Full opinion text
OPINION AND ORDER MELINDA HARMON, District Judge. Pending before the Court in the above referenced cause are three motions for summary judgment, filed on June 26, 2006 by (1) Merrill Lynch, Pierce, Fenner & Smith, Inc. and Merrill Lynch & Co. (collectively, “Merrill Lynch”) (instrument # 4816); (2) Barclays PLC, Barclays Bank PLC, and Barclays Capital, Inc. (collectively, “Barclays”) (# 4817); and (3) Credit Suisse First Boston LLC (now Credit Suisse Securities (USA) LLC), Pershing LLC, and Credit Suisse First Boston (USA), Inc. (now Credit Suisse (USA), Inc.) (collectively “CSFB”) (# 4824). These motions for summary judgment were “updated” after the issuance of two key decisions, Regents of University of California v. Credit Suisse First Boston (USA), 482 F.3d 372 (5th Cir.2007)(2-1) (hereinafter, “Regents”), cert, denied sub nom. Regents of University of California v. Merrill Lynch, Pierce, Fenner & Smith, Inc., - U.S. -, 128 S.Ct. 1120, 169 L.Ed.2d 957 (2008), and Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 128 S.Ct. 761, 169 L.Ed.2d 627 (2008) (hereinafter, “Stoneridge”) (5-3, with Justice Breyer not participating). After careful review and consideration of the record and the law, as a matter of law this Court concludes that Regents and Stoneridge are dispositive of Lead Plaintiff the Regents of the University of California’s § 10(b) claims against these secondary-actor Financial Institution Defendants, and therefore of the motions for summary judgment. I. Standard of Review Summary judgment under Federal Rule of Civil Procedure 56(c) is appropriate when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” See, e.g., Condrey v. SunTrust Bank of Ga., 429 F.3d 556, 562 (5th Cir.2005). Movant bears the initial burden of demonstrating that there is no genuine issue of material fact. Id., citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists if the summary judgment evidence is such that a reasonable jury could return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding whether a genuine issue of material fact exists, “we view facts and inferences in the light most favorable to the nonmoving party.” Mahaffey v. Gen. Sec. Ins. Co., 543 F.3d 738, 740 (5th Cir.2008). While “failure to state a claim” is usually challenged by a motion to dismiss under Rule 12(b)(6), it may also serve as a basis for summary judgment. Whalen v. Carter, 954 F.2d 1087, 1098 (5th Cir.1992). In a summary judgment context, the failure to state a claim “is the ‘functional equivalent’ of the failure to raise a genuine issue of material fact.” Id. In such an instance also, the court must “accept all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” “[Evaluated much the same as a 12(b)(6) motion to dismiss,” summary judgment is appropriate “if accepting all alleged facts as true, the plaintiffs’ complaint nonetheless failed to state a claim.” Ashe v. Corley, 992 F.2d 540, 544 (5th Cir.1993); Gilbert v. Outback Steakhouse of Fla., Inc., 295 Fed.Appx. 710, 712-13 (5th Cir.2008). See also United States ex rel. Simmons v. Zibilich, 542 F.2d 259, 260 n. 3 (5th Cir.1976) (“The district court’s order does not state whether it rests on Rule 12(b)(6) or on Rule 56. That difficulty raises no material obstacle, since the standard to be met in granting a 12(b)(6) motion (plaintiff unable to prove any set of facts that would entitle him to recovery) and the standard for granting a motion for summary judgment (no dispute of material fact and movant entitled to judgment by law) both reduce to the same question in this case: Was defendant entitled to judgment on the basis that the law does not recognize a federal cause of action for the facts alleged by plaintiff.”). II. Relevant Law A. The Fifth Circuit in Regents In Regents, 482 F.3d 372, on the interlocutory appeal reversing this Court’s class certification in Newby and remanding the case for further proceedings, the Fifth Circuit briefly summarized Lead Plaintiffs § 10(b) and Rule 10b-5(a) and (c) allegations of scheme liability against the Financial Institution Defendants as follows: Plaintiffs allege that defendants Credit Suisse First Boston ..., Merrill Lynch & Company, Inc ...., and Barclays Bank PLC ... entered into partnerships and transactions that allowed Enron Corporation (“Enron”) to take liabilities off its books temporarily and to book revenue from the transactions when it was actually incurring debt. The common feature of these transactions is that they allowed Enron to misstate its financial condition; there is no allegation that the banks were fiduciaries of the plaintiffs, that they improperly filed financial reports on Enron’s behalf, or that they engaged in wash sales or other manipulative activities directly in the market for Enron securities. Id. at 377. Moreover, Plaintiffs allege that the banks knew exactly why Enron was engaging in seemingly irrational transactions such as [the Nigerian Barge transaction]. They cite certain of the banks’ internal communications they characterize as proving that the banks were aware of the personal compensation Enron executives received as a result of inflating their stock price through the illusion of revenue and that the banks intended to profit by helping the executives maintain that illusion. Likewise, the plaintiffs allege that, although each defendant may not have been aware of exactly how each other defendant was helping Enron to misrepresent its financial health, the defendants knew in general that other defendants were doing so and that Enron was engaged in a long-term scheme to defraud investors and maximize executive compensation by inflating revenue and disguising risk and liabilities through its partnerships and transactions. Id. at 377. The Honorable Jerry E. Smith, writing for the majority, first focused on this Court’s “incorrect” definition, drawn from a dictionary, of “deceptive act” under § 10(b) as including “participation in a ‘transaction whose principal, purpose and effect is to create a false appearance of revenues,’ ” and determined that this Court’s definition was “dispositive of this appeal” because it “sweeps too broadly.” Id. at 378, 382, 383, 390. Moreover, this Court also concluded “that rule 10b-5(a)’s prohibition of any ‘scheme ... to defraud’ gives rise to joint and several liability for defendants who commit individual acts of deception in furtherance of such a scheme,” such as that which Lead Plaintiff attempted to plead in Newby. Id. at 378. The appellate court opined that only certain Supreme Court case law, and not a dictionary, should be the source of the definition of “deceptive device.” 482 F.3d at 389. It admonished, “It is essential for us to ensure that the district court does not misapply aiding-and-abetting liability under the guise of primary liability, through an overly broad definition of ‘deceptive aet[s],’ and thereby give rise to an erroneous classwide presumption of fraud on the market.” Id. at 383. Judge Smith stressed the Supreme Court’s holding that for primary liability, a “device,” such as a scheme, is not “deceptive” within the meaning of § 10(b) “unless it involves breach of some duty of candid disclosure” owed to investors; otherwise the defendant merely aided and abetted the fraud by Enron by participating in a scheme and engaging in transactions that allowed Enron to misrepresent its financial condition. Id. at 389, citing Chiarella v. US., 445 U.S. 222, 234-35, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980) (“When an allegation of fraud is based upon nondisclosure, there can be no fraud absent a duty to speak.... We hold that a duty to disclose under § 10(b) does not arise from the mere possession of nonpublic market information.”), and U.S. v. O’Hagan, 521 U.S. 642, 655, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997) (“Because the deception essential to the misappropriation theory involves feigning fidelity to the source of information, if the fiduciary discloses to the source that he plans to trade on nonpublic information, there is no ‘deceptive device’ and thus no § 10(b) violation.”). With respect to the effect of a duty to disclose on the element of reliance under Affiliated Ute, the Fifth Circuit opined, Where liability is premised on a failure to disclose rather than on a misrepresentation, “positive proof of reliance is not a prerequisite to recovery.... This obligation to disclose and the withholding of a material fact establish the requisite element of causation in fact.” .... For us to invoke the Affiliated Ute presumption of reliance on an omission, a plaintiff must (1) allege a case primarily based on omissions or nondisclosure and (2) demonstrate that the defendant owed him a duty of disclosure. The case at bar does not satisfy this conjunctive test. Assuming arguendo that plaintiffs’ case primarily concerns improper omissions, the banks were not fiduciaries and were not otherwise obligated to the plaintiffs. They did not owe plaintiffs any duty to disclose the nature of the alleged transactions. 482 F.3d at 383-84 (citations omitted). See also Regents, 482 F.3d at 384 (“ ‘[D]eception within the meaning of § 10(b) requires that a defendant fail to satisfy a duty to disclose material information to a plaintiff. Merely pleading that defendants failed to fulfill that duty by means of a scheme or an act rather than by a misleading statement does not entitle plaintiffs to employ the Affiliated Ute presumption.”). The Fifth Circuit expressly found, “Enron had a duty [of candid disclosure] to its shareholders, but the banks did not. The transactions in which the banks engaged at most aided and abetted Enron’s deceit by making its misrepresentations more plausible. The banks’ participation in the transactions, regardless of the purpose or effect of those transactions, did not give rise to primary liability under § 10(b).” Id. at 390. Because Lead Plaintiff had pleaded its claims against the Financial Institution Defendants primarily under Rule 10b-5(a) and (c), and not subsection (b), and that an Affiliated Ute presumption applied, this Court had determined that no preliminary finding of market efficiency or reliance needed to be made. This Court did conclude “that the banks lacked any specific duty” to Enron investors; but it found instead that the banks had a “duty not to engage in a fraudulent scheme” or “course of conduct,” and determined that because they breached that duty, the Affiliated Ute presumption of reliance applied. Regents, 482 F.3d at 384; In re Enron Corp. Sec., 529 F.Supp.2d 644, 739 (S.D.Tex.2006) (relying on Smith v. Ayres, 845 F.2d 1360, 1363 & n. 8 (5th Cir.1988)), subsequent determination, 236 F.R.D. 313 (S.D.Tex. 2006), rev’d and remanded sub nom. Regents of University of Cal. v. Credit Suisse First Boston (USA), Inc., 482 F.3d 372, 384 & n. 19 (5th Cir.2007), cert. denied sub nom. Regents of University of Cal. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., — U.S. —, 128 S.Ct. 1120, 169 L.Ed.2d 957 (2008). The Fifth Circuit disagreed, stating that this Court had misconstrued Smith v. Ayres. Regents, 482 F.3d at 384 (“Neither Smith nor any other of this circuit’s cases is authority for [the] proposition” that the Affiliated Ute presumption of reliance “applies because the banks omitted their duty not to engage in a fraudulent scheme.”). The panel stated, When [the district court] determined (correctly) that the banks owed no duty to the plaintiffs other than the general duty not to engage in fraudulent schemes or acts (that is, the duty not to break the law), the district court should have declined to apply the Affiliated Ute presumption. 482 F.3d at 385. Furthermore the panel opined, Id. See also id. at 383 (stating that the district court’s “determination that the Affiliated Ute presumption applies to the facts of this case is incorrect”). Therefore, concluded the majority in Regents, “the only presumption potentially available in this case” was fraud-on-the market, which requires a showing of an efficient market, a material, public misrepresentation or conduct, and public knowledge and reliance on that misrepresentation or conduct. Id. at 383, citing Basic, Inc. v. Levinson, 485 U.S. 224, 248 & n. 27, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). The logic of Affiliated Ute is that where a plaintiff is entitled to rely on the disclosures of someone who owes him a duty, ... [i]t is natural to expect a plaintiff to rely on the candor of one who owes him the duty of disclosure.... Here, however, where the plaintiffs had no expectation that the banks would provide them with information, there is no reason to expect that the plaintiffs were relying on their candor. Accordingly, it is only sensible to put plaintiffs to their proof that they individually relied on the banks’ omissions. Nevertheless, even with its proposed revised theory, Lead Plaintiff insists this is not a fraud-on-the-market case, but an Affiliated Ute case; Lead Plaintiff emphasized at the hearing on February 1, 2008, after Regents and Stoneridge were handed down, “It’s a straight omissions case with a duty, and the question is whether the duty arises with the banks’ financial banking activities in this case.” # 5885 at 22. Thus Lead Plaintiff maintains that the fraud-on-the-market theory is not applicable here. B. Stoneridge In Stoneridge, a 5-3 opinion authored by Justice Anthony Kennedy and issued after Regents, the Supreme Court focused on the viability of what is frequently termed the theory of “scheme liability,” which had caused conflict among courts and was at the core of Lead Plaintiffs arguments against the Financial Institution Defendants before Stoneridge: “when, if ever, an injured investor may rely upon § 10(b) to recover from a party that neither makes a public misstatement nor violates a duty to disclose but does participate in a scheme to violate § 10(b).” 128 S.Ct. at 767. In the Stoneridge class action, filed by investors in common stock issued by Charter Communications, Inc. (“Charter”), two equipment suppliers, Scientific-Atlanta and Motorola, participated in a number of sham business transactions with Charter. Charter, in turn, misled its auditor and issued misleading, inflated financial statements that affected its stock price. The Charter investors alleged that the suppliers knowingly participated in a scheme for the purpose of creating a false appearance about Charter’s revenues. The Supreme Court found that although the two suppliers knew or recklessly disregarded that their transactions with Charter had no economic substance, that the transactions were recorded in back-dated documents, and that Charter intended to use them to inflate its revenues and operating cash flow by $17 million in order to meet Wall Street’s expectations, nevertheless the suppliers themselves were not involved in preparing or disseminating Charter’s fraudulent financial statements, made no statements to Charter shareholders or the investing public, had no contact with the investors, and had no duty to disclose then-deceptive acts to Charter shareholders. “No member of the investing public had knowledge, either actual or presumed, of respondents’ deceptive acts during the relevant times.” 128 S.Ct. at 769. While clearly holding that an oral misrepresentation or omission is not essential for liability under § 10(b) and that “[cjonduct itself can be deceptive” and can give rise to liability when it has the “requisite proximate relation to the investors’ harm,” the Supreme Court emphasized, “Reliance by the plaintiff upon the defendant’s deceptive acts is an essential element of the § 10(b) private cause of action.” Id. at 769. Asserting that “reliance is tied to causation, leading to the inquiry whether respondents’ acts were immediate or remote to the injury,” the Supreme Court decided that the suppliers could not be liable under the statute because their “deceptive acts, which were not disclosed to the investing public, [were] too remote to satisfy the requirement of reliance.” Id. at 770. Thus in addition to satisfaction of the elements of a primary violation under the statute, the rather vague touchstone for determining liability based on a secondary actor’s conduct or acts under § 10(b) is whether it is “immediate or remote to the injury.” Id. at 770. Additionally, the Supreme Court emphasized that the suppliers’ wrongful conduct “took place in the marketplace for goods and services, not in the investment sphere” (which was not the case for Newby plaintiffs), and “Charter was free to do as it chose in preparing its books, conferring with its auditor, and then issuing its financial statements.” Id. at 769, 774. The Supreme Court had previously recognized that a class-wide rebuttable presumption of reliance may arise in two circumstances: (1) an omission of a material fact made by one with a duty to disclose or (2) under the fraud-on-the-market doctrine, the statement [or deceptive act] at issue became public and that information was reflected in the market price of the security. Id. at 769. Given the facts of Stoneridge, the Supreme Court found that neither circumstance was met, so there was no rebuttable class-wide presumption of reliance applicable under either Affiliated Ute or under the fraud-on-the-market theory: Respondents had no duty to disclose; and their deceptive acts were not communicated to the public. No member of the investing public had knowledge, either actual or presumed, of respondents’ deceptive acts during the relevant times. Petitioner, as a result, cannot show reliance upon any of respondents’ actions except in an indirect chain that we find too remote for liability. Id. See also In re Parmalat Sec. Litig., 570 F.Supp.2d 521, 526 (S.D.N.Y.2008) (“Stoneridge made plain that investors must show reliance upon a defendant’s own deceptive conduct before that defendant, otherwise a secondary actor, may be found primarily liable.”). The Supreme Court specifically addressed, though not by name, the theory of “scheme liability,” which was argued by Lead Plaintiff in the Newby action, and rejected it for policy reasons and under its new standard, i.e., whether the challenged conduct is “immediate or remote to the injury” [128 S.Ct. at 770]: Liability is appropriate, petitioner contends, because respondents engaged in conduct with the purpose and effect of creating a false appearance of material fact to further a scheme to misrepresent Charter’s revenue. The argument is that the financial statement Charter released to the public was a natural and expected consequence of respondents’ deceptive acts; had respondents not assisted Charter, Charter’s auditor would not have been fooled, and the financial statement would have been a more accurate reflection of Charter’s financial condition. That causal link is sufficient, petitioner argues, to apply Basic’s [fraud-on-the-market] presumption to respondents’ acts.... In effect petitioner contends that in an efficient market investors rely not only upon the public statements relating to a security but also upon the transactions those statements reflect. Were this concept of reliance to be adopted, the implied cause of action would reach the whole marketplace in which the issuing company does business; and there is no authority for this rule. 128 S.Ct. at 770. The majority concluded that merely because respondents engaged in conduct with the intention and result of creating a false appearance of material fact to further a scheme to misrepresent Charter’s revenue and that the financial restatement released by Charter to the public was “a natural and expected consequence of respondents’ deceptive acts” (in essence, the SEC’s test for liability), those facts were not sufficient to impose liability on the secondary actors. Id. at 770. As noted, because respondents’ acts in the case were not disclosed to the investing public, the majority determined that they were “too remote to satisfy the requirement of reliance. It was Charter, not respondents, that misled its auditor and filed fraudulent financial statements; nothing respondents did made it necessary or inevitable for Charter to record the transactions as it did.” Id. The Supreme Court did acknowledge and affirm its earlier recognition of an implied private right of action in the statute and its implementing regulation, but limited it by opining that implied causes of action are to be based only upon explicit indication from Congress. 128 S.Ct. at 768, citing Superintendent of Ins. of N.Y. v. Bankers Life & Casualty Co., 404 U.S. 6, 13 n. 9, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971), 772 (“Though the rule once may have been otherwise, it is settled that there is an implied cause of action only if the underlying statute can be interpreted to disclose the intent to create one. [citations omitted]”), and 773 (“Concerns with the judicial creation of a private cause of action caution against its expansion. The decision to extend the cause of action is for Congress, not for us. Though it remains the law, the § 10(b) private right should not be extended beyond its present boundaries.”). Explaining its heavy reliance on Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 177, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994) (5-1) (holding that a § 10(b) private civil action did not extend to aiders and abettors), also authored by Justice Kennedy, the majority in Stoneridge highlighted Congress’ post-Central Bank decision not to provide investors with an express cause of action for aiding and abetting in the PSLRA: The decision in Central Bank led to calls for Congress to create an express cause of action for aiding and abetting within the Securities Exchange Act---- Congress did not follow this course. Instead, in § 104 of the ... PSLRA, ... it directed prosecution of aiders and abettors by the SEC. 128 S.Ct. at 768-69, citing 15 U.S.C. § 78t(3). Justice Kennedy noted that instead, the statute provided other remedies. Id. at 771 (“Aiding and abetting liability is authorized in actions brought by the SEC but not by private parties.”); id. at 773 (“Secondary actors are subject to criminal penalties, see, e.g., 15 U.S.C. § 78ff, and civil enforcement by the SEC, see, e.g., § 78t(e).”). Indeed, Stoneridge follows the lead of Central Bank in reflecting the Supreme Court’s intent to limit the scope of the implied private cause of action under § 10(b) and Rule 10b-5. Yet it did not completely close the door on imposing liability on secondary actors: All secondary actors ... are not necessarily immune from private suit. The securities statutes provide an express private right of action against accountants and underwriters in certain circumstances, see 15 U.S.C. § 77k, and the implied right of action in § 10(b) continues to cover secondary actors who commit primary violations. 128 S.Ct. at 773-74, citing Central Bank, 511 U.S. at 191, 114 S.Ct. 1439. As in Central Bank, it did not clearly define the parameters of such secondary actor liability under § 10(b), but generally referenced the elements of a primary violation. “The conduct of a secondary actor must satisfy each of the elements or preconditions for liability”: “[i]n a typical § 10(b) private action a plaintiff must prove (1) a material misrepresentation or omission [or deceptive act] by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation; (5) economic loss; and (6) loss causation.” Id. at 768-69, 770. In the same vein, the Supreme Court also objected to the Stoneridge petitioner’s attempt to apply the statute “beyond the securities markets — the realm of financing business — to purchase and supply contracts-the realm of ordinary business operations,” i.e., the “market place for goods and services, not in the investment sphere,” which is generally governed by state law. Id. at 770, 774. It admonished, “Were the implied cause of action to be extended to the practices described here, however, there would be a risk that the federal power would be used to invite litigation beyond the immediate sphere of securities litigation and in areas already governed by functioning and effective state-law guarantees. Our precedents counsel against extension.” Id. at 770-71. While the statute is “not ‘limited to preserving the integrity of the securities markets,’ ... it does not reach all commercial transactions that are fraudulent and affect the price of a security in some attenuated way.” Id. at 771. The Court reiterated earlier rulings that § 10(b) “does not incorporate common-law fraud into federal law,” and it “should not be interpreted to provide a private cause of action against the entire marketplace in which the issuing company operates.” Id. Thus the Supreme Court objected generally on policy grounds to the practical consequences of expanding the reach of the statute to “expose a whole new class of defendants” to potential liability, “raising the costs of doing business,” and deterring overseas firms from doing business here. Id. at 772. Furthermore, since the implied private cause of action in § 10(b) was a judicial construct, not a right authorized by Congress, since evolving law has now settled that an implied cause of action exists “only if the underlying statute can be interpreted to disclose the intent to create one,” and since Congress enacted the PSLRA with its heightened pleading requirements and loss causation requirement, the Supreme Court concluded that restraint is the appropriate approach with the private right of action under § 10(b). Id. at 772-73. In contrast to the claims in Stoneridge, the Newby allegations of fraud remain largely within the investment sphere. Furthermore, if there is no duty of the Banks to disclose (as the Fifth Circuit concluded), to be actionable, the Newby claims must satisfy the require-merits of public disclosure of the Financial Defendants’ wrongful conduct and direct causation of the plaintiffs’ injuries. Under Stoneridge, allegations of scheme liability, alone, are insufficient to satisfy the reliance element of § 10(b). In sum, to be primarily liable, a secondary actor’s conduct must meet each element or precondition of a primary cause of action under § 10(b), including reliance and loss causation, demonstrating a “direct chain” between each wrongdoer, individually, and the defrauded investors. C. Law-of-the-Case Doctrine and the Mandate Rule The threshold legal/procedural issue in the instant case is whether, under the mandate rule, the Fifth Circuit’s ruling in Regents that the Financial Institution Defendants “did not owe plaintiffs any duty to disclose the nature of the alleged transactions,” forecloses Lead Plaintiff from continuing to litigate whether the Financial Defendants owed a duty to disclose to the Newby plaintiffs, or, as argued by Lead Plaintiff, to the market as a whole, the breach of which triggered an Affiliated Ute classwide presumption of reliance. Elsewhere the Fifth Circuit has explained, The mandate rule “is but a specific application of the general doctrine of law of the case.” United States v. Matthews, 312 F.3d 652, 657 (5th Cir.2002). “Absent exceptional circumstances, the mandate rule compels compliance on remand with the dictates of a superior court and forecloses relitigation of issues expressly or impliedly decided by the appellate court.” United States v. Lee, 358 F.3d 315, 321 (5th Cir.2004). The rule also bars “litigation of issues decided by the district court but foregone on appeal or otherwise waived, for example because they were not raised in the district court.” Id. The mandate rule applies unless: “(1) the evidence at a subsequent trial is substantially different; (2) there has been an intervening change of law by a controlling authority; [or] (3) the earlier decision is clearly erroneous and would work a manifest injustice.” Matthews, 312 F.3d at 657. United States v. Archundia, 242 Fed.Appx. 278, 279 (5th Cir.2007), cert. denied sub nom. Hernandez-Hernandez v. U.S., — U.S. —, 128 S.Ct. 1106, 169 L.Ed.2d 838 (2008). See also United States v. Becerra, 155 F.3d 740, 752 (5th Cir.1998) (Under “the well-settled ‘law of the case’ doctrine ... an issue of law or fact decided on appeal may not be reexamined either by the district court on remand or by the appellate court on a subsequent appeal.”), abrogated on other grounds as recognized in United States v. Farias, 481 F.3d 289 (5th Cir.2007). The law of the case doctrine “ ‘serves the practical goals of encouraging finality of litigation and discouraging ‘panel shopping.’ ” Becerra, 155 F.3d at 752, citing Illinois Cent. Gulf R.R. v. International Paper Co., 889 F.2d 536, 539 (5th Cir.1989). The doctrine “ ‘is predicated on the premise that ‘there would be no end to a suit if every obstinate litigant could, by repeated appeals, compel a court to listen to criticisms on their opinions or speculate of chances from changes in its members.’ ’ ” Becerra, 155 F.3d at 752, quoting White v. Murtha, 377 F.2d 428, 431 (5th Cir.1967) (quoting Roberts v. Cooper, 61 U.S. (20 How.) 467, 481, 15 L.Ed. 969 (1857)). “The mandate rule requires a district court on remand to effect our mandate and to do nothing else.” United States v. Castillo, 179 F.3d 321, 329 (5th Cir.1999). Moreover on remand, the district court “must implement both the letter and the spirit of the appellate court’s mandate and may not disregard the specific directives of that court.” Matthews, 312 F.3d at 657. “In implementing the mandate, the district court must ‘take into account the appellate court’s opinion and the circumstances it embraces.’ ” Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 453 (5th Cir.2007), quoting United States v. Lee, 358 F.3d at 321. See also Af-Cap, Inc. v. Republic of Congo, 462 F.3d 417, 425 (5th Cir.2006) (the mandate rule is an application of the law-of-the-case doctrine, which “‘applies only to issues that were actually decided, rather than all questions in the case that might have been decided, but were not.’... An issue is ‘actually decided’ if the court explicitly de.cided it or necessarily decided it by implication.”), cert. denied, 549 U.S. 1275, 127 S.Ct. 1511, 167 L.Ed.2d 247 (2007). In the instant action, the Financial Institution Defendants maintain, The mandate rule — the basic appellate ‘chain of command’ rule that allows the appellate process to function — forbids Lead Plaintiff from relitigating the question of whether there was a duty to disclose in this Court. Because Lead Plaintiffs entire opposition to summary judgment hinges on the existence of a duty to disclose already rejected by the Fifth Circuit, summary judgment must be entered in favor of the Financial Institution Defendants. # 5970 at 3. The Financial Institution Defendants contend that the Fifth Circuit “clearly considered this Court’s holding concerning the lack of a duty to disclose,” “characterized the Court’s opinion as a ‘determina[ation],’ ” and stated “that the district court’s ‘determination that the Affiliated Ute presumption applies to the facts of this case is incorrect.’ ” # 5986 at 6, quoting Regents, 482 F.3d at 385, 383. See also Regents, 482 F.3d at 390 (“Enron had a duty to its shareholders, but the banks did not.”); id. at 386 (the Financial Institution Defendants “owed no duty to Enron’s shareholders.”). The Financial Institution Defendants insist, “If, as Lead Plaintiff now asserts, the Fifth Circuit had considered this Court’s opinion regarding the duty to disclose to be nothing more than a ‘comment,’ it certainly would not have reversed the class certification order outright (which it clearly did), but would have had to remand the case with specific instructions that this Court decide whether defendants owed a duty to disclose.” # 5986 at 6. III. Arguments of the Parties A. Lead Plaintiffs Supplemental Opposition to Pending Motions for Summary Judgment (# 5939) and Second Supplemental Opposition (# 5980) Lead Plaintiff observes that under Stoneridge, while conduct alone can be seen as “deceptive” within the meaning of § 10(b), without more it cannot give rise to a class-wide presumption of reliance. Therefore, in response to the recent case law, Lead Plaintiff now presents “a revised theory of reliance that fits squarely within the framework established by the Supreme Court and the Fifth Circuit decisions, and is based on long-established legal principles.” # 5939 at 1. Lead Plaintiff contends that this “alternative” theory of reliance, rooted in the Banks’ Enron-related market activity in addition to the deceptive transactions (and thus not the solely transaction-based theory of liability reviewed in Regents and Stoneridge), gives rise to a duty to disclose on the part of the Financial Institution Defendants. Moreover, maintains Lead Plaintiff, this alternative theory was not presented to either the Supreme Court or the Fifth Circuit. Furthermore, argues Lead Plaintiff, the Fifth Circuit’s review in Regents was limited by Federal Rule of Civil Procedure 23, which allows a party to appeal issues of class certification only, and no others. Therefore, insists Lead Plaintiff, for all these reasons its new alternative theory is not subject to the mandate rule. Lead Plaintiff also argues, as a recognized exception to the mandate rule, that the intervening change in the law should permit Lead Plaintiff to “re-sculpt the contours of its argument.” # 5980 at 10. Lead Plaintiff also seeks to revisit the issue of class certification based on its revised theory. In summarizing Lead Plaintiffs arguments below, for some of the intricate and detailed disputes the Court has footnoted the Financial Institution Defendants’ responses in opposition to Lead Plaintiffs arguments. The footnoting does not mean that the Court is subordinating-in importance Financial Institution Defendants’ points, but only providing a clear and immediate linkage of particular contentions. The Court has also used footnotes in the traditional way to explain in more detail a party’s reasoning. Maintaining that this case is primarily one of omission (“the Banks’ failure to disclose the impact of the fraud on Enron’s financial conditions [emphasis in original]),” Lead Plaintiff relies not only on the Supreme Court’s seminal duty-to-disclose decision in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972), but on a multifactor test for determining the existence of a duty to disclose under Rule 10b-5 adopted in First Virginia Bankshares v. Benson, 559 F.2d 1307, 1314 (5th Cir.1977) (citing White v. Abrams, 495 F.2d 724, 735 (9th Cir.1974)), cert. denied sub nom. Walter E. Heller & Co. v. First Virginia Bankshares, 435 U.S. 952, 98 S.Ct. 1580, 55 L.Ed.2d 802 (1978); see also Kaplan v. UtiliCorp United, 9 F.3d 405, 407-08 (5th Cir.1993) (citing Virginia Bankshares for that five-factor test). In Virginia Bankshares, the Fifth Circuit opined, Silence, or omission to state a fact, is proscribed only in certain situations: first, where the defendant has a duty to speak, secondly, where the defendant has revealed some relevant material information even though he had no duty (i.e., a defendant may not deal in half-truths). In determining whether the duty to speak arises, we consider the relationship between the plaintiff and defendant, the parties’ relative access to the information to be disclosed, the benefit derived by the defendant from the purchase or sale, defendant’s awareness of plaintiffs reliance on defendant in making its investment decisions, and defendant’s role in initiating the purchase or sale. Virginia Bankshares, 559 F.2d at 1314 (emphasis added by the Court). Instead of arguing that as a matter of law the Financial Institution Defendants had a duty to disclose to the market as a whole what they knew about the fraud that demonstrated that Enron’s financial statements were false, Lead Plaintiff attempts to raise fact questions about each of the five Virginia Bankshares’ factors to argue that “sufficient facts exist to allow a jury to find such a duty” and to defeat summary judgment. Lead Plaintiff characterizes the facts in Virginia Bankshares as revolving around a proposed acquisition by First Virginia of a finance company, Benson. A large financing firm, Heller, had served as Benson’s principal financier: Heller extended loans to Benson, secured by Benson’s notes receivable, and conducted regular audits of Benson’s books. Unknown to First Virginia, Heller discovered that Benson was falsifying its financial condition in its reports. For purposes of the acquisition, First Virginia hired a broker, Michel-man, who in turn asked Heller for information about Benson, but Heller did not disclose to Michelman Heller’s knowledge of Benson’s fraud at that time, nor what it learned subsequently. The Fifth Circuit found, The jury could also consider that Michelman’s inquiry was more than an ordinary inquiry [sic ] it covered the Ben-sons’ integrity, ability, and reputation for honesty.... Heller had much to gain by encouraging the sale of the Bensons’ company because it has [sic ] more than $3,000,000 at risk in Benson debt that was secured by accounts which were tainted with poor or dishonest accounting, and the Benson operation was losing money rapidly. The jury could find that acquisition by another company would relieve Heller of risk to its $3,000,000. Also, through its May 1972 examination of the Bensons’ company, Heller obtained information strongly indicating gross inaccuracy in the Bensons’ books. This information was not known to any potential purchaser and was designed by the Bensons not to be discovered. As matters stood, Heller had superior knowledge of inside information. On the basis of this information, the jury could find that Heller had a duty to disclose to Michelman the information uncovered by the May 1972 examination. Virginia Bankshares, 559 F.2d at 1317. Lead Plaintiff analogizes the facts here to those in Virginia Bankshares and applies the five factors to its evidence in an attempt to show that there is a jury question as to each factor regarding whether the Financial Institution Defendants had a duty to disclose Enron’s true financial status to investors. # 5939 at 31-35. Lead Plaintiff contends that all the factors favor finding that the Financial Institution Defendants had a duty to disclose, as summarized below. Regarding the first factor of the Virginia Bankshares test, “relationship between the plaintiff and defendant,” Lead Plaintiff argues that a jury could find that the Financial Institution Defendants owed a duty to disclose to investors material information about Enron’s actual financial condition. Analogizing the Banks’ relationship to Enron to that between Heller and Benson, Lead Plaintiff points out that the Banks provided financing to Enron, as Heller did to Benson. As in Heller’s services to Benson, the Banks’ activity and transactions for Enron provided the Banks with superior knowledge of Enron’s fraudulent operations. Furthermore, here the Banks held themselves out as being in a unique position to judge the value of Enron’s securities for investors. Merrill Lynch and CSFB issued analyst reports about Enron, purportedly providing unbiased, independent evaluation of the securities for the investing public. The Banks either underwrote the issuance of Enron securities and/or brought Enron-related securities to market, thereby vouching for the alleged quality of these securities. Regarding the second factor, “the parties’ relative access to the information to be disclosed,” Lead Plaintiff argues that a jury could find that the Banks had “had superior knowledge of inside information” about Enron’s reported financial condition, just as Heller could be found to have superior knowledge of inside information about Benson. The Regents has presented evidence detailing the Banks’ knowledge of the fraudulent effects of the transactions with the Banks on Enron’s reported financial condition. Regarding “the benefit derived by the defendant from the purchase or sale,” Lead Plaintiff argues that its evidence would allow a reasonable jury to find that the Banks had a tremendous financial interest in the continuing marketability of Enron securities at favorable prices, in continuing to collect lucrative fees from Enron for structured-finance transactions, and in the provision of credit to Enron. Like Heller to Benson, the Banks had significant credit exposure to Enron. As for “defendant’s awareness of plaintiffs reliance on defendant in making its investment decisions,” a reasonable jury could find from the evidence here that CFSB and Merrill Lynch knew that Enron needed prestigious investment banks to recommend its securities because investors rely on those influential recommendations. Moreover in this context, reliance can only mean that the plaintiff relied on the defendant to provide accurate information and full disclosure. A jury could find that the Banks knew that their recommendations strongly influenced the investors and that they were paid high fees to underwrite and market the Enron securities specifically because of that influence, thus favoring the finding of a duty to disclose. The last factor, “defendant’s role in initiating the purchase or sale,” played no role in Virginia Bankshares, but here a jury could reasonably find that Financial Institution Defendants helped initiate the purchase of the securities through analyst reports and by underwriting Enron and Enron-related securities for the marketplace. Indeed Lead Plaintiff analogizes the situation in the instant case to that in Affiliated Ute, where the Supreme Court found that the defendants’ activities induced the purchase and sale of the stock. A jury could reasonably find that the Banks had a duty to disclose their “superi- or knowledge” of Enron’s falsified reported financial condition based on the transactions specifically and on their general contacts with Enron. Referring generally to “well-settled legal principles regarding the existence of a disclosure duty for those that engage in certain market-related activity” (# 5939 at 2), Lead Plaintiff maintains that there need not be a fiduciary duty before a duty to disclose arises, as long as the Virginia Bankshares test is satisfied. Lead Plaintiff insists that the facts here are distinguishable from those in Stoneridge and support finding a duty to disclose. Their market activity on Enron’s behalf established a relationship with the entire market for Enron securities — even those investors with whom they had no direct contact. They were involved in the equity swaps and transacted in Enron credit-default derivatives. The securities market knows that an investment bank’s central activity is maintaining an information marketplace that facilitates securities transactions, and the market expects candor in that information. The Financial Institution Defendants had superior knowledge to that of the investors relating to the massive fraud being pursued through Enron’s structured finance transactions, and in some of their roles Defendants held themselves out as experts on Enron. They issued analyst reports about Enron and recommended purchase of its stock. They also benefitted from sales of Enron securities, making millions in fees that would only continue to come if Enron’s securities remained marketable. Defendants also knew that the market relied on them in making investment decisions. By their underwriting of Enron securities, their contact with credit rating agencies, and their issuance of analyst reports recommending that investors buy the Enron securities, the Financial Institution Defendants created a duty on themselves to disclose material information to Enron investors. In sum, Lead Plaintiff urges that thus the Financial Institutions Defendants here, acting “in the investment sphere,” “engaged and interacted with the Enron market on multiple levels” through “a web of market-related activities.” Lead Plaintiff contends that, “[t]aken together (and in some instances taken singly), these multiple points of contact with the securities market created a duty to disclose the Banks’ knowledge of the falsity of Enron’s reported financials.” # 5932 at 1-2, 11. More specifically, “[t]he Banks here traded in Enron and Enron-related securities, underwrote offerings in Enron and Enron-related securities, interacted with rating agencies, and at least [CSFB] and Merrill Lynch ... issued numerous analyst reports.” Id. at 2; see also id. at 10. The banks “held themselves out as experts having special knowledge and insight into Enron” and actively sought to encourage and induce market investors to purchase Enron securities. Id. at 11, 10, 12. “Thus, the Banks’ role in the Enron world was not limited to engaging in the Transactions; it extended beyond, as the Banks were intertwined with Enron’s corporate financing activities, with the market in which Enron securities traded, and with various constituencies within the market. In short, the Banks sought to engage and did engage with the investor members of the plaintiff class.” Id. at 11. These investors “rightly should have been able to expect candor and to expect that the Banks were not themselves involved behind the scenes in deceptive transactions that undercut their market activity” and “can be said to have a reasonable expectation of disclosure.” Id. at 11, 12. Lead Plaintiff contends that this theory of reliance, where a duty to disclose is based on defendants’ “complex, multifaceted, active participation ... in the market for Enron securities and their efforts to encourage and induce investors to purchase those securities,” is not foreclosed by the decisions of the Fifth Circuit in Regents nor the Supreme Court in Stoneridge. Id. at 10, 2. In addition to this duty to disclose arising from the “web of market-related activities,” Lead Plaintiff argues that the Financial Defendants also had a duty to disclose based on their insider trading. Lead Plaintiff relies on the well established rule that a corporate insider, e.g., a corporate officer who possesses material non-public information about the company due to his position in it, is subject to a duty to disclose the information to the investing public before trading in the company’s securities or a duty to refrain from trading until the information has been revealed to the public. See, e.g., Chiarella v. United States, 445 U.S. 222, 227, 229, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980). Relying on dicta in a footnote in Dirks v. S.E.C., Lead Plaintiff argues that not only traditional “insiders,” i.e., corporate officers, but others who obtain corporate information from the company may acquire the status of an “insider” and a concomitant duty to disclose or abstain from trading in the corporation’s securities: Under certain circumstances, such as where corporate information is revealed legitimately to an underwriter, accountant, lawyer, or consultant working for the corporation, these outsiders may become fiduciaries of the shareholders. The basis for recognizing this fiduciary duty is not simply that such persons acquired nonpublic corporate information, but rather that they have entered into a special confidential relationship in the conduct of the business of the enterprise and are given access to information solely for corporate purposes. Dirks v. SEC, 463 U.S. 646, 655 n. 14, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983). Lead Plaintiff asserts that the Banks engaged in extensive investment banking activities with Enron, gained knowledge of the fraud, and were counterparties to the equity swaps and forward trades; in other words, they were “insiders” with material inside information which they must either disclose to the investing public or abstain from trading in or recommending Enron securities until the inside information is disclosed. SEC v. Tex. Gulf Sulphur Co., 401 F.2d 833, 848 (2d Cir.1968) (en banc), cert. denied sub nom. Coates v. SEC, 394 U.S. 976, 89 S.Ct. 1454, 22 L.Ed.2d 756 (1969); Kurtzman v. Compaq Computer Corp., No. H-99-779, 2000 Dist. LEXIS 22476, at *80 n. 32, 2000 WL 34292632, at *22 n. 32 (S.D.Tex. Dec. 12, 2000). The Banks did neither, insists Lead Plaintiff. Instead, at Enron’s request, their investment bankers performed equity swaps or equity forwards. Moreover, at several times during the Class Period, Enron requested that CSFB and Merrill purchase Enron stock in the marketplace; Enron would guarantee repayment within one year of the cost at market price of their purchasing these shares, plus commissions and interest. These transactions increased the share volume and artificially supported the price of Enron common stock, which in turn impacted the market as a whole. Lead Plaintiff points out that the Banks did not disclose their knowledge of the fraud at the time of the market activity. A trier of fact could find this independent duty to disclose or abstain satisfies the Affiliated, Ute duty requirement and gives rise to a presumption of class-wide reliance. Lead Plaintiff also argues that a separate duty to disclose is imposed on all three of the Banks based solely on their underwriting of Enron securities. The Regents contends that several courts have concluded that underwriters were in essence “insiders,” subject to the abstain-or-disclose duty. United States v. Bryan, 58 F.3d 933, 953 (4th Cir.1995), abrogated on other grounds, United States v. O’Hagan, 521 U.S. 642, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997); In re Initial Pub. Offering Sec. Litig., 241 F.Supp.2d 281, 384 n. 157 (S.D.N.Y.2003). Issuers look to underwriters partly because the underwriters invest the offering with their credibility, their reputation, their integrity, their independence, and their expertise, upon which the public relies. Underwriters occupy a position of confidence and trust in relationship to shareholders and have a heightened duty to investigate and to disclose material information to the investing public. See, e.g., Dolphin & Bradbury, Inc. v. SEC, 512 F.3d 634, 641-42 (D.C.Cir.2008); In re Enron Corp. Sec., Derivative & ERISA Litig., 235 F.Supp.2d 549, 612 (S.D.Tex.2002). That position of trust in the underwriter (as a recipient of nonpublic inside information) gives rise to a duty to disclose, insists Lead Plaintiff. As another source of a duty to disclose, Lead Plaintiff points to Item 508(Z)(1) of Regulation S-K (17 C.F.R. § 229.508(0(1)), which requires that underwriters of securities disclose “any transaction that the underwriter intends to conduct during the offering that stabilizes, maintains, or otherwise affects the market price of the offered securities,” including “any other transaction that affects the offered security’s price.” Lead Plaintiff alleges that nearly all of the transactions “were calculated to permit Enron to fraudulently maintain its positive credit rating — and that this rating affected the market price of all of Enron’s securities.” # 5939 at 42. Item 508ffl(l)’s required disclosure of the transactions gives rise to a duty to disclose that is actionable under Rule 10b-5. See Woodward v. Metro Bank of Dallas, 522 F.2d 84, 97 n. 28 (5th Cir.1975) (“A duty of disclosure may exist where any person possessed inside information, or where the law imposes special obligations, as for accountants, brokers, or other experts, depending on the circumstances of the case. This list, however, is not intended to be exhaustive.”); Kunzweiler v. Zero.net, Inc., No. 3:00-CV-255-P, 2002 U.S. Dist. LEXIS 12080, at *31-32, 2002 WL 1461732, at *12 (N.D.Tex. July 3, 2002) (“courts have held that an affirmative duty to disclose does arise when ... a statute or regulation requires disclosure”); Kurtzman v. Compaq Computer Corp., No. H-99-779, 2000 U.S. Dist. LEXIS 22476 at *78, 2000 WL 34292632, at *22 (S.D.Tex. Dec. 12, 2000) (“Courts have recognized that a duty to disclose material facts arises when ... a statute or regulation requires disclosure .... ”). After providing these various sources of a duty to disclose, Lead Plaintiff insists it has satisfied the remaining elements of a § 10(b) cause of action. First, it has demonstrated scienter (“severe recklessness”) by showing senior personnel at CSFB, Merrill, and Barclays knew, or were severely reckless in not knowing, about the extensive fraudulent market activity and scam transactions and the falsity of Enron’s reported financial condition (earnings, cash flows and debt), which created their duty to disclose. As a result of their direct participation in the fraud, the Banks purportedly were generally aware that Enron undertook a substantial number of transactions designed to materially alter its reported financial condition. In addition, asserts Lead Plaintiff, each of the Banks was aware of the specific and material impact of its own transactions on Enron’s financials. See # 5939 at 53-54 for CSFB; at 55-56 for Merrill; and at 57-58 for Bar-clays. Lead Plaintiff maintains that the fact-specific nature of an evaluation of scienter makes the issue inappropriate for summary judgment and that the question should also be determined by a jury. In Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 366 (5th Cir.2004), under which this Court dismissed allegations against CSFB and Merrill Lynch based on alleged false statements and misrepresentation in their analyst reports, the Fifth Circuit rejected group pleading. To determine whether to hold a corporation liable under § 10(b) for a statement that had to be made with scienter, the panel required an examination of the state of mind of the individual corporate official or officials “who make or issue the statement (or order or approve it or its making or issuance, or who furnish information or language for inclusion therein, or the like) rather than the collective knowledge generally of all the corporation’s officers and employees acquired in the course of their employment.” Lead Plaintiff now argues that Southland applies only to affirmative statements, not to omissions such as the ones in dispute here. Thus there is no speaker whose state of mind can be examined. Therefore the appropriate inquiry for scienter, insists Lead Plaintiff, is whether relevant individuals at the Banks had knowledge that the Banks were engaging in deceptive transactions, that the transactions distorted Enron’s financials in a material manner, that the Banks were active in the market for Enron securities, and that no disclosure of the fraud was made. Lead Plaintiffs asserts it has met this test. Furthermore the Southland panel observed that a corporation makes a statement acting with scienter where the employee who furnished the “information or language for inclusion therein or omission therefrom” had scienter. 365 F.3d at 367; see also Marko v Issues & Rights, Ltd. v. Tellabs, Inc., 513 F.3d 702, 708 (7th Cir.2008) (“The court in the Southland Securities case said that corporate scienter could be based on the state of mind of someone who furnished false information that became the basis of a fraudulent public announcement. Suppose he had knowingly supplied the false information intending to help the company. His superiors would not be liable for failing to catch the mistake, but Southland implies that the corporation would be liable, just as it would be in a common law tort suit.”). Lead Plaintiff points to evidence previously submitted in opposition to the motions for summary judgment, in an omissions context, that knowledge of the material facts omitted resided in individuals at senior levels in each of the Financial Institution Defendants. As for the element of “materiality” under § 10(b), Lead Plaintiff contends that the undisclosed, deceptive transactions at issue were clearly “material” within the meaning of the securities laws in that they distorted by billions of dollars Enron’s reported earnings, cash flow, and debt. In addition, the alleged wrongful conduct satisfies the element of “in connection with the purchase or sale of any security” because the scheme coincided with trading of Enron’s securities. SEC v. Zandford, 535 U.S. 813, 822, 122 S.Ct. 1899, 153 L.Ed.2d 1 (2002) (“It is enough that the scheme to defraud and the sale of securities coincide” to satisfy the “in connection with” requirement of § 10(b).). Lead Plaintiff maintains that the reliance element is met since the Affiliated Ute presumption is applicable. In Newby, which is primarily based on omission or nondisclosure, the Financial Institution Defendants had a duty to disclose and failed to do so. Regents of University of California v. Credit Suisse First Boston (USA), 482 F.3d 372, 384 (5th Cir.2007) (for the Affiliated Ute presumption to apply, “the plaintiff must (a) allege a case primarily based on omissions or non-disclosure and (2) demonstrate that the defendant owed him a duty of disclosure.”), cert. denied sub nom. Regents of University of California v. Merrill Lynch, Pierce, Fenner & Smith, Inc., — U.S. —, 128 S.Ct. 1120, 169 L.Ed.2d 957 (2008). Lead Plaintiff maintains that the Banks had a duty to disclose, grounded in the multi-factor test of Virginia Bankshares and several independent bases, and they breached that duty by not disclosing their fraudulent transactions with Enron as they traded in Enron stock and debt and underwrote Enron-related offers, issued analyst reports, communicated with rating agencies, and allowed the fraud to continue, thereby violating § 10(b) and Rule 10b-5. As a result, all Enron investors were injured. The causation-in-fact element is also satisfied here: had the banks satisfied their duty to disclose, the Enron fraud would have been revealed. See Affiliated Ute, 406 U.S. at 154, 92 S.Ct. 1456 (showing the defendant had a duty to disclose and the withholding of material information by the defendant establishes the element of causation in fact). Lead Plaintiff also argues that when causation in fact is present, as here, conduct is actionable under Rule 10b-5 notwithstanding the fact that the breached duty of disclosure ran to another party. See U.S. v. O’Hagan, 521 U.S. 642, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997). Relying on O’Hagan, Lead Plaintiff asserts that even if the Banks owed a duty only to the purchasers of the securities they marketed, because all Enron investors were harmed the factfinder could find causation in fact. According to Lead Plaintiff, CSFB and Merrill’s duty to disclose ran not merely to purchasers of the securities they marketed and sold, as argued by Defendants, but to the entire market because they were active in Enron’s common stock and their analyst reports addressed that market. Even if the Financial Institutions are correct that they owed a duty of disclosure only to purchasers of the securities that they each marketed, the fact that all Enron investors were harmed allows a finding of causation in fact. Finally, economic loss satisfying the standard in Dura Pharmaceuticals v. Broudo, 544 U.S. 336, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005), ensued when the true state of Enron’s operations was revealed to the market. Lead Plaintiff points out that this Court previously adopted the loss causation analysis of Lentell v. Merrill Lynch & Co., 396 F.3d 161, 171 (2d Cir.2005). In re Enron Corp. Sec., Derivative & “ERISA” Litig., 439 F.Supp.2d 692, 705-06, 724 (“[T]he loss causation requirement will be satisfied if [the defendant’s] conduct had the effect of concealing the circumstances that bore on the u