknowledge on the second page of the Complaint, LaBranche & Co’s IPO was held on the first day of the Class Period; no stock sales could have taken place prior to the start of the Class Period. Plaintiffs second argument — ie., that the majority of the insider trades at issue were made when the investigation was imminent — is contradicted by the Complaint’s allegations. According to the Complaint, Hayward and Burke, pursuant to a registration statement, sold some 413,-849 shares of LaBranche & Co. common stock on January 18, 2002. (See Compl. ¶ 229). There is no allegation that the NYSE investigation was either underway or imminent in January 2002. Rather, the Complaint states that the NYSE investigation was launched in late 2002. Even assuming arguendo that M. LaBranche and Murphy were in a position to provide LaBranche & Co. with early warning of an impending NYSE investigation, they have alleged no facts that would support the inference that such warning could have been provided some twelve months prior to the investigation’s launch. Therefore, the argument concerning the allegedly suspicious timing of the sales fails with respect to these 413,849 shares, which constitute 69.5% of all shares allegedly sold by Hayward, Gallagher, and Burke during the Class Period. Moreover, Plaintiffs have identified nothing else that would render these the sale of these 413,849 shares suspicious. With respec