Full opinion text
OPINION SWEET, District Judge. In this proposed class action, plaintiff Del Dietrich (“Dietrich”) has moved for appointment of additional class representatives. Defendant Barry Witz (“Witz”) has moved for reconsideration of an order extending Dietrich’s time to serve him with the amended complaint and for dismissal of the amended complaint pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted and for failure to plead fraud with particularity. Defendants Jack T. Dawson (“Dawson”), Green-Cohn Group (“Green-Cohn”), Morton Cohn (“Cohn”), Van D. Greenfield (“Greenfield”), Leonard Schwalb (“Schwalb”), CS First Boston Corporation (“CS First Boston”), Bear Stearns & Co., Inc. (“Bear Stearns”), Smith Benton & Hughes, Inc. (“SB & H”), Michael Zaman, Claudia Zaman (together with Michael Zaman, the “Zamans”), PaineWebber Incorporated (“Paine-Webber”) and Oppenheimer & Co., Inc. (“Oppenheimer”) (collectively, and together with “Witz,” the “Defendants”), have also moved pursuant to Rules 12(b)(6) and 9(b) for dismissal of Dietrich’s amended complaint. For the reasons set forth below, Dietrich’s motion for additional class representatives is denied, as is Witz’s motion for reconsideration, and the Defendants’ motions to dismiss will be granted in part and denied in part. Specifically, the claims brought pursuant to (1) Section 12(1) and 12(2) of the Securities Act of 1933,15 U.S.C. § 77Z(1), (2) (the “1933 Act”), along with its California state counterparts; (2) the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 (“RICO”); (3) negligent misrepresentation; (4) and sections 17200 et seq. of the California Business Professions Code are dismissed as to all the Defendants. As to the primary liability claims brought under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (the “1934 Act”), SEC Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder, and common law fraud, the motions to dismiss of Dawson, Cohn, Greenfield, Schwalb, Bear Stearns, Oppenheimer, PaineWebber, the Zamans, and Witz are granted, and those of Green-Cohn and SB & H are denied. The motions to dismiss claims alleging controlling person liability under Section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a), on the part of Greenfield, Cohn, and the Zamans are denied. CS First Boston’s motion to dismiss the Section 10(b), Rule 10b-5, and common law fraud claims is granted in part and denied in part; any claim against CS First Boston for participation in the Regulation S scheme is dismissed, whereas the claim alleging participation in the market manipulation scheme is sustained. In accordance with this decision, Dietrich will be given leave to replead certain of the dismissed claims. Parties Dietrich, a resident of Campbell, California, invested in the common stock of Scorpion Technologies (“Scorpion”). Defendant Richard Bauer has been a director of Scorpion since February 1989 and its chief executive officer and chairman of the board since September 1993. Bauer is also chief executive officer of Groupe Scorpion, B.V. (“Groupe Scorpion”). Defendant Groupe Scorpion, a Dutch company, is a wholly owned foreign subsidiary of Scorpion. Dawson is an attorney who provided services for Scorpion. Green-Cohn is a brokerage firm located in New York, New York. Cohn is the owner of Green-Cohn. Greenfield is the president of Green-Cohn. Schwalb is the chief financial officer of Green-Cohn. CS First Boston is a brokerage firm whose principal offices are located in New York, New York. Bear Stearns is a brokerage firm whose principal offices are located in New York, New York. It acted as the clearing broker for Green-Cohn’s transactions. SB & H, whose offices are located in Englewood, Colorado, is a brokerage firm registered with the Securities and Exchange Commission (“SEC”) since October 5,1987. Michael Zaman is president of SB & H. Claudia Zaman is a financial principal of SB & H. Defendant Emmet A. Larkin & Company (“Emmet Larkin”) is a brokerage firm with offices in San Francisco, California. PaineWebber is a brokerage firm whose principal offices are located in New York, New York. Oppenheimer is a brokerage firm whose principal offices are located in New York, New York. Defendant Edward Fisch maintains offices in Century City, California, and purportedly performed investment banking services for Scorpion in 1991. Witz maintains offices in Century City, California, and allegedly performed investment banking services for Scorpion in 1991. Defendant Mario V. Andrade, a resident of Bolivia, is the chairman of the board of Saturn Enterprises, Ltd. (“Saturn”). Defendant IData, Inc. is a transfer agent located in Dallas, Texas, and has served as Scorpion’s transfer agent since May 1992. Defendant Robert Bogutski is president of IData, Inc. Defendant Kathleen Bogutski is secretary, treasurer, and manager of IData, Inc. Defendant Westfield Financial Corporation (“Westfield Financial”) is a brokerage firm whose principal offices are located in New York. Prior Proceedings In this action, filed on August 28, 1995, Dietrich alleges violations of Section 12(1) and 12(2) of the 1933 Act; Section 10(b) of the 1934 Act; Rule 10b-5; RICO; sections 25110, 25130, 25401, 25501, 25503, and 25504.1 of the California Corporations Code; and sections 17200 et seq. of the California Business Professions Code. Dietrich also brings related claims for common law fraud and negligent misrepresentation. Finally, of the Defendants at issue, Dietrich seeks to hold Dawson, Cohn, Greenfield, and the Zamans as controlling persons under Section 20(a) of the 1934 Act. By opinion dated December 10,1996, the Honorable Lawrence M. McKenna dismissed the complaint with leave to replead. See Dietrich v. Bauer, No. 95 Civ. 7051, 1996 WL 709572 (S.D.N.Y. Dec.10, 1996). On February 10, 1997, Dietrich filed an amended complaint (“Amended Complaint”). The instant motions were filed as follows: PaineWebber filed its motion to dismiss the Amended Complaint on April 14, 1997; Oppenheimer, CS First Boston, Green-Cohn, Cohn, Greenfield, Schwalb, and Bear Stearns on April 15, 1997; Dawson joined in the motions on April 24,1997; Dietrich filed its motion for appointment of seven additional class representatives June 6, 1997 ; and Witz filed its motion for reconsideration and dismissal on December 4,1997. On December 1, 1998, this action was reassigned to this Court pursuant to recu-sal by Judge McKenna upon discovery of a conflict. A pretrial conference was held on December 14, 1998, at which time the instant motions were considered fully submitted. Facts The facts in this action have been set forth in detail in a prior opinion by Judge McKenna, familiarity with which is assumed. See Dietrich, 1996 WL 709572, at *1-*4. Those facts relevant to the instant motion are set forth below. In considering a motion to dismiss, the •facts alleged in the complaint are presumed to be true and all factual inferences must be drawn in the plaintiffs favor and against the defendants. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir.1989); Dwyer v. Regan, 777 F.2d 825, 828-29 (2d Cir.1985). Accordingly, the factual allegations considered here and set forth below are taken primarily from the Amended Complaint and do not constitute findings of fact by the Court. They are presumed to be true only for the purpose of deciding the present motion. This action is alleged to be brought on behalf of a class consisting of “[a]ll persons or entities who purchased or otherwise acquired shares of Scorpion securities during the period from and including May 13, 1992 through and including December 31, 1994.” (Am.Compl^ 41.) According to Dietrich, he invested $2,275 in shares of Scorpion in September 1991, $1,033 in December 1992, and $1,131 in December 1993. Dietrich does not identify from whom he bought the Scorpion shares. Dietrich alleges, inter alia, that the Defendants engaged in two separate but interrelated schemes perpetuated from 1992 through late 1994, involving the unlawful sale of unregistered stock issued by Scorpion (“Regulation S scheme”) and the unlawful manipulation of the trading price of Scorpion stock (“Market Manipulation scheme”) as a means to maximize the profits for the participants in the scheme. Dietrich contends that these interconnected fraudulent schemes allowed the Defendants not only to substantially increase the price of Scorpion stock, but also to distribute to unknowing purported class members stock that should not have been issued absent a filing with the SEC of a registration statement for a secondary-public offering. I. Regulation S Scheme In 1991 and early 1992, Scorpion, a publicly traded corporation listed on the NASDAQ market under the symbol “SCPNA,” sought to register a secondary offering of Class A common stock for public sale. To this end, in November 1991, Scorpion filed a registration statement with the SEC, and in January 1992, filed a first amendment to this statement. In February 1992, the SEC informed Scorpion that it was under investigation. Scorpion’s officers withdrew their registration statement, recognizing that the SEC investigation would prevent Scorpion from obtaining SEC approval for the offering during the pendency of the investigation. At the time that the registration statement was withdrawn, Scorpion, through its officers, directors, and others, developed and carried out, between May 1992 and late 1994, a plan to sell securities by issuing stock ostensibly pursuant to Regulation S — SEC rules governing offers and sales made outside of the United States without registration under the 1993 Act— but with the intention of causing the stock to be sold to United States purchasers through securities broker/dealers within the United States, thus avoiding registration under Section 5 of the 1933 Act. Under this plan, Scorpion transferred its common stock to foreign entities controlled by the Defendants and other participants in the plan. The alleged foreign entities to whom Scorpion transferred stock include Mayfair Financial, FRM Commodities, Ta-naka Capital, Mahsa Poust, Saturn, Well-come Mason, Osicom Technologies, Inc., Pentasonic, S.A., Gerard Perón, and Unison, J.Y. They are not defendants in this action. The sole function of these foreign entities was to re-transfer Scorpion common stock to broker/dealers within the United States for sale to the public. Generally, no payment was made by the foreign entities to whom the stock was issued at the time of transfer. The foreign entities to which Scorpion issued Scorpion common stock did not publicly disclose their sale of the stock pursuant to Regulation D of the 1933 Act. Dietrich claims that the broker/dealers, including Bear Stearns, Green-Cohn, Emmet Larkin, SB & H, Oppenheimer, PaineWebber, and Westfield Financial, effectively functioned as underwriters and sellers of a secondary public offering. II. Market Manipulation Scheme According to Dietrich, during the week of January 18, 1993, the Defendants, including CS First Boston, Bear Stearns, Green-Cohn, and SB & H, planned and carried out a scheme to defraud investors by artificially creating a market demand for Scorpion stock. The Defendants involved accomplished this through their trading activity and by creating false rumors of institutional interest in Scorpion stock and expected fourth quarter earnings of $.15/share. The result of the rumors and trading activity was that the Defendants were able to increase the demand for Scorpion common stock, tripling the market price. When the market opened on January 18, 1993, the stock was trading at a low of $.75/share. The trading volume for the prior ninety days was 350,-000 shares. At approximately 2:30 p.m. Eastern standard time, Bloomberg’s new-swire reported a rumor of institutional buying of Scorpion stock. The total volume of trading for January 18, 1993, exceeded 5.7 million shares. On January 19, 1993, 4.1 million shares of Scorpion stock were traded, with an average price of $.75/ share. On January 20, 1993, the Scorpion stock rose from $.78/share to $1.28/share with a volume of 6.6 million. At some point during the day of January 22, 1993, the stock peaked at over $2.00/share with a volume of over 5.5 million. During the week of alleged manipulation, Dietrich also asserts that through a number of inter-Defendant trades, the Defendants were able to increase the reported trading volume of the stock. According to Dietrich, this was due to wash transactions among the Defendants. Specifically, Dietrich asserts that on January 18, 1993, Saturn sold approximately 470,000 shares of stock through Green-Cohn and two Bear Stearns accounts, purportedly beneficially owned by principals of Green-Cohn, purchased approximately 447,000 shares. Additionally, at the same time SB & H was selling in excess of one million shares, CS First Boston was acquiring for ultimate sale in excess of one million shares. Dietrich represents that the Regulation S and Market Manipulation schemes caused him injury, in that at the time Dietrich bought his shares of Scorpion common stock the true value was zero. Currently, the stock has no market and is valueless. Dietrich has not sold his interest in Scorpion. Discussion I. Dietrich’s Motion for Appointment of Additional Class Representatives Is Denied By means of a motion to add class representatives, Dietrich seeks to designate seven additional proposed representatives in this litigation. The purpose, according to Dietrich, of the proposed intervention by these additional class members is the preservation and protection of the claims under Section 12(1) of the 1933 Act. This motion is premature and without procedural foundation because no class has been certified. Dietrich wishes to add additional representatives to a class that does not exist. Indeed, Dietrich has not cited any controlling, or convincing, authority for the appointment of class representatives prior to certification of the alleged class that they would represent. In Trief v. Dun & Bradstreet Corp., 144 F.R.D. 193 (S.D.N.Y.1992), cited by Dietrich, the court did allow an additional class representative to intervene, but only in connection with the certification of a class, which was conceded by the defendants in that case to be appropriate and granted by the court. See id. at 197-203. Dietrich seeks to bolster the Section 12 claims in his Amended Complaint by adding additional class representatives in order to withstand the current round of motions to dismiss, and then proceed — for the first time — to the class certification stage. However, Dietrich cannot salvage his Section 12 claims by contending that the proposed new representatives have standing to prosecute when they are not named as plaintiffs and when, as discussed below, he himself lacks standing to prosecute those claims. It is well established that a named plaintiff must have standing in order to sustain a claim, and as this Court has stated, “a plaintiff may not use the procedural device of a class action to bootstrap himself into standing he lacks under the express terms of the substantive law.” German v. Federal Home Loan Mortgage Corp., 885 F.Supp. 537, 548 (S.D.N.Y.1995). Dietrich’s effort to add new class representatives in an effort to resuscitate his Amended Complaint is procedurally inappropriate, and his motion is therefore denied. II. Witz’s Motion to Vacate the Order Extending Time of Service Is Denied Witz moves for reconsideration of an order dated July 31, 1997 (the “Order”), extending Dietrich’s time to serve Witz with the Amended Complaint, and for dismissal of the action against him because Dietrich did not serve him with the complaint within 120 days of the institution of the action as required by Rule 4(m) of the Federal Rules of Civil Procedure. According to Witz, he has been prejudiced by the late service of the complaint because Terry Marsh (“Marsh”), President and Chief Executive Officer of Scorpion, was indicted approximately a year after the commencement of this action and has advised that because of the pending indictment against him, he would decline now to testify in this action on Fifth Amendment grounds. Witz’s reconsideration motion is governed by Local Rule 6.3, which provides, in pertinent part: “There shall be served with the notice of motion a memorandum setting forth concisely the matters or controlling decisions which counsel believes the court has overlooked.” Thus, to be entitled to reconsideration, the movant must demonstrate that the Court overlooked controlling decisions or factual matters that were put before it on the underlying motion. See Ameritrust Co. Nat’l Ass’n v. Dew, 151 F.R.D. 237, 238 (S.D.N.Y.1993); Fulani v. Brady, 149 F.R.D. 501, 503 (S.D.N.Y.1993), aff'd sub nom. Fulani v. Bentsen, 35 F.3d 49 (2d Cir.1994); East Coast Novelty Co. v. City of New York, 141 F.R.D. 245, 245 (S.D.N.Y.1992); B.N.E. Swedbank, S.A. v. Banker, 791 F.Supp. 1002, 1008 (S.D.N.Y.1992); Novak v. National Broadcasting Co., 760 F.Supp. 47, 48 (S.D.N.Y.1991); Ashley Meadows Farm, Inc. v. American Horse Shows Ass’n, 624 F.Supp. 856, 857 (S.D.N.Y.1985). Local Rule 6.3 is to be narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been considered fully by the court. See American Alliance v. Eagle Ins., 163 F.R.D. 211, 213 (S.D.N.Y.1995) (citing Caleb & Co. v. E.I. DuPont De Nemours & Co., 624 F.Supp. 747, 748 (S.D.N.Y.1985)). In deciding a reconsideration motion, the Court must not allow a party to use the motion as a substitute for appealing from a final judgment. See Morser v. AT & T Information Sys., 715 F.Supp. 516, 517 (S.D.N.Y.1989); Korwek v. Hunt, 649 F.Supp. 1547, 1548 (S.D.N.Y.1986), aff'd, 827 F.2d 874 (2d Cir.1987). Therefore, a party may not “advance new facts, issues or arguments not previously presented to the court.” Morse/Diesel, Inc. v. Fidelity & Deposit Co. of Md., 768 F.Supp. 115, 116 (S.D.N.Y.1991); see Litton Indus., Inc. v. Lehman Bros. Kuhn Loeb Inc., No. 86 Civ. 6447, 1989 WL 162315, at *3 (S.D.N.Y. Aug.4, 1989). The decision to grant or deny the motion is within the sound discretion of the district court. See Schaffer v. Soros, No. 92 Civ. 1233, 1994 WL 592891 (S.D.N.Y. Oct. 31, 1994). Because Witz’s motion does not present “matters or controlling decisions the court overlooked that might materially have influenced its earlier decision,” Morser, 715 F.Supp. at 517, the motion is denied. In the Order, Judge McKenna granted Dietrich’s motion for an extension of time to effectuate service of the summons and complaint on Witz. Rule 4(m) provides, in relevant part, that: If the service of the summons and complaint is not made upon the defendant within 120 days of filing the complaint, the court, upon its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effectuated within a specified time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period. Fed.R.Civ.P. 4(m) (emphasis added). Pursuant to the Rule, where a party shows “good cause” for his failure to effect service within 120 days of filing, the Court must extend the time for service for an appropriate period. If “good cause” is not shown, then the Court may either dismiss the action or order service within a specified period of time. See Landy v. Irizarry, 884 F.Supp. 788, 793 (S.D.N.Y.1995). In assessing whether good cause exists for late service, consideration is made as to whether the plaintiff has made reasonable efforts to effect service and whether the defendant will suffer prejudice from the delay. See National Union Fire Ins. v. Barney Assoc., 130 F.R.D. 291, 293 (S.D.N.Y.1990). Submissions by Witz fail to demonstrate that Dietrich’s efforts to effectuate service lacked diligence. See generally United States v. Ayer, 857 F.2d 881, 885 (1st Cir.1988); Landy, 884 F.Supp. at 793 n. 7. Moreover, Witz has not established that he has been prejudiced by late service. Witz’s prejudice argument is based upon his assertion that prior to the filing of a criminal indictment against Marsh, the former President and Chief Executive Officer of Scorpion, in August 1996, Marsh would have been willing to testify in the pending action if subpoenaed to appear at a deposition or a trial. Witz claims that Marsh’s testimony “would serve to establish that the alleged scheme and plan to evade the registration provisions of the federal securities laws and to evade Regulation S never existed.” (Witz Decl. ¶ 4.) According to Witz, Marsh told him that, because of the indictment, Marsh would invoke his constitutional privilege against self-incrimination with respect to all matters relating to Scorpion if he were now subpoenaed to testify. Witz’s prejudice argument fails because Marsh’s purported offer of exculpatory testimony is inadmissible hearsay. More- ■ over, Witz fails to explain exactly what Marsh’s testimony would have been, or how it would have exculpated Witz. Finally, it is unclear- — -Dietrich suggests false— that Marsh would have been willing to testify in this action prior to his criminal indictment in August 1996. Marsh invoked his Fifth Amendment privilege against self-incrimination at least as early as February 23, 1995, when he was deposed in federal litigation in California involving Scorpion. Accordingly, Witz’s motion for reconsideration is denied. III. Legal Standards for the Motions to Dismiss A. Rule 12(b)(6) In deciding the merits of a motion to dismiss for failure to state a claim, all material allegations composing the factual predicate of the action are taken as true, for the court’s task is to “assess the legal feasibility of the complaint, not assay the weight of the evidence which might be offered in support thereof.” Ryder Energy Distribution v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir.1984) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir.1980)). Thus, where it is beyond doubt that the plaintiff can prove no set of facts in support of his claim which would warrant relief, the motion for judgment on the pleadings must be granted. See H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 250, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989); Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Additionally, on a Rule 12(b)(6) motion, consideration is limited to the factual allegations in the complaint, “to documents attached to the complaint as an exhibit or incorporated in it by reference, to matters of which judicial notice may be taken, or to documents either in plaintiff’s] possession or of which plaintiff ] had knowledge and relied on in bringing suit.” Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir.1993); see Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir.1991). Matters suggested in Dietrich’s opposing papers that interpret allegations in the Amended Complaint broadly or facts that are offered but that do not appear in the Amended Complaint will not be considered. See Sheppard v. TCW/DW Term Trust 2000, 938 F.Supp. 171, 178 (S.D.N.Y.1996) (explaining that the court could not consider allegations contained in plaintiffs’ opposition to defendants’ motion to dismiss but could only consider allegations within the complaint); O'Brien v. National Property Analysts Partners, 719 F.Supp. 222, 229 (S.D.N.Y.1989) (stating that “it is axiomatic that the complaint cannot be amended by the briefs in opposition to a motion to dismiss”). B. Rule 9(b) Rule 9(b) of the Federal Rules of Civil Procedure requires that in all allegations of fraud, the circumstances constituting the fraud must be stated with particularity. See Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1127 (2d Cir.1994); In re Time Warner, Inc. Sec. Litig., 9 F.3d 259, 265 (2d Cir.1993); Shemtob v. Shearson, Hammill & Co., 448 F.2d 442, 444-45 (2d Cir.1971). The pleading must be sufficiently particular to serve the three goals of Rule 9(b), which are (1) to provide a defendant with fair notice of the claims against him; (2) to protect a defendant from harm to his reputation or goodwill by unfounded allegations of fraud; and (3) to reduce the number of strike suits. See Di Vittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir.1987); O’Brien v. Price Waterhouse, 740 F.Supp. 276, 279 (S.D.N.Y.1990), aff'd, 936 F.2d 674 (2d Cir.1991). The Court of Appeals has required that allegations of fraud specify adequately the statements made that were false or misleading, give particulars as to the respect in which it is contended that the statements were fraudulent, and state the time and place the statements were made and the identity of the person who made them. See McLaughlin v. Anderson, 962 F.2d 187, 191 (2d Cir.1992); Cosmas, 886 F.2d at 11. Not all elements of fraud need be pleaded with equal particularity, however. See In re Blech Sec. Litig., 961 F.Supp. 569, 580 (S.D.N.Y.1997) [hereinafter Blech II ]. For example, allegations of scienter are not subject to the same exacting scrutiny applied to the other components of fraud, such as direct participation. See id. Scienter can be alleged by eonclusory allegations if they are supported by facts giving rise to a strong inference of fraudulent intent. See IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1057 (2d Cir.1993). The inference 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, 25 F.3d at 1128; see Time Warner, 9 F.3d at 268-69. Additionally, this Court has also noted that, in a complaint alleging market manipulation under Section 10(b), where the exact mechanism of the scheme is likely to be unknown to the plaintiff, allegations of the nature, purpose, and effect of the fraudulent conduct and the roles of the defendants are sufficient for alleging participation. See Blech II, 961 F.Supp. at 580; In re Blech Sec. Litig., 928 F.Supp. 1279, 1291 (S.D.N.Y.1996) [hereinafter Blech /]. The complaint must specify “what manipulative acts were performed, which defendants performed them, when the manipulative acts were performed, and what effect the scheme had on the market for the securities at issue.” Id. When, as in this case, a complaint is made against multiple defendants, “the pleading must give notice to each defendant of its alleged misconduct.” Id. at 1292 (emphasis added). This requirement exists because each defendant named in the complaint is entitled to be apprised of the circumstances surrounding the fraudulent conduct with which he individually stands charged. See id. at 1292-93 (citing Red Ball Interior Demolition Corp. v. Palmadessa, 874 F.Supp. 576, 584 (S.D.N.Y.1995)); see also Granite Partners, L.P. v. Bear, Stearns & Co. Inc., 17 F.Supp.2d 275, 286 (S.D.N.Y.1998). Without this requirement, the policies of giving fair notice to, and protecting the reputation of, each defendant would be frustrated — parties might be improperly swept into the discovery stage of a litigation with other parties against whom fraud has been properly alleged. As a result, Rule 9(b) is not satisfied by a complaint in which “ ‘defendants are clumped together in vague allegations.’” Blech I, 928 F.Supp. at 1294 (quoting Three Crown Ltd. Partnership v. Caxton Corp., 817 F.Supp. 1033, 1040 (S.D.N.Y.1993)). IY. Dietrich’s Section 12(1) and (2) Claims Are Dismissed The Amended Complaint alleges violations of Section 12(1) and (2) of the 1933 Act. These claims allege that the “Selling Defendants” sold Scorpion securities without a registration statement. The term “Selling Defendants” is defined as follows: In connection with the scheme and transactions described above [to sell unregistered securities], Defendants Green-Cohn; Bear Stearns; SB & H; Westfield Financial; and Emmet Larkin (the “Selling Defendants”) functioned as “sellers” of securities for purposes of Section 12(1) and 12(2) of the Securities Act, 15 U.S.C. § 77Z(1) and (2). (Am.ComplY 79.) Section 12 of the 1933 Act, 15 U.S.C. § 771, provides that: Any person who (1) offers or sells a security in violation of Section 5 [15 U.S.C. § 77e], or (2) offers or sells a security ... by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission) ... shall be liable to the person purchasing such security from him. The United States Supreme Court has held that the purchaser of unregistered securities under Section 12 has a cause of action only against the person or entity who sold, offered, or actually solicited an offer to buy those securities to him. See Pinter v. Dahl, 486 U.S. 622, 643, 108 S.Ct. 2063, 100 L.Ed.2d 658 (1988). Thus, under Pinter, the imposition of liability pursuant to Section 12(1) requires proof of “a buyer-seller relationship, not unlike traditional contractual privity.” Id. at 642, 108 S.Ct. 2063. As a result, Section 12(1) imposes liability on only the buyer’s immediate seller and remote purchasers are precluded from bringing actions against remote sellers. See id. at 644 n. 21, 108 S.Ct. 2063. Additionally, it is not enough simply to allege that one acquired the securities through the defendant, or that the defendant made the sale of securities possible. Cf. id. at 654, 108 S.Ct. 2063 (“Being merely a ‘substantial factor’ in causing the sale of unregistered securities is not sufficient in itself to render a defendant liable under § 12(1)”). Rather, facts must also be alleged establishing that the defendant was the “seller” of the securities within the meaning of Section 12 — i.e., either that the defendant was the title-holder of the securities prior to sale, see id. at 642, 108 S.Ct. 2063, or that the defendant, acting as agent, successfully solicited the plaintiffs purchase from the title-holder. See id. at 646, 108 S.Ct. 2063. Among the defects found in the pleading of the Section 12(1) claim in the original complaint was the fact that plaintiff had failed to allege “when and from whom he purchased the [Scorpion] stock.” Dietrich, 1996 WL 709572, at *5. Although Dietrich now has alleged when he purchased his stock — namely, September 1991, December 1992, and December 1993- — Dietrich still has not stated from whom he purchased the shares. Although required by Section 12, the Amended Complaint fails to allege that the Scorpion stock purchased by Dietrich was either sold, offered, or actively and successfully solicited by any of the Defendants. This omission is fatal to Dietrich’s First Claim, brought under Section 12(1) of the 1933 Act. Under Section 12(2), a defendant may be held liable when misstatements or omissions occur in a “prospectus or oral communication.” 15 U.S.C. § 111(2). The Supreme Court has held that a Section 12(2) claim must be based on a prospectus, which is defined as “documents related to public offerings by an issuer or its controlling shareholders,” Gustafson v. Alloyd Co., 513 U.S. 561, 569, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995), or in an oral communication that relates to a public written communication, such as a prospectus. See id. at 567-68, 115 S.Ct. 1061. Nowhere in the Amended Complaint does Dietrich allege the existence of a “prospectus” or any other document which sets forth the information required in a prospectus. Moreover, Dietrich does not allege any oral statements made by the Defendants which relate to a prospectus. Indeed, Dietrich acknowledges that the Defendants’ submissions in support of the motion to dismiss the Section 12(2) claim comport with the prior decision and asserts that the claim is realleged solely to protect fully his interests on any potential appeal. Thus, the Second Claim of the Amended Complaint, brought pursuant to Section 12(2), is hereby dismissed. V. Dietrich’s Section 10(b) and Rule 10b-5 Claims Are Dismissed in Part Section 10 of the 1934 Act makes it unlawful for any person ... (b) [t]o use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe as necessary or appropriate in the public interest for the protection of investors. 15 U.S.C. § 78j(b). Rule 10b-5, a general anti-fraud provision, promulgated by the SEC in 1942 states: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a)To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240.10b-5. In order to state a claim under Section 10(b) and Rule 10b-5, a plaintiff must allege that “ ‘in connection with the purchase or sale of securities, the defendant, acting with scienter, made a false material representation or omitted to disclose material information and that plaintiffs reliance on defendant’s action caused [plaintiffs] injury.’ ” Time Warner, 9 F.3d at 264 (quoting Bloor v. Carro, Spanbock, Londin, Rodman & Fass, 754 F.2d 57, 61 (2d Cir.1985)); accord Acito v. IMCERA Group, Inc., 47 F.3d 47, 52 (2d Cir.1995). The Third Claim of the original complaint, alleged under Section 10(b) of the 1934 Act and Rule 10b-5, was dismissed for three reasons: (1) the failure to allege facts relating to Dietrich’s discovery of the alleged fraud, see Dietrich, 1996 WL 709572, at *8; (2) the failure to adequately allege loss, see id. *8-*9; and (3) the failure to adequately allege affirmative misrepresentations pursuant to Rule 9(b), with the exception that it was found that “[p]laintiff s Section 10(b) market manipulation claim, which does not depend entirely on affirmative misrepresentations, is sufficiently individualized with regard to Defendant’s CS First Boston’s and Green Cohn’s alleged participation in a market manipulation scheme.” Dietrich, 1996 WL 709572, at *9-*10. Dietrich’s Amended Complaint now asserts two claims under Section 10(b): the Third Claim (Am.Compl.1ffl 110-15), and the Fourth Claim (Am.Compl.lffl 116-20), alleging, respectively, in Dietrich’s characterization: two separate but interrelated fraudulent schemes perpetrated from 1992 through late 1994, involving the unlawful sale to class members of unregistered stock issued by Scorpion, a publicly held Colorado corporation, and the unlawful manipulation of the trading price of Scorpion stock as a means to maximize the illicit profits for the participants in the scheme. (Pl.’s Mem. at 3.) As indicated above, the first of these schemes, alleged in the Third Claim, will be referred to as the Regulation S scheme, and the second scheme, alleged in the Fourth Claim, will be referred to as the Market Manipulation scheme. The Defendants assert that the Third and Fourth Claims should be dismissed on the following grounds: failure to plead fraud with particularity as required by Rule 9(b); failure to state a claim upon which relief can be granted due to the inadequate pleading of scienter, transaction causation, and loss causation; and failure to comply with the statute of limitations. Although Dietrich’s action is not time-barred and he has alleged transaction and loss causation sufficiently, Dietrich has not pleaded scienter, as to certain of the Defendants, adequately or in compliance with Rule 9(b). Moreover, the full range of Dietrich’s allegations under Section 20(a), holding as controlling persons certain individual defendants, cannot be maintained. A. Rule 9(b), Scienter, and Control Person Liability 1. Regulation S Scheme According to Dietrich, the Regulation S scheme commenced in approximately May 1992 and continued through late 1994. The Defendants alleged to have participated in this scheme are Dawson, Green-Cohn, Cohn, Greenfield, Schwalb, Bear Stearns, SB & H, the Zamans, Oppenheimer, PaineWebber, and Witz. Of these Defendants, Dietrich represents that Dawson, Green-Cohn, Cohn, Greenfield, Schwalb, S & H, the Zamans, and Witz were involved in devising the scheme. In addition to allegations of primary violations of Section 10(b) and Rule 10b-5 by the participants of the scheme, Dietrich alleges controlling person liability under Section 20(a) of the 1934 Act as to Dawson, as controlling person of Scorpion and Groupe Scorpion; Cohn and Greenfield, as controlling persons of Green-Cohn; and the Zamans, as controlling persons of SB & H. In Dietrich, the claim premised on the Regulation S scheme was dismissed “to the extent that it [was] relying on affirmative misrepresentations, because [Dietrich] failed to comply with Fed.R.Civ.P. 9(b).” Dietrich, 1996 WL 709572, at *9. It was found that Dietrich had not “sufficiently individualized allegations regarding affirmative misstatements.’’ Id. Dietrich has not remedied this defect. However, his claim focuses on the selling of, and utilizing in a scheme to defraud, unregistered securities. According to Dietrich, the participating Defendants engaged in transactions with the intent that those transactions appear to comply with the requirements of Regulation S, but their true purpose was to sell Scorpion stock in the United States to the public without registration. Dietrich urges that this deliberate intent, and elaborate implementation thereof, elevate the Defendants’ conduct to the category of fraudulent schemes prohibited by Section 10(b) and Rule 10b-5. In essence, it is the nondisclosure, and not affirmative misstatements, on which Dietrich’s Third Claim is based. Pulling the wool over the eyes of investors as to the registration status of the securities and gaining from this deception may form a violation of Section 10(b) and Rule 10b-5. See Securities & Exchange Comm’n v. Softpoint, Inc., 958 F.Supp. 846, 862-63 (S.D.N.Y.1997) (“By facilitating the sale of unregistered shares, [defendant] engaged in a course of business that deceived purchasers as to the legality of the stock issue and the financial stability of their investment. Thus, [defendant’s] activities in the liquidation scheme fall within the scope of ... Section 10(b) and Rule 10b-5.”), aff'd, 1998 WL 537522 (2d Cir. June 29, 1998). Yet alleging a sale of unregistered securities in and of itself without adequately pleading scienter, for instance, will not withstand a motion to dismiss. In the instant ease, Dietrich successfully states a claim for primary liability against Green-Cohn and SB & H, and control person liability against Cohn, Greenfield, and the Zamans. As to Dawson, Schwalb, Bear Stearns, Oppenheimer, PaineWebber, Witz, and CS First Boston, Dietrich falls short of meeting Rule 9(b) requirements, sufficiently alleging scienter, or establishing control person liability. a. Dawson The allegations in the Amended Complaint relied on by Dietrich as stating a claim against Dawson do not adequately plead a claim of a primary violation of Section 10(b) on his part. The controlling person allegations — that Dawson by virtue of his position as attorney exercised control over Scorpion and Scorpion Groupe— under Section 20(a) of the 1934 Act fail as well. Section 20(a) of the 1934 Act imposes joint and several liability on any person who “controls any person liable under any provision of this title or of any rule or regulation thereunder.” 15 U.S.C. § 78t(a) (1995). To make out a prima facie case for control person liability, “a plaintiff must show a primary violation by the controlled person[,] ... control of the primary violator by the targeted defendant^] ... and ... that the controlling person was in some meaningful sense a culpable participant in the fraud perpetuated by the controlled person.” S.E.C. v. First Jersey Sec., 101 F.3d 1450, 1472 (2d Cir.1996) (citations omitted). Furthermore, “control over a primary violator may be established by showing that [the controller] possessed ‘the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.’ ” Id. (quoting 17 C.F.R. § 240.12b-2). Actual control is essential to control person liability. See Blech II, 961 F.Supp. at 586 (citing Ross v. Bolton, 83 Civ. 8244, 1989 WL 80428, at *2 (S.D.N.Y. Apr.4, 1989) (stating that defendant must possess actual control over the transactions in question)). In order to overcome a motion to dismiss at this stage, a plaintiff must plead facts which “support a reasonable inference that [the defendants] had the potential power to influence and direct the activities of the primary violator.” Food and Allied Service Trades Dep’t, AFL-CIO v. Millfeld Trading Co., 841 F.Supp. 1386, 1391 (S.D.N.Y.1994); see Borden, Inc. v. Spoor Behrins Campbell & Young, Inc., 735 F.Supp. 587, 591 (S.D.N.Y.1990). That Dawson is a lawyer for Scorpion does not, without more, mean that he controls Scorpion within the meaning of Section 20(a). See generally Barker v. Henderson, Franklin, Starnes & Holt, 797 F.2d 490, 494 (7th Cir.1986). Where, as is the case with Dawson, “a defendant does not clearly occupy control status, the plaintiff must plead facts from which control status can be inferred, e.g., that defendant had power, pursuant to an agreement to control the primary violator or aided the primary violator in performing some culpable conduct linking the defendant to the primary violation for which relief is sought.” Sloane Overseas Fund, Ltd. v. Sapiens Int’l Corp., 941 F.Supp. 1369, 1378 (S.D.N.Y.1996); see Barker, 797 F.2d at 494 (explaining that an attorney’s “ability to persuade and give counsel is not the same thing as ‘control,’ which almost always means the practical ability to direct the actions of the people who issue or sell securities”). The Amended Complaint does not allege such facts with respect to Dawson with the particularity required by Rule 9(b). Accordingly, the Third Claim is dismissed as to Dawson. b. Green-Cohn The Amended Complaint alleges that Green-Cohn sold unregistered Scorpion stock. Again, the sale of unregistered stock in the United States can constitute a violation of Section 10(b). See Softpoint, 958 F.Supp. at 862-63. The Amended Complaint also alleges facts from which scienter on the part of Green-Cohn can be inferred. As previously noted, it is sufficient to allege facts establishing motive and opportunity to commit fraud or to allege facts constituting circumstantial evidence of conscious or reckless behavior to satisfy pleading scienter under Rule 9(b). See Time Warner, 9 F.3d at 268-69. “[GJreat specificity ... [is] not required with respect to ... allegations of knowledge and scienter.” Goldman v. Belden, 754 F.2d 1059, 1070 (2d Cir.1985). As to Green-Cohn, Dietrich submits that it maintained and executed trades for foreign entities through which the Regulation S stock was transferred to the United States for sale to the public. The Regulation S stock was sold in the United States through Green-Cohn immediately upon the expiration of the waiting period during which Regulation S stock cannot be sold in the United States, or, in some instances, before such expiration. According to Dietrich, the sheer volume of the Regulation S stock — millions of shares at a time — that passed through GreenCohn’s hands indicated that the issuance and sale of the stock were not legitimate, bona fide transactions. Additionally, as put by Dietrich, Green-Cohn knew, or at minimum, recklessly disregarded, indications that the Regulation S transactions in which it engaged violated the securities laws and regulations. Dietrich has alleged sufficient facts to establish motive and opportunity on the part of Green-Cohn. For example, the Amended Complaint states that Green-Cohn maintained and executed trades on behalf of several foreign entities, including Mayfail Financial, FRM Commodities, and Saturn. Contrary to its standard policies and practices, Green-Cohn did not maintain any information about those entities except for their names and addresses, and had no financial or other information about them. The persons purporting to represent several of the foreign entitles with whom Green-Cohn dealt were the same individuals. Dietrich submits that Green-Cohn accepted without explanation the unlikely possibility that the same people would act on behalf of several ostensibly unrelated foreign entities seeking to sell large amounts of unregistered Scorpion stock in the United States. Moreover, the amounts received by Green-Cohn for executing Scorpion stock trades for the foreign entities were unusually large and far in excess of typical commissions for similar trades in other stock. Furthermore, contrary to standard practice, virtually no written agreements setting forth Green-Cohn’s compensation for executing such trades existed between Green-Cohn and the foreign entities. Finally, Dietrich alleges that the participating Defendants, including Green-Cohn, divided the proceeds from the sales of the Regulation S stock. Opportunity and financial motive have thus been established. Given the facts alleged in the Amended Complaint, Green-Cohn’s motion to dismiss the Third Claim is denied. c. Cohn, Greenfield, and Schwalb Dietrich represents that Cohn, Greenfield, and Schwalb participated in devising the scheme to evade the registration provisions of the federal securities laws. Yet conclusory characterizations set forth by words such as “devised” and “participated,” without factual support, are insufficient under Rule 9(b). See, e.g., Blech II, 961 F.Supp. at 584. The Amended Complaint is devoid of any allegations forming a primary violation of Section 10(b) and Rule 10b-5 on the part of these defendants. As to Cohn and Greenfield, however, the allegations that they are controlling persons of Green-Cohn sustain the instant motions. Cohn and Greenfield are alleged to be, respectively, the owner and the president of Green-Cohn, positions from which control “can be directly inferred without more.” Sloane Overseas Fund, 941 F.Supp. at 1878. Accordingly, claims of primary liability under Section 10(b) and Rule 10b-5 are dismissed as to Cohn, Greenfield, and Schwalb, and claims of controlling person liability pursuant to Section 20(a) remain as to Cohn and Greenfield. d. Bear Stearns Bear Stearns is alleged both to have been the clearing broker for GreenCohn’s transactions and to have sold unregistered Scorpion stock. Bear Stearns’ activity as clearing broker, standing alone, is not a ground for liability under Section 10(b). See Blech II, 961 F.Supp. at 584; Blech I, 928 F.Supp. at 1295-96; Connolly v. Havens, 763 F.Supp. 6, 10 (S.D.N.Y.1991); Dillon v. Militano, 731 F.Supp. 634, 636 (S.D.N.Y.1990). Dietrich’s response, that his claims against Bear Stearns are not based merely on the clearing services it performed but rather on allegations that Bear Stearns knowingly and recklessly worked with the other Defendants to bring Regulation S stock into the United States and sell it here, is not supported by the allegations in the Amended Complaint, all of which are con-clusory, unparticularized, and factually unsupported. Contrary to Dietrich’s assertions, Blech II provides no support for his contention that he has asserted viable claims against Bear Stearns. In Blech II, this Court found insufficient the allegations which “characterize Bear Stearns’ conduct as ‘engaging in,’ ‘executing,’ or ‘entering into’ fraudulent trades,” because “[s]uch conclu-sory characterizations do not suffice when the factual allegations underlying those assertions are consistent with the normal activity of a clearing broker.” Blech II, 961 F.Supp. at 584. It was explained that: Even assuming that Bear Stearns had knowledge of the Blech scheme, primary liability cannot attach when the fraudulent conduct that is alleged is no more than the performance of routine clearing functions. In other words, under Section 10(b), the act of clearing sham trades is not equivalent to causing or directing sham trades for the purpose of soliciting or inducing a plaintiff to purchase securities. The act of clearing sham trades alone, even with scienter, is not enough to show an attempt to unlawfully affect the price of such securities within the meaning of Section 10(b). Id. at 584. To be brought within Section 10(b), it also must be alleged that Bear Stearns “directly and knowingly participated in deceptive or manipulative conduct that caused damage to the [plaintiff].” Id. at 582. The Amended Complaint does not make such allegations as to Bear Stearns with the particularity required by Rule 9(b). Although Dietrich alleges that Bear Stearns sold unregistered Scorpion stock, it does not allege facts from which scienter on the part of Bear Stearns can be inferred. Therefore, the Third Claim is dismissed as to Bear Stearns, pursuant to Rules 12(b)(6) and 9(b). e. SB&H The Amended Complaint alleges that SB & H sold unregistered Scorpion stock. It also alleges facts from which scienter on the part of SB & H can be inferred. Motive and opportunity have been established, in part, based on the allegations that SB & H, together with others, devised the scheme, engaged in transactions involving foreign entities where no payment was made by the foreign entities at the time of transfer, and received proceeds from the sale of stock to the public as a participant of the alleged scheme. Accordingly, the Third Claim will not be dismissed as to SB & H. f. Michael Zaman and Claudia Za-man As with Cohn, Greenfield, and Schwalb, the Amended Complaint does not adequately plead a claim of a primary violation of Section 10(b) on the part of Michael Zaman or Claudia Zaman. However, the allegations that the Zamans are controlling persons of SB & H are sufficient. Michael Zaman and Claudia Zaman are alleged to be, respectively, the president and “a financial principal” of SB & H. The position of Michael Zaman as president of SB & H is one from which control “can be directly inferred without more.” Sloane Overseas Fund, 941 F.Supp. at 1378. The allegation that Claudia Zaman is “a financial principal” of SB & H is sufficient as a matter of pleading, since it implies “substantial stock ownership.” Id. Accordingly, the primary violation claim under Section 10(b) is dismissed, whereas the Section 20(a) claim may lie. g. Oppenheimer The only allegation in the Amended Complaint referring specifically to the sale by Oppenheimer of unregistered Scorpion stock is the allegation that “either” Green-Cohn, Westfield Financial, or Oppenheimer did so. (See Am. Compl. ¶ 59.) This pleading of Oppenheimer’s involvement in the disjunctive fails to particularize Oppenheimer’s role as required by Rules 9(b) and 12(b)(6). Assuming arguendo that the Amended Complaint alleged a sale by Oppenheimer, the claim nonetheless could not stand. In Dietrich’s opposition papers, he asserts that individuals at Oppenheimer apparently received bribes for their participation in the scheme. Yet there is no such allegation in the Amended Complaint, and it therefore cannot be considered in the instant motion. See Sheppard, 938 F.Supp. at 178; O’Brien, 719 F.Supp. at 229. The Amended Complaint, however, does allege that in 1991 an Oppenheimer broker received an interest-free loan from Scorpion. Although the statement regarding the bribes in the opposing papers and that of the interest-free loan in the Amended Complaint are not consistent, the allegation may give rise to an inference of fraudulent intent on part of the broker. Nonetheless, the inference is softened by the fact that the loan was purportedly made before the Regulation S scheme was allegedly conceived. There is no allegation in the Amended Complaint that Oppenheimer helped to devise the scheme; that it knew either that Scorpion stock was issued pursuant to Regulation S or that the stock was being transferred in large blocks to foreign entities or that such transfers were a sham; that Oppenheimer was privy to inside information about Scorpion’s business and alleged unlawful trading activities; that Oppenheimer dealt directly with any foreign recipient of Scorpion stock; that it executed trades in Scorpion stock on behalf of any foreign entity; that any of the foreign entities involved transferred Scorpion stock directly to Oppenheimer for sale, either prior to or immediately upon expiration of the Regulation S waiting period; or that Oppenheimer participated in the sales proceeds or received some illicit profit from the scheme. Instead, the only allegations made against Oppenheimer in the Amended Complaint are that (1) at some time during the time period at issue it was involved (in some unparticularized fashion) in trading Scorpion common stock, possibly including some Scorpion Regulation S stock held at some earlier date by a foreign entity; and (2) it received commissions for the trading it did. Such allegations amount only to a description of the ordinary business of a securities broker/dealer and cannot sustain causes of action for securities fraud. Accordingly, the Third Claim is dismissed as to Oppenheimer. h. PaineWebber The Amended Complaint alleges that PaineWebber sold unregistered Scorpion stock. Yet it does not allege facts from which scienter on the part of PaineWebber can be inferred. Dietrich asserts that PaineWebber was among several broker/dealers through whom the foreign entities involved sold the unregistered stock and identifies three such transactions: sales by Saturn, Well-come Mason, and Gerard Perón. Dietrich then contends that these foreign entities sold unregistered Scorpion shares to buyers in the United States between August 1992 and April 1993. Additionally, according to Dietrich, PaineWebber was “involved” with the reissuances of a share certificate issued to Saturn. The significance of this reissuance is never explained, however, and none of the allegations imply something other than the ordinary course of a broker/dealer’s business. Unlike the claim against Green-Cohn, for example, the Amended Complaint is lacking in facts that establish motive and opportunity on PaineWebber’s part in accordance with Rule 9(b). For instance, Dietrich does not allege, as he does regarding Green-Cohn and SB & H, that PaineWebber was involved in devising the Regulation S scheme or that it received a division of the proceeds from the scheme. (See Am. Compl. ¶¶ 49, 53.) The sole allegation regarding PaineWebber’s motive is that the firm earned “substantial commissions” from trades. (Am.Compl^ 97(d)). This allegation, however, is made in connection with the Market Manipulation scheme and not the Regulation S scheme. Because scienter has not been pleaded to satisfaction, the Third Claim is dismissed as to PaineWebber. i. Witz The allegations against Witz are meager as well. According to Dietrich, Witz participated only in the Regulation S scheme (and not the Market Manipulation scheme), but the allegations against him do not describe his role or connection to the scheme. The Amended Complaint refers to Witz in three of its one hundred and ninety-three numbered paragraphs. First, Witz “purportedly performed investment banking services for Scorpion in 1991” and allegedly “participated in orchestrating Scorpion’s issuance of stock to foreign entities for ultimate sale in the United States.” (Am.ComplY 29.) Second, Witz, along with others, including thirteen identified persons and entities, “devised a scheme and plan to evade the registration provisions of the federal securities laws ... with the intention of causing the stock to be sold to United States purchasers ... beginning no later than May 1992.” (Am.ComplJ 49.) Third, it is alleged that “[t]he proceeds from the sales of the stock to the public were then divided among the participants of the scheme, including [sixteen persons or entities and] Witz ....” (Am.ComplJ 53.) These allegations fail to describe the nature of Witz’s alleged investment banking services for Scorpion in 1991 or how such services had anything to do with Scorpion’s allegedly illegal issuance of stock “beginning no later than May 1992.” Additionally, they fail to identify Witz’s role in the alleged scheme or when that role began or ended. As stated previously, utilization of the word “devised” is insufficient under Rule 9(b). See, e.g., Blech II, 961 F.Supp. at 584. Moreover, Dietrich fails to identify any facts that would permit a strong inference of scienter on Witz’s part. Furthermore, he fails to differentiate Witz from the other members of the Regulation S scheme. Accordingly, the Third Claim against Witz is dismissed for failure to comply with Rule 9(b). j. CS First Boston The Amended Complaint does not include CS First Boston among the Defendants who participated in the Regulation S scheme. However, Dietrich erroneously includes a Section 10(b) violation predicated on the Regulation S scheme against CS First Boston in his opposition papers. Again, these papers cannot be used as a substitute for the complaint. As CS First Boston is not alleged to have participated in the scheme, the Third Claim is dismissed as against it pursuant to Rule 12(b)(6). 2. Market Manipulation Scheme According to Dietrich, the Market Manipulation scheme occurred during the week of January 18, through January 22, 1993. The Defendants alleged to have participated in this scheme are Green-Cohn, Cohn, Greenfield, Schwalb, Bear Stearns, CS First Boston, SB & H, Michael Zaman, and Claudia Zaman. Dietrich acknowledges that at present he has insufficient evidence to allege participation in the scheme by PaineWebber and Oppenheimer. Additionally, Witz is not mentioned in the Amended Complaint as related to this scheme. “Manipulation is ‘virtually a term of art when used in connection with securities markets.’ ” Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 476-77, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977) (quoting Ernst & Ernst v. Hochfelder, 425 U.S. 185, 199, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976)). A claim premised on market manipulation, as alleged here, focuses on the “engaged in a scheme to defraud” aspect of Section 10(b) and Rule 10b-5 and was described by the Supreme Court in Hochfelder. In that case, the Court defined market manipulation as conduct “designed to deceive or defraud investors by controlling or artificially affecting the price of securities.” Hochfelder, 425 U.S. at 199, 96 S.Ct. 1375. To set forth a claim for market manipulation under Section 10(b) and Rule 10b-5, a plaintiff must allege the following: (1) damage (2) caused by reliance on defendants’ misrepresentations or omissions of material facts, or on a scheme by the defendants to defraud, (3) scienter (4) in connection with the purchase or sale of securities, (5) furthered by the defendants’ use of the mails or any facility of a national securities exchange. See Cowen & Co. v. Merriam, 745 F.Supp. 925, 929 (S.D.N.Y.1990); Baxter v. A.R. Baron & Co., Inc., No. 94 Civ. 3913, 1995 WL 600720,