Full opinion text
MEMORANDUM AND ORDER NAOMI REICE BUCHWALD, District Judge. Plaintiffs bring this securities class action under Sections 11, 12, and 15 of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. §§ 77k, 111 and 770; Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78j(b) and 78t(a); and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. Plaintiffs filed a Consolidated Amended Class Action Complaint (the “CAC”) on August 25, 2008. Plaintiffs are investors in Ambac Financial Group, Inc. (“Ambac”), who purchased or acquired (1) Ambac stock during the period from October 25, 2006, through and including April 22, 2008 (the “Class Period”), or (2) securities issued pursuant to certain Ambac registration statements described below. Lead Plaintiffs, appointed pursuant to an order of this Court on May 9, 2008, 2008 WL 2073931, are a group of institutional investors comprised of the Public School Teachers’ Pension and Retirement Fund of Chicago, the Arkansas Teachers’ Retirement System, and the Public Employees’ Retirement System of Mississippi, (collectively, “Lead Plaintiffs”). The CAC also names an additional plaintiff, Painting Industry Insurance and Annuity Funds, whose separately filed case was subsequently consolidated pursuant to our order of October 22, 2008. Defendants are Ambac, several of Ambac’s officers and directors (the “Individual Defendants”), Ambac’s auditor (KPMG) and the underwriters of Ambac’s securities offerings in February 2007 and March 2008 (the “Underwriter Defendants”). Before the Court are defendants’ motions to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, filed August 27, 2009. For the reasons stated below, the defendants’ motions are granted in part and denied in part. FACTUAL BACKGROUND The following facts are taken from the CAC, written instruments attached to the CAC, statements or documents incorporated into the CAC by reference, public disclosure documents required to be filed with the SEC, and documents upon which plaintiffs relied in bringing the suit. The Court may consider such documents on a motion to dismiss. See ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007). The Court assumes all alleged facts to be true for the purpose of deciding these motions to dismiss, and construes all alleged facts in the light most favorable to the plaintiffs. See Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir.2006). I. Ambac and the Credit Derivative Market A. Ambac’s Historic Business Ambac is a holding company with numerous subsidiaries that provide financial guarantee products and other financial services to clients in both the public and private sectors. Its common stock is traded on the New York Stock Exchange. Ambac was founded in 1971 as the first company to offer insurance on municipal bonds. Ambac became known as a “mono-line” insurer because it provided one type of insurance — a guarantee to protect against credit risk, ie. the risk of default. Ambac’s business model has always been based on establishing underwriting guidelines and procedures that enable the company to guarantee only those obligations that were “of investment grade quality with a remote risk of loss.” In the years leading up to the Class Period, the focus of Ambac’s business shifted from insuring municipal bonds towards providing insurance and default protection for structured financial products. While Ambac’s exposure to municipal bonds remained roughly constant, Ambac’s total insured portfolio grew rapidly, due mostly to the company’s structured finance division. CAC ¶¶ 69-70. As a result, Ambac’s exposures to public finance shrank from 85% of the company’s insured portfolio in 1997, to 35% of the portfolio in 2007. Id. B. Residential Mortgage Backed Securities (“RMBS”) An RMBS is a debt security that receives cash inflows directly from underlying pools of residential mortgages. CAC ¶ 43. Banks form RMBS by first purchasing mortgages from lenders or originating them directly, then compiling those mortgages into RMBS. The underlying mortgages are grouped into different classes, called “tranches,” according to their expected risk of default. The riskiest tranches are, at least by design, the first to default, while the less risky — and thus higher rated — tranches are less likely to suffer losses caused by defaults within the underlying mortgage pool. RMBS are sold in these different tranches, priced according to the expected risk of default associated with the particular tranch. CAC ¶¶ 44-46. The monthly interest and principal payments on the mortgages are pooled and paid to the holders of RMBS, ie. the bondholders. If mortgage defaults cause losses in the pool, such losses are first allocated to “excess spread” and then to “overcollateralization” — mechanisms built into the securities to protect bondholders from facing losses. If losses exceed the amount of excess spread and overcollateralization, the losses are allocated to bondholders according to the risk profile of each tranch. The holders of bonds with the lowest credit rating face losses first, while AAA bondholders face losses last. CAC ¶ 45. If an entity holds less-risky, investment-grade tranches of RMBS, they are said to be protected by “subordination,” ie. the fact that subordinate bondholders will face losses first. CAC ¶ 47. Ambac provided insurance against the risk of default on RMBS, but did not originate or underwrite mortgages or compile RMBS. C. Collateralized Debt Obligations (“CDOs”) A CDO is a derivative security that receives cash inflows from asset-backed securities, including RMBS, or from other CDOs that are themselves funded by asset-backed securities. A CDO that receives cash inflows in part from other CDOs is known as a “CDO squared.” CAC ¶ 48. To form CDOs, banks bought RMBS from mortgage originators and then created and issued CDOs. CAC ¶ 50. The CDO structuring process allowed lower-rated tranches of RMBS to be compiled into pools, thereby restructuring the cash flows so that other CDO tranches could be labeled as investment grade. A core assumption in this restructuring is that, between similarly rated RMBS tranches, there would be a limited correlation of defaults in the underlying mortgage collateral. If most or all of the similarly rated RMBS tranches supporting a CDO suffered defaults at the same time, the protective benefits of subordination would prove illusory. Ambac issued default protection for CDOs in the form of credit default swaps (“CDS”). As a result, Ambac became the ultimate holder of risk for the mortgages at the bottom of these structured financial products. CAC ¶ 44. When Ambac wrote traditional insurance, regulation required it to allocate approximately 3% of the amount insured to support its capital cushion. CAC ¶ 65. However, when Ambac wrote CDS against CDOs, the amount of capital it had to allocate to the transaction was lower, even if the size of the deal and premium paid to Ambac were the same. Id. Thus, writing CDS was potentially more profitable to Ambac than traditional insurance. The danger to the company’s viability of taking losses on CDO deals was also heightened, due to the smaller capital cushion in place relative to the amount of risk insured. By the beginning of the Class Period, Ambac had increased its focus on guaranteeing CDOs. Looking at Ambac’s “new business guaranteed” by bond type for 2004, 2005, and 2006, the percentage of CDO guarantees increased from 6% to 33% over the two year period. Additionally, Ambac’s CDO deals contained increasing amounts of RMBS collateral. Ambac’s net exposure to CDOs with greater than 25% RMBS as the underlying collateral increased from $900 million in 2004 (5.8% of Ambac’s domestic CDO exposure) to $29 billion as of December 31, 2007 (57.5% of domestic CDO exposure). CAC ¶ 66. Most of the CDOs Ambac was exposed to were “synthetic CDOs.” CAC ¶ 54. A synthetic CDO magnifies the risk of underperformance of the underlying RMBS because payment to the CDO depends in part on cash flows from complex derivatives whose value depends on the performance of the same underlying collateral. Thus, investments in synthetic CDO instruments lowered Ambac’s diversification by “doubling down” on the same underlying securities. Id. Generally Accepted Accounting Principles (“GAAP”) required Ambac to record the total value of its CDS contracts at fair value as part of the company’s quarterly financial disclosure. CAC ¶¶ 270-71. The price of a CDS is set by the expected likelihood of a default and the probable amount of the loss, or the “loss severity.” CAC ¶ 272. The “value” of the swap is the difference between the premiums the issuer — here, Ambac — will receive and the likely default payments it will make; as the amount of the anticipated default payments increases, the value of the swap decreases. Id. GAAP required Ambac to take “write-downs” based on any increased chance that Ambac would have to perform on its obligation. CAC ¶¶ 273-76. D. Ambac’s AAA Credit Rating In each of the fourteen years prior to 2008, credit rating agencies Standard & Poors (S & P), Moody’s, and Fitch had all assigned Ambac a credit rating of AAA (or the equivalent top rating). CAC ¶ 32. This credit rating was essential to Ambac’s business model because, in acting as an insurer of financial products, the company effectively sold its AAA credit rating to enhance the credit rating of bonds and asset-backed securities. CAC ¶ 34. Through a financial guarantee insurance contract — known as a “wrap” — Ambac enhanced a security’s credit rating by “lending” its own AAA rating to the security and assuming the security’s credit risk. This allowed an issuer to save money by lowering the interest rate it had to pay to investors. CAC ¶ 33. The investment community understood the importance of a top credit rating to monoline insurers. For example, in June 2005, a Euromoney article on monoline insurers noted that “[t]here is no AA+ for these guys, it’s AAA or nothing.” CAC ¶ 34. Rating agencies assign ratings to bond insurers based on proprietary models that measure, among other characteristics, the capital adequacy of financial guarantors under stress scenarios. In order to preserve its credit rating, Ambac was required to have a capital cushion, ie. to maintain capital levels at or in excess of the amounts set by each rating agency. Ambac’s loss reserves and insured exposures, detailed in the company’s quarterly disclosures, were particularly important to the rating agencies and the investing community because of their impact on Ambac’s capital cushion. CAC ¶ 36. Ambac’s total capital was only a fraction of its total amount of insured obligations, so any marked increase in losses would place the adequacy of Ambac’s capital cushion, and ultimately its AAA rating, at risk. For example, the ratio of Ambac’s net financial guarantees to qualified statutory capital (its “capital ratio”) was 125:1 as of March 31, 2007. CAC ¶ 37. Since the failure of a small amount of Ambac’s insured portfolio would be enough to wipe out Ambac’s excess capital, the quality of the company’s underwriting and monitoring of its risk exposures was very important to investors. Id. II. The Alleged Scheme A. Pressure at Ambac to Guarantee Riskier Products The CAC alleges that Ambac employees faced pressure to guarantee increasingly risky kinds of financial products for two principal reasons. First, in 2005, Ambac’s CEO Robert J. Genader (“Genader”) announced an aggressive net income goal, aiming to reach one billion dollars per year “in the near future.” CAC ¶ 67. Ambac’s 2004 earnings were $724 million. CAC ¶ 74. Confidential Witness 1 (“CW” l) claims that Genader pushed this income goal but did not increase Ambac’s infrastructure or staff size to achieve it, compelling the company to take on high premium, high risk transactions. CAC ¶ 75. Second, Ambac’s historic business of insuring municipal bonds had become a diminishing source of growth for the company. A July 2006 report by Moody’s noted that Ambac had “taken the muni market about as far as it can go ... When you have penetration like that, it’s hard to do more business....” CAC ¶39. The CAC also alleges that Ambac’s municipal bond business had previously benefited from the rating agencies’ undisclosed practice of assigning lower ratings to municipalities and governments in order to force them to purchase bond insurance. CAC ¶ 40. In early 2006, Moody’s allegedly informed Ambac that it would no longer assign ratings in this way, curtailing the profitability of Ambac’s work in the municipal bond sector. Id. In the face of these pressures on Ambac’s business, plaintiffs allege that Ambac pursued riskier, more lucrative deals that the company had previously lost to competitors because they did not meet Ambac’s (historically) cautious underwriting policies. See CAC ¶¶ 78, 81, 84-5. B. Underwriting Standards at Ambac i. Ambac Allegedly Learned That Mortgage Originators Had Lowered Their Lending Standards Before the start of the Class Period, the largest mortgage originators in the United States had lowered their lending standards and were selling lower quality mortgages into RMBS-related securities. CAC ¶¶ 12, 55-59. Ambac stated in its financial disclosure that the company’s underwriting often “entails on-site due diligence covering the parties to the transaction, such as the issuer, originator, servicer or manager.” CAC ¶ 76. According to CW 3, Ambac learned of the lowered standards being employed by mortgage originators at due diligence visits to originators in 2005 and early 2006. CAC ¶ 77. Plaintiffs allege that by the middle of 2006 Ambac knew that originators had materially lowered their lending standards across the board. CAC ¶ 87. ii. Ambac Allegedly Reduced Their Underwriting Requirements for RMBS Ambac allegedly lowered their underwriting requirements in three ways. First, in 2006 Ambac lowered its demands on overcollateralization for guaranteeing securities based on home equity lines of credit (“HELOCs”). Whereas Ambac used to require 3.5% overcollateralization for such deals, in early 2006 Ambac reduced the minimum amount of this structural protection to 0.5%. CAC ¶¶ 80-81. According to CW 3, in June 2006 the First Vice President in Ambac’s Consumer Asset-Backed Securities Group wrote a memo to the Credit Risk Committee detailing a “drastic” change in underwriting standards for HELOCs. CAC ¶ 84. The Credit Risk Committee, which included defendants Genader, John W. Uhlein III (“Uhlein”) and David W. Wallis (“Wallis”), reviewed the memo and approved the change. Id. The CAC alleges that Ambac did not disclose this change, but there is no allegation that Ambac ever publicly reported their precise overcollateralization requirements. Second, in 2006 Ambac began to insure RMBS backed by “piggyback” loans, which are closed-end second mortgages (“CES” mortgages) that cover the initial down-payment for a home. CAC ¶ 82. Prior to 2006, Ambac had a policy against such deals and would only insure RMBS backed by CES loans if the borrowers had owned their home for some time, had paid back part of their first-lien mortgage, and had some equity in their home. Id. Ambac did not disclose this change in policy. Third, in June 2006, Ambac stopped testing RMBS on a loan-by-loan basis to assess risk and instead applied a new model that looked only at the historical cumulative default rate of the loan originators. CAC ¶¶ 85-86. For example, if a pool of underlying loans was originated by Countrywide, Ambac would run its model against Countrywide’s historic default rate, but would not look at the underlying loans in the pool as the basis for projecting future defaults. Id. Ambac did not disclose this change in their underwriting procedure. iii. Ambac’s Underwriting Standards for CDO Transactions Were Allegedly Deficient The CAC alleges that Ambac approved CDO deals in which the underlying RMBS collateral would not have satisfied the company’s internal RMBS underwriting requirements, even after such requirements had been lowered. CAC ¶ 91. In October 2006, defendant Uhlein, an Executive Vice President and a member of the Credit Risk Committee, received a memo from the head of Consumer Asset-Backed Securities that asked: “Why are we willing to insure stuff in the secondary market [i.e. the CDO market] that we would not touch with a ten foot pole in the primary market [i.e. the RMBS market]?” CAC ¶¶ 88-89. CW 3 claims to have seen this memo on a computer screen around the time it was sent. Id. According to CW 4, Jeff Nabi, a Managing Director in the Consumer AsseL-Backed Securities group, expressed his concerns about Ambac’s CDO exposures and complained internally that CDO deals did not face the same scrutiny or stress testing as other transactions. CAC ¶ 90. Finally, plaintiffs allege various other deficiencies in Ambac’s CDO underwriting and surveillance practices. According to CW 2, Ambac’s surveillance department was not responsive, often short-staffed, and, because of high turnover in personnel, was “in disarray” in 2006. CAC ¶ 75. According to CW 5, in late 2006 and early 2007 Ambac’s CDO team was “churning out deals” and failed to conduct in-depth analysis of the collateral supporting CDOs on at least some deals. CAC ¶ 91. Instead of conducting detailed underwriting, the process evolved to “relying on counter-parties” for due diligence, meaning the investment bankers who originated CDOs. Id. CW 5 also states that the CDO team relied heavily on ratings published by credit rating agencies in determining whether to review the RMBS collateral supporting a CDO. CAC ¶¶ 92, 103. Ambac’s public disclosures stated that its policy was not to rely on ratings agencies in approving transactions because the company conducted its own independent analysis of each transaction. CAC ¶ 104. C. The Performance of Ambac’s RMBS and CDO Portfolios Plaintiffs make detailed allegations about the deterioration of the RMBS and CDO markets and its impact on Ambac’s guarantees of such products. By the start of the Class Period, a negative trend in the market indicated rising delinquencies and default rates in the underlying collateral of RMBS-related instruments. CAC ¶ 105. Moody’s and S & P reports described rising mortgage delinquencies and early payment defaults starting in the third quarter of 2006, and the trend worsened as the Class Period continued. CAC ¶ 108. Whereas in mid-2006 the average percentage of underlying mortgages that had been in delinquency for 30-59 days was under 1%, this figure had doubled by the end of 2006 and had tripled by late summer 2007. CAC ¶ 133. By early 2007, media and research analysts had begun to link the decline in the housing market and increase in delinquencies to a weakening of the securitized RMBS and CDO markets. CAC ¶ 111. Plaintiffs allege that although Ambac mostly guaranteed only the highly-rated tranches of RMBS and CDOs, the erosion of the supposedly secure revenue streams that supported these instruments meant that the risk was increasing that Ambac would actually have to (a) pay out on their obligations and (b) disclose and account for these losses, impairing its capital cushion and putting pressure on Ambac’s AAA credit ratings. CAC ¶ 109. Plaintiffs illustrate their claims about Ambac’s deteriorating'CDO portfolio using “expert analysis” from anonymous independent consultants, including mortgage industry specialists and a former trader of RMBS and CDOs. CAC ¶ 114; Oral Argument Tr. 30. Plaintiffs’ analysis compares a sample of Ambac’s CDS contracts with two market indices, the “ABX” and “TABX” indices, which track the value of CDS written as insurance against dozens of representative RMBS. CAC ¶ 111. The analysis allegedly demonstrates that, throughout the Class Period, Ambac’s portfolio performed in line with “and often times worse than” the deteriorating market. CAC ¶ 125. In particular, the analysis concludes that by the first quarter of 2007 there was a “clear deterioration” in the underlying assets of Ambac’s HELOC and CES portfolios, which performed “almost identically (ie. just as poorly) as [sic] the ABX and TABX indices.” CAC ¶ 130-31. Plaintiffs’ expert analysis seeks to replicate the information that was available to Ambac and its surveillance team, but which was not available to investors because Ambac did not publicly identify the underlying collateral of its insured CDOs, at least until January 30, 2008. CAC ¶¶ 115-16. This information gap was understood by market analysts. For example, on August 23, 2007, a Piper Jaffrey analyst report noted that only Ambac had access to the information needed to accurately asses the quality of its CDO exposures and the adequacy of its underwriting: “Despite any analyst or investor’s best attempt, the information flow on a deal by deal basis simply cannot be granular enough to come to any real conclusion about these very protections, let alone knowing whether or not they exist in a specific deal.” CAC ¶ 204. III. The Allegedly False and Misleading Statements Issued During the Class Period During the Class Period, plaintiffs allege that Ambac made numerous false statements that fall generally into three categories. The first category of statements are those that portray Ambac’s underwriting procedures as continuing to be cautious and conservative, while failing to disclose that the company had lowered its underwriting standards. CAC ¶ 87. In the second category are statements about Ambac’s active monitoring of its RMBS and CDO portfolios in conjunction with statements about the strong performance of those portfolios, including statements that describe Ambac as outperforming the market. CAC ¶ 125. The third category covers Ambac’s allegedly false financial statements and the company’s failure to disclose, in a timely manner, any material impairment to the RMBS-related instruments Ambac insured. CAC ¶ 105. A. Statements Regarding Underwriting Standards Defendants’ alleged misstatements during the Class Period include: • “[W]e’re very selective in [the CDO] sector ... I would also say, as a matter [sic], that our CDO portfolio, when we look at structured credit with MBS, we’re also very cautious about mezzanine-type securities that come out of mortgage-backed securitizations. So, we are taking a cautious position for underwriting reasons.” Sean T. Leonard, Chief Financial Officer, October 25, 2006, investor conference call; CAC ¶ 92,148. • With respect to Ambac’s CDO obligations: “Ambac considers the unique attributes of the underlying collateral and transaction.” Ambac Form 10-Q for 3Q 2006, filed November 8, 2006; CAC ¶ 153. • “[Ambac’s due diligence] often entails on-site due diligence covering the parties to the transaction, such as the issuer, originator, services or manager.” Ambac Form 10-K for the year ended December 31, 2006, filed on March 1, 2007; CAC ¶ 161. • “The deals we ensure must meet Ambac’s strict underwriting standards ... [W]e have maintained the same conservative standards over the years.” Uhlein, March 6, 2007, conference at Association of Independent Financial Advisors; CAC ¶¶ 100,173. • Regarding Ambac’s “conservative” underwriting: “[0]ur strongest writings were in CDOs of ABS where we have been cautious and selective.” Leonard, July 25, 2007, investor conference call following press release; CAC ¶ 193. • “[Ambac] does not underwrite based solely on the deal’s public rating ... We believe our credit-risk analysis goes far beyond that which a typical CDO investor would perform ... [Ambac puts each deal through a] rigorous review process, [including] a rigorous review of the CDO manager ... and a detailed review and re-rating of the underlying RMBS collateral in the deal.” Tom Godolfo, Senior Managing Director, July 25, 2007, investor conference call following press release; CAC ¶ 194. • “First of all, we use our own ratings, and so we rate the transactions. All of them are Triple A. And how we actually dig into them is that we drill down. In the case of some of our transactions we will look at 15,000 individual [data points], we will then project current rates of loss, and future rates. We are very comfortable with that portfolio and our detailed analysis that we update every single month.” Genader, November 1, 2007, CNBC Interview; CAC ¶ 217. • “Ambac does not rely on the agencies in either approving transactions or assigning internal ratings to the deals it approves. We conduct our own independent analysis of each transaction and the transaction is reviewed by one of our respective Senior Credit Committees pursuant to our credit process and policies ... [Ambac’s subprime RMBS exposure] has steadily decreased ... [as] a result of Ambac having been very selective in underwriting new direct RMBS exposure in the last two years.” Ambac Form 8-K, filed November 13, 2007; CAC ¶¶ 234-35. B. Statements Relating to Performance and Monitoring of Ambac’s Portfolio Defendants’ alleged misstatements during the Class Period include: • “Active surveillance of the insured portfolio enables Ambac’s Surveillance Group to track credit migration of insured obligations from period to period and prepare an adversely classified credit listing. The active credit reserve is established only for adversely classified credits. The criteria for an exposure to be included on the adversely classified credit listing includes underperformance of the underlying collateral (for collateral dependent transactions such as mortgage-backed securitizations), problems with the servicer of the underlying collateral and other adverse economic events or trends.... ” Ambac Form 10-Q for 3Q 2006, filed November 8, 2006; CAC ¶ 151. • Regarding the surveillance review process: “Those credits that are either in default or have developed problems that eventually may lead to a claim or loss are tracked closely by the appropriate surveillance team and reported to management and Ambac’s Board of Directors by preparation of an adversely classified credit listing. Relevant information, along with the plan for corrective actions and a reassessment of the credit’s rating and credit classification, is reviewed with senior management in regular adversely classified credit meetings ... Ambac’s exposure to CDOs in its classified portfolio is currently limited.” Ambac Form 10-K for the year ended December 31, 2006, filed March 1, 2007; CAC ¶¶ 162-63. • “[0]ur participation in subprime market [sic] has dropped significantly over the last three years. The deals we have done ... are performing satisfactorily. We get monthly downloads on all of our deals and actively surveil, and monitor the performance of all our mortgage originators.” Uhlein, March 6, 2007, conference at Association of Independent Financial Advisors; CAC ¶¶ 100,173. • “Rest assured that we will continue to be disciplined and rigorous in our scrutiny of [mortgage-related exposures]” Genader, March 30, 2007, letter to shareholders in Ambac 2006 Annual Report; CAC ¶¶ 94,176. • On April 25, 2007: “[We have] very current information — information, pool information up through the end of March, so very current ... [We are] able to analyze that on a very current basis and look for trends of the underlying performance ... We just haven’t seen — certainly not significant deterioration ... We’re just not seeing deterioration up through March that wasn’t expected.” Leonard, investor conference call following press release; CAC ¶ 180. • Regarding how market-wide RMBS weakness could affect Ambac: “We’ve been pretty conservative and so we are very comfortable with our current book of business, even in this environment. So I think the focus from our perspective is to the extent there is a little turmoil in the market, to be honest, that’s actually a good thing for financial guarantors, so we are hoping to participate more in the market going forward.” Uhlein, June 12, 2007, Mortgage Finance Conference at Keefe, Bruyette & Woods; CAC ¶¶ 94, 188. • In response to investor questioning regarding the ABX and TABX indices: “I look at the same indexes that you look at [W] hen we look at our deals, we don’t feel we underwrite the market.” Godolfo, July 25, 2007, investor conference call following press release; CAC ¶ 195. • “[T]here clearly is a disconnect between the value of our portfolio, which is in very good shape, versus what has happened in the stock price in the last couple of months ... Our company is very solid and very safe ... [Ambac’s] stock price is definitely too low ... Our performance, as Ambac, is very different than the rest of the market.” Genader, November 1, 2007, CNBC Interview; CAC ¶ 218. • Regarding Ambac’s stock price decline in late October and early November of 2007: “[Ambac’s stock price] drop in the last few weeks has been caused by a number of misperceptions about the industry in general and misperceptions about Ambac specifically ... I hope to be able to calm the stories and restore the faith in the credit underwriting skills and surveillance and remediation capabilities that this Company has displayed for more than 35 years ... [These misperceptions are, for example, that] Ambac’s insured portfolio mirrors the ABX.” Genader, November 7, 2007, investor conference call; CAC ¶ 227. • “In fact, Ambac is not a proxy for the mortgage market: we are not a mortgage guarantor, we did not wrap any of the deals on the ABX index and we have wrapped only a fraction of the hundreds of deals that have been downgraded by S & P, Moody’s and Fitch.” Ambac Form 8-K, filed November 13, 2007; CAC ¶ 235. • “Our transactions do not replicate the ABX index. [The ABX index] is not Ambac.” Genader, November 28, 2007, Friedman Billings Conference; CAC ¶ 241. C. Ambac’s Financial Statements The CAC alleges that Ambac falsely reported its financial position, in violation of GAAP, for the years ended December 31, 2006 and December 31, 2007, and for the quarterly periods ended March 30, 2007, June 30, 2007, and September 30, 2007 by, inter alia, overstating assets and net earnings, understating liabilities, failing to disclose negative trends, failing to fairly mark-to-market the value of its CDS on CDOs, and failing to take adequate loss reserves on its direct RMBS exposures. CAC ¶ 259. In particular, plaintiffs assert that GAAP required defendants to disclose material impairment to Ambac’s CDO exposures long before the company announced a significant writedown on January 16, 2008. The “expert analysis” performed by plaintiffs’ consultants determined that Ambac should have reported net mark-to-market losses on its CDS contracts in the following amounts: (1) $2.1 billion for the quarter ended March 30, 2007, when Ambac in fact announced $5 million; (2) $2.7 billion for the quarter ended June 30, 2007, when Ambac announced $57 million; (3) $8.9 billion for the quarter ended September 30, 2007, when Ambac announced $743 million; and (4) $17 billion for the year ended December 31, 2007, when Ambac in fact announced $6.1 billion. CAC ¶¶ 141-45. Defendants’ alleged misstatements during the Class Period in this category include: • “Ambac’s exposure to derivative instruments ... are accounted for at fair value under SFAS 133[ ].” See, e.g., Ambac Form 10-K for the year ended December 31, 2006, filed March 1, 2007; CAC ¶ 160. • “[0]ur Consolidated Financial Statements ... have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).” See, e.g., Ambac Form 10-K for the year ended December 31, 2006, filed March 1, 2007; CAC ¶¶ 184, 200, 231, 253. IV. Corrective Disclosure Starting on January 16, 2008, Ambac investors began to learn the full scale of the company’s financial distress resulting from RMBS-related exposures. That day, Ambac issued a press release announcing (1) a $5.4 billion mark-to-market loss on its CDO portfolio for the fourth quarter of 2007, (2) a $1.1 billion credit impairment charge, (3) an expected net loss of “up to $32.83” per share for the quarter, and (4) the resignation of Genader as CEO. CAC ¶¶ 245, 315. Ambac attributed the losses primarily to underperforming HELOC and CES RMBS securitizations. CAC ¶ 246. Ambac’s stock price fell from $21.14 to $6.24 per share in the two days following the announcement. CAC ¶¶ 316-17. On January 18, 2008, Ambac’s credit rating was downgraded by Fitch, making Ambac the first bond insurer to lose its AAA rating. CAC ¶ 319. On January 30, 2008, a financial research and investment firm posted on its website an “Open Source Model,” which listed all of Ambac’s RMBS and CDO exposures, including the securities comprising collateral for Ambac’s CDOs. CAC ¶ 116; Oral Argument Tr. 10. This information had not previously been available to the public — at least not in a form that was accessible to the average investor— and therefore the Open Source Model allowed investors to determine for the first time whether Ambac’s statements about its mortgage collateral were true. CAC ¶ 115; Oral Argument Tr. 10-17. The remaining facts and disclosure occurred after the Class Period, which ended on April 22, 2008. On April 23, Ambac announced (1) a net loss of $1.66 billion for the first quarter of 2008, (2) a mark-to-market loss of $1.7 billion on CDO exposures, and (3) a credit impairment charge of $1.0 billion attributed to HELOC and CES deals. CAC ¶ 320. Defendant Leonard stated that “on some exposures ... losses could reach as high possibly as 80%.” CAC ¶ 320. That day, Ambac’s stock price fell 43% to $3.46. CAC ¶ 322. The stock fell below $1.05 on July 2, 2008 and trading was temporarily halted. CAC ¶ 323. Ambac’s stock price had reached a Class Period high of $96.08 on May 18, 2007. Id. Ambac also disclosed the causes of its financial distress. For example, on May 22, 2008, Ambac disclosed that their poorly performing CES deals were “piggyback” transactions, ie. pools of second mortgages that covered the initial down payment on a home. CAC ¶ 322. On June 4, 2008, an Ambac Executive Vice President stated at a financial conference that Ambac’s recent CES deals were “essentially where people were leveraging to make 100%— leveraging their down payment on a house.” CAC ¶ 322. Ambac did not receive a “bailout” in the form of direct assistance from the Federal government and the company has not restated any of its financials. V. Ambac’s Public Offerings During the Class Period During the Class Period, Ambac completed three public securities offerings. The CAC alleges that the registration statements and prospectuses for these offerings contained misrepresentations or omissions of material fact or incorporated by reference documents that contained misrepresentations or omissions of material fact. A. February 2007 “DISCS” Offering Ambac made a $400 million public offering of Directly-Issued Subordinated Capital Securities (“DISCS”) on February 7, 2007. CAC ¶¶ 355-56. This offering was made pursuant to the following documents, filed with the SEC: (1) Ambac’s automatic shelf registration statement, on Form S-3, filed February 16, 2006; (2) a post-effective amendment to the Form S-3, filed February 6, 2007; and (3) a prospectus supplement, filed February 7, 2007. The prospectus supplement incorporated by reference the following disclosure documents released during the Class Period: Ambac’s Form 10-Q for the third quarter of 2006, filed November 8, 2006, and two Form 8-Ks containing Ambac’s press releases from October 25, 2006 and January 31, 2007. The additional plaintiff named in the CAC, Painting Industry Insurance and Annuity Funds, purchased DISCS securities in this offering. CAC ¶ 368. The prospectus supplement and registration statement for the DISCS offering were signed, pursuant to powers of attorney, by defendants Genader and Leonard, as well as by the Board of Directors, namely defendants Callen, Lassiter, Considine, Gregory, Theobald, Unger, and Wallace. CAC ¶¶ 371-79. The underwriters for the DISCS offering were defendants Citigroup, Goldman Sachs, J.P. Morgan, HSBC, Merrill Lynch, UBS and Wachovia. CAC ¶¶ 381-88. The CAC alleges that certain statements in the DISCS offering documents, or incorporated into the offering documents by reference, were misleading because (1) “[i]n 2006 mortgage originators lowered their underwriting standards for mortgages comprising Ambac’s direct and derivative RMBS exposures,” (2) “Ambac had lowered its own underwriting standards for RMBS and CDOs backed by RMBS,” and (3) “[t]he collateral supporting Ambac’s RMBS-exposures and in CDOs backed by RMBS showed negative trends in delinquencies and other key metrics.” CAC ¶¶ 400, 405, 408. The allegedly misleading statements identified in the CAC are: • “We are currently witnessing a solid level of deal inquiries and opportunities ... We remain steadfast in judiciously allocating our capital to transactions that enable us to continue to deliver superior returns. Form 8-K, filed October 25, 2006; CAC ¶399. • Active surveillance of the insured portfolio enables Ambac’s Surveillance Group to track credit migration of insured obligations from period to period and prepare an adversely classified credit listing. The active credit reserve is established only for adversely classified credits. The criteria for an exposure to be included on the adversely classified credit listing includes underperformance of the underlying collateral (for collateral dependent transactions such as mortgage-backed securitizations), problems with the servicer of the underlying collateral and other adverse economic events or trends ...” Form 10-Q for the quarter ended September 30, 2006, filed November 8, 2006; CAC ¶ 402. • Arabac takes active credit reserves based on, inter alia, Ambae’s information regarding “historical default information [and] internally developed loss severities.” Form 10-Q for the quarter ended September 30, 2006, filed November 8, 2006; CAC ¶¶ 403-04. • “[W]e note that the mortgage-backed and home equity ultimate [loss] severities have been better than or equal to our current severity assumption.” Id. • With respect to CDO obligations, “Ambac considers the unique attributes of the underlying collateral and transaction.” Id. Although not listed in the CAC, we also note the following statements from the DISCS offering documents or incorporated by reference therein: • “Underwriting guidelines, policies and procedures have been developed by Ambac Assurance’s management with the intent that Ambac Assurance guarantees only those obligations which, in the opinion of Ambac Assurance underwriting officers, are of investment grade quality with a remote risk of loss ... The underwriting process involves review of structural, legal, political and credit issues, including compliance with current Ambac Assurance underwriting standards. These standards are reviewed periodically by management.” Form 10-K for the year ended December 31, 2005, filed on March 13, 2006, at 10; see Decl. of Lee C. Wilson, Ex. 31. • Among a number of “Risk Factors” about the DISCS offering: “Our risk management policies and practices may not anticipate unforeseen risks and/or the magnitude of potential for loss as the result of foreseen risks. As described in “Business-Risk Management” on page 10 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, which is incorporated by reference in this prospectus supplement, we have established underwriting policies and practices which seek to mitigate our exposure to credit risk in our insured portfolio. These policies and practices are based in part on models reflecting historical factors, e.g. default rates and severity of loss experience. These policies and practices may not insulate us from risks that are unforeseen and which have unanticipated loss severity.” Prospectus Supplement for DISCS Offering, filed February 7, 2007, at S-10 (emphasis in original); see Wilson Deck, Ex. 60. B. The March 2008 Offerings On March 6, 2008, Ambac made a public offering of 5 million equity units (the “Equity Units Offering”) and, on the same day, a public offering of over 170 million shares of common stock (the “Common Stock Offering”). CAC ¶¶359, 362. These offerings were made pursuant to the following documents, filed with the SEC: (1) Ambac’s automatic shelf registration statement, on Form S-3, dated February 16, 2006, (2) a post-effective amendment to the Form S-3, dated January 16, 2008, and (3) two prospectus supplements, one for each offering, both dated March 6, 2008. Each of the prospectus supplements incorporated by reference the following disclosure documents released during the Class Period: Form 10-Ks for the years ended December 31, 2006 and December 31, 2007; Form 10-Qs for the first, second and third quarters of 2007; Form 8-Ks containing press releases from January 31, 2007, April 25, 2007, July 25, 2007, October 24, 2007, January 16, 2008, and January 22, 2008. Two of the institutional investors named as Lead Plaintiffs, the Arkansas Teachers’ Retirement System and the Public Employees’ Retirement System of Mississippi, purchased Ambac common stock in the Common Stock Offering. CAC ¶¶ 366-67. No named plaintiff purchased securities in the Equity Units Offering. The prospectus supplements and registration statements for the March 2008 offerings were signed, pursuant to powers of attorney, by defendants Callen and Leonard, as well as by the Board of Directors, namely defendants Considine, Theobald, Unger, Wallace, and Duff. CAC ¶¶ 371-80. The underwriters for the March 2008 offerings were defendants Citigroup, UBS, Credit Suisse, Banc of America, and Keefe, Bruyette & Wood. CAC ¶¶ 381-91. The opinions of Ambac’s outside auditor, defendant KPMG, were incorporated by reference into the prospectuses and registration statements for the March 2008 offerings. CAC ¶ 392. The CAC alleges that certain statements in the March 2008 offering documents, or incorporated into the offering documents by reference, were misleading. Misstatements in Ambae’s SEC filings during the Class Period, excerpted in Part III, were incorporated into the March 2008 offering documents. The prospectus supplements for the March 2008 offerings also contained extensive disclosure of “Risk Factors” related to Ambac and its financial condition. This disclosure included: • As a result of market conditions, rating agency actions and investor concern with respect to our financial position, our ability to write new business has been severely limited since November 2007, and we have written virtually no new business thus far in 2008. • The placement of our ñnancial strength rating on negative credit watch by S & P and on review for possible downgrade by Moody’s and the downgrade by Fitch has had a material adverse effect on our competitive position and our ability to write new business. • Various third-party market participants, including several underwriters in this offering and in the concuirent Equity Units Offering, have made estimates of our losses, estimates of credit impairments and mark-to-market losses that in some cases materially exceed the amounts we have reported. • We are subject to credit risk and other risks related to BMBS and CDOs of ABS. We have insured, and written credit default swaps (“CDS”), with respect to, RMBS (including transactions composed of second lien mortgage products, Home Equity Line of Credit (“HELOCs”) and closed end second mortgage loans) and CDOs of ABS and are thus exposed to credit risk associated with those asset classes ... While further deterioration in performance of the subprime mortgage sector is generally expected, the extent and duration of any future continued deterioration of the credit markets is unknown, as is the impact, if any, on potential claim payments and ultimate losses of the securities within Ambac Assurance’s portfolio. • Our underwriting and risk management policies and practices in the past have not anticipated unforeseen risks and/or the magnitude of potential for loss as the result of foreseen risks. See Ambac Prospectus Supplement, filed March 7, 2008 pursuant to SEC Rule 424(b)(5), for the Equity Units Offering, S-29 to S-41 (emphasis in original); Ambac Prospectus Supplement, filed March 7, 2008 pursuant to SEC Rule 424(b)(5), for the Common Stock Offering, S-7 to S-22 (emphasis in original). PROCEDURAL BACKGROUND Before the Court are defendants’ motions to dismiss the CAC made pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. On August 27, 2009, motions to dismiss and memoranda of law were filed on behalf of Ambac and the Individual Defendants (“Ambac Mem.”), the Underwriter Defendants (“Underwriters Mem.”), and KPMG (“KPMG Mem.”). The Court heard oral argument on the pending motions on December 17, 2008 (“Oral Argument”). PLEADING STANDARDS I. Motion to Dismiss On a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must accept as true all of the factual allegations in the complaint and draw all reasonable inferences in plaintiffs’ favor. ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007); Grandon v. Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir.1998). Nonetheless, “[fjactual allegations must be enough to raise a right of relief above the speculative level, on the assumption that all of the allegations in the complaint are true.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted). Ultimately, plaintiffs must allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570, 127 S.Ct. 1955. If plaintiffs “have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. This pleading standard applies in “all civil actions.” Ashcroft v. Iqbal, — U.S.-, 129 S.Ct. 1937, 1953, 173 L.Ed.2d 868 (2009) (quotation omitted). II. Exchange Act Claims Claims of securities fraud brought under Section 10(b) and Rule 10b-5 of the Exchange Act are “subject to heightened pleading requirements that the plaintiff must meet to survive a motion to dismiss.” ATSI Commc’ns, 493 F.3d at 99. The heightened pleading requirements are set forth in Rule 9(b) of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act (the “PSLRA”), 15 U.S.C. § 78u-4(b). A. Rule 9(b) While the rules of pleading in federal court usually require only “a short and plain statement” of the plaintiffs claim for relief, Fed.R.Civ.P. 8, averments of fraud must be “state[d] with particularity,” Fed.R.Civ.P. 9(b). See ATSI Commc’ns, 493 F.3d at 99. In order to satisfy Rule 9(b), a plaintiff must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Rombach v. Chang, 355 F.3d 164, 170 (2d Cir.2004) (internal quotation marks and citation omitted). Furthermore, “[allegations that are conclusory or unsupported by factual assertions are insufficient.” ATSI Commc’ns, 493 F.3d at 99. B. PSLRA In the context of securities fraud allegations, the PSLRA has expanded on Rule 9(b)’s pleading requirements. See 15 U.S.C. § 78u-4(b). “The statute insists that securities fraud complaints ‘specify’ each misleading statement; that they set forth the facts ‘on which [a] belief that a statement is misleading was ‘formed’; and that they ‘state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.’ ” Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 345, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005) (quoting 15 U.S.C. § 78u-4(b)(l), (2)). “Therefore, ‘[wjhile we normally draw reasonable inferences in the non-movant’s favor on a motion to dismiss,’ the PSLRA ‘establishes a more stringent rule for inferences involving scienter’ because the PSLRA requires particular allegations giving rise to a strong inference of scienter.” ECA, Local 131 IBEW Joint Pension Trust of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 196 (2d Cir.2009) (quoting Teamsters Local 115 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190, 194 (2d Cir.2008) (alteration in original)). III. Securities Act Claims Claims brought under Sections 11 and 12(a)(2) of the Securities Act are generally subject to the ordinary federal pleading rules of Fed.R.Civ.P. 8. Such claims are not automatically subject to heightened pleading requirements because fraud is not an element or a requisite to a claim under § 11 or § 12(a)(2). Rombach, 355 F.3d at 171. However, the heightened pleading standard of Rule 9(b) applies to Securities Act claims insofar as the claims are premised on allegations of fraud. Id. Courts are required to perform “a case-by-case analysis of particular pleadings to determine whether the gravamen of the complaint is plainly fraud.” In re Refco, Inc. Sec. Litig., 503 F.Supp.2d 611, 632 (S.D.N.Y.2007) (internal citation and quotation omitted). When plaintiffs bring claims under both the Exchange Act and the Securities Act, “the same course of conduct that would support a Rule 10b-5 claim may as well support a Section 11 claim or a claim under Section 12(a)(2).” Rombach, 355 F.3d at 171. Thus, even when “it is clear that plaintiffs believe [the defendants] were engaged in a massive fraud[,][t]his fact ... does not take away plaintiffs’ right to plead in the alternative that defendants violated provisions requiring only negligence.” In re Refco, 503 F.Supp.2d at 632. However, plaintiffs’ Securities Act claims “cannot evade the Rule 9(b) strictures by summarily disclaiming any reliance on a theory of fraud or recklessness.” In re JP Morgan Chase Sec. Litig., 363 F.Supp.2d 595, 635 (S.D.N.Y.2005). Rather, plaintiffs should “specifically [plead] alternate theories of fraud and negligence” in order to avoid heightened pleading standards for their Securities Act claims. In re Refco, 503 F.Supp.2d at 633. DISCUSSION Plaintiffs assert claims under seven separate counts. Counts I and II allege fraud and are brought under Sections 10(b) and 20(a) of the Exchange Act against Ambac and certain Individual Defendants. Counts III to VII allege strict liability for material misstatements in connection with Ambac’s public securities offerings in February 2007 and March 2008, and are brought under Sections 11, 12, and 15 of the Securities Act against Ambac, certain Individual Defendants, the Underwriter Defendants, and KPMG. I. Claims under the Exchange Act A. Section 10(b) Claim (Count I) “Section 10(b) of the Exchange Act is designed to protect investors by serving as a ‘catchall provision’ which creates a cause of action for manipulative practices by defendants acting in bad faith.” In re Open-wave Sys. Sec. Litig., 528 F.Supp.2d 236, 249 (S.D.N.Y.2007) (citing Ernst & Ernst v. Hochfelder, 425 U.S. 185, 206, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976)). The Securities and Exchange Commission (“SEC”) implemented Section 10(b) of the Exchange Act by promulgating Rule 10b-5, 17 C.F.R. § 240.10b-5. In relevant part, Rule 10b-5 provides that it is unlawful “[t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” 17 C.F.R. § 240.10b-5. In order to sustain a private cause of action for securities fraud under section 10(b) and Rule 10b-5, plaintiffs must adequately plead: (1) a material misrepresentation or omission 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 or omission; (5) economic loss; and (6) loss causation. Heller v. Goldin Restructuring Fund, L.P., 590 F.Supp.2d 603, 613 (S.D.N.Y. 2008). In this case, defendants argue that plaintiffs have failed to sufficiently plead three of the necessary elements: scienter, materiality, and loss causation. For the reasons discussed below, we reject defendants’ arguments and find that plaintiffs have stated a claim under section 10(b). i. Scienter Under the PSLRA, in order to plead scienter adequately and state a claim under section 10(b) and Rule 10b-5, it is necessary to “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). “The requisite state of mind in a Rule 10b-5 action is ‘an intent to deceive, manipulate or defraud.’ ” Gemino v. Citizens Utils. Co., 228 F.3d 154, 168 (2d Cir.2000) (quoting Ernst & Ernst, 425 U.S. at 193 n. 12, 96 S.Ct. 1375). Second Circuit case law provides that “[t]he requisite ‘strong inference’ of fraud may be established either (a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.” Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994). The Supreme Court, in Tellabs, Inc. v. Makor Issues & Rights, Ltd., has interpreted the PSLRA’s “strong inference” requirement, and has held that, “[a] complaint will survive ... only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” 551 U.S. 308, 324, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). In conducting this analysis, a court must be careful to consider whether “all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.” Id. at 323, 127 S.Ct. 2499 (emphasis in original). The Supreme Court further noted that “[t]he inference that the defendant acted with scienter need not be irrefutable, i.e., of the ‘moking-gun’ genre, or even the ‘most plausible of competing inferences.’ ” Id. at 424, 127 S.Ct. 2499 (internal citation omitted). In analyzing whether plaintiffs have pleaded the requisite “strong” inference of scienter, the Court will utilize the Second Circuit’s overarching framework of “motive and opportunity” and “conscious misbehavior or recklessness.” As at least one court in this District has recognized, the analyses under Tellabs and under the Second Circuit’s case law “are very much interrelated,” such that “the determination of whether [p]laintiff[s] [have] pleaded the proper ‘strong’ inference of scienter under Second Circuit case law serves as a significant, if not determinative, factor in assessing whether [p]laintiff[s] [have] pleaded the proper ‘strong’ inference of scienter under Tellabs.'” In re PXRE Group, Sec. Litig., 600 F.Supp.2d 510, 529 & n. 21 (S.D.N.Y.2009), aff'd sub nom. Condra v. PXRE Group Ltd., 357 Fed.Appx. 393 (2d Cir.2009). Plaintiffs here must plead scienter with respect to each defendant named in plaintiffs’ 10(b) claim, i.e., defendants Genader, Leonard, Uhlein, Wallis, as well as the corporate defendant Ambac (collectively, the “Exchange Act Defendants”). When a defendant is a corporate entity, courts look to whether the pleaded facts “create a strong inference that someone whose intent could be imputed to the corporation acted with the requisite scienter.” See Teamsters Local 115 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190, 195 (2d Cir.2008), remanded to No. 05 Civ. 1897, slip op., 2009 WL 3380621 (S.D.N.Y. Oct. 19, 2009) (“Dynex II ”). Courts routinely impute to the corporation the intent of officers and directors acting within the scope of their authority. See, e.g., Dynex II, No. 05 Civ. 1897, slip op. at 11. In this case, the officers whose intent could be imputed to Ambac on the pleaded facts are the defendants Genader, Leonard, Uhlein and Wallis (collectively, the “Exchange Act Officers”). We thus focus our analysis on the alleged fraudulent intent of the Exchange Act Officers, whose intent we impute to Ambac. 1. Motive and Opportunity It is not disputed that the Exchange Act Officers had an “opportunity” to commit fraud. See, e.g., Pension Comm. Of Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 446 F.Supp.2d 163, 181 (S.D.N.Y.2006) (“Regarding the ‘opportunity’ prong, courts often assume that corporations, corporate officers, and corporate directors would have the opportunity to commit fraud if they so desired.”); see also In re GlaxoSmithkline PLC, No. 05 Civ. 3751, 2006 WL 2871968, at *6 (S.D.N.Y. October 6, 2006) (“Where a plaintiff alleges securities fraud against a public company and its officers and directors, it is motive rather than opportunity that is at issue.”). Therefore, the issue before the Court on this prong of the analysis is whether plaintiffs have adequately pleaded “motive.” Plaintiffs argue that the Exchange Act Officers were motivated to commit fraud by their desire to (1) maintain Ambac’s AAA credit rating, upon which Ambac’s entire business model allegedly depended, (2) reach a particular target for the company’s net income, (3) increase their compensation packages, much of which was paid in the form of Ambac stock or stock options, and (4) keep their jobs. See CAC ¶¶ 67-68, 74, 78, 109; Lead Plaintiffs’ Omnibus Opposition to Defendants’ Motion to Dismiss (“Pis. Opp’n Mem.”) 45-46. Specifically, the CAC alleges that Ambac’s officers had an incentive to guarantee increasingly risky financial products in order to generate short-term profits for the company and to achieve the aggressive net income target set by the company’s CEO, Genader. CAC ¶ 67. Ambac’s business model was premised on its AAA credit rating, which was the basis of the security Ambac provided as a financial guarantor. Thus, when guaranteeing these riskier products began to threaten Ambac’s financial health' — and in particular the company’s credit rating — the Exchange Act Officers were motivated to maintain this rating by concealing the losses and thereby inflating Ambac’s stock price. CAC ¶ 109. The CAC alleges that the Exchange Act Officers were motivated to increase their stock-based compensation and protect their jobs from the fallout of Ambac disclosing its true financial position. Pis. Opp’n Mem. 46. Plaintiffs note that when Ambac eventually did disclose material losses on its CDO portfolio, on January 16, 2008, defendant Genader lost his position as CEO. CAC ¶ 245. In the Second Circuit, “[sjufficient motive allegations ‘entail concrete benefits that could be realized by one or more of the false statements and wrongful nondisclosures alleged.’ ” Kalnit, 264 F.3d at 139 (quoting Novak v. Kasaks, 216 F.3d 300, 307 (2d Cir.2000)). However, “[m]otives that are generally possessed by most corporate directors and officers do not suffice; instead, plaintiffs must assert a concrete and personal benefit to the individual defendants resulting from the fraud.” Kalnit, 264 F.3d at 139. Plaintiffs here have failed to plead motive adequately. Each of the motivations alleged in the CAC would be “generally possessed by most corporate directors and officers.” Kalnit, 264 F.3d at 139. The desire of Ambac officers to increase company profits, keep then- jobs, and increase compensation, are classic examples of motives that fail under the Second Circuit analysis as too general. See Chill v. General Elec. Co., 101 F.3d 263, 268 (2d Cir.1996) (motive to “maintain the appearance of corporate profitability” held insufficient); Shields v. Citytrust, 25 F.3d at 1130 (desire to keep corporate office not sufficient); Acito v. IMCERA Group, Inc., 47 F.3d 47, 54 (2d Cir.1995) (motive to inflate stock price to increase compensation not sufficient). Similarly, the desire to maintain a high corporate credit rating is not enough to plead motive, even though Ambac’s credit rating was fundamental to its business model. See In re PXRE