Full opinion text
MEMORANDUM OPINION AND AMENDED ORDER JAMES O. BROWNING, District Judge. THIS MATTER comes before the Court on: (i) the Opposed Motion to Dismiss of Defendants Greenwich Capital Acceptance, Inc. (n/k/a RBS Acceptance Inc.), Structured Asset Mortgage Investments II, Inc., Credit Suisse Securities (USA) LLC, RBS Securities Inc. (f/k/a Greenwich Capital Markets, Inc.), Robert J. McGinnis, Carol P. Mathis, Joseph N. Walsh III, John C. Anderson, James M. Esposito, Jeffrey L. Verschleiser, Michael B. Nierenberg, Jeffrey Mayer, Thomas F. Maraño, filed July 11, 2011 (Doc. 125) (“Joint Motion”); (ii) Banc of America Securities LLC’s Joinder in the Motion to Dismiss of the Depositor Defendants, the Individual Defendants, Credit Suisse Securities (USA) LLC, and RBS Securities, Inc., filed February 11, 2011 (Doc. 130) (“Joinder in Motion”); and (iii) the Rating Agencies’ Motion to Dismiss with Prejudice the Amended Class Action Complaint, filed February 11, 2011 (Doc. 128) (“Rating Agency Defendants’ Motion”). The Court held a hearing on September 19, 2011. The primary issues are: (i) whether the Plaintiffs Maryland-National Capital Park & Planning Commission Employees’ Retirement System and Midwest Operating Engineers Pension Trust Fund have constitutional standing to pursue their claims; (ii) whether the Plaintiffs’ claims are time-barred by the applicable statutes of limitation or repose; (iii) whether the Plaintiffs have stated sufficient materiality allegations against the Defendants other than the Rating Agency Defendants; (iv) whether the Plaintiffs have alleged a section 12(a)(2) claim under the Securities Act of 1933, 15 U.S.C. §§ 77a-77aa against the Defendants; (v) whether the Plaintiffs must plead reliance on the alleged misrepresentations in the offering documents for the 2006-5 offering; (vi) whether the Plaintiffs have stated a control-person claim against the Individual Defendants or Defendant RBS Securities, Inc.; (vii) whether lack of causation undercuts the Plaintiffs’ claims related to the 2006-5 offering; (viii) whether the Plaintiffs have stated claims under the New Mexico Securities Act, N.M.S.A. 1978, §§ 58-13B-1 through 58-13B-57, repealed by L. 2009, Ch. 82, § 703, effective Jan. 1, 2010, against any of the Defendants; (ix) whether the Plaintiffs have stated sufficient materiality allegations against the Rating Agency Defendants; (x) whether the First Amendment of the United States Constitution bars the Plaintiffs’ claims against the Rating Agency Defendants; and (xi) whether the Credit Rating Agency Reform Act of 2006 (“CRARA”), Pub.L. No. 109-291, 120 Stat. 1327, preempts any of the Plaintiffs’ New Mexico Securities Act claims against the Rating Agency Defendants. The Court will grant in part and deny in part both the Joint Motion and the Rating Agency Defendants’ Motion. The Court will allow the Plaintiffs leave to file a motion to amend their pleadings consistent with its discussion in the Memorandum Opinion and Amended Order. With respect to the issue of pleading their compliance with the applicable statute of limitations and statute of repose, the Court will grant the Plaintiffs leave to amend to cure this defect without requiring them to file a motion seeking leave to amend. The Plaintiffs have constitutional standing to pursue their claims against the Defendants. The Plaintiffs’ claims are not time-barred under federal securities law or under the New Mexico Securities Act. The Plaintiffs have sufficiently pled allegations about material misrepresentations or omissions against the Defendants other than the Rating Agency Defendants with respect to: (i) their abandonment of their loan underwriting guidelines; (ii) their improper appraisal practices regarding the 2006-5 offering; (iii) the inflated loan-to-value (“LTV”) ratios regarding the 2006-5 offering; and (iv) to the credit ratings regarding the 2006-5 and 2007-4 offerings. The Plaintiffs have adequately alleged their section 12(a)(2) claims. The Plaintiffs have no obligation to plead reliance on the alleged misrepresentations related to the 2006-5 offering. The Plaintiffs have adequately stated a control-person claim. Lack of causation does not undercut the Plaintiffs’ claims related to the 2006-5 offering. While the Plaintiffs have not sufficiently alleged that their claims satisfy the jurisdictional provisions of the New Mexico Securities Act, they have sufficiently alleged that the Rating Agency Defendants can be liable under the New Mexico Securities Act. Against the Rating Agency Defendants, the Plaintiffs have sufficiently pled allegations about material misrepresentations or omissions with respect to Defendants McGraw-Hill Companies, Inc. and Standard & Poor’s Rating Services, but not against Defendants Fitch, Inc., Fitch Ratings, Moody’s Corp., or Moody’s Investors Services, Inc. The First Amendment does not bar the Plaintiffs’ claims against the Rating Agency Defendants. Lastly, CRARA preempts some of the theories on which the Plaintiffs base their claims under the New Mexico Securities Act against the Rating Agency Defendants. FACTUAL BACKGROUND The Court recites the factual background in this case in the light most favorable to the Plaintiffs. This dispute arises out of several investment offerings of mortgage-backed securities (“MBS”). The asserted class invested in these MBS and ultimately suffered significant losses on their investments. The Plaintiffs contend that the Defendants made a variety of misrepresentations relating to these investments that misled the asserted class as to the true risk of these investments. 1. Non-Parties Thornburg Mortgage Securities Trust 2006-3, Thornburg Mortgage Securities Trust 2006-5, and Thornburg Mortgage Securities Trust 2007-4 are statutory trusts formed under Delaware law. See Amended Complaint for Violations of §§ 11, 12(a)(2) and 15 of the Securities Act of 1933 and §§ 58-13B-30(B) and 58-13B-40(A) of the New Mexico Securities Act of 1986 ¶ 21, at 13, filed December 10, 2010 (Doc. 103) (“Amended Complaint”). On March 22, 2011, the Plaintiffs voluntarily dismissed these statutory trusts from this action. See Plaintiffs’ Notice of Voluntary Dismissal Without Prejudice of Defendants Thornburg Mortgage Securities Trust 2006-3, Thornburg Mortgage Securities Trust 2006-5, and Thornburg Mortgage Securities Trust 2007-4 (Doc. 138). These statutory trusts are referred to collectively as the “Thornburg Trusts.” The Plaintiffs did not name Thornburg Mortgage Home Loans, Inc. (“Thornburg Mortgage Home Loans”) as a Defendant, but Thornburg Mortgage Home Loans originated many of the mortgage loans involved in this dispute. See Amended Complaint ¶ 3, at 7. 2. The Parties This action is brought by Lead Plaintiffs: (i) Maryland-National Capital Park & Planning Commission Employees’ Retirement System (“Maryland-National Capital”); and (ii) Midwest Operating Engineers Pension Trust Fund (“Midwest Operating”). See Amended Complaint ¶¶ 19-20, at 13. Maryland-National Capital is a single-employer, defined-benefit-pension plan established in 1972 that a board of trustees administers. See Amended Complaint ¶ 19, at 13. It purchased certificates in the 2006-3 and 2007-4 offerings. See Amended Complaint ¶ 19, at 13. Midwest Operating provides benefits to members of the Local 150 of the International Union of Operating Engineers. See Amended Complaint ¶20, at 13. Midwest Operating purchased certificates in the 2006-3, 2006-5, and 2007-4 offerings. See Amended Complaint ¶20, at 13. Defendant Greenwich Capital Acceptance, Inc. (“GC Acceptance”) is a finance subsidiary of Greenwich Capital Holdings, Inc. and an affiliate of RBS Securities, Inc. (“RBS Securities”), organized for the limited purpose of acquiring, owning, and transferring mortgage assets and selling interests in those assets or bonds secured by those assets. See Amended Complaint ¶22, at 14. Defendant Structured Asset Mortgage Investments II, Inc. (“SAMI II”) is a wholly owned subsidiary of The Bear Stearns Companies Inc. (“Bear Stearns”), which JP Morgan Chase & Co. acquired, and was organized for the sole purpose of serving as a private secondary mortgage market conduit. See Amended Complaint ¶ 23, at 14. The Plaintiffs state in their Amended Complaint that RBS Securities served as a “depositor” for the Series 2006-3 and Series 2007-4 certificates and was the “issuer” of the certificates within the meaning of § 2(a)(4) of the Securities Act of 1933, 15 U.S.C. §§ 77a-77aa. Amended Complaint ¶ 22, at 14. The Plaintiffs state in their Amended Complaint that SAMI II served as a “depositor” for the Series 2006-5 certificates and was the issuer of the certificates within the meaning of § 2(a)(4) of the Securities Act. Amended Complaint ¶ 23, at 14. Defendants GC Acceptance and SAMI II are collectively referred to as the “Depositor Defendants.” Defendant Credit Suisse Securities LLC, d/b/a/ Credit Suisse Securities (USA) LLC (“Credit Suisse”), is a subsidiary of Credit Suisse Group. See Amended Complaint ¶ 25, at 14. Defendant RBS Securities is a subsidiary of Greenwich Capital Holdings, Inc. See Amended Complaint ¶26, at 15. Defendant Banc of America Securities LLC (“BA Securities”) is an investment banking subsidiary of Bank of America Corp. See Amended Complaint ¶ 27, at 15. The Plaintiffs state in their Amended Complaint that Credit Suisse acted as an “underwriter” for the 2006-3 and 2006-5 offerings within the meaning of § 2(a)(ll) of the Securities Act. See Amended Complaint ¶ 25, at 14. The Plaintiffs also state that RBS Securities acted as an underwriter for the 2006-3, 2006-5, and 2007-4 offerings. See Amended Complaint ¶26, at 15. The Plaintiffs state that BA Securities acted as an underwriter for the 2006-5 offering. See Amended Complaint ¶27, at 15. These underwriters participated in the drafting and dissemination of the offering documents involved in the Plaintiffs’ purchase of the certificates at issue in this case. See Amended Complaint ¶¶ 25-28, at 14-15. Defendants Credit Suisse, RBS Securities, and BA Securities are collectively referred to as the “Underwriter Defendants.” The Plaintiffs also joined a variety of individuals as Defendants in this case. Defendant Robert J. McGinnis was, at all relevant times, a Director and Principal Executive Officer of RBS Securities. See Amended Complaint ¶ 29, at 15. Defendant Carol P. Mathis was, at all relevant times, the Principal Financial Officer and Principal Accounting Officer of GC Acceptance. See Amended Complaint ¶ 30, at 15. Defendant Joseph N. Walsh III was, at all relevant times, a Director and Managing Director of RBS Securities. See Amended Complaint ¶ 31, at 16. Defendant John C. Anderson was, at all relevant times, a Director and Managing Director of RBS Securities. See Amended Complaint ¶ 32, at 16. Defendant James M. Esposito was, at all relevant times, a Director, Managing Director, General Counsel, and Secretary of RBS Securities. See Amended Complaint ¶ 33, at 16. Defendants McGinnis, Mathis, Walsh, Anderson, and Esposito signed the registration statements RBS Securities filed on January 11, 2006 (No. 333-130961) and January 29, 2007 (No. 333-140279), as amended. See Amended Complaint ¶¶ 29-33, at 15-16. Defendant Jeffrey L. Verschleiser was, at all relevant times, the Principal Executive Officer of SAMI II. See Amended Complaint ¶ 34, at 16. Defendant Michael B. Nierenberg was, at all relevant times, the Principal Financial Officer and Principal Accounting Officer of SAMI II. See Amended Complaint ¶ 35, at 16. Defendant Jeffrey Mayer was, at all relevant times, a Director of SAMI II. See Amended Complaint ¶ 36, at 16. Defendant Thomas F. Maraño was, at all relevant times, a Director of SAMI II. See Amended Complaint ¶ 37, at 16. Defendants Verschleiser, Nierenberg, Mayer, and Maraño signed the Registration Statement filed by SAMI II on March 6, 2006 (No. 333-132232), as amended. See Amended Complaint ¶¶ 34-37, at 16. These nine individuals collectively are referred to as the “Individual Defendants.” The Plaintiffs have also joined several rating agencies as Defendants. Defendant Moody’s Corp. is a Delaware corporation which, together with Defendant Moody’s Investors Service, Inc. (collectively, “Moody’s”), is a credit rating agency that performs credit analysis for commercial and government entities. Amended Complaint ¶39, at 17. Defendant McGrawHill Companies, Inc. (“McGraw-Hill”) is a New York corporation. See Amended Complaint ¶40, at 17. Defendant Standard & Poor’s Ratings Services (“S & P”), a division of McGraw-Hill, is a credit rating agency that performs credit analysis for commercial and government entities. See Amended Complaint ¶ 40, at 17. Defendants Fitch, Inc. and Fitch Ratings (collectively, “Fitch”) is a credit rating agency headquartered in New York, New York and London, England. Amended Complaint, ¶ 41, at 17. Defendants Moody’s Corp., Moody’s Investors Services, McGraw-Hill, Standard & Poor’s, Fitch, Inc., and Fitch Ratings are collectively referred to as the “Rating Agency Defendants.” The Plaintiffs state that the Depositor Defendants retained the Rating Agency Defendants to issue certain ratings, not below investment grade, for the certificates in question. See Amended Complaint ¶¶ 39-41, at 17-18. This specific rating was a condition of issuance of the certificates. See Amended Complaint ¶¶ 39-41, at 17-18. The Plaintiffs allege that the Rating Agency Defendants were substantial participants in creating each of the Thornburg Trusts and in drafting and disseminating the offering documents for the certificates. See Amended Complaint ¶¶ 39-41, at 17-18. Plaintiffs state that the Thornburg Trusts, Depositor Defendants, Underwriter Defendants, and Individual Defendants paid the Rating-Agency Defendants substantial amounts of money during 2006 and 2007 for their participation in the issuance and sale of the certificates. See Amended Complaint ¶ 42, at 58. 3. The Nature of the Statutory Trust Arrangement and Related Offerings. The Thornburg Trusts issued mortgage-pass through certificates or MBS. MBS represent a securitized interest in an underlying pool of mortgages, paying certificate holders the cash flows derived from the pools of securitized mortgages. See Amended Complaint ¶ 3, at 7. The theory behind this capital structure is to have the principal and interest payments from the underlying pool of mortgages pass directly to the investors each month. See Amended Complaint ¶ 3, at 7. Interests in the MBS are then sold to investors in the form of certificates using a cash-flow schedule — referred to as a waterfall — that is structured to allocate incoming cash flows to various “tranches” of the trust. Amended Complaint ¶ 43, at 18. Those tranches within a MBS which have the highest priority of payment represent the safest investments in the pool, and are structured by issuers, depositors, and rating agencies to receive AAA/Aaa ratings. See Amended Complaint ¶ 43, at 18. Tranches lower down the entitlement line obtain payment only after the more senior tranches are paid and therefore receive lower credit ratings. See Amended Complaint ¶ 43, at 18. Stated differently, the senior tranches normally receive ratings of AAA/Aaa and take their payments first. See Class Action Complaint for Violations of the Securities Act of 1933 ¶ 53, at 18 (filed February 27, 2009 with the First Judicial District, County of Santa Fe, New Mexico), filed March 27, 2009 (Doc. 1-1) (“Original Complaint”). The middle tranches — also called the mezzanine tranches — generally receive ratings of AA/ Aa2 and take payments after the senior tranches. See Original Complaint ¶ 53, at 18. The bottom tranches — also called the equity tranches — generally receive ratings below investment grade, in other words a rating at or below BBB-/Baa3, and take payments after the mezzanine tranches. See Amended Complaint ¶ 73, at 36-37; Original Complaint ¶ 53, at 18. A certificate’s value and the interest rate at which it can be sold are tied directly to the objective ability of the borrowers associated with the underlying mortgages to repay the principal and interest on the underlying mortgages as well as the adequacy of the collateral in the event of default. See Amended Complaint ¶ 3, at 7. Pools of mortgage loans backed the certificates at issue in this case. Amended Complaint ¶ 3, at 7. Thornburg Mortgage Home Loans and its business affiliates, including Wells Fargo Bank, N.A. (“Wells Fargo”), originated, acquired, and/or serviced these mortgage loans. See Amended Complaint ¶ 3, at 7. The Defendants designed the certificates to ensure that they received the highest ratings, because the Defendants could not have sold the certificates without the AAA/Aaa ratings assigned to the certificates by the Rating Agency Defendants. See Amended Complaint ¶ 44, at 18. In connection with the registration and sale of each of the 2006-3, 2006-5, and 2007-4 offerings, the Defendants prepared and filed with the Securities and Exchange Commission (“SEC”) registration statements for each offering. See Original Complaint ¶ 65, at 21-22. Each registered offering included a base prospectus and a prospectus supplement. Some of the representations in the various prospectus supplements are highly similar or identical. See Amended Complaint ¶¶ 52-53, 57, 62, 68-69, at 22-23, 25, 29, 33-34. These offering documents represented that Thorn-burg Mortgage Home Loans acquired the loans contained in the Thornburg Trusts by: (i) originating the loans itself; (ii) acquiring loans originated through Thorn-burg Mortgage Home Loans correspondents; and/or (iii) via bulk purchases of loans from originators such as Wells Fargo. See Amended Complaint ¶ 46, at 19. The offering documents described the underwriting guidelines purportedly used in connection with the origination of those loans, identified the specific loan originators who sold the loans to Thornburg Mortgage Home Loans, and detailed the originators’ specific underwriting guidelines. See Amended Complaint ¶ 46, at 19. The offering documents provided detailed information about the underlying loans contained in each trust, including the number of loans purportedly originated using a full-documentation program. See Amended Complaint ¶ 46, at 19. The offering documents also described the appraisal practices purportedly used in connection with loan origination with respect to the loans within the Thornburg Trusts. See Amended Complaint ¶ 46, at 19. The offering documents represented that: (i) the loans within the Thornburg Trusts complied with specific LTV ratios; (ii) the certificates had investment-grade credit ratings that the Rating Agency Defendants issued; and (iii) none of the documents submitted in connection with the loan underwriting process contained untrue or false information. See Amended Complaint ¶ 46, at 19. 4. The Defendants’ Alleged Misrepresentations. The Defendants made a variety of misrepresentations based on statements contained in the offering documents for the 2006-3, 2006-5, ■ and 2007-4 offering. First, the offering documents misrepresented the loan origination and underwriting standards which the Defendants and their affiliates used. See Amended Complaint ¶¶ 48-54, at 20-24. Second, the offering documents misrepresented the documentation purportedly required to issue the mortgage loans ultimately placed in the Thornburg Trusts. See Amended Complaint ¶¶ 55-56, at 24-25. Third, the offering documents misrepresented the validity of the property appraisals conducted in connection with the issuance of the loans ultimately placed in the Thornburg Trusts. See Amended Complaint ¶¶ 57-61, at 25-28. Fourth, the offering, documents falsely stated that the loan documents connected with the issuance of the mortgage loans were accurate and free of fraud. See Amended Complaint ¶¶ 62-63, at 29-30. Fifth, the offering documents misrepresented the LTV ratios of the mortgages placed in the Thornburg Trusts. See Amended Complaint ,¶¶ 64-67, at 30-33. a. Loan Origination and Underwriting Standards. The offering documents misrepresented the loan origination and underwriting standards which the Defendants and their affiliates used. Wells Fargo originated approximately seventy-two percent of the loans in the mortgage pool underlying the 2006-5 Thornburg Trust. See Amended Complaint ¶ 48, at 20. With respect to the 2006-5 offering, the prospectus supplement represented that the loans in the 2006-5 Thornburg Trust were underwritten in accordance with one or more of the following: (i) Wells Fargo’s general underwriting standards; (ii) Wells Fargo’s retention program; and (iii) the underwriting standards of participants in Wells Fargo’s non-agency conduit program. See Amended Complaint ¶ 49, at 20. The prospectus supplement further represented that ‘Wells Fargo Bank’s underwriting standards are applied by or on behalf of Wells Fargo Bank to evaluate the applicant’s credit standing and ability to repay the loan, as well as the value and adequacy of the mortgaged property as collateral.” Amended Complaint ¶ 49, at 20. The 2006-5 Prospectus Supplement also represented, with respect to all loans acquired via Thornburg Mortgage Home Loans’ Bulk Purchase program, including the Wells Fargo loans, that Thornburg Mortgage Home Loans conducted adequate loan documentation reviews which “confirm adherence to the terms of the purchase agreement with the loan seller,” and obtained assurances that those loans “were underwritten in accordance with the underwriting standards and guidelines of the respective loan seller or other specified underwriting standards and guidelines.” Amended Complaint ¶ 50, at 20-21. These statements are misrepresentations because of the failure to disclose a variety of facts. These omitted facts include: (i) Wells Fargo’s systematic failure to follow its stated underwriting standards; (ii) Wells Fargo’s requirement that underwriters generate a specified number of loans regardless of the borrower’s financial circumstances; (iii) Wells Fargo’s awareness that borrowers submitted a variety of false information in connection with their loan applications; (iv) Wells Fargo’s systematic disregard of its own loan underwriting standards during the period of time origination of the loans placed into the Thornburg Trusts occurred; (v) Wells Fargo’s implementation in late 2006 of a “courageous underwriting program” which formalized the practice of disregarding its underwriting guidelines; (vi) that Wells Fargo as a matter of practice extended loans to person with questionable credit and income levels; and (vii) the resulting failure of the Defendants and Wells Fargo to employ the stated underwriting , standards. Amended Complaint ¶ 51, at 21. Thornburg Mortgage Home Loans or its “correspondent lenders” originated a large percentage of the mortgages in the 2006-3 Thornburg Trust (82.6%), the 2006-5 Thornburg Trust (26.3%), and the 2007-4 Trust (100%). Amended Complaint ¶ 52, at 22. The prospectuses relating to each of the offerings from the Thornburg Trusts provided the general underwriting guidelines Thornburg Mortgage Home Loans and its correspondent lenders purportedly followed. See Amended Complaint ¶ 52, at 22. One provision of these guidelines stated: “On a case-by-case basis, the seller may determine that, based upon compensating factors, a prospective borrower not strictly qualifying under the applicable underwriting guidelines warrants an underwriting exception.” Amended Complaint ¶ 52, at 22. For loans that the correspondent lenders originated, the offering documents represented that Thornburg Mortgage Home Loans had reviewed the lenders’ mortgage files before acquiring the loans contained in the Thorn-burg Trusts to ensure that the lenders complied with the stated underwriting guidelines. Amended Complaint ¶ 53, at 23. The following statement made this representation: Prior to acquiring any mortgage loan from a correspondent, [Thornburg Mortgage Home Loans] conducts a review of the mortgage file to determine whether the mortgage loan meets [Thornburg Mortgage Home Loans’] underwriting standards ... or whether an exception is warranted on a case by case basis. For a limited number of loans, the review process is conducted under [Thornburg Mortgage Home Loans’] supervision by one of its retail fulfillment vendors. Amended Complaint ¶ 53, at 23. Instead of following these practices and the respective underwriting guidelines: (i) Thornburg Mortgage Home Loans’ correspondent lenders and wholesale mortgage brokers and lenders were generating loans without regard to Thornburg Mortgage Home Loans’ stated underwriting standards; (ii) Thornburg Mortgage Home Loans’ correspondent lenders and wholesale mortgage brokers and lenders were abusing underwriter discretion allowed for under the guidelines, because as a matter of course they invoked exceptions to and/or diverged from applicable underwriting standards; (iii) Thornburg Mortgage Home Loans failed to conduct adequate quality control reviews of the mortgage loans acquired from its correspondent lenders, wholesale mortgage brokers and lenders, and sellers through its program of purchasing loans from them — including purchases from Wells Fargo — to ensure that the loans complied with the stated underwriting guidelines; and (iv) the mortgage loans underlying the certificates were not supported by adequate documentation, such as accurate data concerning the borrowers’ income, employment, or accurate appraisals of their property. See Amended Complaint ¶ 54, at 22-23. b. Loan Documentation. The offering documents represented that “the vast majority of the mortgage loans underlying the Certificates were originated using a full documentation program, which documented and verified the borrowers’ current employment and income.” Amended Complaint ¶ 55, at 19. The offering documents for the 2006-3, 2006-5, 2007-4 offerings listed specific percentages of the loans within the Thornburg Trusts that complied with this full-documentation program. See Amended Complaint ¶ 55, at 19. The full-documentation program required inclusion of information regarding whether a borrower’s current employment is verified, a two-year history of previous employment (or for self-employed borrowers, two years of income tax returns), verification through deposit verifications of sufficient liquid assets for down payments, closing costs and reserves, and depository account statements or settlement statements documenting the funds received from the sale of the previous home are required. Amended Complaint ¶ 55, at 19. Rather than follow these standards, Thornburg Mortgage Home Loans and its correspondent lenders misrepresented the truth by generating loans in violation of Thornburg Mortgage Home Loans’ underwriting standards, failing to include for the full-documentation loans sufficient documentation concerning the borrowers’ financial circumstances, and failing to conduct adequate quality control reviews of the mortgage loans acquired from its correspondent lenders or from originators through its Bulk Purchase program. See Amended Complaint ¶ 56, at 24-25. In doing so, they did not ensure compliance with Thornburg Mortgage Home Loans’ stated underwriting standards for full-documentation loans. See Amended Complaint 1156, at 24-25. c. Appraisal Validity. The offering documents for the 2006-3, 2006-5 and 2007-4 Thornburg Trusts represented that the “appraisal of any mortgaged property reflects the individual appraiser’s judgment as to value, based on the market values of comparable homes sold within the recent past in comparable nearby locations and on the estimated replacement cost.” See Amended Complaint ¶ 57, at 25. The offering documents further represented that each mortgage file contained an: appraisal of the related mortgaged property by a qualified appraiser, duly appointed by the originator of the mortgage loan, who had no interest, direct or indirect in the mortgaged property or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the mortgage loan or, in accordance with certain specified programs of the originator of the mortgage loan an approved AVM in lieu of the appraisal. Amended Complaint ¶ 57, at 25. These statements constitute a misrepresentation based on Thornburg Mortgage Home Loans and Wells Fargo using inflated appraisals, which resulted in a misrepresentation that the homes securing the underlying mortgage loans were worth more than the actual market value of the property. See Amended Complaint ¶ 58, at 25. Specifically, there was a variety of alleged misconduct by Wells Fargo, including: (i) pressuring appraisers to accept fees fifty percent below the market rate for appraisals; and (ii) systematically threatening to not do business with real estate appraisers, or even to blackball them in a particular market to prevent them from getting business with other companies, if they failed to manipulate their appraisals above market value. See Amended Complaint ¶ 58, at 26-27. For example, Wells Fargo lenders allegedly directed appraisers in California to appraise houses that others had described as ‘“crack houses’ which should have been bulldozed” with values exceeding $100,000.00. Amended Complaint ¶ 58, at 27. Furthermore, the Defendants’ representations that the appraisals underlying the loans were based on “the market values of comparable homes sold within the recent past in comparable nearby locations” is false and misleading based on manipulations of such data by the appraisers to inflate the appraisals, and based on the appraisers failure to conduct a legitimate valuation analysis of individual properties. Amended Complaint ¶ 59, at 27. One of Wells Fargo’s appraisers faced regulatory action and sanctions in Nevada based on these practices. See Amended Complaint ¶ 60, at 27-28. Independent appraisers in Florida — from where a significant number of the mortgage loans placed in the Thorn-burg Trusts came — have confirmed that many relevant appraisals were not based on comparable properties. See Amended Complaint ¶ 61, at 28. These appraisers stated that, to stay in business, they would inflate appraisals even if they had to drive twenty miles away from the property in question to find “comparable” sales. Amended Complaint ¶ 61, at 28. These Florida appraisers also stated that they intentionally used more expensive properties with larger lots, square footage, or more amenities than the appraised property to inflate the appraised property’s value. See Amended Complaint ¶ 61, at 28. d. Loan Documents Being Accurate and Free of Fraud. The offering documents to the 2006-3, 2006-5, and 2007-4 offerings stated that: (i) to the seller’s best knowledge, no fraud occurred in the origination of the mortgage loans, and the seller is not aware of any fact that would reasonably lead the seller to believe that any mortgagor had committed fraud in connection with the origination of a mortgage loan; (ii) the information set forth in the final mortgage loan schedule is complete, true, and correct in all material respects; and (iii) the origination practices that the seller or the related originator of the mortgage loans used, with respect to each mortgage note and mortgage, have been in all respects legal, proper, prudent, and customary in the mortgage origination and servicing business. See Amended Complaint ¶ 62, at 29. These statements constitute misrepresentations, because the Defendants either knew or should have known of the misrepresentations and fraud in the loan documents before offering the certificates for sale, as the Defendants purportedly performed due diligence on the loans before purchasing them from originators. See Amended Complaint ¶ 63, at 29. The true facts about the loan portfolios for the 2006-3, 2006-5, and 2007-4 Thornburg Trusts were that: (i) borrowers and loan originators, including Wells Fargo, were systematically and routinely falsifying the incomes of the borrowers to qualify borrowers for loans for which they could not otherwise qualify or afford to pay; (ii) appraisers, who faced pressure and/or threats from loan originators, systematically inflated the property appraisals used in connection with the loans in the Thorn-burg Trusts; and (iii) the loan documentation contained misrepresentations overstating borrowers’ assets, understating borrowers’ debts, and/or misrepresenting borrowers’ employment status and the occupancy of the purchased properties. See Amended Complaint ¶ 63, at 29-30. e. LTV Ratios. The prospectus supplements used in connection with the sale of the certificates detailed the LTV ratios associated with the loans in each Thornburg Trust. See Amended Complaint ¶ 64, at 30. This information is material to investors, because lower LTV ratios indicate less risk associated with the certificates, while a higher LTV ratio indicates greater risk. See Amended Complaint ¶ 64, at 30. The prospectus supplement for the 2006-3 offering represented that the weighted average of the original LTV ratio of the mortgage loan was sixty-seven percent and that approximately 2.33%, 2% and 1.19% of the group 1, group 2 and group 3 mortgage loans, respectively, had original LTV ratios in excess of eighty percent. See Amended Complaint ¶ 64, at 30. The prospectus supplement for the 2006-5 offering represented that the weighted average of the original LTV ratio of the mortgage loans was approximately 67.59% and that less than 1% of the loans had original LTV ratios in excess of eighty percent. See Amended Complaint ¶ 64, at 30. The prospectus supplement for the 2007-4 offering represented that the weighted average of the original LTV ratio of the mortgage loans was 70.74% and that approximately 3.43%, 2.54% and 2.54% of the group 1, group 2 and group 3 mortgage loans respectively had original LTV ratios in excess of 80%. See Amended Complaint ¶ 64, at 30. The prospectus supplements each contained additional details on the LTV ratios of the mortgage loans. See Amended Complaint ¶ 65-66, at 31-32. These representations of the LTV ratios constitute actionable misrepresentations, because the LTV-ratio calculations relied on the false appraisals, which resulted in inflated property values, thus undermining the accuracy of the LTV ratios. See Amended Complaint ¶ 67, at 33. As a result, the certificates appeared to investors to be a safer investment than they were. See Amended Complaint ¶ 67, at 33. Additionally, the borrowers’ equity position in the properties was overstated, subjecting the Thornburg Trusts to greater risk of default and leaving them with a lower equity cushion to protect the Thorn-burg Trusts in the event of default or foreclosure on the underlying mortgage loan. See Amended Complaint ¶ 67, at 33. 5. Role of the Rating Agency Defendants. The Defendants made misrepresentations based on the Rating Agency Defendants’ improper conduct. This improper conduct on the part of the Defendants and the Rating Agency Defendants is as follows. First, the credit ratings prominently displayed in the offering documents were false and misleading. See Amended Complaint ¶¶ 68-71, at 33-36. Second, the Rating Agency Defendants issued false and misleading ratings on the certificates in question. See Amended Complaint ¶¶ 72-79, at 36-38. Third, the Defendants used the defective models and methodologies created by the Rating Agency Defendants to design the certificates. See Amended Complaint ¶¶ 80-81, at 38-39. Fourth, the Rating Agency Defendants used outdated and defective models when assigning their ratings. See Amended Complaint ¶¶ 82-84, at 39-41. Fifth, the Rating Agency Defendants failed to conduct reasonable due diligence into the underwriters’/servicers’ representations. See Amended Complaint ¶¶ 85-86. at 41-42. Sixth, the Rating Agency Defendants lacked the resources to adequately and properly rate the MBS certificates. See Amended Complaint ¶ 87, at 42. Lastly, the Rating Agency Defendants were not sufficiently independent when assigning their ratings. See Amended Complaint ¶¶ 88-89, at 42-43. a. Prominent Display of Credit Ratings. The offering documents acknowledged the importance of the ratings that the Rating Agency Defendants issued. See Amended Complaint ¶ 68, at 33. The offering documents each used the same, or substantially similar language, that it was a condition to the issuance of the offered certificates that at least one of the Rating Agency Defendants rate the certificates as AAA/Aaa. See Amended Complaint ¶ 68, at 33. The offering documents went on to state: “The ratings assigned by the above rating agencies address the likelihood of the receipt of all distributions on the mortgage loans by the related certificateholders under the agreement pursuant to which the certificates are issued.” Amended Complaint ¶ 68, at 33-34. The offering documents also stated: The ratings of each rating agency take into consideration the credit quality of the related mortgage pool, including any credit support providers, structural and legal aspects associated with the certificates, and the extent to which the payment stream on that mortgage pool is adequate to make payments required by the certificates. Amended Complaint ¶ 68, at 34. Each of the prospectus supplements to each offering provided the ratings for each class of loans within each Thornburg Trust. See Amended Complaint ¶ 69, at 34-35. These statements constituted misrepresentations. The true facts were that the ratings assigned to these certificates: (i) did not reflect the true likelihood of the receipt of payments on the underlying loans; (ii) misrepresented that the ratings were based on the actual credit quality of the loans; and (iii) misrepresented that certain certificates were investment-grade when they should have been classified as below investment-grade, in accordance with the Rating Agency Defendants’ preestablished rating guidelines. See Amended Complaint ¶ 70, at 35. Furthermore, the original ratings provided by the Rating Agency Defendants did not represent, based on the above misrepresentations, the true risk of the certificates, because the ratings relied on insufficient information and faulty assumptions concerning how many underlying mortgages were likely to default. See Amended Complaint ¶ 70, at 35. The fee model which the Rating Agency Defendants employed resulted in conflicts of interest with issuers of securities. See Amended Complaint ¶ 71, at 36. This undisclosed conflict arose because the Rating Agency Defendants would only receive compensation if they provided the rating that the Depositor Defendants, the Underwriter Defendants, and the Individual Defendants demanded. See Amended Complaint ¶ 71, at 36. b. False and Misleading Ratings. AAA/Aaa ratings have a historic yield-default rate of less than 1/20 of one percent. See Amended Complaint ¶ 73, at 36-37. In comparison, default rates for BBB/ Baa investments are twenty times higher at a one percent default rate. See Amended Complaint ¶ 73, at 36-37. The Defendants were aware that credit ratings are very important to institutional investors, like those in the asserted class, as they are barred from holding below investment-grade assets. See Amended Complaint ¶ 74, at 37. Investments with a rating of BBB-/Baa3 or below qualify as below investment grade while a higher rating qualifies as investment grade. See Amended Complaint ¶ 73, at 36-37. The Rating Agency Defendants received compensation for their services from the Defendants only when the certificates in question received the desired rating of investment grade. See Amended Complaint ¶ 74, at 37. To determine whether to award a particular certificate an investment-grade rating, the Rating Agency Defendants needed to assess the potential future performance of the underlying loan pool. See Amended Complaint ¶ 75, at 37. To make this assessment, the Rating Agency Defendants were to assess the credit characteristics of the borrowers, including the nature of the documentation that the borrowers provided to verify their income levels, and/or their assets, and other loan information. See Amended Complaint ¶ 75, at 37. That other loan information would include information such as the loan’s principal amount, the property’s geographic location, the borrower’s credit history and the credit score, the LTV ratio, the type of loan, the amount of equity in the property used as collateral, and whether the borrowers intended to rent or occupy their homes. See Amended Complaint ¶ 75, at 37. Additionally, the Rating Agency Defendants were required to review the Thorn-burg Trusts’ capital structure and determine if that capital structure was sufficient to meet the desired credit rating for the certificates or whether, as part of the transaction, the Depositor Defendants would need to adjust the capital structure to provide the requisite credit enhancement for the desired rating. See Amended Complaint ¶ 76, at 37-38. The investment-grade ratings that the Rating Agency Defendants assigned to the certificates issued by the 2006-3, 2006-5, and 2007-4 Thornburg Trusts did not represent the true risk of the certificates. See Amended Complaint ¶ 77, at 38. The Rating Agency Defendants based their ratings on insufficient information and false assumptions about the underlying mortgages. See Amended Complaint ¶ 77, at 38. Following the offerings, the Rating Agency Defendants eventually had to disclose to the public that the ratings they assigned were inaccurate. See Amended Complaint ¶ 78, at 38. As MBS across the country began to fail in unprecedented numbers, the Rating Agency Defendants had to adjust ratings downward to the level that the certificates should have originally received if the Rating Agency Defendants had completed reasonable diligence and/or not ignored facts concerning the credit quality of the loans included in the Thornburg Trusts. See Amended Complaint ¶ 78, at 38. Based on this downgrade, the certificates that the Plaintiffs and the rest of the class purchased declined significantly in price. See Amended Complaint ¶ 79, at 38. In addition to the price declines, those who invested in these MBS were harmed by receiving a rate of return that did not reflect the true riskiness of the MBS securities. See Amended Complaint ¶ 79, at 38. The downgrades were dramatic. See Amended Complaint ¶ 79, at 38. More specifically, the certificates received a downgrade of not just one or two grade levels, but as many as eighteen grade levels downward. See Amended Complaint ¶ 79, at 38. c. Defective and Outdated Models and Methodologies. The Underwriter Defendants used the Rating Agencies’ models to create the certificates, because the Rating Agency Defendants shared their methodologies and models with the underwriters. See Amended Complaint ¶ 80, at 38. The purpose of sharing this information was to allow the Underwriter Defendants, Depositor Defendants and Individual Defendants to structure the Thornburg Trusts to achieve the desired investment-grade ratings. See Amended Complaint ¶ 80, at 38. The Defendants created the certificates based on the Rating Agency Defendants models. See Amended Complaint ¶ 81, at 39. The Defendants handsomely compensated the Rating Agency Defendants to obtain the desired ratings of investment grade for the certificates. See Amended Complaint ¶ 81, at 39. Because the Underwriter Defendants and the other Defendants used the Rating Agency Defendants’ methods and models to create the certificates, the certificates received AAA/Aaa ratings. See Amended Complaint ¶ 81, at 39. The Rating Agencies purported to employ complex mathematical models to predict foreclosure rates for mortgages. Around April 2010, however, subsequent to the 2006-3, 2006-5, and 2007-4 offerings, the Rating Agency Defendants disclosed additional information to the public by releasing internal electronic mail transmissions and through testimony from high ranking executives of these rating agencies. See Amended Complaint ¶ 82, at 39. This information revealed that the Rating Agency Defendants were aware that their modeling assumptions were wrong, yet failed to timely adjust their models or cease issuing defective credit ratings on MBS. See Amended Complaint ¶ 82, at 39. With respect to S & P, a variety of employees and high-level officials internally admitted that, as early as August 2006, serious problems existed with the assessment that the ratings agencies gave to these MBS. See Amended Complaint ¶ 82, at 39-40. With respect to Moody’s, a high-level official testified before the United States Senate on April 23, 2010 that, even as late as December 2007, that Moody’s had not set a high priority on improving their models and methodologies. See Amended Complaint ¶ 82, at 40. A Moody’s managing director also commented that the rating agency’s “errors make us look either incompetent at credit analysis or like we sold our soul to the devil for revenue or a little bit of both.” Amended Complaint ¶ 82, at 40 (emphasis omitted). In May 2006, S & P announced its plans to change the model used to rate subprime mortgage bonds. See Amended Complaint ¶ 83, at 40. Under this new model, sub-prime bonds issued before July 1, 2006, would continue to be rated by the old, less rigorous model. See Amended Complaint ¶ 83, at 40. The prospectus supplements for the 2006-3 and 2006-5 offerings were issued under the older model, which the Defendants knew or should have known was outdated and inaccurate. See Amended Complaint ¶ 83, at 40-41. S & P did not make a major change to its models and methodologies until July 2007. See Amended Complaint ¶ 84, at 41. Even though this change was substantial, S & P decided not to retest existing MBS, because reevaluating them would have led to mass downgrades. See Amended Complaint ¶ 84, at 41. Subsequently, these downgrades occurred, causing massive losses to MBS investors. See Amended Complaint ¶ 84, at 41. d. Lack of Due Diligence into Underwriters ’/Servicers ’ Representations and Lack of Resources to Properly Rate MBS. The Rating Agency Defendants were either aware or should have known that the originators of the mortgage loans in the Thornburg Trusts had loosened — or worse, abandoned — their underwriting standards and were relying on falsified mortgage loan documentation. In spite of this knowledge or reason to know of these problems, the Rating Agency Defendants rated the certificates in this case as investment-grade quality while disclaiming any responsibility for verifying the accuracy of the underlying loans. See Amended Complaint ¶ 85, at 41. Testimony before a Senate Subcommittee in 2010 revealed that in the prior decade S & P, the managing directors, and analysts received internal communications telling them that any request for loan level information from banks was totally unreasonable. See Amended Complaint ¶ 85, at 41. In spite of these communications, S & P told the directors and analysts that they “MUST produce a credit estimate” and that it was their “responsibility to devise some method for doing so.” Amended Complaint ¶ 85, at 41. While testifying before the Senate on April 22, 2008, the Fitch President and CEO admitted that Fitch “did not do the due diligence function of trying to recognize whether there was fraud involved in the origination of loans” and asserted that this failure to perform due diligence was “one of the biggest accelerants for why there’s been problems across the board in the mortgage market itself.” Amended Complaint ¶ 86, at 40-41. The Rating Agency Defendants lacked to a gross degree the staff and resources to adequately and properly rate the MBS. See Amended Complaint ¶ 87, at 42. As a result, the underwriters of the certificates argued with the credit-rating analysts, substituted lower value assets in the Thornburg Trusts at the last minute, and pressured analysts to waive their procedures and standards. See Amended Complaint ¶ 87, at 42. A variety of internal S & P communications corroborate these allegations of gross understaffing and lack of resources. See Amended Complaint ¶ 87, at 42 n.9. Because of this lack of resources, the Rating Agency Defendants failed to conduct even cursory due diligence of loan quality in connection with the issuance of the certificates. See Amended Complaint ¶ 86, at 41. This failure on the Rating Agency Defendants’ part served as a prime factor in the issuance of the false and misleading ratings assigned to the certificates. e. The Rating Agency Defendants’ Independent Nature. The Rating Agency Defendants held themselves out as independent arbiters of the MBS that they rated. See Amended Complaint ¶ 88, at 42. A variety of conflicts of interest, however, undercut the Rating Agency Defendants’ independence. See Amended Complaint ¶ 88, at 42. More specifically: (i) the Rating Agency Defendants’ desire for increased market share and revenue from the increased volume of rating MBS deals caused them to provide unsupported credit ratings by using outdated models; (ii) Moody’s “underwent a revision in the compensation structure” in 2006 so that a larger percentage of its employees’ compensation was deferred, making it more important to its analysts that they reach revenue numbers on a quarterly and annual basis, thus creating an improper incentive for the analysts to rate securities highly; and (iii) Moody’s faced extreme pressure from Wall Street to refrain from downgrading MBS investments and succumbed to that pressure. See Amended Complaint ¶ 88, at 42-43. The Rating Agency Defendants played a crucial role in the 2006-3, 2006-5, and 2007-4 offerings. See Amended Complaint ¶ 89, at 43. The certificates from the Thornburg Trusts could not have been issued without the investment-grade ratings from the Rating Agency Defendants. See Amended Complaint ¶ 89, at 43. Thus, in spite of the flawed, and/or non-existent underwriting standards that originators such as Wells Fargo employed, the Rating Agency Defendants continued to give the certificates AAA/Aaa ratings, the same ratings given to United States Treasury debt. See Amended Complaint ¶ 89, at 43. PROCEDURAL BACKGROUND This case is a federal securities class action that sets forth claims under the Securities Act and under the New Mexico Securities Act. Against the Depositor Defendants, the Individual Defendants, and the Underwriter Defendants, the Plaintiffs assert claims under section 11 of the Securities Act of 1933, 15 U.S.C. § 77k, and section 12(a)(2) of the Securities Act, 15 U.S.C. § 111 (a)(2). Against the Individual Defendants and the Underwriter Defendant RBS Securities, the Plaintiffs assert claims under section 15 of the Securities Act, 15 U.S.C. 77o. Against all the Defendants, the Plaintiffs assert claims under the New Mexico Securities Act, N.M.S.A. 1978, §§ 58-13B-30 and 58-13B-40. 1. Procedural History. Genesee County Employees’ Retirement System (“Genesee County”) filed its Original Complaint on February 27, 2009 in the First Judicial District, County of Santa Fe, State of New Mexico. See Original Complaint. Genesee County joined ten total Thornburg Trusts as Defendants in the Original Complaint: (i) the 2006-2 trust; (ii) the 2006-3 trust; (iii) the 2006-4 trust; (iv) the 2006-5 trust; (v) the 2006-6 trust; (vi) the 2007-1 trust; (vii) the 2007-2 trust; (viii) the 2007-3 trust; (ix) the 2007-4 trust; and (x) the 2007-5 trust. See Original Complaint ¶ 41, at 14-15. Genesee County, however, alleged that it made purchases only from the 2007-4 offering, not from the other ten offerings. See Original Complaint ¶ 19, at 10. The Original Complaint asserted the following causes of action under the Securities Act: (i) a section 11 claim; (ii) a section 12(a)(2) claim; and (iii) a section 15 claim. See Class Action Complaint for Violations of the Securities Act of 1933 pt. 2 (dated February 27, 2009), filed March 27, 2009 (Doc. 1-2) (“Original Complaint pt. 2”). The Original Complaint did not assert any causes of action under the New Mexico Securities Act. The Defendants removed this action on March 27, 2009. See Notice of Removal (Doc. 1). On June 26, 2009, Maryland-National Capital and Midwest Operating filed The Maryland-National Capital Park & Planning Commission Employees’ Retirement System’s and Midwest Operating Engineers Pension Trust Fund’s Motion for Appointment as Lead Plaintiff and Approval of Their Selection of Lead and Liason Counsel. See Doc. 55. On February 26, 2010, the Court granted the motion to appoint Maryland-National Capital and Midwest Operating as lead Plaintiff. See Order Appointing the Maryland-National Capital Park & Planning Commission Employees’ Retirement System and Midwest Operating Engineers Pension Trust Fund as Lead Plaintiff and Approving Lead Plaintiffs Selection of Lead Counsel (Doc. 83). On December 10, 2010, the Plaintiffs filed their Amended Complaint. See Amended Complaint. On February 11, 2011, the Defendants, other than the Rating Agency Defendants and BA Securities, filed their Joint Motion seeking to dismiss the Plaintiffs’ claims against them. See Joint Motion at 2-3. On February 11, 2011, BA Securities filed its Joinder in Motion in which it joined in the Joint Motion. See Joinder in Motion at 1-7. On February 11, 2011, the Rating Agency Defendants filed their Rating Agency Defendants’ Motion seeking dismissal of the claims against them. See Rating Agency Defendants’ Motion at 1. On February 11, 2011, the Defendants who filed the Joint Motion requested that the Court take judicial notice of various SEC filings and some news articles relevant to the issue of inquiry notice. See Request for Judicial Notice by Defendants Greenwich Capital Acceptance, Inc. (n/k/a RBS Acceptance Inc.), Structured Asset Mortgage Investments II, Inc., Credit Suisse Securities (USA) LLC, RBS Securities Inc. (f/k/a Greenwich Capital Markets, Inc.), Robert J. McGinnis, Carol P. Mathis, Joseph N. Walsh III, John C. Anderson, James M. Esposito, Jeffrey L. Verschleiser, Michael B. Nierenberg, Jeffrey Mayer, and Thomas F. Maraño in Support of Their Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. 127) (“Request for Judicial Notice”). On March 30, 2011, the Plaintiffs filed their Lead Plaintiffs’ Memorandum of Law in Opposition to Motion to Dismiss of Defendants Greenwich Capital Acceptance, Inc. (n/k/a RBS Acceptance, Inc.), Structured Asset Mortgage Investments II, Inc., Credit Suisse Securities (USA) LLC, RBS Securities Inc. (f/k/a Greenwich Capital Markets, Inc.), Robert J. McGinnis, Carol P. Mathis, Joseph N. Walsh III, John C. Anderson, James M. Esposito, Jeffrey Yersehleiser, Michael B. Nierenberg, Jeffrey Mayer and Thomas F. Maraño and Banc of America Securities LLC’s Joinder in the Motion to Dismiss of the Depositor Defendants, the Individual Defendants, Credit Suisse Securities (USA) LLC, and RBS Securities, Inc. See Doc. 140 (“Response to Joint Motion”). On March 30, 2011, the Plaintiffs filed their Lead Plaintiffs’ Memorandum of Law in Opposition to Rating Agency Defendants’ Motion to Dismiss. See Doc. 139 (“Response to Rating Agency Defendants’ Motion”). At the end of both of these responses, the Plaintiffs specifically requested leave to amend to cure any defects if the Court decides to grant either motion to dismiss. See Response to Joint Motion at 81 n.40; Response to Rating Agency Defendants’ Motion at 32 n. 25. On May 12, 2011, the Defendants, other than the Rating Agency Defendants and BA Securities, filed their reply to the Plaintiffs’ Response to Joint Motion. See Reply Memorandum of Law in Support of the Motion to Dismiss of Defendants Greenwich Capital Acceptance, Inc. (n/k/a RBS Acceptance, Inc.), Structured Asset Mortgage Investments II, Inc., Credit Suisse Securities (USA) LLC, RBS Securities Inc. (i/k/a Greenwich Capital Markets, Inc.), Robert J. McGinnis, Carol P. Mathis, Joseph N. Walsh III, John C. Anderson, James M. Esposito, Jeffrey Verschleiser, Michael B. Nierenberg, Jeffrey Mayer, and Thomas F. Maraño (Doc. 151) (“Joint Reply”). On May 12, 2011, the Rating Agency Defendants filed their reply to the Plaintiffs’ Response to Rating Agency Defendants’ Motion. See The Rating Agencies’ Reply Memorandum of Law in Further Support of Their Motion to Dismiss with Prejudice the Amended Class Action Complaint (Doc. 149) (“Rating Agency Defendants’ Reply”). On May 12, 2011, Moody’s filed a supplemental reply. See The Moody’s Defendants’ Supplemental Reply Memorandum of Law in Further Support of the Rating Agencies’ Motion to Dismiss with Prejudice the Amended Class Action Complaint (Doc. 148) (“Moody’s Reply”). On May 12, 2011, Fitch also filed a supplemental reply. See Defendant Fitch, Inc’s Supplemental Reply Memorandum of Law in Further Support of the Joint Motion to Dismiss the Amended Class Action Complaint (Doc. 150) (“Fitch Reply”). On May 12, 2011, BA Securities filed its joinder in the Joint Reply. See Banc of America Securities LLC’s Joinder in the Reply in Further Support of the Motion to Dismiss of the Depositor Defendants, the Individual Defendants, Credit Suisse Securities (USA) LLC, and RBS Securities Inc. (Doc. 152) (“BA Securities Reply”). On September 12, 2011, the Plaintiffs filed a notice of recent authority. See Notice of Recent Authority in Further Support of Lead Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motions to Dismiss (Doc. 168). On September 28, 2011, the Rating Agency Defendants filed with the Court a letter pointing out some recent authority favorable to their position. See Letter to the Court from Floyd Abrams (dated September 28, 2011), filed September 28, 2011 (Doc. 176) (“Sept. 28, 2011 Letter”). On October 31, 2011, the Defendants filed a notice of supplemental authority to support their argument that the Plaintiffs do not have tranche-based standing to assert claims on behalf of the tranches in which they did not invest. See Notice of Supplemental Authority for the Motion to Dismiss of Defendants Greenwich Capital Acceptance, Inc. (n/k/a RBS Acceptance Inc.), Structured Asset Mortgage Investments II, Inc., Credit Suisse Securities (USA) LLC, RBS Securities Inc. (f/k/a Greenwich Capital Markets, Inc.), Robert J. McGinnis, Carol P. Mathis, Joseph N. Walsh III, John C. Anderson, James M. Esposito, Jeffrey Verschleiser, Michael B. Nierenberg, Jeffrey Mayer, and Thomas F. Maraño (Doc. 180). In the Joint Motion, the Defendants assert that the Court should dismiss the claims against them. See Memorandum of Law in Support of the Motion to Dismiss of Defendants Greenwich Capital Acceptance, Inc. (n/k/a RBS Acceptance Inc.), Structured Asset Mortgage Investments II, Inc., Credit Suisse Securities (USA) LLC, RBS Securities Inc. (f/k/a Greenwich Capital Markets, Inc.), Robert J. McGinnis, Carol P. Mathis, Joseph N. Walsh III, John C. Anderson, James M. Esposito, Jeffrey Verschleiser, Michael B. Nierenberg, Jeffrey Mayer, and Thomas F. Maraño, filed February 21, 2011 (Doc. 126) (“Memorandum in Support of Joint Motion”). With respect to standing, the Defendants argue that the Plaintiffs have not suffered a cognizable economic loss and thus lack standing to assert their claims. See Memorandum in Support of Joint Motion at 40-44. The Defendants also assert that Genesee County lacked standing to assert any claims regarding any offering other than the 2007-4 offering at the time it filed the Original Complaint. See Memorandum in Support of Joint Motion at 57. Thus, they assert, the applicable statute of repose bars the Plaintiffs’ claims relating to the 2006-3 and 2006-5 offerings. See Memorandum in Support of Joint Motion at 58. They argue that the Amended Complaint does not relate back to the Original Complaint. See Memorandum in Support of Joint Motion at 57. The Defendants contend that the Plaintiffs as a matter of law had inquiry noti