Full opinion text
OPINION AND ORDER SHIRLEY WOHL KRAM, District Judge. TABLE OF CONTENTS I. BACKGROUND...........................................................254 A. Procedural History....................................................254 B. Parties...............................................................254 C. Factual Allegations....................................................255 1. The GTA:SA Fraud................................................255 2. The Options Backdating Fraud......................................257 D. Legal Claims.................■.........................................258 II. DISCUSSION.............................................................259 A. Claims for Material Misrepresentations Under Section 10(b) and Rule 10b-5 ...................................................... 260 1. The GTASA Fraud................................................260 i. The SAC Adequately Alleges a False Statement and Misleading Omission in Take-Two’s 2004 and 2005 Forms 10-K..............260 ii. The Alleged Misleading Statement in Take-Two’s 2004 and 2005 Forms 10-K Is Attributable to Defendants Take-Two, Eibeler, Winters, Emmel, Flug, and Grace......................265 a. The Group Pleading Doctrine Does Not Apply to Brant.........266 b. The Exception for Subsidiary Liability Does Not Apply to the Roekstar Defendants .................................268 iii. The SAC Fails to Allege Scienter with Respect to All Defendants .................................................268 a. The SAC Inadequately Pleads Scienter With Respect to Brant, Houser, and Donovan..............................269 (1) The SAC Insufficiently Alleges That Houser, Donovan, and Brant Possessed a Motive to Commit Fraud.....269 (2) The SAC Alleges Insufficient Circumstantial Evidence of Knowledge or Recklessness With Respect to Brant, Houser, and Donovan...........................270 b. The SAC Inadequately Pleads Eibeler’s Scienter...............273 (1) The SAC Insufficiently Alleges That Eibeler Possessed a Motive to Commit Fraud............................273 (2) The SAC Alleges Insufficient Circumstantial Evidence of Eibeler’s Knowledge or Recklessness.................273 c. The SAC Inadequately Pleads Scienter With Respect to Emmel, Flug, and Grace..................................275 d. The SAC Inadequately Pleads Winters’s Scienter..............277 (1) The SAC Adequately Alleges Winters’s Motive and Opportunity to Commit Fraud.........................277 (2) The SAC’s Proposed Inference of Scienter Is Not as Compelling as Competing Noneulpable Explanations.....278 e. The SAC Inadequately Pleads Scienter With Respect to Take-Two and Roekstar..................................281 2. The Options Backdating Fraud......................................281 i. The SAC Sufficiently Pleads Loss Causation Only as to the July 10 Disclosure of SEC’s Informal Investigation...................282 a. Loss Causation May Not Be Predicated upon the June 26 Disclosure..............................................282 b. Loss Causation May Be Predicated Upon the July 10 Disclosure..............................................286 ii. The SAC Adequately Alleges the Materiality of Defendants’ Misstatements Regarding Options Backdating...................290 iii. The SAC Adequately Pleads Scienter With Respect to Take- Two, Brant, Eibeler, Emmel, Flug, and Grace...................293 a. The SAC Adequately Alleges Brant’s Scienter.................293 b. The SAC Adequately Alleges Scienter With Respect to Emmel, Flug, and Grace..................................293 (1) The SAC Adequately Alleges that Emmel, Flug, and Grace Possessed Motive and Opportunity................294 (2) The Inference That Emmel, Flug, and Grace Acted With Scienter Is More Compelling Than Competing Noneulpable Explanations for Their Conduct............298 c. The SAC Inadequately Alleges Eibeler’s Scienter ..............301 (1) The SAC Adequately Alleges That Eibeler Possessed Motive and Opportunity...............................301 (2) The Inference That Eibeler Acted With Scienter Is Not as Compelling as Competing Noneulpable Explanations for His Conduct..........................302 d. The SAC Inadequately Alleges Winters’s Scienter..............304 e. The SAC Adequately Alleges Take-Two’s Scienter.............305 B. Claims for Violations of Section 20(a) of the Exchange Act..................306 1. The GTA:SA Fraud................................................306 2. The Options Backdating Fraud......................................307 C. Claims for Violations of Section 20A(a) of the Exchange Act.................308 D. Leave to Amend the SAC...............................................312 III. CONCLUSION..................... ......................................313 In this putative class action, the New York City Employees’ Retirement System, the New York City Police Pension Fund, and the New York City Fire Department Pension Fund (collectively, “Lead Plaintiffs”) bring various securities fraud claims against Take-Two Interactive Software, Inc. (“Take-Two” or the “Company”); its wholly-owned subsidiary, Rockstar Games, Inc. (“Rockstar”); and several of these companies’ officers and directors (collectively, “Defendants”). Pending before the Court are various motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b), and the Private Securities Litigation Reform Act of 1995 '(“PSLRA”). For the reasons that follow, the Court grants these motions in part and denies them in part. Additionally, the Court grants Lead Plaintiffs’ request for leave to amend deficient portions of their pleadings. I. BACKGROUND A. Procedural History On February 2, 2006, the first of several putative class actions alleging that Take-Two had committed securities fraud was filed in this District. 06 Cv. 803(SWK), Dkt. No. 1. In an order signed on July 12, 2006, the Court consolidated that action with all related securities cases pending in this District, and appointed Lead Plaintiffs to represent the putative class. 06 Cv. 803(SWK), Dkt. No. 33. Pursuant to a scheduling order also issued on July 12, 2006, see 06 Cv. 803(SWK), Dkt. No. 32, Lead Plaintiffs filed the Consolidated Amended Complaint (the “AC”) on September 11, 2006, 06 Cv. 803(SWK), Dkt. No. 34. The AC charged that Defendants made material misrepresentations and omissions in public statements respecting: (1) Take-Two’s compliance with the video game rating requirements of the Entertainment Software Ratings Board (the “ESRB”); and (2) Take-Two’s compliance with its stock-option plans and accounting for stock-option grants to several officers and directors. In a scheduling order filed on January 3, 2007, the Court halted briefing on motions to dismiss the AC, in contemplation of Take-Two’s anticipated financial restatement, 06 Cv. 803(SWK), Dkt. No. 48, which the Company eventually issued on February 28, 2007. On April 16, 2007, Lead Plaintiffs timely filed the Consolidated Second Amended Complaint (the “SAC”), which reiterated, with the benefit of more recent factual developments, the securities fraud claims set forth in the AC. 06 Cv. 803(SWK), Dkt. No. 51. Thereafter, Defendants filed the motions to dismiss that are the subject of this Opinion. B. Parties Lead Plaintiffs “are actuarial pension systems of the City of New York.” (SAC ¶ 37(a).) They are joined by an additional class representative, the State-Boston Retirement System, which “is the actuarial pension system of the City of Boston.” (SAC ¶ 37(b).) These large institutional investors purport to bring this action “on behalf of all persons and entities who purchased or otherwise acquired common stock of Take-Two” between December 17, 2002, and July 10, 2006 (the “Class Period”). (SAC ¶ 1.) The SAC names both corporate and individual defendants. The corporate defendants are Take-Two and Rockstar. Take-Two is a public company whose stock is traded on the Nasdaq National Market (“NASDAQ”). Among other things, Take-Two “manufactures and markets video games and video game accessories.” (SAC ¶38.) Rockstar, a wholly-owned subsidiary of Take-Two, develops video games for publication and distribution by its parent corporation. Rockstar is affiliated with another of Take-Two’s wholly-owned subsidiaries, Rockstar North Ltd., the entity that created the popular video game distributed by Take-Two, Grand Theft Auto: San Andreas (“GTA:SA”). (SAC ¶ 39.) The SAC names eight individual defendants, all of whom are former and current officers and directors of Take-Two and Rockstar: Paul Eibeler (“Eibeler”) was the Chief Executive Officer (“CEO”) of Take-Two from January 2005 through March 2007, the President of Take-Two from July 2000 through June 2003 and again from April 2004 through March 2007, and a director of Take-Two from December 2000 through February 2003. (SAC ¶ 40(a).) Karl Winters (“Winters”) was Chief Financial Officer (“CFO”) of Take-Two from February 2002 until April 2007. (SAC ¶ 41(a).) Ryan Brant (“Brant”) founded Take-Two and acted as the Company’s Chairman and CEO until March 2004. From March 2004 through October 2006, Brant was Take-Two’s Vice President of Publishing. (SAC ¶ 42(a).) Sam Houser (“Houser”) is, and at all times relevant to this action was, the President and co-founder of Rockstar. (SAC ¶ 43.) Terry Donovan (“Donovan”) is, and at all times relevant to this action was, the CEO of Rockstar. (SAC ¶ 44.) Robert Flug (“Flug”) was a director of Take-Two from February 1998 through March 2007. Flug was also a member of the compensation committee of Take-Two’s board of directors (the “Compensation Committee”) from 2000 through December 2006, and the Chairman of that committee between 2004 and December 2006. (SAC ¶45.) Oliver Grace, Jr. (“Grace”) was a director of Take-Two from April 1997 through March 2007, and a member of the Compensation Committee from 2000 until December 2006. (SAC ¶ 46.) Todd Emmel (“Emmel”) was a member of Take-Two’s board of directors from February 2002 through March 2007, and a member of the Compensation Committee between 2002 and 2003. (SAC ¶ 47.) C. Factual Allegations The SAC avers that Defendants made material misrepresentations and omissions concerning: (1) Take-Two’s compliance with the ESRB’s rules in the rating of GTA:SA (the “GTA:SA Fraud”); and (2) Take-Two’s compliance with its stock-option plans and accounting for stock-option grants to several officers and directors (the “Options Backdating Fraud”). The following sections outline the SAC’s factual allegations with respect to these two largely distinct frauds. 1. The GTA:SA Fraud Take-Two publishes video games widely known for their adult themes. (SAC ¶¶ 117-18.) Take-Two’s most successful product is the Grand Theft Auto video game series, which accounted for thirty-four to forty percent of Take-Two’s annual revenues from 2002 through 2005. (SAC ¶ 121.) Since its initial release in 1998 (SAC ¶ 21), the Grand Theft Auto series has featured violence, profanity, and illegal behavior (see SAC ¶ 23). On March 1, 2004, Take-Two announced the release of the next installment in the Grand Theft Auto series, GTA:SA (SAC ¶ 122.) Throughout the summer of 2004, several Rockstar employees, including defendants Houser and Donovan, discussed the inclusion of explicit sexual content in GTA:SA (SAC ¶¶ 123, 125.) Among the sexual scenes considered for inclusion in GTA:SA was a highly-developed, participatory minigame that allowed players to control one of the video game’s characters as he performed sexual acts (the “Sex Minigame”). (SAC ¶ 23.) After substantial deliberation involving Rockstar employees, including defendants Houser and Donovan, as well as one Take-Two employee, defendant Brant (SAC ¶¶ 125, 133— 40), the decision was made to exclude the Sex Minigame from available game play in the final version of GTA:SA (SAC ¶ 140). This decision was based at least in part on concerns, raised by defendants Houser and Donovan, regarding the rating that the ESRB would bestow upon GTA:SA. (SAC ¶ 133.) The ESRB is a self-regulatory organization established to provide guidance for retailers and consumers in stocking and purchasing video games. (SAC ¶ 128.) The ESRB assigns rating categories to each game it evaluates, ranging from the least restrictive, “Early Childhood,” to the most restrictive, “Adults Only” (“AO”). (SAC ¶ 129.) If a game is rated “AO,” large retailers such as Wal-Mart, Circuit City, and Best Buy will not sell it (SAC ¶ 130), thereby closing important distribution channels to the game’s vendor (SAC ¶¶ 130, 134). Various Rockstar employees, including defendants Houser and Donovan, expressed concern in the months leading up to the release of GTA:SA that the Sex Minigame, as well as other graphic sexual content, would cause the ESRB to assign GTA:SA an “AO” rating. (SAC ¶¶ 134, 135, 137.) The Sex Minigame was thus excluded from normal game play in the final version of GTA:SA. (SAC-¶¶ 133,140.) Completely eliminating the Sex Mini-game from GTA:SA’s code would have been costly. The deletion of code from a video game is a time-consuming and potentially expensive process. (SAC ¶¶ 25-26, 140^41.) Indeed, because various sections of a game’s code often interact, the deletion of one section of code may have undesired consequences for other sections. (SAC ¶ 141.) In order to obviate the potential shortcomings of deletion, the code for the Sex Minigame was rendered inaccessible through an alternative process known as “wrapping.” (SAC ¶¶ 140-41.) Unlike deleted code, “wrapped” video game code remains on the game disc. (SAC ¶ 140.) Nonetheless, a video game user cannot access wrapped code without deliberately modifying the game’s code. (SAC ¶¶ 140,145.) Notwithstanding the presence of the wrapped Sex Minigame in GTA:SA’s code, Take-Two did not disclose the content of the Sex Minigame to the ESRB when it submitted GTA:SA for rating. (SAC ¶ 143.) In September 2004, the ESRB assigned the Playstation 2 (“PS2”) version of GTA:SA a rating of “Mature 17+” (“M”), which is one rating level below the undesired “AO.” (SAC ¶¶ 143, 130.) The PS2 version of GTA:SA, which was released on October 25, 2004, also sold under the rating “M” (SAC ¶ 168), as did the personal computer (“PC”) version of GTA.SA which was released on June 7, 2005 (SAC ¶ 169). On June 9, 2005, a modification (“mod”) that unlocked the Sex Minigame became available on the PC version of GTA:SA. (SAC ¶¶ 30, 169.) Apparently, the mod was also made available on the PS2 and X-Box versions of GTA:SA some time shortly thereafter. (SAC ¶¶ 163-65; 172.) The mod was referred to as “Hot Coffee” because the Sex Minigame commenced with the game’s protagonist accepting a woman’s invitation into her home for coffee. (SAC ¶ 30.) “Hot Coffee” had circulated widely by late June 2005, prompting the initiation in early July of an ESRB investigation into the re-rating of GTA:SA. (SAC ¶¶ 170-71.) On July 20, 2005, the ESRB announced that it had re-rated GTA:SA as “AO” in light of the “Hot Coffee” mod. (SAC ¶ 175.) Immediately thereafter, retailers such as Best Buy, Circuit City, and Wal-Mart pulled GTA:SA from their shelves, and Take-Two dramatically reduced its revenue and earnings projections for the remainder of the 2005 fiscal year. (SAC ¶ 32.) On July 21, 2005, one day following the re-rating of GTA:SA, Take-Two’s stock dropped 4.9% on trading volume that was five times the average. (SAC ¶ 177.) Various local, state, federal, and foreign governmental entities announced investigations into the rating and sale of GTA:SA in the weeks and months that followed. (SAC ¶¶ 178-83.) The price of Take-Two stock dropped precipitously shortly after the announcements of two of these investigations. (SAC ¶¶ 323-24.) Throughout the Class Period, Take-Two issued various public statements asserting that it complied with the ESRB’s rating rules and requirements. (SAC ¶¶ 185, 222, 227, 232, 233.) Lead Plaintiffs assert that these public statements were false and misleading because Take-Two had violated the ESRB’s rules by failing to divulge the presence of the wrapped Sex Minigame in GTA:SA’s code. (SAC ¶¶ 235, 261, 273.) Lead Plaintiffs also aver that Defendants knew these statements to be false (SAC ¶¶ 235, 261, 273), in part because of the allegedly clear requirements of the ESRB submission process, but also because of certain facts about the market for Take-Two’s products. In particular, the fan base for the Grand Theft Auto video game series includes knowledgeable computer programmers who routinely engage in the development of mods. (SAC ¶ 145.) Moreover, Rockstar’s official webpage for GTA:SA lists a number of websites that prominently feature mods and expressly refers to such sites as sources of mods. (SAC ¶ 148.) Accordingly, Lead Plaintiffs aver that Defendants knew and intended that the Sex Minigame would become widely accessible, despite its wrapping. (SAC ¶¶ 144, 166; see also SAC ¶ 159.) 2. The Options Backdating Fraud From 1997 through 2005, Take-Two issued stock options to certain of it officers and directors. (SAC ¶ 70.) The Company made these stock-option grants pursuant to two Stock Option Plans, which each provided that the exercise price at which shares of Take-Two common stock could be purchased would not be less than 100% of the fair market value of Take-Two shares on the grant date. (SAC ¶¶ 62-64.) In its annual reports to the Securities and Exchange Commission (the “SEC”) during the Class Period, Take-Two stated that it accounted for these stock-option grants in accordance with Accounting Principles Board Opinion No. 25 (“APB 25”). (SAC ¶ 66.) That Opinion requires a company to record a compensation cost when an option is accorded an exercise price below the market value of the shares on the grant date. (SAC ¶ 108.) Despite these public representations, during the Class Period “the dates of stock option grants to insiders at Take-Two were routinely manipulated to fall on days with the lowest stock prices.” (SAC ¶ 71.) A special committee of Take-Two’s board of directors (the “SC”) concluded in a report published on January 22, 2007, that defendant Brant had controlled the company’s options-granting process and had engaged in a pattern of options backdating between April 1997 and August 2003. (SAC ¶ 84.) On February 14, 2007, the Manhattan District Attorney’s Office announced that Brant had pleaded guilty to falsifying Take-Two’s business records in furtherance of widespread options backdating. (SAC ¶ 85.) On that same date, the SEC announced that it had filed and settled civil charges against Brant for granting undisclosed, “in the money” stock options to himself and to other Take-Two officers and employees. (SAC ¶ 88.) The beneficiaries of Take-Two’s pattern of options backdating included not only Brant, but also defendants Eibeler, Flug, Grace, and Emmel. (SAC ¶¶ 77, 80.) On February 23, 2007, Take-Two announced that certain options issued to defendants Flug, Grace, and Emmel had been improperly dated, and that these individuals had entered into an agreement to repay improper stock-option compensation. (SAC ¶¶ 92, 95.) On February 28, 2007, Take-Two issued its Form 10-K for fiscal year 2006, which reported that although Brant was primarily responsible for Take-Two’s options backdating, certain past employees and past members of management had assisted him. (SAC ¶¶ 96-97.) The 2006 Form 10-K also stated that the Compensation Committee, which included defendants Flug, Grace, and Emmel, had abdicated its responsibilities in the options-granting process. (SAC ¶ 98.) According to Lead Plaintiffs, the existence of widespread options backdating at Take-Two rendered false and misleading various material statements made in Take-Two’s public disclosures during the Class Period. First, contrary to its public statements, Take-Two “did not grant employee stock options at 100% of the fair market value on the date of grant.” (SAC ¶¶ 192(a), 210(a), 234(a), 260(a), 272(a).) Second, Take-Two “did not account for employee stock options in compliance with APB 25” (SAC ¶¶ 192(b), 210(b), 234(b), 260(b), 272(b)) because it did not take compensation expenses for “in the money” options grants. (See SAC ¶¶ 108-10.) Third, “by reason of its improper accounting for employee stock options, [Take-Two] materially understated compensation expenses and materially overstated net income.” (SAC ¶¶ 192(c), 210(c), 234(c), 260(c), 272(c).) In fact, Take-Two’s earnings were overstated by 20% in fiscal year 2002, 11% in fiscal year 2003, and 5-6% in fiscal years 2004 and 2005. (SAC ¶ 99.) D. Legal Claims The SAC recites four counts of securities fraud: Count I of the SAC alleges that Defendants made materially misleading statements and omissions throughout the Class Period, thereby deceiving the investing public into purchasing shares of Take-Two common stock at inflated prices, in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder. (SAC ¶ 330-31.) Count I is premised upon the alleged misleading statements that underlie both the GTA:SA Fraud and the Options Backdating Fraud, as described in the preceding sections. (See SAC ¶¶ 336-42.) Count II asserts claims against defendants Brant, Eibeler, and Winters for control-person liability under Section 20(a) of the Exchange Act. (SAC ¶ 348.) According to Count II, these defendants influenced and controlled Take-Two in its perpetration of the GTA:SA Fraud and the Options Backdating Fraud. (SAC ¶ 349.) Count III advances control-person claims under Section 20(a) of the Exchange Act against defendants Take-Two, Donovan, and Houser. (SAC ¶ 353.) Count III alleges that these defendants influenced and controlled Rockstar in its involvement in the GTA:SA Fraud. (SAC ¶ 354.) Count IV avers that defendants Winters, Flug, and Grace violated Section 20A(a) of the Exchange Act by selling Take-Two common stock while in possession of material, adverse, non-public information regarding the GTA:SA Fraud. (SAC ¶¶ 358-60.) Defendants have moved, under Federal Rules of Civil Procedure 12(b)(6) and 9(b), and under the PSLRA, to dismiss all four counts of the SAC for failure to state a claim upon which relief can be granted. II. DISCUSSION In ruling upon a motion to dismiss an action for securities fraud, courts must accept the complaint’s allegations as true, Tellabs, Inc. v. Makor Issues & Rights, Ltd. — U.S.-, -, 127 S.Ct. 2499, 2509, 168 L.Ed.2d 179 (2007), and draw all reasonable inferences in the plaintiffs favor, Caiola v. Citibank, N.A., 295 F.3d 312, 321 (2d Cir.2002). In addition to the complaint and reasonable inferences drawn therefrom, courts “may consider any written instrument attached to the complaint, statements or documents incorporated into the complaint by reference, legally required public disclosure documents filed with the SEC, and documents possessed by or known to the plaintiff and upon which it relied in bringing the suit.” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007). Courts may also consider matters subject to judicial notice. Tellabs, 127 S.Ct. at 2509 (citation omitted). Under Rule 12(b)(6), the touchstone for adequate pleading is plausibility. Bell Atl. Corp. v. Twombly, — U.S.-,-, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007); see also ATSI Commc’ns, 493 F.3d at 98 & n. 2 (applying Twombly to securities fraud complaint). Thus, materials properly before the court must provide grounds for more than mere speculation or suspicion that a plaintiff is entitled to the requested relief. See Twombly, 127 S.Ct. at 1965 (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed.2004)). Instead, a plaintiff must “nudgef ][his] claims across the line from conceivable to plausible.” Twombly, 127 S.Ct. at 1974. In addition, securities fraud claims are subject to the heightened pleading standards set forth in Rule 9(b), which requires a plaintiff to “state with particularity the circumstances constituting fraud.... ” Fed.R.Civ.P. 9(b). In order to satisfy Rule 9(b), a securities fraud complaint premised upon material misstatements “must (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” ATSI Commc’ns, 493 F.3d at 99 (citing Novak v. Kasaks, 216 F.3d 300, 306 (2d Cir.2000)). Private securities fraud actions must also pass muster under the PSLRA. See 15 U.S.C. § 78u-4(b)(3)(A); ATSI Commc’ns, 493 F.3d at 99. In an action for money damages requiring proof of scienter, the PSLRA prescribes that “the complaint shall ... state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” Id. § 78u-4(b)(2). An inference is “strong” under the PSLRA only if “a reasonable person would deem [it] cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” Tellabs, 127 S.Ct. at 2510. The Court turns now to an assessment of the SAC’s legal claims in light of the pleading standards adumbrated above. A. Claims for Material Misrepresentations Under Section 10(b) and Rule 10b-5 In order to state a claim under Rule 10b-5(b) for material misrepresentations, “plaintiffs must allege that [the defendants] (1) made misstatements or omissions of material fact; (2) with scienter; (3) in connection with the purchase or sale of securities; (4) upon which plaintiffs relied; and (5) that plaintiffs’ reliance was the proximate cause of their injury.” Lentell v. Merrill Lynch & Co., 396 F.3d 161, 172 (2d Cir.2005) (internal quotation marks and citation omitted), cert. denied, 546 U.S. 935, 126 S.Ct. 421, 163 L.Ed.2d 321 (2005). Here, Count I avers that the defendants made a series of misstatements and omissions respecting: (1) the GTA:SA Fraud, and (2) the Options Backdating Fraud. In the sections that follow, the Court separately addresses the adequacy of Lead Plaintiffs’ pleading with respect to each fraud. 1. The GTA-.SA Fraud In their motions to dismiss, Defendants have attacked the sufficiency of Lead Plaintiffs’ allegations with respect to the GTA.SA Fraud on three grounds. First, Defendants contend that Lead Plaintiffs have failed to identify a false statement or misleading omission in Take-Two’s public disclosures concerning the company’s compliance with the ESRB’s rules in the rating of GTA:SA. Second, several defendants maintain that the SAC insufficiently attributes any alleged false statement to them individually. Third, Defendants argue that Lead Plaintiffs’ factual allegations do not give rise to a strong inference of scien-ter. For the reasons discussed below, the Court finds that the SAC adequately alleges a false statement in Take-Two’s 2004 and 2005 Forms 10-K, which is properly attributable to defendants Take-Two, Ei-beler, Winters, Emmel, Flug, and Grace. Nevertheless, the SAC fails to allege facts supporting a strong inference that any defendant acted with scienter. Thus, the Court dismisses the SAC’s Section 10(b) claims insofar as they are premised upon the GTA:SA Fraud. i. The SAC Adequately Alleges a False Statement and Misleading Omission in Take-Two’s 2004 and 2005 Forms 10-K In order to state a claim under Rule 10b-5(b), plaintiffs must specifically identify a false statement or misleading omission. See, e.g., ATSI Commc’ns, 493 F.3d at 99; Lentell, 396 F.3d at 172. Here, Lead Plaintiffs have identified two allegedly false statements that appear in several public disclosures made by Take-Two: (1) “We label and market our products in strict accordance with [ESRB] principles and guidelines” (SAC ¶¶232, 258); and (2) “We believe that we comply with [the ESRB’s] rating systems and properly display the ratings and content descriptions received for our titles” (SAC ¶¶ 215, 222, 227, 233, 240, 247, 252, 259). Additionally, Lead Plaintiffs contend that Take-Two’s various pronouncements concerning the company’s compliance with the ESRB’s rules, which included, inter alia, these two allegedly false statements, were rendered misleading by Defendants’ failure to disclose that the Sex Minigame was intentionally wrapped in GTA:SA’s code. (SAC ¶¶ 235, 261,273.) The veracity of Take-Two’s statements concerning its compliance with the ESRB’s rating requirements depends in part on the content of those requirements. Here, Lead Plaintiffs allege — and there seems to be little dispute — that Take-Two submitted GTA:SA to the ESRB for rating without disclosing the presence of the Sex Minigame in fully rendered, though wrapped, form. (SAC ¶ 143.) Lead Plaintiffs also aver that the discovery and subsequent widespread dissemination of the Sex Minigame was inevitable because of the prevalence of modding and the encouragement of that practice by Take-Two and Rockstar. (SAC ¶¶ 144-67.) Under these circumstances, Lead Plaintiffs argue, the defendants clearly violated the ESRB’s rating rules. (See, e.g., SAC ¶ 301.) Defendants respond that the ESRB’s rules, as codified at the time GTA:SA was submitted for rating, did not require disclosure of wrapped game content not meant to be seen or experienced by consumers. (Take-Two GTA:SA Mot. Dismiss 5-6, 12-13.) Thus, Defendants conclude, Take-Two’s assertions that it complied with the ESRB’s rating systems were literally true and cannot give rise to liability under the securities laws. (Take-Two GTA:SA Mot. Dismiss 13.) When read in the light most favorable to Lead Plaintiffs, the SAC alleges that the ESRB’s rules required the disclosure of the Sex Minigame. According to the SAC, the ESRB obliges video game companies to submit all “pertinent content” for rating, including “the most extreme content of the final product — in terms of relevant rating criteria such as violence, language, sexuality, gambling, and alcohol, tobacco, and drug reference or use.” (SAC ¶¶ 131-32.) The SAC sufficiently alleges that the Sex Minigame portrayed graphic sexual content. (See, e.g., SAC ¶ 23.) The SAC also avers that an ESRB official identified the Sex Minigame as “undisclosed and highly pertinent content” at the time that the ESRB announced its decision to re-rate GTA:SA on July 20, 2005. (Take-Two GTA:SA Mot. Dismiss, Declaration of Stephen Chahn Lee (“Lee Decl.”) Ex. 8; SAC ¶ 176.) Therefore, Lead Plaintiffs’ averments support an inference that Take-Two violated the ESRB’s rules by not divulging to the ESRB the presence of pertinent sexual content, i.e., the Sex Mini-game, in GTA:SA. (See, e.g., SAC ¶ 301.) Of course, the Court need not draw this inference insofar as it is contradicted by documents properly considered on Defendants’ motion to dismiss. In re Yukos Oil Co. Sec. Litig., 04 Cv. 5243(WHP), 2006 WL 3026024, at *12 (S.D.N.Y. Oct. 25, 2006) (citations omitted); In re Aegon N.V. Sec. Litig., 03 Cv. 0603(RWS), 2004 WL 1415973, at *5 (S.D.N.Y. June 23, 2004). According to a complaint filed by the Federal Trade Commission (“FTC”) against Take-Two (the “FTC Complaint”), at the time that GTA:SA was rated, the ESRB’s published requirements mandated that game companies disclose relevant content resulting from the use of “cheat codes” or the unlocking of virtual “Easter eggs” (i.e., messages, graphics, sound effects, features, or actions that are enabled when the user inputs a set of commands on a game console or keyboard). The ESRB’s published requirements did not state that relevant content included ... content in the game code that was inaccessible or unplayable without modifying the code. (Take-Two GTA:SA Mot. Dismiss, Lee Decl. Ex. 1, FTC Compl. ¶ 10.) In expressly directing game companies to submit for rating content revealed through the use of “cheat codes” and “Easter eggs,” but not addressing wrapped content, such as the Sex Minigame, the ESRB’s rules may, impliedly, have exempted wrapped content from rating scrutiny. See, e.g., VKK Corp. v. Nat’l Football League, 244 F.3d 114, 130 (2d Cir. 2001) (discussing principle of expressio un-ius est exclusio alterius, i.e., that mention of one item implies exclusion of other, related item). Such an inference is supported by the ESRB’s press release concerning the re-rating of GTA:SA, in which the ESRB stated, “[g]oing forward, the ESRB will now require all game publishers to submit any pertinent content shipped in final product even if it is not intended to ever be accessed during game play or remove it from the final disc.” (Lee Decl. Ex. 8.) This statement suggests that the ESRB did not require video game companies to present wrapped content for rating at the time that GTA:SA was submitted, but only instituted that policy in response to the scandal caused by GTA:SA. Thus, the record properly before the Court provides grounds to doubt Lead Plaintiffs’ aver-ments that the ESRB’s rules required disclosure of the Sex Minigame. These grounds for doubt, however, do not so “contradict” Lead Plaintiffs’ aver-ments and proposed inferences as to convince the Court to disregard them. Cf. VTech Holdings, Ltd. v. Pricewaterhouse Coopers LLP, 348 F.Supp.2d 255, 263 (S.D.N.Y.2004) (holding that existence of written contract did not necessarily contradict plaintiffs allegation of oral contract, and thus, refusing to discredit plaintiffs claim concerning oral contract). Here, there is no complete, unambiguous statement of the ESRB’s rules, properly on the record, which controverts Lead Plaintiffs’ allegations. Cf. In re Yukos Oil, 2006 WL 3026024, at *14 — *15 (determining that complaint failed to allege facts constituting violations of Russian tax rules where those rules were known to court); Chu v. Sabratek Corp., 100 F.Supp.2d 827, 835 (N.D.Ill. 2000) (holding that complaint failed to allege facts constituting violations of federal regulations where those regulations were known to court). Moreover, certain materials within the Court’s possession support, rather than contradict, Lead Plaintiffs’ averments. To wit, the ESRB’s statements concerning the “pertinence” of the Sex Minigame suggest that it believed Take-Two was required to disclose the Sex Minigame. In addition, the ESRB’s decision to re-rate GTA:SA itself implies that the ESRB had determined that the game was improperly rated in the first instance. Under these circumstances, Lead Plaintiffs have plausibly alleged that the ESRB’s rules required Take-Two to divulge the Sex Minigame to the ESRB. (See, e.g., SAC ¶ 301.) Therefore, insofar as Lead Plaintiffs’ claims are premised upon Take-Two’s assertion, “We label and market our products in strict accordance with [ESRB] principles and guidelines,” which appeared in Take-Two’s 2004 and 2005 Forms 10-K (SAC ¶¶232, 258), Lead Plaintiffs have adequately identified a specific, allegedly false statement in Take-Two’s public disclosures. Lead Plaintiffs identify a second allegedly false statement in Take-Two’s 2004 and 2005 Forms 10-K, couched in the terms of an opinion: “We believe that we comply with [the ESRB’s] rating systems and properly display the ratings and content descriptions received for our titles.” (SAC ¶¶ 215, 222, 227, 233, 240, 247, 252, 259.) A statement of opinion is actionable only “if the speaker does not genuinely and reasonably believe it or if it is without a basis in fact.” In re IBM Corp. Sec. Litig., 163 F.3d 102, 109 (2d Cir.1998). Thus, whereas the Court’s discussion of Take-Two’s asserted compliance with the ESRB’s rules trained on the veracity vel non of that assertion, the Court’s inquiry into the Company’s stated belief in its compliance with the ESRB’s rules focuses on the genuineness and reasonableness of that belief. As elaborated above, there was reason for Take-Two to believe that the ESRB’s rules did not require the disclosure of the Sex Minigame. In particular, the ESRB’s rules omitted reference to wrapped content, though such reference might naturally have been made alongside mention of “Easter eggs” and “cheat codes.” See, e.g., VKK Corp., 244 F.3d at 130 (internal citations omitted). Furthermore, some of the ESRB’s pronouncements suggest that the entity changed its policy to require the disclosure of wrapped content only in response to the GTA:SA scandal. {See, e.g., Lee Deck Ex. 8.) Under these circumstances, Take-Two’s professed belief in its compliance with the ESRB’s rules was not without a basis in fact. Moreover, for largely the same reasons discussed in the Court’s scienter analysis in Part II.A.l.iii, the SAC fails to allege sufficient facts to impugn the genuineness and reasonableness of Defendants’ belief in Take-Two’s compliance with the ESRB’s rules. As set forth in the FTC Complaint, “the ESRB’s published requirements did not state that relevant content included unused textures (‘skins’) in the game software or content in the game code that was inaccessible and unplayable without modifying the code.” (Lee Decl. Ex. 1, FTC Compl. ¶ 10.) As such, the ESRB’s published requirements were at the very least silent with respect to that issue. The SAC, however, fails to allege the existence of sources of information other than the ESRB’s published requirements from which Defendants might have inferred the content of the ESRB’s disclosure rules as they pertained to the Sex Minigame. Under these circumstances, Lead Plaintiffs have failed to aver adequately that the defendants were disingenuous or unreasonable in “believing” that Take-Two had complied with the ESRB’s rules. Thus, whether or not Take-Two’s non-disclosure of the Sex Minigame constituted a violation of the ESRB’s rules, Lead Plaintiffs have failed to allege an actionable misstatement or omission with respect to Take-Two’s stated belief in its compliance with the ESRB’s rules. In summary, Lead Plaintiffs have plausibly alleged a false statement in Take-Two’s 2004 and 2005 Forms 10-K, insofar as those disclosures assert, “We label and market our products in strict accordance with [ESRB] principles and guidelines.” (SAC ¶¶ 232, 258.) However, Lead Plaintiffs have failed to aver an actionable misleading statement or omission inasmuch as they rely upon Take-Two’s profession, “We believe that we comply with [the ESRB’s] rating systems and properly display the ratings and content descriptions received for our titles.” (SAC ¶¶ 215, 222, 227, 233, 240, 247, 252, 259.) ii. The Alleged Misleading Statement in Take-Two’s 2004 and 2005 Forms 10-K Is Attributable to Defendants Take-Two, Eibeler, Winters, Emmel, Flug, and Grace Having held that the SAC adequately alleges a materially misleading statement in Take-Two’s 2004 and 2005 Forms 10-K, the Court must now ascertain to whom the SAC adequately attributes that misleading statement. In re Refco, Inc. Sec. Litig., 503 F.Supp.2d 611, 641 (S.D.N.Y.2007) (“When fraud is alleged against multiple defendants, a plaintiff must set forth separately the acts complained of by each defendant.”) (internal quotation marks, alterations, and citation omitted); In re Global Crossing, Ltd. Sec. Litig., 322 F.Supp.2d 319, 330 (S.D.N.Y. 2004) (“[I]n cases brought under Rule 10b-5(b), defendants can only be held liable for statements that are publicly attributed to them.”) (citing Wright v. Ernst & Young, LLP, 152 F.3d 169 (2d Cir.1998)); see also ATSI Commc’ns, 493 F.3d at 99 (stating that securities fraud complaint must identify, inter alia, the alleged maker of a false statement). There is no dispute that the allegedly false statement in Take-Two’s 2004 and 2005 Forms 10-K, concerning the company’s compliance with the ESRB’s rules, is attributable to Take-Two. Furthermore, this allegedly false statement is attributable to defendants Eibeler, Winters, Emmel, Flug, and Grace, who, according to Lead Plaintiffs’ averments (SAC ¶¶ 229, 255), signed the company’s 2004 and 2005 Forms 10-K. See In re Marsh & Mclennan Cos. Sec. Litig., 501 F.Supp.2d 452, 479 (S.D.N.Y.2006). In addition, Lead Plaintiffs claim that Brant should be held liable for the alleged misrepresentation in Take-Two’s 2004 and 2005 Forms 10-K under the group pleading doctrine, and that Rockstar, Donovan, and Houser (collectively, the “Rockstar Defendants”) should be held liable under a limited exception for subsidiary liability. (Pis.’ Opp’n 71-73.) For the reasons that follow, the Court rejects these contentions and holds that the SAC has alleged insufficient facts attributing the alleged misstatement in Take-Two’s 2004 and 2005 Forms 10-K to defendants Brant, Rockstar, Donovan, and Houser. a. The Group Pleading Doctrine Does Not Apply to Brant The doctrine of group pleading establishes a limited exception to the general rule that a plaintiff must directly link individual defendants to particular alleged misstatements in order to state a claim under Section 10(b) and Rule 10b-5. See In re Refco, 503 F.Supp.2d at 641; Pension Comm, of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC., 446 F.Supp.2d 163, 180 (S.D.N.Y.2006) (citation omitted). Under the group pleading doctrine, a court may presume that certain group-published documents, including annual reports, are attributable to corporate insiders involved in the everyday affairs of the company. In re Marsh & Mclennan, 501 F.Supp.2d at 479 (internal quotation marks and citation omitted). “For statements to be attributable to [an individual defendant], the Complaint must allege that the statements were made at a time when the particular defendant held a high level position indicating that he was an insider, with direct involvement in day-to-day affairs, at the entity issuing the statement.” In re Alstom SA Sec. Litig., 406 F.Supp.2d 433, 449 (S.D.N.Y.2005). Here, the SAC contains some allegations concerning Brant’s high-level position at Take-Two (SAC ¶ 281), his knowledge of the Sex Minigame (SAC ¶ 307), and his control over Take-Two’s SEC filings (SAC ¶ 283). Nevertheless, the group pleading doctrine’s presumption of responsibility cannot apply to Brant because the SAC, taken as a whole, fails to allege that Brant possessed the requisite insider status at the time that Take-Two’s 2004 and 2005 Forms 10-K were issued. The SAC avers that Brant resigned from his position as Chairman and CEO of Take-Two in March 2004. (SAC ¶ 42.) The SAC also alleges that Brant entered into a consent decree with the SEC in June 2005, which, inter alia, barred him from serving as an officer or director of a public company during the ensuing five years. (SAC ¶ 42.) Furthermore, the SAC indicates that Brant held only the position of Vice President of Publishing from March 2004 until October 16, 2006. (SAC ¶ 42.) Take-Two’s SEC filings describe this position as “non-executive.” (Brant Mot. Dismiss, Declaration of Edward M. Spiro (“Spiro Decl.”) Ex. 3, at 6.) Thus, during the very period of time in which Take-Two issued the allegedly misleading statement in its 2004 and 2005 Forms 10-K, Brant occupied a non-executive position at the company, and was barred by consent decree from acting as an officer or director of any public company. According to the SAC, Brant’s mission as Vice President of Publishing was to develop Take-Two’s portfolio of proprietary brands, a task that required the maintenance of close working relationships with defendants Houser and Donovan. (SAC ¶ 304.) The SAC also alleges that defendant Houser voiced strong objections to the removal of the Sex Minigame from GTA:SA’s code in an e-mail, dated August 17, 2004, and addressed to Brant. (SAC ¶ 137.) This allegation gives rise to an inference that Brant was involved in the development of GTA:SA and, perhaps, in the decision to wrap the Sex Minigame in GTA:SA’s code. Nevertheless, this allegation provides little reason to conclude that Brant controlled Take-Two’s disclosures regarding the company’s compliance with the ESRB’s rules. Likewise, the SAC’s averment that Brant was the highest paid member of Take-Two’s management in 2004, despite his resignation from the Chairman and CEO positions (SAC ¶¶ 42, 306), sheds little light upon his specific job responsibilities, including his authority to influence and control Take-Two’s filings with the SEC. Given the position Brant occupied at the time Take-Two issued its 2004 and 2005 Forms 10-K, and in light of Lead Plaintiffs’ failure to allege specific facts concerning Brant’s actual authority to influence the Company’s public disclosures, the Court finds unreasonable the presumption that Brant was responsible for the content of Take-Two’s SEC filings. See In re Alstom SA, 406 F.Supp.2d at 467 & n. 31 (indicating that titles of Senior Vice President and Vice President of Finance did not, without more, indicate authority necessary to hold such individuals liable for corporation’s statements). The Court therefore declines to apply the group pleading doctrine to him. See Pension Comm, of the Univ. of Montreal Pension Plan, 446 F.Supp.2d at 180. As there is no other basis for attributing to Brant the alleged misstatement in Take-Two’s 2004 and 2005 Forms 10-K, that statement is not properly attributed to him. b. The Exception for Subsidiary Liability Does Not Apply to the Rockstar Defendants In certain narrow circumstances, a subsidiary and its senior officers may be held liable for misstatements appearing in the parent company’s public disclosures. For example, this Court held that a subsidiary may be found liable when the relevant statements by the parent company are “uniquely within the subsidiary’s knowledge and control.” In re Marsh & Mclen-nan, 501 F.Supp.2d at 480 (citation omitted). Under different circumstances, courts in this District have found that a subsidiary may be held liable for statements of its parent when the “subsidiary provides false or misleading financial information to a parent, knowing that the information will be communicated to investors.” In re Alstom, 406 F.Supp.2d at 464; see also In re LaBranche Sec. Litig., 405 F.Supp.2d 333, 351-52 (S.D.N.Y.2005); In re Kidder Peabody Sec. Litig., 10 F.Supp.2d 398, 407 (S.D.N.Y.1998). Here, the SAC avers that Rockstar develops video games for publication and sale by Take-Two, and that an entity affiliated with Rockstar created GTA:SA. (SAC ¶ 39.) The SAC also alleges that the Rockstar Defendants knew that the Sex Minigame should have been disclosed to the ESRB, and that Take-Two had misrepresented its compliance with the ESRB’s rules. (SAC ¶ 302.) On the basis of these allegations, Lead Plaintiffs argue that subsidiary liability applies to the Rockstar Defendants. (Pis. Opp’n 71-72.) The Court disagrees. Although Lead Plaintiffs allege that the Rockstar Defendants knew the content of Take-Two’s public disclosures concerning its compliance with the ESRB’s rules (SAC ¶ 302), the SAC avers no facts tending to show that the Rockstar Defendants had control over the information disclosed by Take-Two. Thus, the “knowledge and control” branch of subsidiary liability is inapposite. Cf. In re Marsh & Mclennan 501 F.Supp.2d at 480 (applying doctrine where senior management officials at subsidiary actually participated in drafting parent’s SEC filings and had control over the content of such filings). Moreover, the SAC is devoid of factual allegations showing that the purported false statements in Take-Two’s 2004 and 2005 Forms 10-K originated in previous intentional falsehoods propagated by the Rockstar Defendants. Therefore, the “propagation of knowing falsehoods” branch of subsidiary liability is also inapplicable in this case. Cf. In re Alstom, 406 F.Supp.2d at 464 (allowing subsidiary liability where subsidiary communicated misleading information to parent knowing that it would be incorporated in parent’s public statements). Under these circumstances, the Rockstar Defendants may not be held liable for the alleged misstatement in Take-Two’s 2004 and 2005 Forms 10-K. In sum, the SAC has averred sufficient facts to attribute responsibility for the alleged false statement in Take-Two’s 2004 and 2005 Forms 10-K to defendants Take-Two, Eibeler, Winters, Emmel, Flug, and Grace. However, the SAC insufficiently attributes responsibility to defendants Brant, Rockstar, Donovan, and Houser. iii. The SAC Fails to Allege Scienter with Respect to All Defendants To state a claim for a violation of Rule 10b-5, plaintiffs must aver particular facts giving rise to a strong inference that the defendants acted with the requisite scien-ter, i.e., with the “intent to deceive, manipulate or defraud.” Kalnit v. Eichler, 264 F.3d 131, 138 (2d Cir.2001) (internal quotation marks and citation omitted); see also 15 U.S.C. § 78u-4(b)(2) (setting forth PSLRA’s “strong inference” requirement). An inference of scienter may be predicated upon “facts (1) showing that the defendants had both motive and opportunity to commit the fraud or (2) constituting strong circumstantial evidence of conscious misbehavior or recklessness.” ATSI Commc’ns, 493 F.3d at 99 (citing Ganino v. Citizens Utils. Co., 228 F.3d 154, 168-69 (2d Cir. 2000)). That inference is “strong,” however, only if it is cogent and at least as plausible as nonculpable explanations for the defendant’s conduct. Tellabs, 127 S.Ct. at 2510. For the reasons that follow, the Court finds that the SAC fails to allege sufficient facts giving rise to an inference of scienter with respect to any defendant other than Winters. Moreover, with regard to defendant Winters, whatever inference of scienter may be drawn in Lead Plaintiffs’ favor is not “strong,” within the meaning of the PSLRA. Thus, the Court holds that Lead Plaintiffs have not adequately pleaded that any defendant acted with the requisite scienter. a. The SAC Inadequately Pleads Scienter With Respect to Brant, Houser, and Donovan Although the Court has already determined that the misstatements in Take-Two’s 2004 and 2005 Forms 10-K are not attributable to defendants Brant, Houser, and Donovan, see supra Part II.A.1.Ü, it nonetheless addresses the scienter allegations made against these defendants in order to inform the parties’ arguments concerning Lead Plaintiffs’ anticipated motion to amend the SAC. Lead Plaintiffs claim that they have pleaded scienter with respect to Brant, Houser, and Donovan by way of adequate “motive and opportunity” allegations, or, alternatively, through sufficient averments constituting strong circumstantial evidence of conscious misbehavior or recklessness. (Pis.’ Opp’n 65-70, 72-76.) Upon close inspection, however, Lead Plaintiffs’ allegations are far too general to give rise to an inference of scienter under either theory. (1) The SAC Insufficiently Alleges That Houser, Donovan, and Brant Possessed a Motive to Commit Fraud To allege motive, a complaint must identify “concrete benefits that could be realized by one or more of the false statements and wrongful disclosures alleged.” Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1130 (2d Cir.1994); see also Novak, 216 F.3d at 311 (indicating that pre-PSLRA case law applying “motive and opportunity” test should inform postPSLRA scienter inquiry). These concrete benefits must inure to particular defendants in a “personal way.” Novak, 216 F.3d at 307. Thus, “[mjotives that are generally possessed by most corporate directors and officers do not suffice.... ” Kalnit, 264 F.3d at 139. Here, Lead Plaintiffs aver that defendants Houser, Donovan, and Brant realized that GTA:SA would receive a rating of “AO” if the Sex Minigame was included as part of normal game play (SAC ¶¶ 133-38), as initially intended. These defendants were also aware that deletion of the Sex Minigame “would have required additional testing and delayed launch of the game.” (SAC ¶ 139.) Such additional testing entailed further costs (SAC ¶ 140), and any significant delay in the launch of the GTA:SA would have pushed the game’s release date into 2005, thereby severely curtailing revenues for 2004. (SAC ¶ 308.) Thus, the SAC posits that these defendants wrapped the Sex Minigame and fraudulently concealed that act in order to avoid the negative marketing consequences of an “AO” rating (SAC ¶ 130), evade the additional costs resulting from further testing, and ensure a release date during the 2004 fiscal year. (SAC ¶¶ 308-09.) Accepting as true this rendition of the pertinent facts, the Court nonetheless finds that Lead Plaintiffs have failed to allege that defendants Houser, Donovan, and Brant possessed a cognizable motive to commit fraud. The desire to improve a company’s year-end financial numbers is essentially identical to the “motive to maintain the appearance of corporate profitability,” which does not give rise to inference of scienter. Chill v. Gen. Elec. Co., 101 F.3d 263, 268 (2d Cir.1996). Because the SAC is devoid of additional allegations establishing a concrete, personal benefit to defendants Houser, Donovan, and Brant, Lead Plaintiffs have failed to allege that these defendants possessed a motive to commit fraud. (2) The SAC Alleges Insufficient Circumstantial Evidence of Knowledge or Recklessness With Respect to Brant, Houser, and Donovan A securities fraud plaintiff may also predicate an inference of scienter upon circumstantial evidence of conscious or reckless misbehavior, such as allegations that the defendants “knew facts or had access to information suggesting that their public statements were not accurate.” No-vak, 216 F.3d at 311; see also In re Carter-Wallace, Inc., Sec. Litig., 220 F.3d 36, 39 (2d Cir.2000) (plaintiffs may satisfy “conscious misbehavior” theory by alleging “conduct which is highly unreasonable and which represents an extreme departure from the standards of ordinary care to the extent that the danger was either known to the defendant or so obvious that the defendant must have been aware of it”) (internal quotation marks and citation omitted). Nevertheless, where, as here, a “motive is not apparent ..., the strength of the circumstantial allegations must be correspondingly greater.” Kalnit, 264 F.3d at 142 (internal quotation marks and citation omitted). In the instant ease, Lead Plaintiffs’ circumstantial scienter allegations rest upon three foundational allegations: First, defendants Brant, Houser, and Donovan knew that GTAKA’ s code contained the Sex Minigame, and that such content was properly rated “AO.” (SAC ¶¶ 133-35.) Second, these defendants knew and intended that the Sex Minigame would become widely available. (SAC ¶ 166.) Third, Brant, Houser, and Donovan knew that the ESRB’s rules required disclosure of the wrapped Sex Minigame. (SAC II301.) For the reasons that follow, however, the SAC contains insufficient factual allegations to support the last two of these aver-ments. Most importantly, though Lead Plaintiffs have plausibly alleged that the ESRB’s rules required disclosure of the Sex Minigame, Lead Plaintiffs have failed to advance sufficient averments tending to show that Brant, Houser, and Donovan knew that the ESRB mandated such disclosure. Lacking factual allegations showing that these defendants knew that the Sex Minigame should have been disclosed to the ESRB, the SAC has not alleged strong circumstantial evidence that defendants Brant, Houser, and Donovan engaged in knowing misconduct or were reckless. As an initial matter, the Court notes that Lead Plaintiffs have adequately alleged facts showing that defendants Brant, Houser, and Donovan knew that the wrapped Sex Minigame was present in GTA:SA’s code, and that the Sex Mini-game contained “AO” content. Specifically, the SAC quotes from various e-mails exchanged by Brant, Houser, and Donovan in August 2004, which discussed the Sex Minigame and the ESRB’s rating process. (SAC ¶¶ 133 — 42.) Nevertheless, the SAC fails to allege sufficient facts to support an inference that defendants Brant, Houser, and Donovan knew the discovery of the Sex Minigame was inevitable. When read in the light most generous to Lead Plaintiffs, the SAC’s factual allegations at most give rise to the inference that defendants Brant, Houser, and Donovan knew that modders would search for hidden content in GTA:SA. For example, the SAC alleges that these defendants were aware that modding is a “mainstream phenomenon” (SAC ¶¶ 145-46) encouraged by the GTA:SA official website (SAC ¶¶ 147-49). The SAC also avers that modders would likely devote thousands of hours to locating unlockable activities and features in GTA:SA’s code (SAC ¶ 156), and that a knowledgeable programmer could easily unlock such activities or features once they were located (SAC ¶ 157). These allegations, however, do not beget the pertinent inference that Brant, Houser, and Donovan knew that modders would actually locate the Sex Minigame. Lead Plaintiffs’ expert, Independent Security Evaluators LLC (“ISE”), also fails to support this inference. Indeed, although ISE opined that the discovery of the Sex Minigame was inevitable (SAC ¶ 159), ISE also stated that it could not determine how difficult it would be for a modder to locate the Sex Minigame, because it lacked authorization to disassemble GTA:SA’s code (SAC ¶ 152). Moreover, ISE expressly indicated that it could not speak to Defendants’ state of mind. (SAC ¶ 160.) Under these circumstances, ISE’s opinion does not support an inference that Brant, Houser, and Donovan knew that the discovery of the Sex Mini-game was inevitable. Lead Plaintiffs’ reliance on the rapid discovery of the Sex Minigame (SAC ¶ 162) is similarly misplaced. This allegation, though marginally relevant, cf. In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 72 (2d Cir.2001) (indicating that courts may rely on pre-class period data and post-class period data, as well as any other information that sheds light on relevant issues), bears the hallmarks of impermissible pleading of “fraud by hindsight,” No-vak, 216 F.3d at 309 (internal quotation marks and citation omitted). The appearance of the “Hot Coffee” mod shortly after the release of the PC version of GTA:SA says little about any individual defendant’s knowledge, at a date several months earlier, that this would occur. See Novak, 216 F.3d at 309 (“Corporate officials need not be clairvoyant; ... allegations that defendants should have anticipated future events and made certain disclosures earlier than they actually did do not suffice to make out a claim of securities fraud.”) (citations omitted). In light of the foregoing, Lead Plaintiffs have failed to allege sufficient facts showing that Brant, Houser, and Donovan knew that the discovery of the Sex Minigame was inevitable. Most importantly, Lead Plaintiffs have failed to allege adequate facts demonstrating that defendants Brant, Houser, and Donovan knew that the ESRB’s rules required disclosure of the wrapped Sex Mini-game. As the Court has already determined, see supra Part ILAl.i, the SAC plausibly alleges that the ESRB in fact mandated the disclosure of all pertinent game content, including wrapped content. Nonetheless, the Court’s prior analysis demonstrates that there was, at the very least, significant ambiguity in the ESRB’s treatment of wrapped content. For instance, the ESRB’s rules did not make reference to wrapped content, although the ESRB required that other forms of hidden content, such as content unlocked through the use of cheat codes and “Easter eggs,” be disclosed. (Lee Decl. Ex. 1, FTC Compl. ¶ 10.) Moreover, the ESRB announced a new policy expressly requiring the disclosure of wrapped content only after the re-rating of GTA:SA. (Lee Deck Ex. 8.) Given the evident ambiguity in the ESRB’s rules, Lead Plaintiffs’ mere allegation that Take-Two violated the ESRB’s rules does not give rise to a strong inference that Brant, Houser, and Donovan knew that Take-Two had violated those rules. See, e.g., See In re Yukos Oil, 2006 WL 3026024, at *20 (alleged violation of Russian law did not support inference of scienter where defendant’s interpretation of such law was reasonable in light of prevailing case law); In re Bristol-Myers Squibb Sec. Litig., 312 F.Supp.2d 549, 567 (S.D.N.Y.200