Full opinion text
DECISION AND ORDER VICTOR MARRERO, District Judge. TABLE OF CONTENTS I. INTRODUCTION..........................................................387 II. BACKGROUND...................................... 387 A. THE FAIRFIELD GREENWICH FUNDS...............................387 B. THE FUNDS AND MADOFF...........................................389 C. FGG’S FALSE STATEMENTS AND OMISSIONS........................390 D. RED FLAGS..........................................................391 E. FEES PAID TO FGG ..................................................392 F. CITCO................................................................392 G. GLOBEOP............................................................394 H. PRICEWATERHOUSECOOPERS.......................................395 1. Clean Audits.......................................................395 2. Relationship with Plaintiffs...........................................396 3. Risks..............................................................396 III. DISCUSSION.............................................................397 A. THRESHOLD ISSUES COMMON TO ALL DEFENDANTS...............397 1. SLUSA............................................................397 2. Choice of Law......................................................399 3. Standing...........................................................400 4. Martin Act.........................................................402 B. FAILURE TO STATE A CLAIM........................................402 C. FAIRFIELD GREENWICH DEFENDANTS.............................403 1. FGG..............................................................403 2. Securities Fraud Claims.............................................404 a. Application of Morrison..........................................404 b. Group Pleading.................................................405 c. Scienter .......................................................406 d. Causation......................................................411 e. Section 20(a) ...................................................412 3. Common Law Claims................................................414 a. Fraud.........................................................414 b. . Gross Negligence...............................................414 c. Breach of Fiduciary Duty........................................415 d. Negligent Misrepresentation .....................................416 e. Third-Party Breach of Contract ..................................417 f. Constructive Trust..............................................419 g. Mutual Mistake.................................................420 h. Unjust Enrichment..............................................421 D. ADMINISTRATORS AND CUSTODIANS................................421 1. Citco Defendants ...................................................421 a. Rule 8(a).......................................................422 b. Federal Securities Claims........................................423 i. Section 10(b) and Rule 10b-5 Claim Against Administrators.....423 A. Scienter...............................................423 B. Reliance...............................................424 ii. Section 20(a) Claim against Citco Group .......................425 A. Control................................................425 B. Culpable Participation...................................427 iii. Statute of Limitations.......................................428 c. Third-Party Beneficiary Breach of Contract........................428 i. Administration Agreements..................................429 ii. Custody Agreements........................................431 d. Negligence, Gross Negligence, and Negligent Misrepresentation.....431 i. Duty of Care...............................................432 ii. Citco Group Secondary Liability..............................435 iii. Gross Negligence...........................................436 e. Breach of Fiduciary Duty........................................437 i. Individual Defendants.......................................438 ii. Citco Defendants ...........................................440 f. Aiding and Abetting Breach of Fiduciary Duty and Fraud............442 g. Unjust Enrichment..............................................443 h. Holder Claims..................................................443 i. Statute of Limitations.......................................445 2. GlobeOp...........................................................446 a. Supervening Cause..............................................446 b. Fiduciary Duty.................................................446 c. Negligence and Gross Negligence.................................448 E. AUDITORS...........................................................449 1. Federal Securities Law Claims Against the PwC Member Firms..........449 a. Scienter .......................................................449 i. Legal Standard for Accountants ..............................449 ii. The PwC Member Firms’ Conscious Recklessness...............449 A. Professional Standards..................................450 B. Red Flags .............................................451 iii. Plausible Opposing Inference.................................453 b. Section 20(a) Claim Against PwC International......................454 2. Common Law Claims................................................454 a. Gross Negligence...............................................454 b. Negligence and Negligent Misrepresentation.......................454 i. Duty of Care...............................................454 A. Awareness That the Financial Reports Were to Be Used for a Particular Purpose...............................455 B. Intention for a Known Party to Rely on the Financial Reports .............................................455 C. Linking Conduct Evincing the Accountants’ Understanding of Plaintiffs’ Reliance ..............................456 c. Breach of Contract..............................................457 d. Aiding and Abetting a Breach of Fiduciary Duty and Fraud..........458 e. Unjust Enrichment..............................................458 f. Vicarious Liability...............................................458 i. Control of the Audits........................................459 ii. General Control ............................................459 g. Statute of Limitations ...........................................461 F. LEAVE TO REPLEAD.......... .....................................461 IV. ORDER ........................... .....................................462 I. INTRODUCTION This lawsuit is a putative class action on behalf of individuals and entities (collectively, “Plaintiffs”) who invested large sums of money in four funds founded and operated by the Fairfield Greenwich Group (“FGG”). The overwhelming majority of Plaintiffs’ money was in turn invested in the Ponzi scheme operated by Bernard Madoff (“Madoff’) under the auspices of Bernard L. Madoff Investment Securities, Inc. (“BMIS”), and for which Madoff was sentenced to 150 years in prison following his guilty plea. See United States v. Madoff, No. 09 Cr. 0213, S.D.N.Y. June 29, 2009. Plaintiffs are now suing a number of Fairfield Greenwich entities, executives, and other professional service providers who audited, administered, or served as custodian of the funds. The Second Consolidated Amended Complaint, filed September 29, 2009 (the “SCAC”), alleges violations of federal securities law and common law tort, breach of contract and quasi-contract causes of action. FGG and numerous co-defendants (collectively, “Defendants”) move to dismiss the SCAC in its entirety, asserting defenses grounded in federal and state law. Because of the breadth of issues raised in Defendants’ various submissions, the Court considers their motions in two separate rulings. The first Decision and Order (“Anwar I”) was issued July 29, 2010, and addressed a discrete issue arising solely under New York state law. See Anwar v. Fairfield Greenwich Ltd., 09 Civ. 0118, 728 F.Supp.2d 354, 2010 WL 3022848 (S.D.N.Y. July 29, 2010). This Decision and Order, to be referred to as “Anwar II,” considers a host of arguments made by Defendants that all of Plaintiffs’ claims should be dismissed. II. BACKGROUND A. THE FAIRFIELD GREENWICH FUNDS The facts in this case are relatively straightforward; the complications arise in attempting to comprehend and dissect FGG’s corporate structuring, an intricate tangle of entities with, as alleged in the SCAC, connections of various strength to New York, Florida, Delaware, Bermuda, the United Kingdom, the Cayman Islands, and the British Virgin Islands. (See SCAC ¶¶ 118, 120, 122, 141, 172, 173, 121, 130, 139, 143, 118, 170, 171.) This structure is comprised of, as alleged and pertinent to the motions to dismiss at hand, corporate entities that all apparently existed to accomplish the same task — managing funds invested almost exclusively with Bernard Madoff. Those entities, in addition to FGG, are Fairfield Greenwich Ad-visors LCC (“FGA”), Fairfield Greenwich Ltd. (“FGL”), and three wholly-owned FGL subsidiaries: Fairfield Greenwich (Bermuda) Ltd. (“FGBL”), Fairfield Risk Services Ltd. (“FRS”), and Fairfield Heathcliff Capital LCC (“FHC”). The SCAC alleges that these entities were run, in part, by the following individuals: Walter M. Noel Jr. (“Noel”) and Jeffrey H. Tucker (“Tucker”), both founding partners and current senior officers at FGG; Andres Piedrahita (“Piedrahita”), Director and President of FGBL, and general partner of Greenwich Sentry and Greenwich Sentry Partners; Amit Vijayvergiya (‘Vijayvergiya”), Chief Risk Officer and President of FGBL; Daniel E. Lipton (“Lipton”), FGG’s Chief Financial Officer; and Mark McKeefry (“McKee-fry”), FGG’s Chief Operating Officer and General Counsel. (Id. ¶¶ 124-29.) According to Plaintiffs, FGG fulfilled a critical role for Madoff, who knew that secrecy and obfuscation were key to prolonging how long he could keep his big lie afloat and his sand castles grounded. The four FGG funds — two nominally incorporated in the British Virgin Islands, Fair-field Sentry Ltd. and Fairfield Sigma Ltd. (the “Offshore Funds”) and two nominally incorporated in Delaware, Greenwich Sentry L.P. and Greenwich Sentry Partners L.P. (the “Domestic Funds”) (collectively, the “Funds”) — were “feeder funds” into Madoffs scheme, meaning they allegedly collected investments into the Funds, which in turn gave Madoff access to a steady stream of new investors without requiring him to risk his own financial interests too much. Madoff purported to be investing Plaintiffs’ money pursuant to a “split-strike conversion strategy,” which “entail[ed]: (i) the purchase of a group or basket of equity securities that are intended to highly correlate to the S & P 100 Index, (ii) the sale of out-of-the-money S & P 100 Index call options in an equivalent contract value dollar amount to the basket of equity securities, and (in) the purchase of an equivalent number of out-of-the-money S & P 100 Index put options.” (SCAC ¶ 184.) This case is about the people who started and ran the Funds, the Funds’ accountants and the entities that administered the Funds. The FGG entities had various roles in the Funds. For example, FGL was the placement agent for the Offshore Funds and was Fairfield Sentry Ltd.’s investment manager until 2003, when FGBL became the investment manager for both Offshore Funds. FHC was also the Funds’ placement agent. Each of the Funds required a minimum investment of $100,000 and investment was restricted in various ways. Specifically, Fairfield Sentry Ltd. was limited to non-United States residents and certain United States tax-exempt entities. Fairfield Sigma Ltd. was limited to non-United States residents. Seventy-eight plaintiffs invested in Fairfield Sentry Ltd., including seventy-two non-United States residents and five United States non-profit entities. Thirty plaintiffs, all non-United States residents (except for a school incorporated in the United States but operating in Rome), invested in Fairfield Sigma Ltd. Only United States residents invested in the Domestic Funds. Seven plaintiffs invested in Greenwich Sentry L.P. and one plaintiff invested in Greenwich Sentry Partners L.P. Plaintiffs assert claims on behalf of “all shareholders in Fairfield Sentry Ltd., Fairfield Sigma Ltd., Greenwich Sentry, L.P., and Greenwich Sentry Partners, L.P., as of December 10, 2008 ... who suffered a net loss of principal invested in the Funds.” (Id. ¶ 351.) Defendants are excluded from the class. Billions of dollars were invested in the Funds and almost all of it went to Madoff, though the Funds represent that they placed up to 5 percent of the Funds’ assets with non-Madoff investments. B. THE FUNDS AND MADOFF At its core, the SCAC alleges that Ma-doffs fraud was so egregious as to be obvious to anyone with a modicum of financial knowledge. In particular, Plaintiffs detail a series of specific warning signs that should have alerted Defendants to the rot within the Funds. Defendants allegedly ignored these “red flags” — from brushing off suspicions aroused by Ma-doffs use of an essentially one-person accounting firm for his multi-billion dollar investment business to unblinking acceptance of trade confirmations that were fraudulent on their face. These indicators were ignored during the length and breadth of the marketing of the Funds and, as alleged in the complaint, evidence of lingering questions or mind-numbing ignorance became particularly explicit in the final months before Madoff confessed his gargantuan fraud to the world. In short, the SCAC alleges that Madoff was a vampire and the various FGG defendants his glamoured familiars who procured the sleeping victims. Noel and Tucker founded FGG in 1983. (Id. ¶ 168.) In 1990, Tucker and another FGG founding partner, Fred Kobler, established a relationship between FGG and Madoff that resulted in the creation of two funds: Fairfield Sentry Ltd. and Aspen/Greenwich Limited Partnership. (Id. ¶ 169.) Fairfield Sentry Ltd. was “an international business company” incorporated in the British Virgin Islands. (Id. ¶ 170.) Aspen/Greenwich Limited Partnership was a Delaware limited partnership that soon changed its named to Greenwich Sentry, L.P. (Id. ¶ 172.) Each of these two initial funds was eventually joined by a companion fund: Fairfield Sentry Ltd.’s counterpart was another British Virgin Islands entity known as Fairfield Sigma Ltd., created in 1997, and wholly invested in Fairfield Sentry Ltd.; Greenwich Sentry’s counterpart was Greenwich Sentry Partners, L.P. a Delaware limited partnership created in 2006. (Id. ¶¶ 171, 173.) Though the Funds were incorporated in either the British Virgin Islands or Delaware, FGG ran much of its operations from New York City. (Id. ¶¶ 118, 120, 122, 128, 137, 140, 142, 143.) FGG also had offices in Miami, London, and Bermuda. (Id. ¶¶ 141,130,139,143,121,127.) In the meantime, Madoff was running “a giant Ponzi scheme” that he later admitted was “one big lie.” (SCAC ¶ 167.) Though the scheme was at least partially in effect since FGG started its investments with Madoff, Madoffs last legitimate securities transaction occurred in 1995. (Id. ¶ 188.) Two years before that, in 1993, was the last time Madoffs three-person accounting firm Friehling & Horowitz (“F & H”) was subject to peer review by the American Institute of Certified Public Accountants. (Id. ¶ 222.) F & H’s small size was at first unknown to FGG, as became clear in 2005 when a Fairfield Sentry investor asked the Fair-field Defendants “who supervises that everything is in order?” {Id. ¶ 225.) Lipton told FGG employees who were going to speak with the inquiring client that F & H was “a small to medium size financial services audit and tax firm, specializing in broker-dealers and other financial services firms” and was “well respected in the local community.” {Id.) During investigations to answer the investor’s benign question, FGG discovered that F & H operated out of a strip mall in New City, New York and had only one working accountant. {Id.) These misrepresentations continued in a “marketing piece” released in April 2006 that boasted of FGG’s diligence standards and noted that FGG would question “obscure auditing firm[s]” associated with any of their investments. {Id. ¶ 227.) Madoff, after numerous SEC investigations and rumors spread amongst the financial investment community, publicly admitted his scheme on December 11, 2008. Seven months before the confession, Vijayvergiya emailed FGG executives that “there are certain aspects of [Madoffs] operation that remain unclear.” (Id. ¶ 228.) That admission came after a client requested information about account segregation, audits and trade confirmations. (Id.) Three months before the confession, on August 20, 2008, Lipton emailed Vijayvergiya to ask for basic information about F & H, including whether anyone knew of other clients of F & H or how big the firm was. (Id. ¶ 226.) Three months before Madoffs revelation, on September 16, 2008, Vijayvergiya emailed Fairfield Sentry investors that the funds assets were “fully invested in short date U.S. Treasury Bills.” {Id. ¶ 229.) On October 2, 2008, two months before Madoffs disclosure, Noel, Tucker, McKee-fry and Vijayvergiya had a phone conversation with Madoff. Madoff refused to answer many questions, including “the names of key personnel involved in implementation of the split-strike conversion strategy.” {Id. ¶¶ 218, 230.) FGG did not follow-up. After Madoffs confession on December 11, 2008, he pled guilty to an eleven count criminal complaint on March 12, 2009, and was eventually sentenced to 150 years in federal prison. On April 1, 2009, the Securities Division of the Office of the Secretary of the Commonwealth of Massachusetts filed an administrative complaint against FGA and FGBL. This complaint noted that the defendants “were blinded by the fees they were earning, did not engage in meaningful due diligence and turned a blind eye to any fact that would have burst their lucrative bubble.” (Id. ¶ 253.) On August 12, 2009, FGA and FGBL consented “to the entry of the findings of the facts alleged” in the Massachusetts complaint, (id. ¶ 256), and on September 8, 2009, entered into a consent order that included payment of penalties and restitution amounting to approximately $8.5 million. (Id. ¶ 257.) On July 21, 2009, the Offshore Funds were ordered to be liquidated by the Eastern Caribbean Supreme Court in the High Court of Justice of the British Virgin Islands. C. FGG’S FALSE STATEMENTS AND OMISSIONS The SCAC alleges that FGG made a continuous series of false representations and material omissions from the founding of the Funds in 1990 to Madoffs confession in December 2008. These misstatements came in two broad categories: marketing materials provided initially to investors to encourage them to invest in the funds in the form of private placement or confidential offering memorandum (“Placement Memos”) and periodic updates about the Funds’ performance that were also distributed or made available to investors to motivate them to retain their investments in the Funds. (Id. ¶ 181 (listing “Fund updates; performance reports, and marketing and sales materials”); see also ¶ 190 (describing “uniform reports, including ‘Semi-Annual Reports’ and ‘Monthly Strategy Reviews.’ ”).) The misrepresentations essentially involved three strands of information: (1) that the Plaintiffs’ investments were actually invested by Madoff in the so-called “split-strike conversion” strategy, (2) that Madoffs strategy resulted in substantial, consistent returns, and (3) that FGG had performed extensive due diligence on Ma-doffs operations and continually monitored them and, as a result, had full transparency to all of Madoffs operations. (Id. ¶ 182.) In addition, when individual investors in the Funds raised concerns, FGG “purposefully gave false or obfuscated responses.” (Id. ¶ 183.) Instances of these alleged false statements or material omissions abound in the SCAC. (See, e.g., id. ¶¶ 184-216, 229, 231, 233.) The most striking examples concern the Funds’ investment by Madoff via a “split-strike conversion” strategy, an investment that never actually occurred. (Id. ¶ 184.) FGG also trumpeted the prior trading results of the Funds and presented information showing “substantial, consistent annualized rates of return for the Funds.” (Id. ¶ 187.) They also did not disclose that they were simply recycling information Madoff had provided and did nothing to independently verify whether investment occurred or whether the returns were accurate. (Id. ¶ 189.) Contrary to these statements, FGG represented that it used “strict risk management principles” to monitor the Funds’ performance. (Id. ¶ 190.) Such risk management principles applied with special force to Madoff who, as an “external manager,” would be subject to exacting review, including FGG “obtaining] underlying portfolio information for monitoring and client communication purposes.” (Id. ¶ 194.) FGG also represented that it conducted “daily monitoring” of Madoff, including “monitoring of portfolio activity against all risk limits” and usage of “proprietary software.” (Id. ¶ 196.) Such risk-monitoring of Madoff was further bolstered by purported “regular on-site visits” by “senior members of FGG’s legal, operations, and risk teams.” (Id. ¶ 197.) FGG also specifically touted the Funds’ defenses against Ponzi schemes. (Id. ¶ 203.) But “in reality, no one had conducted meaningful due diligence on Madoff” prior to his selection as the Funds “broker, execution agent, and custodian; no one was meaningfully monitoring or independently verifying Madoffs trade activity;” there was “effectively no transparency to Ma-doffs operations;” and no one had an “independent, factual basis for stating that Madoff was executing a split-strike conversion strategy.” (Id. ¶ 182.) FGG “knowingly disregarded the fundamentally important operating and risk management principles that they touted” and “failed to disclose to Plaintiffs that they were not fulfilling these important functions.” (Id. ¶ 205.) “[T]he only attempt ... to confirm that Madoff was actually making trades was a 2001 visit to Madoffs office by Jeffrey Tucker .... ” (Id. ¶ 213.) D. RED FLAGS The SCAC alleges that these misstatements or omissions were made despite numerous “red flags” that should have put FGG on notice that Madoff was not being honest. First, Madoff ran a “secretive operation” and simply “refused to answer even basic questions.” (Id. ¶ 218.) This “secrecy was exacerbated” by Madoffs positioning of family members in key positions at his firm, an arrangement that FGG knew about. (Id. ¶ 220.) In addition to this tightly-knit operation, Madoff did not trade through an independent broker but “self-cleared all Fund activities through his wholly-owned company.” (Id. ¶ 221.) Madoff was also “his own custodian or sub-custodian for the Funds assets,” an “arrangement [that] should have altered the [FGG] to the need for heightened scrutiny, monitoring and verification of transactions.” (Id.) Madoff used paper trading records that were provided to FGG three to five days after the fake trades purportedly occurred. (Id. ¶ 223.) This old-fashioned way of doing business was an anomaly in a world of real-time' electronic reporting and was “patently susceptible to manipulation.” (Id.) As detailed above, Madoff also employed an astonishingly under-sized accounting firm, an anomaly of which FGG eventually became aware. (Id. ¶ 222.) In addition to these specific warning signs, the unerring profits from Madoffs investments should have put FGG on alert. On its face, Madoffs tendency to buy “near daily lows and [sell] near highs” over decades was simply “uncanny.” (Id. ¶ between 223 and 224.) Madoffs “reported results were inconsistent with the split-strike strategy.” (Id.) But even more than this implausibility, “Madoff reported trades at prices that were outside the stocks’ actual trading ranges or took place on weekends,” events that were “impossible.” (Id.) Madoff also “reported purchases of options on equity trades that had not yet been executed.” (Id. ¶ 215.) “[A]ny comparison of Madoffs reports to market prices would have led to discovery of the fraud.” (Id. ¶ 67.) These returns in fact did lead “other investment banks and investment professionals” to quickly conclude that Madoffs numbers “simply did not add up.” (Id. ¶ 224 (citing Nelson D. Schwartz, European Banks Tally Losses Linked To Fraud, N.Y. Times, Dec. 16, 2008, at B1).) FGG also “never contacted any of Ma-doffs purported counterparties,” which, since no trades were made and no counter-parties existed, would have soon exposed Madoffs fraud. (Id. ¶ 211.) E. FEES PAID TO FGG FGG earned lucrative fees from piloting Plaintiffs’ investments to Madoff. The most salient of these fees include the following: the Offshore Funds, through their placement agent or investment manager, charged up an initial placement fee of up to 3 percent of an investment. (Id. ¶¶ 237, 242.) Each quarter, performances fees of 20 percent of net appreciation were extracted from Plaintiffs’ investments — a total of about $547 million dollars’ between 2002 and 2008. (Id. ¶¶238, 245.) Each year, certain FGG entities were paid about 1 percent of the total value of the Funds as a management fee — about $200 million between 2002 and 2008. (Id. ¶¶ 239, 246.) The SCAC alleges that FGG has “failed to repay compensation that they received which was calculated on the basis of Ma-doffs fraudulent investment returns.” (Id. ¶ 249.) FGG also claims to be owed “millions of dollars in fees from the few tangible assets that remain” in the Funds. (Id.) F. CITCO Citco, defined in the SCAC to include defendants Citco Group Ltd. (“Citco Group”), Citco Fund Services (Europe) B.V. (“CFSE”), Citco (Canada) Inc. (“CCI”), Citco Global Custody N.V. (“Cit-co Global”), Citco Bank Nederland N.V. Dublin Branch (“Citco Bank,”), and Citco Fund Services (Bermuda) Ltd. (“CFSB”), contracted with the Funds to perform financial services that included serving as administrator, custodian, bank, and depository. Plaintiffs allege that Citco owed duties to them as fund investors, and wholly failed to fulfill these duties, assisting the Funds in their fraud and breaches in fiduciary duty, and ultimately allowing Madoff to abscond with Plaintiffs’ money. Plaintiffs allege that despite the separate corporate identities that Citco used to contract with the Funds, Citco both markets and operates itself as a single financial services provider — an industry leader with extensive experience in the field, a “reputation for independence,” and in its own words, a company that functions as “a reliable fiduciary to safeguard the interests of investors.” (Id. ¶ 325.) According to Plaintiffs, Citco’s individual corporations are all controlled by Citco Group, which appoints division directors to monitor the daily operations of each division, including, relevant here, the fund services division. For that reason, irrespective of which specific entity contracted with the Funds, Plaintiffs allege that the Funds agreed that services might be “provided by Citco Group or any of its companies, not just the company that is engaged.” (Id. ¶ 323.) Citco committed to serve a variety of key roles for the Funds. As administrators, with CFSE and CCI as contracting companies, Citco agreed to reconcile cash and other balances at brokers, independently reconcile the Funds’ portfolio holdings, and calculate the Net Asset Value (the “NAV”) of the Funds, as well as the NAV per share. The NAV calculations, which Plaintiffs allege were crucial to their decisions to invest and hold investments, determined the number of shares Plaintiffs were entitled for a given investment in addition to their reported profits. Citco also agreed to prepare monthly financial statements in accordance with International Accounting Standards, and reconcile information provided by “the Fund’s prime broker and custodian” — Madoff—“with information provided by the Investment Manager.” (Id. ¶ 327.) In performing these services, pursuant to the contracts with the Funds, Citco was “permitted only to rely on information it received without making further inquiries if that information demonstrated an ‘absence of manifest error.’ ” (Id. ¶ 329 quoting Fairfield Sentry Administration Agreement § 6.2, Sched. 2, at Pt. 1; Fairfield Sigma Administration Agreement § 6.2(c).) Citco also functioned as the Funds’ public liaison. In this role, Citco communicated with Plaintiffs and Plaintiffs communicated with Citco. Contact between Plaintiffs and Citco allegedly included subscription documents and investments sent by Plaintiffs to Citco, and investment confirmations sent by Citco to Plaintiffs in return. As custodian, bank, and depositary for Fairfield Sentry and Fairfield Sigma, with Citco Global and Citco Bank as contractors, Citco was responsible for monitoring any subcustodian of the Funds, including, notably, BMIS. Citco agreed to record the assets held by them as custodians or by the sub-custodians, and to “ ‘keep the securities in the custody of the Custodian or procure that they are kept in the custody of any sub-custodian.’ ” (Id. ¶ 330 (quoting Fairfield Sentry Custody Agreement § 6.1.1; Fairfield Sigma Custody Agreement § 5.2).) In performing these duties, Citco had authority to act without instruction from the Fund if “necessary ‘to preserve or safeguard the Securities or other assets of the Fund.’ ” (Id. 330 (quoting Fairfield Sentry Custody Agreement § 6.3; Fairfield Sigma Custody Agreement § 7.3).) Plaintiffs allege that they were aware of the services that Citco provided, and that as investors and shareholders they were relying on Citco to fulfill their obligations to the Funds, and to them as investors and limited partners by extension. The SCAC alleges that Citco’s reputation gave the Funds legitimacy, and “provided potential and current investors with assurance about the quality of financial services provided to the Funds, the security of assets held by the Funds, and the accuracy of the reported values of the Funds and of the investors’ individual accounts.” (Id. ¶ 333.) This, as Plaintiffs allege, is exactly what Citco intended. But instead of fulfilling its duties as promised, Plaintiffs claim that Citco “utterly failed to take industry-standard steps” in performing its services to the Funds, and that Citco relied on information from Madoff and the Funds “even though that information was manifestly erroneous and should not have been relied on.” (Id. ¶ 336, 338.) The SCAC alleges Citco should have increased scrutiny and sought independent verification of the information provided by Madoff and the Funds because of the roles consolidated in Madoff, the impossibility of the trade and profit information provided by Madoff, and the warning signs discussed above. Moreover, Plaintiffs claim that Citco did not safeguard the assets entrusted to it, handing over money to Madoff without due diligence, monitoring, or even a good faith basis for its reliance. It further failed, according to Plaintiffs, to record the assets held by the custodians and sub-custodians as it agreed to do. Plaintiffs allege that if Citco had safeguarded investors’ assets as required, Plaintiffs could have recovered their investments before December 2008, when Madoff confessed and chaos ensued. Plaintiffs allege that because of Citco’s long history of working with the Funds, as well as its experience in providing hedge fund services, Citco “knew or was willfully blind to the fact that the due diligence and risk controls employed by the Fairfield Defendants were grossly deficient” and that the Funds were misrepresenting to Plaintiffs “that they employed thorough due diligence, monitoring and verification of Fund managers, including Madoff, and strict risk controls.” (Id. ¶ 342). According to Plaintiffs, Citco kept this information from investors and shareholders, and continued to receive investments from Plaintiffs and send investments to Madoff until his fraud was finally revealed to the public. G. GLOBEOP GlobeOp Financial Services, LLC (“GlobeOp”) provided administrative services to Greenwich Sentry L.P. from about January 2004 to August 2006. Plaintiffs allege that GlobeOp held itself out as a skilled provider of hedge fund financial services, with “independence, technology leadership, and deep knowledge of complex financial instruments” that enabled it to independently calculate NAV reports. (Id. ¶ 344.) According to Plaintiffs, GlobeOp, like Cit-co, took on discretionary responsibilities including “preparing and distributing ‘monthly reports that contained] the amount of the Partnership’s net assets, the amount of any distributions from the Partnership and Incentive Allocation, accounting and legal fees, and all other fees and expenses of the Partnership.’ ” (Id. ¶ 345 (quoting GS COM-5/2006, at 10).) According to Plaintiffs, investors in Greenwich Sentry reposed their trust in GlobeOp, which owed a duty of care to Plaintiffs in performing its administrative services for the Funds. Plaintiffs allege that GlobeOp failed to fulfill these duties by not taking “industry-standard steps to calculate the Fund’s NAV, or to verify independently or even minimally scrutinize the information provided to it.” (Id. ¶ 347.) In fact, Plaintiffs allege that GlobeOp did the opposite — blindly and recklessly relying on information from BMIS and the Fund in determining the Greenwich Sentry, L.P.’s NAV. Plaintiffs allege that GlobeOp’s failures caused Plaintiffs to invest and maintain their investment in Greenwich Sentry L.P. H. PRICEWATERHOUSECOOPERS Plaintiffs allege that defendants PricewaterhouseCoopers LLC (“PwC Canada”), PricewaterhouseCoopers Accountants Netherlands N.V. (“PwC Netherlands”) (together, “PwC Member Firms”), and PricewaterhouseCoopers International Ltd. (“PwC International”) (collectively, “PwC”), provided independent auditing services to the Funds from about 2002 through 2007. Although the Funds specifically retained the PwC Member Firms to perform their audits, Plaintiffs claim that PwC operates as an “umbrella organization that coordinates the accounting and auditing activities of the various PricewaterhouseCoopers accounting firms,” including the PwC Member Firms. (Id. ¶ 268.) For example, Plaintiffs allege that PwC audited other Madoff feeder funds, and in doing so, that all firms part of PwC International worked together to conduct their services. This coordinated effort, Plaintiffs allege, also gave PwC a unique opportunity to verify information about BMIS. As an illustration, Plaintiffs point to a January 8, 2008 SEC filing, which reflects that BMIS had assets totaling about $17 billion. Yet the assets invested in PwC-audited feeder funds at that time by themselves totaled about $16,877,743,429 — only a relatively minor difference — a fact which should have put PwC on alert. As auditors, the PwC Member Firms provided certain services to the Funds on a “regular and recurring basis,” including preparing annual financial statements and certifying that those statements were to be prepared and presented in accordance with Generally Accepted Accounting Principles (“GAAP”) and Generally Accepted Auditing Standards (“GAAS”). According to Plaintiffs, PwC also committed to perform various tests to verify the accuracy of the Funds’ financial statements, including: “tests of physical existence, ownership and recorded value of selected assets,” “tests of selected recorded transactions with documentation required by law and good business practice,” and “direct confirmation with selected third parties.” (Id. ¶ 260.) Plaintiffs allege that PwC never performed these tests, but misrepresented to Plaintiffs that they had. 1. Clean Audits PwC Netherlands issued a clean audit opinion for Greenwich Sentry for the year 2005; Fairfield Sentry for the years 2002, 2003, 2004, and 2005; and Fairfield Sigma for the years 2003, 2004, and 2005. PwC Netherlands certified that the audits conducted for Greenwich Sentry were in accordance with GAAS and that the statements conformed with GAAP. PwC Netherlands also certified that the Fair-field Sentry and Fairfield Sigma statements complied with International Financial Reporting Standards (“IFRS”) and that the audits conducted were in accordance with International Standards of Auditing (“ISA”). PwC Canada issued clean audit opinions for the financial statements of Greenwich Sentry, Fairfield Sentry, Fairfield Sigma, and Greenwich Sentry Partners for the years 2006 and 2007. PwC Canada certified that the statements of Greenwich Sentry and Greenwich Sentry Partners complied with GAAP, and that the audits of those funds were conducted in accordance with GAAS. PwC Canada also certified that the statements of Fairfield Sigma and Fairfield Sentry conformed with IFRS, and that the audits of those funds were performed in accordance with GAAS. 2. Relationship with Plaintiffs According to the SCAC, PwC addressed the audit reports directly to Plaintiffs as investors and shareholders in the Funds. Plaintiffs allege that PwC knew that they would rely on those audit reports in making initial investments and retaining their investments, and that PwC knew it owed a duty to Plaintiffs to provide accurate reports. Plaintiffs point specifically to a statement sent to FGG in which PwC acknowledges that it was “ ‘responsible for reporting to the ... shareholders and/or partners on the financial statements of the Funds.’ ” (Id. ¶ 276 (citation omitted)). Plaintiffs further allege that PwC was aware its name was being used in the Funds’ marketing materials and Placement Memos, and that its audit letters were made available to both prospective and current investors, as evidenced by an agreement to that effect in PwC’s engagement letters with the Funds. According to Plaintiffs, PwC “knew that the primary purpose of its audits was to provide investors in the Funds with assurance that the Funds’ assets were legitimately invested and accurately valued.” (Id. ¶ 279.) PwC knew that Plaintiffs’ shares were not valued by the market, and that as auditors they were providing Plaintiffs with the only “independently-verified third party financial information” available. (Id. ¶ 279.) 3. Risks Plaintiffs allege that PwC knew the risks posed by the Funds’ investments with Madoff, but that PwC nonetheless failed to take steps in response to those risks by either implementing additional auditing procedures, or even performing standard procedures required by industry practices and its own policies. Plaintiffs allege that PwC knew that the Funds were “merely vehicles to aggregate investments and transfer them to Madoff’ (id.), that the Funds were purporting to use a nontraditional investing strategy, and that BMIS functioned as custodian, sub-custodian, and prime broker of the Funds. PwC claimed that it would meet with BMIS to “obtain an understanding of the key control activities as they relate to the operations and process over the custodian, sub-custodian, and prime broker functions.” (Id. ¶ 307 (quoting Audit Plan at 11).) Plaintiffs allege, however, that PwC accepted Madoffs representations without any independent investigation. For example, Madoff stated to PwC that BMIS’s trades were mostly electronic, with records and reconciliation updated daily. But Plaintiffs allege that PwC knew that Madoff did not provide electronic confirmation to the Funds, instead providing delayed paper records of his trades. Plaintiffs allege that had PwC analyzed and tested Madoffs investment strategy, it would have detected that the strategy could not have functioned as described, and that the returns claimed by Madoff were “not achievable.” (Id. ¶ 308.) Plaintiffs allege that pursuant to certain industry standards and guidelines, PwC was required to verify the existence of the Funds’ investments and understand the Funds’ internal controls. According to Plaintiffs, PwC altogether failed to perform these duties. Plaintiffs allege that PwC represented that the Funds’ financial statements were free of material misstatements without collecting evidence to support that opinion, and without determining whether the assets reflected in those statements even existed. Further, according to the SCAC, PwC did not verify the existence of the transactions of Madoffs so-called split-strike conversion strategy even though PwC represented that it was performing these substantive tests, and had indicated in its Audit Plan that transaction testing of BMIS’s investment strategy would be appropriate. (See id. ¶ 307.) Plaintiffs allege that PwC also concluded that verification of the Citco Defendants’ valuations would be necessary, but that PwC failed to actually perform those tests as well. (See id. ¶ 309.) Plaintiffs allege that if PwC had performed a proper audit, it would have discovered that Madoff did not actually engage in any legitimate trades and that the assets of the Funds did not exist. (See id. ¶¶ 308, 313.) On the other hand, Plaintiffs allege that even the limited amount of work performed by PwC “would have given it actual knowledge or information that it willfully ignored,” including that BMIS was not audited by a legitimate firm; that the Funds and Fairfield Defendants “performed no meaningful due diligence on BMIS”; that the Funds, like PwC, did not test Madoffs performance or strategy, and “had no process in place to verify the fair value” of Madoffs supposed investments. (Id. ¶ 314.) PwC, by way of its limited audit work, also knew, or had information that it willfully ignored, that the Funds did not verify Madoffs trades with counter-parties or third parties, and did not verify the existence of the Plaintiffs’ assets. (See id.) Plaintiffs also assert that PwC failed to exercise the due care required of an audit professional, specifically that it failed: to exercise professional skepticism when considering the risk of fraud; to obtain an understanding of the Funds or BMIS, their internal controls, and their risk of material misstatements; to procure sufficient audit evidence regarding the existence of the assets or to conduct a proper audit to verify the existence of the assets; and to audit the purported transactions and the split-strike strategy, including confirming settled transactions and inspecting assets. (See id. ¶ 315.) Plaintiffs also allege that PwC failed to perform additional procedures where, as here, there was a consolidation of the roles of custodian, sub-custodian, and broker in one entity, and other red flags surrounding Madoff and BMIS. (See id.) Plaintiffs also allege that any reliance by PwC on BMIS’s financial statements would have been improper because F & H was not a qualified auditor able to audit in accordance with GAAP. (See id.) In sum, Plaintiffs conclude that “PwC’s audits were so deficient that in reality there were no audits at all.” (Id. ¶ 316.) III. DISCUSSION A. THRESHOLD ISSUES COMMON TO ALL DEFENDANTS 1. SLUSA Defendants contend that Plaintiffs’ fraud-related claims based in state law are precluded by the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”). See 15 U.S.C. § 78bb(f); 15 U.S.C. 77p(b)(l). SLUSA was enacted to prevent securities fraud class actions based on state laws with less stringent pleading requirements than federal law. See Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 82, 126 S.Ct. 1503, 164 L.Ed.2d 179 (2006). In particular, SLUSA bars class actions of fifty or more members “based upon the statutory or common law of any State” that allege “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security.” 15 U.S.C. § 78bb(f)(l)(A). For SLUSA, a “covered security is one traded nationally and listed on a regulated national exchange.” Dabit, 547 U.S. at 83, 126 S.Ct. 1503 (quotation marks omitted); see also 15 U.S.C. § 77r(b)(l). Though not disputing that they propose a class action composed of more than fifty members, Plaintiffs argue that SLUSA does not apply to this lawsuit because the Funds are not covered securities. And though Madoff in turn purported to purchase securities covered by SLUSA, Plaintiffs assert those transactions were too disconnected from Plaintiffs’ actual investments to activate SLUSA’s preclusive powers. Defendants do not argue that the Plaintiffs’ investments — whether purchases of shares in the Offshore Funds or limited partnership interests in the Domestic Funds — amount to “covered securities” under SLUSA; they instead contend that the relevant covered securities are those Ma-doff lied about purchasing. But this argument overlooks the basic facts of this case, which concern misrepresentations and breaches of duties concerning shares purchased in the Funds. See Romano v. Kazacos, 609 F.3d 512, 523 (2d Cir.2010) (“SLUSA requires [a court’s] attention to both the pleadings and the realities underlying the claims.”). Investments in the Funds simply were not purchases of covered securities. This conclusion puts all the pressure of Defendants’ argument on the “in connection with” requirement of SLUSA. The United States Supreme Court has held that SLUSA’s “in connection with” language is to be given “a broad interpretation.” Dabit, 547 U.S. at 85, 126 S.Ct. 1503. Under the Court’s precedents, “it is enough that the fraud alleged ‘coincide’ with a securities transaction — -whether by the plaintiff or by someone else.” Id. (citation omitted); see also Romano, 609 F.3d at 521 (“The ‘coincide’ requirement is broad in scope .... ” citation omitted). Such an interpretation is required because the “magnitude of the federal interest in protecting the integrity and efficient operation of the market for nationally traded securities cannot be overstated.” Id. at 78, 126 S.Ct. 1503. The Court finds that the “in connection with” requirement is not met here. The allegations in this case present multiple layers of separation between whatever phantom securities Madoff purported to be purchasing and the financial interests Plaintiffs actually purchased. First, Plaintiffs invested their money in the Funds, with one of the Citco Defendants receiving the actual deposits. The Citco Defendants then placed this money with Madoff, a transaction which Plaintiffs allege did not occur instantaneously; the Funds were not a cursory, pass-through entity. The Funds also placed up to 5 percent of their assets in non-Madoff investments, a relatively small portion overall but representing many millions of dollars. Madoff, when and if he received Plaintiffs’ investments from the Funds, then represented he was investing this money in a manner intended to “highly correlate to the S & P 100 Index.” (SCAC ¶ 184.) But sometimes Madoff claimed he also invested this money in Treasury Bills. Though the Court must broadly construe SLUSA’s “in connection with” phrasing, stretching SLUSA to cover this chain of investment — from Plaintiffs’ initial investment in the Funds, the Funds’ reinvestment with Madoff, Madoffs supposed purchases of covered securities, to Madoffs sale of those securities and purchases of Treasury bills-snaps even the most flexible rubber band. Finally, the Court notes that the policy objectives of SLUSA are not implicated in this case. Plaintiffs successfully press federal securities law claims against many of the Defendants and have not attempted to bypass the higher pleading requirements required for these claims by resorting to more lenient state law. See Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25, 36 (2d Cir.2005) (noting SLUSA’s concern with “federal flight litigation”), vacated on other grounds, 547 U.S. 71, 126 S.Ct. 1503, 164 L.Ed.2d 179 (2006) (quotation marks omitted). 2. Choice of Law This Court must apply the choice of law rules of the state where it is located. See, e.g., Zerman v. Ball, 735 F.2d 15, 20 (2d Cir.1984) (“In deciding a question of state law, the federal court must apply the forum state’s choice-of-law rules to determine which state’s law governs.”). The present action contains tort, contract and quasi-contract claims. The relevant analytical approach to choice of law in tort actions in New York is the “interest analysis,” where “the law of the jurisdiction with the most significant interest in, or relationship to, the dispute” is applied. Lazard Freres & Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1539 (2d Cir.1997); accord Schultz v. Boy Scouts, 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679, 684 (1985). For contract claims, New York courts typically look to the “center of gravity” of the dispute or the “grouping of contacts” in the jurisdictions at issue, unless the policies underlying conflicting laws in a contract dispute are “readily identifiable and reflect strong governmental interests.” In re Allstate Ins. Co., 81 N.Y.2d 219, 597 N.Y.S.2d 904, 613 N.E.2d 936, 939 (1993). Regardless of whether the “center of gravity” or “interest analysis” is applied, both require consideration of the facts and significant contacts underpinning the dispute. See Anglo Am. Ins. Group, P.L.C. v. CalFed, Inc., 940 F.Supp. 554, 557 (S.D.N.Y.1996). In the present case, a substantial part of the events and actions of the Defendants that gave rise to Plaintiffs’ claims occurred within New York. As alleged in the SCAC, FGG operated largely out of New York City, as did Madoff. The core facts implicated in every cause of action in this lawsuit — Madoffs fraud and allegations of reckless ignorance of this fraud or other breaches of duty — center on conduct that occurred in New York. Additionally, Plaintiffs are widely dispersed throughout the world and their injury was sustained in various “locations with only limited connection to the conduct at issue.” Pension Comm., 446 F.Supp.2d 163, 192, 193-94 (S.D.N.Y.2006) (considering that fraud originated in New York and defendants had “extensive interaction” and “communicated regularly” with New York offices). Because activities in New York and the parties’ contacts with that forum bear the most relation to the claims at issue, New York has the greatest interest in applying its law. See id.; Cromer Fin. Ltd. v. Berger, 137 F.Supp.2d 452, 492 (S.D.N.Y.2001) (applying New York law as the “jurisdiction where the fraud originated and where substantial activities in furtherance of the fraud were committed”). The Court will therefore apply New York law in reviewing Plaintiffs’ common law claims. 3. Standing Defendants argue that Plaintiffs’ common law claims essentially amount to allegations of mismanagement of the Funds, and therefore only the Funds themselves have standing to sue and that Plaintiffs only recourse is to sue derivatively on behalf of the Funds. The Court is not persuaded by Defendants’ blanket characterizations of Plaintiffs’ claims. The SCAC alleges causes of action against what amount to outsiders to the Funds— Plaintiffs’ general theory is that investment managers, accountants, custodians and administrators had responsibilities to individual investors, regardless of whatever duties the Defendants owed the Funds themselves. No directors of the Funds or other nominally corporate officers of the Funds are named as Defendants based on their duties as directors. As noted above, the Court will analyze Defendants’ argument regarding Plaintiffs’ standing to bring a direct claim using New York law. Under New York law, a shareholder may sue individually “when the wrongdoer has breached a duty owed to the shareholder independent of any duty owing to the corporation wronged.” Fraternity Fund Ltd. v. Beacon Hill Asset Mgmt. LLC, 376 F.Supp.2d 385, 409 (S.D.N.Y.2005) (quoting Abrams v. Donati, 66 N.Y.2d 951, 498 N.Y.S.2d 782, 489 N.E.2d 751, 751-52 (1985)) (holding that a direct action was allowed because the “principal wrong” was a valuation fraud, in which the defendants concealed declines in the value of fund assets that injured the Plaintiffs rather than the funds and the fiduciary duty was owed independently to the plaintiffs); see also Ceribelli v. Elghanayan, 990 F.2d 62, 63-65 (2d Cir.1993); Benedict v. Whitman Breed Abbott & Morgan, 282 A.D.2d 416, 722 N.Y.S.2d 586, 588 (2d Dep’t 2001); Rudey v. Landmarks Pres. Comm’n of New York, 137 A.D.2d 238, 529 N.Y.S.2d 744, 747 (1st Dep’t 1988). Accordingly, to the extent that Plaintiffs properly allege duties owed by each defendant directly to them (a venture in which, as will be seen below, they are not always successful), they have standing to pursue such claims. In addition, allegations by investors of having been tortiously induced to invest or to retain an investment are not derivative claims. See Pension Comm., 446 F.Supp.2d at 205. At its core, this case alleges claims against the corporate entities and individuals responsible for the representations that led Plaintiffs to make and maintain investments in the Funds which, though nominally corporate, were merely vessels for ferrying the investments to Madoff. The fraud and breaches of duty were essential to the Funds’ corporate forms thriving as substantially all of the Funds’ assets were invested with Madoff. Ironically, the alleged concealment or reckless ignorance by Defendants did not harm the Funds as such. Rather, what the pleadings suggest is that Defendants’ errors and omissions, committed under the spell of Madoffs profits, served as the lotus that kept Defendants blissful and that sustained their corporations. Without the fraud and other wrongs alleged in this action, the Funds would not have existed. The Court is not inclined to limit liability to the corporate entity that allegedly functioned essentially as a vehicle for harming Plaintiffs. See Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 118 (2d Cir.1991) (in the bankruptcy context, “[a] claim against a third party for defrauding a corporation with the cooperation of corporate management accrues to creditors, not to the guilty corporation”); Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1093-95 (2d Cir.1995) (applying Wagoner rule to Ponzi scheme). The availability of direct actions is further shown by the asymmetrical injury alleged in the SCAC. See Higgins v. New York Stock Exch., Inc., 10 Misc.3d 257, 806 N.Y.S.2d 339, 348 (2005) (discussing whether “differentiated harm” is required under New York standing law). In Continental Casualty Co., the New York Court of Appeals rejected claims asserted by investors in a hedge fund against the fund’s auditors as derivative because the investors “experienced [their] losses in their capacities as limited partners in common with all limited partners.” 907 N.Y.S.2d 139, 933 N.E.2d at 743. That is not the case here. Plaintiffs were free to invest any amount of money in the Funds and free, with some restriction, to redeem the appreciation in their investment. Some did withdraw profits and others did not. When the game was up, investors who had not redeemed any of their investment lost more money than those who had. And because some investors had redeemed and realized appreciation of their initial investments, the Funds as a whole did not lose the value of all the initial investments. At the pleadings stage, Plaintiffs have alleged sufficient information to show that Plaintiffs suffered individual harm distinct from losses experienced by other investors. The Court notes that this facet of Plaintiffs’ standing argument is ripe for further factual development and is more properly decided at the class certification or summary judgment stage of this proceeding. See In re Grand Theft Auto Video Game Consumer Litig. (No. II), No. 06-MD-1739, 2006 WL 3039993, at *2 (S.D.N.Y. Oct. 25, 2006) (examining authorities and concluding it was proper to “treat class certification as logically antecedent to standing where class certification is the source of the potential standing problems”). At this early stage in the litigation, the Court must accept Plaintiffs’ factual allegations as true. As discovery unfolds, if additional facts change the premise for the Court’s ruling on standing, the parties are free to make a motion at the appropriate time. 4. Martin Act Defendants argue that the Martin Act preempts the majority of Plaintiffs’ common law claims. As set forth in Anwar I, the Court is not persuaded. See Anwar v. Fairfield Greenwich Ltd., 09 Civ. 0118, 728 F.Supp.2d 354, 2010 WL 3022848 (S.D.N.Y. July 29, 2010). For the reasons stated there, Defendants’ arguments are rejected. B. FAILURE TO STATE A CLAIM Defendants’ remaining arguments are essentially all in support of motions to dismiss Plaintiffs’ various causes of action under Fed.R.Civ.P. 12(b)(6). “To survive 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.’ ” Ashcroft v. Iqbal, 556 U.S. -, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This standard is met “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A court should not dismiss a complaint for failure to state a claim if the factual allegations sufficiently “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. The task of the court in ruling on a motion to dismiss is to “assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.” In re Initial Pub. Offering Sec. Litig., 383 F.Supp.2d 566, 574 (S.D.N.Y.2005) (internal quotation marks omitted). The court must accept all well-pleaded factual allegations in the complaint as true, and draw all reasonable inferences in the plaintiffs favor. See Chambers v. Time Warner, 282 F.3d 147, 152 (2d Cir.2002). C. FAIRFIELD GREENWICH DEFENDANTS As noted, Plaintiffs allege a number of federal securities law, state common law tort, contract and quasi-contract claims. Common law fraud and claims under § 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b) (“ § 10(b)”), and Rule 10b-5 promulgated thereunder (“Rule 10b-5”), 17 C.F.R. § 240.10b-5, are alleged against FGG, FGL, FGBL, FGA, FRS, Noel, Tucker, Piedrahita, Vijayvergiya, Lipton and McKeefry (collectively, “Fraud Defendants”). Plaintiffs also assert claims under § 20(a) of the Exchange Act, 15 U.S.C. § 78t(a) (“ § 20(a)”) against the Fraud Defendants, and three other FGG partners who were members of FGG’s Executive Committee: Richard Landsberger (“Landsberger”), Charles Murphy (“Murphy”) and Andrew Smith (“Smith”) (collectively, “Section 20(a) Defendants”). Negligent misrepresentation, gross negligence, breach of fiduciary duty, breach of contract, constructive trust, and mutual mistake claims are asserted against the Section 20(a) Defendants, and FHC (collectively, “Fairfield Defendants”). Breach of contract, constructive trust and mutual mistakes claims are also brought against a number of partners of FGG: Yanko Delia Schiava, Philip Toub, Lourdes Barrenche, David Horn, Cornells Boele, Vianney d’Hendencourt, Jacqueline Harary, Santiago Reyes, Julia Luongo, Harold Greisman, Corina Noel Piedrahita, Robert Blum, and Maria Teresa Pulido Mendoza (“Pulido Mendoza”) (collectively, “Fairfield Fee Claim Defendants”). Unjust enrichment is asserted against all of the above-the Fairfield Defendants and the Fairfield Fee Claim Defendants. 1. FGG FGG disputes whether it can be legally sued and contends FGG is merely a name used for marketing purposes. Plaintiffs concede that FGG’s origin cannot be traced to a formal partnership agreement, but instead all