Full opinion text
OPINION AND ORDER DENISE COTE, District Judge. This action concerns an ambitious copper-gold mining project in a remote area of British Columbia, Canada undertaken by defendant NovaGold Resources, Inc. (“NovaGold”). NovaGold’s decision to abandon the mining project because of spiraling capital costs, and the sharp decline in its stock price, have led to this putative securities class action lawsuit, which primarily challenges NovaGold’s disclosures regarding the anticipated costs and risks of the mining project. This Opinion addresses the motions to dismiss that three separate groups of defendants have filed. As explained below, the defendants’ motions to dismiss the claims filed under the Securities Act of 1933 (the “Securities Act”), are granted. As for the claims brought under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), only the claim against NovaGold survives. BACKGROUND The following allegations are taken from the corrected consolidated class action complaint (the “consolidated complaint”) and the documents on which it relies. NovaGold was founded as a mineral exploration company, but shifted its focus to mineral extraction and production in the late 1990s. As part of its foray into mineral extraction, NovaGold began investigating the untapped mineral reserves of Galore Creek in northern British Columbia in 2003, and acquired the mineral rights to 215,000 acres. Located in a mountainous area, the untapped Galore Creek — initially accessible only by helicopter — was believed to have large copper, silver, and gold deposits. The minerals were to be extracted through an “open pit” mine, close to the surface, but spread out over a large area. A. Scoping the Project: Engineering Challenges and the Preliminary Feasibility Study Considerable engineering challenges accompanied the lucrative potential of the mine. Because the Galore Creek site was an open pit mine, extracting the minerals would require excavating the waste rock sitting on top of the minerals first. The excavated earth, which contained waste rock (the portion not containing valuable minerals) and tailings (the material left over from the process of separating the valuable minerals from the worthless portion of the ore) needed to be stored permanently elsewhere, usually in a structure known as a “tailings dam.” NovaGold initially intended to place the tailings dam in a valley where Galore Creek flowed, requiring the creek to be directed for 4.7 miles around the tailings dam area. Heavy rains and snowfall in the winter of 2005-06 sharply increased the amount of surface water that NovaGold would need to divert. The remote location and large size of the mine only amplified these logistical difficulties. NovaGold undertook feasibility studies regarding the project in compliance with Canadian securities regulations imposing specific disclosure requirements on companies undertaking mineral exploration. These requirements include preparation of “feasibility studies” by independent experts that include sufficient detail to enable a financial institution to determine whether it should finance the development of a project. NovaGold retained defendant Hatch Ltd. (“Hatch”) in 2003 to perform a preliminary study of the feasibility of the Galore Creek mine (the “Project”). Defendant Rick Van Nieuwenhuyse, Nova-Gold’s CEO, announced the results of the preliminary study in October 2005, which included a capital cost estimate of US$ 1.1 billion (approximately 1.3 billion Canadian dollars (“C$”)), indicating the commercial viability of the Project. Hatch then began a final feasibility study, which was designed to estimate costs within 10-15% (the “Hatch Study”). NovaGold expected Hatch’s study to be complete in the second half of 2006. NovaGold subsequently raised US$ 165.3 million through an initial public offering (“IPO”) on January 24, 2006. A week later, it announced an agreement with the Native Canadian Tahltan First Nation, which resided on portions of the Galore Creek area (the “February 2006 Participation Agreement”). In June 2006, NovaGold reported to Canadian authorities that it had explored “all viable options” so that it could make a “reasonable decision” about planning the Project. B. Barrick’s Hostile Takeover Bid and the Release of the Hatch Study NovaGold had earlier begun discussions with global mining giant Barrick Gold Corp. (“Barrick”) regarding a potential joint venture to develop Galore Creek. On July 24, 2006, Barrick announced a hostile bid for NovaGold at US$ 14.50 per share, and NovaGold’s share price increased from US$ 11.67 to US$ 16.17 the following day. NovaGold issued a press release on July 25 condemning Barrick’s offer. While attempting to fight off the hostile bid, Nova-Gold also continued to learn more about the surface water issues caused by heavy precipitation, which drove up the costs of the Project further. By October 2006, NovaGold’s share price declined to $15.35, approaching the $14.50 offered by Barrick. NovaGold issued a press release on October 12 announcing that the Hatch Study would likely be released by the end of the quarter. Barrick responded on October 24 by raising its offer to US$ 16 per share. The next day, NovaGold announced the release of the Hatch Study in a press release (the “October 25, 2006 Press Release”), entitled “Final Feasibility Study Completed at NovaGold’s Galore Creek Project.” As described in the October 25, 2006 Press Release, the study confirmed the economic viability of the Project, stating that it was “one of the world’s largest undeveloped copper-gold-silver projects with one of the lowest cash costs in the industry,” and calculated capital costs at US$ 1.8 billion, or C$ 2.2 billion. The October 25, 2006 Press Release also explained that the study’s estimates reflected a +15%/-10% level of accuracy, and encompassed “all the direct and indirect costs and appropriate project estimating contingencies,” including “construction of all major civil earthworks for the dams and water diversion structures.” Analysts responded to the Hatch Study enthusiastically and advised investors to reject Barrick’s bid. NovaGold announced in an October 31 press release that, because of the strong projections in the study, its negotiations with potential joint venture partners had accelerated. It noted its recent “value-adding milestones,” including the release of the “independent Galore Creek Feasibility Study, confirming economics of the project and providing the Company’s first Proven and Probable Reserves.” The hostile takeover bid was overwhelmingly rejected on November 8, 2006, and NovaGold announced the same in a press release issued that day. It attributed the shareholders’ rejection of the bid to “milestones,” which included the “[e]ompleted final Feasibility Study at Galore Creek.” NovaGold also held a conference call on November 8 (the “November 8, 2006 Conference Call”), in which Van Nieuwenhuyse characterized the Hatch Study as “done” and informed the public that NovaGold was moving forward with construction: Final preparations are now being made ... to basically take that feasibility study and implement that into a construction plan ... having completed the feasibility study at Galore Creek, we can now speak about the reserves there. Also participating in the call, defendant Robert J. MacDonald, the CFO of Nova-Gold, described “significant interest from potential joint venture partners,” who had been awaiting “the completion of our feasibility study, which was just released two weeks ago.” MacDonald also repeated the Hatch Study’s cost figures: “based on the feasibility study ... for Galore Creek, we have a total capital of about [US]$ 1.8 billion.” Van Nieuwenhuyse referred to the Project as “eminently finaneeable” in a November 14 press release (the “November 14, 2006 Press Release”), noting that “[w]ith the Feasibility Study for Galore Creek now complete, NovaGold has been approached by a variety of interested financial and industry partners ... we are confident that Galore Creek is of significant interest to potential joint venture parties.” Another press release of December 5 (the “December 5, 2006 Press Release”) urged investors to continue to reject Bar-rick’s bid, with Van Nieuwenhuyse declaring that “we plan to build [the Galore Creek] project on time and on budget.” The press release also mentioned “the release of an independent Feasibility Study confirming Proven and Probable Reserves and the economics of the Galore Creek project.” NovaGold again touted the Hatch Study in a December 14 press release, noting cost estimates of “approximately US$ 1.8 billion” to be incurred “between 2007 and 2010” and again stating that “[a] final Feasibility Study for the Galore Creek project, completed by Hatch Ltd. in October 2006, provided Proven and Probable Reserves for NovaGold and confirmed the economics and mine plan of the Galore Creek project.” C. Cost Increases and a Secondary Offering Behind the scenes, plaintiffs confidential sources report that costs were spiraling upward and approached C$ 3.7 billion by early summer 2007. Without publicly disclosing its decision, NovaGold retained AMEC Americas Ltd. (“AMEC”), a competitor of Hatch, to conduct a new feasibility study to re-estimate certain costs beginning in February or March 2007. NovaGold’s disclosures, meanwhile, continued to refer to the cost figures calculated in the Hatch Study. On February 9 (the “February 2007 Report”), NovaGold issued a press release stating that “the Feasibility Study budget is sufficient for construction of the Project within current contingency allegations” and reiterating the cost figures from the Hatch Study. The February 2007 Report quoted defendant Peter W. Harris, Chief Operating Officer of NovaGold, who, after noting that a “Project Development Team has been reviewing the Feasibility Study capital costs,” stated that “the team has determined that the Feasibility Study budget is sufficient for construction of the Galore Creek project within current contingency allocations. This review will continue as basic and detailed project engineering proceeds.” The press release accompanying Nova-Gold’s 2006 annual statement, released on February 28 (“the February 28, 2007 Press Release”), again “confirmed the economics and mine plan,” of the Project, as well as the US$ 1.8 billion cost figure. During a March 2, 2007 conference call reviewing earnings for the fourth quarter of 2006 (the “March 2, 2007 Conference Call”), MacDonald reviewed the cost figures once again: “[y]ou see the total capital for Galore Creek at approximately [US]$ 1.8 billion or C$ 2.2 billion ... just over four months ago, NovaGold completed the feasibility study for Galore Creek.” D. The Secondary Offering On the advice of Citigroup, NovaGold sought to obtain additional financing for the Project. On April 18, NovaGold commenced a secondary offering of 12.5 million shares of its stock that raised US$ 194 million pursuant to an Amended Registration Statement on Form F10/A, filed with the SEC on April 16, 2007 (the “Registration Statement”). NovaGold also issued a press release and its Form 6-K Quarterly report on April 16. The press release noted that the start-up of operations at Galore Creek would be delayed from 2011 to 2012, but that the construction would nonetheless require an “unchanged overall construction budget of [C]$ 2.2 billion (US$ 1.8 billion).” NovaGold then held an earnings conference call on April 25 (the “April 25, 2007 Conference Call”), where Van Nieuwenhuyse commented that NovaGold was “driving down into the very low end of the cash cost curve with production from Galore Creek.” MacDonald repeated the same cost and viability tropes: “[t]he total project financing cost [for the Project] is about C$ 2 billion.” On May 23, NovaGold issued a joint press release with Teck Comineo (“Teck”) announcing their US$ 2 billion partnership to develop Galore Creek, named “the Galore Creek Mining Corporation” (“GCMC”) (the “May 23, 2007 Press Release”). The press release noted that “[s]ince the completion of the Feasibility Study last fall, NovaGold has been preparing for the start of construction.” NovaGold also disclosed that it planned “an aggressive program of ... technical studies ... aimed at increasing the value of the Galore Creek project by optimizing the additional approximately 1 billion tonne mineral resource in the Galore Creek Valley that is not currently included in the Galore Creek feasibility study.” In the meantime, construction would “continue in accordance with Nova-Gold’s previously announced timelines and budgets to achieve production by mid-2012.” Several analysts responded favorably to the joint venture, viewing it as evidence of the value of the Project. By the fall of 2007, Teck had provided C$ 78 million of funding. E. Cost Estimates Rise In mid-2007, NovaGold began to experience cost overruns at another project, Rock Creek. Analysts from MGI questioned management regarding whether the flawed estimates could impact the Project. Satisfied that they would not, MGI issued a report in July stating that NovaGold had reviewed estimates with “their consultants” and “believe[d] that the numbers provided still stand.” A June 1 press release (the “June 1, 2007 Press Release”) discussed further technical studies, but without any effect on the Project’s budgets or timelines: Construction will proceed in accordance with NovaGold’s previously announced budgets and timelines to achieve production by mid-2012, and the Galore Creek partnership will engage in exploration and technical studies aimed at increasing the value of the project by optimizing the additional resources that are not currently included in the Galore Creek Feasibility Study completed by Hatch Ltd. in October 2006. A press release issued on July 16 reiterated that the Project would require an “investment of US$ 2 billion.” A Form 6-K quarterly report filed that same day with the SEC (the “July 16, 2007 Quarterly Report”) also confirmed that the budget described in the Hatch Study would remain “unchanged.” Taking analysts on a tour of the Project in August 2007, NovaGold described the AMEC study as a “scoping study” intended to measure a project’s reserves, compared with capital costs. Following the analyst visit, some analysts began to increase their own cost estimates for the Project. On August 30, an analyst from defendant Cormark Securities Inc. (“Cor-mark”) explained that he now believed capital costs on the Project to be higher than originally estimated, owing to currency fluctuations and the fact that Hatch’s estimate did not account for cost inflation occurring during the construction period or a US$ 115 million power line that the Project required. Cormark increased its capital expenditure assumption by approximately 25%, to US$ 2.3 billion. NovaGold issued a press release on October 1 that hewed to the Hatch Study’s cost figure, referencing only the “C$ 2.2 billion” “estimated construction costs” of the “October 2006 Feasibility Study.” F. Disclosures of Cost Increases NovaGold’s first disclosure that costs were expected to exceed the Hatch Study’s estimate, and that AMEC had been engaged to conduct a new feasibility study, came in a press release issued on October 15 (“October 15, 2007 Press Release”). The October 15, 2007 Press Release disclosed that Galore Creek Mining Corporation has engaged AMEC to prepare an updated feasibility study to, amongst other things, support the project financing of Galore Creek. The updated feasibility study is expected to result in significant increases to capital costs resulting from, among other things, the inclusion of additional power line costs in connection with the higher-capacity line described below, and escalating local and worldwide constructions; further optimization of the project, including potential modifications to grind size and the significant strengthening of the Canadian dollar against the U.S. dollar. Capital cost increases are expected to be partially offset by improvements in operating costs. The updated feasibility study is targeted to be complete in the first half of 2007, but revised costs for the project may be available earlier than that. (Emphasis supplied). NovaGold’s Form 6-K quarterly earnings report signed the same day (the “October 15, 2007 Quarterly Report”) repeated the statements above. Following the press release, the share price fell by forty-six cents, from US$ 19 to US$ 18.54. On a conference call two days later (the “October 17, 2007 Conference Call,”) Van Nieuwenhuyse again described the AMEC study as an “updated” feasibility study. A presentation to the New Orleans Investment Conference delivered on October 23, 2007 (the “October 23, 2007 NOIC Presentation”), however, referred twice to the Hatch Study when estimating Project costs, without mentioning any “update.” Six weeks after it first disclosed that AMEC was updating the Hatch Study, on November 26, 2007, NovaGold and Teck announced that they were suspending the Project, whose capital costs were now expected to approach US$ 4.4 billion (C$ 5 billion), a 144% increase from the original estimate. A member of the Tahltan Nation (“CW 3”) learned that Teck insisted on the Project’s suspension, while Nova-Gold had hoped to continue, despite the dramatic increase in the capital cost estimate. The press release announcing the suspension, dated November 26, 2007, disclosed that NovaGold had retained AMEC in April 2007 to review the results of the Hatch Study, with a focus on the construction of the tailings and water management structures and mine facilities. According to the press release, by October 2007, AMEC’s preliminary findings indicated it expected capital costs would be significantly higher than originally estimated. As a result, NovaGold and Teck Comineo commenced a project strategy review ... to assess the AMEC work. Estimated costs have continued to increase during this review, and NovaGold and Teck Comineo now have sufficient information to indicate that the capital cost of the project could approach as much as [C]$5 billion. The engineering review is ongoing. Although there have been changes in scope from the original feasibility study, the largest portion of the capital cost increase is related to the complex sequencing of activities necessary to build the tailings dam and water management structures, and the resulting extension of the construction by 18 to 24 months. The project has also been affected by the rapidly escalating capital costs affecting major construction projects world-wide. In light of these developments, Nova-Gold and Teck Comineo have agreed to suspend construction ... (Emphasis supplied). The day that the press release announcing the suspension was issued, NovaGold’s share price fell 53% to US$ 10.76 on a trading volume of over 24 times the daily average during the class period. G. The Lawsuit Three prospective lead plaintiffs filed securities class action complaints against NovaGold, alleging that the company had deceptively concealed the true costs of the Project in violation of securities laws, seeking recovery on behalf of a class who had acquired NovaGold common stock between October 25, 2006, the day of the press release announcing the completion of the Hatch Study, and November 23, 2007 (the “Class Period”). The first complaint was filed on August 7, 2008 by Rudolph Textor, naming NovaGold, Van Nieuwenhuyse, MacDonald, and Harris as defendants and alleging violations of Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§ 78j, 78t(a), and Rule 10b-5, the parallel regulation promulgated under Section 10(b), as well as Sections 11 (against all defendants except Harris) and 15 of the Securities Act (against Van Nieuwenhuyse and MacDonald only), 15 U.S.C. §§ 77k(a) and 77(o). After a second plaintiff filed a complaint on September 9 against the same defendants, bringing Exchange Act claims only, an Order issued on September 15 scheduling a conference to consider any motions to be appointed as lead plaintiff and for consolidation. Following the conference, held on October 31, an Order of November 5 appointed the New Orleans Employees’ Retirement System (“NOERS”) as Lead Plaintiff (“plaintiff’), consolidated the actions, and required a consolidated complaint to be filed by December 19, 2008. NOERS then filed its own complaint on November 21. To the defendants already named in the previously filed actions, it added the remainder of the defendants named below, including NovaGold’s directors, Hatch Ltd., and the companies who served as underwriters of the April 18, 2007 secondary offering. In addition to the violations alleged by other plaintiffs, plaintiff alleged that NovaGold and the underwriters had violated Section 12(a)(2) of the Securities Act, 15 U.S.C. § 111 (a), and that the underwriters, NovaGold’s directors, and Hatch and its employee Bruce Rustad, had violated Section 11 of the Securities Act, and that NovaGold officers Douglas Brown, Carl Gagnier, Harris, Gregory S. Johnson, Joseph R. Piekenbrock, Elaine M. Sanders, and Douglas Nicholson had violated Section 15 of the Securities Act. The plaintiffs complaint did not include Exchange Act claims. Plaintiff filed the consolidated complaint on December 30, 2008, challenging Nova-Gold’s disclosures regarding the Project. It asserts causes of action under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, as well as others under Sections 11, 12(a)(2) and 15 of the Securities Act. In essence, the complaint alleges that NovaGold, fearing Barriek’s hostile takeover bid, manipulated the results of the Hatch Study, and continued to rely on the estimates contained in the Hatch Study in public disclosures, including the Registration Statement, while concealing the true escalation in the costs of Galore Creek and the retention of AMEC to assess those costs. In addition to NovaGold and GCMC, the consolidated complaint identifies several groups of defendants, including: — NovaGold officers Van Nieuwenhuyse, MacDonald, Harris, and Brown, who was NovaGold’s Vice President of Business Development at the time that the Registration Statement became effective and the General Manager of Galore Creek and President of GCMC beginning in May 2007; — NovaGold Directors George Brack, Michael H. Halvorson, Gerald J. McConnell, Clynton R. Nauman, and James L. Philip, all of whom signed the Registration Statement (the “NovaGold Directors”; collectively with NovaGold and Galore Creek Mining Corporation, the “NovaGold Defendants”); — The underwriters of the secondary public offering, including Citigroup Global Markets Inc., Citigroup Global Markets Canada Inc., RBC, Scotia Capital Inc., Cormark, and MGI (the “Underwriter Defendants”); and — Hatch and Rustad, an engineer working for Hatch who had primary responsibility for the Hatch Study, who consented to the Registration Statement making references to his name and involvement in the study (the “Hatch Defendants”). Allegations appearing for the first time in the consolidated complaint include those asserting that NovaGold officer Brown violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 and that the NovaGold Directors violated Section 20(a) of the Exchange Act. On January 23, 2009, the Underwriter Defendants, the Hatch Defendants, and the NovaGold Defendants each filed motions to dismiss the consolidated complaint for failure to state a claim on multiple grounds, pursuant to Rules 8(a), 9(b), 12(b)(1), and 12(b)(6) of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u-4(b). The Hatch Defendants also seek dismissal of the claims against Rustad under Rules 12(b)(2) and (5), Fed.R.Civ.P. This Opinion first addresses defendants’ arguments that plaintiffs Securities Act claims against the NovaGold Directors, NovaGold officer Brown, the Underwriter Defendants, and the Hatch Defendants are barred by the statute of limitations before considering whether plaintiff has stated a claim for relief under the Securities and Exchange Acts. DISCUSSION “Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short and plain statement of the claim showing that the pleader is entitled to relief.’ ” Ashcroft v. Iqbal, — U.S. —, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citation omitted). This rule “does not require ‘detailed factual allegations,’ ” id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)), but “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ ” Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955); see also Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir.2006). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ” Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). A court considering a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) must “accept as true all factual statements alleged in the complaint and draw all reasonable inferences in favor of the non-moving party.” Vietnam Ass’n for Victims of Agent Orange v. Dow Chemical Co., 517 F.3d 104 (2d Cir.2008) (citation omitted). To survive such a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). This “plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citation omitted). The Supreme Court in Iqbal summarized the “[t]wo working principles that underlie” Twombly: “First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id. “Second, only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 1950. Applying this second principle “will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. Thus, the Supreme Court set out a “two-pronged” approach for courts deciding a motion to dismiss: [A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.... When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id. A court may also consider “any written instrument attached to the complaint, statements or documents incorporated into the complaint by reference ... and documents possessed by or known to the plaintiff and upon which it relied in bringing the suit” on a motion to dismiss. ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007) (citation omitted) (“ATSI”). A. Securities Act Claims Each of the defendants named for the first time in the plaintiffs November 21, 2008 complaint has moved to dismiss the Securities Act claims pleaded against them in the consolidated complaint. Motions to dismiss a complaint on statute of limitations grounds are properly brought under Rule 12(b)(6), Fed.R.Civ.P. McKenna v. Wright, 386 F.3d 432, 436 (2d Cir.2004). Such motions may be granted only “if the defense appears on the face of the complaint” and where “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” Id. (citation omitted). See also Staehr v. Hartford Financial Svcs. Group, Inc., 547 F.3d 406, 412 (2d Cir.2008) Plaintiffs Securities Act claims assert violations of Sections 11,12(a)(2), and 15 of the Act. Section 11 of the Act provides that any signer, director of the issuer, preparing or certifying accountant, or underwriter may be liable if “any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading ____” 15 U.S.C. § 77k(a). Section 12(a)(2) of the Securities Act allows a purchaser of a security to bring a private action against a seller that “offers or sells a security ... by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements ... not misleading.” 15 U.S.C. § 711 (a)(2). Section 15 extends Securities Act liability to “[e]very person who, by or through stock ownership, agency, or otherwise ... controls any person liable under [section 11] or [section 12] of this title,” 15 U.S.C. § 77o. Defendants argue that the October 15, 2007 Press Release, in which NovaGold announced that it had engaged AMEC to undertake a feasibility study of the Project and that significant increases were expected in the Project’s costs, triggered the one-year limitations period applicable to the Securities Act claims. If they are correct, the limitations period expired on October 15, 2008, over a month before plaintiff first alleged that the Hatch Defendants, the NovaGold Directors, Brown, and the Underwriter Defendants had violated the Securities Act. 1. Statute of Limitations: the Duty of Inquiry Claims brought under Sections 11, 12, and 15 of the Securities Act are subject to the one-year statute of limitations set out under Section 13 of the Securities Act. See 15 U.S.C. § 77m; Dodds v. Cigna Securities, Inc., 12 F.3d 346, 359-50, 350 n. 2 (2d Cir.1993) (Section 15). The limitations period begins to run when the plaintiff “obtains actual knowledge of the facts giving rise to the action or notice of the facts, which in the exercise of reasonable diligence, would have led to actual knowledge.” Kahn v. Kohlberg, Kravis, Roberts & Co., 970 F.2d 1030, 1042 (2d Cir.1992). Put otherwise, “Section 13 imposes a duty of inquiry.” Jackson Nat’l Life Ins. Co. v. Merrill Lynch & Co., Inc., 32 F.3d 697, 701 (2d Cir.1994). The presence of the duty to inquire is evaluated according to an objective, totahty-of-the-circumstances test examining “when the circumstances would suggest to an investor of ordinary intelligence the probability” that she has a cause of action. Staehr, 547 F.3d at 427 (citation omitted). The circumstances giving rise to constructive notice and the duty to inquire are referred to as “storm warnings.” Id. To trigger the duty of inquiry, the storm warnings must “relate directly” to the misrepresentations and omissions on which the plaintiffs base their claims, but they “need not detail every aspect” of the alleged scheme. Id. (citation omitted). When the storm warnings take the form of “company-specific information probative” of the alleged wrongdoing, a duty to investigate arises. Id. at 428 (citation omitted). But, storm warnings exist only when the available information makes wrongdoing “probable, not merely possible.” Shah v. Meeker, 435 F.3d 244, 249 (2d Cir.2006) (citation omitted). In some cases, despite the presence of storm warnings, investors are not placed on inquiry notice “because the warning signs are accompanied by reliable words of comfort from management.” LC Capital Partners LP v. Frontier Ins. Group, Inc., 318 F.3d 148, 155 (2d Cir.2003). While such statements must be considered, their existence will prevent or dissipate the duty to inquire “only if an investor of ordinary intelligence would reasonably rely on the statements to allay the investor’s concern.” Id. This depends “in large part on how significant the company’s disclosed problems are, how likely they are of a recurring nature, and how substantial are the ‘reassuring’ steps announced to avoid their recurrence.” Id. 2. The Registration Statement’s Alleged Misrepresentations The Securities Act claims arise from the Registration Statement filed on April 16, 2007. Plaintiff describes five ways in which the Registration Statement was allegedly false and misleading: 1) it did not disclose the true capital cost projections for Galore Creek; 2) it stated that the Project was economically viable; 3) it failed to disclose that proceeds from the offering would be used to fund a new feasibility study; 4) it characterized the Hatch Study as the “final” feasibility study; and 5) it failed to disclose that NovaGold had retained AMEC to conduct a new feasibility study. When the Registration Statement is examined, it becomes clear that each of these misrepresentations or omissions arises from the statement’s discussion of the Hatch Study. After a general description of the Galore Creek Project, the Registration Statement proceeds to a section entitled “Feasibility Study.” In that section, it explains that in October 2006, Hatch Ltd., an independent engineering services company ... completed a feasibility study (the ‘Galore Creek Feasibility Study’) for the Galore Creek project. This study confirms the economic viability of a conventional open-pit mining operation using long-term metals prices____The information set out below is a summary of information contained in the Feasibility Study and is subject to important qualifications, assumptions and exclusions. (Emphasis supplied). The next page and a half of the Registration Statement sets out tables with financial information drawn from the Hatch Study, including a line item for total capital costs, comprised of mine facility and infrastructure costs, which were listed as US$ 1.805 million. In addition, among the items described in the fourteen-page Risk Factors section of the Registration Statement, NovaGold disclosed the possibility that the capital cost estimate might later be revised by a future feasibility study: [cjapital and operating costs, production and economic returns, and other estimates contained in the [Feasibility Study] or other feasibility studies or economic assessments, if prepared, may differ significantly from those anticipated by NovaGold’s current studies and estimates, and there can be no assurance that the Company’s actual capital and operating costs will not be higher than currently anticipated. (Emphasis supplied). The Registration Statement also incorporates “by reference” one other document on which the plaintiff relies: the February 2007 Report “announcing that the Galore Creek copper-gold-silver project in northwestern British Columbia is rapidly advancing toward the start of construction.” The Registration Statement explains that this document and others have been filed with the securities commission in Canada and are available through the internet. The February 2007 Report includes the following description of the Project: A final Feasibility Study for the Galore Creek project, completed in October 2006, ... confirmed the economics ... of the project.... The Feasibility Study estimates that the total capital cost to develop the Galore Creek project will be approximately US$ 1.8 billion..... The Feasibility Study was completed by Hatch Ltd.... (Emphasis supplied). The first two misrepresentations of which the plaintiff complains, which concern the capital cost projections and the Project’s economic viability, .come directly from the Registration Statement’s (and the February 2007 Report’s) discussion of the Hatch Study. Plaintiff’s fourth and fifth allegations of misrepresentation also relate directly to the Hatch Study as well as the retention of AMEC to undertake another feasibility study. These two allegations take issue with the characterization in the February 2007 Report of the Hatch Study as “final,” and with the allusion in the Risk Factor section of the Registration Statement to other feasibility studies that might be prepared. The plaintiffs assert that AMEC had already been retained by NovaGold by March 2007 to prepare another feasibility study. Plaintiffs remaining Securities Act allegation asserts that the retention of AMEC rendered the “Use of Proceeds” portion of the Registration Statement misleading. The “Use of Proceeds” section explained that the proceeds from the offering will be used to fund further exploration at, and initial construction of, the Galore Creek project, to fund general exploration and development on the Company’s other projects and for general corporate purposes. Plaintiff alleges that the “Use of Proceeds” section does not describe any funding for an additional feasibility study, even though AMEC’s was already under way. In summary, each of plaintiffs Securities Act allegations rests on the Registration Statement’s description of the Hatch Study or its failure to disclose the retention of AMEC to prepare another feasibility study. They derive from the Hatch Study’s cost estimates and conclusions regarding the viability of the Project and its status as the sole and final feasibility study. 3. The October 15, 2007 Press Release Triggers the Duty of Inquiry. In relevant part, the October 15, 2007 Press Release disclosed that “Galore Creek Mining Corporation has engaged AMEC to prepare an updated feasibility study to, amongst other things, support the project financing of Galore Creek. The updated feasibility study is expected to result in significant increases to capital costs.” This statement is “company-specific information” that relates directly to the misrepresentations alleged. See Staehr, 547 F.3d at 428. The October 15, 2007 Press Release thus put plaintiff on inquiry notice of the claims relating to the retention of AMEC, including the Registration Statement’s alleged failure to disclose that proceeds from the offering would be used to fund a new feasibility study; its characterization of the Hatch Study as the “final” feasibility study that had “confirmed” the economic viability of the Project; and its failure to disclose that NovaGold had retained AMEC to conduct a new feasibility study. When plaintiff first sought to bring these claims against the NovaGold Directors, Brown, the Hatch Defendants, and the Underwriter Defendants over a year later, they were time-barred. Plaintiff argues that “nothing” in the October 15, 2007 Press Release is indicative of a securities fraud claim, that the press release does not foreshadow the cost increases relating to the tailings dam and water management structures that were largely responsible for derailing the Project, that the small correction in Nova-Gold’s stock price following the press release evinces a lack of inquiry notice, and that the October 15, 2007 Press Release contained words of comfort tempering the storm warnings. Each argument fails. Plaintiffs complaint and opposition brief repeatedly advise that its Securities Act claims are not based on fraud, and fraud is not a requirement of a Securities Act claim. See Rombach v. Chang, 355 F.3d 164, 170-71 (2d Cir.2004) (considering whether a particular Securities Act claim sounded in fraud or negligence). Rather, the simple presence of “an untrue statement of a material statement” or an omission of “a material fact required to be stated” to make the statement at issue not misleading is sufficient for liability. 15 U.S.C. § 77k(a). Accordingly, Section 13 of the Securities Act, its statute of limitations provision, provides that the limitations period expires “within one year after the discovery of the untrue statement or the omission,” and makes no mention of fraud. 15 U.S.C. § 77m; In re WorldCom Securities Litigation, 496 F.3d 245, 249 (2d Cir.2007). A plaintiff is thus on inquiry notice when it learns of the probability of an earlier “untrue statement” or “omission,” not when it learns a misstatement involved fraud. Plaintiff also attempts to characterize the October 15, 2007 Press Release as “vague and misleading” in its failure to suggest the “colossal underestimation” of costs required to complete the tailings dam and water management structures. As explained above, the cost estimates and economic viability projection that plaintiff faults in the Registration Statement are expressly identified as the estimates and projection of the Hatch Study, which was specifically called into question by the October 15, 2007 Press Release. This press release clearly discloses that the Hatch Study is under revision, and that the new feasibility study “is expected to result in significant increases to capital costs.” These disclosures triggered inquiry notice. While it did not detail every line item in the Hatch Study that the AMEC study was calling into question, storm warnings “need not detail every aspect” of the alleged scheme. Staehr, 547 F.3d at 427. Plaintiff submits that the decline in NovaGold stock following the October 15, 2007 Press Release, which, at under fifty cents, was much smaller than the drop that occurred after the November 26 disclosure that the Project was being suspended, is “telling” evidence that investors were not, in fact, put on notice of misstatements by the October 15, 2007 Press Release. While courts have considered fluctuations in share price following a disclosure when determining the presence of inquiry notice in the securities fraud context, stock price is “typically not dispositive standing alone.” Newman v. Warnaco Group, Inc., 335 F.3d 187, 195 (2d Cir.2003). In this case, the share price for Nova-Gold stock promptly fell US$ 0.46, from US$ 19 to US$ 18.54, following the October 15, 2007 Press Release. The plaintiff does not suggest that this drop was insignificant when compared to the stock’s historical performance or when assessed against the control provided by the entire market’s and the mining industry’s stock price movements of that same day. Instead, the plaintiff points to the even more dramatic collapse of the stock that followed the suspension of the Project six weeks later. The issue is not, however, whether the October 15, 2007 Press Release adequately warned investors of the Project’s suspension, but whether it placed them on inquiry notice that the Hatch Study’s financial analysis of the Project was no longer reliable. That, it did, and the stock price drop following the press release supports that finding. Finally, plaintiff cannot point to words of comfort tempering the October 15, 2007 Press Release’s questioning of the Hatch Study. Plaintiff points to statements in the press release that suggested that construction was proceeding, but these do not impact or conceal the disclosure that the Hatch Study was being superseded. As explained above, the Hatch Study is the basis of the Registration Statement’s assurances concerning the economic viability of the Project. The duty of inquiry having been triggered, plaintiffs Securities Act claims against Brown, the NovaGold Directors, the Hatch Defendants, and the Underwriter Defendants, all of which appeared for the first time in the November 21, 2008 complaint, are time-barred. 4. Securities Act Claims Against Nova-Gold and Three of Its Officers The remaining Securities Act allegations accuse NovaGold and its officers Van Nieuwenhuyse, MacDonald, and Harris of violating Section 11 of the Securities Act, assert a claim under Section 12(a) (2) of the Securities Act against NovaGold only, and charge the three officers with “control person” liability under Section 15 of the Securities Act. Defendants do not challenge the timeliness of Securities Act claims brought against these defendants, but seek dismissal on other grounds. First, the NovaGold Defendants assert that the heightened pleading standard of Rule 9(b), Fed.R.Civ.P., applies to plaintiffs Securities Act claims because, despite disclaimers to the contrary, the claims actually sound in fraud, and fail to state a claim under this standard. Second, they assert that the language of the Registration Statement is not actionable for various reasons, including those contained in the Underwriter Defendants’ papers and incorporated by reference. 5. Applicable Pleading Standard As already noted, Sections 11 and 12(a)(2) of the Securities Act impose liability for misrepresentations of material fact in registration statements or prospectuses, respectively. To state a claim under either section, a plaintiff need not plead scienter, reliance, or fraud. Rombach, 355 F.3d at 169 n. 4. But the Second Circuit has determined that the wording of Federal Rule of Civil Procedure 9(b) “is cast in terms of the conduct alleged, and is not limited to allegations styled or denominated as fraud or expressed in terms of the constituent elements of a fraud cause of action.” Id. at 171. Therefore, “the heightened pleading standard of Rule 9(b) applies to Section 11 and Section 12(a)(2) claims insofar as the claims are premised on allegations of fraud.” Id. Thus, under Rombach, in determining which pleading standard applies to a securities cause of action, a court must look not to the statutory elements of the cause of action, but rather to the underlying conduct alleged. The heightened pleading standard does not apply to the Securities Act claims here. Plaintiff sets off its Securities Act claims in a separate section of the complaint, prefaced with the statement that they sound in “strict liability and negligence.” The Securities Act allegations also charge defendants with failing to make a reasonable and diligent investigation into the statements contained in the Registration Statement, conduct suggesting negligence, not fraud. Moreover, the Securities Act claims do not delineate between the conduct of the Underwriter Defendants, the Hatch Defendants, and the NovaGold Defendants. Each group of defendants had different incentives in the secondary offering, and each served a different function. The complaint could not uniformly plead fraudulent conduct against all defendants given these distinctions; more specific conduct would need to be alleged. Defendants identify no controlling authority finding that Securities Act allegations, when plead entirely separately from Exchange Act allegations, and accompanied by a disclaimer explaining that they sound in negligence, in fact sound in fraud. The Rombach court advised that “courts are not required to sift through allegations of fraud in search of some lesser included claim of strict liability,” but no sifting is required in a situation such as this, where the claims are separately plead. Rombach, 355 F.3d at 176 (citation omitted). 6. Allegations, of False Statements a. Legal Standard: PSLRA Safe Harbor and Bespeaks Caution Defendants argue that the items in the Registration Statement which plaintiff claims violated the Securities Act are not actionable, principally because they are protected as forward-looking statements under the PSLRA safe harbor or bespeaks caution doctrine, or because they were not untrue statements of material fact. The PSLRA defines a forward-looking statement, in relevant part, as (A) a statement containing a projection of revenues, income (including income loss), earnings (including earnings loss) per share, capital expenditures, dividends, capital structure, or other financial items; (B) a statement of the plans and objectives of management for future operations, including plans or objectives relating to the products or services of the issuer; (C) a statement of future economic performance, including any such statement contained in a discussion and analysis of financial condition by the management or in the results of operations included pursuant to the rules and regulations of the Commission ... 15 U.S.C. § 77z-2(i) (emphasis supplied). The PSLRA safe-harbor provision provides that an issuer, or a person acting on an issuer’s behalf, is not liable for a forward-looking statement that contains an untrue statement of material fact or an omission of material fact 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 ... 15 U.S.C. §§ 77z-2(a), (c)(1); Rombach, 355 F.3d at 173. The safe harbor does not apply to forward-looking statements if made with “actual knowledge” that they are false or misleading. 15 U.S.C. § 77z-2(c)(1)(B). Similarly, the judicially created “bespeaks caution” doctrine also removes liability for statements accompanied by cautionary language, providing that “alleged misrepresentations in a stock offering are immaterial as a matter of law if it cannot be said that any reasonable investor could consider them important in light of adequate cautionary language set out in the same offering.” Rombach, 355 F.3d at 173 (citation omitted). If a disclosure contains cautionary language, the court does not look at the alleged misrepresentation in isolation, but considers the disclosure in its entirety “to determine whether a reasonable investor would have been misled,” asking “whether defendants’ representations or omissions, considered together and in context, would affect the total mix of information and thereby mislead a reasonable investor regarding the nature of the securities offered.” Id. (citation omitted). Examined in context, the cautionary language must “warn [] of the specific contingency that lies at the heart of the alleged misrepresentation.” P. Stolz Family Partnership L.P. v. Daum, 355 F.3d 92, 97 (2d Cir.2004). See also Hunt v. Alliance N. Am. Gov’t Income Trust, Inc., 159 F.3d 723, 729 (2d Cir.1998) (“The cautionary language ... must relate directly to that by which plaintiffs claim to have been misled.”). In addition, “[c]autionary words about future risk cannot insulate from liability the failure to disclose that the risk has transpired.” Rombach, 355 F.3d at 173; see also P. Stolz, 355 F.3d at 97 (“knowledge within the grasp of the [company] — is a different matter”). “The doctrine of bespeaks caution provides no protection to someone who warns his hiking companion to walk slowly because there might be a ditch ahead when he knows with near certainty that the Grand Canyon lies one foot away.” Rombach, 355 F.3d at 173 (citation omitted). b. Legal Standard: Materiality If a part of a Registration Statement is not protected under the PSLRA safe harbor or because it bespeaks caution, it violates the Securities Act, as stated above, if it “contain[s] an untrue statement of a material fact or omit[s] to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” 15 U.S.C. §§ 77k(a); 771(a)(2). The materiality of a misstatement is evaluated using the well-established standard articulated in Basic Inc. v. Levinson, 485 U.S. 224, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988), which requires proof that there is a “substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” Id. at 231-32, 108 S.Ct. 978, (citation omitted). Put otherwise, “[t]he materiality of a misstatement depends on whether there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to act.” ECA, Local 134 IBEW Joint Pension Trust of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 197 (2d Cir.2009) (citation omitted) (“ECA”). A material fact can relate to past, existing or even prospective events. Sonesta Int’l Hotels Corp. v. Wellington Assoc., 483 F.2d 247, 251 (2d Cir.1973). “Because materiality is a mixed question of law and fact,” it is ordinarily inappropriate for resolution at the motion to dismiss stage. ECA, 553 F.3d at 197. A complaint may be dismissed because the alleged misstatements or omissions are immaterial, however, if the “they are so obviously unimportant to a reasonable investor that reasonable minds could not differ on the question of their importance.” Id. (citation omitted). c. Disclosures Relating to the Project’s Cost Estimate and Its Economic Viability The US$ 1.8 million cost estimate figure calculated in the Hatch Study and the Hatch Study’s assessment that the Project was economically viable are forward-looking statements accompanied by cautionary language, eligible for protection under the PSLRA safe harbor. At the time of the Secondary Offering, years remained until Galore Creek was operational, and a prediction about its ultimate costs, as well as whether the costs would be offset by sufficient revenue to render the Project economically viable, are “projection^]” plainly satisfying the definition in the PSLRA. Plaintiff unpersuasively depicts these statements as statements of present fact by arguing that NovaGold, at the time the statement was made, had already determined what the Project would cost. Any projection or forward-looking statement necessarily has its basis in current conditions, but this does not change the fact that it uses those current conditions to make some kind of prediction about the future. Plaintiffs argument is better understood as an assertion that NovaGold knew, based on present conditions, that the statements were false when made, and should not be protected by the PSLRA safe harbor. This argument is addressed below. Plaintiff also submits that the fact that the Hatch Study was a “bankable” study, designed to serve as the basis for investors to ascertain whether the Project could provide long-term returns, demonstrates that its conclusions were not forward-looking projections. Investors routinely make investment decisions using forward-looking material, betting on future returns from investments. That they do so does not render such information not forward looking. The cost figure and economic viability prediction were also accompanied by cautionary language adequate to invoke the PSLRA safe harbor and bespeaks caution doctrine. The Registration Statement’s “Cautionary Statement Regarding Forward-Looking Statements” warns investors that the Registration Statement eontain[s] forward-looking statements ... concerning the Company’s plans at the Galore Creek, Donlin Creek, Nome Operations and Ambler projects, production, capital, operating and cash flow estimates .... These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. (Emphasis supplied). The Registration Statement then included a list of twenty-four separate risks. The fifth item on the list was “uncertainty of capital costs, operating costs, production and economic returns.” In the Risk Factors section of the Registration Statement, bold, italicized text noted that “[ajctual capital costs, operating costs, production and economic returns may differ significantly from those NovaGold has anticipated and there are no assurances that any future development activities will result in profitable mining operations.” Underneath, the Registration Statement disclosed that “[t]he capital costs to take the Company’s projects into production may be significantly higher than anticipated. None of the Company’s mineral properties, including the Galore Creek ... project[has] an operating history upon which the Company can base estimates of future operating costs.” After noting that decisions to develop Galore Creek and other properties would be based on feasibility studies, the Registration Statement warned that “other feasibility studies or economic assessments, if prepared, may differ significantly from those anticipated by NovaGold’s current studies and estimates, and there can be no assurance that the Company’s actual capital and operating costs will not be higher than currently anticipated.” In the same section of the Registration Statement, under the bold, italicized heading disclosing that “NovaGold has no history of producing precious metals from its mineral exploration properties and there can be no assurance that it will successfully establish mining operations or profitably produce precious metals,” the statement added that NovaGold is subject to all of the risks associated with establishing new mining operations ... including: the timing and cost, which can be considerable, of the construction of mining and processing facilities .... The costs, timing and complexities of mine construction and development are increased by the remote location of the Company’s mining properties. It is common in new mining operations to experience unexpected problems and delays during development, construction and mine start-up ... Accordingly, there are no assurances that the Company’s activities will result in profitable mining operations or that the Company will successfully establish mining operations or profitably produce precious metals. (Emphasis supplied). Additionally, the “Summary Financial Results” table, which includes the US$ 1.8 million cost figure, lists the Project’s expected costs based on a “base case” of assumptions about metals prices, as well as “estimates of annual production and cash costs.” These examples indicate that the cost figure and prediction of the Project’s economic viability were subject to risks regarding capital costs, the very risks which ultimately materialized. See, e.g., Rombach, 355 F.3d at 176 (caution that there was “no assurance” that company could raise sufficient capital for continued expansion bespoke caution); Luce v. Edelstein, 802 F.2d 49, 56 (2d Cir.1986) (representations regarding potential cash and tax benefits of a partnership protected by statement in offering memorandum that “[n]o assurance [could] be given that these projections [would] be realized”). The warnings appeared “prominently and specifically” at the beginning of the Registration Statement and then again, in partially bolded text in the Risk Factors section. See Olkey v. Hyperion 1999 Term Trust, 98 F.3d 2, 5 (2d Cir.1996) (finding no liability where prospectus gave “prominent and specific” warnings of “exactly the risk the plaintiffs claim was not disclosed” so as to “bespeak caution”). Additionally, characterizing a cost figure as an “estimate,” as the Registration Statement did, is inherently cautionary, as the word “estimate” connotes uncertainty. Using the language of the bespeaks caution doctrine, no reasonable investor could review the Registration Statement and not understand that its cost estimates and NovaGold’s current view that the Project was economically viable were subject to change. When the Registration Statement was issued, mine production start-up was still five years away, as the Registration Statement noted. Given the warnings regarding capital costs, it would be unreasonable to demand that a cost estimate must hold steady over a multi-year period requiring considerable amounts of construction of a large mine in a remote location by a company just getting its start in the mineral production business. Plaintiff argues that the cautionary language provided is inadequate because it did not warn of the “specific” event that came to pass, an increase in the construction of the tailing dam and water management structures. The Registration Statement does warn of this risk at a higher level of generality, at the level of capital costs. This level of generality is sufficient and addressed the “relevant risk directly,” a risk of rising capital costs. See Halperin v. eBanker USA.com, Inc., 295 F.3d 352, 360 (2d Cir.2002). The Registration Statement need not predict all of the details of the contingency that came to pass. Requiring it to do so would force companies warning of capital cost risks to detail every single capital expenditure they planned to make and their expected costs. Such an approach would be impractical.