Full opinion text
MEMORANDUM OPINION & ORDER [Resolving Doc. 82] ADAMS, District Judge. I. Introduction This is an action for securities fraud brought on behalf of shareholders of The Goodyear Tire & Rubber Company against Defendants The Goodyear Tire & Rubber Company, Samir G. Gibara, Robert J. Keegan, Robert W. Tieken, Richard J. Kramer, and Stephanie W. Bergeron (collectively referred to as “Defendants”). The action was filed as a class action, excluding from the class Defendants, directors and officers of Goodyear, their families and affiliates. Plaintiffs base their claims on violations of Section 10(b) of the Securities and Exchange Act of 1934, Section 20(a) of the Securities Exchange Act of 1934, and Rule 1 Ob-5, which was promulgated thereunder. In essence, Plaintiffs claim that Defendants made a series of allegedly false statements regarding the financial health of The Goodyear Tire & Rubber Company and that those statements materially misled the investing public. Defendants have filed a motion seeking the dismissal of Plaintiffs’ Consolidated Amended Class Action Complaint (the “Amended Complaint”), which presents the Court with the following issues: (1) whether the Amended Complaint fails to plead fraud with particularity and fails to properly plead a strong inference of scien-ter; (2) whether the Amended Complaint fails to adequately plead loss causation; and (3) whether the Amended Complaint sufficiently alleges damages on behalf of all putative class members. The parties have extensively briefed the matter and the Court has reviewed the pleadings, motion, opposition and reply thereto. And for the reasons that follow, the Court grants Defendants’ motion because Plaintiffs have failed to plead scien-ter as required by both the Private Securities Litigation Reform Act (“PSLRA”) and Federal Rule 9(b). Alternatively, Defendants do not plead fraud with the particularity required by the PSLRA and Rule 9(b). Dismissal of Plaintiffs’ claims, therefore, is warranted. Furthermore, without any primary liability, Plaintiffs cannot state a claim under Section 20(a) for control person liability. Having found the pleading insufficient for the above-stated reasons, the Court need not reach the remainder of the issues presented in Defendants’ motion. II. Factual Background For purposes of its consideration of Defendants’ motion, the Court must assume the truth of the following facts, which were drawn from the Amended Complaint. A. The Parties Capital Invest die Kapitalanlagegsells-chaft der Bank Austria Creditanstalt Gruppe GmgH is the lead plaintiff in this action. It is a fund management company-located in Vienna, Austria, that has approximately $20 billion in assets under management. Capital Invest purchased shares of Goodyear common stock on the New York Stock Exchange during the period of time relevant to this action. It represents the class of plaintiffs injured by Defendants’ allegedly fraudulent activity (Capital Invest and the class itself are collectively referred to as “Plaintiffs”). Defendant The Goodyear Tire & Rubber Company is an Ohio corporation. Its principal place of business is in Akron, Ohio. Goodyear manufactures and markets tires, belts, hoses, and other engineered rubber products for the transportation industry and for the consumer market. Gi-bara, Keegan, Tieken, Kramer, and Ber-geron (the “Individual Defendants”) all served in various executive capacities during the relevant time frame. Gibara served as Goodyear’s Chief Executive Officer and President from January 1996 through December 2002. He also served as Chairman of the Board of Directors of Goodyear (“the Board”) from July 1996 through July 2003. Keegan succeeded Gi-bara as Chairman of the Board in July 2003 and succeeded him as Chief Executive Officer in January 2003. Tieken served as Goodyear’s Chief Financial Officer and Executive Vice President from May 1994 throughout the relevant time frame. Kramer served as Goodyear’s Vice President of Corporate Finance from February 2000 through June 2004 and has since replaced Tieken as Chief Financial Officer and Executive Vice President. Bergeron served in the capacity of Senior Vice President of Corporate Financial Operations and Treasurer from February 2002 through August 2002. B. Substantive Allegations According to Plaintiffs, Goodyear faced significant problems with its business operations and financial condition prior to and throughout April 2001 and October 2003 (the “Class Period”). Plaintiffs claim that Goodyear was a “cash-strapped and debt-choked” company that was close to defaulting on billions of dollars of debt and being forced into bankruptcy. (Compl. ¶ 2). Goodyear’s mounting debt was discussed in a series of press releases, which became the subject of industry commentary. For instance, on June 29, 2000, a Goodyear press release received news coverage when the company lowered its earnings guidance for the second quarter of fiscal 2000. Goodyear attributed this to an increasingly competitive environment coupled with increases in raw material and energy costs. Gibara stated that although the books had not closed for the month, it was clear that Goodyear would not be able to overcome the volume shortfall resulting from the previous months’ increases. (Compl. ¶¶ 33 — 34). The next day, a J.P. Morgan research analyst commented on Goodyear’s downward earnings guidance. According to the analyst, Goodyear’s “problems [were] deeper and more intractable than earlier believed .... ” The analyst also stated that J.P. Morgan was lowering its earnings per share (“EPS”) considerably. (Compl. ¶ 35). On September 21, 2000, Goodyear announced that it had revised its earnings guidance downward for the second half of fiscal 2000. It again cited escalating costs, along with the deterioration of the euro, weak pricing conditions in markets around the world, and lower than expected tire industry volumes in North America and Europe. Goodyear estimated that its net income in the third quarter 2000 would either break even or produce a loss. It estimated the same for the fourth quarter 2000. (Compl. ¶ 36). Again, J.P. Morgan issued a research report highlighting the severity of Goodyear’s problems. The analyst noted that the company’s earnings and cash flow outlook was poor. Other industry commentators echoed this concern. (Compl. ¶¶ 37-38). On February 14, 2001, Goodyear issued another press release that reported a loss of $16.5 million for the fourth quarter 2000. Gibara commented that Goodyear’s results for both the fourth quarter and the full year were disappointing. (Compl. ¶ 39). The next day, the Wall Street Journal publicly commented that Goodyear was hurt badly in its last quarter “by a severe downturn in business from auto makers as well as other factors that have dogged the company for some time, including high oil prices and the weakness of the euro .... ” (Compl. ¶ 40). As a result of these losses, Plaintiffs allege that Goodyear’s debt began to grow. They claim that Goodyear’s fixed charges exceeded its earnings by almost $216 million in 2001 — in contrast to previous years when Goodyear’s earnings covered its fixed charges. (Compl. ¶ 41). According to Plaintiffs, Goodyear’s mounting debt impacted certain covenants on its bank credit facilities that required it to: (1) maintain a minimum consolidated net worth; (2) maintain a minimum interest coverage ratio; and, (3) remain within a total debt ceiling. (Compl. ¶ 42). Plaintiffs claim that as 2001 progressed, it became clear that Goodyear was likely to violate the interest coverage covenant. At some point in time, Goodyear amended certain bank credit facility agreements and other agreements with banks to modify the interest coverage ratio and consolidated net worth covenants to reflect its current operating conditions. Goodyear filed these changes in a report with the Securities Exchange Commission (“SEC”). (Compl. ¶ 43). Then, in an effort to avoid an impending bankruptcy, Defendants allegedly engaged in widespread accounting fraud by overriding its accounting systems to manufacture false profits. Their goal, according to Plaintiffs, was to inflate earnings and understate losses in an attempt to create the illusion that Goodyear was a healthy company. (Compl. ¶¶ 2, 47). 1. Defendants’ False Statements Plaintiffs claim that Goodyear either knowingly or recklessly made materially false and misleading statements, or omitted material information relating to its financial results and compliance with Generally Accepted Accounting Principles (“GAAP”). The false statements, on which Plaintiffs base their claims, relate to ten press releases (and in some instances a conference call with industry analysts) that Goodyear issued regarding its quarterly and year-end financial results during the Class Period and the formal SEC reports that were filed thereafter. Each of the SEC reports was also signed by one or more of the Individual Defendants and contained a statement that certified the accuracy of the report. • The First Report: On April 24, 2001, Goodyear issued a press release announcing its financial re-suits for the first quarter 2001. The press release noted an improved performance over the previous quarter, but admitted a net loss of $46.7 million. The release also stated that Goodyear’s Chemical Products Division reported an operating income of $16.4 million and that its Engineered Products Division reported an operating income of $9.5 million. (Compl. ¶ 108). On May 15, 2001, Goodyear filed its quarterly report with the SEC (“2001 First Quarter 10-Q”). Kramer signed the form, which confirmed and reiterated the financial results announced in the April 24th press release. (Compl. ¶ 109). • The Second Report: On July 23, 2001, Goodyear issued a press release for the second quarter 2001, which reported a net income of $7.8 million, an operating income of $12.9 million from its Chemical Products Division, and an $8.4 million operating income in the Engineered Products division. Gibara commented on Goodyear’s “improved results” and stated that he expected this “positive momentum” to continue. (Compl. ¶ 112). On August 1, 2001, Goodyear filed its quarterly report with the SEC (“2001 Second Quarter 10-Q”). Kramer also signed this form, which confirmed and reiterated the results in the July 23, 2001 press release. (Compl. ¶ 113). • The Third Report: On October 25, 2001, Goodyear issued a press release announcing its results for the third quarter 2001, which reported a net income of $9.3 million. The release reported operating losses in the Engineered Products Division of $1.2 million and losses in the Chemical Products Division of $16.4 million. (Compl. ¶ 117). On November 14, 2001, Goodyear filed its quarterly report with the SEC (“2001 Third Quarter 10-Q”). Again, Kramer signed the form. The 2001 Third Quarter 10-Q reiterated the results stated in the October 25, 2001 press release. (Compl. ¶ 118). • The Fourth Report: On February 8, 2002, Goodyear issued a press release reporting its financial results for the fourth quarter 2001. It reported a net loss of $174 million for the fourth quarter and a net loss of $203.6 million for the year. The Chemical Products Division reported an operating income of $14.5 million for the fourth quarter and $60.2 million for the 2001 year. The Engineered Products Division reported operating losses of $5.1 million for the fourth quarter and an operating income of $11.6 million for the year. (Compl. ¶ 121). That same day, Goodyear conducted a conference call with Wall Street analysts to discuss its fourth quarter and year end results. Gi-bara, Keegan and Tieken participated in the call and reiterated Goodyear’s reported net loss for the period of $174 million. (Compl. ¶ 122). On March 11, 2002, Goodyear filed its annual report for 2001 on a Form 10-K (“2001 10-K”). Defendants Gibara, Tieken, and Kramer signed the report, which reaffirmed the previously announced financial results for 2001 as they were reported in the February 8th press release. (Compl. ¶ 124). • The Fifth Report: On April 24, 2002, Goodyear issued a press release for the first quarter 2002. The release reported a net loss of $63.2 million for the first quarter 2002. (Compl. ¶ 126). That same day, Goodyear conducted a conference call with Wall Street analysts to discuss its first quarter 2002 results and reiterated the financial results announced in the press release. Gibara, Keegan, and Bergeron participated in the call and Gibara confirmed that Goodyear had net losses for the first quarter 2002 of $63.2 million. (Compl. ¶ 126). On May 2, 2002, Goodyear filed its quarterly report for the first quarter 2002 (“2002 First Quarter 10-Q”). Kramer signed the form. It reaffirmed the previously announced results. (Compl. ¶ 127). • The Sixth Report: On July 23, 2002, Goodyear issued a press release announcing its financial results for the second quarter 2002. The press release reported net income of $28.9 million for the second quarter 2002. Gi-bara commented that Goodyear’s earnings more than tripled and that it was Goodyear’s best earnings performance since the second quarter 2000. (Compl. ¶ 129). That same day, Goodyear conducted a conference call with Wall Street analysts and confirmed the financial results for the second quarter 2002. Gibara, Keegan, Tieken and Bergeron participated in the call and Gibara stated that the net income was $29 million. (Compl. ¶ 129). On August 6, 2002, Goodyear filed is quarterly report for the second quarter 2002 (“2002 Second Quarter 10-Q”). Tieken signed the form. Gibara and Tieken also certified that the information presented, in all material respects, represented Goodyear’s financial condition and results of operations. (Compl. ¶ 130). • The Seventh Report: On October 30, 2002, Goodyear issued a press release reporting its financial results for the third quarter 2002. It reported its net income as $33.7 million. (Compl. ¶ 132). That same day, Goodyear held a conference call with analysts and reiterated its previously announced third quarter results. Gibara, Keegan, Bergeron, and Tieken participated in the call, and Gibara stated that the reported net income for the third quarter 2002 was $33.7 million. (Compl. ¶ 134). It also filed its quarterly report with the SEC (“2002 Third Quarter 10-Q”). The form confirmed the results set forth in the press release. Gibara and Tieken also certified that the financial statements were fairly presented in all material respects and that the report did not contain any untrue statements of material fact or omit to state a material fact necessary to make a statement not misleading. (Compl. ¶ 133). • The Eighth Report: On April 3, 2003, Goodyear issued a press release and reported its financial results for the fourth quarter, as well as for the year ended December 31, 2002. The release reported a net loss of $1.1 billion. (Compl. ¶ 136). That day, Goodyear also filed its annual report for 2002 with the SEC (“2002 10-K”). Gibara, Kee-gan, Tieken, and Bergeron signed the form. It confirmed and reiterated the previously announced financial results for the fourth quarter and full-year ended 2002. It stated that Goodyear reported liabilities totaling $136.7 million for anticipated costs relating to workers’ compensation liability; and reported a net loss of $1.1 billion primarily resulting from a non-cash charge of $1.08 billion to establish a valuation allowance against Goodyear’s deferred tax assets. (Compl. ¶ 137). Keegan and Tieken certified under oath that the annual report did not contain any untrue statements of material fact or omit to state a material fact necessary to make the statements not misleading and that all information was accurate. (Compl. ¶ 138). Also that day, Keegan, Tieken, and Ber-geron participated in a conference call with analysts and reiterated Goodyear’s financial results including its loss of $1.1 billion. Tieken also discussed a reduction in shareholder equity of $651 million as a result of an increase in pension liability and a net loss of $1.1 billion. (Compl. ¶ 139). • The Ninth Report: On April 30, 2003, Goodyear issued a press release reporting its financial results for the first quarter 2003. It reported a net loss of $163.3 million for the first quarter. The press release reported an operating income for the Engineered Products Division for the first quarter 2003 as $10.8 million. Keegan stated that Goodyear remained pleased with the strength of its international tire business, its Engineered Products Division, and its chemical units. (Compl. ¶ 141). That same day, Goodyear filed its quarterly report for the first quarter 2003 with the SEC (“First Quarter 2003 10-Q”). Bergeron signed the form. It reaffirmed the previously announced financial results. Keegan and Tieken certified under oath that the financial statements were fairly presented in all material respects. (Compl. ¶ 142). The First Quarter 2003 10-Q stated that Goodyear had recorded liabilities totaling $141.1 million for anticipated costs related to workers’ compensation. (Compl. ¶ 143). • The Tenth Report: On July 30, 2003, Goodyear issued a press release reporting its financial results for the second quarter 2003. It reported a net loss of $73.6 million and an operating income of $23.7 million for the Chemical Products Division. (Compl. ¶ 145). That same day, Goodyear filed its quarterly report with the SEC (“2003 Second Quarter 10-Q”). Bergeron signed the form. It reaffirmed the previously announced financial results. Keegan and Tieken certified under oath that the financial statements were fairly presented in all material respects. (Compl. ¶ 146). 2. Pre-Restatement Press Releases Plaintiffs assert that Goodyear’s improper earnings management began to unravel on October 22, 2003 when Goodyear announced that it would restate its earnings for the time period of 1998 through 2002 and for the first two quarters of 2003. Goodyear stated that it expected to decrease its net income by up to $100 million and reported a reduction in shareholders’ equity of up to $120 million. (Compl. ¶¶ 3, 84). Immediately following the news of the intended restatement, shares of Goodyear stock fell more than 10%. When the stock market closed the following day, shares were down even further. (Compl. ¶ 85). On November 19, 2003, Goodyear issued a press release in which it reported its third quarter 2003 financial results and provided more details about its upcoming restatement. It predicted that its prior-period net income would be reduced by $84.7 million. (Compl. ¶ 86). In this same press release, Goodyear stated that its second quarter 2003 net income would be reduced by $31.3 million. (Compl. ¶ 87). During this time, the SEC began an informal investigation into the facts and circumstances regarding Goodyear’s upcoming restatement. Shortly thereafter, the informal investigation was upgraded to a formal investigation. (Compl. ¶¶ 9, 88, 90). From December 2003 through March 2004, Goodyear issued more press releases. In these releases, Goodyear announced that it was conducting its own internal investigations regarding the improper accounting issues in its European divisions. It also announced that it had fired several senior managers and reprimanded other personnel regarding the improper accounting issues. (Compl. ¶¶ 89, 91). On April 12, 2004, Goodyear announced that it had concluded its overseas investigation and expected its reduction in net income to total approximately $10 million. It stated that this would primarily impact its European Union business. Goodyear also announced that even more accounting violations might be included in its restatement to the amount of $65 million. (Compl. ¶ 92). 3.The Restatement On May 19, 2004, Goodyear restated its earnings (hereinafter “the Restatement”) as part of its 2003 annual report filed with the SEC on a Form 10-K (“2003 10-K”). It provided the details regarding the Restatement and, according to Plaintiffs, admitted that its financial results during the Class Period included materially false and misleading statements. In the Restatement, Goodyear announced that it had identified accounting irregularities related to its earnings management. Specifically, accounts were improperly adjusted between periods and expenses improperly deferred. (Compl. ¶ 94). As a result, Goodyear was forced to reduce its earnings per share and restate its shareholders’ equity to reflect a loss. (Compl. ¶ 97). The Restatement contained numerous adjustments, including the following: (1) net income for the fiscal year ended December 31, 2001 was overstated by $50 million; (2) net income for the second quarter 2001 was overstated by $50.5 million; (3) net income for the second quarter 2002 was overstated by $4.2 million; (4) net income for the third quarter 2002 was overstated by $5.5 million; (5) net loss for the fourth quarter 2002 was understated by $115.7 million; (6) net loss for the year ended 2002 was understated by $121.2 million; and, (7) net loss for the first quarter 2003 was understated by $33.2 million. (Compl. ¶¶110, 115, 125, 131, 135, 140, 143). In total, Goodyear admitted that it had overstated its income by $280.8 million — $52.9 million prior to 2001, $50.5 million in 2001, $121.2 million in 2002, and $56.2 million in 2003. (Compl. ¶¶ 4, 93). 4. Allegations of Accounting Improprieties According to Plaintiffs, Goodyear admitted to intentionally misstating its financial results throughout the Class Period when it issued the Restatement, which reduced its previously reported after-tax income by $280.8 million. (Compl. ¶ 48). Plaintiffs also allege that Goodyear admitted to the following: (1) intentionally engaging in fraud by overriding internal controls and failing to correct material weaknesses in those controls, which resulted in $65 million of the Restatement; (2) intentionally undervaluing Goodyear’s exposure to workers’ compensation claims, which resulted in $17.7 million of the Restatement; (3) intentionally holding down the amount of claim reserves; (4) intentionally engaging in fraudulent accounting procedures for Goodyear’s general and products liability; (5) intentionally understating expenses and net income by deliberately failing to record $11.6 million of additional costs in its financial statements, even though certain claims had been resolved; and (6) improperly adjusting accrual accounts between periods and improperly deferring accounts beyond the third quarter 2003, which resulted in the need for a $9.2 million write-off. (Compl. ¶¶ 51, 53, 55, 56, 57, 59, 60). 5. Goodyear’s Explanation of the Restatement & Plaintiffs’ Contrary Allegations In the Restatement, Goodyear attributed a large portion of the accounting errors to its Enterprise Resource Planning system (“ERP”). (Compl. ¶ 61). Specifically, Goodyear attributed the following amounts to the ERP’s failures: (1) $13.1 million to the failure of the system to properly depreciate fixed assets and to remove from the fixed assets account the carrying value of disposed assets; (2) $25 million to the failure of the system to balance the accounts receivable control account in the general ledger with the subsidiary accounts receivable trial balance; and, (3) $15.2 million to system errors related to inventory and fixed assets at Wingfoot, which resulted in an understatement of the cost of goods by $11 million. (Compl. ¶¶ 66, 70). Goodyear also attributed $28.8 million to its Inter-plant System, which tracks the procurement and transfer of fixed assets, raw materials, and spare parts acquired or manufactured by Goodyear units in the United States for Goodyear’s foreign manufacturing locations. (Compl. ¶ 66). Goodyear admitted that $7.7 million of the Restatement was required as a result of intentional manipulations at Goodyear’s chemical products segment. Specifically, Goodyear admitted that the adjustments were required because of improprieties concerning the timing of the recognition of manufacturing variances to reflect the actual cost of inventories, the fair-valued adjustment of a hedge for natural gas, and the correction of inter-company profit elimination in inventory to eliminate selling and administrative expenses in inventory. (Compl. ¶ 71). On the contrary, Plaintiffs allege that the ERP is a sophisticated and highly reliable accounting and reporting system that is incapable of such errors, and that but for Defendants’ override of the ERP system controls, and their failure to monitor the reports and other information, such errors would not have gone undetected. (Compl. ¶ 62). According to the allegations in the Amended Complaint, the ERP system would have quickly detected accounting errors of the magnitude listed in the Restatement and would have produced reports alerting Defendants of any errors. (Compl. ¶ 63). Plaintiffs claim that the chances of random errors in the ERP system were extremély minimal and that if they were truly random errors, as Goodyear claims, they would not have improved Goodyear’s financial results. (Compl. ¶ 64). Plaintiffs also allege that Pricewaterhou-seCoopers, LLP (“PwC”), Goodyear’s independent auditor, considered Goodyear’s management override material enough to characterize it as a “reportable condition,” which under Generally Accepted Auditing Standards (“GAAS”) represents a significant deficiency in the design or operation of Goodyear’s internal controls that could adversely affect its ability to initiate, record, process, and report financial data consistent with its financial statements. (Compl. ¶ 58). Plaintiffs allege that Defendants failed to monitor the reports and other information that the ERP system produced to alert Goodyear of the reporting problems. (Compl. ¶ 63). According to an unnamed former Goodyear Tire Plant Controller, Tieken knew that the system was reporting errors, but directed that those errors remain uncorrected because correcting them would have reduced Goodyear’s financial results. (Compl. ¶ 65). Plaintiffs contend that the “failures” described regarding the $28.8 million attributed to the Interplant System, the $13.1 million attributed to the ERP system, and the $21.3 million attributed to the failure of the ERP to account for transactions related to the Engineered Products Division were actually the result of intentional or highly reckless conduct because the failures “would have been obvious” and “should have been detected” by Goodyear employees and/or Defendants themselves. Plaintiffs also claim that Goodyear’s sophisticated system would not have recorded half of a transaction, i.e., it would not have billed a transfer without recording the other half. And, that even if it did, the system would have reported the imbalance and required that the error be corrected. (Compl. ¶ 67). Plaintiffs also allege that Tieken discussed the seriousness of these imbalances at weekly meetings that involved Goodyear’s senior financial officers. Another unnamed former Goodyear employee, who worked as a finance director between 1996 and 2001, claims to have attended these meetings where Tieken allegedly discussed the financial reporting issues caused by the inter-company transactions and imbalances. According to this employee, the participants at the meetings suspected that the inter-company imbalances overstated Goodyear’s financial results. (Compl. ¶ 68). According to Plaintiffs, there “simply is no credible explanation” — with respect to the $25.5 million attributed to the ERP’s failure to balance accounts receivable — as to why or how these errors went undetected for over four years. Plaintiffs again allege that the safeguards built into the ERP system would have ensured that these errors were detected, and that only a manual override bypassing system controls could have caused the condition to remain undetected for such a length of time. (Compl. ¶ 69). With respect to the $15.2 million attributed to ERP system errors at Wingfoot, Plaintiffs again allege that there is no explanation for how the ERP system recorded the sale without properly relieving the inventory and charging the cost of goods sold. Plaintiffs claim that this is true with respect to the fixed asset losses. According to Plaintiffs, when the sale or disposition is recorded, the system — unless it is overridden — relieves the carrying value of the asset and recognizes any losses. (Compl. ¶ 70). 6. Goodyear’s Pension Discount Rate In the Restatement, Goodyear also announced that it was shaving fifty basis points from the discount rates it had used to calculate its current domestic pension fund costs for 2001-2003. Goodyear detailed the impact of the discount rate reduction and the increased pension plan expenses, which resulted from the reduction. It explained the financial statement impact of the retroactive reduction in the discount rate, including the tax consequences. (Compl. ¶¶ 72, 75). According to Plaintiffs, Defendants knowingly and/or recklessly allowed these rates to be dramatically overstated in 2001, 2002, and 2003. This, Plaintiffs allege, caused Goodyear’s originally reported pension liabilities, other comprehensive income (“OCI”), deferred tax assets, and valuation allowance all to be materially misstated. (Compl. ¶ 73). Plaintiffs claim that the lower the discount rate, the larger the size of the obligation to future retirees, and that by using an inflated discount rate, Goodyear materially understated its pension expenses and overstated its financial results. (Compl. ¶ 74). They allege that Goodyear admitted that it had improperly inflated the original rates as evidenced by the retroactive revision of the discount rates used for the prior three years. Moreover, Plaintiffs allege that a Goodyear spokesperson acknowledged this much when he stated that “when you do restate it’s because the numbers aren’t right.” Plaintiffs point to the fact that industry commentators noted that such restatements typically imply some sort of error or irregularity in past accounting. (Compl. ¶ 76). With respect to the original discount rates, Plaintiffs claim that they were extremely high compared to the discount rates used at other companies. Plaintiffs reference articles by certain commentators who noted that other companies were using lower discount rates than Goodyear. According to Plaintiffs, one commentator in particular stated that Goodyear used an “uncommon” way of calculating the rate. (Compl. ¶ 77). Plaintiffs allege that Goodyear’s restatement of its prior discount rates “appears to have been unprecedented.” (Compl. ¶ 78). They further allege that Defendants knew that a reduction in discount rates would have a substantial impact. According to Plaintiffs, Goodyear knew that it was using unconventionally high discount rates and thereby putting its financial results and condition at risk during a presentation prepared in connection with its 2003 fourth quarter conference call. (Compl. ¶ 79). Goodyear’s reduction in discount rates resulted in an increase in liabilities (pension costs) of $160.9 million and a charge to OCI totaling $150.1 million for the years ended 2001 and 2002. (Compl. ¶ 80). As part of the Restatement, Goodyear concluded that it was required to create a valuation allowance to reflect the reality that its deferred tax assets, which were created as a result of the discount rate restatement, would not be realized. Goodyear disclosed in its 2003 10-K that it was going to maintain a valuation allowance until sufficient positive evidence existed to support a realization of its deferred tax assets. The creation of a valuation allowance caused Goodyear to increase its income tax expense. (Compl. ¶ 82). A further effect of the discount rate adjustments was to render income tax expenses understated by $122.5 million in 2002 and $3.5 million in 2002. It was overstated by $1.2 million prior to 2001. The discount rate adjustment accounted for $81.2 million of the of the $122.5 million understatement for 2002, and the balance of the net understatement of $43.6 million related to the correction of errors in the computation of Goodyear’s deferred tax assets and liabilities. (Compl. ¶ 35). C. Scienter Allegations Plaintiffs claim that each of the Individual Defendants acted with scienter because they had actual knowledge that their statements were materially false and misleading. Alternatively, Plaintiffs claim that they acted with reckless disregard for the truth. According to Plaintiffs, the fact that the Individual Defendants acted with the intent to deceive is demonstrated by both circumstantial evidence and the fact that they had motive and opportunity to commit fraud. (Compl. ¶ 148). Specifically, Plaintiffs claim that scienter is evidenced because: (1) Defendants admitted that they deliberately managed earnings and intentionally overrode internal controls; (2) there were overwhelming weaknesses in Goodyear’s internal controls; and, (3) Defendants failed to disclose the $31.3 million charge in the second quarter 2003 report. 1. Admissions of Earnings Management and Intentional Overrides Goodyear admitted in the Restatement that the “accounting irregularities primarily related to earnings management whereby accrual accounts were improperly adjusted between periods or expenses were improperly deferred.” Goodyear also admitted that PwC uncovered material weaknesses resulting from “intentional overrides of internal controls by those in authority .... ” According to Plaintiffs, these admissions evidence an intentional scheme to manipulate the financial results by those persons in authority at Goodyear. (Compl. ¶ 149). Plaintiffs also allege that certain statements of former Goodyear employees show that Defendants acted fraudulently or recklessly. For instance, Plaintiffs point to the former financial analyst at Goodyear who said that dollar amounts in certain accrual accounts often became too high and were reversed in the Company’s profit and loss statements as needed in order to meet quarterly earnings targets. This employee stated that the reversals were deliberate and that the people doing the reversals were aware that their actions could violate GAAP. This employee also stated that there was extreme pressure to meet quarterly earnings at all costs. (Compl. ¶ 150). Another former Goodyear employee, who worked as a finance director, stated that the intentional overrides in the inter-company billing systems were widely known at Goodyear and that there were open discussions at Goodyear’s headquarters in Akron about this. The employee stated that Tieken held weekly meetings on this topic, at which seven to eight other Goodyear employees discussed these problems. (Compl. ¶ 151). A third individual formerly employed at Goodyear, who at one time worked as a plant controller, indicated that Tieken was aware that Goodyear’s accounts receivable were overstated in 2000, and that Goodyear had problems with other balance sheets prior to June 2000. This employee indicated that Tieken left them alone, however, because to fix them would have reduced Goodyear’s reported financial results. (Compl. ¶ 153). Plaintiffs also allege that Defendants’ attempt to blame the Restatement on the ERP system supports scienter. According to Plaintiffs, Goodyear’s claim disregards the fact that its ERP system is one of the most sophisticated and relied upon systems in the market and Goodyear’s own independent auditor did not fault the ERP system for these problems. (Compl. ¶ 153). They claim that the ERP would have generated reports and would have recorded any imbalances obvious to those employees responsible for maintaining the accounts and that the errors were openly discussed at meetings. Furthermore, Plaintiffs allege that there is circumstantial evidence of scienter from the fact that each of the accounting violations caused an overstatement in Goodyear’s net income and not one violation caused an understatement of net income. (Compl. ¶ 154). 2. Weaknesses in Goodyear’s Internal Controls The Amended Complaint states that Goodyear’s lack of proper internal controls gives rise to a strong inference that Defendants knew or were reckless in not knowing that Goodyear’s Class Period financial results were materially false and misleading. (Compl. ¶ 155). Plaintiffs also cite to the fact that PwC identified material weaknesses in Goodyear’s internal controls as evidence of scienter. (Compl. ¶¶ 156, 157). Plaintiffs claim that Goodyear’s remedial measures, after the fraud was revealed, further demonstrate the “complete absence” of internal controls because Goodyear acknowledged the need to make certain changes. 3. Failure to Disclose $31.3 Million Charge in Second Quarter 2003 Report Plaintiffs allege that Keegan and Tieken either knew, or were reckless in not knowing, that the 2003 Second Quarter 10-Q omitted that Goodyear had recorded a $31.3 million charge to its net income. The report stated that Goodyear had recorded a net loss of $73.6 million for the quarter, but it did not reveal that $31.3 million of the loss resulted from an adjustment to reconcile imbalances in Goodyear’s general ledger accounts. (Compl. ¶¶ 160, 161). Goodyear did not disclose this amount, despite having had the opportunity to do so, until November 19, 2003 when it provided more detail regarding the impending Restatement. (Compl. ¶ 162). Plaintiffs allege that Keegan and Tieken’s failure to disclose this amount evidences their intent to deceive investors and to disguise the existence of the fraud. (Compl. ¶ 163). 4. Motive and Opportunity Plaintiffs further allege that Defendants also had motive and opportunity to artificially inflate Goodyear’s stock price to finance its underfunded pension obligations and avoid detrimental financial consequences with respect to its satisfaction of debt obligations. (Compl. ¶ 164). According to Plaintiffs, Goodyear issued a certain amount of shares of its common stock to its Common Trust for the Collective Investment of Plan Funds on September 10, 2001 and then issued an additional amount of shares to its Directed Retirement Trust on September 12, 2002. Goodyear issued these shares as a contribution to the assets of these pension plans. (Compl. ¶ 165). Plaintiffs allege Defendants’ accounting improprieties artificially inflated this stock, and, as a result, Defendants were able to issue fewer shares to satisfy Goodyear’s pension fund commitments. (Compl. ¶ 166). Lastly, Plaintiffs allege that Goodyear’s increasing debt and employee benefit obligations, coupled with its poor earnings, provided motive for fraud because Goodyear was close to losing its credit facilities and defaulting on its loan covenants. (Compl. ¶¶ 167,168). Plaintiffs also allege that the Individual Defendants Gibara, Keegan, and Tieken, by virtue of their high-level positions with Goodyear, participation and/or awareness of Goodyear’s operations, and/or intimate knowledge of Goodyear’s performance— had (and exercised) the power to influence and control the decision-making at Goodyear either directly or indirectly. Moreover, Plaintiffs allege that these Defendants were provided with or had unlimited access to copies of Goodyear’s press releases and public filings, and had the ability to either prevent the dissemination of such statements or correct them. (Compl. ¶ 170). Additionally, Plaintiffs claim that these Defendants had direct involvement in Goodyear’s day-to-day operations, and are therefore presumed to have had the power to control or influence the transactions at issue. (Compl. ¶ 171). The Amended Complaint alleges that these Defendants did not possess reasonable grounds for the belief that the statements contained in the SEC filings, press releases, etc. were true and devoid of any misstatements or omissions of material fact. Therefore, according to Plaintiffs, each of the Individual Defendants are liable by virtue of their position of control within Goodyear. (Compl. ¶ 172). The Complaint alleges that Gibara, Keegan, and Tieken were all “control persons” at Goodyear. (Compl. ¶¶ 173-176). III. Applicable Pleading Standards A. Rule 12(b)(6) In applying the typical Rule 12(b)(6) motion to dismiss, the Court “must construe the complaint in a light most favorable to the plaintiff, accept all of the factual allegations as true, and determine whether the plaintiff undoubtedly can pi-ove no set of facts in support of his claims that would entitle him to relief.” Columbia Natural Resources, Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.1995) (citing Allard v. Weitz-man, 991 F.2d 1236, 1240 (6th Cir.1993)). If an allegation is capable of more than one inference, the Court must construe it in the plaintiffs favor. Id. The Court may not grant a Rule 12(b)(6) motion merely because it may not believe a plaintiffs factual allegations. Id. Although this is a liberal standard of review, the plaintiff still must do more than merely assert bare legal conclusions. Id. To survive a Rule 12(b)(6) motion to dismiss, the plaintiffs complaint must allege either “direct or inferential” allegations regarding all of the material elements necessary to sustain recovery under “some” viable legal theory. Id. B. Pleading Securities Fraud Because this is a securities action, however, the Court is required to apply a more vigorous standard of review. The Court must first view the allegations under Federal Rule 9(b)’s requirement that claims of fraud be plead with particularity. Fed.R.Civ.P. 9(b). Specifically, this rule states 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.” Id. In order to satisfy this heightened requirement, a plaintiff must detail specifically the facts and circumstances it claims constitute the defendant’s fraudulent conduct. Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass’n, 176 F.3d 315, 322 (6th Cir.1999) (quotation omitted). In other words, the plaintiff must “allege the time, place, and content of the alleged misrepresentation,” the fraudulent intent of the defendants and the resulting injury. Id. (quoting Coffey v. Foamex L.P., 2 F.3d 157, 161-62 (6th Cir. 1993)). Generalized and conclusory allegations that the defendant’s conduct was fraudulent do not satisfy Rule 9(b). Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 361 (6th Cir.2001) (quotations omitted). Notwithstanding Rule 9(b)’s mandate that fraud must be plead with particularity, the Court must also apply the strictures of the PSLRA, which requires that a plaintiff state with particularity all facts supporting an allegation made on information and belief, as well as all facts establishing scienter. Section 78u-4(b) states, in relevant part: (b) Requirements for securities fraud actions (1) Misleading statements and omissions In any private action arising under this chapter in which the plaintiff alleges that the defendant— (A) made an untrue statement of a material fact; or (B) omitted to state a material fact necessary in order to make the statements made, in the light of circumstances in which they were made, not misleading; the complaint shall specify each statement alleged to have been misleading, 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. (2) Required state of mind In any private action arising under this chapter in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall, with respect to each act or omission alleged to violate this chapter, 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)(l)-(2). Thus, Plaintiffs must set forth specific facts not only in support of allegations of falsity and fraud, but also to support allegations of the requisite state of mind. In other words, Plaintiffs must plead facts giving rise to a strong inference of scienter — complaints containing conclusory allegations are properly dismissed. Helwig v. Vencor, Inc., 251 F.3d 540, 565 (6th Cir.2001). This does not change the fact that the Court is still required to draw inferences in favor of the plaintiff; however, the Court is required to accept plaintiffs inferences of scienter only if those inferences are the most plausible of competing inferences. Id. at 553. IV. Discussion Section 10(b) of the Act makes it unlawful 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 ... 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). Under Rule 10b-5, it is illegal for one “[t]o 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 light of the circumstances under which they were made, not misleading----” 17 C.F.R. § 240.10b-5. To establish a claim under Section 10(b) and Rule 10b-5, a plaintiff must allege — in connection with the purchase or sale of securities — the following: (1) a misstatement or omission; (2) of a material fact; (3)made with scienter; (4) justifiably relied on by the plaintiff; and (5) proximately causing their injury. See e.g., Helwig, 251 F.3d at 554. Control person liability under Section 20(a) is contingent upon the plaintiffs ability to prove a primary violation under Section 10(b). PR Diamonds, Inc. v. Chandler, 364 F.3d 671, 696 (6th Cir.2004). Dismissal of the control person claims is appropriate where the plaintiff does not establish the primary violation alleged. Id. Here, Plaintiffs have failed to satisfy, as a matter of law, the first and second requirements. In other words, dismissal is appropriate because Plaintiffs have failed to (1) specify “each statement alleged to have been misleading [and] the reason or reasons why the statement is misleading” and (2) they have failed to allege the “facts giving rise to a strong inference that [Defendants] acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(l)-(2). A. Plaintiffs Have Failed to Plead Scienter The Court will first address the scienter element of Plaintiffs’ claims under Section 10(b) and Rule 10b-5 because scienter is the linchpin of those claims. In order to determine whether Plaintiffs have sufficiently alleged scienter, the Court must engage in a fact-intensive analysis based on the totality of the circumstances. In re FirstEnergy Corp. Securities Litigation, 316 F.Supp.2d 581, 597 (N.D.Ohio 2004). In securities fraud claims based on statements of present or historical fact, such as Plaintiffs’ claims in this case, scienter can be established by knowledge or recklessness. PR Diamonds, Inc., 364 F.3d at 681. As the Court previously indicated, Plaintiffs are not entitled to all inferences of scienter in their pleading. Rather, Plaintiffs’ allegations of scienter will only survive Defendants’ motion if those inferences are both reasonable and strong. Helwig, 251 F.3d at 551 (citation omitted). The Court must balance competing interests and credit to Plaintiffs their inferences only if it appears from all the facts and circumstances that those are the most plausible. PR Diamonds, Inc., 364 F.3d at 683-84. Moreover, it is not enough for Plaintiffs to show that Defendants were negligent — there must be sufficient allegations of knowing or reckless conduct. Id. at 686-87. In securities fraud cases, recklessness is defined as “highly unreasonable conduct which is an extreme departure from the standards of ordinary care.” In re Coms-hare Inc. Sec. Litig., 183 F.3d 542, 550 (6th Cir.1999) (quoting Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017, 1025 (6th Cir.1979)). Recklessness under the PSLRA is “a mental state apart from negligence and akin to conscious disregard.” Id. Moreover, “[w]hile the danger need not be known, it must at least be so obvious that any reasonable man would have known of it.” Id. (quoting Mansbach, 598 F.2d at 1025). Thus, the Court must determine whether Plaintiffs have alleged facts sufficient to give rise to a strong inference that, when Defendants made the alleged misrepresentations or materially misleading omissions, they did so with at least a conscious disregard of the falsity of that information. According to Defendants, Plaintiffs have failed to raise a strong inference of scien-ter. Plaintiffs, however, assert that they have indeed set forth sufficient allegations to create a strong inference of scienter. Specifically, Plaintiffs argue that the Amended Complaint shows a strong inference of scienter because: (1) Goodyear was on notice of accounting irregularities prior to, and during, the Class Period; (2) deliberate acts of fraud were specifically alleged; (3) Goodyear used an improper discount rate for its future pension obligations; (4) Defendants had motive and opportunity to commit fraud; (5) the Individual Defendants signed and certified the accuracy of the financial statements, and knew or should have known of the accounting irregularities; (6) the Individual Defendants are liable under the group pleading doctrine; and, (7) the Amended Complaint meets at least six of the nine Hehuig factors. Although the Court will address each these allegations in turn, its ultimate conclusion is that Plaintiffs have failed to adequately plead scienter. In other words, Plaintiffs have failed to meet their burden of pleading specific facts, which, when viewed cumulatively, persuade the Court that the most plausible conclusion is that Defendants must or should have known about Goodyear’s problems. “While the allegations no doubt merit drawing some inference of scienter, that it not enough. The PSLRA requires the [Amended] Complaint to establish a strong inference [of scienter].” PR Diamonds, 364 F.3d at 684 (emphasis in original). They must show that Defendants “acted at least recklessly, meaning that their states of mind were reflected in highly unreasonable conduct constituting an extreme departure from the standards of ordinary care so obvious that any reasonable person would have known of it.” Id. The Amended Complaint fails in this respect. 1. Admission of Accounting Irregularities and Earnings Management The primary allegation of scienter found throughout the Amended Complaint is Plaintiffs’ assertion that Goodyear admitted to accounting irregularities and earnings management in the Restatement, and that such admissions evidence scienter. According to Plaintiffs, “accounting irregularities” is the technical term for fraud when it is used in a restatement. In other words, Plaintiffs argue that when a company states that it has made “accounting irregularities” in a restatement, this denotes scienter. In support of this argument, Plaintiffs cite to In re Baker Hughes Securities Litigation, 136 F.Supp.2d 630, 649 (S.D.Texas 2001) (quoting In re Paracelsus Corp. Securities Litigation, 61 F.Supp.2d 591, 599 (S.D.Texas 1998)). However, while the term “accounting irregularities” generally denotes “intentional misstatements or omissions” under the American Institute of Certified Public Accountant’s Codification of Statements on Accounting Standards § 316, the “[flactual allegations that a company has admitted to intentional misstatements ... are sufficient to meet the heightened pleading standards of the PSLRA if those admissions were made with regard to each of the false statements that the complaint alleges were made with scienter.” In re Paracelsus Corp. Securities Litigation, 61 F.Supp.2d at 599 (emphasis in original). Here, Plaintiffs have not specifically pled the nexus between those “admissions” of irregularities in the Restatement and the allegedly false statements in the Amended Complaint. To explain, the Restatement makes admissions regarding accounting irregularities that were discovered in December 2003 (and some later discovered irregularities). Most of the irregularities discussed in the Restatement pertain to accounting irregularities in Goodyear’s European Union Tire business segment. The remainder of the irregularities mentioned in the Restatement resulted from the following: (1) Goodyear’s understatement of its workers’ compensation liability; (2) the valuation of real estate received in payment of trade accounts receivable in Chile; and, (3) the improper deferral of manufacturing variances in 1998. (2003 10-K at 70). The Amended Complaint, however, does not plead the nexus between those irregularities discussed in the Restatement and each of the allegedly false statements. Furthermore, Goodyear’s admission that the accounting irregularities were “primarily related to earnings management” and due to “intentional overrides of internal controls by those in authority” does not automatically require a finding of scienter. In other words, the Court disagrees with Plaintiffs that these are powerful admissions of complicity, intent, and deliberate fraudulent activity. Plaintiffs claim that the Restatement, by definition, is an admission that Goodyear committed intentional fraud. Again, the Court disagrees. Plaintiffs’ assertion implies that there was fraud merely because there was a restatement. This is simply not the case. The need for a restatement, while it may demonstrate the falsity of a prior statement, does not automatically result in a finding of scienter. It is self-evident that “the purpose of a restatement is to correct an error in a previously-issued financial statement. By definition ... a restatement says that the prior financial statement was false.” In re FirstEnergy Corp. Securities Litigation, 316 F.Supp.2d at 595 (discussing Merzin v. Provident Financial Group, Inc., 311 F.Supp.2d 674, 679-81 (S.D.Ohio 2004)). There is no disputing that Goodyear issued false statements — the issue this Court is called on to decide is whether the statements were fraudulent. 2. Notice of Accounting Irregularities & Certification of Financial Statements According to Plaintiffs, Goodyear was on notice of accounting irregularities prior to, and during the Class Period, which raises a strong inference of scienter. Plaintiffs point to the fact that Goodyear admitted that it had discovered accounting irregularities in the second quarter 1999, but did not actually correct its financial statements until 2004. This, Plaintiffs argue, belies Defendants’ argument that they were unaware of any improprieties and that they undertook remedial measures and a full investigation as soon as they became aware that something was amiss. In other words, Plaintiffs argue that Goodyear, by virtue of its 1999 discovery of the 1998 accounting irregularities, was put on notice that its financial reporting procedures were both prone to error and to intentional manipulation. Plaintiffs’ argument, however, is not well-taken. First, Goodyear’s discovery of accounting irregularities in 1999 cannot serve as notice of that which allegedly occurred during the Class Period from April 2001 through October 2003. As Defendants note, the discovery of one accounting issue at a single manufacturing plant does not serve to put them on notice of entirely unrelated and allegedly “fraudulent conduct” that occurred within Goodyear’s entire global financial reporting operation. It is illogical for Plaintiffs to argue that Defendants, by virtue of the 1999 discovery of an isolated accounting error, would be on notice of errors within the ERP system that' Goodyear did not even begin to implement until 1999, or of the need to adjust its pension discount rates for the years 2001-2003 when those rates had not yet been selected. The Court agrees with Defendants that there is a total lack of similarity and temporal proximity between that which Goodyear discovered in 1999 and that which was discovered and set forth in the Restatement. The Restatement sets forth a number of different accounting adjustments in different segments of Goodyear’s global business over a six-year period. It is difficult for this Court to find that Defendants’ knowledge of one accounting issue that was discovered before the Class Period indicates that there was fraud or recklessness with respect to the entire Restatement. Plaintiffs also make much out of the allegations that Defendants had knowledge that its financial results were inflated. Specifically, Plaintiffs point to the allegations in the Amended Complaint regarding the 2003 Second Quarter 10-Q where Keegan and Tieken allegedly “knew or were reckless” in not knowing that Goodyear had recorded a $31.3 million charge to its net income, but did not reveal that the loss resulted from an adjustment to reconcile imbalances in Goodyear’s general ledger accounts. According to Plaintiffs, scienter can be inferred because Goodyear made no disclosure of this adjustment until November 2003 when it provided more detail regarding the Restatement. Once again, however, the Amended Complaint does not state with particularity facts giving rise to a strong inference that Defendants acted with the required state of mind. See generally 15 U.S.C. § 78u-4(b)(2). Contrary to Plaintiffs assertion, the instant matter is unlike City of Monroe v. Bridgestone Corp., 399 F.3d 651 (6th Cir.2005), which arguably stands for the proposition that prior notice of improper conduct is evidence of a strong inference of scienter. In City of Monroe, the Sixth Circuit found that the defendants’ specific knowledge that a certain model of tires caused accidents raised a strong inference of scienter in connection with the subsequent recall of those same tires. Id. at 687-88. Here, there are no allegations that Defendants had specific knowledge of conduct that occurred later. And the allegations of Defendants’ prior knowledge of accounting improprieties was unrelated to those alleged improprieties that occurred later. Although Defendants may have been negligent, or even remiss, in not diligently attempting to prevent further accounting improprieties from occurring, such carelessness does not give rise to a strong inference of scienter. See generally In re Comshare Inc. Sec. Litig., 183 F.3d at 550 (noting that recklessness is a mental state apart from negligence and akin to conscious disregard). Plaintiffs also argue that the Individual Defendants’ certification of financial statements is indicative of scienter. According to Plaintiffs, those Individual Defendants who signed the financial statements during the Class Period “were on notice and knew, or should have known” about the subsequent accounting irregularities and errors. In support of their argument, Plaintiffs cite In re Atlas Air Worldwide Holdings, Inc. Sec. Litig., 324 F.Supp.2d 474 (S.D.N.Y.2004). In Atlas, the district court held that the “[kjnowledge of the falsity of a company’s financial statements can be imputed to key officers who should have known of facts relating to the core operations of their company that would have led them to the realization that the company’s financial statements were false when issued.” Id. at 490. The court’s holding in Atlas, however, was premised on the fact that specific allegations were made to establish that the individual defendants ignored reasonably available data that the value of their planes was impaired before they reported the company’s financial results. Id. at 491. The Atlas court noted that the defendants had a duty to familiarize themselves with the facts relevant to the company’s core operations and held that they were “not entitled to make statements concerning the company’s fina