Full opinion text
OPINION AND ORDER ON CERTAIN MOTIONS TO DISMISS FILED BY LEAD UNDERWRITER CREDIT SUISSE FIRST BOSTON JAMES L. GRAHAM, District Judge. This matter is before the Court on motions filed by Credit Suisse First Boston LLC (now Credit Suisse Securities LLC) to dismiss the claims made against it in this multi-district litigation. Credit Suisse served as lead underwriter of the NPF VI, Inc. and NPF XII, Inc. securitization programs. The Court finds that the complaints put Credit Suisse at the center of the alleged scheme to defraud National Century Financial Enterprise’s investors, and, thus, Credit Suisse’s motions to dismiss are largely denied. I. BACKGROUND A. Factual Allegations against Credit Suisse This order concerns the complaints filed by the following plaintiffs: Metropolitan Life Insurance Company and Metropolitan Insurance and Annuity Company (collectively “MetLife”); Lloyds TSB Bank PLC; the State of Arizona, the City of Chandler, and Crown Cork & Seal Company (collectively the “Arizona Noteholders”); the New York City Pension Funds; and Pha-ros Capital Partners, L.P. Though the allegations vary somewhat from complaint to complaint, below is a summary of what the Plaintiffs allege against Credit Suisse. Plaintiffs allege that Credit Suisse underwrote and managed the notes issued by National Century through the NPF VI and NPF XII securitization programs. Between 1998 and 2002, NPF VI made at least 10 bond issuances and NPF XII made at least 12 bond issuances. During this time, National Century issued approximately $3 billion of debt securities to finance the purchase of accounts receivable from healthcare providers. The notes were sold to institutional investors who could invest millions, if not hundreds of millions, of dollars in notes. Credit Suisse was the initial purchaser and placement agent for each note issuance. Credit Suisse then created a secondary market for the notes by actively soliciting institutional investors, who were provided with various offerings materials and given sales presentations. Credit Suisse allegedly authored the offering materials in substantial part, and Credit Suisse’s representatives allegedly participated in the sales presentations. Plaintiffs allege that Credit Suisse made numerous misrepresentations and material omissions in the offering materials and sales presentations. These misrepresentations went to the financial soundness of the note programs, the quality of the notes, and, hence, the security of Plaintiffs’ investments. According to Plaintiffs, Credit Suisse represented that NPF VI and NPF XII would use the note proceeds to purchase only high-quality accounts receivable, which would serve as collateral for the notes. Further, Credit Suisse represented that indenture trustees would maintain reserve accounts for NPF VI and NPF XII according to strict standards designed to offset the risks associated with buying receivables. Credit Suisse further represented that NPF VI and NPF XII would not engage in related-party transactions; that is, they would refrain from purchasing accounts receivable from healthcare providers in which National Century or its principals held a financial interest. Plaintiffs contend that Credit Suisse’s representations were false and that the NPF VI and NPF XII note programs, though perhaps at one time legitimate, had become a sham by the time Plaintiffs invested in them. In a nutshell, the complaints allege that National Century used Plaintiffs’ money to purchase low-quality or even non-existent receivables from healthcare companies that National Century’s principals (Lance Poulsen, Donald Ayers, and Rebecca Parrett, collectively “the Founders”) controlled or had some financial interest in. These healthcare companies became overfunded because National Century paid them for receivables that had little or no value. The Founders allegedly used their control of the healthcare companies to gain access to the overfunded amounts. In time, the reserves at NPF VI and NPF XII became severely depleted, the alleged wrongdoing was uncovered, and National Century filed for bankruptcy in November 2002, with an alleged aggregate loss to investors of at least $2.6 billion. The complaints put Credit Suisse alongside National Century’s Founders as being at the center of a scheme to defraud investors. Beginning in 1995, National Century selected Credit Suisse to serve as its financial advisor at-large. The Arizona Note-holders’ complaints characterize National Century and Credit Suisse as having a “close, broad, and multifaceted relationship” whereby Credit Suisse “continuously enjoyed extensive access to inside information regarding [National Century], its finances, and its operations.” See State of Arizona Second Am. Compl., ¶ 96A. Credit Suisse allegedly conducted numerous examinations of National Century’s finances and reviewed the results of due diligence investigations performed by third party professionals. According to the complaints, Credit Suisse’s relationship with National Century was lucrative. Credit Suisse allegedly received millions of dollars in investment banking and placement fees for its services. The complaints therefore allege that Credit Suisse had a strong financial incentive to promote NPF VI and NPF XII notes to institutional investors. Plaintiffs allege that as early as January 1998 Credit Suisse had knowledge that the NPF VI and NPF XII note programs were not operating in the manner described by the offering materials. The details of how Credit Suisse allegedly gained this knowledge will be reviewed below in the Court’s discussion of Credit Suisse’s scienter, but Plaintiffs allege that Credit Suisse gained extensive knowledge of National Century’s operations. The complaints allege that Credit Suisse knew in particular that National Century was purchasing ineligible accounts receivable, not properly maintaining reserve accounts, and engaging in related-party transactions. Despite this knowledge, Credit Suisse allegedly proceeded to sell notes to Plain- ' tiffs and other investors. When rumors or reports surfaced that there were problems with the NPF VI and NPF XII note programs, Credit Suisse is alleged to have acted swiftly to undermine the reports and reassure investors that their money was safe, even though Credit Suisse allegedly knew NPF VI and NPF XII were a fraud. The complaints allege that in order to preserve its lucrative position and protect the unsold notes it had on its hands, Credit Suisse went so far as to make unsecured loans to National Century when NPF Vi’s and NPF XII’s reserves were depleted. B. The Plaintiffs 1. MetLife and Lloyds Metropolitan Life Insurance Company is a New York corporation with its principal place of business in New York. Between June 2001 and July 2002, MetLife purchased a total of $102.6 million of NPF XII notes. In August 2002, MetLife’s affiliate, Metropolitan Insurance and Annuity Company, purchased $18.46 million of NPF XII notes. Lloyds is a British public limited company with its principal place of business in London, England. Lloyds purchased a total of $60 million of NPF XII notes in March 2001. It separately purchased $68 million of NPF XII notes in November 2002 under a Participation Agreement with Credit Suisse. MetLife and Lloyds filed separate suits in New Jersey federal court but have filed joint briefs and motions since their actions have been consolidated in this multi-dis-trict litigation. MetLife asserts the following claims against Credit Suisse: violations of Section 10(b) of the Securities Exchange Act, violations of Ohio’s and New Jersey’s blue sky laws, fraud, negligent misrepresentation, and negligence. Lloyds asserts those same claims against Credit Suisse in relation to its initial note purchase and to the Participation Agreement. Lloyds also asserts a breach of contract claim with respect to the Participation Agreement. 2. The Arizona Noteholders The Arizona Noteholders are a large collection of investors who filed three separate lawsuits in Arizona state court. Some of the Arizona Noteholders lack any direct connection to Arizona, but they are included in the group because they joined in the lawsuits originally filed in Arizona. The Arizona Noteholders include governmental entities from Arizona and other states, as well as businesses incorporated in various states and foreign countries. The Arizona Noteholders collectively purchased about $1.4 billion of NPF VI and NPF XII notes between 1998 and 2002. Attached to their complaints are detailed lists of when and how much each Noteholder invested in NPF VI and NPF XII. The Arizona Noteholders assert the following claims against Credit Suisse: violations of the blue sky laws of numerous states, unfair competition under Massachusetts state law, fraud, negligent misrepresentation, aiding and abetting fraud, aiding and abetting breach of fiduciary duty, conspiracy, unjust enrichment, and breach of contract. 3. The New York City Pension Funds The New York City Pension Funds are a group of public pension funds in charge of managing the assets of various New York City employees and retirees. The New York Funds purchased $89 million of NPF XII notes in October 2000 and May 2002. The New York Funds originally filed suit in New York federal court. They assert the following claims against Credit Suisse: violations of Section 10(b) of the Securities Exchange Act, fraud, aiding and abetting fraud, negligent misrepresentation, and negligence. 4.Pharos Capital Partners Pharos is a limited partnership organized under the laws of Delaware. Pharos describes itself as being in the business of making equity investments on behalf of its limited partner investors. Pharos purchased $12 million worth of National Century preferred stock on July 8, 2002. Pharos brought suit in the Southern District of Ohio and asserts the following claims against Credit Suisse: violations of Ohio’s blue sky law, fraud, negligent misrepresentation, aiding and abetting, and conspiracy. Because the claims of Pharos, who purchased preferred stock in National Century, are slightly different than the claims of the noteholder Plaintiffs, Pharos’s claims will be discussed separately below. II. MOTION TO DISMISS STANDARD OF REVIEW When considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded material allegations in the complaint as true. Scheuer v. Rhodes. 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Roth Steel Prods, v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir.1982). A complaint may be dismissed for failure to state a claim only where “it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A motion to dismiss under Rule 12(b)(6) will be granted if the complaint is without merit due to an absence of law to support a claim of the type made or of facts sufficient to make a valid claim, or where the face of the complaint reveals that there is an insurmountable bar to relief. Rauch v. Day & Night Mfg. Corp., 576 F.2d 697 (6th Cir.1978). Because a motion under Rule 12(b)(6) is directed solely at the complaint itself, the court must focus on whether the claimant is entitled to offer evidence to support the claims, rather than whether the plaintiff will ultimately prevail. Scheuer, 416 U.S. at 236, 94 S.Ct. 1683; Roth Steel Prods., 705 F.2d at 155; see also Bell Atlantic Corp. v. Twombly, — U.S. -, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007) (Rule 8 “does not impose a probability requirement at the pleading stage”). A complaint must contain either direct or inferential allegations with respect to all material elements necessary to sustain a recovery under some viable legal theory. Weiner v. Klais & Co., Inc., 108 F.3d 86, 88 (6th Cir.1997). The court is not required to accept as true unwarranted legal conclusions or factual inferences. Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987). Though the complaint need not contain detailed factual allegations, the factual allegations must be enough to raise the claimed right to relief above the speculative level and to create a reasonable expectation that discovery will reveal evidence to support the claim. Bell Atlantic, 127 S.Ct. at 1964-65, 167 L.Ed.2d 929; Associated Gen. Contractors of Cal, Inc. v. Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). Plaintiff must provide more than labels and conclusions, or a formulaic recitation of the elements of a cause of action, Bell Atlantic, 127 S.Ct. at 1965, 127 S.Ct. 1955, and the court is not “bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Attain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986); accord Morgan, 829 F.2d at 12. III. THE NOTEHOLDERS’ SECTION 10(B), FRAUD, AND NEGLIGENT MISREPRESENTATION CLAIMS A. Elements 1. Section 10(b) Plaintiff MetLife, Lloyds, and the New York Funds have brought claims against Credit Suisse for violating Section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5(b) promulgated thereunder, 17 C.F.R. § 240.10b-5(b). Section 10(b) prohibits any person from making “fraudulent, material misstatements or omissions in connection with the sale or purchase of a security.” Morse v. McWhorter, 290 F.3d 795, 798 (6th Cir.2002); see 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5(b). To state a claim under Section 10(b) and Rule 10b-5(b), plaintiffs must allege, in connection with the purchase or sale of securities: “(1) a misstatement or omission, (2) of a material fact, (3) made with scienter, (4) justifiably relied on by plaintiffs, and (5) proximately causing them injury.” Helwig v. Vencor, Inc., 251 F.3d 540, 554 (6th Cir.2001); see also In re Comshare, Inc. Sec. Litig., 183 F.3d 542, 548 (6th Cir.1999). The Private Securities Litigation and Reform Act (“PSLRA”) requires complaints asserting a claim of federal securities fraud to “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.” 15 U.S.C. § 78u-4(b)(l). Moreover, “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)(2). 2.Fraud MetLife, Lloyds, the New York Funds, and the Arizona Noteholders have asserted claims for common law fraud against Credit Suisse. The elements of a fraud claim are: (1) a representation or, where there is a duty to disclose, concealment of a fact, (2) which is material to the transaction at hand, (3) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (4) with the intent of misleading another into relying upon it, (5) justifiable reliance upon the representation or concealment, and (6) a resulting injury proximately caused by the reliance. Russ v. TRW, Inc., 59 Ohio St.3d 42, 49, 570 N.E.2d 1076, 1083-84 (Ohio 1991). Under Rule 9(b), Fed.R.Civ.P., averments of fraud and the circumstances constituting the fraud must be stated with “particularity.” To comply with Rule 9(b), “a plaintiff, at a minimum, must ‘allege the time, place, and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.’ ” Walburn v. Lockheed Martin Corp., 431 F.3d 966, 972 (6th Cir.2005) (quoting Coffey v. Foamex L.P., 2 F.3d 157, 161-62 (6th Cir.1993)). Scienter may be averred generally and inferred from circumstantial evidence. See Fed.R.Civ.P. 9(b); S.E.C. v. Blackwell, 291 F.Supp.2d 673, 696 (S.D.Ohio 2003). 3. Negligent Misrepresentation MetLife, Lloyds, the New York Funds, and the Arizona Noteholders have also brought claims against Credit Suisse for negligent misrepresentation. The Ohio Supreme Court has defined negligent misrepresentation as follows: One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. Delman v. Cleveland Hts., 41 Ohio St.3d 1, 4, 534 N.E.2d 835, 838 (Ohio 1989) (quoting 3 Restatement of the Law 2d, Torts (1965), Section 552(1)). 4. Summary of Credit Suisse’s Arguments Credit Suisse opposes the Section 10(b), fraud, and negligent misrepresentation claims on the same grounds. In its motions to dismiss, Credit Suisse first argues that it made no misrepresentations to Plaintiffs and owed no duty of disclosure. Credit Suisse next argues that the complaints fail to sufficiently plead scienter. Finally, Credit Suisse contends that the offering materials contained disclaimers that precluded Plaintiffs from claiming they justifiably relied on Credit Suisse’s alleged misrepresentations. B. The Alleged Misrepresentations Plaintiffs allege that they received offering materials from Credit Suisse in connection with their purchase of NPF VI and NPF XII notes. These materials included private placement memoranda, supplemental private placement memoranda, and the Master Indenture governing the NPF XII note program. MetLife and Lloyds allege that Credit Suisse, as initial purchaser and lead underwriter of the notes, was “intimately involved with the drafting” of the offering materials. See MetLife Fourth Am Compl., ¶ 34; Lloyds Fourth Am. Compl., ¶ 36. The New York Funds similarly allege that Credit Suisse, as primary seller of the notes and as National Century’s financial advisor, had “active involvement in drafting, editing and/or approving” the offering materials. See New York Funds Second Am. Compl., ¶ 143. The Arizona Noteholders make the same allegations that Credit Suisse played a significant role in drafting the offering materials. Plaintiffs contend that the offering materials contained material misstatements and omissions regarding how NPF VI and NPF XII operated, including that the note programs: • maintained separate books and records from other National Century entities; • had on their boards of directors an independent director unaffiliated with National Century; • restricted their business to purchasing eligible receivables and issuing notes; • provided certain credit enhancements for the notes in accordance with the Master Indenture governing the note programs; • were capitalized by National Century in accordance with the Indenture; • maintained segregated reserve accounts; • used proceeds from issuing notes to purchase eligible receivables; • did not purchase receivables in excess of payor concentration limitations set forth in the Indenture; and • did not engage in related party transactions. Plaintiffs contend that these misrepresentations were material because they went to assuring that National Century’s business model was financially sound and that the notes were a good investment. Plaintiffs allege that Credit Suisse repeated many of the same misrepresentations during sales presentations given to Plaintiffs. For instance, MetLife alleges that Credit Suisse gave a sales presentation at MetLife’s offices on October 11, 2000. During this presentation, Credit Suisse allegedly misrepresented that the notes were of high quality and the note programs had strong credit controls and enhancements. The New York Funds allege that Credit Suisse made a sales presentation to them in October 2000 in which Credit Suisse made the same or similar misrepresentations as were contained in the offering materials. The Arizona Note-holders likewise allege that during sales presentations and telephone calls, representatives of Credit Suisse reiterated the misrepresentations made in the offering materials and made false assurances about the quality of the notes. Plaintiffs further allege that Credit Suisse made material misrepresentations and omissions in other written materials. For instance, MetLife alleges that Credit Suisse sent it a “Salespoints” document on December 18, 2000. This Salespoints document allegedly made the same or similar misrepresentations as were contained in the offering materials, namely that NPF XII was operating in compliance with the material terms of the Master Indenture. In June 2001, Credit Suisse sent to Met-Life an email misrepresenting that the reserve accounts were being properly maintained and that the accounts receivable being purchased were of high quality. Lloyds similarly alleges that Credit Suisse sent it a document in January 2001 containing misrepresentations regarding the nature and quality of the receivables, the nature of the collateralization of the notes, and the maintenance of the reserve accounts. In July 2002, after the NPF XII notes were downgraded by ratings agency Fitch, Inc., Lloyds contacted Credit Suisse, who responded by sending a “Research Report” containing the same or similar misrepresentations. The New York Funds likewise allege that Credit Suisse issued the July 2002 Research Report, which misrepresented that there were no problems with the NPF XII note program. And the Arizona Note-holders allege that Credit Suisse sent them a number of “Salespoints” documents that repeated the same misrepresentations as were made in the offering materials. In the face of these allegations, Credit Suisse argues that it made no misrepresentations to Plaintiffs. Selectively quoting language from the offering materials stating that National Century prepared the materials, Credit Suisse contends that any misrepresentations in those materials belonged to National Century and not to Credit Suisse. This argument is unpersuasive. Credit Suisse’s name is displayed on the front page of all the offering materials, which identify Credit Suisse as the initial purchaser of the notes. The complaints allege that Credit Suisse drafted the materials and provided them to Plaintiffs when marketing the notes. Indeed, the complaints go so far as quoting Credit Suisse’s own internal papers showing that Credit Suisse helped draft and review the offering materials. See MetLife Compl., ¶ 34, Lloyds Compl., ¶ 36, New York Funds Compl., ¶ 148. In Gabriel Capital, L.P. v. NatWest Finance, Inc., 94 F.Supp.2d 491, 502 (S.D.N.Y.2000), the court rejected a similar argument made by two underwriters in a motion to dismiss: “[T]he cover of the Offering Memorandum prominently lists both NatWest and McDonald as two of the four initial purchasers.... In addition, NatWest and McDonald gave the Offering Memorandum to plaintiffs as part of their sales pitch.... At this stage of the proceedings, that is a sufficient basis to conclude that the alleged misrepresentations were attributable to NatWest and McDonald.” Credit Suisse next argues that it owed no duty of disclosure to Plaintiffs. Generally, a party to a business transaction has a duty to disclose only when a special relationship exists, which Credit Suisse contends was not the case here. See Interim Healthcare of Northeast Ohio, Inc. v. Interim Services, Inc., 12 F.Supp.2d 703, 712 (N.D.Ohio 1998). However, a party who chooses to speak in a securities transaction assumes a duty to speak truthfully and completely about the matters on which he speaks. See Rubin v. Schottenstein, Zox & Dunn, 143 F.3d 263, 268 (6th Cir.1998) (en banc). Even though a party “in a securities transaction may not always be under an independent duty to volunteer information ... he assumes a duty to provide complete and nonmisleading information with respect to subjects on which he undertakes to speak.” Rubin, 143 F.3d at 268. Here, the complaints adequately allege that Credit Suisse undertook, through the offering materials, sales presentations, and other written materials, to speak about the material aspects of the NPF VI and NPF XII note programs. These allegations are sufficient to impose a duty on Credit Suisse to provide complete and nonmisleading information regarding all the subjects on which Credit Suisse spoke. Finally, Credit Suisse argues that the claims of the New York Funds and the Arizona Noteholders must be dismissed because the complaints fail to identify which, if any, of the various plaintiffs who make up the New York Funds and Arizona Noteholders received and reviewed the offering materials. This argument too is without merit. The New York Funds specifically allege that they made investment decisions through their agents Citibank, N.A. and Lincoln Capital, LLC and that these agents received and reviewed the offering materials from Credit Suisse. Each of the Arizona Noteholders allege that Credit Suisse provided the offering materials either directly to them or to their investment advisors. C. Scienter 1. Pleading Standard The Sixth Circuit has described the PSLRA’s provisions as “[a]dding to the Federal Rules of Civil Procedure 9(b) requirement that fraud must be stated with particularity.” In re Ford Motor Co. Secs. Litig., 381 F.3d 563, 567 (6th Cir.2004). “[N]ot only must the complaint make particular factual allegations, but the inference of scienter which those allegations generate must be strong.” PR Diamonds, Inc. v. Chandler, 364 F.3d 671, 682 (6th Cir.2004). To establish liability under Section 10(b) and Rule 10b-5, a plaintiff must prove that the defendant acted with scienter, “a mental state embracing intent to deceive, manipulate, or defraud.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193-94, n. 12, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). In the Sixth Circuit, reckless behavior may suffice for liability under Section 10(b). Robert N. Clemens Trust v. Morgan Stanley DW, Inc., 485 F.3d 840, 847 (6th Cir.2007); Helwig v. Vencor, Inc., 251 F.3d 540, 548 (6th Cir.2001) (en banc). Recklessness is a mental state falling “somewhere between intent and negligence” and is characterized by “highly unreasonable conduct which is an extreme departure from the standards of ordinary care.” Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017, 1025 (6th Cir.1979). “While the danger need not be known, it must at least be so obvious that any reasonable man would have known of it.” Id. The United States Supreme Court recently discussed Section 10(b)’s scienter requirement in Tellabs, Inc. v. Makor Issues & Rights, Ltd., — U.S. -, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). The Court was called on to interpret the PSLRA’s requirement that the allegations give rise to a “strong inference that the defendant acted with the required state of mind.” In the case before us, the Court of Appeals for the Seventh Circuit held that the “strong inference” standard would be met if the complaint “allege[d] facts from which, if true, a reasonable person could infer that the defendant acted with the required intent.” 437 F.3d 588, 602 (2006). That formulation, we conclude, does not capture the stricter demand Congress sought to convey in § 21D(b)(2) [of the PSLRA]. It does not suffice that a reasonable factfinder plausibly could infer from the complaint’s allegations the requisite state of mind. Rather, to determine whether a complaint’s scienter allegations can survive threshold inspection for sufficiency, a court governed by § 21D(b)(2) must engage in a comparative evaluation; it must consider, not only inferences urged by the plaintiff, as the Seventh Circuit did, but also competing inferences rationally drawn from the facts alleged. An inference of fraudulent intent may be plausible, yet less cogent than other, nonculpable explanations for the defendant’s conduct. To qualify as “strong” within the intendment of § 21D(b)(2), we hold, an inference of scienter must be more than merely plausible or reasonable-it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent. 127 S.Ct. at 2504-05. The Supreme Court set the following guidelines for analyzing whether a complaint sufficiently pleads scienter. “First, faced with a Rule 12(b)(6) motion to dismiss a § 10(b) action, courts must, as with any motion to dismiss for failure to plead a claim on which relief can be granted, accept all factual allegations in the complaint as true.” 127 S.Ct. at 2509. “Second, courts must consider the complaint in its entirety.... The inquiry, as several Courts of Appeals have recognized, is whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.” Id. (citing cases). “Third, in determining whether the pleaded facts give rise to a ‘strong’ inference of scienter, the court must take into account plausible opposing inferences.” Id. With respect to this last point, the Court explained: The strength of an inference cannot be decided in a vacuum. The inquiry is inherently comparative: How likely is it that one conclusion, as compared to others, follows from the underlying facts? To determine whether the plaintiff has alleged facts that give rise to the requisite “strong inference” of scienter, a court must consider plausible nonculpa-ble explanations for the defendant’s conduct, as well as inferences favoring the plaintiff. The inference that the defendant acted with scienter need not be irrefutable.... Yet the inference of scienter must be more than merely “reasonable” or “permissible” — it must be cogent and compelling, thus strong in light of other explanations. A complaint will survive, we hold, only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged. Id. at 2510. 2. Plaintiffs’ Allegations of Scienter Plaintiffs allege at length that Credit Suisse knew that its representations concerning the note programs were false. Below is a summary of the numerous allegations of Credit Suisse’s scienter. MetLife and Lloyds allege that Credit Suisse became aware of the fraud at National Century no later than 1999 when Credit Suisse performed a due diligence review of National Century’s operations. Credit Suisse performed the review as a part of National Century’s ultimately unsuccessful efforts to arrange an initial public stock offering, which Credit Suisse was set to underwrite. During the due diligence, Credit Suisse allegedly reviewed, or at least had access to, documents informing it that National Century’s operations were fraudulent. For instance, Credit Suisse had access to draft audit reports dating back to 1995. These reports directly stated that National Century had not complied with the Master Indenture’s requirements for purchasing accounts receivable because it had purchased receivables that were “significantly aged” and “deemed uncollectible.” Moreover, Credit Suisse allegedly had access to a June 25, 1999 document authored by PriceWater-houseCoopers LLP reporting that National Century had improperly done the following: purchased receivables older than 180-day limit set by the Master Indenture; listed ineligible receivables as collateral; and commingled or transferred funds between note programs. MetLife and Lloyds further allege that Credit Suisse received and reviewed an April 27, 1999 document authored by Kaye, Scholer, Fi-erman, Hays & Handler stating that National Century had not complied with certain documentary and reporting provisions of the Master Indenture. MetLife and Lloyds allege that Credit Suisse continued to receive information informing it of problems at National Century. For instance, they allege that in July 2000 representatives from Credit Suisse and Fitch met to discuss Fitch’s concerns about the note programs. Fitch allegedly told Credit Suisse that it had found evidence of a surprising amount of related party transactions, meaning that National Century was purchasing receivables from healthcare providers in which National Century or its Founders held a financial interest. MetLife and Lloyds further allege that Credit Suisse received documents from April and May 2001 indicating that National Century was over-advancing money to healthcare providers and that the reserve accounts had dropped below the required levels. Credit Suisse allegedly received a March 7, 2002 letter from Lance Poulsen, one of National Century’s Founders, indicating that National Century was kiting funds between note programs in order to create the appearance that the reserve level requirements were being met. Further, an October 15, 2002 internal memorandum written by Poulsen allegedly stated that he had met with Credit Suisse about artificially boosting the reserve accounts. The New York Funds and the Arizona Noteholders also make extensive allegations of scienter. They allege that, as part of the due diligence, Credit Suisse reviewed a draft registration statement stating that National Century had engaged in related party transactions. The draft identified by name several of the healthcare providers in which National Century or its Founders held interests, and it stated that related party transactions accounted for 36.3% of National Century’s gross revenues in 1998. These Plaintiffs further allege that in 1998 one of Credit Suisse’s financial clients, Freenius, contacted Credit Suisse about selling a healthcare business, NMC Homecare, to National Century. Credit Suisse helped arrange the sale of NMC Homecare and its receivables to National Century. In the process, Credit Suisse allegedly learned that National Century was buying NMC Homecare’s receivables even though they did not meet the eligibility standards described in the offering materials and Master Indenture. The New York Funds and the Arizona Noteholders additionally allege that Credit Suisse knew of large shortfalls in the reserve accounts. In September 2000, Credit Suisse allegedly loaned $300 million to National Century for the specific purpose of using the money to hide the shortfalls in the reserve accounts of NPF VI and NPF XII. The New York Funds and the Arizona Noteholders also cite a July 15, 2002 report issued by Credit Suisse in which it admitted that it knew for several years that the note programs had violated the concentration limits set forth in the Master Indenture. Those concentration limits were supposed to restrict the note programs from purchasing too many of the same class of receivables and from purchasing too many receivables from any one provider. The complaints also contain numerous indirect allegations of scienter. According to Plaintiffs, the alleged fraud at National Century was so great in magnitude, with losses between $2 and $3 billion, that insiders like Credit Suisse had to have known of the fraud. The complaints further allege the existence of many “red flags” that should have alerted Credit Suisse to the alleged fraud. Some of the red flags included: (1) Credit Suisse’s receipt of anonymous letters raising specific concerns about the operation of the note programs; (2) Deutsche Bank, which at one time served as an underwriter, abruptly terminating its relationship with National Century in 2000; (3) PriceWaterhouseCoopers, which served as National Century’s auditor, abruptly terminating its relationship with National Century in 1999; (4) unexplained delays in the issuing of audits; (5) Deloitte & Touche, which replaced Price-Waterhouse as auditor, failing to complete its audit in 2001 and stating that there were concerns about the quality of the receivables; and (6) Fitch downgrading its rating of the NPF VI and NPF XII notes. Each of the Plaintiffs further allege that Credit Suisse had financial motives for continuing to market the notes and misrepresent their quality, despite knowing that the note programs had repeatedly committed material violations of the Master Indenture. Plaintiffs allege that Credit Suisse collected significant investment banking and placement fees in its role as placement agent. In addition, Plaintiffs allege that Credit Suisse stood to lose millions of dollars if it, the initial purchaser of the notes, could not transfer the notes to the secondary market before National Century’s alleged fraud was exposed. 3. Discussion Credit Suisse offers four main reasons for why Plaintiffs’ allegations of scienter are insufficient. First, Credit Suisse interprets the allegations as showing that it discovered the fraud after the fact — after it had already sold the notes to Plaintiffs. Second, Credit Suisse contends that the complaints allege that it merely had access to information. Third, Credit Suisse argues that the allegations concerning due diligence support nothing more than an inference that Credit Suisse performed the due diligence review negligently. Finally, Credit Suisse argues that the allegations of motive are nonsensical because Credit Suisse would not have increased its exposure to National Century after having learned of the alleged fraud. Upon review of the complaints, the Court finds that each complaint supports a strong inference of scienter that is more compelling than the competing inferences suggested by Credit Suisse. Credit Suisse contends that scienter cannot be established through allegations of “fraud by hindsight.” As a legal principle, this is true. If a defendant did not know or recklessly disregard the falsity of the statement at the time it was made, then Section 10(b) liability cannot be imposed even if the statement turns out to be false in hindsight. See Sinay v. Lamson & Sessions Co., 948 F.2d 1037, 1042 (6th Cir.1991) (holding that allegations of fraud by hindsight are insufficient to withstand a motion to dismiss). But Credit Suisse confuses how this principle applies here. It does not matter, as Credit Suisse seems to believe it does, that the complaints are unable to trace Credit Suisse’s alleged knowledge of the fraud to the time the alleged scheme to defraud investors was conceived. What matters for purposes of Section 10(b) liability is that Credit Suisse is alleged to have known of the fraudulent scheme by the time it made misrepresentations to Plaintiffs. See Sinay, 948 F.2d at 1040 (the issue is “whether the statement was false when made”). The complaints here thoroughly allege that Credit Suisse knew of the material aspects of the fraud — including the purchase of ineligible receivables, the related-party transactions, and the depletion and manipulation of reserve accounts — before it solicited and sold notes to Plaintiffs. In an argument directed particularly at MetLife and Lloyds, Credit Suisse argues that the complaints allege only that Credit Suisse had access to information. For instance, MetLife and Lloyds allege that Credit Suisse had access to draft audit reports and a PriceWaterhouseCoopers document when it performed the due diligence review. Credit Suisse correctly notes that mere access to information is not enough to establish scienter. See Fidel v. Farley, 392 F.3d 220, 229-30 (6th Cir.2004); PR Diamonds, Inc. v. Chandler, 364 F.3d 671, 688 (6th Cir.2004). In Fidel and PR Diamonds, the complaints alleged in conclusory fashion that the defendants, because of their positions with the companies committing the fraud, had access to information that would have given them knowledge of the fraud. The complaints failed to allege what documents in particular the defendants had access to or what information they would have learned from reviewing the documents. In contrast to the plaintiffs in Fidel and PR Diamonds, MetLife and Lloyds describe exactly what documents Credit Suisse had access to, why Credit Suisse likely would have reviewed them, and what Credit Suisse would have learned by reviewing them. More importantly, as discussed in Part III.C.2 above, the complaints of MetLife and Lloyds go beyond allegations of mere access and describe what information Credit Suisse did review and know. The complaints allege that Credit Suisse knew — based on the Kaye Scholer memo, information from the meeting with Fitch, documents dated from April and May 2001, and correspondence with Lance Poulsen — that National Century was purchasing ineligible receivables, making related-party transactions, and manipulating its depleted reserve accounts. Thus, even putting aside the allegations of access, the complaints sufficiently allege that Credit Suisse reviewed information giving it knowledge of the alleged fraud. Credit Suisse next contends that the complaints portray its performance of the due diligence review as negligent at best, and negligence is not sufficient to impose Section 10(b) liability. See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 210, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976) (holding that Section 10(b) “cannot be extended, consistently with the intent of Congress, to actions premised on negligent wrongdoing”). But the thrust of the complaints is not that Credit Suisse negligently performed the due diligence. Rather, it is that Credit Suisse did perform the due diligence and did receive and review information providing it with knowledge of the material aspects of the alleged fraud. The Arizona Noteholders, for instance, quote Credit Suisse’s own statement to investors that it had done “lots of due diligence.” See, e.g., State of Arizona’s Second Am. Compl., ¶ 108. Even if the allegations about the due diligence review, standing alone, do not create a strong inference of scienter, the Court must consider each complaint as a whole. Each complaint contains additional allegations of post-due diligence information Credit Suisse actually received and knew, as well as specific allegations of numerous red flags that would have alerted a reasonable person in Credit Suisse’s position of the fraud. See PR Diamonds, 364 F.3d at 686 (“Specific factual allegations .that a defendant ignored red flags, or warning signs that would have revealed the accounting errors prior to their inclusion in public statements, may support a strong inference of scienter.”). All of these allegations, when combined with the due diligence allegations, create a strong inference of scienter. Finally, Credit Suisse attacks the allegations of motive as being nonsensical. Credit Suisse questions why it would continue to serve as the initial purchaser of the notes if it knew of the fraud. No reasonable business, according to Credit Suisse, would expose itself to such a high risk of loss. Though Credit Suisse may ultimately be able prove this to be the case, the Court at this stage must accept the allegations in the complaints as true. The complaints allege that Credit Suisse continued its involvement in National Century because that was the best way for Credit Suisse to reduce its exposure. Plaintiffs allege that Credit Suisse, having become deeply involved in the fraudulent enterprise and with hundreds of millions of dollars of unsold notes on its hands, reduced its exposure by selling the notes to unsuspecting investors. And by selling the notes, Credit Suisse generated enough funds to keep the note programs going awhile longer. In summary, the Court finds that each complaint alleges facts that, when taken as true and considered collectively, give rise to a strong inference of scienter. Credit Suisse has challenged isolated portions of the complaints but does not offer any competing explanations of the pleaded facts that are as plausible as Plaintiffs’ explanations. The complaints portray Credit Suisse as an insider to the scheme to defraud. They describe a complete picture of Credit Suisse’s participation, knowledge, and motivation regarding National Century’s alleged scheme to defraud investors' — -a fraud so great in magnitude that the most plausible inference is that Credit Suisse almost surely had to know of it. See PR Diamonds, 364 F.3d at 684-85 (finding that fraud of great magnitude, in combination with other factors, may support a strong inference of fraud). D. Reliance Credit Suisse next argues that Plaintiffs could not have justifiably relied on the alleged misrepresentations. Credit Suisse points to several disclaimers contained in the offering materials, including that: (1) Credit Suisse did not do “any independent investigation” of the statements in the offering materials; (2) Credit Suisse made no “representations or warranties as to the accuracy or completeness of the information” contained in the offering materials; (3) prospective purchasers “must rely on their own examination” of the issuer and note offering; and (4) no person, apart from those “specifically designated,” was “authorized to give any information or to make any representations other than those contained in [the memoranda].” See Private Placement Memoranda and Supplemental Private Placement Memoranda, pp. 3-4. Credit Suisse argues that no reasonable investor could have relied on any misrepresentations in the offering materials after seeing the disclaimers. Credit Suisse contends that the Participation Agreement between it and Lloyds contained similar disclaimers to the ones in the offering materials. The Agreement stated that Credit Suisse had not made any representations or warranties to Lloyds and that Lloyds was responsible for conducting its own examination of the NPF XII note program. See Participation Agr., § 12. The Court finds that the disclaimers in the offering materials and Participation Agreement do not preclude Plaintiffs from showing that they justifiably relied on Credit Suisse’s alleged misrepresentations. The reasons why this is so are fully explained in Plaintiffs’ briefs, and the Court will discuss them only briefly. The issue of whether a party’s reliance was justifiable is largely a question of fact inappropriate for resolution on a motion to dismiss. See Bass v. Janney Montgomery Scott, Inc., 210 F.3d 577, 590 (6th Cir.2000) (“[T]he question of whether [plaintiffs] reliance was reasonable is beyond doubt a question of fact for a jury to decide, and not a fit subject for judgment as a matter of law.”). This is particularly true here because the purported disclaimers were undermined or contradicted by other information allegedly available to potential investors. For instance, the disclaimer stating that Credit Suisse had done no independent investigation would seem beyond credulity to potential investors who knew that Credit Suisse, a major financial institution, had helped devise the note programs, helped draft the offering materials, and had purchased hundreds of millions of dollars of notes in its role as initial purchaser. Other disclaimers stated that Credit Suisse was not making any representations of accuracy and that potential investors should rely on their own examinations. But those disclaimers were contradicted by a statement on the second page of the offering materials telling potential investors, “You should rely only on the information contained in this document.” The very documents that Credit Suisse put into the hands of investors told them to rely on the statements made in those documents. The last disclaimer — the one in the offering materials stating that no person, apart from those “specifically designated,” was authorized to make representations other than those in the private placement memoranda — on its face did not apply to representations made in the offering materials. Moreover, the offering materials nowhere made a specific designation of who was authorized to make representations. In the absence of a specific designation otherwise, investors dealing with Credit Suisse, who served as placement agent for the notes and whose name appeared prominently on the front page of the offering materials, certainly had reason to believe that Credit Suisse was authorized to make representations. Courts have long held that general disclaimers of accuracy do not shield sellers who knowingly make false statements. “[I] f a deliberate fraud may be shielded by a clause in a contract that the writing contains every representation made by way of inducement, or that utterances shown to be untrue were not an inducement to the agreement, sellers of bogus securities may defraud the public with impunity, through the simple expedient of placing such a clause in the prospectus which they put out, or in the contracts which their dupes are asked to sign.” Arnold v. Nat’l Aniline & Chemical Co., 20 F.2d 364, 369 (2d Cir.1927). As Plaintiffs argue, it would defeat the securities laws if parties could escape liability for their own deliberate misrepresentations by inserting boilerplate disclaimers into offering materials. See Milman v. Box Hill Systems Corp., 72 F.Supp.2d 220, 231 (S.D.N.Y.1999) (“[N]o degree of cautionary language will protect material misrepresentations or omissions where defendants knew their statements were false when made.”); Jadoff v. Gleason, 140 F.R.D. 330, 335 (M.D.N.C.1991) (“[Upholding such disclaimers of reliance would give a 10b-5 defendant license to make any representations he desired with impunity.”). Indeed, Section 29(a) of the Securities Exchange Act prohibits the waiver of the substantive obligations of the Act. It provides, “Any condition, stipulation, or provision binding any person to waive compliance with any provision of this title or of any rule or regulation thereunder, or of any rule of an exchange required thereby shall be void.” 15 U.S.C. § 78cc(a); see AES Corp. v. Dow Chemical Co., 325 F.3d 174, 179 (3d Cir.2003). “[A] party cannot disclaim liability for fraudulent misrepresentations by placing a disclaimer to that effect in a contract.... This is especially true of fraud in securities transactions. 15 U.S.C. § 78cc voids any contract which purports to release an individual from obligations under the federal securities laws, or to waive any claims under those statutes before those claims accrue.” Katz v. First of Mich., No. K87-264 CA4, 1989 WL 62196, at * 10 (W.D.Mich. March 13, 1989). Thus, the Court finds that Credit Suisse’s purported disclaimers do not preclude Plaintiffs from pleading justifiable reliance. E. Statute of Limitations Challenge to Arizona Noteholders’ Fraud Claims Credit Suisse argues that a significant number of the Arizona Noteholders filed their fraud claims, as well as the rest of their common law claims, after Arizona’s statute of limitations had run. The Arizona Noteholders filed two of their lawsuits on May 23, 2003 and the third suit on August 9, 2003. Credit Suisse argues that the common law claims accrued upon the purchase of the notes, some of which had purchase dates in 1998, 1999, and early 2000. Arizona law has a three-year statute of limitations for fraud-based claims and a two-year statute of limitations for other common law claims. See Ariz.Rev. Stat. Ann. §§ 12-542,12-543. The Court must reject Credit Suisse’s argument. The Arizona Note-holders have alleged at length that Credit Suisse concealed its conduct. They contend that the offering materials did not disclose the fraudulent nature of National Century’s operations, and when they approached Credit Suisse with concerns, Credit Suisse allegedly issued false assurances about the health of the NPF VI and NPF XII programs. The statute of limitations is subject to a discovery rule whereby a claim accrues when a plaintiff knows, or by the exercise of due diligence should know, of the defendant’s wrongful conduct. See Taylor v. State Farm Mut. Auto. Ins., Co., 913 P.2d 1092, 1095, 185 Ariz. 174, 177 (Ariz.1996); Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 898 P.2d 964, 966-67, 182 Ariz. 586, 588-89 (Ariz.1995). The complaints sufficiently allege that the Arizona Noteholders could not have reasonably discovered the wrongful conduct until the time of National Century’s collapse in October 2002. F. Summary For the reasons discussed above, the Court finds that the complaints of MetLife, Lloyds, and the New York Funds satisfy the pleading standard of the PSLRA and sufficiently state claims against Credit Suisse under Section 10(b). Those same complaints, as well as the complaints of the Arizona Noteholders, satisfy the standard of Rule 9(b) in stating claims for fraud and negligent misrepresentation. IV. STATE BLUE SKY LAW CLAIMS MetLife, Lloyds, and the Arizona Note-holders have asserted claims under the blue sky laws of various states. These laws prohibit the use of misrepresentations and material omissions in connection with the sale of securities. Typically, a state’s blue sky law will have provisions imposing primary liability on sellers or solicitors who make untrue statements in connection with a sale, and it will have provisions imposing secondary liability on persons who materially aid the seller and on persons who control the seller. See e.g., Ohio Rev.Code § 1707.41(A) (primary liability), § 1707.43(A) (secondary liability). Credit Suisse opposes the blue sky law claims for the same reasons that it opposed the Section 10(b) and fraud claims. It contends that it made no misrepresentations, did not have a duty to disclose, did not act with the requisite scienter, and that the disclaimers precluded reasonable reliance by Plaintiffs. As discussed in Part III above, those arguments are not persuasive. Credit Suisse additionally argues that the blue sky law claims fail for the following reasons: (1) certain plaintiffs have not alleged any nexus to the particular states whose blue sky laws they invoke; (2) the claims of certain Arizona Noteholders are time-barred; (3) the Arizona Noteholders who are governmental entities lack standing to assert a claim; (4) there is no private right of action under the blue sky laws of New Jersey and Oregon; (5) the laws of several states do not apply to private placements; (6) the laws do not protect certain Arizona Noteholders who purchased notes from Credit Suisse in the aftermarket; (7) Credit Suisse did not sell or solicit the sale of notes to certain Arizona Noteholders who purchased notes from someone other than Credit Suisse; and (8) Credit Suisse did not materially assist or aid the sale of notes to those Arizona Noteholders who purchased notes from someone other than Credit Suisse. A. Nexus with Certain States 1. Lloyds Credit Suisse first contends that Lloyds has not alleged a sufficient nexus with New Jersey to assert a claim under the blue sky law of that state. This is correct. In its May 7, 2007 Opinion concerning the Outside Directors, the Court found: [T]he complaint of Lloyds (a British public limited company with its principal place of business in London, England), makes no allegations about where it was offered, or where it accepted an offer, to purchase notes. The complaint alleges that Credit Suisse First Boston LLC served as lead underwriter for the notes. According to the complaint, Credit Suisse First Boston LLC is a Delaware limited liability company, with its principal place of business in New York. Banc One Capital Markets, a broker-dealer that allegedly had a role in the note offering, is incorporated in Delaware, with it principal place of business in Illinois. The Court finds that the complaint of Lloyds fails to contain any allegations that would bring the Outside Directors’ alleged conduct within the scope of New Jersey’s Blue Sky law. On the face of the complaint, there is no connection between New Jersey and the Outside Directors’ actionable conduct. Lloyds has amended its complaint four times, and despite the Outside Directors raising this issue from the outset, the complaint fails to allege any connection to New Jersey. Accordingly, Lloyds’s claim under New Jersey’s Blue Sky law is dismissed. May 7, 2007 Opinion, p. 35. Lloyds’s complaint likewise fails to allege any connection between New Jersey and Credit Suisse’s actionable conduct, and, thus, Lloyds’s claim under New Jersey’s blue sky law is dismissed. 2. Certain Arizona Noteholders Credit Suisse next argues that four of the Arizona Noteholders have not alleged a sufficient nexus with the state whose blue sky law they invoke. Those plaintiffs and states are: the State of Indiana Public Employees’ Retirement Fund (Indiana); Mellon Investor Services LLC (New Jersey); Crown, Cork & Seal Company Master Retirement Trust (Pennsylvania); and the Metropolitan Government of Nashville and Davidson County (Tennessee). Each of these plaintiffs reside in the state whose law they invoke. Credit Suisse argues that residency is not enough; rather, there must be a purchase or an offer to buy or sell in a particular state before that state’s blue sky law may be invoked. According to the complaints, the State of Indiana Public Employees’ Retirement Fund and the Metropolitan Government of Nashville and Davidson County acted through an investment advisor in Illinois. The Crown, Cork & Seal Company Master Retirement Trust acted through an investment advisor in Minnesota. The complaint is not entirely clear about Mellon Investor Services, but it groups Mellon with other plaintiffs from New York in a way suggesting that it acted through an advisor in New York. Credit Suisse does not challenge the claims these plaintiffs make under the laws of the states where their investment advisors were located or under the law of Ohio, where National Century was headquartered. It challenges only the residency-based claims. Each of the blue sky laws at issue apply to the “offer, sale, or purchase” of a security in that state. See Ind.Code § 23-2-1-12; N.J. Stat. Ann. § 49:3-51(a); 70 Pa. Cons.Stat. § 1-401; Tenn.Code Ann. § 48-2-121 (a). Credit Suisse argues that the sales here occurred in the state where the plaintiffs agent was located, not where plaintiff resided. Plaintiffs counter that each state has an interest in protecting its residents and that the blue sky laws may validly be applied to protect residents who have been defrauded in purchasing securities. The Court finds that these blue sky law claims should survive the motion to dismiss. Typically, a defrauded buyer of a security may assert a blue sky claim under the law of his own state. In A.S. Goldmen & Co., Inc. v. New Jersey Bureau of Securities, 163 F.3d 780, 787 (3d Cir.1999), the Third Circuit recognized that securities transactions often are not confined to one state. Courts should look to where the “elements of the transaction have occurred.” Id. Thus, a “contract between [a seller] in New Jersey and a buyer in New York does not occur ‘wholly outside’ New Jersey, just as it does not occur ‘wholly outside’ New York. Rather, elements of the transaction occur in each state, and each state has an interest in regulating the aspect of the transaction that occurs within its boundaries.” Id. Here, the plaintiffs assert claims under the laws of their own state, the state of the seller, and the state where their investment advisors were located. At this early stage, the Court cannot say that the laws of the states where plaintiffs resided do not apply. B. Statute of Limitations Credit Suisse argues that the claims of certain Arizona Noteholders are barred by the applicable statutes of limitations. The Arizona Noteholders filed two of their lawsuits on May 23, 2003 and the third suit on August 9, 2003. The complaints allege that notes were purchased in 1998 and early 1999 by the Asset Allocation & Management Plaintiffs, Bayerische Landes-bank, Mutual of New York, SanPaolo IMI, and United of Omaha Insurance Company. Credit Suisse argues the Ohio blue sky law claims being asserted on those notes are time-barred under the applicable two-year statute of limitations. Credit Suisse also argues that United of Om