Full opinion text
MEMORANDUM OPINION SCHWAB, District Judge. Pending before the Court is Defendants’ Motion to Dismiss the Second Amended Class Action Complaint (“SAC”), Docket No. 73. For the reasons discussed below, the Motion is granted in its entirety and Plaintiffs’ complaint is dismissed with prejudice. I. BACKGROUND A. Factual History IT Group, Inc. (“ITG” or “the Company”), was a Delaware corporation headquartered in Monroeville, Pennsylvania, whose primary business was providing environmental remediation services to commercial customers and federal government agencies. In 'November 1996, Defendant The Carlyle Group (“Carlyle”), a private merchant bank located in Washington, D.C., invested some $45 million in ITG, acquiring more than 46,0000 shares of convertible preferred stock and 1.2 million shares of common stock, giving it approximately 25% of the voting power of the Company. As holder of the preferred stock, Carlyle was paid an annual stock dividend of $6.36 million, regardless of the performance of IT Group and regardless of the value of ITG stock to open-market investors. By virtue of its position as principal holder of the convertible preferred stock, Carlyle had the right to elect one fewer than the majority of directors and to vote with the common shareholders on the election of other directors. Carlyle was thereby able to install one of its managing directors, Defendant Daniel D’Aniello, as Company chairman, and named four other members of the ITG Board of Directors-Defendants Philip Dolan, Martin Gibson, Robert F. Pugliese, and James David Watkins. Although Defendant Francis J. Harvey had no formal affiliation with Carlyle, he served on two other boards at Carlyle-controlled companies and served on the ITG Board “at Carlyle’s behest.” (SAC, ¶ 85.) Other directors were Defendants James C. McGill and Richard W. Pogue. Anthony J. DeLuea served as President and Chief Executive Officer (“CEO”); Defendant Harry J. Soose was Senior Vice President and Chief Financial Officer. Soon after Carlyle took control of the Company, ITG embarked on an aggressive plan of growth and diversification through acquisition. Between 1997 and 2000, the Company acquired eleven domestic and international companies, many of which had been competitors in the environmental remediation field. To finance these acquisitions, ITG took the following steps: • In February through June 1998, in connection with its acquisition of OHM Corporation, ITG obtained a $240 million credit facility which was later refinanced to consist of an eight-year $228 million amortizing term loan and a six-year, $185 million revolving credit facility. • In December 1998, when acquiring Fluor Daniel GTI, Inc., the Company borrowed $20 million in cash from Fluor Daniel and financed the remaining $51.4 million of purchase and transaction costs using cash on hand and its revolving credit facility. • To finance its acquisitions of Roche Limited Consulting Services and EFM Group in the spring of 1999 and to refinance existing indebtedness in the revolving credit facility, ITG issued $225 million of ten-year senior subordinated notes for net proceeds of $216 million. The acquisitions and diversification boosted ITG revenues from $400 million in 1996 to approximately $1.4 billion in 2000. However, by the spring of 2000, the Board of Directors realized that the Company’s strategy of “growth by acquisition” had failed for a number of reasons: • the increase in revenue, although significant, was not sufficient to offset the debt which financed the acquisitions; • ITG had difficulty managing the diversity of the acquired companies and the businesses they performed, in part because of turnover among key personnel in those companies; • several of the acquired entities did not perform as well as expected; • the Company did not realize the anticipated cost-savings and other efficiencies expected from consolidation of the acquired businesses, in part because of poor management; and • the general economic slowdown of the late 1990s. (SACA 87.) The Board of Directors re-focused its attention on debt reduction, recognizing that ITG was having increased difficulty meeting the financial covenants associated with its bank loans. On March 8, 2000, ITG obtained an additional $100 million, seven-year term loan (“Term C Loan”) from its lending banks in an attempt to resolve its liquidity problems. Although described as a means to support “seasonal business pattern working capital requirements,” Plaintiffs allege that, in reality, the Term C Loan was merely a temporary solution to the Company’s massive liquidity problems which Defendants concealed from investors. Late in 2000, ITG agreed with its lenders that in 2001, it would divest itself of “certain non-core assets and implement other measures in order to reduce debt and raise capital.” (SAC, ¶ 95.) Plaintiffs contend that as another example of the Company’s “general pattern of obfuscation,” this divestiture plan extended not only to passive assets such as real estate, but to businesses which had just been acquired in the preceding three or four years. Despite the ever-increasing liquidity crisis, ITG maintained a public relations campaign designed to reassure the investing public about the Company’s stability and bright future. At the same time, a number of allegedly deceptive accounting and managerial practices (discussed in more detail below) were implemented at the direction of Defendants DeLuca and Soose. By September 2001, the Company’s line of credit was almost depleted and it was having difficulty meeting its loan covenants. As a result, it was forced to renegotiate the terms of its loans. On November 13, 2001, Defendant De-Luca announced his resignation as President and CEO; he was replaced by Mr. Harvey. According to Plaintiffs, Mr. Harvey had actually become Mr. DeLuca’s de facto superior at the May 2001 Board of Directors meeting when he was named vice chairman of ITG. Plaintiffs claim that Carlyle required Mr. DeLuca’s ouster “due to the [Company’s] severe financial situation.” (SAC, ¶¶ 86, 98.) By December 7, 2001, even the questionable accounting practices instituted by Messrs. DeLuca and Soose were not sufficient to keep ITG afloat and it was forced to admit to its lenders that without an emergency loan of $35 million, it would be bankrupt by January 4, 2002. The lenders refused to advance more funds; Carlyle refused to invest additional monies. Although ITG immediately retained workout, and restructuring specialists, the Company acknowledged at a second meeting with the banks on December 18, 2001, that its liquidity and leverage problems prevented it from obtaining new contracts with its largest customer, the federal government. On December 27, 2001, the Company publicly announced to investors that a bankruptcy filing could be expected. On January 16, 2002, just three weeks later, ITG filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. B. Procedural History On May 31, 2002, Plaintiff Thomas L. Payne filed a class action suit in the United States District Court for the District of Nevada, alleging that Defendants DeLuca and' Soose had issued public statements which failed to disclose the magnitude of the Company’s financial difficulties and perpetrated a fraudulent scheme to artificially inflate the price of ITG’s shares. (Complaint, ¶ 4.) Mr. Payne brought suit “behalf of all other persons or entities who purchased or acquired [ITG] common stock during the Class Period and were damaged thereby.” {Id., ¶ 17.) The Class Period was defined as February 24, 2000, through January 15, 2002. On October 4, 2002, Mr. Payne, Sid Archinai, Gary H. Karesh, Jo Ann Karesh, Belca D. Swanson and Merle K. Swanson were approved by the District Court in Nevada as Lead Plaintiffs. Based on the relationship of this suit to Staro Asset Management LLC v. DeLuca et al., CA No. 02-886, already pending in this Court, the parties stipulated to a transfer of the action to this District. Plaintiffs then filed an Amended Complaint on February 28, 2003 (Docket No. 26), adding the Board members and The Carlyle Group as Defendants. Defendants moved to dismiss the Amended Complaint on June 9, 2003 (Docket No. 38), which the parties continued to brief until June 10, 2004, adding evidence and argument as information emerged from the Company’s bankruptcy proceedings in the U.S. District Court for the District of Delaware. On December 16, 2004, the Court issued a Memorandum Opinion, granting the motion to dismiss for failure of Plaintiffs to allege scienter with the particularity required by the Private Securities Litigation Reform Act (“Reform Act” or “PSLRA”), 15 U.S.C. § 78u et seq. However, the dismissal was without prejudice and Plaintiffs were directed to file a Second Amended Class Action Complaint. (Docket No. 68.) Defendants moved to dismiss the Second Amended Complaint on May 27, 2005. C. Jurisdiction and Venue This Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 1337, Section 27 of the Securities Exchange Act of 1934 (“the 1934 Act.”) Plaintiffs claim that Defendants violated Sections 10(b) and 20(a) of the 1934 Act, 15 U.S.C. §§ 78j(b), 78(n) and 78t(a) and Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder by the Securities and Exchange Commission (“SEC”) Venue is appropriate in this District pursuant to 15 U.S.C. § 78aa and 28 U.S.C. § 1391(b) inasmuch as many of the acts giving rise to the violations alleged herein occurred in this District. II. STANDARD OF REVIEW — MOTION TO DISMISS Unlike a typical civil matter, a securities fraud action is subject to a pyramid of requirements in order to withstand a motion to dismiss for failure to state a claim upon which relief can be granted. The base of the pyramid is established by Federal Rule of Civil Procedure 12(b)(6), which in general requires the court to accept all well-pleaded allegations in the complaint as true and to draw all reasonable inferences in favor of the non-moving party.... Dismissal under Rule 12(b)(6) is not appropriate unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief. In re Rockefeller Ctr. Props., Inc. Secs. Litig., 311 F.3d 198, 215 (3d Cir.2002) (internal citations omitted.) The inquiry under Rule 12(b)(6) “is not whether plaintiffs will ultimately prevail in a trial on the merits, but whether they should be afforded an opportunity to offer evidence in support of their claims.” In re Rockefeller Ctr., id. The court is not required, however, to credit “bald assertions or legal conclusions,” nor may “legal conclusions draped in the guise of factual allegations ... benefit from the presumption of truthfulness.” Id. at 216. As a general matter under Rule 12(b)(6), a court may not consider matters extraneous to the pleadings without treating the motion as one for summary judgment and giving all parties reasonable opportunity to present materials pertinent to such a motion under Rule 56. An exception is made, however, for a “document integral to or explicitly relied upon in the complaint,” and it has been long established that “a court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiffs claims are based on the document.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997) (internal citations omitted.) In securities fraud actions, it is equally well-established that a court may consider public filings such as quarterly and annual reports filed with the SEC. Oran v. Stafford, 226 F.3d 275, 289 (3d Cir.2000). In such a case, the court must also apply Rule 9(b), requiring that “in all averments of fraud, ... the circumstances constituting fraud ... shall be stated with particularity.” Fed.R.CivP. 9(b). As the Third Circuit Court of Appeals has repeatedly held, “this particularity requirement has been rigorously applied in securities fraud cases.” In re Rockefeller Ctr., 311 F.3d at 216, citing In re Burlington, 114 F.3d at 1417. Although Rule 9(b) does not demand that a plaintiff present every material detail of the fraud such as date, location, and time, plaintiffs must use “ ‘alternative means of injecting precision and some measure of substantiation into their allegations of fraud.’ ” In re Rockefeller Ctr., id., quoting In re Nice Sys. Ltd. Secs. Litig., 135 F.Supp.2d 551, 577 (D.N.J.2001). The heightened pleading standard of Rule 9(b) “gives defendants notice of the claims against them, provides an increased measure of protection for their reputations, and reduces the number of frivolous suits brought solely to extract settlements.” In re Burlington, 114 F.3d at 1418. At the top of pyramid, the Reform Act adds a further requirement, i.e., that “the complaint shall, with respect to each act or omission alleged to violate this title, ... state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). Courts have interpreted this language to mean that while under Rule 9(b) malice, intent, knowledge, and other mental states may be averred generally in suits claiming fraud, the Reform Act requires more than vague or unspecific allegations concerning each defendant’s state of mind at the time in question. In re Rockefeller Ctr., 311 F.3d at 224. Heightened particularity also applies to statements which are alleged to have been misleading or false, requiring the plaintiff to state with regard to each such statement “the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l). “If a complaint fails to comply with the PSLRA’s pleading requirements, dismissal is mandatory.” GSC Partners CDO Fund v. Washington, 368 F.3d 228, 237 (3d Cir.2004), citing 15 U.S.C. § 78u-4(b)(3)(A). III. APPLICABLE LAW — COUNT I A. Count I — Violation of Section 10(b) of the Securities Exchange Act In Count I of the Second Amended Complaint, Plaintiffs allege that each Individual Defendant violated Section 10(b) of the 1934 Act. In particular, Plaintiffs allege: At all relevant times, the Defendants, individually and in concert, directly and indirectly, ... engaged and participated in a continuous course of conduct whereby they knowingly and/or recklessly made and/or failed to correct public representations which were or had become materially false and misleading regarding [ITG’s] financial results and operations. This continuous course of conduct resulted in the Defendants causing [ITG] to publish public statements which they knew, or were reckless in not knowing, were materially false and misleading, in order to artificially inflate the market price of [ITG] stock and which operated as a fraud and deceit upon the members of the Class. The Individual Defendants are liable as direct participants in and as a controlling persons [sic] of the wrongs complained herein. By virtue of their positions of control and authority as officers and directors of [ITG] the Individual Defendants were able to and did, directly or indirectly, control the content of the aforesaid statements relating to the Company, and/or the failure [sic] to correct those statements in timely fashion once they knew or were reckless in not knowing that those statements were no longer true or accurate. The Individual Defendants caused or controlled the preparation and/or issuance of public statements and the failure to correct such public statements containing misstatements and omissions of material facts as alleged herein. (SAC, ¶¶ 483-484.) Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful “to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange ... 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(b). Among the rules and regulations promulgated under Section 10(b), Rule 10b-5 provides: 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. In a securities fraud action brought pursuant to Section 10(b) and Rule 10b-5, the basic elements to be alleged by a plaintiff are: (1) a material misrepresentation or omission by the defendant; (2) scienter, i.e., a wrongful state of mind on the part of the defendant; (3) in connection with the purchase or sale of a security; (4) reliance, often referred to in fraud-on-the-market cases as “transaction causation;” (5) economic loss; and (6) “loss causation,” i.e., a causal connection between the material misrepresentation and the loss. Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 125 S.Ct. 1627, 1631, 161 L.Ed.2d 577 (2005). Before we address the question of whether the Second Amended Complaint satisfies each of these elements, we digress to consider two bodies of law which pertain to the allegations therein, the fraud-on-the-market doctrine, and legal theories which may provide some protection for statements which might otherwise be actionable as fraudulent misrepresentations or omissions. B. Fraud-on-the-Marhet Under traditional securities fraud analysis, the plaintiff was required to prove that he purchased or sold securities in reliance on the defendant’s misrepresentations, i.e., that he was aware of and directly misled by a specific representation. See Semerenko v. Cendant Corp., 223 F.3d 165, 178 (3d Cir.2000). In recent years, however, courts have applied a “fraud-on-the-market” doctrine to the- sale and purchase of securities traded on an efficient open market where face-to-face transactions are rare. See Basic, Inc. v. Levinson, 485 U.S. 224, 241-243, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988); Semerenko, id. Under this theory, a plaintiff is entitled to three presumptions: (1) the market price of the security incorporated the alleged' misrepresentations (or omissions), (2) the plaintiff relied on the market price as an indicator of the security’s value, and (3) the plaintiff acted reasonably in relying on the security’s market price. Semerenko, 223 F.3d at 179; Basic, Inc., 485 U.S. at 248-249, 108 S.Ct. 978. In short, plaintiffs relying on a fraud-on-the-market theory are alleging that the defendants’ misleading statements “caused injury, ... not through the plaintiffs’ direct reliance upon them, but by dint of the statements’ inflating effect on the market price of the security purchased.” Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1218 (1st Cir.1996). In the Third Circuit, an efficient market is defined as one in which “information important to reasonable investors ... is immediately incorporated into stock prices.” In re Burlington, 114 F.3d at 1425 (citation omitted.) Here, Plaintiffs allege that the market for ITG securities was efficient because: • the stock was listed and actively traded on the New York Stock Exchange, a highly efficient market; • ITG’s average trading volume during' the Class Period was in excess of 96,-000 shares and it had market capitalization during the Class Period in excess of $165 million; • the Company regularly communicated with public investors via established market communication mechanisms, e.g., press releases, communications with the financial press, and periodic conference calls with securities analysts; and • securities analysts at major brokerage firms made their reports about ITG widely available to brokerage sales personnel and thence to customers. (SAC, ¶ 478.) Plaintiffs contend that the market for ITG securities promptly absorbed current information about the Company — including the alleged misrepresentations — and that the information was reflected in the prices at which the stock traded. Therefore, the fraud-on-the-market theory applies to all purchases of ITG securities by members of the Class during the Class Period. . (SAC, ¶ 479.) Defendants do not dispute Plaintiffs’ argument that they are entitled to the presumption of reliance in either their Memorandum of Points and Authorities in Support of Defendants’ Motion to Dismiss the Second Amended Class Action Complaint (Docket No. 74, “Defs.’ Memo.”) or their Reply Memorandum in Support of the Motion to Dismiss the Second Amended Class Action Complaint (Docket No. 88.) Therefore, in the analysis which follows, we do not address the element of reliance, the fourth element recognized in Dura. C. The Reform Act’s Statutory Safe Harbor and Related Protections Defendants do dispute, however, Plaintiffs’ contention that the statutory “safe harbor” provided for forward-looking statements does not apply. Because we discuss the applicability of this doctrine throughout our consideration of the alleged material misrepresentations, we set out the general principles of that doctrine as a threshold matter. Also, we discuss briefly the “bespeaks caution” doctrine and the law related to “puffery.” 1. The Statutory Safe Harbor: “Concerned about the effect of litigation’s specter on corporate disclosure, Congress created in the PSLRA a safe harbor for forward-looking statements.” In re Merck & Co. Sec. Litig., 432 F.3d 261, 272 (3d Cir.2005), citing S.Rep. No. 104-98, at 16, reprinted in 1995 U.S.C.C.A.N. 679, 695. As defined in the Reform Act, a forward-looking statement (written or oral) is one which contains “a projection of revenues, income (including income loss), earnings (including earnings loss) per share, capital expenditures, dividends, capital structure, or other financial items.” See In re Advanta Corp. Sec. Litig., 180 F.3d 525, 536 (3d Cir.1999), quoting 15 U.S.C. § 78u-5(i)(l)(A). A forward-looking statement may also address “the plans and objectives of management for future operations, including plans or objectives relating to the products or services of the issuer.” 15 U.S.C. § 78u-5(i)(l)(B). Such statements are said to fall within the “statutory safe harbor” of the Reform Act and are not grounds for liability under Section 10(b). In re Advanta, id. By definition, statements which are not forward looking are not entitled to protection of the statutory safe harbor provision. Also explicitly excluded are any forward-looking statements “included in a financial statement prepared in accordance with generally accepted accounting principles.” 15 U.S.C. § 78u-5(b)(2)(A). In order to fall within the safe harbor, a forward-looking statement must be identified as such and “accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement.” EP Med-systems, Inc. v. EchoCath, Inc., 235 F.3d 865, 872-873 (3d Cir.2000), quoting 15 U.S.C. § 78u-5(c)(1)(A)(i). Cautionary language must be “extensive yet specific.” In re Trump Casino Sec. Litig., 7 F.3d 357, 369 (3d Cir.1993) (comparing safe harbor cautionary language to that of the bespeaks caution doctrine discussed below.) The safe harbor provision does not apply, however, if the statement was made by a natural person (as compared to a business entity) who had “actual knowledge” at the time that the statement was false or misleading. 15 U.S.C. § 78u-5(c)(l)(B)(i). A forward-looking statement made by a business entity is protected unless it was made by or with the approval of an executive officer of that entity who had actual knowledge that the statement was false or misleading. 15 U.S.C. § 78u~ 5(c)(l)(B)(ii). If a forward-looking statement later proves to be erroneous, there is no duty imposed by the Reform Act to update such a statement. In re Advanta, 180 F.3d at 536; 15 U.S.C.A. § 78u-5(d) (“Nothing in this section shall impose upon any person a duty to update a forward-looking statement.”) In applying the Reform Act safe harbor provision, the court must first look at the statement itself, determine if it is forward-looking, and decide if it is accompanied by adequate cautionary statements or is otherwise immaterial. The second step is to consider whether the plaintiff has adequately alleged that the forward-looking statement, even if accompanied by cautionary language, was made with actual knowledge that the statement was false or misleading. Greebel v. FTP Software, Inc., 194 F.3d 185, 201 (1st Cir.1999). 2. The “Bespeaks Ca%ition” Doctrine: Enactment of the PSLRA’s safe harbor provision did not do away with the judicially created “bespeaks caution” doctrine. EP Medsystems, 235 F.3d at 873. “ ‘[Bjespeaks caution’ is essentially shorthand for the well-established principle that a statement or omission must be considered in context, so, that accompanying statements may render it immaterial as a matter of law.” In re Trump Casino, 7 F.3d at 364. The Third Circuit has strictly delineated, however, the type of accompanying language which is sufficient to trigger application of the bespeaks caution doctrine. That language must relate directly to that on which investors claim to have relied..... [A] vague or blanket (boilerplate) disclaimer which merely warns the reader that the investment has risks will ordinarily be inadequate to prevent misinformation. To suffice, the cautionary statements must be substantive and tailored to the specific future projections, estimates or opinions ... which the plaintiffs challenge. EP Medsystems, 235 F.3d at 873. Like the safe harbor provision, the bespeaks caution doctrine does not protect forward-looking statements made with actual knowledge of their falsity at the time they are made. In re Trump Casino, 7 F.3d at 368. 3. “Puffery:” A third source pf protection for allegedly false or misleading statements is the concept of “puffery.” Puffery comes into play when a court is considering the materiality of statements alleged to have been misleading. While materiality determinations are typically reserved for the trier of fact, “complaints alleging securities fraud often contain claims of omissions or misstatements that are obviously so unimportant that courts can rule them immaterial as a matter of law at the pleading stage.” In re Burlington, 114 F.3d at 1426. The Third Circuit has defined puffery as “vague and general statements of optimism ... understood by reasonable investors as such.” In re Advanta, 180 F.3d at 538; In re Burlington, 114 F.3d at 1428, n. 14. Such “statements of subjective analysis or extrapolations, such as opinions, motives and intentions” or other types of “soft information” are not actionable because investors do not rely on such information in making decisions. In re Advanta, id. at 539; see also Parnes v. Gateway 2000, 122 F.3d 539, 547 (8th Cir. 1997), pointing out that “some statements are so vague and such obvious hyperbole that no reasonable investor would rely upon them.” The context in which optimistic statements are made is critical to the distinction between misrepresentation and puffery. In re Lucent Technologies, Inc. Sec. Litig., 217 F.Supp.2d 529, 559 (D.N.J. 2002). In general, the more the statement diverges from known facts about the entity or the more precise and concrete the statement, the less likely courts have been to dismiss the statement as inactionable puffery. See Southland Sec. Corp. v. Inspire Ins. Solutions Inc., 365 F.3d 353, 372 (5th Cir.2004). The source of the comment also plays a role in determining if general statements of optimism are actionable. Statements of opinion by top corporate officials may be actionable if they are made without a reasonable basis. Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1099, 111 S.Ct. 2749, 115 L.Ed.2d 929 (1991). The Court distinguished such statements from ordinary, unattributed expressions of optimism because such statements “can be materially significant to investors because investors know that these top officials have knowledge and expertise far exceeding that of the ordinary investor.” In re Burlington, 114 F.3d at 1428, citing Virginia Bank-shares, 501 U.S. at 1090-1091, 111 S.Ct. 2749. “If a statement meets the definition of mere puffery and hence, is immaterial as a matter of law, it is irrelevant whether the statement is forward-looking or made with actual knowledge that it is ’false.” California Pub. Emples. Ret. Sys. v. Chubb Corp., (“CALPERS”), CA No. 00-4285, 2002 U.S. Dist. LEXIS 27189, *34, n13 (D. N.J. June 26, 2002). IV. ANALYSIS OF COUNT I We turn now to analysis of each of the critical Dura elements, scienter and the existence of material misrepresentations which proximately caused Plaintiffs’ losses. A. Scienter Normally, analysis of a securities fraud action would begin with a discussion of the statements alleged to be material misrepresentations or omissions by the defendant. However, we begin with the concept of scienter because we conclude that for the second time, Plaintiffs have failed to allege that all but two of the Individual Defendants acted with the wrongful state of mind necessary to state a claim against them under the Reform Act. The Third Circuit Court of Appeals defines scienter as a mental state embracing intent to deceive, manipulate or defraud, or, at a minimum, highly unreasonable conduct, involving not merely simple, or even excusable negligence, but an extreme departure from the standards of ordinary care, ... which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it. In re IKON Office Solutions, Inc., 277 F.3d 658, 667 (3d Cir.2002) (citations and internal quotations omitted). The PSLRA requires a plaintiff, “with respect to each act or omission,” to “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” GSC Partners, 368 F.3d at 237, quoting 15 U.S.C. § 78u-4(b)(2). A plaintiff may satisfy the “strong inference” requirement in either of two ways: “(a) by alleging facts sufficient to show that defendants had the motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.” In re Burlington, 114 F.3d at 1418 (internal quotation omitted). As we have previously pointed out in this case, the facts giving rise to a strong inference of scienter must be alleged with particularity, meaning that plaintiffs must plead “the who, what, where, when, and how: the first paragraph of any newspaper story.” (Docket No. 68 at 11, quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990).) The Third Circuit has concluded that to the extent the general pleading permitted with respect to mental state established in Rule 9(b) conflicts with the PSLRA’s heightened scienter requirements, the PSLRA “supersedes Rule 9(b) as it relates to Rule 10b-5 actions.” In re Advanta, 180 F.3d at 531, n. 5. The appropriate sanction for complaints which fail to meet the PSLRA scienter requirement is dismissal. Id. at 531. 1. Identifying the Individual Defendants: Because scienter must be determined as to each Individual Defendant, we first briefly outline their roles with ITG. Plaintiffs provide the following information about the ten Individual Defendants who are alleged to have violated Section 10(b). Officers are listed first, followed by members of the Board of Directors. • Anthony DeLuca: Chief Executive Officer, President, and Director of ITG from 1996 when the Company was taken over by Carlyle until he was forced to resign in November 2001. Had been with ITG in senior management positions since March 1990. (SAC, ¶ 40.) The only Individual Defendant identified in the SAC as being a stockholder in ITG. (Id., ¶ 99.) • Francis J. Harvey: Replaced Mr. De-Luca as Acting CEO and President in November 2001 upon the latter’s termination. Director of ITG from 1999 through 2002; was a member of the Board of Directors’ executive committee and the compensation committee. Served on the boards of other companies in which Carlyle had major investments. (SAC, ¶ 42.) Elected Vice Chairman of the Board in May 2001. (Id., ¶ 86.) • Harry J. Soose: Joined ITG in 1991; became Senior Vice President and Chief Financial Officer as of July 1999 and remained in those positions until ITG declared bankruptcy. (SAC, ¶ 41.) • Daniel A. D’Aniello: Elected to represent Carlyle on the Board and served as Board Chairman from 1996 through 2002. Had been a managing director of Carlyle since 1987 and served on boards of other companies owned by Carlyle. Member of the executive and compensation committees. (SAC, ¶¶ 45, 79.) • James C. McGill and Richard W. Po-gue: Served as directors during the Class Period; members of the audit review committee. (SAC, ¶¶ 43-44.) • Martin Gibson and Robert F. Pug-liese: Elected by Carlyle to represent its interests on the Board; served as directors throughout the Class Period; members of the audit review committee. (SAC, ¶¶ 47-48.) • Philip B. Dolan: Represented Carlyle on the Board from 1996 through 2002 and served on the board of one other company affiliated with Carlyle. Was a principal, then managing director, of Carlyle from 1998 through 2002 and a vice president of Carlyle since 1989. Member of the compensation committee. (SAC, ¶ 46.) • James D. Watkins: Elected to represent Carlyle on the Board from 1996 through 2002 and served on the board of one other company affiliated with Carlyle. Member of the compensation committee. (SAC, ¶ 49.) 2. Motive and Opportunity Method of Satisfying the “Strong Inference” Requirement: In a Complaint comprised of 491 paragraphs and 181 pages, Plaintiffs fail to state whether they are relying on motive and opportunity to establish scienter, on circumstantial evidence, or on a combination of the two. In their Memorandum of Law in Opposition to Defendants’ Motion to Dismiss the Second Amended Class Action Complaint (Docket No. 86, “Plfs.” Memo), Plaintiffs argue that “the distinctive motivational factor in this case” was “prolonging the Company’s survival” for two years and that in the SAC, they “clearly allege that IT Group’s viability depended on Defendants’ scheme to artificially make it appear viable.” {Id. at 52-53.) Under the PSLRA, motive and opportunity must be supported by “facts stated ‘with particularity’ and those facts must give rise to a ‘strong inference’ of scien-ter.” In re Advanta, 180 F.3d at 535, quoting 15 U.S.C.A. § 78u-4(b)(2). At least one court has held that the opportunity to commit fraud by controlling dissemination of information to investors may be presumed when the defendants served as the company’s senior officers and/or directors. In re Stonepath Group, Inc. Sec. Litig., 397 F.Supp.2d 575, 591 (E.D.Pa.2005). However, there are no factual allegations in the Second Amended Complaint that any Individual Defendant took any particular steps to control the flow of information and neither Defendants nor Plaintiffs address this prong in their briefs. We need not dwell on this question, however, because we conclude that the purported motive — prolonging the Company’s survival — is insufficient to establish scienter. In attempting to show scienter from a defendant’s motive and opportunity to commit fraud, “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 this fraud.” GSC Partners, 368 F.3d at 237 (internal quotation omitted.) General motives such as wishing to complete a particular corporate transaction {GSC Partners, id.), the desire to avoid breaching loan covenants or disclosing lack of liquidity (In re Stonepath Group, 397 F.Supp.2d at 592-593), attempting to increase a company’s stock value as part of an acquisition strategy (In re Nice Sys., 135 F. Supp.2d at 583-84), or even such personal benefits as increasing one’s compensation or maintaining continued employment {In re Digital Island Secs. Litig., 357 F.3d 322, 331 (3d Cir.2004)) are insufficient establish scienter. Reading the Second Amended Complaint in its entirety, the most one can conclude is that Plaintiffs allege because each Individual Defendant held a position as officer or director, he was therefore motivated to keep the Company afloat. Of course, the goal of every director and officer of a business entity is to assure its longevity and market position, not only for personal motives such as compensation or the prestige of being associated with a successful organization, but also for the more general purposes of attracting investors and achieving the goals of the corporation, including profitability. “Prolonging the company’s survival,” however, surely falls within those generalized motives which, as Plaintiffs recognize, “can be ascribed to virtually all corporate officers and directors” and thus may not be used to establish scienter. (Plfs.’ Memo at 54, quoting In re Nice Sys., 135 F.Supp.2d at 583.) The only Individual Defendant to whom Plaintiffs point as having reaped a “concrete and personal benefit ... resulting from the fraud” is Mr. DeLuca. Plaintiffs allege that Mr. DeLuca, aware that the end-game for IT Group’s financial cover-up was soon approaching, began dumping his holdings of IT Group stock. According to his filings with the SEC, DeLuca sold 20,000 shares in October 2001 and 226,398 shares between November 6 and November 14, 2001. These were the first sales by DeLuca since at least January 1, 1999, and were transacted while DeLuca knew that the Company was in serious financial trouble because he knew the true facts which were concealed from the public.... (SAC, ¶ 468.) According to Defendants, Messrs. Soose, Harvey, and Pogue also owned stock in ITG during the Class Period. However, none of them sold stock during the Class Period and all lost their investments when ITG declared bankruptcy on January 16, 2002. (Defs.’ Memo at 11, n. 8.) In support of their argument that Mr. DeLuca actually sold at a loss, Defendants provide “Form 4’s” dated April 10, 2000, January 10, 2001, and February 12, 2001, together with “Form 144’s” filed on November 13, 2001, October 5, 2001, December 18, 2001, and January 17, 2002. (Declaration of David A. Becker in Support of Defendants’ Motion to Dismiss the Second Amended Class Action Complaint, Docket No. 75, “Becker Deck,” Tabs A and B.) Defendants assert that Mr. DeLuca purchased ITG stock worth more than $700,000 during the Class Period at prices of more than $5.00 per share, but was forced to sell in response to margin calls at prices between $2.30 and $1.38 per share. (Defs.’ Memo at 11-12.) The Court is unable to determine from the documents provided how Defendants calculated these losses, but does note that Mr. DeLuca purchased 114,365 shares in the period March 27, 2000, through December 15, 2000, at prices ranging from $5.00 to $7.43 per share. He sold 246,398 shares in October and November 2001 at prices between $1.90 and $5.20 per share, leading to a probable loss. We find no evidence in the exhibits provided to support the argument that these sales were forced as the result of margin calls, but consider that information irrelevant. Drawing inferences in favor of Plaintiffs as required, we agree that Mr. DeLuca may have been aware in November 2001 that the Company’s demise was imminent. However, it is also logical to infer that if Mr. DeLuca were motivated to sell his stock because he knew “the true facts which were concealed from the public” regarding the Company’s serious financial trouble, he would have done so during the summer of 2001 when stock prices reached a high of $7.75 per share and not waited until news of the Company’s problems began to emerge in October 2001. The sales might also have occurred because Mr. De-Luca was aware of the imminent demise of his relationship with ITG. We conclude that these sales, at best, provide only a weak inference of scienter on the part of Mr. DeLuca. See Ganey v. PEC Solutions, Inc., 418 F.3d 379, 390 (4th Cir.2005) (together with other factors, the fact that individual defendants lost collective stock value during the class period gave rise to a strong inference that no scienter existed.) Finally, Plaintiffs point to the fact that Carlyle would lose its investment of over $45 million if ITG collapsed, as well as the $6.3 million annual dividend on its preferred stock and an investment banking fee on the Company’s acquisitions. While these might have been financial motivations for Carlyle to keep the Company afloat, no Section 10(b) claim is made against Carlyle in Count I. Nor are there any allegations that Defendants named to the Board by Carlyle to represent its interests (D’Aniello, Gibson, Pngliese, Dolan and Watkins) took any specific actions to protect Carlyle’s investment. Moreover, Carlyle invested an additional $6 million in ITG during the Class Period (see Becker Deck, Tab E), did not receive the quarterly dividend on its preferred stock after the last quarter of 2000 (see Becker Deck, Tab J-ll), and, presumably, lost its entire investment when ITG declared bankruptcy. See In re Alpharma Sec. Litig., 372 F.3d 137, 152 (3d Cir.2004) (affirming lower court’s reasoning that where largest stockholder, i.e., the one who stood to gain the most from the alleged fraud, sold no stock during the class period and thus failed to have benefited from the alleged scheme, plaintiffs had not satisfied the motive and opportunity prong of Burlington.) The Court concludes that to the extent Plaintiffs have attempted to show any Defendant had motive and opportunity to fraudulently misrepresent the financial condition of the Company to the investing public in order to keep it afloat, they have failed to establish that claim with the particularity required by the Reform Act. 3. The Reckless Behavior Method of Alleging Scienter: Because we have been unable to discern any allegations of motive (except with regard to Defendant DeLuca), and because Plaintiffs repeatedly apply the adjective “reckless” to Defendants’ actions, we now focus on the second prong of the Burlington test for establishing a strong inference of scienter. Under the PSLRA, plaintiffs attempting to plead scienter by alleging facts sufficient to establish recklessness must allege a statement involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it. In re Advanta, 180 F.3d at 535 (internal quotation omitted), and also noting that “scienter may be alleged by stating with particularity facts giving rise to a strong inference of conscious wrongdoing, such as intentional fraud or other deliberate illegal behavior.” Reckless behavior should not be defined liberally, otherwise there is a risk of losing the distinction between scienter and negligence. In re Digital Island Sec. Litig., 223 F.Supp.2d 546, 555 (D.Del.2002). Plaintiffs contend that in addition to overwhelming documentary evidence to show that the Individual Defendants knew about the fraudulent misrepresentations and omissions made in press releases and SEC filings throughout the Class Period, they now have information from five confidential witnesses who provide first hand knowledge of how the fraud was perpetrated. Before considering that evidence in detail, however, we note that with the exception of Defendants Soose, DeLuca, Do-lan, D’Aniello, and Harvey, none of the Individual Defendants is mentioned by name anywhere in the Second Amended Complaint after being identified in paragraphs 40 through 49. They are referred to generically in their capacity as members of the Board of Directors in several instances, e.g., they all are alleged to have attended a March 2001 Board meeting in Washington, D.C., at which Confidential Witness 1 (“CW1”) made a presentation about the Company’s financial situation. (SAC, ¶¶ 148-149.) Similarly, Confidential Witness 3 (“CW3”) stated that he had made presentations to “the Board” at its regular meetings on as many as four occasions in 1999 and 2000 in which he “laid out” problems related to working capital issues. {Id,., ¶ 64.) Based on these “contacts with the Board,” CW3 concluded that the Board members “knew in 2000 and 2001 that the Company had significant liquidity problems.” {Id., ¶ 265.) In a similar vein, Plaintiffs refer generally to what “Defendants” knew or did. For example, in their statements regarding scienter, they allege: Each of the Individual Defendants, by virtue of his high-level position with the Company, directly participated in the management of the Company, and ... was directly involved in the day-to-day operations of the Company at the highest levels and/or was involved in major policy making and decision-making regarding business strategy and financial reports, and therefore was privy to confidential proprietary information concerning the Company.... The Individual Defendants ... were involved in drafting, preparation and/or dissemination of the various public, shareholder and investor reports or other communications alleged herein, were aware of, or recklessly disregarded, that materially false and misleading statements were being issued regarding the Company, and approved or ratified these statements.... The Individual Defendants ... because of their positions of control and authority as officers and/or directors of the Company, were able to and did control the content of the various SEC filings, press releases and other public statements pertaining to the Company.... Each Individual Defendant ... was provided with copies of the documents alleged herein to be materially misleading prior to or shortly after their issuance and/or was aware of their contents before their issuance and had the ability and/or opportunity to prevent their issuance or cause them to be corrected. The Individual Defendants ... thus caused the misrepresentations in such public statements to be made. Because of the .positions and access to material non-public information available to them but not [the] public as alleged above, each of the Individual Defendants ... knew or recklessly disregarded that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public and that the representations concerning the Company complained of herein were then materially false and misleading.... Defendants, who were under a duty to disclose the true facts, but instead misrepresented or concealed them during the relevant period herein, [sic] As officers and directors and controlling persons of a publicly held company ... the Individual Defendants ... each had a duty to promptly disseminate accurate and truthful information with respect to IT Group’s financial condition and performance [etc.] .... and to correct any previously-issued statements that had become materially misleading or untrue, so that the market price of the Company’s publicly traded securities would be based upon truthful and accurate information .... (SAC, ¶¶ 52-57.) The Second Amended Complaint is scattered with allegations directed vaguely at “Defendants.” For example, Plaintiffs allege that “Defendants artificially reduced IT’s indebtedness at the end of each fiscal quarter in order to present misleading numbers reported in the Company’s quarterly and annual SEC filings.” (SAC, ¶ 11a.) Accepting that statement as true for purposes of analysis, who took what particular step to artificially reduce ITG’s indebtedness or how that step was accomplished is never alleged with particularity for any Defendant other than Messrs. Soose and DeLuca. Similarly, the allegation that “on March 7, 2000, Defendants disseminated a press release which announced four new contracts for environmental consulting and engineering services” which was “false and misleading because it failed to disclose the Company’s growing liquidity problems related to its growth-by-acquisition strategy” (SAC, ¶ 295) is not supported by factual allegations as to which Defendants wrote or approved the press release. Plaintiffs repeatedly allege in general terms that “Defendants” knew or should have known that certain practices were violations of GAAP or that certain representations were false. However, those allegations are not supported in turn by corroborating factual support explaining how and why any particular Defendant (other than Mr. Soose) knew the statements to be violative of GAAP. There are other vague references to Company “management,” e.g., “management ... further concealed the nature and extent of the Company’s liquidity problems ... in a conference call with a Salomon Smith Barney analyst in the July 2000 time frame” (SAC, ¶ 337), or, as reported in a Salomon Smith Barney analyst’s report dated October 27, 2000, “management continue[d] to maintain that year end debt levels of $625 million will be met....” (Id., ¶ 357.) There are, however, no factual allegations identifying the particular member(s) of “management” who participated in such conference calls. Allegations that the Company’s financial difficulties were “a common theme” at Board meetings or that by 2000 the Board members were aware of that problem does not establish that the attendees of those meetings were therefore committing fraud. Although several Defendants (McGill, Po-gue, Gibson and Pugliese) are identified as members of the Board’s audit review committee, the Court has been unable to pinpoint a single allegation that as members of that committee, any one of them took or failed to take specific action that perpetrated the fraud, even though they would be the sub-group of the Board most likely to be aware of deliberate inconsistencies between public information and private knowledge or of violations of GAAP. Most of the allegations against the Individual Defendants fall squarely within the category of “group pleading.” As Judge Harold Ackerman recently noted, “group pleading,” a method by which securities fraud plaintiffs could name corporate officers as individual defendants without pleading the particulars of their participation in the preparation and dissemination of corporate statements, was a judicial response to the difficulty that such plaintiffs often faced in attributing authorship for public corporate statements. In re Bio-Technology Gen. Corp. Sec. Litig., 380 F.Supp.2d 574, 583 (D.N.J.2005). Although “the Third Circuit has not expressly determined whether group pleading has survived enactment of the PSLRA ... the prevailing authority within this District counsels that group pleading has been abolished.” Id. at 584, citing cases from the Districts of New Jersey and Eastern Pennsylvania; see also In re PMA Capital Corp. Sec. Litig., CA No. 03-6121, 2005 WL 1806503, *12, 2005 U.S. Dist. LEXIS 15696, *41 (E.D.Pa. July 27, 2005); In re Digital Island, 223 F.Supp.2d at 553; compare, however, In re Rent-Way Secs. Litig., 209 F.Supp.2d 493, 518 (W.D.Pa.2002) (concluding that there was “no reason to find that group pled allegations per se cannot meet the heightened pleading standards of Rule 9(b) or the PSLRA.”) Judge Ackerman further noted that the best indication to date of how the Third Circuit Court of Appeals will decide this question is the Court’s holding in In re Advanta, i.e., that “generalized imputations of knowledge do not suffice” to establish scienter, regardless of the defendant’s position with the corporation. In re Bio-Technology, 380 F.Supp.2d at 584. We agree with the District Court in New Jersey, and the majority of courts in this Circuit who have considered the matter, that under the PSLRA, allegations based solely on group pleading cannot establish a strong inference of scienter. Thus, generalized claims that each Individual Defendant — e.g., “by virtue of his high-level position with the- Company, directly participated in the management of the Company” or “was privy to confidential proprietary information concerning the Company” — are not sufficient to give rise to a strong inference that he acted with the required state of mind. In re Alpharma, 372 F.3d at 142. Similarly, the allegation that each Individual Defendant was “involved in drafting, preparation and/or dissemination of the various public, shareholder and investor reports or other communications” or was “able to and did control the content of the various SEC filings, press releases and other public statements pertaining to the Company” is insufficient to establish scienter. Where' — as in the Second Amended Complaint — the plaintiff “fails to allege why a defendant’s position necessarily entails a particular duty or why a specific corporate policy requires the defendant to have responsibility for particular press releases or SEC filings, allegations concerning group-published information should be rejected for failing to plead scienter with particularity.” In re BioTechnology, 380 F.Supp.2d at 584. We find that these blanket allegations fail to satisfy the particularity requirement of the Reform Act when alleging scienter of each Individual Defendant. As the Court of Appeals has noted, “it is not enough for plaintiffs to merely allege that defendants ‘knew their statements were fraudulent, or that defendants ‘must have known’ their statements were false.” GSC Partners, 368 F.3d at 239. Because Plaintiffs state no particular factual allegations against Individual Defendants McGill, Pogue, Gibson, Pugliese, and Watkins, we conclude that Plaintiffs have failed to establish scienter with regard to them and they must, consequently, be dismissed from the action herein. 4. Reckless Behavior and Defendants Dolan, DAniello and Haney: Plaintiffs provide a few more detailed allegations regarding Defendants Dolan, D’Aniello, and Harvey. Confidential Witness 3 stated that when he presented information to the Board at its meetings about the subject of “bad” accounts receivable, Mr. Do-lan would remark “go collect the receivables.” (SAC, ¶ 259.) CW3 also stated that at the March 2001 Board meeting, he personally “laid out the problems with the Company” to Defendants Harvey and either Dolan or D’Aniello. (Id., ¶ 265.) Mr. Dolan is alleged to have attended the December 7, 2001, meeting at which the lending banks were told of the Company’s dire financial situation. (SAC, ¶ 218.) In June 2001, CW3 and Mr. D’Aniello had a private talk lasting more than two hours “in which CW3 frankly stated the extent of the Company’s liquidity and other problems” and “told D’Aniello that someone had to stand up and take the write-offs.” (SAC, ¶ 266.) CW3 also states that Mr. D’Aniello had similar meetings with the heads of the government services and international business lines at the same June 2001 Board meeting (id.), but there are no allegations about what those individuals told Mr. D’Aniello or what his reaction might have been to their information. Plaintiffs allege that Mr. Harvey testified in the ITG bankruptcy proceedings that no later than December 2000 or early January 2001, the Board of Directors became aware of the Company’s difficulty in meeting loan covenants and the “severe financial crisis that the company found themselves [sic] in.” (SAC, ¶¶ 150-151.) They also allege that Mr. Harvey was secretly installed as Acting CEO and President in May 2001, six months before Mr. DeLuca’s termination was publicly announced, “because Carlyle was unhappy with the Company’s financial results.” (SAC, ¶ 86.) Mr. Harvey also is alleged to have spoken to Defendants Dolan and D’Aniello “every day concerning ITG’s business and finances from the time Harvey was first installed by Carlyle,” (id.), but there are no factual allegations to support this claim or any discussion of inferences that might be drawn from it. During the summer of 2001, CW3 took Mr. Harvey on a nation-wide tour to see for himself the widespread project mismanagement, particularly non-payment of vendors and abandoned projects, the Company’s failure to write-off uncollectible accounts receivable, and its inability to pay subcontractors. (Id., ¶ 267.) Soon after he became CEO, Mr. Harvey became aware of the Company’s violation of the federal government’s “pay-when-paid” policy and “put a stop to” it. (IcL, ¶ 205.) According to Mr. Soose, Mr. Harvey “led the presentation” to the lending banks on December 7, 2001. (IcL, IT 218.) In sum, Defendants Dolan, D’Aniello, and Harvey are alleged to have known in late 2000 or earlier 2001 about the Company’s (1) problems collecting accounts receivable; (2) failure to write-off certain accounts receivable in a timely manner; (3) liquidity problems; (4) difficulty meeting loan covenants; and (5) general mismanagement. Based on these specific claims, together with more general allegations against Company “management,” or “Defendants,” Plaintiffs appear to allege that the failure by Defendants Dolan, D’Aniello, and Harvey to make these problems known to the investing public was reckless and a violation of Section 10(b). The problem is that Plaintiffs fail to allege the role any of these Defendants had in “drafting, preparation and/or dissemination of’ the alleged materially false and misleading SEC filings or other public statements made during the Class Period or how they knew of the alleged accounting frauds, other than by reference to each Defendant’s “high-level position with the Company.” As noted above, scienter cannot be shown by alleging generalized imputations of knowledge based on a defendant’s position with the company. Thus, the Court concludes that although Plaintiffs state allegations against Defendants Dolan, D’Aniello, and Harvey with more particularity than those against the other directors, they have still failed to meet the requirements of the PSLRA for establishing scienter on the part of those Defendants. 5. Reckless Behavior and Defendants Soose and DeLuca: We reach a contrary conclusion, however, with regard to Plaintiffs’ allegations against Messrs. DeLuca and Soose. Plaintiffs contend that Mr. Soose, the Chief Financial Officer, manipulated ITG’s accounting system in a number of ways designed to suppress the Company’s apparent debt and artificially inflate revenues. Defendant Soose directed CW1 to “slow down payments of the Company’s bills” (SAC, ¶ 129) and directed him to ignore pay-when-paid regulations, telling him that the regulations “didn’t matter” (id., ¶ 207.) He allegedly inflated the claimed contract backlog for the Company’s Beneco division by including maximum potential revenue, not the historical estimate (id., ¶ 276) and indirectly ordered Confidential Witness 5 (“CW5”) to improperly “book revenues in excess of orders already received” (id., ¶ 280.) These accounting manipulations were reflected in. the Company’s filings with the SEC which Mr. Soose prepared and signed. Plaintiffs also contend that Defendant Soose was reckless in not disclosing the artificial suppression of the Company’s indebtedness (id., ¶ 27) and in failing to assure that ITG complied with the pay-when-paid regulations (id., ¶ 14b.) To support their allegations that Mr. Soose acted wi