Full opinion text
OPINION AND ORDER MELINDA HARMON, District Judge. Pending before the Court in the above referenced cause are the RBC Defendants’ (collectively, “RBC’s”) motion to dismiss (instrument # 30) Plaintiffs’ Second Amended Complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) and RBC’s motion to strike Plaintiffs’ sur-reply (# 36). Plaintiffs allege that RBC conspired with and aided and abetted Enron in defrauding them and other investors by helping to devise and implement complex sham transactions (Alberta, LJM2, Hawaii Trusts, and Cerberus) whose only function was to help Enron hide millions of dollars of debt and overstate its income. Relying on Enron’s false financial statements and the information about Enron created by Defendants and disseminated through various media outlets to investors, Plaintiffs purchased and continued to hold through Enron’s collapse the following Enron securities: (1) American National Property and Casualty Company, American National Investment Accounts, Inc., SM & R Investments, Inc, and Standard Life and Accident Insurance Company purchased Enron common stock from 1997-2001; (2) Farm Family Casualty Insurance Company and Farm Family Life Insurance purchased Enron Capital, L.L.C. preferred shares in 1993; (3) Farm Family Life Insurance Company purchased an Enron bond in 1992; (4) American National Insurance Company purchased Enron commercial paper and an Enron bond in 2001; and (5) National Western Life Insurance Company purchased Enron bonds in 1992 and 1993. They claim that they suffered substantial losses when Enron collapsed and filed for bankruptcy protection on December 2, 2001. RBC’s motion points out that the four causes of action asserted by Plaintiffs against RBC under Texas law and presents reasons why they should each be dismissed: (1) aiding and abetting fraud by Enron under the Texas Securities Act, Texas Revised Civil Statute Annotated Article 581-33F(2) (West 2002) (“TSA”), because Plaintiffs cannot state a viable claim of primary liability against Enron; (2) common law fraud because Plaintiffs have not alleged an actionable misrepresentation nor material non-disclosure by the RBC Defendants;© violation of Section 27.01 of the Texas Business and Commerce Code (West 2002) because Plaintiffs fail to allege that (a) the RBC Defendants had a duty to disclose Enron’s alleged misrepresentations, (b) that RBC Defendants directly benefitted from any of Enron’s alleged fraudulent misrepresentations, (c) that Plaintiffs actually and justifiably relied on any alleged misrepresentations in purchasing the securities at issue; and (4) civil conspiracy to commit fraud because Plaintiffs fail to adequately plead key elements, specifically a combination or agreement between RBC and Enron and actual and justifiable reliance by Plaintiffs on Enron’s alleged misrepresentations in purchasing their Enron securities. Furthermore, RBC contends that Plaintiffs’ “holder” claims, based on the diminution in value of Enron securities they purchased in early 1990’s and were induced to hold because of Enron’s alleged misrepresentations, should be dismissed. In their response to the motion to dismiss, Plaintiffs state in a footnote that based on the Court’s decision in American National Ins. Co. v. J.P. Morgan Chase & Co., G-02-0299, instrument # 66, in which this Court addressed and dismissed the holder claims as a matter of law, Plaintiffs will no longer be urging these claims against the RBC Defendants here. # 32 at 5 n. 1. In addition the Court refers the parties to and incorporates here its earlier opinion and order, # 75 in American National Ins. Co., et al., v. Citigroup, Inc., et al., G-02-723, which further addresses the “holder”-claim issue as a matter of law. Accordingly, the Court dismisses the holder claims based on Farm Family Casualty Insurance Company and Farm Family Life Insurance’s purchases of Enron Capital, L.L.C. preferred shares in 1993; Farm Family Life Insurance Company purchase of an Enron bond in 1992; and National Western Life Insurance Company’s purchase of. Enron bonds in 1992 and 1993. RBC points out that Plaintiffs have filed two amended complaints and have had ample opportunity to state a claim and therefore asks the Court to deny them leave to replead. RBC argues that the nature of the deficiencies here is legal and is not subject to cure and thus additional amendment would be futile. The Court now examines the motion to dismiss the four causes of action. I. Standards of Review As stated in 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure Civ.3d § 1204 at 104-05 (West 2004), The manner and details of pleading in the federal courts are governed by the Federal Rules of Civil Procedure regardless of the source of substantive law to be applied in the particular action.... It no longer can be doubted that the rules regarding the standard of specificity to be applied to federal pleadings, the pleadings allowed in the federal courts, the form of the pleadings, the special requirements for pleading certain matters, the allocation of the burden of pleading among the parties, and the signing of pleadings by an attorney of record or an unrepresented party, all are governed by the federal rules and not by the practice of the courts in the state in which the federal court happens to be sitting. See also In re Enron Corp. Sec., Derivative & “ERISA” Litig., 388 F.Supp.2d 780, 783-84 (S.D.Tex.2005) (and cases cited therein). A. Rule 9(b) Federal Rule of Civil Procedure 9(b) provides, In 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 must be averred generally. “In every case based upon fraud, Rule 9(b) requires the plaintiff to allege as to each individual defendant ‘the nature of the fraud’, some details, a brief sketch of how the fraudulent scheme operated, when and where it occurred, and the participants.” Hernandez v. Ciba-Geigy Corp. USA, 200 F.R.D. 285, 291 (S.D.Tex.2001). In a securities fraud suit, the plaintiff must plead with particularity the circumstances constituting the alleged fraud: Rule 9(b) requires the plaintiff to “ ‘specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.’” Southland Securities Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 362 (5th Cir.2004), quoting Williams v. WMX Technologies, Inc., 112 F.3d 175, 177-78 (5th Cir.1997), cert. denied, 522 U.S. 966, 118 S.Ct. 412, 139 L.Ed.2d 315 (1997). “ ‘In cases concerning fraudulent misrepresentation and omission of facts, Rule 9(b) typically requires the claimant to plead the type of facts omitted, the place in which the omissions should have appeared, and the way in which the omitted facts made the representations misleading.’ ” Carroll v. Fort James Corp., 470 F.3d 1171, 1174 (5th Cir.2006), quoting United States ex. rel. Riley v. St. Luke’s Hosp., 355 F.3d 370, 381 (5th Cir.2004). Although Rule 9(b) allows a plaintiff to plead intent to deceive or defraud generally, a mere conclusory statement that the defendant had the required intent is insufficient; the plaintiff must set forth specific facts that raise an inference of fraudulent intent, for example, facts that show the defendant’s motive. Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1068 (5th Cir.1994); Melder v. Morris, 27 F.3d 1097, 1102 (5th Cir.1994). Intent to deceive or defraud usually must be proved by circumstantial evidence, but to establish a material fact, that evidence “ ‘must transcend mere suspicion.’ ” IKON Office Solutions, Inc. v. Eifert, 125 S.W.3d 113, 124 (Tex.App.-Houston [14th Dist.] 2003, pet. denied). Although a party’s intent to defraud is determined at the time the party made the misrepresentation, “it may be inferred from the party’s subsequent acts after the representation is made.” Id.; see also Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex.1986). The court should not view each piece of circumstantial evidence separately, but should weigh the evidence as a whole. IKON, 125 S.W.3d at 124. “Intent is a fact question uniquely within the realm of the trier of fact because it so depends upon the credibility of the witnesses and the weight to be given to their testimony.” Spoljaric v. Percival Tours, Inc., 708 S.W.2d at 434. “[Wh]en agency is an element of a fraud claim, agency must be pleaded with particularity required under Rule 9(b).” Whitney National Bank v. Medical Plaza Surgical Center, L.L.P., No. H-06-1492, 2007 WL 400094, *3 (S.D.Tex.2007), citing Kolbeck v. LIT America, Inc., 923 F.Supp. 557, 570 (S.D.N.Y.1996), aff'd, 152 F.3d 918, 1998 WL 406036 (2d Cir.1998); American Credit Indemnity Co. v. HCG Financial Servs., Inc., No. 89 C 9583, 1990 WL 77992, *4 (N.D.Ill. June 1, 1990); Chou v. University of Chicago, 254 F.3d 1347, 1362 (Fed.Cir.2001); Abels v. Farmers Commodities Corp., 259 F.3d 910, 916 (8th Cir.2001); and Lachmund v. ADM Investor Servs., Inc., 191 F.3d , 777, 783 (7th Cir.1999). The particularity requirement of Rule 9(b) also governs a conspiracy to commit fraud. Southwest Louisiana Healthcare System, v. MBIA Ins. Corp., No. 05-1299, 2006 WL 1228903, *5 & n. 47 (W.D.La. May 6, 2006); Hernandez v. CIBA-GEIGY Corp. USA No. Civ. A. B-00-82, 2000 WL 33187524, *4 (S.D.Tex. Oct.17, 2000) (“The weight of Fifth Circuit precedent holds that a civil conspiracy to commit a tort that sounds in fraud must be pleaded with particularity.”); In re Ford Motor Co. Vehicle Paint Litigation, No. MDL 1063, 1996 WL 426548, *34 (E.D.La. July 30, 1996); and Castillo v. First City Bancorporation of Texas, Inc., 43 F.3d 953, 961 (5th Cir.1994). The Fifth Circuit, although construing Rule 9(b) strictly, has recognized an exception and permits the requirements to be “relaxed” where facts relating to the fraud are “peculiarly within the perpetrator’s knowledge”; then the alleged fraud “may be pled on information and belief, provided the plaintiff sets forth the factual basis for his belief.” United States ex rel. Russell v. Epic Healthcare Management Group, 193 F.3d 304, 308 (5th Cir.1999), citing United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir.1997) (warning that the exception “must not be mistaken for license to base claims of fraud on speculation and conclusory allegations.”). The relaxed standard is not applicable where the information is available from another source or where the plaintiff fails to allege a factual basis for his beliefs. Sealed Appellant I v. Sealed Appellee I, 156 Fed.Appx. 630, 634 (5th Cir.2005) (plaintiff must allege sufficient factual basis for his belief defendant committed fraud, e.g., particular documents containing false statements, identified by number, date or otherwise, or explain how he tried, but failed to obtain the information, whom he contacted, etc.). A dismissal for failure to plead with particularity in accordance with Rule 9(b) is treated as a Rule 12(b)(6) dismissal for failure to state a claim. Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir.1996). If it appears that given an opportunity to amend the pleading, the plaintiff would be able to state a claim upon which relief could be granted, the court should grant leave to amend. People’s Choice Home Loan, Inc. v. Mora, No. 3:06-CV-1709-G, 2007 WL 708872, *4 (N.D.Tex. Mar. 7, 2007), citing Kennard v. Indianapolis Life Ins. Co., 420 F.Supp.2d 601, 608-09 (N.D.Tex.2006). B. Rule 12(b)(6) Dismissal under Rule 12(b)(6) is disfavored and a motion to dismiss under the rule is rarely granted. Lowrey v. Texas A & M University System, 117 F.3d 242, 247 (5th Cir.1997). The court must construe the complaint liberally in favor of the plaintiff and all well pleaded facts must be taken as true and any doubts regarding the sufficiency of the claim must be resolved in favor of the plaintiff. Id.; Jones v. Alcoa, Inc., 339 F.3d 359, 362 (5th Cir.2003). Nevertheless conclusory allegations and unwarranted factual deductions will not suffice to avoid a motion to dismiss. United States ex rel. Willard v. Humana Health Plan of Texas, Inc., 336 F.3d 375, 379 (5th Cir.2003). Traditionally, dismissal was not proper “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Lowrey, 117 F.3d at 247, citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In a recent antitrust case, Bell Atlantic Corporation v. Twombly, — U.S. —, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (7-2), however, the Supreme Court appears to have modified the Conley rule by inserting a new “plausibility standard,” when it pronounced that the “‘no set of facts’ language” test “has earned its retirement” and “is best forgotten.” Bell Atlantic, 127 S.Ct. at 1969, opined that “a plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conclusions and a formulaic recitation of the elements of a cause of action will not do ....” 127 S.Ct. at 1964-65. “Factual allegations must be enough to raise a right to relief above the speculative level ....” Id. at 1965, citing 5 C. Wight & A. Miller, Federal Practice and Procedure § 1216, at 235-36 (3d ed.2004). The Federal Rules “have not dispensed with the pleading of facts altogether,” but “for most types of cases ... [have] eliminated the cumbersome requirement that a claimant ‘set out in detail the facts upon which he bases his claim.’ ” Id. at 1265 n. 3, citing Conley, 355 U.S. at 47, 78 S.Ct. 99. Nevertheless “some factual allegation” is necessary to “satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds’ on which the claim rests.” Id., citing 5 Wright & Miller § 1202 at 94, 95(“Rule 8(a) ‘contemplate^] the statement of circumstances, occurrences, and events in support of the claim presented’ and does not authorize a pleader’s ‘bare averment that he wants relief and is entitled to it’ ”). In reviewing Conley, the Supreme Court concluded, [0]nce a claim has been stated adequately, it may be supported by any set of facts consistent with the allegations in the complaint. Conley, then, described the breadth of opportunity to prove what an adequate complaint claims, not the- minimum standard of adequate pleading to govern a complaint’s survival. 127 S.Ct. at 1969. Because Rule 9(b)’s heightened pleading standard applies to the fraud-based claims alleged here, the Court will not analyze Bell Atlantic further. II. Applicable Substantive Law A. TSA 1. Primary Liability A prerequisite for establishing secondary liability for aiding and abetting under the TSA is a primary violation -under the statute. Sterling Trust Co. v. Adderley, 168 S.W.3d 835, 845 (Tex.2005) (“a secondary violator’s liability depends upon the primary violator’s culpability”). Plaintiffs assert that Enron was a primary violator under the TSA under two provisions, articles 581-33A(2) and 581-33C. Under Article 581-33A(2), a primary violator is a person who “offers or sells a security ... by means of an untrue statement of a material fact or an omission, to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.” Art. 581-33A(2). Under the TSA a statutory “seller” is the person who sold the security directly to the purchaser or who acted as the vendor’s agent and solicited the sale. In re Enron Sec., Derivative & ERISA Litig., 258 F.Supp.2d 576, 601-08 (S.D.Tex.2003) (requiring privity between the primary-violator “seller” and plaintiff). Either Plaintiffs must plead facts showing that Enron sold the securities directly to Plaintiffs or must plead facts demonstrating that Lehman Brothers acted as a broker or agent of Enron. If Plaintiffs pursue their agency theory, they must plead facts, and ultimately produce evidence,, showing. that there exists, or there is a genuine issue of material fact for trial about, an Enron-RBC agency relationship that satisfies Texas law requirements. Id.; # 76 at 20-21, 34-36 in G-02-723. “Under Texas law, agency is a mixed question of law and fact.” Karl Rove & Co. v. Thornburgh, 39 F.3d 1273, 1295-96 (5th Cir.1994). Nevertheless, if the evidence is undisputed, whether an agency relationship exists is a question of law for the court. Coffey v. Fort Wayne Pools, Inc., 24 F.Supp.2d 671, 677 (N.D.Tex.1998), citing Campbell v. Hamilton, 632 S.W.2d 633, 634 (Tex.App.-Dallas 1982, writ ref'd n.r.e.). The party who “asserts the existence of agency relationship has the burden of proving it.” Karl Rove, 39 F.3d at 1296. Under Texas law, Agency is a legal relationship created by an express or implied agreement or by operation of law whereby the agent is authorized to act for the principal, subject to the principal’s control. As in the formation of any contract, the consent of both parties is necessary to establish an agency relationship. Agency is never presumed; it must be shown affirmatively. ... To prove an agency relation under Texas law, there must be evidence from which the court could conclude that “[t]he alleged principal [had] the right to control both the means and the details of the process by which the alleged agent [was] to accomplish the task, [citations omitted]” Karl Rove, 39 F.3d at 1296. “Under Texas agency law, the essential element is the ‘right of control’ of the purported agent by the purported principal.” United States v. Contemporary Health Management, 807 F.Supp. 47, 49 (E.D.Tex.1992), cited for that proposition in Karl Rove, 39 F.3d at 1296 n. 111. See also In re Carolin Paxson Advertising, Inc., 938 F.2d 595, 598 (5th Cir.1991) (“The alleged principal must have the right to control both the means and the details of the process by which the alleged agent is to accomplish his task.”), quoted by Karl Rove, 39 F.3d at 1296. “Absent proof of the right to control, only an independent contractor relationship is established.” In re Carolin Paxson Advertising, Inc., 938 F.2d at 598. In addition Plaintiffs newly and alternatively assert that Enron, as a statutory issuer of the stocks and bonds they have purchased, is a primary violator under Article 581-33C of the TSA. Article 581-33C of the TSA imposes primary liability on issuers of registered securities purchased on a secondary market for misleading statements in the prospectus under which those securities were issued. Plaintiffs assert that they purchased the Enron common stock and the bond, which were registered securities, on the secondary market, specifically the New York Stock Exchange. 2. Secondary Liability Article 581-33F(2) provides for secondary liability of aiders and abettors: A person who directly or indirectly with intent to deceive or defraud or with reckless disregard for the truth or the law materially aids a seller, buyer, or issuer of a security is liable under Section 33A, 33B, or 33C jointly and severally with the seller, buyer, or issuer, and to the same extent as if he were the seller, buyer or issuer. A claim for secondary liability for another party’s primary violations of the TSA art. 581 — 33(F)(2) may be based on either (1) control person liability (“[a] person who directly or indirectly controls a seller, buyer, or issuer of a security”) or on (2) aider and abettor liability (permitting suit against one “who directly or indirectly with intent to deceive or defraud or with a reckless disregard for the truth or the law materially aids a seller, buyer, or issuer of a security.”). Plaintiffs’ claims against RBC fall into the second category. An aider and abettor is jointly and severally liable with the primary violator “to the same extent as if he were” the primary violator. Art. 581~33F(2). To establish secondary liability for aiding and abetting under the TSA, a plaintiff must prove (1) that a primary violation of the securities laws occurred; (2) that the alleged aider and abettor had a “general awareness” of its role in this violation; (3) that the aider and abettor rendered “substantial assistance” in this violation; and (4) that the aider and abettor either intended to deceive plaintiff or acted with reckless disregard of the truth of the representations made by the primary violator. Frank v. Bear, Stearns & Co., 11 S.W.3d 380, 384 (Tex.App.-Houston [14th Dist.] 2000, pet. denied); Goldstein v. Mortenson, 113 S.W.3d 769, 776 (Tex.App.Austin 2003). See also Sterling Trust Co. v. Adderley, 168 S.W.3d 835, 842 (Tex.2005) (holding that as the statute’s scienter requirement for aiding and abetting, “the TSA’s ‘reckless disregard for the truth or the law standard means that an alleged aider can only be held liable if it rendered assistance ‘in the face of a perceived risk’ that its assistance would facilitate untruthful or illegal activity by the primary violator.... In order to perceive such a risk, the alleged aider must possess a “general awareness that his role was part of an overall activity that was improper.” ’ ”). Furthermore, “the TSA does not require the aider to have had direct dealing with the defrauded party; indeed a person who ‘materially aids a seller’ may have no contact at all with the investors.” Sterling Trust, 168 S.W.3d at 843. The TSA also does not require an investor to prove he relied on the alleged misrepresentations or omissions. In re Westcap Enterprises, 230 F.3d 717, 726 (5th Cir.2000). B. Common law Fraud To prevail on a cause of action for common law fraud under Texas law, a plaintiff must prove that the defendant (1) made a misstatement or omission (2) of material fact (3) with the intent to defraud (4) on which the plaintiff relied, and (5) which proximately caused the plaintiff injury. Hernandez v. Ciba-Geigy Corp. USA, 200 F.R.D. 285, 291 (S.D.Tex.2001), citing Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir.1997). The elements of a fraud are a material misrepresentation, which was false and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon and which caused injury. “[A] defendant who acts with knowledge that a result will follow is considered to intend the result.” Ernst & Young, L.L.P. v. Pacific Mutual Life Ins. Co., 51 S.W.3d 573, 578-80 (Tex.2001) (concluding that Texas jurisprudence is consistent with the standard of the Restatement (Second) of Torts § 531 (1977) that the fraudfeasor intend or have “reason to expect” that the third party will act in reliance on the misrepresentation). The Texas Supreme Court has recognized a cause of action for common law fraud when (a) a party conceals or fails to disclose a material fact within the knowledge of that party, (b) the party knows that the other party is ignorant of the fact and does not have an equal opportunity to discover the truth, (c) the party intends to induce the other party to take some action by concealing or failing to disclose the fact, and (d) the other party suffers injury as a result of acting without knowledge of the disclosed fact. Bradford v. Vento, 48 S.W.3d 749, 754-55 (Tex.2001). “Fraudulent concealment or non-disclosure is a subcategory of fraud that occurs when a party with a duty to disclose a material fact fails to disclose that fact.” GMAC Commercial Mortgage Corp. v. East Texas Holdings, Inc., 441 F.Supp.2d 801, 807 (E.D.Tex.2006), citing Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex.1997) (“Reliance is an element of fraud. Fraud by non-disclosure is simply a subcategory of fraud because where a party has a duty to disclose, the non-disclosure may be as misleading as a positive misrepresentation of facts [citations omitted].”), and Bradford, 48 S.W.3d at 754-55. As indicated, for a claim of fraud based on non-disclosure, the defendant must have a duty to disclose. When particular circumstances impose on a person a duty to speak, silence can constitute a false representation. World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 670 (Tex. App.-Fort Worth 1998, pet. denied). An affirmative duty to disclose may arise in four circumstances: (1) where there is a fiduciary or confidential relationship between the parties; (2) where a person voluntarily discloses information, he must disclose the whole truth; (3) when a person makes a representation and new information makes that earlier misrepresentation misleading or untrue; and (4) when a person makes a partial disclosure and conveys a false impression. Hoggett v. Brown, 971 S.W.2d 472, 487 (Tex.App.-Houston [14th Dist.] 1997, pet. denied); Id. See also Union Pacific Resources Group, Inc. v. Rhone-Poulenc, Inc., 247 F.3d 574, 586 (5th Cir.2001); GMAC Commercial, 441 F.Supp.2d at 808. A plaintiff must allege facts showing that a defendant had such a duty to disclose under Rule 9(b). Carroll, 470 F.3d at 1174. Relying on, but not formally adopting, the Restatement (Second) of Torts § 531 (1977), the Texas Supreme Court has also recognized a common law fraud cause of action where the false representation was made with the intent of reaching and deceiving a third person and thereby causing that third party injury; privity is not required between the fraudfeasor and the person he is trying to influence. Ernst & Young, 51 S.W.3d at 580. Section 531 requires more than probability of reliance and more than an obvious risk that a misrepresentation might be repeated to the third party; the fraudfeasor must “have information that would lead a reasonable man to conclude there is an especial likelihood that it will reach those persons and will influence their conduct.” Ernst & Young, 51 S.W.3d at 581, citing § 531 cmt. d (1977). See also IQ Holdings, Inc. v. Arthur Andersen, LLP (In re WorldCom, Inc. Securities Litig.), No. 02 Civ. 3288(DLC), 2006 WL 1047130 (S.D.N.Y. Apr.21, 2006) (under Texas common law fraud where a misrepresentation was intended to reach a third person and induce reliance, plaintiffs reliance on defendant’s statement must have been “especially likely”). Section 531 also has a “similar transaction requirement”: “[t]he plaintiff must have incurred pecuniary loss ‘in the type of transaction in which [the maker of the representation] intends or has reason to expect [his or her] conduct to be influenced.’ ... Though the transaction sued upon need not be identical to that the defendant contemplates, it must have the same essential character.... ” Ernst & Young 51 S.W.3d at 580. Reliance is an element of common law fraud, regardless of whether the fraud is by affirmative misrepresentation or by nondisclosure. Celanese Corp. v. Coastal Water Authority, 475 F.Supp.2d 623, 637-38 (S.D.Tex.2007) (applying Texas law). Because one must often determine whether particular circumstances impose a duty to disclose information where the claim is based on a failure to disclose and whether plaintiffs justifiably relied on a misrepresentation or nondisclosure, “[r]eliance is ordinarily a question of fact for the fact-finder” and “is not a proper matter for dismissal on the pleadings.” Id., citing Jones v. Ray Ins. Agency, 59 S.W.3d 739, 754 (Tex.App.-Corpus Christi 2001, pet. denied, 92 S.W.3d 530 (Tex.2002)), and 1001 McKinney Ltd. v. Credit Suisse First Boston Mortgage Capital, 192 S.W.3d 20, 30 (Tex.App.-Houston [14th Dist.], 2005, pet. denied) (“In the context of common law fraud, courts have uniformly treated the issue of justifiable reliance as a question for the factfinder.... The question of justifiable reliance depends heavily on the relationship between the parties and their relative sophistication.”). C. Section 27.01 of the Texas Business and Commerce Code For a primary violation of the statute the elements of a claim of “[fjraud in a transaction involving ... stock in a corporation” under the Texas Business and Commerce Code § 27.01(a) (1) (2002) in relevant part are: (1) false misrepresentation of a past or existing material fact ... (A) made to a person for the purpose of inducing that person to enter into a contract; and (B) relied on by that person in entering that contract. Because the statute is derived from common law fraud, Plaintiffs must show that they actually and justifiably relied upon Enron’s allegedly fraudulent misrepresentations. Haralson v. E.F. Hutton Group, Inc., 919 F.2d 1014, 1025 & n. 4 (5th Cir.1990), abrogated on other grounds, Gustafson v. Alloyd Co., Inc., 513 U.S. 561, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995). The burden to show “justifiable” reliance under § 27.01 is lighter than that for “reasonable reliance.” Id. at 1025. “To determine justifiability, courts inquire whether—given a fraud plaintiffs individual characteristics, abilities, and appreciation of facts and circumstances at or before the time of the alleged fraud'—-it is extremely unlikely that there is actual reliance on the plaintiffs part.” Id. at 1026. Common law fraud is very similar to Section 27.01 except that the statutory cause of action does not require proof of a defendant’s knowledge or recklessness in order to recover actual damages. Diversified, Inc. v. Walker, 702 S.W.2d 717, 723 (Tex.App.-Houston 1st Dist.1985, writ ref d n.r.e.) (“Sec. 27.01 is generally less demanding than common law fraud, imposing liability upon the maker of a misrepresentation without proof that he intended to deceive or knowledge that the representation was false.”); Robbins v. Capozzi, 100 S.W.3d 18, 26 (Tex.App.-Tyler 2002, no pet.) (“A cause of action for statutory fraud differs from the common law cause of action only in that it does not require proof that the false representation was made knowingly or recklessly,” but it must be made with the intent to induce the claimant into entering the transaction), citing Larsen v. Carlene Langford & Assoc., Inc., 41 S.W.3d 245, 248 (Tex.App.-Waco, 2001, pet.denied); Fletcher v. Edwards, 26 S.W.3d 66, 77 (Tex.App.-Waco 2000, pet. denied); Brush v. Reata Oil and Gas Corp., 984 S.W.2d 720, 726 (Tex.App.-Waco 1998, pet. denied) (and cases cited therein). Section § 27.01(d) also provides liability for aiding and abetting a primary violator: A person who (1) has actual awareness of the falsity of a representation ... made by another person and (2) fails to disclose the falsity of the representation ... to the person defrauded, and (3) benefits from the false representation or promise commits the fraud described in Subsection (a) of this section and is liable to the person defrauded for exemplary damages. Actual awareness may be inferred where objective manifestations indicate that a person acted with actual awareness. Two appellate courts have concluded that the Texas Supreme Court’s definition of “actual awareness” in a DTPA case “ ‘would be similar, if not identical’ ” to that for section 27.01 of the Texas Business & Commerce clause: actual awareness ‘does not mean merely that a person knows what he is doing; rather, it means that a person knows what he is doing is false, deceptive, or unfair. In other words, a person must think to himself at some point, “Yes, I know this is false, deceptive, or unfair to him, but I’m going to do it anyway.’ ” Woodlands Land Development Co. v. Jenkins, 48 S.W.3d 415, 426 (Tex.App.-Beaumont 2001), and Scott v. Sebree, 986 S.W.2d 364, 371 (Tex.App.-Austin 1999, pet. denied). According to one court, Section 27.01(d) “applies' to those who have benefitted in the specific sale of real estate or stock in which the fraud occurred, for instance a company who receives fees in a real estate closing.” IQ Holdings (In re WorldCom Sec. Litig.), 2006 WL 1047130 at *6, citing Belton v. Dover Properties Sales, Inc., Civ. A. No. 3-85-0557-H, 1985 WL 8797, *3 (N.D.Tex.1985) (The “benefit from the false representations” obtained by the aider and abettor may include “customary fees of the closing itself’ since the “fees would not have been received if the desired disclosure was made.”). D. Conspiracy to Defraud The elements of a cause of action for civil conspiracy in Texas are (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result. Juhl v. Airington, 936. S.W.2d 640, 644 (Tex.1990). The “meeting of the minds” element is “to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means.” Transport Insurance Co. v. Faircloth, 898 S.W.2d 269, 278 (Tex.1995). “[Tjhere must be a preconceived plan and unity of design and purpose.” Goldstein v. Mortenson, 113 S.W.3d 769, 779 (Tex.App.-Austin 2003) (“A conspiracy to defraud on the part of two or more persons means a common purpose, supported by a concerted action to defraud, that each has the understanding that the other has that purpose.”). “Once a conspiracy is proven, each co-conspirator ‘is responsible for all acts done by any of the conspirators in furtherance of the unlawful combination.’ ” Carroll v. Timmers Chevrolet, 592 S.W.2d 922, 926 (Tex.1979) (quoting State v. Standard Oil Co., 130 Tex. 313, 329, 107 S.W.2d 550, 559 (1937)). The “gist” of a “civil conspiracy” is the injury the conspirators intend to cause. Conspiracy is a derivative tort, because recovery is not based on the conspiracy, i.e., the agreement, but on the injury from the underlying tort, here allegedly fraud. Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex.1996). Thus to be liable for conspiracy, a defendant must also participate in the underlying fraud. Id. Furthermore, if a plaintiff cannot adequately allege with particularity or ultimately prove an element of the underlying fraud, the conspiracy claim also fails. Hernandez v. Ciba-Geigy Corporation USA, 200 F.R.D. 285, 292 (S.D.Tex.2001); United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370, 380 (5th Cir.2004). Under Rule 9(b), conspiracy to commit fraud must be pleaded with particularity as to time, place, and contents of false representations and the identity of the person making them and what he obtained thereby. Castillo v. First City Bancorporation of Texas, Inc., 43 F.3d 953, 961 (5th.Cir.1994). Typically a conspiracy is proved by circumstantial evidence. Schlumberger, 435 S.W.2d at 858, citing Jernigan v. Wainer, 12 Tex. 189 (1854). “Circumstantial evidence may be used to establish any material fact, but it must constitute more than mere suspicion.” Transport, 898 S.W.2d at 278, citing Browning—Ferris, Inc. v. Reyna, 865 S.W.2d 925, 927-28 (Tex.1993) (“some suspicion linked to other suspicion produces only more suspicion, which is not the same as evidence.”); Schlumberger, 435 S.W.2d at 858 (“vital facts may not be proved by unreasonable inferences from other facts and circumstances”; any vital fact must be proved “by evidence amounting to something more than a mere scintilla”). Where the circumstantial evidence is meager, “if ‘circumstances are consistent with either of two facts and nothing shows that one is more probable than the other, neither fact can be inferred.’ ” Transport Ins., 898 S.W.2d at 278, quoting $56,700 in U.S. Currency v. State, 730 S.W.2d 659, 662 (Tex.1987). Circumstantial evidence can. include acts by or statements of the alleged conspirators. International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 581-82 (Tex.1963) (“The general rule is that conspiracy liability is sufficiently established by proof showing concert of action or other facts and circumstances from which the natural inference arises that the unlawful overt acts were committed in furtherance of common design, intention, or purpose of the alleged conspirators.”). III. Factual Allegations Against RBC The Second Amended Complaint (# 26) asserts that as Enron’s financial problems increased, it implemented a giant Ponzi scheme. To convince investors to lend money, it would “cook” its books to present a false picture of its financial stability. In November and December of 2001, when Enron filed for bankruptcy protection, and afterwards through the investigations by the Department of Justice, the Securities and Exchange Commission, bankruptcy examiners Neal Batson and Harrison J. Goldin, several Congressional committees, and investor lawsuits, the fraud was gradually revealed, according to Plaintiffs. The Second Amended Complaint further alleges that sworn statements (including settlements, cooperation agreements, and plea agreements) of ex-Enron officials, such as Chief Accounting Officer Richard Causey, Chief Financial Officer Andrew Fastow, Treasurer Ben Glisan, Mark Koe-nig, Kevin P. Hannon, Assistant Treasurer Timothy Despain, and Michael Kopper, some containing judicial admissions, “unequivocally establish Enron’s scheme to defraud the investing public.” # 26 at ¶¶ 39-53. The pleadings further charge that RBC materially assisted Enron in perpetrating its fraud through multiple transactions that involved off-balance sheet debt and that were impermissibly guaranteed by Enron, the proceeds of which were treated as operating income on Enron’s financial statements. RBC also structured transactions designed to hide Enron’s debt and to materially alter its financial statements in violation of civil and criminal statutes. According to the Second Amended Complaint, RBC participated in a number of multi-million dollar transactions that concealed Enron’s liabilities and that were designed to allow Enron to falsely report positive financial results .in SEC filings and misstate Enron’s financial condition in various other financial reports. # 26 at ¶ 55. RBC participated in using partnerships or special purpose entities (“SPEs”), which did not qualify for “off the books” accounting treatment, for the same purposes. Id. at ¶ 56. RBC structured transactions to enable Enron to report loan proceeds as “cash flow from Operations” so it could inflate its financial condition in reports and filings. Id. at ¶ 57. The complaint focuses specifically on four transactions in which Enron allegedly was aided by RBC and which were used by Enron to manipulate its financial statements: Alberta Prepay,' Cerberus, Hawaii, and LJM2. In the Alberta transaction (# 26 at ¶¶ 59-72), which began in August 2000, in return for a substantial fee from Enron, RBC’s newly acquired Global Structured Finance Group in London allegedly financed a loan disguised as a prepay agreement that went through three -different structures before Enron finally approved the last for fraudulent “off-balance-sheet” accounting treatment. The third and final proposal, outlined in RBC’s “Transaction Request-Global .Banking,” dated September 27, 2000, “involved four swaps providing two circular streams of payment among RBC and Chase, all guaranteed by Enron, with RBC funding 50% of the total purchase price.” # 26 • at ¶ 62. The complaint quotes documents and statements by named officials involved in the transaction, evidencing that RBC and Enron knowingly intended to bypass U.S. GAAP requirements and apply off-balance-sheet treatment to a “prepay” commercial transaction that was actually nothing more than a loan to Enron. The final Alberta transaction request required that the risk associated with the Alberta transaction was “all guaranteed by Enron Corp.” Its structure was approved by RBC on September 27, 2000. .Enron Examiner Goldin determined that RBC’s role in Alberta allowed Enron to understate its risk, overstate its cash flow from operating activities and overstate its price management liability. The Examiner summed up the transaction: “In essence, RBC paid C$147 million to Enron Canada up front and ENA was obligated to pay quarterly interest and principal on that amount. The floating cash flow went from Enron Canada to RBC to Chase to ENA. Hence, the Alberta prepay was effectively a loan from RBC to Enron.” # 26 at ¶ 72. The Second Amended Complaint (#26 at ¶¶ 73-97) asserts that LJM2, structured in 1999 and employed to work a number of year-end “deals” in which Enron “sold” unmarketable “assets” (that no legitimate purchaser wanted) to LJM2 so as to allow Enron to report strong earnings in its year-end financial reports, was owned and controlled by Enron CFO Andrew Fastow, with his subordinate Michael Kopper. Enron reported profits on these sales and later repurchased the assets. Even though LJM2 was not independent, Enron did not report, the partnership on its consolidated financial statements. RBC, which had routinely reviewed and analyzed Enron’s financial statements from as early as 1996, knew that LJM2’s structure, purpose, and control by Enron were improper. One reason was an obvious potential conflict of interest between those invested in LJM2 and those invested in Enron stocks and bonds, since Fastow made LJM2’s management and investment decisions, yet was also charged with protecting Enron’s interests. Thus RBC knew that LJM2 should have been consolidated on Enron’s financial statements, that the Raptors (discussed infra), also not independent, should have been reported on Enron’s consolidated financial statements, and that Enron used the Raptors to manipulate its reported financial results, which in turn defrauded Plaintiffs and other Enron investors. In spite of this knowledge, RBC entered a Revolving Credit Agreement with LJM2 for $10 million on November 13, 2000 in hopes of gaining more lucrative transactions with Enron. # 26 at ¶ 74. The complaint further asserts that Fas-tow’s plea agreement recited how LJM2 was used to falsify Enron’s reported financial results by falsely inflating its improper earnings and funds flow, allowing Enron to set excessive market prices for assets, and keeping poorly' performing and volatile assets off Enron’s balance sheet, to help Enron “cook its books” by allowing Enron to inflate its earnings and reduce its debts, typically near the quarter-end or year-end of the reporting period, while improperly keeping its activities off Enron’s consolidated- financial statements. LJM2 was used for a variety of transactions, including the “sale” of underperforming or unsellable assets. Fastow admitted that he and others secretly agreed that LJM2 would not lose money in the transactions it entered into. As admitted by Fastow in his Plea Agreement, even though LJM2 was not independent, nevertheless its transactions were not consolidated onto Enron’s balance sheet but improperly treated as “off-balance-sheet.”. According to the complaint, transactions with the four Raptor SPEs, through complex structured finance vehicles, had the greatest impact on manipulating Enron’s financial statements. In three of them, Enron in essence hedged against itself by transferring its own stock, or contracts to receive Enron stock, to the Raptors at a discount price, breaching a basic accounting and financial rule that, except under limited circumstances, a business may not recognize gains due to the increase in the value of its capital stock on its income statement. LJM2 invested $30 million in each of the Raptors; in October 2000 Fastow reported to LJM2 limited partners that the internal rates of return on the four'. Raptors were 193%, 278%, 2500%, and a projected 125%. The complaint alleges that RBC knew of Enron’s misrepresentations about, LJM2 from the beginning. The potential conflict cause by Fastow’s dual role was obvious, and RBC’s Risk Management team was concerned from the initial PPM about “significant control issues”- and problems with the “valuation” of assets. The complaint cites or quotes emails and statements of identified RBC officials, showing that RBC knew Enron’s actual off-balance-sheet liabilities were far in excess of what Enron publicly disclosed, but RBC still accepted Enron’s invitation to finance LJM2 because “we regard participation as a ‘must’ in order to position the bank for other transactions which will undoubtedly be generated by Enron in the near future.” # 26 at ¶ 102. The complaint summarizes, “The effect of LJM2 and other SPEs was to eliminate losses of approximately $95,000,000 in 1999 and $8,000,000 in 2000 from Enron’s financial statements.” # 26 at ¶ 106. Also in November 2000 RBC became a syndicate member and lender to the “Hawaii Trusts,” borrowing SPEs that conducted transactions similar in nature and purpose to those of Cerberus and LJM2. The transactions involved over-valued assets of Enron and its subsidiaries, with guarantees from Enron; in each, Enron accounted for the loan proceeds as a form of income and treated the Hawaii Trusts as “off-balance-sheet” entities and did not consolidate them in its public financial reports. Required by its own guidelines and by regulatory mandates to scrutinize and assess the risk of each transaction carefully, RBC, according to the complaint, knew or recklessly disregarded the improper accounting for these transactions that materially assisted Enron’s fraudulent scheme. In the fall of 2000, RBC internally concluded that Enron’s off-balance sheet liabilities were grossly misrepresented. See footnote 21. As an example of Enron’s “on the edge” accounting practices, RBC knew that the purpose of the Hawaii Trusts was to “ ‘serve as a warehouse vehicle for Enron assets’” and that the structure “‘allows Enron to effectively sell (under FASB 125) assets without losing control until a legitimate third party buyer can be located.’ ” # 126 at ¶ 111. Nevertheless RBC decided to participate and completed the Hawaii deal in November 2000 by loaning Enron $20 million. The complaint also alleges that Cerberus (a/k/a Heracles or the “RBC Loan Facility”) was one of Enron’s largest “off the books” debt-concealment schemes. RBC lent $517 million to an SPE called Heracles Trust, which RBC created and which was owned and directed by Enron (and thus should have been included in Enron’s consolidated financial statements) and which, through the SPE called Cerberus, had a partial interest in an Enron affiliate known as Aeneas L.L.C. Heracles then gave the $517 million to Aeneas in exchange for shares in EOG Resources, Inc., a spin-off created by Enron in 1999, Aeneas then sent the money to an Enron subsidiary, Enron Asset Holdings, Inc. According to falsified financial reports in the year 2000, Enron realized a gain on the value of EOG stock through Heracles’ “hedges,” accounted for the proceeds of the RBC loan as cash flow, and recorded the gain in value of the EOG shares as income. It subsequently reported additional profits on the increase in the market value of the Heracles-owned EOG shares, but failed to record as losses a subsequent decline in the market value of those same shares. According to the complaint, three RBC senior managers, Giles Darby, David Bermingham, and Gary Mulgrew, were recruited by RBC in May 2000 from Greenwich NatWest Bank, which had previously worked with Enron in devising structured transactions to hide Enron’s debt. They were recruited for the specific purpose of structuring unconventional financing arrangements with and for Enron. The complaint represents that Darby, Bermingham, and Mulgrew, with other senior RBC managers, worked with Enron and helped devise, structure, and implement the Cerberus transaction. The complaint asserts that RBC, which was sophisticated and knowledgeable about “off-balance-sheet” transactions, reviewed copies of Enron’s financial reports and knew that Heracles failed to meet requirements for non-consolidation, including independent control and a minimum of 3% ownership by outside investors. RBC thus knew the reporting of the loan proceeds as cash flow was fraudulent and that RBC’s $514 million loan to Heracles was attributable to Enron. At the time RBC made the loan to Heracles, RBC purportedly knew or recklessly disregarded the fact that Heracles had no assets other than the publicly traded EOG shares, which could fluctuate below the value of the RBC loan. RBC and Enron also knew that dividend income from the shares was not enough to pay the principal and interest on the RBC loan and that Heracles had no independent means to repay the RBC loan. So with the help of Darby, Bermingham, and Mulgrew, RBC structured the loan to include guarantees that Enron would be ultimately liable for all payments of principal and interest on the loan. RBC first structured a total return swap that obligated Enron to make all payments of principal and interest on the Heracles loan, in exchange for RBC’s receiving EOG dividend payments from Heracles. Then RBC included a “put” option that obligated another Enron subsidiary to buy back the Heracles “class B interest” at full value of the loan upon RBC’s demand. (Enron retained the “class A” voting shares held by another Enron-controlled SPE; therefore control and price risk remained with Enron.) The guarantees transferred to Enron the full hazard of the high risk Heracles loan; they demonstrate that RBC knew of the dangers of the loan and decided to eliminate any exposure of itself. Ultimately with the help of Bermingham and Darby, that exposure was allegedly transferred to a party which was ignorant of Enron’s financial irregularities and potential for collapse: Rabobank, a large Dutch bank, which agreed to take over the loan in a swap agreement with RBC in January 2001. The complaint points out that the loan was included on RBC’s top borrowers list, which indicated that the transaction was approved by RBC’s Senior Lending Committee, which was required to implement periodic reviews of the loan. The cumulative effect of Cerberus was that Enron improperly included US$517.5 million in its operating cash flow for the year ending December 21, 2000, rather than recording it as debt. As Enron began to implode in the fall of 2001, RBC executives sent emails that reflect how they “knew it all along.” For example on October 22 Frank Piazza sent the following email with a news article on Enron attached, to Morten Friis, demonstrating that RBC’s partnership with Enron provided RBC with insider information about Enron’s balance sheet liabilities unknown to the investing public: A scathing article attached, I have already mentioned my distrust of the CFO. Until there is a new CFO at Enron, and assuming we can get comfortable with their financial structure, it’s hard to see why we should do business with the company. It’s also difficult to believe that the market was not aware of the L JM vehicles as they were disclosed in SEC filings,, albeit poorly. I suspect that the market is not aware of the off-balance sheet leverage in this company. # 26 at ¶ 127. Similarly, in a November 8, 2001 email to Norm Achen, Piazza revealed that RBC had long been suspicious of Enron’s accounting: Good old “accounting risk”, [sic ] We’ve seen this in the media and telecom sector for the better part of the past few years and now with Enron. No-one can understand their financial statements. We need to beef up our internal ability to obtain a positive for the “smelling a rat in the financial statements” test. While we suspected this for the longest time and had been pressing the company for more information, we could not conclusively prove it without more disclosure from the company. # 26 at ¶ 129. The complaint summarizes at ¶ 130, RBC knew, but recklessly disregarded, that the SPEs and other transactions were shams, that employees and officers of Enron had interests in and control over the SPEs, that the prepay and other “off balance sheet” transactions improperly hid -Enron’s true financial picture from investors, and that the SPEs and the other transactions should have been reported in Enron’s consolidated financial reports. , Simply put, RBC knew that the SPEs and various other sham transactions were designed to misstate Enron’s true financial picture and that, as a result of their material assistance!,] Enron’s books had been “cooked.” Despite increasing public media revelations and RBC’s inside knowledge, Plaintiffs complain that RBC allowed Enron to direct false information about Enron’s finances to Plaintiffs. Plaintiffs claim that in purchasing their Enron securities they relied upon Enron’s SEC filings, which were falsified with RBC’s aid, and on information obtained from financial information services such as Bloomberg, to which they subscribe. They claim that RBC’s transactions with Enron materially altered the “total mix” of information upon which they made their investment decisions. IV. Briefing Relating to RBC’s Motion To Dismiss A. TSA RBC contends that Plaintiffs fail to state a claim against RBC for aiding and abetting fraud by Enron under the Texas Securities Act, Texas Revised Civil Statute Annotated Article 581-33F(2), because Plaintiffs have no viable claim of primary liability against Enron since Enron was not a statutory “seller” under the TSA. Article 581-33A(2) (a primary violator is a person who “offers or sells a security ... by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.”) See also discussion of law in this opinion and order at 11-12. Plaintiffs respond that they purchased their Enron commercial paper at issue directly from an Enron agent, Lehman Brothers, and thus Enron was a “statutory seller” as to the commercial paper. They also argue that Enron was “in the chain of the selling process.” Article 581^4E of the TSA, in defining “sale,” “offer to sell,” or “sell,” includes any act of selling, including solicitation of sale, an attempt to sell or offer to sell “directly or by an agent or salesman ____” Plaintiffs maintain that they have pled and identified material false statements and omissions by Enron made for the purpose of inducing and defrauding investors. Complaint at ¶¶ 21, 22, 33-54, 135. They have also discussed portions of Fastow’s plea agreement, Koenig’s cooperation agreement, Hannon’s cooperation agreement, and Causey’s plea agreement to demonstrate how Enron perpetrated the fraud and that its false and misleading statements were ones that a reasonable investor would have considered important in making a decision to invest in Enron securities. For the other securities, Plaintiffs assert that Enron was primarily liable under article 581-33C as a “statutory issuer.” They point to the complaint at ¶ 31: “Publicly traded on the New York Stock Exchange under the symbol ENE, Enron was an ‘issuer’ of securities for the purpose of applying securities laws.” They further state that RBC does not dispute that Plaintiffs’ Enron stocks and bonds were registered securities for which Enron issued prospectuses that incorporated by reference Enron’s materially misleading SECrfiled 10-Ks and 10-Qs. They contend that RBC presents no argument or evidence challenging that allegation. Article 581-33C imposes primary liability against issuers of registered securities purchased on the secondary market, such as the securities purchased by Plaintiffs here. Plaintiffs maintain that Enron as an issuer was a primary violator liable under section 33C. Aider and abettor liability under article 581-33F(2) applies equally to “a seller, buyer, or issuer.” In reply, RBC objects to Plaintiffs’ two newly raised theories that (1) Enron is primarily liable under article 581-33A(2) as a statutory “seller” of the Enron commercial paper to Plaintiffs because Lehman Brothers was acting as an agent for Enron when it sold the commercial paper to Plaintiffs; and (2) Enron is primarily liable under article 581-33C as an “issuer” of the stocks and bonds that Plaintiffs bought in a secondary market. Stating that Plaintiffs have conceded that Enron was not their immediate “seller,” RBC notes that this Court has previously rejected the pre-1977-amendment definition of “seller” as including “any link in the chain of the selling process.” See In re Enron Securities, Derivative & ERISA Litig., 258 F.Supp.2d 576, 601-08 (S.D.Tex.2003). Moreover, RBC charges that Plaintiffs are obfuscating the distinction between a securities “dealer” and an “agent.” The TSA defines “dealer” to “include every person or company other than an agent, who engages in this state ... directly or through an agent, in selling, offering for sale or delivery or soliciting subscriptions to or orders for ... any security or securities .... ” Tex.Rev.Civ. State, art. 581 — 4(0 (2006). The TSA, consistent with Section 3(a)(5) of the Securities Exchange Act of 1934, 15 U.S.C. § 78c(5) (2007) (“ ‘dealer’ means any person engaged in the business of buying and selling securities for [his] own account’ ”), states that the term “dealer” includes “a securities professional selling for his own account, often called a principal and embracing a market maker Alan R. Bromberg, Civil Liability under Texas Securities Act § 33 and Related Claims, 32 Sw. L.J. 867, 927 (1978-1979); see also 4 Banking Law § 96.13[1] (Matthew Bender & Co.2000) (“Dealers purchase paper from issuers and place it with investors.”). In their Second Amended Complaint at ¶¶ 31 and 200 in G-02-0463 (# 31) and in their opposition brief in this case (# 32 at 27 n. 5), Plaintiffs indicate that they purchased their Enron commercial paper directly from Lehman Brothers out of its inventory (without mentioning any involvement from Enron); thus Lehman Brothers was acting as a principal, not as an agent, in selling the commercial paper for its own account to Plaintiffs. Enron did not actively solicit the sale to Plaintiffs of the securities so as to become the vendor’s agent. In re Enron Corp. Securities, Derivative, & “ERISA” Litig., 258 F.Supp.2d 576, 606 (S.D.Tex.2003). As for their argument that Enron is a non-selling “issuer” for purposes of primary liability under article 581-33C, RBC argues that the express language of 581-33C indicates that it applies only to an issuer registering securities for sale by owners under either Section 7 of the TSA or Section 6 of the Securities Act of 1933. Hal Bateman, in Securities Litigation, 15 Houston L.Rev. at 849, concluded, “This means that Section 33C will apply only to registered secondary offerings by persons other than the issuer and will not apply in primary offerings by the issuer itself.” RBC further observes that Professor Bromberg, the primary draftsman of the 1977 amendments to the TSA, similarly explains that article 581-33C “makes issuers liable for untruths and omissions when they register outstanding securities for secondary sale by the holders.” Alan R. Bromberg, Civil Liability under Texas Securities Act § 33 and Related Claims, 32 Sw. L.J. 867, 890 (1978-1979). Moreover, argues RBC, the express language of 581-33C indicates that it applies only to an issuer registering securities for sale by owners under either Section 7 of the TSA or Section 6 of the Securities Act of 1933. Bateman, 15 Hous. L.Rev. at 849 (“Section 33C will apply only to registered secondary offerings by persons other than the issuer and will not apply in primary offerings by the issuer itself.”); see also Bromberg, 32 Sw. L.J. at 890 (Section 33C “makes issuers liable for untruths and omissions when they register outstanding securities for secondary sale by the holders.”). Thus Plaintiffs’ conelusory allegation that Enron’s securities were registered and traded on the New York Stock Exchange, by itself, is inadequate to state a claim because Plaintiffs do not allege and almost certainly cannot prove that the securities they purchased on the secondary market are traceable to a registered secondary, not a primary, offering. Plaintiffs confuse “securities in a registered secondary offering” (the subject of Section 33C), with “registered securities purchased on the secondary market,” such as the securities purchased by Plaintiffs here. Krim v. pcOrder.com, 402 F.3d 489, 491 n. 4 and 498-99 (5th Cir.2005) (the “afte