Full opinion text
DECISION AND ENTRY SUSTAINING IN PART AND OVERRULING IN PART DEFENDANTS’ MOTION TO DISMISS (DOC. #24); PLAINTIFFS’ AMENDED COMPLAINT (DOC. # 22) DEEMED AMENDED; NO FURTHER AMENDED COMPLAINT NECESSARY; STAY OF DISCOVERY VACATED WALTER HERBERT RICE, District Judge. This is a putative class action, predicated upon alleged securities fraud in connection with the purchase of publically traded securities of Huffy Corporation (“Huffy”). The putative class is defined as persons who purchased shares of Huffy stock during the class period, ie., between April 16, 2002, and August 13, 2004. Plaintiffs’ Amended Complaint (Doc. # 22) at ¶ l. This litigation arises out of Huffy’s acquisition of Gen-X, a Canadian manufacturer of snowboards, in-line skates, golf clubs, hockey equipment and other types of sporting goods. Id. at ¶ 2. The Plaintiffs have named four former executives of Huffy as Defendants herein, to wit: Don Gra-ber (“Graber”), who is alleged to have been its President and CEO from the beginning of the class period until January 31, 2004 (id. at ¶ 14); Timothy Howard (“Howard”), who is alleged to have served as a Vice President of Huffy and its Corporate Controller and principal accounting officer from the beginning of the class period until July 1, 2004 (id. at ¶ 15); Robert Lafferty (“Lafferty”), alleged to have served as Huffy’s Vice President of Finance, CFO and Treasurer throughout the class period (id. at ¶ 16); and Paul D’Aloia (“D’Aloia”), who is alleged to have served in a number of capacities at Huffy during the class period, culminating as its CEO from January 7, 2004, through the end of that period (id. at ¶ 17). In their Amended Complaint (Doc. #22), the Plaintiffs seek to impose liability on the Defendants in accordance with §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78j(b) and 78t(a), as well as under Rule 10b-5, promulgated by the Securities and Exchange Commission (“SEC”), 17 C.F.R. § 240.10b-5. This case is now before the Court on the Defendants’ Motion to Dismiss (Doc. # 24), wherein they argue that the Plaintiffs’ Amended Complaint fails to meet the pleading standards of Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure and § 21D(b) of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4(b). In support of that assertion, the Defendants have presented five bases for dismissal. See Doc. # 24 at 2 (the first). Rather than initially cataloguing the allegations Plaintiffs have set forth in their 121-page, 304-paragraph Amended Complaint (Doc. #22), this Court will set forth a brief synopsis of the central allegations upon which the Plaintiffs’ claims are based, following which it will review the procedural standards that are applicable to motions such as that filed by the Defendants herein. The Court will then turn to the parties’ arguments concerning the five bases for dismissal the Defendants have set forth in their motion. During that analysis, the Court will conduct a more through review of the relevant allegations in the Plaintiffs’ Amended Complaint (Doc. # 22). As indicated, this litigation arises out of the decision of Huffy to purchase Gen-X. The Plaintiffs allege in their Amended Complaint that the acquisition was a “disaster,” because Gen-X’s costs were not controlled, its inventory was in a state of disarray, its invoices had not been collected and its bills were unpaid. Doc. # 22 at ¶ 3. Plaintiffs also contend that the “defendants” thereafter misrepresented the value of the assets Huffy had acquired and the impact of the acquired product lines on Huffy’s revenue and earnings and that those misrepresentations caused Huffy’s securities to trade at an inflated price. Id. at ¶¶ 4-5. In that pleading, Plaintiffs also categorize failings of Huffy, prior to the acquisition of Gen-X and the beginning of the class period, including investing in the manufacture of fad scooters that it could not sell, failing in its efforts to purchase the assets of its former competitor, Schwinn, and having its largest customer, Kmart, which accounted for more than one-third of its sales, declare bankruptcy. Id. at ¶ 30. According to the Plaintiffs, the Defendants issued materially false and misleading statements during the class period, concerning: (1) the “extensive due diligence” purportedly performed by defendants prior to the acquisition of Gen-X; (2) the value of the assets acquired from Gen-X; (3) the performance of Gen-X after the acquisition and its impact on Huffy’s financial results; and (4) Huffy’s financial results and condition, and its future prospects for profitability. Id. at ¶ 89. In particular, the Plaintiffs have identified the following as sources of such statements: 1. A press release issued by Huffy on April 16, 2002, announcing its financial results for the First Quarter of Fiscal Year 2002 (id. at ¶¶ 90-94); 2. A press release issued by Huffy on June 17, 2002, announcing its agreement to acquire Gen-X (id. at ¶¶ 95-96); 3. Huffy’s S-4 Registration Statement, filed on July 5, 2002, and Amended S-4 Registration Statement, filed on July 29, 2002, setting forth information concerning the merger between Huffy and Gen-X and recommending shareholder approval (id. at ¶¶ 97-100); 4. Huffy’s release of information concerning its financial results for the Second Quarter of Fiscal Year 2002, including a press release, conference calls on July 16, 2002, in which Lafferty and Graber participated, and Huffy’s report on Form 10-Q (“10-Q Report”) for that period (id. at ¶¶ 101-108 and subparagraphs); 5. A press release issued by Huffy on November 13, 2002, a conference call conducted the following day and Huffy’s 10-Q Report, all concerning its financial results for the Third Quarter of Fiscal Year 2002, as well as prospects for the future (id. at ¶¶ 109-118 and subparagraphs); 6. A press release issued by Huffy on January 9, 2003, concerning Huffy’s financial results for the Fourth Quarter of Fiscal Year 2002 (id. at ¶ 119); 7. A press release issued by Huffy on February 11, 2003, conference calls conducted by Graber and Lafferty that day, and Huffy’s Form 10-K Report (“10-K Report”), all concerning its financial results for the Fourth Quarter of Fiscal Year 2002, as well as for all of that Fiscal Year, and its prospects for the future (id. at ¶¶ 120-130 and subparagraphs); 8. A press release issued by Huffy on April 16, 2003, a conference call conducted by Graber and Lafferty that day, and Huffy’s 10-Q Report, all concerning its financial results for the First Quarter of Fiscal Year 2003, and its prospects for the future (id. at ¶¶ 131-140 and subparagraphs); 9. A press release issued by Huffy on July 15, 2003, a conference call conducted by Graber and Lafferty the following day, and Huffy’s 10-Q Report, all concerning its financial results for the Second Quarter of Fiscal Year 2003 (id. at ¶¶ 141-149 and subparagraphs); 10. An announcement by Huffy on September 10, 2003, that it was lowering its expectations for the full-year sales for Fiscal Year 2003 to between $455 and $460 million from between $470 and $480 million (id. at ¶ 150); 11. A press release issued by Huffy on October 15, 2003, a conference call conducted by Graber the following day, and Huffy’s 10-Q Report, all concerning its financial results for the Third Quarter of Fiscal Year 2003, and its prospects for the future (id at ¶¶ 151-159 and subpara-graphs); 12. Huffy’s projection on December 1, 2003, that it would suffer a loss in the Fourth Quarter of Fiscal Year 2003, that earnings for the entire year would fall short of previous expectations and that sales would be even lower (id at ¶ 160); 13. A conference call conducted on December 2, 2003, during which Graber, Laf-ferty and D’Aloia attempted to explain Huffy’s disappointing projection announced the previous day (id at ¶¶ 161— 162); 14. Huffy’s announcement of December 31, 2003, that it had suffered a net loss for Fiscal Year 2003, of nearly $1.4 million (id at ¶ 163); 15. Huffy’s announcement of January 7, 2004, that Graber would retire as CEO effective the January 31st, and that he would remain as Chairman of the Board throughout the remainder of 2004 (id at ¶ 164); 16. Huffy’s press release of January 15, 2004, that its loss for the Fourth Quarter of Fiscal Year 2003 would be substantially worse than anticipated and that, as a result, it now expected a modest loss for that Fiscal Year, as opposed to the previously anticipated profit of $0.08 to $0.10 earnings per share (id at ¶ 165); 17. Huffy’s press release of February 17, 2003, announcing that it suffered a net loss of $11.8 million, or $0.74 per share, for the Fourth Quarter of Fiscal Year 2003, and a net loss of $7.5 million, or $0.49 per share, for 2003, and that Huffy expected to realize a profit of $0.22 to $0.27 per share for 2004 (id at ¶ 167); 18. A conference call conducted on February 17, 2004, during which Lafferty and D’Aloia “continued to falsely assure investors that Huffy’s problems were being managed, while failing to disclose the extent of its problems with its lenders and suppliers” and D’Aloia claimed that the snowboard and golf lines of Gen-X had “ ‘finished the year with solid earnings and ... strong revenue growth’ ” (id at ¶ 169); 19. Huffy’s 10-K Report for Fiscal Year 2003 and 10-Q Report for the Third Quarter of that Fiscal Year, which, inter alia, contained incomplete disclosures, downplayed the significance of Huffy’s debt and failed to disclose the full extent of the problems at Gen-X (id at ¶¶ 170-175 and subparagraphs); 20. Huffy’s press release of April 13, 2004, announcing that, although its sales figures were in line with expectations, initial income figures indicated that the loss for the First Quarter of Fiscal Year 2004 would be greater than anticipated, significantly higher than the loss for the First Quarter of the previous Fiscal Year (id at ¶ 177); 21. D’Aloia’s comments on the information set forth in that press release, to the effect that the loss was primarily related to the performance of Gen-X including significantly higher than normal charges related to customer returns and deductions (id at ¶ 178); 22. Huffy’s press release on April 29, 2004, announcing that it would not return to profitability in Fiscal Year 2004 and that it had retained the firm of Lazard Freres & Co., in order “to explore strategic alternatives, including the sale of the Company or of product segments within the Company” (id at ¶ 179); 23. Huffy’s press release issued on May 6, 2004, announcing that it was delaying the release of its results for the First Quarter of Fiscal Year 2004, in part as a result of a review of certain intangible assets and deferred tax assets (id at ¶ 180); 24. Huffy’s press releases issued on May 17, 2004, and May 24, 2004, announcing further delays in the release of results for the First Quarter of Fiscal Year 2004 (id. at ¶¶ 181-183); 25. Huffy’s June 9, 2004, announcement that it had received a warning from the New York Stock Exchange, indicating that its (Huffy’s) listing on that exchange was at risk because of the recent decline in its market capitalization and anticipated significant loss for the First Quarter of Fiscal Year 2004 (id. at ¶ 184); and 26. Huffy’s press release issued on August 13, 2004, indicating that it would restate its results for Fiscal Year 2003, and that it anticipated a loss in the range of $70.0 million to $72.0 million for the First Quarter of Fiscal Year 2004 (id. at ¶ 185). With many of the foregoing allegations, the Plaintiffs also claim that the Defendants made optimistic statements about Huffy’s anticipated future performance, optimism which would prove to be unwarranted. As can be seen, therefore, the cornerstone of the Plaintiffs’ claims are that Huffy, in an already weakened condition as a result of the loss of its largest customer and its failure to purchase Schwinn, made the disastrous acquisition of Gen-X, and in the process of acquiring Gen-X and thereafter, the Defendants made numerous materially false and misleading statements, concerning that acquisition and Huffy’s financial condition, while releasing some negative information which was overshadowed by optimistic forecasts for the future. Having reviewed the central allegations set forth in Plaintiffs’ Amended Complaint (Doc. # 22), the Court turns to a review of the procedural standards it must apply when ruling on the Defendants’ Motion to Dismiss (Doc. #24), in particular Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure and the PSLRA. Rule 9(b) provides: (b) Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally. The Sixth Circuit has interpreted Rule 9(b) as requiring the plaintiff to “allege the time, place, and content of the alleged misrepresentations on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.” Sanderson v. HCA — The Healthcare Co., 447 F.3d 873, 877 (6th Cir.) (internal quotation marks and citations omitted), cert. denied, — U.S. -, 127 S.Ct. 303, 166 L.Ed.2d 155 (2006). In League of United Latin American Citizens v. Bredesen, 500 F.3d 523 (6th Cir.2007), the Sixth Circuit restated the standards which a District Court must apply when determining whether to dismiss a complaint, pursuant to Rule 12(b)(6), for failure to state a claim upon which relief can be granted: The court must construe the complaint in the light most favorable to plaintiffs, accept all well-pled factual allegations as true and determine whether plaintiffs undoubtedly can prove no set of facts consistent with their allegations that would entitle them to relief. Id. Though decidedly liberal, this standard does require more than bare assertions of legal conclusions. Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 361 (6th Cir.2001). Plaintiffs’ obligation to provide the “grounds” of their entitlement to relief requires more than labels and conclusions or a formulaic recitation of the elements of the cause of action. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007). The factual allegations, assumed to be true, must do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief. Id. at 1965. To state a valid claim, a complaint must contain either direct or inferential allegations respecting all the material elements to sustain recovery under some viable legal theory. Id. at 1969. Id. at 527. See also Bishop v. Lucent Technologies, Inc., 520 F.3d 516 (6th Cir.2008). As a result of the adoption of the PSLRA, heightened pleading requirements have been imposed on plaintiffs bringing securities fraud actions. Those requirements are set forth in § 21D(b) of that statute, 15 U.S.C. § 78u-4(b). The Court will discuss those heightened pleading requirements when it turns to the Defendants’ contention that it must dismiss the Plaintiffs’ Amended Complaint, because they have failed to plead scienter in adequate fashion. The Plaintiffs have referred to documents in order to support their claims, and the Defendants have appended documents to their motion, in an effort to demonstrate that those claims must be dismissed. Therefore, the Court will briefly review the standards which govern what matters outside the pleadings it may consider when ruling on a motion to dismiss, without transforming the motion into one for summary judgement, which, herein, this Court most decidedly will not do, given that the PSLRA prohibits the Plaintiffs from conducting discovery until the Court has ruled upon the Defendants’ Motion to Dismiss (Doc. #24). Rule 12(d) of the Federal Rules of Civil Procedure provides: (d) Result of Presenting Matters Outside the Pleadings. If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion. In Tellabs, Inc. v. Makor Issues & Rights, Ltd., — U.S. -, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007), a decision which is discussed below, the Supreme Court cited 5B Wright & Miller, Federal Practice and Procedure § 1357, as setting forth types of such materials which can be considered when ruling on a motion to dismiss a securities fraud action. Id. at 2509. That section of the treatise provides, in pertinent part: In determining whether to grant a Federal Rule 12(b)(6) motion, district courts primarily consider the allegations in the complaint. The court is not limited to the four corners of the complaint, however. Numerous cases, as the note below reflects, have allowed consideration of matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned; these items may be considered by the district judge without converting the motion into one for summary judgment. 5B Wright & Miller, Federal Practice and Procedure § 1357 at 375-76 (footnote omitted). The Sixth Circuit has approved of the use of each of those types of materials, when ruling on a motion to dismiss, without converting same to a motion for summary judgment. See e.g., Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir.1999) (District Court may consider documents referred to in plaintiffs complaint and central to his claim, public records, matters of which a court may take judicial notice and decisions of governmental agencies). See also Wyser-Pratte Management Co. Inc. v. Telxon Corp., 413 F.3d 553, 560 (6th Cir.2005); Nieman v. NLO, Inc., 108 F.3d 1546, 1554 (6th Cir.1997) (quoting Wright & Miller, supra, with approval). Of course, where the submitted materials “capture[] only part of the incident and would provide a distorted view of the events at issue, ... we do not require a court to consider that evidence on a 12(b)(6) motion.” Jones v. City of Cincinnati, 521 F.3d 555, 562 (6th Cir.2008) (internal quotation marks omitted). Based upon the foregoing discussion of legal principles, this Court con-eludes that, when ruling on the Defendants’ Motion to Dismiss (Doc. # 24), it is appropriate to consider the public securities filings by Huffy and statements to analysts and to the press (i.e., conference calls and press releases) which have been referred to in the Plaintiffs’ Amended Complaint (Doc. # 22), given that those materials are central to Plaintiffs’ claims. Jackson, supra (holding that District Court may consider documents referred to in plaintiffs complaint and central to his claim). It is also appropriate for the Court to consider other of Huffy’s securities filings which Defendants have attached to their motion, even though Plaintiffs did not refer to those filings in their Amended Complaint (Doc. #22), because those filings are public records. The Plaintiffs contend that the Defendants committed securities fraud, in part, as a result allegedly false statements in some of Huffy’s public securities filings. Those allegations render other such filings integral to the Plaintiffs’ claims. Thus, although Plaintiffs have argued to the contrary, this Court will consider those other filings when ruling on the instant motion. Herein, the parties also dispute whether this Court can consider a complaint filed by the Trustee of the Huffy Recovery Trust (“Trustee”) in Huffy’s bankruptcy proceeding. That question was brought before the Court by the Plaintiffs’ Request for Judicial Notice in further Opposition to Defendants’ Motion to Dismiss (Doc. # 42), as supplemented by Doc. #45. The Defendants have opposed that motion (see Doc. # 46), and the Plaintiffs have filed a Reply Memorandum (Doc. #49) in support thereof. In the complaint filed in Huffy’s bankruptcy proceedings, the Trustee has set forth claims against Gra-ber, Howard and some of Huffy’s other directors, alleging, inter alia, that those individuals had breached the fiduciary duty owed to Huffy by paying Graber nearly $2.7 million out of Huffy’s Supplemental Executive Retirement Plan, on February 13, 2004, after the effective date of Graber’s retirement, without determining whether Huffy was solvent at the time. In their motion, the Plaintiffs argue that the allegations set forth in the Trustee’s complaint counter the Defendants’ argument that the allegations of scienter in the Amended Complaint (Doc. # 22) are insufficient, since there is no allegation that they (Defendants) had a motive to misrepresent the impact of the Gen-X acquisition. See Doe. # 42 at 1 (citing Defendants’ Motion to Dismiss (Doc. #24) and Reply Memorandum (Docs.# 33)). Plaintiffs also contend that the Trustee’s complaint will add support to their allegations concerning the falsity of Defendants’ allegedly fraudulent statements. Id. The Plaintiffs stress that they are not requesting that the Court take judicial notice of the truth of the allegations in the Trustee’s complaint; rather, they request that the Court take such notice of the fact that those allegations have been set forth therein and that those allegations were made by an individual who has had custody of Huffy’s internal books and records for two years. Id. at 2-3. Although the Plaintiffs have not expressly identified the portions of the Trustee’s complaint of which they want this Court to take judicial notice, they have quoted ¶¶ 12-23 and 25-26 of that pleading. Id. at 4-6. The other allegations in the Trustee’s complaint have not been mentioned in the Plaintiffs’ motion. Therefore, the Court concludes that the Plaintiffs are requesting only that the Court take judicial notice of ¶¶ 12-23 and 25-26 from the Trustee’s complaint. In opposition, the Defendants argue that the allegations in a complaint are not the subject of judicial notice, since that which has been plead in the Trustee’s complaint are allegations rather than being facts. Judicial notice is governed by Rule 201 of the Federal Rules of Evidence, which provides in pertinent part: (a) Scope of rule. This rule governs only judicial notice of adjudicative facts. (b) Kinds of facts. A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. (c) When discretionary. A court may take judicial notice, whether requested or not. (d) When mandatory. A court shall take judicial notice if requested by a party and supplied with the necessary information. (e) Opportunity to be heard. A party is entitled upon timely request to an opportunity to be heard as to the propriety of taking judicial notice and the tenor of the matter noticed. In the absence of prior notification, the request may be made after judicial notice has been taken. (f) Time of taking notice. Judicial notice may be taken at any stage of the proceeding. It is a matter of settled precedent in the Sixth Circuit that courts may take judicial notice of proceedings in other courts. Lyons v. Stovall, 188 F.3d 327, 333 n. 3 (6th Cir.1999). As is indicated, however, Defendants argue that this Court cannot take judicial notice of the Trustee’s complaint, because the matters set forth therein are allegations, rather than being facts. In support of that proposition, the Defendants rely upon, inter alia, Nolte v. Capital One Fin. Corp., 390 F.3d 311 (4th Cir. 2004). That decision arose out of an appeal by the plaintiffs from the dismissal of their securities fraud action and the District Court’s denial of their request for leave to amend. During the course of the appeal, the SEC initiated a civil action against one of the defendants, and the plaintiffs requested that the Fourth Circuit take judicial notice of the complaint filed by the SEC and the facts alleged therein. The Fourth Circuit declined that request, concluding that Rule 201 authorizes courts to take judicial notice of indisputable facts alone and the allegations in the complaint filed by the SEC were not such facts. Id. at 317 n. *. Herein, the Plaintiffs contend that Nolte is distinguishable, since they are not requesting that the Court take judicial notice of the truth of the matters alleged in the Trustee’s complaint, only that those allegations have been made. This Court finds it unnecessary to resolve the parties’ differences over the applicability of Rule 201 to the Trustee’s complaint. It bears emphasizing that this ease is not before the Court on a request for summary judgment, where this Court would be required to decide whether the evidence, which would include facts of which this Court can take judicial notice, raises genuine issues of material fact which must be resolved in a trial. Rather, this litigation is before the Court on the Defendants’ Motion to Dismiss (Doc. # 24), under which this Court must decide whether the allegations in Plaintiffs’ Amended Complaint (Doc. # 22), viewed through the prisms of Rules 9(b) and 12(b)(6) and the PSLRA, state a claim for relief. The Plaintiffs merely seek to have the Court consider the allegations set forth by the Trustee in his complaint, when it engages in that analysis. In effect, the Plaintiffs are requesting that the Court give them leave to amend to include the allegations set forth by the Trustee in his complaint. Such an amendment would be appropriate, even though it would occur after the Defendants’ Motion to Dismiss (Doc. #22) had been fully briefed. Cf. E.E.O.C. v. Ohio Edison Co., 7 F.3d 541, 546 (6th Cir.1993) (holding in an appeal from the dismissal of the plaintiffs complaint pursuant to Rule 12(b)(6) that, when the papers before the Sixth Circuit indicate that the plaintiff could submit an amended complaint that would state a claim upon which relief can be granted, the proper course is to remand to permit the plaintiff to amend). However, rather than treating Plaintiffs’ request that the Court take judicial notice as a motion for leave to amend, granting that motion and overruling the Defendants’ Motion to Dismiss (Doc. # 24) without prejudice, thus resulting in the Defendants filing a new motion seeking dismissal and the parties then engaging in a new round of briefing, this Court will consider ¶¶ 12-23 and 25-26 of the Trustee’s complaint, when it rules on the Defendants’ Motion to Dismiss (Doc. # 24). The Court will also consider the Defendants’ arguments that, notwithstanding the allegations in that pleading, fatal deficiencies remain in the Plaintiffs’ Amended Complaint. See Doc. # 46 at 11-17. As indicated, the Plaintiffs base their claims on §§ 20(a) and 10(b) of the Exchange Act and Rule 10b-5. Briefly, § 20(a) provides that anyone who, directly or indirectly, controls any person liable under any provision of the Exchange Act or of any rule or regulation promulgated thereunder shall be jointly and severally liable with and to the same extent as the entity that person controls. In PR Diamonds, Inc. v. Chandler, 364 F.3d 671 (6th Cir.2004), the Sixth Circuit set forth the elements which must be established in order to impose liability under § 20(a): Section 20(a) thus establishes two requirements for a finding of control person liability. First, the “controlled person” must have committed an underlying violation of the securities laws or the rules and regulations promulgated thereunder. Second, the “controlling person” defendant in a Section 20(a) claim must have directly or indirectly controlled the person liable for the securities law violation. “Control” is defined as “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.” 17 C.F.R. § 230.405. Id. at 696-97. Section 10(b) makes it unlawful “[t]o use or employ, in connection with the purchase or sale of any security ..., any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe as necessary or appropriate in the public interest or for the protection of investors.” 15 U.S.C. § 78j(b). Rule 10b-5, which is such a rule, provides: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240.10b-5. In Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005), the Supreme Court reviewed the elements of a claim under Rule 10b-5: In cases involving publicly traded securities and purchases or sales in public securities markets, the action’s basic elements include: (1) a material misrepresentation (or omission), see Basic Inc. v. Levinson, 485 U.S. 224, 231-232, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988); (2) scienter, i.e., a wrongful state of mind, see Ernst & Ernst [v. Hochfelder, 425 U.S. 185, 197, 199, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976)]; (3) a connection with the purchase or sale of a security, see Blue Chip Stamps [v. Manor Drug Stores, 421 U.S. 723, 730-731, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975)]; (4) reliance, often referred to in cases involving public securities markets (fraud-on-the-market cases) as “transaction causation,” see Basic, supra, at 248-249, 108 S.Ct. 978 (nonconclusively presuming that the price of a publicly traded share reflects a material misrepresentation and that plaintiffs have relied upon that misrepresentation as long as they would not have bought the share in its absence); (5) economic loss, 15 U.S.C. § 78u-4(b)(4); and (6) “loss causation,” i.e., a causal connection between the material misrepresentation and the loss, ibid.; cf. T. Hazen, Law of Securities Regulation §§ 12.11[1], [3] (5th ed.2005). Id. at 341^42, 125 S.Ct. 1627 (emphasis in the original). See also Brown v. Earthboard Sports USA, Inc., 481 F.3d 901, 917 (6th Cir.2007). The Defendants have presented five bases for dismissal in their motion, arguing that the Plaintiffs have failed to allege in adequate fashion scienter, loss causation, falsity/materiality and control person liability and that the group pleading doctrine did not survive the enactment of the PSLRA. See Doc. #24 at 2 (the first). As a means of analysis, the Court will address those propositions in the above order, discussing, however, the group pleading doctrine first. In addition to arguing that this Court should dismiss the Plaintiffs’ Amended Complaint (Doc. # 22), the Defendants argue that this Court should not permit Plaintiffs to attempt to amend to cure any deficiencies in their current pleading. See Doc. # 24 at 86-88. Not surprisingly, the Plaintiffs disagree. See Doc. # 28 at 86-87. In the event that this Court agrees with the Defendants that Plaintiffs’ Amended Complaint (Doc. # 22) must be dismissed, it will turn to the parties’ arguments concerning the question of whether Plaintiffs should be permitted to amend. I. Group Pleading The genesis of the group pleading doctrine is the decision of the Ninth Circuit in Wool v. Tandem Computers Inc., 818 F.2d 1433 (9th Cir.1987), wherein the court explained that doctrine: In cases of corporate fraud where the false or misleading information is conveyed in prospectuses, registration statements, annual reports, press releases, or other ‘group-published information,’ it is reasonable to presume that these are the collective actions of the officers. Under such circumstances, a plaintiff fulfills the particularity requirement of Rule 9(b) by pleading the misrepresentations with particularity and where possible the roles of the individual defendants in the misrepresentations. Id. at 1440. See also Winer Family Trust v. Queen, 503 F.3d 319, 335 (3d Cir.2007) (noting that “the group pleading doctrine allows a plaintiff to plead that defendants made a misstatement or omission of a material fact without pleading particular facts associating the defendants to the alleged fraud”); In re Solv-Ex Corp. Securities Litig., 210 F.Supp.2d 276, 283 (S.D.N.Y. 2000) (noting that the group pleading doctrine permits plaintiffs to “rely on a presumption that statements in prospectuses, registration statements, annual reports, press releases, or other group-published information, are the collective work of those individuals with direct involvement in the everyday business of the company”) (internal quotation marks and citations omitted); In re Livent, Inc. Securities Litig., 78 F.Supp.2d 194, 219 (S.D.N.Y.1999) (noting that the doctrine allows plaintiffs “to allege that misstatements contained in company documents may be presumed to be the work of the company’s officers and directors”). The Sixth Circuit neither adopted nor rejected the group pleading doctrine either before or after the passage of the PSLRA. City of Monroe Employees Retirement System v. Bridgestone Corp., 399 F.3d 651, 690 (6th Cir.2005) (noting that “[tjhis court has not taken a position on whether [the group pleading] exception exists” and that it was not necessary therein to decide the current viability of that doctrine). With that overview of the group pleading doctrine, this Court turns to the question of whether that doctrine has survived the passage of the PSLRA. As is indicated above, the PSLRA requires that a complaint setting forth claims of securities fraud, inter alia, “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b) (emphasis added). In Southland Securities Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353 (5th Cir.2004), the court held that the use of the phrase “the defendant” in § 21D(b) of the PSLRA meant that “may only reasonably be understood to mean ‘each defendant’ in multiple defendant cases, as it is inconceivable that Congress intended liability of any defendants to depend on whether they were all sued in a single action or were each sued alone in several separate actions.” Id. at 364-65. As a consequence, the Southland Securities Corp. court concluded that the group pleading doctrine did not survive the passage of the PSLRA, assuming that it had previously been viable, for that reason and because it conflicted with the pleading requirement established by that statute, writing: The “group pleading” doctrine conflicts with the scienter requirement of the PSLRA because, even if a corporate officer’s position supports a reasonable inference that he likely would be negligent in not being involved in the preparation of a document or aware of its contents, the PSLRA state of mind requirement is severe recklessness or actual knowledge. Therefore, we agree with the district court that the PSLRA requires the plaintiffs to “distinguish among those they sue and enlighten each defendant as to his or her particular part in the alleged fraud.” As such, corporate officers may not be held responsible for unattributed corporate statements solely on the basis of their titles, even if their general level of day-to-day involvement in the corporation’s affairs is pleaded. However, corporate documents that have no stated author or statements within documents not attributed to any individual may be charged to one or more corporate officers provided specific factual allegations link the individual to the statement at issue. Such specific facts tying a corporate officer to a statement would include a signature on the document or particular factual allegations explaining the individual’s involvement in the formulation of either the entire document, or that specific portion of the document, containing the statement. Various unattributed statements within documents may be charged to different individuals, and specific facts may tie more than one individual to the same statement. And, the corporation itself may be treated as making press releases and public statements issued by authorized officers on its behalf, and statements made by its authorized officers to further the interests of the corporation. Consistent with our rejection of the “group pleading” doctrine, we do not construe allegations contained in the Complaint against the “defendants” as a group as properly imputable to any particular individual defendant unless the connection between the individual defendant and the allegedly fraudulent statement is specifically pleaded. While the plaintiffs aver in paragraph 21 of the Complaint that the individual defendants “each controlled the contents of and participated in writing INSpire’s SEC filings, reports and releases,” this conclu-sory allegation fails to specify which of these documents is attributable to each individual defendant, let alone which portions or statements within these documents are assignable to each individual defendant. Id. at 365. In Winer Family Trust, the Third Circuit reached the same conclusion, based upon similar reasoning. 503 F.3d at 335-36. The Seventh Circuit has also concluded that the group pleading doctrine did not survive the enactment of the PSLRA. Makor Issues & Rights, Ltd. v. Tellabs, Inc., 437 F.3d 588, 602-03 (7th Cir.2006), reversed on other grounds sub nom., Tellabs, Inc. v. Makor Issues & Rights, Ltd., - U.S. -, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). In contrast, the Ninth and the Tenth Circuits have continued to apply the group pleading doctrine after the enactment of the PSLRA; however, those decisions merely followed precedent which predated the adoption of that statute, without discussing the impact of that statute on that doctrine. Howard v. Everex Systems, Inc., 228 F.3d 1057 (9th Cir.2000); Schwartz v. Celestial Seasonings, Inc., 124 F.3d 1246, 1254 (10th Cir.1997). In addition, a number of District Courts in this Circuit have held that the doctrine has continued vitality. See, e.g., In re SmarTalk Teleservices, Inc. Sec. Litig., 124 F.Supp.2d 527, 545 (S.D.Ohio 2000) (Sar-gus, J.). However, other District Courts have reached the opposite conclusion. See, e.g., D.E. & J Ltd. Partnership v. Conaway, 284 F.Supp.2d 719 (E.D.Mich.2003). This Court is convinced by the rationale adopted by the Third, Fifth and Seventh Circuits in, respectively, Winer Family Trust, Southland Securities Corp. and Tellabs. The group pleading doctrine is antithetical to the pleading requirement for scienter set forth in § 21D(b) of the PSLRA. Accordingly, this Court concludes that, assuming it was applicable in the Sixth Circuit before the adoption of the PSLRA, the group pleading doctrine has not survived that event. Therefore, this Court will not utilize that doctrine in determining whether the Plaintiffs’ Amended Complaint (Doc. #22) is in compliance with the applicable pleading standards. II. Scienter A major focus of the Defendants’ Motion to Dismiss (Doc. # 24) is that the Plaintiffs have failed to allege the element of scien-ter in adequate fashion. The Defendants initially set forth arguments relating to the appropriate legal standards to apply when engaging in that analysis, following which they set forth their assertions as to why the Amended Complaint (Doc. #22) fails to meet those standards. As a means of analysis, this Court will initially set forth applicable legal standards, about which there could be no dispute, following which it will turn to the Defendants’ arguments concerning legal standards which differ from those which the Court initially discusses. The Court will then address the parties’ arguments concerning the application of those standards to the allegations in the Plaintiffs’ Amended Complaint. A. Legal Standards Concerning Scienter About Which There Could Be No Dispute The Supreme Court has indicted that scienter is a “mental state embracing intent to deceive, manipulate, or defraud.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n. 12, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). Therein, the Court also noted that it was not necessary to address the question of whether reckless behavior is sufficient for liability under Rule 10b-5. Id. In Earthboard Sports, the Sixth Circuit discussed the requirement of scienter: As we have noted elsewhere, scienter is limited to those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and that present a danger of misleading buyers or sellers which is either known to the defendant or is so obvious that the defendant must have been aware of it. Platsis v. E.F. Hutton & Co., 946 F.2d 38, 40 (6th Cir.1991) (citations and internal quotation marks omitted). “In securities fraud claims based on statements of present or historical fact — such as the claims Plaintiffs bring in this case— scienter consists of knowledge or recklessness.” PR Diamonds, Inc. v. Chandler, 364 F.3d 671, 681 (6th Cir.2004). 481 F.3d at 917-18. See also Helwig v. Vencor, Inc., 251 F.3d 540, 548 (6th Cir.2001) (en banc) (noting that the Sixth Circuit has long recognized recklessness as a sufficient mental state to impose liability under § 10(b) and Rule 10b — 5). In PR Diamonds, Inc. v. Chandler, 364 F.3d 671 (6th Cir.2004), the Sixth Circuit noted that recklessness is “ ‘highly unreasonable conduct which is an extreme departure from the standards of ordinary care’ ” and that “[w]hile the danger need not be known, it must at least be so obvious that any reasonable man would have known of it.” Id. at 681, 684 (first quotation from Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017, 1025 (6th Cir.1979)). As is indicated above, the pleading requirements adopted by the PSLRA are set forth in § 21D(b) of that statute, which provides in pertinent part: (b) Requirements for securities fraud actions (1) Misleading statements and omissions In any private action arising under this chapter in which the plaintiff alleges that the defendant— (A) made an untrue statement of a material fact; or (B) omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances in which they were made, not misleading; the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed. (2) Required state of mind In any private action arising under this chapter in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall, with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind. 15 U.S.C. § 78u-4(b). The Third Circuit has indicated that the heightened pleading standards under the PSLRA is a reflection of the objective of Congress “to provide a filter at the earliest stage (the pleading stage) to screen out lawsuits that have no factual basis.” In re NAHC, Inc. Securities Litig., 306 F.3d 1314, 1332-33 (3d Cir.2002) (citation omitted). In Tellabs, Inc. v. Makor Issues & Rights, Ltd., — U.S. -, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007), the Supreme Court held that, in determining whether the plaintiff has stated “with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind,” as required by § 21D(b)(2), courts must consider competing inferences and that “an inference of scienter must be more than merely plausible or reasonable — it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Id. at 2504-05. The Tellabs Court also emphasized that the focus of the inquiry is on “whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.” Id. at 2509 (emphasis in the original). In addition, the Supreme Court indicated therein that courts must consider “other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Id. (citing 5B Wright & Miller, Federal Practice and Procedure § 1357). In Earthboard Sports, the Sixth Circuit reiterated that it applies the totality-of-the-circumstances test, in order to determine whether a plaintiff has met the pleading requirements of § 21D(b)(2) and set forth a non-exclusive list of factors which, among others, are considered when deciding whether the plaintiff has adequately alleged scienter: (1) insider trading at a suspicious time or in an unusual amount; (2) divergence between internal reports and external statements on the same subject; (3) closeness in time of an allegedly fraudulent statement or omission and the later disclosure of inconsistent information; (4) evidence of bribery by a top company official; (5) existence of an ancillary lawsuit charging fraud by a company and the company’s quick settlement of that suit; (6) disregard of the most current factual information before making statements; (7) disclosure of accounting information in such a way that its negative implications could only be understood by someone with a high degree of sophistication; (8) the personal interest of certain directors in not informing disinterested directors of an impending sale of stock; and (9) the self-interested motivation of defendants in the form of saving their salaries or jobs. 481 F.3d at 917 (quoting City of Monroe Employees Ret. Sys. v. Bridgestone Corp., 399 F.3d 651, 683 (6th Cir.2005)). Since that list of factors was initially adopted by the Sixth Circuit in Helwig v. Vencor, Inc., 251 F.3d 540 (6th Cir.2001) (en banc), this Court will refer to them as the “Helwig factors,” as have the parties. Parenthetically, in Helwig, the Sixth Circuit stressed that, while not exhaustive, the list is “at least helpful in guiding securities fraud pleading.” 251 F.3d at 552. Of course, given that the Tellabs Court directed courts to focus their inquiry on “whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard” (127 S.Ct. at 2509 (emphasis in the original)), this Court will not consider each of those factors in isolation. The PSLRA added § 21E to the Exchange Act as a safe harbor, limiting liability for forward-looking statements. Th.at statute provides in pertinent part: (c) Safe harbor (1) In general Except as provided in subsection (b) of this section, in any private action arising under this chapter that is based on an untrue statement of a material fact or omission of a material fact necessary to make the statement not misleading, a person referred to in subsection (a) of this section shall not be liable with respect to any forward-looking statement, whether written or oral, if and to the extent that— (A) the forward-looking statement is— (i) identified as a forward-looking statement, and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement; or (ii) immaterial; or (B) the plaintiff fails to prove that the forward-looking statement— (i) if made by a natural person, was made with actual knowledge by that person that the statement was false or misleading; or (ii) if made by a business entity; was— (I) made by or with the approval of an executive officer of that entity; and (II) made or approved by such officer with actual knowledge by that officer that the statement was false or misleading. (2) Oral forward-looking statements In the case of an oral forward-looking statement made by an issuer that is subject to the reporting requirements of section 78m(a) of this title or section 78o(d) of this title, or by a person acting on behalf of such issuer, the requirement set forth in paragraph (1)(A) shall be deemed to be satisfied— (A) if the oral forward-looking statement is accompanied by a cautionary statement— (i) that the particular oral statement is a forward-looking statement; and (ii) that the actual results might differ materially from those projected in the forward-looking statement; and (B) if- (i) the oral forward-looking statement is accompanied by an oral statement that additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statement is contained in a readily available written document, or portion thereof; (ii) the accompanying oral statement referred to in clause (i) identifies the document, or portion thereof, that contains the additional information about those factors relating to the forward-looking statement; and (iii) the information contained in that written document is a cautionary statement that satisfies the standard established in paragraph (1)(A). 15 U.S.C. § 78u-5(e). Thus, in PR Diamonds, the Sixth Circuit noted that the safe harbor provision contained in the PSLRA renders scienter irrelevant for forward-looking statements accompanied by meaningful cautionary language and requires actual knowledge of the statements’ false or misleading character for such statements not accompanied with meaningful cautionary language. 364 F.3d at 681 n. 3 (citing 15 U.S.C. § 78u-5(c)(l)(A) and (B)). Under § 21E(b)(2)(A), a forward-looking statement “included in a financial statement prepared in accordance with generally accepted accounting principles” is excluded from the safe harbor. 15 U.S.C. § 78u-5(b)(2)(A). B. Defendants’ Arguments Concerning Additional Legal Standards The Defendants have presented a number of legal propositions, which they contend are applicable to the resolution of the issue of whether Plaintiffs have adequately plead scienter, which will be addressed in the order presented. First, they contend that only the most plausible inference can meet the requirement of § 21D(b)(2) that a plaintiff allege particularized facts giving rise to a strong inference of scienter. See Doc. #24 at 14. On the contrary, the Tellabs Court held that, to meet that requirement, an inference must be “at least as compelling as any opposing inference of nonfraudulent intent.” 127 S.Ct. at 2505. Therefore, this Court rejects Defendants’ legal argument that only the most plausible inference can meet the pleading burden established by § 21D(b)(2) of the PSLRA. Second, Defendants contend that, in order to have complied with the requirement contained in § 21D(b)(2), the Plaintiffs must have alleged that the Defendants received concrete and personal benefits as a result of the alleged scheme. Doc. # 24 at 15. In support thereof, the Defendants cite Albert Fadem Trust v. Am. Elec. Power Co., 334 F.Supp.2d 985 (S.D.Ohio 2004) (Marbley, J.). Therein, in the context of discussing why the plaintiffs’ allegations of opportunity and motive in that litigation were not sufficient to establish the requisite strong inference of scienter, the District Court wrote, “[t]he ‘plaintiffs must assert concrete and personal benefit to the individual defendants resulting from the fraud.’ ” Id. at 1015 (quoting In re K-tel International, Inc. Securities Litig., 300 F.3d 881, 894 (8th Cir.2002)). This Court cannot agree with the Defendants’ argument in that regard. As long as the inference of scienter from Plaintiffs’ Amended Complaint is “at least as compelling as any opposing inference of nonfraudulent intent” (Tellabs, 127 S.Ct. at 2505), it does not matter whether any one or more or all of the Defendants personally derived a benefit from the alleged scheme. In other words, the absence of such a benefit will not, in and of itself, prevent this Court from concluding that the Plaintiffs have met their burden of pleading scienter under the PSLRA. That said, however, the existence or nonexistence of such a benefit could certainly be important in determining whether Plaintiffs have met that burden. Third, Defendants argue that an allegation that a defendant has violated generally accepted accounting principles (“GAAP”), in and of itself, is not sufficient to state a securities law claim. Doc. # 24 at 18-19. This Court agrees, in part. In PR Diamonds, the Sixth Circuit held that “ ‘[t]he failure to follow GAAP is, by itself, insufficient to state a securities fraud claim.’ ” 364 F.3d at 684 (quoting In re Comshare, Inc. Securities Litig., 183 F.3d 542, 553 (6th Cir.1999)). However, the Sixth Circuit cautioned in PR Diamonds that, although “a strong inference of scienter cannot be drawn from speculative and conclusory allegations of GAAP violations ..., some courts have recognized that an inference of knowledge or recklessness may be drawn from allegations of accounting violations that are so simple, basic, and pervasive in nature, and so great in magnitude, that they should have been obvious to a defendant.” Id. This Court will follow PR Diamonds. Fourth, the Defendants argue that generalized imputations of knowledge based upon a defendant’s corporate position are insufficient to raise a strong inference of scienter. Doc. # 24 at 19-20. Once again, this Court agrees, in part. In PR Diamonds, the Sixth Circuit explained: Contrary to Plaintiffs’ assertions, fraudulent intent cannot be inferred merely from the Individual Defendants’ positions in the Company and alleged access to information. As even the authorities which Plaintiffs cite indicate, the Complaint must allege specific facts or circumstances suggestive of their knowledge. Without more, Plaintiffs fail to meet the PSLRA requirement to state with particularity facts giving rise to a strong inference of scienter. 364 F.3d at 688. In accordance with PR Diamonds, therefore, this Court concludes that scienter cannot be inferred from the Defendants’ positions in Huffy, alone. Fifth, in their Amended Complaint, the Plaintiffs rely upon information provided to them by a number of confidential witnesses or informants to support their claims against the Defendants. See Doc. # 22 at ¶¶ 20-28 (identifying the confidential witnesses). The Defendants argue that this Court may not consider those allegations, because the Plaintiffs have failed to identify those witnesses and then-sources of information with specificity. Doc. # 24 at 20-22. In Higginbotham v. Baxter Intern., Inc., 495 F.3d 753 (7th Cir.2007), the Seventh Circuit discussed the role of information supplied by confidential or anonymous witnesses in satisfying the pleading requirements of the PSLRA: One upshot of the approach that Tel-labs announced is that we must discount allegations that the complaint attributes to five “confidential witnesses” — one ex-employee of the Brazilian subsidiary, two ex-employees of Baxter’s headquarters, and two consultants. It is hard to see how information from anonymous sources could be deemed “compelling” or how we could take account of plausible opposing inferences. Perhaps these confidential sources have axes to grind. Perhaps they are lying. Perhaps they don’t even exist. At oral argument, we asked when the identity of these five persons would be revealed and how their stories could be tested. The answer we received was that the sources’ identity would never be revealed, which means that their stories can’t be checked. Yet Tellabs requires judges to weigh the strength of plaintiffs’ favored inference in comparison to other possible inferences; anonymity frustrates that process. Not that anonymity is possible in the long run. There is no “informer’s privilege” in civil litigation. Defendants are entitled to learn in discovery who has relevant evidence, and to obtain that evidence. Indeed, plaintiffs are obliged by Fed.R.Civ.P. 26(a)(1)(A) to provide defendants with the names and addresses of all persons “likely to have discoverable information that the disclosing party may use to support its claims or defenses.” Concealing names at the complaint stage thus does not protect informers from disclosure (and the risk of retaliation); it does nothing but obstruct the judiciary’s ability to implement the PSLRA. This does not mean that plaintiffs must reveal all of their sources, as one circuit has required. See In re Silicon Graphics Inc. Securities Litigation, 183 F.3d 970, 985 (9th Cir.1999). A complaint is not a discovery device. Our point, rather, is that anonymity conceals information that is essential to the sort of comparative evaluation required by Tellabs. To determine whether a “strong” inference of scienter has been established, the judiciary must evaluate what the complaint reveals and disregard what it conceals. It is possible to imagine situations in which statements by anonymous sources may corroborate or disambiguate evidence from disclosed sources. Informants sometimes play this role in applications for search warrants. Because it is impossible to anticipate all combinations of information that may be presented in the future, and because Tellabs instructs courts to evaluate the allegations in their entirety, we said above that allegations from “confidential witnesses” must be “discounted” rather than ignored. Usually that discount will be steep. It is unnecessary to say more today. Id. at 756-57. Accord, Frank v. Dana Corp., 525 F.Supp.2d 922, 931 (N.D.Ohio2007); In re Proquest Securities Litig., 527 F.Supp.2d 728, 739-40 (E.D.Mich.2007). Contra Rosenbaum Capital, LLC v. McNulty, 549 F.Supp.2d 1185 (N.D.Cal.2008). The Seventh Circuit revisited the issue of confidential or anonymous sources in its decision on remand from the Supreme Court in Tellabs. Makor Issues & Rights, Ltd. v. Tellabs, Inc., 513 F.3d 702 (7th Cir.2008). Therein, the Seventh Circuit distinguished the requirement it had adopted in Higginbotham six months earlier, writing: But that was a very different ease from this one. The misconduct alleged [in Higginbotham ] consisted of frauds committed by Baxter’s Brazilian subsidiary, but because the suit was against the parent, the plaintiffs had to show that the parent knew about the Brazilian fraud. The subsidiary had tried to conceal it from its parent as well as from the Brazilian government. There was no basis other than the confidential sources, described merely as three ex-employees of Baxter and two consultants, for a strong inference that the subsidiary had failed to conceal the fraud from its parent and thus that the management of the parent had been aware of the fraud during the period covered by the complaint. The confidential sources listed in the complaint in this case, in contrast, are numerous and consist of persons who from the description of their jobs were in a position to know at first hand the facts to which they are prepared to testify, such as the returns of the 5500s, that sales of the 5500 were dropping off a cliff while the company pretended that demand was strong, that the 6500 was not approved by Re