Full opinion text
ORDER (1) GRANTING IN PART AND DENYING IN PART NOMINAL DEFENDANT COUNTRYWIDE’S MOTION TO DISMISS; (2) GRANTING IN PART AND DENYING IN PART INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS; AND (3) GRANTING DEFENDANT DOUGHERTY’S MOTION TO DISMISS. MARIANA R. PFAELZER, District Judge. Before the Court are several motions to dismiss Plaintiffs’ derivative claims in In re Countrywide Financial Corp. Derivative Litigation (“Arkansas Teachers”). Nominal Defendant Countrywide Financial Corporation (“Countrywide” or “Company”) moves to dismiss on the grounds that Plaintiffs’ have not made pre-suit demand or adequately pled that demand is excused in this case. Individual Defendants move to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), 9(b), 8(a)(2), and the provisions of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. §§ 78u-4(b)(1), 78u-4(b)(2), 78u-5(c)(l)(a), § 78u-5(c)(2)(a). I. BACKGROUND A complete procedural background of this and other related proceedings is provided in the Court’s March 28, 2008 Order. Relevant here, Plaintiffs filed a Consolidated Complaint on February 15, 2008 alleging both derivative and class action claims. See Consolidated Shareholder Derivative Action and Class Action Complaint for Breaches of Fiduciary Duty, Aiding and Abetting Breaches of Fiduciary Duty, and Violations of the California and Federal Securities Laws (“Compl.”). On March 28, this Court stayed the class action claims in favor of similar proceedings in the Delaware Court of Chancery. The instant motions seek to dismiss the nine remaining derivative claims. A. Plaintiffs Plaintiffs here are Arkansas Teacher Retirement System (“ATRS”), Fire & Police Pension Association of Colorado (“FPPAC”), Public Employees Retirement System of Mississippi (“MS PERS”), and Central Laborers Pension Fund (“CLPF”). B. Nominal Defendant Nominal Defendant Countrywide is a Delaware corporation with its principal executive offices in Calabasas, California. Id. ¶ 53. C. Individual Defendants The Individual Defendants consist of both director and non-director defendants. The Complaint names as director Defendants, Angelo R. Mozilo (Chairman of the Board since 1999 and Chief Executive Officer since 1998), David Sambol (Director since Sept. 2007, President and Chief Operating Officer, and various other executive positions), Jeffrey M Cunningham (Director since 1998), Robert J. Donato (Director since 1993), Martin R. Melone (Director since 2003), Robert T. Parry (Director since 2004), Oscar P. Robertson (Director since 2000), Keith P. Russell (Director since 2003), Harley W. Snyder (Director since 1991), Henry G. Cisneros (Director from 2001-0ct.2007), and Michael E. Dougherty (Director from 1998-Jun. 2007). Id. ¶¶ 54-64. The Complaint names as non-director Defendants Stanford M. Kurland (President and Chief Operating Officer until 2006, and various other executive positions), Carlos M. Garcia (several executive positions and former Chief Financial Officer), and Eric P. Sieracki (Chief Financial Officer and Executive Managing Director): Id. ¶¶ 66-69. D. Countrywide’s Business Countrywide originates home loans, retaining a portion of these loans on its balance sheet as investments, and securi-tizing and selling the remainder. Id. ¶ 101. The Company services the loans that it produces. Id. ¶ 102. It produces both “conforming loans” which can be sold to government-sponsored entities Fannie Mae and Freddie Mac, and non-conforming ones, which can be sold only to private investors. Id. ¶¶ 106-108. Countrywide finances its operations in large part with capital from private parties — including the secondary mortgage market, where investors purchase mortgages and “mortgage-backed securities.” Id. ¶¶ 103-104. In addition to retaining some in its portfolio for investment purposes, the Company holds “retained interests” — or residual interests in some mortgage-backed securities that have been passed along to investors. Id. ¶208. According to the Complaint, retained interest holders receive interest payments from a “real estate mortgage investment conduit” only after all required regular interest has been paid to investors in higher priority securities tranches. Id. ¶ 129. Finally, the Company maintains a catalog of “loans held for sale” composed of mortgages that will ultimately be sold to third party investors, and “mortgage servicing rights” on the mortgages that it originates. Id. ¶ 210. Countrywide must consistently produce quality mortgages, or at least mortgages “at levels that meet or exceed secondary mortgage market standards” to ensure that the secondary market will continue to provide capital to finance its operations. Id. ¶¶ 104-105. Moreover, if the Company originates and sells loans that are not in compliance with its own underwriting policies, in violation of the representations or warranties made to purchasers, those purchasers can require Countrywide to repurchase them. Id. ¶ 106. E. Plaintiffs’ Allegations 1. Increased Origination of Non-conforming Loans Plaintiffs allege that from 2002-2006, the Company steadily increased the origination of “non-conforming” loans, which are inherently less safe than conforming loans because they cannot be sold to government-sponsored entities. Id. ¶¶ 106-108. Countrywide also “strategically” shifted away from traditional fixed-rate home loans to borrowers with “prime” credit scores, in favor of a variety of non-traditional higher-risk loans. Id. ¶ 109. The Complaint identifies several categories of these non-traditional loans: (1) adjustable rate mortgages (ARMs), which typically provided a low “teaser” interest rate during an introductory period, followed by higher rates; (2) interest-only mortgages, where require the borrower to pay only the interest during an introductory period; (3) “pay option” ARMs, which provide the borrower the option to pay a “minimum” monthly payment less than the interest accruing that month, and add any remaining interest to loan principal; (4) stated income loans, which rely on the borrower’s representations of an ability to pay, and require little or no supporting documentation from the borrower; and (5) home equity lines of credit (“HELOCs”), which are second loans secured by the difference between the value of a home and the amount due on the first mortgage. Id. ¶110. Plaintiffs allege that these types of loans are considerably more risky than traditional conforming loans. Id. ¶ 119. For instance, with stated income loans, the borrower may overstate his income, resulting in a loan that is fundamentally at risk of default if the borrower’s income is inadequate. Id. ¶ 110. In addition, HELOCs become a problem if housing prices decline: the HELOC lender’s security interest decreases because the first lien-holder has priority to be paid in full the amount of the first mortgage. At the extreme, the HELOC becomes completely unsecured. Id. Plaintiffs contend that this can occur with a mere 10-20% reduction in the value of a home. Id. Pay option ARMs raise other concerns. With pay option ARMs, a borrower’s failure to pay at least the minimum monthly interest results in “negative amortization,” whereby any interest that remains unpaid is added to the amount of principal outstanding on the loan. Id. ¶ 121. While accumulated negative amortization is reported as deferred interest earnings on the Company’s income statement or with the loan on the balance sheet, it is particularly problematic where borrowers chose to skip payments out of necessity, as those borrowers very likely have an increased risk of default. Id. ¶ 122. 2. Origination of Loans in Violation of the Company’s Underwriting Standards Significantly, according to Plaintiffs, Countrywide did not simply originate loans that were inherently risky. Id. ¶ 116. Rather, the Company exacerbated the risky nature of these loans by offering them to borrowers without requiring them to document their income. Id. For instance, the vast majority (78% in 2004, and 91% in 2006) of Countrywide’s pay option ARMs fell into the “low documentation” category. Id. ¶¶ 12, 116-121. Without assurances of the credit-worthiness of its borrowers, Countrywide could not reasonably know how likely it was that deferred interest on pay option ARMs would ultimately be repaid. Id. ¶ 122. According to Plaintiffs, HELOCs, too, were provided to borrowers who were less credit-worthy than that instrument required. While HELOCs were often labeled as “prime” products, one observer in late 2007 commented that Countrywide’s HELOCs were performing on par with a competitor’s sub-prime loans. See id. ¶¶ 250-251 (citing analyst who observed that Countrywide’s “definition of ‘prime’ was [apparently] loosened in the recent boom”). Plaintiffs allege that in practice, the origination of these “riskier” loans often violated the Company’s own loan underwriting policies. The Complaint offers the accounts of numerous confidential witnesses, who are mostly former employees such as underwriters and loan officers, relating how Countrywide departed from its strict underwriting standards by generating large numbers of loans without proper regard for their quality. See ¶¶ 147-158 (noting standards were also loosened with respect to loans labeled and marketed as “prime”). The Complaint also provides the accounts of several former vice presidents at Countrywide who similarly attest that Countrywide was simply pushing through loans without adherence to underwriting standards. Id. ¶¶ 148-152. 3. Failure to Effectively Hedge and Adjust Loan Loss Allowance and Impairment Charges Despite the changes to Countrywide’s loan portfolio that resulted from the combination of increasingly risky loans offered by Countrywide and increasingly lax adherence to loan underwriting standards, Plaintiffs contend that Individual Defendants improperly maintained the Company’s “loan loss allowances” for loans held for investment at depressed levels from 2003-2006. Id. ¶¶ 16, 194. Loan loss allowances are set aside to absorb the estimated amount of probable losses in the loan portfolio. Id. ¶ 194. Viewed as a percentage of the overall loan portfolio, Plaintiffs observe, the allowances in 2003-2006 were less than half their 2002 levels. Id. (noting reserves of 0.69% in 2002, but an average reserve of just over 0.30% in the following four years). By maintaining such low reserves, Plaintiffs allege, Defendants improperly boosted profits and deceived the market as to the true risk of their portfolio. They point to the sudden rise in loan loss allowances from 0.33% in 2006 to 1.84% by the end of 2007 as evidence that the allowances for this whole period had been inadequate. Similarly, it is alleged that proper Board oversight would have led to increased impairment charges on residual interests held by the Company with respect to pay option ARMs that were securitized. Id. ¶ 204. Plaintiffs also contend that the Company’s “hedges” for retained interests and Mortgage Servicing Rights (“MSRs”) — devices which serve to mitigate negative valuation changes in these various interests— were ineffective. Id. ¶¶ 210-212. They also contend that the valuations of these interests were based upon improper assumptions, which caused them “to fluctuate wildly without any basis.” Id. ¶ 230. Plaintiffs also provide the testimony of a Vice President-level confidential witness who reports that the hedge he worked on failed to meet the requirements of “FAS 133,” a standard metric for hedging activities, and furthermore, that he was asked by Countrywide management to improperly remove bad loans retroactively from the portfolio. Id. ¶¶ 221-229. F. Duties of Individual Defendants on Board Committees The Board’s Committees were tasked with the duties to actively monitor and control all of these aspects of the Company’s business. Id. ¶ 26. The Audit and Ethics Committee was obliged to oversee the integrity of financial statements and reports and discuss, manage, and monitor the Company’s exposure to risk. Id. ¶¶ 79-81. The Credit Committee was responsible for overseeing credit objectives and policies, including review of the Company’s credit exposures and loan loss allowances. Id. ¶¶ 86-87. The Finance Committee was required to assess the Company’s access to liquidity, both long and short term, and review “equity repurchases.” Id. ¶ ¶ 92, 29. The Compensation Committee was responsible for the overall compensation structure for employees, and executive compensation. Id. ¶¶29, 82-85. Lastly, the Operations and Public Policy Committee was charged with oversight of “operational risk” and other matters relating to responsible lending. Id. ¶ 95. The Complaint sets forth the membership of director Defendants on these committees as well as the frequency of committee meetings. See, e.g., id. ¶ 77. Plaintiffs also cite other examples indicating that Individual Defendants were aware of their duties to monitor the Company’s practices, including (1) public statements made in 2007 that the Board “has always been actively engaged” in overseeing business strategy; and (2) signatures by director Defendants and Defendant Sieracki on the Company’s Form 10-K filings with the United States Securities and Exchange Commission (“SEC”), id. ¶¶ 132-135. G. Red Flags Throughout the Complaint, Plaintiffs identify numerous “red flags” that would have invariably provided warnings to the Individual Defendants, including those on the relevant Board Committees above, to increasingly serious problems with loans generated by the Company: (1) the shift to riskier loan products; (2) the rising delinquencies in pay-option ARMs and HELOCs, id. ¶ 198; (3) sharply rising rates of negative amortization and associated “phantom earnings,” id. ¶¶ 121, 139; (4) the “dramatic increase in retained interests held on Countrywide’s balance sheet,” id. ¶ 130; (5) the fact that the Company’s valuation of MSRs, retained interests and loans held for sale “fluetuate[d] wildly without any basis,” id. ¶ 230; (6) the pitfalls of other mortgage lenders, id. ¶ 299; and (7) industry publications about nontraditional loans, including those that were critical of low-documentation pay option ARMs, id. ¶ 139. H. Defendants’ False and Misleading Statements In view of Countrywide’s loan origination practices and failure to monitor, Plaintiffs allege that Individual Defendants caused Countrywide to issue false and misleading statements. These statements reassured investors as to the quality of loans originated by Countrywide and the procedures and policies for underwriting and managing risk. Plaintiffs contend that these statements were misleading because they failed to inform the public about the true nature of the loans originated by the Company and the risk to the Company’s long term prospects. Plaintiffs identify several different categories of public statements: 1. Press Releases and Conference Calls Plaintiffs point to allegedly misleading press releases, including releases as early as 1Q04 and 3Q04, in which Mozilo stressed “the strength and flexibility of [Countrywide’s] business model and risk management strategies.” Id. ¶¶ 276-277. Similarly, at the end of 3Q05, Countrywide announced that it was “well-positioned with a ... high quality credit profile in our loan portfolio.” Id. ¶ 279. Similarly, with its 1 Q06 results, Countrywide touted its “time-tested business model” in this “challenging environment.” Id. ¶ 278. Plaintiffs also provide excerpts of conference calls with analysts. For example, in April, 2004, Mozilo stated that “Countrywide has ... very strong discipline in the origination of sub-prime loans” and specifically assured an analyst that “[i]t is well over 720 FICO average on HELOCs” so as to be mostly prime or better. Id. ¶¶ 281-282. Similarly, Mozilo in April, 2005 characterized pay option ARMs as a “very good product” that is a “time tested,” and in May, 2005 Sambol explained that risks were mitigated in those products by “different underwriting criteria ... such as maybe higher credit scores or lower loan to value ratios.” Id. ¶¶ 284-285. 2. SEC Filings The Complaint also references filings with the SEC where Countrywide made similar disclosures. For example, the Form 10-Q for 1Q04 stated that the Company “only retain[ed] high credit quality mortgages in [its] loan portfolio” and the Form 10-K for the 2004 fiscal year stated that the Company “actively manage[d] credit risk” and described in detail underwriting guidelines and loan origination standards. Id. ¶¶ 287-289. See also ¶ 295 (identifying similar statement that the Company manages credit risk related to pay option ARMs, and describing underwriting requirements). In the Company’s Form 10-Q filed on November 8, 2005, it indicated that its “pay-option loan portfolio has a very high initial loan quality, with original average credit rating (expressed in terms of FICO scores) of 720” and that it originated pay-option loans to borrowers who can qualify at the loan’s fully-indexed interest rates. Id. ¶ 293. See also ¶ 293 (citing statement repeated in Form 10-Q filed on May 9, 2006). The director Defendants and Sieracki represented, in the Company’s Form 10-K for 2006, that they were “actively monitoring the delinquency and default experience of ... homogenous pools by considering current economic and market conditions” and that “the senior management [was] actively involved in the review and approval of our allowance for loan losses.” Id. ¶ 204. 3. Proxy Statements The Complaint alleges that proxy statements for the annual shareholder’s meetings in 2005, 2006, and 2007 were likewise materially false and misleading. The 2005 statement, for example, filed April 29, 2005, sought a vote in favor of re-election of Mozilo, Kurland, Robertson and Russell to the Board as well as approval of an amended Annual Incentive Compensation Plan. Id. ¶ 307. It did not, however, disclose that reported figures were boosted by reliance on risky products to inflate short-term performance. Id. ¶¶ 307-309. Had shareholders known of these “undisclosed fundamental changes to the Company’s business model,” Plaintiffs contend, the relevant Defendants would not have been re-elected. Id. ¶¶ 308-309. The 2006 and 2007 statements were similarly misleading, and, in addition, contained misleading statements about the effectiveness of Countrywide’s compensation policies and financial performance. Id. ¶¶ 310-318. 4. 2007 Statements About Countrywide’s Position Plaintiffs also allege that Individual Defendants continued to make misleading statements to the public in 2007, at which point the demise of many competing lenders was largely evident. For example, in March 2007 Mozilo stated that Countrywide was “more diversified” than competing subprime lenders, and that only 7% of the Company’s originations, and only “.2 percent of [Countrywide’s] assets” were in the sub-prime category. Id ¶ 299. Mozilo went on to state that subprime issues “will be great for Countrywide at the end of the day because all the irrational competitors will be gone.” Id. ¶¶ 299-301. On August 23, 2007, Mozilo reassured the market that “there is no more chance for bankruptcy [then] than [there] was six months ago, two years ago, when the stock was $45 per share” and that “Countrywide’s future is going to be great.” Id. ¶ 303. I. Insider Selling Plaintiffs allege that Individual Defendants enriched themselves by selling vast quantities of stock in “illegal, insider sales.” Id. ¶ 29. Sales in the Relevant Period were made at inflated prices because of the “a whole host of associated false and misleading statements” that deceived investors as to the true financial condition of Countrywide and the nature of the loans that were being originated by Countrywide. Id. ¶ 30. In the aggregate, these sales were substantial: Individual Defendants realized proceeds of about $850 million between 2004 and the end of 2007, with Mozilo selling some $474 million worth of shares. Id. ¶ 322. During this period, Plaintiffs place particular emphasis on a $2.4 billion stock repurchase program in which Countrywide repurchased several million shares in 4Q06 and 2Q07. Id. ¶¶ 325-326. They argue that it is suspicious that several directors and officers sold some $150 million of their personal shares during these repurchase periods. The Complaint also alleges that Mozilo frequently revised his “passive” Rule 10b5-l stock sale plan to sell additional shares each month during the repurchase periods. Id. ¶¶ 331-332. It seeks to tie the sales of other directors and officers to those of Mozilo, alleging for example, that other insiders’ sales doubled in November 2006 as compared to October 2006, and after Mozilo’s February amendment to his 10b5-l plan, “[insiders] sold more the week of February 2 [2007] through February 9 than they had the previous two months.” Id. ¶¶ 339-340. J. Countrywide’s Significant Collapse in Value The Complaint describes a drastic drop in common stock value, from $45 in February 2007 to less than $5 in January 2008, government investigations into lending practices and accounting, significant liquidity constraints that limit its ability to conduct business, and damage to goodwill and reputation. Id. ¶¶ 3, 231. Plaintiffs attribute the collapse in share value primarily to “a number of shocking disclosures” in July 2007 and later when the Company was forced to disclose (1) that it took large loan loss provisions to offset delinquencies in home equity lines of credit (“HELOCS”) and pay-option adjustable rate mortgages (“pay-option ARMs”); and (2) that the fair value of the Company’s mortgage servicing rights (“MSRs”) and retained interests dropped considerably, and the losses could only be partially offset by the Company’s hedging. Id. ¶¶ 3-7. The Complaint asserts that these disclosures shocked investors both because of the magnitude of the “miscalculations” and because they reflected previous misrepresentations of the quality of the loans originated by Countrywide. Id. ¶ 5. On July 24, 2007, Countrywide reported second quarter earnings below its estimates, in large part because (1) Countrywide took $417 million of impairment charges on credit-sensitive retained interests (including a $388 million to its retained interest in the securitization of HELOCs); (2) Countrywide took a $293 million loan loss provision on its loans held for investment (including $181 million for HELOCs). Id. ¶¶ 241-244. Countrywide’s stock dropped 10% on that day to $30.50. Id. According to Plaintiffs, the July 24, 2007 disclosure was so surprising because it related principally to the Company’s prime loan portfolio. Id. ¶ 245. Plaintiffs allege, however, that until July 2007, Countrywide had misled investors that its HELOCs were prime loans, when in fact the risk associated with HELOCs was on par with other lenders’ subprime loans. Id. ¶ 245. Following these disclosures, “a steady flow of analyst and news reports ... suggested that Countrywide hid its true default risk of exposure” and changed analysts’ beliefs that Countrywide was poised to “outperform weaker competitors due [to] its limited (and well-managed) credit risk.” Id. ¶ 245. Analysts explained that “[management] made serious miscalculations (and possibly misrepresentations) about the quality of loans added to the bank,” id. ¶ 249, and that Countrywide’s “home equity securitiza-tions are performing roughly in line with [competitors’] sub-prime deals.” Id. ¶ 250. On August 9, 2007, Countrywide filed its quarterly report for 2Q07, confirming the reports from July 24, and also warning that Countrywide was facing liquidity issues. Id. ¶ 254. Credit rating agency Moody’s downgraded Countrywide on both August 2 and August 16, and on August 15, a Merrill Lynch analyst raised concerns that Countrywide could be forced into bankruptcy. Id. ¶¶ 253-254. On August 16, Countrywide “drew down” an $11.5 billion credit from its bank lines. Id. ¶ 254. Countrywide’s share price dropped over several days from $27.75 to $18.95. Finally, on August 22, 2007, Bank of America purchased $2 billion of preferred stock that pays a 7.25% interest coupon and is convertible at a strike price of $18 per share. K. Plaintiffs’ Claims Plaintiffs make nine derivative claims. Claims 1-3 assert that Individual Defendants breached their fiduciary duties, including their duties to act in good faith, loyalty, and with due care and diligence in the management of the Company; and that they committed corporate waste in awarding Mozilo’s compensation and instituting the stock repurchase. Claim 4 alleges insider trading against Mozilo, Kurland, Garcia, Sambol, Robertson, Dougherty, Snyder, Cisneros, Donato, Cunningham, Russell, and Sieracki pursuant to Cal. Corp.Code § 25402. Id. ¶¶ 506-511. Claim 5 asserts that the director Defendants aided and abetted the “insider trading” defendants in their breaches of fiduciary duties. Id. ¶¶ 512-516. Claims 6-9 allege violations of the federal securities laws, including § 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and SEC Rule 10b-5, for “participat[ing] in a scheme with the purpose and effect of defrauding Countrywide ... to purchase at least $2.4 billion in shares ... at an artificially inflated” price. Id. ¶¶ 517-528. II. DISCUSSION The Court begins with two observations that are relevant to the entire analysis. First, as the parties recognized at oral argument, the standard for stating a claim under Exchange Act § 10(b) and Rule 10b-5 overlaps considerably with the standard implicated in analyzing demand. Under the Private Securities Litigation Reform Act (“PSLRA”), the Court evaluates whether the facts pled give rise to a strong inference of scienter. See Dura Pharm. v. Broudo, 544 U.S. 336, 341-42, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005). Similarly, the Court applies a “scienter-based” standard in evaluating the Plaintiffs’ claim that demand is excused in this derivative case on a failure of oversight theory. See Desi-mone v. Barrows, 924 A.2d 908, 935 (Del. Ch.2007). Here, the highly repetitive briefing of the motions is an affirmation that the two issues are inextricably linked. Second, the Court is able to draw no support from the conclusory portions of the prolix and sprawling Complaint, as they cannot satisfy the various statutory and common law requirements at issue. However, in evaluating scienter, the Court notes that its job is “is not to scrutinize each allegation in isolation but to assess all the allegations holistically.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. -, 127 S.Ct. 2499, 2511, 168 L.Ed.2d 179 (2007). Thus, the Court proceeds by evaluating Defendants’ Motions to Dismiss for failure to meet the requisite pleading standards under the PSLRA and Fed.R.Civ.P. 12(b)(6), 9(b), and 8(a)(2). It then assesses Countrywide’s motion to dismiss for failure to make pre-suit demand. A. Exchange Act § 10(b) Count VI of the complaint pleads a violation of § 10(b) of the Exchange Act. A § 10(b) claim requires the following elements: (1) a material misrepresentation or omission; (2) scienter; (3) reliance; (4) economic loss; and (5) loss causation, which is “a causal connection between the material misrepresentation and the loss.” Dura Pharm. v. Broudo, 544 U.S. 336, 341-42, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005); 15 U.S.C. § 78u-4(b)(4). Together, the Individual Defendants’ and Defendant Dougherty’s Motions to Dismiss argue that Plaintiffs have failed to plead each of these elements. The Court addresses each in turn. 1. Scienter In order to survive a motion to dismiss, the Private Securities Litigation Reform Act requires that the complaint plead “with particularity facts giving rise to a strong inference” of scienter, a mental state that embraces the intent to deceive, manipulate, or defraud. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194 n. 12, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976); 15 U.S.C. § 78u-4(b)(2). At a minimum, the facts pleaded must provide strong circumstantial evidence of “deliberate recklessness,” and must “come closer to demonstrating intent, as opposed to mere motive and opportunity.” In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 974 (9th Cir.1999). Moreover, “all of the facts alleged, taken collectively” must give rise to an inference of scienter that is “more than merely plausible or reasonable — it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, 127 S.Ct. at 2504-05, 2509 (2007). a. Analysis Setting aside the conclusory and unsupported portions of the two hundred-page Complaint, Plaintiffs’ allegations create a cogent and compelling inference that the Individual Defendants misled the public with regard to the rigor of Countrywide’s loan origination process, the quality of its loans, and the Company’s financial situation — even as they realized that Countrywide had virtually abandoned its own loan underwriting practices. During the relevant period, Plaintiffs assert that Countrywide began to approve even more risky loans that departed significantly from its established underwriting guidelines. While this increased the volume of loans originated by Countrywide and inflated its market share, this strategy also drastically lowered the quality of the loans and retained interests that Countrywide held for investment, as well as the quality of the mortgage-backed securities it sold into the secondary market. Plaintiffs contend that these low quality mortgages, many of which were approved with low or no documentation from the borrower, exposed Countrywide to a vast amount of undisclosed risk because loan quality is essential to virtually every facet of Countrywide’s business operations. Plaintiffs further assert that the Individual Defendants, due to their roles as members of certain Committees, proceeded with actual knowledge of these problems, or at least deliberate recklessness. See, e.g., ¶¶ 13, 142. Here, the Court finds that Plaintiffs have successfully pleaded facts giving rise to a strong inference of scienter. 1. The Confidential Witnesses give rise to a strong inference that significant deviations from underwriting standards were widespread, and not isolated indiscretions by a few low level employees. Confidential witnesses may be probative of scienter where each of their accounts is “described in the complaint with sufficient particularity to support the probability that a person in the position occupied by the source would possess the information alleged.” In re Daou Systems, Inc., 411 F.3d 1006, 1015 (9th Cir.2005); accord Makor Issues & Rights, Ltd. v. Tellabs, Inc., 513 F.3d 702, 711-712 (7th Cir.2008) (Posner, J.), on remand from Tellabs, 127 S.Ct. 2499. Corroboration from multiple sources also supports an inference of scienter. Tellabs, 513 F.3d at 712. Here, the witnesses cited in the Complaint, many of whom are labeled “confidential,” paint a compelling portrait of a dramatic loosening of underwriting standards in Countrywide branch offices across the United States. Compl. ¶¶ 147-168. The Complaint alleges that underwriting standards were often abandoned entirely with respect to no-documentation loans (or “liar loans”), which “could be published without the ‘burden’ of paperwork.” See Compl. ¶¶ 147, 154. At least one high-ranking witness even alleges that the Company regularly assisted applicants that had already been rejected for full-documentation loans in obtaining no-documentation loans instead. See Compl. ¶ 153 (statement Mark Zachary, former regional vice president of a Countrywide joint venture with a home builder). Significantly, these lapses in underwriting regularly extended to loans that Countrywide labeled as “prime,” rather than subprime. See id. ¶ 156 (relating account of CW9, an auditor who examined loans being returned to the Company that had been labeled as “prime” but were clearly not). According to the Complaint, significant deviations in underwriting were permitted even when it was clear that borrowers might not be able to pay. For example, the confidential witnesses state that under-qualified individuals were given loans for which they could not afford to make payments in the long term — for example, if and when their teaser rate was reset to a higher rate. See Compl. ¶ 148; see also id. ¶ 158-159 (noting that CW9, a compliance auditor, believed real estate speculators were given loans even though they “clearly could not even afford the first payment on the loans unless they could put a renter in the home immediately (or flip the house at a profit)”). The Complaint further alleges that some individuals were given loans based on knowingly inflated home appraisal values that would put them “upside down” immediately after purchase — and also more susceptible to default. Id. ¶ 150. The Court finds that Plaintiffs’ numerous confidential witnesses support a strong inference of a Company-wide culture that, at every level, emphasized increased loan origination volume in derogation of underwriting standards. Supporting this Company-wide inference, the confidential and non-confidential accounts cited in the Complaint (1) emanate from several geographic areas, see id. ¶ 147 (providing similar testimony from former employees in Jacksonville, FL, Roseville, CA, Long Island, NY, Anchorage, AK, and Independence, OH); (2) span different levels of the Company hierarchy, see id. (underwriters, senior underwriters, senior loan officers, vice presidents, auditors, and external consultants remarking on the lack of adherence to Company standards in loan origination); and (3) remain consistent across different time periods, see id. (employees describing their experiences in 2004, 2005, 2006, and 2007). Strikingly, they tell what is essentially the same story — a rampant disregard for underwriting standards — from markedly different angles: • an auditor who assessed loans returned to the Company found that many purported “prime” loans were issued to unqualified borrowers, see id. ¶ 156; • a longtime executive who held two vice president positions discovered that particularly risky loans that were routed out of the normal underwriting process (because they violated underwriting standards) were in fact regularly being approved, with Defendant Sam-bol’s involvement, id. ¶ 163; • Mark Zachary, a vice president in Countrywide’s joint venture with KB Homes, found that appraisers were inflating appraisal values, essentially raising the risk of default on loans, id. ¶ 153; • underwriters at various levels and offices attested to egregious instances of underwriting, involving, for example, previously declined loans that would “come back to life” when new information qualifying the applicants would “miraculously appear,” and loans that were provided pursuant to borrowers’ patently ridiculous “stated incomes,” id. ¶ 147; and • a vice president in accounting left his job because he had been pressured to alter Countrywide’s financials by removing “bad loans” retroactively from the Company’s loans held for investment, so as to create the impression of a better hedging relationship, id. ¶ 224. The lowest level employees report that the impetus to “push” loans through came from above. See id. ¶ 147e (explanation of former Senior Underwriter that it was Company philosophy to close loans, even if it meant approving things that should not have been approved or making exceptions to the rules); Id. ¶ 147 (relating belief of CW’s 1-3, former underwriters, that management, who pressured them to approve loans, were in turn pressured from “up top”). See also id. ¶ 162 (describing assertion of CW10, a former executive vice president, that Countrywide’s senior management, and Sambol in particular, “didn’t want to have to turn down any loan applications because [they] wanted to grow market share”). They also allege that the compensation structure promoted these practices by rewarding Company employees — from executives and management down to the underwriters — for increasing loan volume, but not for generating quality loans. See, e.g., id. ¶ 147 (relating CW’s 1-3 belief that branch managers’ compensation was tied to loan volume only); id. ¶ 113 (citing Wall Street Journal article noting that employees in one California branch office could win prizes, such as a trip to Hawaii, for selling the most pay option ARMs). 2. The Board Committee structure required outside director Defendants, except Dougherty and Snyder, to assess certain red flags and the Company’s underwriting practices. In order to show scienter, Plaintiffs are required to raise a “cogent and ... compelling” inference that the Defendants, and not just the confidential witnesses, were aware or should have been aware of the widespread deviations from loan underwriting standards that were occurring in Countrywide’s branch offices around the country. Defendants contend that none of the confidential sources are “alleged to have ever spoken or had other contact with any of the seven non-management directors ... and none is alleged to have personal knowledge relating to the two management directors.” Countrywide Mem. Supp. Mot. to Dismiss at 16. However, evidence of this sort is not necessary here. First, there is evidence that at least some of the high-ranking witnesses conveyed their concerns to even higher levels of the Company. See, e.g., id. ¶ 153 (alleging that former vice president reported his concerns about the Company’s “low documentation” practices and inflated appraisals up the ladder); Id. ¶ 224 (stating that another former vice president reported to the CFO that one set of the Company’s hedges was ineffective, resulting in an investigation by the Company’s internal auditors). These accounts illustrate that problematic underwriting and origination practices were known to more than just the lowest level employees. See also id. ¶ 153 (account of former executive vice president that reports generated by the “Exception Processing System” and by the Chief Risk Officer were readily available to top executives and management). More importantly, Plaintiffs argue that the nine Individual Defendants who are current or former outside directors would necessarily have known of alleged underwriting problems of this magnitude. These Defendants, they assert, were members of at least one of five Board Committees that was specifically tasked with monitoring detailed aspects of the Company’s financial performance, business operations, and risk exposures: the Audit & Ethics Committee, the Credit Committee, the Finance Committee, the Operations & Public Policy Committee, and the Compensation Committee. In the course of their duties on these Committees, Plaintiffs contend, Defendants became aware of certain trends in the Company’s finances, or “red flags,” that implicated the significant lapses in underwriting. Cf. Guttman v. Huang, 823 A.2d 492, 503 (Del.Ch.2003) (holding that demand excusal on a failure of oversight claim requires plaintiff to identify, at the very least, “well-pled, particularized allegations of fact detailing the precise roles that these directors played at the company” and “the information that would have come to their attention in those roles”); accord Rattner v. Bidzos, No. Civ. A. 19700, 2003 WL 22284323 (Del.Ch. Oct.7, 2003). More specifically, loan quality (and hence, the underlying underwriting practices) is most directly implicated in the performance of mortgages, MSRs, and retained interests that Countrywide held for investment. High quality loans could be expected to generate reliable streams of revenue. In contrast, loans that perform poorly would have a serious impact on Countrywide’s balance sheet. Indications of weakness, such as signs of increased nonpayment or default, are “red flags” and raise questions about both the quality of the loans being originated and the adherence to standards in the underwriting process. Here, Plaintiffs point to at least two red flags of such prominence that Individual Defendants must necessarily have examined and considered them in the course of their Committee oversight duties: (i) the massive rise in negative amortization resulting from pay-option ARMs held for investment, and (ii) the increasing delinquencies in Countrywide’s riskiest loans. First, a rise in negative amortization-— from $29,000 in 2004 to $654 million in 2006 — signaled that the Company’s portfolio of pay-option ARMs was becoming increasingly risky. Compl. ¶ 72. Tellingly, 66% to 76% of the borrowers in pay-option ARMs were not making full interest payments (thereby accumulating negative amortization) in 2006-2007. Mozilo himself understood the reasons behind these trends as early as September 2006, after talking to some of those individuals personally. Id. ¶ 203 (“[The] general answer ... was that the value of my home is going up at a faster rate than the negative amortization ... I realized I was talking to a group ... that had never seen in their adult life real-estate values go down.”) Negative amortization, though formally recorded as profit on Countrywide’s balance sheet, in fact added to the mortgage balances that pay-option ARM borrowers had to repay. See id. ¶ 17. As a result, the large majority of pay-option ARM mortgagees who were making only the minimum payment presented a serious risk of default, since at some point increasing loan balances might no longer be justified by rising home values. According to the Complaint, pay-option ARMs composed a significant portion of the loans originated by Countrywide, reaching 19% of total loan originations in 2005. Id. ¶ 112. The total amount of pay-option ARMs that Countrywide held for investment also rose dramatically, from $4.7 billion in 2004 to $32.7 billion in 2006. Id. ¶ 118. At the same time, however, Plaintiffs allege that the vast majority of Countrywide’s pay-option ARMs were low- or no-documentation mortgages that did not require full verification of a borrower’s income or assets. Id. ¶ 116 (citing analysis in Wall Street Journal that noted that 78% of pay-option ARM originations in 2004 were low- or no-documentation, rising to 91 % in 2006, and that by the end of 2006, 81% of the pay-option ARMs that were held for investment fell into this category). Approving pay-option ARMs— already one of the Company’s riskiest products — on a low documentation basis further exacerbated the risk that borrowers would be unable to pay. See id. ¶ 139 (citing 2006 report of coalition of banking regulators that criticized the sale of “stated-income” pay-option ARMs for this reason). Given the scale on which pay-option ARMs were originated and held for investment, it is difficult to believe that the Individual Defendants were unaware of the implications of the meteoric rise in negative amortization, especially when the overwhelming majority of these loans were approved with little documentation by the borrower. See id. ¶ 110 (noting that stated-income loans requiring low or no documentation were widely known as “liar loans”). The second red flag noted by Plaintiffs relates to the increased delinquencies in the pay-option ARMs and HELOCs, the riskiest loan categories that Countrywide held for investment. For example, the percentage of pay-option ARMs in Countrywide’s portfolio that were delinquent 90 days or more doubled from 2004 to 2005, and nearly tripled from 2005 to 2006. See id. ¶ 198 (0.1% in 2004, 0.22% in 2005, 0.63% in 2006). Likewise, the percentage of HELOCs that were delinquent doubled each year from 2004-2006. Id. (0.79% in 2004, 1.57% in 2005, 2.93% in 2006). Delinquencies in both categories, especially for pay-option ARMs, rose even more dramatically during each quarter in 2007. Id. As mentioned previously, loans held for investment served as an indicator for the Company’s loan underwriting practices— practices which implicated all aspects of Countrywide’s business, including sales into the secondary market. Notably, by late 2007, HELOCs and pay-option ARMs combined accounted for 74% of Countrywide’s investment portfolio and were valued at $59 billion. Id. ¶ 264 (citing analyst report, released after Countrywide announced its 3Q07 financials, that noted HELOCs were 41% ($32 billion) and pay-option ARMs were 33% ($27 billion) of the investment portfolio at the time). The Individual Defendants could not afford to ignore rising delinquency rates with respect to those loans. It is irrelevant that the data underlying these “red flag” trends were fully disclosed to investors. See Individ. Defs.’ Mem. P. & A. Supp. Mot. to Dismiss at Appendix 1 (noting that disclosure of these trends in the SEC 10-K form for Fiscal Year 2005, released March 1, 2006). The Individual Defendants, unlike the investing public, were members of Board Committees charged with oversight of Countrywide’s risk exposures, investment portfolio, and loan loss reserves. As such, they were in a position to recognize the significance of these red flags, and, accordingly, investigate the extent to which underwriting standards had been abandoned. Notably, the underwriting violations, unlike the “red flags” themselves, were not disclosed to the public — indeed, Mozilo repeatedly assured investors of Countrywide’s underwriting discipline and loan quality. See id. ¶¶ 141-146. Here, Plaintiffs have sufficiently alleged facts giving rise to a strong inference that Defendants on four specific Committees knew of the underwriting violations, or at the very least, proceeded with deliberate recklessness: Audit & Ethics Committee members are required to oversee the Company’s risk management practices, its risk assessment policies, and Countrywide’s exposures and liabilities with management. Id. ¶¶ 79-80 (committee charter). Loan origination is at the core of all of Countrywide’s business operations, and risks related to loan performance and delinquency are central to the Company’s overall risk position. Even more crucially, the Corn-plaint identifies a number of Countrywide internal systems for analyzing risk for which the Audit & Ethics Committee has oversight responsibility: the office of the Chief Risk Officer, which generated monthly reports analyzing loan performance and adherence to underwriting policies, id. ¶ 168, and the proprietary Exception Processing System, designed to route highly risky loans to a central underwriting group for evaluation, id. ¶¶ 163-64. As they are responsible for managing these systems, members of this Committee were uniquely positioned to understand the contribution of underwriting standards to overall Company risk. Plaintiffs raise a cogent and compelling inference that Audit & Ethics committee members were aware of (or proceeded with deliberate recklessness with respect to) the significance of red flags relating to increasing delinquencies, negative amortizations, and other signs of loan nonperformance. Likewise, members of the Credit Committee were charged with oversight of the Company’s “credit risk management activities,” or the ways in which Countrywide managed the risk that the Company would lose money if and when borrowers default on their mortgages. Id. ¶¶ 86-89. This risk is closely connected with the quality of the underlying mortgages originated by Countrywide. The Credit Committee was also required to evaluate the adequacy of the Company’s loan loss reserves, a judgment call in which the loans’ future performance, though not the only factor, was highly relevant. Id. ¶¶ 88, 204. Thus, the facts pled give rise to a compelling inference that Credit Committee members recognized the exponentially rising negative amortization on pay-option ARMs and the yearly doubling and tripling of delinquency rates on HELOCs and pay-option ARMs as serious warning signs related to credit risk. At the very least, given that these two loan categories ultimately accounted for 74% of Countrywide’s loan portfolio, or $59 billion worth of investments, there is a strong inference that Committee members proceeded with deliberate recklessness in the face of these warning signs. Given the magnitude of pay-option ARMs and HELOCs held for investment, the Complaint also gives rise to a strong inference that members of the Finance Committee, which was in charge of reviewing investment strategy for the Company’s loans, MSRs and retained interests, were aware of the red flags alleged — or proceeded with deliberate recklessness. Because the Finance Committee was required to oversee investments over the long term, ensuring loan quality was as essential to the Committee members here as it was to Audit & Ethics and Credit committees. Committee members either knew, or proceeded with deliberate recklessness with respect to, the fact that originating loans to borrowers who could not pay back their mortgages would ultimately be counterproductive, lucrative as it was in the short term. Finally, the Operations & Public Policy Committee was charged with oversight of matters of “operational risk” and “matters relating to responsible lending.” Here, plaintiffs have alleged that a pervasive “culture” encouraged underwriters to grant risky loans to unqualified borrowers; not only is loan quality at the core of Countrywide’s operations, from its investment portfolio to its secondary market business, but the vast majority of loans held for investment, as well as a significant portion of total loans originated, were either pay-option ARMs or HELOCs. On such a large scale, the resulting issues of credit risk become matters of operational risk for the entire Company. For these reasons, Plaintiffs’ facts give rise to an inference that members on this Committee proceeded, at the very least, with deliberate recklessness in the face of a number of red flags which they could not miss. Lastly, while the Compensation Committee was responsible for evaluating whether the overall compensation structure establishes “appropriate incentives for management and other employees,” see Compl. ¶ 84 (committee charter), it is unclear how these duties might have required Compensation Committee members to examine the red flags identified by Plaintiffs. Plaintiffs argue that a predictable consequence of tying compensation incentives solely to loan originations would be to increase pressure to generate lower-quality loans. That view, however, suggests that the policies of the Compensation Committee were a cause of the lapses in underwriting standards, not a reason that the Defendants on this Committee would have known of those lapses. Moreover, there are no facts from which the Court can infer that the Compensation Committee was aware of, or complicit in, setting the compensation structure for lower-level employees such as underwriters. Cf. Accredited, 2008 WL 80949, at *10 (finding probative of scienter allegations that defendants, who were Company executives and not outside Board members, “actually directed” deviations from Company policy by pressuring managers, who in turn pressured underwriters). Without more, the Court does not find membership on the Compensation Committee probative of scienter. 3. The facts alleged, taken as a whole, establish a strong inference of scienter. Plaintiffs have sufficiently pled facts regarding the directors’ roles on various committees and the duties which required that they be informed on certain aspects of Countrywide’s business. Because this information implicated underwriting practices at the core of Countrywide’s business model, Plaintiffs raise a strong inference of scienter with respect to every outside director except Dougherty and Snyder. Under Tellabs, an inference of scienter must be “at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, 127 S.Ct. at 2505. Here, the competing inference is that the Board consciously adopted a risky — but publicly disclosed' — strategy by shifting to products such as HELOCs and pay-option ARMs. Under this theory, the Defendants were unaware of any alleged employee wrongdoing at the lower levels, and Countrywide’s misfortunes resulted not from the Defendants’ wrongdoing, but from an “unprecedented seizing up of the capital markets,” See Individ. Defs.’ Mem. P. & A. Supp. Mot. to Dismiss at 23. The directors were “simply unable to shield themselves as effectively as they anticipated,” Tripp v. Indymac Financial, Inc., No. CV 07-1635, 2007 WL 4591930, at *4, 2007 U.S. Dist. LEXIS 95445, at *9 (C.D.Cal. Nov. 29, 2007), when, caught by surprise, the secondary market demand for mortgage-backed securities issued by Countrywide and other lenders “suddenly evaporated” in August 2007. See Individ. Defs.’ Reply Supp. Mot. to Dismiss at 5. Two observations illustrate why the inference of scienter here is at least as plausible as this competing view. First, the idea that a Company-wide culture that encouraged unchecked deviations from underwriting standards in a way which would fatally affect the Company’s continued financial performance went unnoticed by a Board of Directors simply does not square with the specific and comprehensive monitoring duties assigned to the members of the Board. The purpose of the Committee system is to monitor the operation, financial performance, and risk position of the Company. See Miss. Pub. Emps. Retirement Sys. v. Boston Scientific Corp., 523 F.3d 75, 90-91 (1st Cir.2008) (“It is fair to infer the Company has highly effective information systems ... Defendants are in a highly regulated industry and the company, it can be inferred, constantly monitors reports ... and looks for prompt solutions to such problems.”) (finding scienter under the Tellabs standard). Second, while the Court will not engage in speculation as to the causes of the recent economic downturn, the Company’s own SEC filings recognize that ongoing access to the secondary mortgage market requires the consistent production of quality mortgages and servicing of those mortgages at levels that meet or exceed secondary mortgage market standards. Compl. ¶ 104. See also id. ¶ 146 (March 2005 statement by Mozilo that Countrywide’s “underwriting guidelines for nonconforming mortgage loans ... have been designed so that these loans are salable in the secondary mortgage market”). Independent of any turmoil in the capital markets, the widespread violations of underwriting standards, as alleged, would significantly raise the risk of loan default. When combined with what Plaintiffs allege are misrepresentations concerning the quality of Countrywide’s loans, these underwriting issues would ultimately undermine confidence in the secondary market for Countrywide products. In sum, the Complaint, viewed in its entirety, raises a strong inference of scien-ter with respect to all but two of the outside director Defendants. The inference of scienter is even stronger as to the inside directors (Mozilo and Sambol) and the non-director Defendants (Kurland, Garcia, and Sieracki). These defendants were involved in the day-to-day operation of the company and would have been even more aware of a “culture” of undisciplined loan origination, if one existed, than would the outside Defendants. Moreover, the executive Defendants were privy to the company’s risk management systems on an ongoing basis. The Complaint quotes a confidential witness who asserts that reports generated by the Chief Risk Officer were regularly delivered to those executives, and that they also had access to the data contained in the Exception Processing System. The same inferences that apply to the outside directors apply here, albeit with even greater force: it would be difficult to conclude that those Defendants at the top levels of Countrywide management did not know what was going on in their entire business. The Court proceeds by addressing the other allegations in dispute, as well as the other requirements of § 10(b) and segments of the Motions to Dismiss. 4. The repurchase insider trading allegations are consistent with the strong inference of scienter, and particularly probative of scienter for Mozilo. Allegations of insider sales during the Relevant Period permeate the Complaint. The PSLRA “neither prohibits nor endorses the pleading of insider trading as evidence of scienter, but requires that the evidence, like all other evidence, meet the ‘strong inference’ standard.” In re Daou Systems, Inc., 411 F.3d 1006, 1022 (9th Cir.2005) (citing Greebel v. FTP Software, Inc., 194 F.3d 185, 197 (1st Cir.1999)). The key inquiry is whether the insiders’ sales of stock are “suspicious,” namely, whether they are “dramatically out of line with prior trading practices at times calculated to maximize the personal benefit from undisclosed inside information.” In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir.1999). In evaluating stock sales, relevant factors include (1) the amount and percentage of shares sold by insiders; (2) the timing of the sales; and (3) whether the sales were consistent with the insider’s prior trading history. Id. Plaintiffs’ most specific allegations of insider sales concern the share repurchase program, in which the Company repurchased common stock in November 2006 (38.6 million shares for $1.5 billion) and May 2007 (21.5 million shares for $900 million). Both of the repurchases occurred at times where the stock was near its all time high, and Plaintiffs allege that a stock repurchase “signal[s] to the market that the Board believed Countrywide’s shares to be underpriced.” Id. ¶ 325. Yet, at the same time, Defendants reaped $52 million in stock sale proceeds during the first repurchase quarter, and $96 million during the second. How could the Board members approve a repurchase of $2.4 billion dollars worth of stock, and nearly contemporaneously liquidate $148 million of their personal holdings just months before the stock dropped some 80-90%? At the very broadest level, Plaintiffs outline the facts that render the stock repurchase and some of the insider sales suspicious. Specifically: • Defendant Donato sold shares worth $1.3 million on October 27, 2006, “right when the buyback was announced,” and additional shares on December 15, 2006, just after the first repurchase period. Id. ¶ 405f. Donato’s last previous sale was nearly two years before the 2006 sales. • Defendant Dougherty adopted his Rule 10b5-l plan during the first repurchase month (November 2006) and had no sales two years prior to implementation of the plan. Id. ¶ 405a. • Defendant Cunningham, who had instituted a Rule 10b5-l plan in March 2006 to sell 5,000 shares a month, sold an additional 20,000 shares on February 2, 2007, the day after his last sale under this plan, coinciding with the all-time high for Countrywide stock. Id. ¶ 405c. • Defendant Cisneros sold 75% of his holdings on two days in May of 2006, for proceeds of over $3 million. Id. ¶ 405e. • Defendant Snyder sold 20,000 shares on December 16, 2006 for $800,000. Id. ¶ 405d. • Defendant Robertson sold 60,000 shares, or two-thirds of his shares for proceeds of $2.4 million on November 20,2006. Id. 11405b. • Defendant Garcia also adopted a Rule 10b5-l plan at the same time as the announcement of the stock repurchase in late October 2006, and sold 230,000 shares for proceeds of $9 million pursuant to that plan. Id. ¶411. Independently, he sold 189,757 shares on Feb. 2, 2007 for proceeds of $8.5 million. Id. • Defendant Sambol sold 168,000 shares for proceeds of $6.6 million during the first repurchase quarter, and 65,375 shares for proceeds of $2.4 million during the second. Id. ¶ 326. Defendants respond with explanations for some of the sales that mitigate the inferences of scienter. Dougherty’s plan, for example, was instituted at the end of a “blackout period” and as he was preparing for retirement. Both Cunningham and Snyder sold stock in between the two repurchase periods. Cisneros’ large sale in May 2006 does not appear to be dramatically out of line with his previous sales in 2004 and 2005. Finally, Robertson’s large sale occurred during th