City Pension Fund for Firefighters v. Aracruz Cellulose S.A. (41 F. Supp. 3d 1369, 2011)

Citations

41 F. Supp. 3d 1369

Full opinion text

OMNIBUS ORDER ON MOTIONS TO DISMISS (D.E. 35, 74, 79) AND DEFENDANT ZAGURY’S MOTION TO STRIKE (D.E. 102)

JOAN A. LENARD, District Judge.

THIS CAUSE is before the Court on Defendants’ motions to dismiss Plaintiffs Amended Class Action Complaint (“Complaint,” D.E. 30). On November 13, 2009, Defendant Aracruz Cellulose S.A. (“Aracruz”) filed its Motion to Dismiss the Amended Class Action Complaint (“Aracruz’s Motion,” D.E. 35). On October 15, 2010, Defendants Carlos Alberto Vieira (“Vieira”) and Carlos Augusto Lira Aguiar (“Aguiar”) filed their Motion to Dismiss the Amended Class Action Complaint (“Vieira and Aguiar’s Motion,” D.E. 74). Finally, also on October 15, 2010, Defendant Isac Roffe Zagury (“Zagury”) filed his Motion to Stay These Proceedings and Dismiss the Amended Complaint (“Zagury’s Motion,” D.E. 79). In addition, on December 24, 2010, Defendant Zagury filed his Motion to Strike (“Motion to Strike,” D.E. 102), certain declarations, affidavits, and the Commissáo de Valores Mobiliarios (“CVM”) translated findings (D.E. 98). Having considered the various motions, related pleadings, and the record, the Court finds as follows.

I. Background

This case involves a class action complaint against Aracruz, a Brazilian manufacturer of hardwood and paper products, and several of its officers or former officers, Vieira, Aguiar, and Zagury (collectively the “Individual Defendants”), for violations of federal securities laws. On October 5, 2009, Plaintiff City Pension Fund for Firefighters and Police Officers in the City of Miami Beach (“Plaintiff’) filed its Complaint which alleges violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), as amended by the Private Securities Litigation Reform Act (“PSLRA”), and Rule 10b-5 promulgated thereunder, against all Defendants and violations of Section 20(a) against the Individual Defendants. Plaintiff represents a class of investors who purchased American Depository Receipts (“ADRs”) traded on the New York Stock Exchange, or common stock traded on the Bovespa, from Aracruz during the proposed class period of April 7, 2008, to October 2, 2008 (“Class Period”). The facts set forth in the Complaint are as follows.

Aracruz is a major Brazilian manufacturer of forest products and one of the largest pulp manufacturers in the world. (Complaint at ¶ 4.) Its main products are bleached eucalyptus pulp and high-grade hardwood, which it markets internationally to manufacturers of consumer paper products. (Id.) The company reported net operating revenues of approximately $1.7 billion, $1.8 billion, and $1.9 billion for the years 2006, 2007, and 2008 respectively. (Id. at ¶21.) Zagury acted as Aracruz’s Chief Financial Officer (“CFO”) and Director of Investor Relations during the relevant time period until his resignation on October 3, 2008. (Id. at ¶ 18.) Aguiar currently acts as Aracruz’s Chief Executive Officer (“CEO”) and President and did so during the relevant time period. (Id. at ¶ 17.) Vieira served as Aracruz’s Chairman of the Board from April 29, 2004, until his resignation on March 6, 2009. (Id. at ¶ 16.)

During the relevant time period, Aracruz engaged in financial transactions described as “currency hedging” or “foreign exchange risk hedging” in order to hedge its exposure to foreign currency and interest rate fluctuation. (Id. at ¶¶ 6, 27.) Currency hedging is a mechanism by which a company, particularly those involved in exporting, can protect itself against exchange rate volatility and ensure that it collects approximately the same value it contracted for upon realization of payment. (Id. at ¶ 6.) Because Aracruz receives much of its payments for exports in U.S. Dollars, but incurs many of its costs in reais, Aracruz entered into a number of currency derivative contracts ostensibly to hedge against its exposure to the U.S. dollar. (Id. at ¶7.) In essence, the purpose of these derivative transactions was to offset any gain or loss of value caused by the appreciating real. (Id. at ¶ 29.)

Plaintiff contends that, contrary to its public statements regarding the purpose and scope of its currency hedging activities, Aracruz engaged in highly speculative transactions in order to profit from the substantial appreciation of Brazil’s currency. (Id. at ¶ 8.) In sum, Plaintiff asserts that Defendants increasingly placed larger and more speculative bets that Brazil’s currency would continue to appreciate against the U.S. dollar. (Id.) Between 2004 and mid-2008, the Brazilian real steadily appreciated in value. (Id. at ¶ 30.) When the value of Brazil’s' currency rapidly plummeted towards the latter part of 2008, the company suffered approximately $2.1 billion in losses in connection with these currency derivative contracts. (Id. at ¶ 9.) According to Plaintiff, prior to Aracruz’s revelation of the extent of its losses in the fall of 2008, Defendants made various false and misleading statements regarding the nature of Aracruz’s exposure. These allegedly false statements can be grouped into two categories: the April 2008 disclosures and the July 2008 disclosures (collectively the “Disclosures”).

On April 7, 2008, Aracruz filed its Form 6-K with the SEC and issued its quarterly-earnings report for the first fiscal quarter. The April 2008 6-K was signed by Aguiar and stated that, “[t]he Company’s foreign currency risk and interest rate management strategy may use derivative transactions to protect against foreign exchange and interest rate volatility.” (Id. at ¶ 33.) The 6-K also disclosed that:

During the three-month period ended March 31, 2008 the Company recognized gains of US$ 7.0 million on swap transactions (TJLP or interest long-term rate against the U.S. Dollar). There were no such derivative instruments for the three-month period ended March 31, 2007. As of March 31, 2008, the notional amounts of these swaps totaled US$ 345.4 million and the result oustand [sic] balance was an asset of US$ 36.2 million.

(Id.) The April 2008 earnings report contained statements by Zagury to the effect that:

At the end of the 1 Q08, we increased the level of our cash flow currency protection, to a $270 million short position in dollars, representing 5 months of future exposure, which generated, a positive impact of $4 million in the quarter. We also continued to swap financial liabilities from “TJLP plus spread” into “dollar coupon” fixed rates, which generated a positive impact of $7 million during the period.

(Id. at ¶ 34.) Plaintiff alleges these statements inaccurately depict the company’s currency transactions as conservative and only consisting of five months of exposure. (Id.) The earnings report further states that:

It is also important to note that the exchange rate impact will continue to shape the market pulp business, as the devaluation of the American dollar persists, leading either to price increases or to additional closures by local producers unable to absorb the increased costs.

The “Financial Income in the quarter was $10.2 million higher than in the 4Q07, mainly due to the favorable results of our gains on derivative transactions, which amounted to $13.1 million in the 1 Q08 (4Q07: $3.5 million). When compared to the same period of last year, it was $21.1 million lower, mainly due to lower gains on derivative transactions (1Q07: $33.1 million).

At the end of the quarter, the cash flow currency protection was increased, through a short position in dollars totaling US$270 million, which represented approximately 5 months of cash flow exposure to the local currency (real— R$).

(Id. at ¶ 35.)

On July 7, 2008, Aracruz filed its Form 6-K with the SEC and issued its quarterly earnings report for the second fiscal quarter. (Id. at ¶¶ 55-56.) The July 2008 6-K was also signed by Aguiar and stated in part that:

The Company operates internationally and is exposed to market risk from foreign exchange and interest rate volatility. The exposure of U.S. Dollar denominated liability does not represent a risk from an economic and financial standpoint, because the future payment in local currency of such liability is offset by operating revenue which is expressed in U.S. Dollars since almost all sales originate from exportation.

(Id. at ¶ 55.) It also repeated that, “[t]he Company’s foreign currency risk and interest rate management strategy may use derivative transactions to protect against foreign exchange and interest rate volatility.” (Id.) The July 2008 earnings report contained statements by Zagury that:

We increased the level of our cash flow currency protection to a short position of $360 million at the end of the 2Q08 ($270 million at the end of the 1Q08), representing 6 months of future exposure, which generated a positive impact of $46 million in the quarter. In the first half of the year, the cash flow protection provided a gain of $15/t (when divided by the targeted full year production volume), thereby mitigating the negative impact of the Brazilian currency’s appreciation against the dollar.

(Id. at ¶ 56.) The earnings report also stated in part that:

Protecting the company’s exposure to the local currency, according to the financial policy approved by the Board and outlined on Aracruz’s website, the management maintained its strategy of hedging the cash flow and balance sheet exposure to the local currency, using derivative instruments to protect against foreign exchange and local interest rate exposure.

* * *

The company has also been protecting its cash flow exposure to the local currency by taking short positions in dollars, which involves negligible transaction costs and has a positive carry. At the end of the quarter, the cash flow currency protection was increased, through a short position in dollars totaling US$ 360 million, which represented approximately 6 months of cash flow exposure to the local currency (real— R$).

(Id. at ¶ 57.) According to Plaintiff, Aracruz’s website states that its Financial Policy “is designed to protect the company’s cash generation exposure, as measured by the US$ EBITDA, to market risks associated with fluctuations in exchange rates.” (Id. at ¶ 58.) Similarly, the Financial Policy requires “linkage to an effective exposure (non-speculative hedging),” states that there is “no leveraging involved,” states that the “asset side objective is the same as the risk factor that is to be protected,” and that “engaging in structured financial transactions with built-in derivatives is strictly prohibited.” (Id.) Plaintiff also asserts that Aracruz’s Financial Strategy states that the company enters into forward foreign exchange contracts in order to “to minimize currency risk exposure” and “to protect against these market risks.” (Id. at ¶ 59.)

Plaintiff claims the Disclosures were materially false and misleading because they failed to disclose that: (1) Aracruz entered into currency derivative contracts “far larger than necessary”; (2) such contracts violated the company’s financial and internal control policies and contradicted public statements about the nature of such policies; (3) the company lacked adequate internal and financial controls; and (4) the company’s statements about its financial well-being and future business prospects were lacking in any reasonable basis when made. (Id. at ¶¶ 36, 60.) In support, Plaintiff cites to Zagury’s statements to the press that such transactions took place “in the first quarter of 2008.” (Id. at ¶¶ 37, 61.) Plaintiff also contends the company’s failure to disclose violated its Corporate Governance Policy, the Financial Policy and Strategy, and the currency risk management principles set forth in a 2005 Annual Report and Sustainability Report (“Sustainability Report”). (Id. at ¶¶ 23, 40, 62.) Plaintiff additionally cites to Zagury’s statements to the press that the Board of Directors increased the exposure limit dictated by the company’s Financial Policy from $600 million to $1 billion after the Board of Directors meeting in June 2008. (Id. at ¶ 63.) According to Plaintiff, the increased exposure limit was not disclosed in the July 7, 2008, disclosures or in any Board of Directors meeting minutes for the June 19, 2008, June 20, 2008, July 1, 2008, or September 19, 2008, meetings. (Id. at ¶ 64.)

Plaintiff claims the Disclosures were made with the Ml knowledge, support, and approval of the Individual Defendants, as well as the company’s other executives and officers. (Id. at ¶¶ 41-42, 65-66.) Furthermore, Aracruz admitted Zagury directed the currency transactions. (Id. at ¶¶ 41, 65.) In support, Plaintiff cites to Zagury’s statements to the press that, the company’s Financial Committee and Board of Directors were aware of the currency transactions and approved them. (Id. at ¶¶ 42-47.) Plaintiff also generally suggests that Aracruz management, including the Individual Defendants, were motivated to engage in risky currency transactions in order to increase the company’s revenue and therefore increase their own personal compensation. (Id. at ¶ 52.)

In the fall of 2008, the nature and extent of Aracruz’s currency hedging activity was revealed. On September 26, 2008, Aracruz filed a Form 6-K with the SEC announcing that the company’s “maximum loss volume on derivative transactions and also the total exposure to Mures contracts based on U.S. Dollars may have exceeded the limits set forth in [the] Company’s Financial Policy approved by the Board of Directors.” (Id. at ¶ 67.) The disclosure was- signed by Aguiar. (Id.) Aracruz also announced that Zagury was resigning. (Id.) Nevertheless, the September 26, 2008, 6-K stated, “[t]here is currently no indication that any potential adjustments, as a consequence of the pending derivative contract analysis, will materially affect the Company’s cash account.” (Id.) The value of Aracruz ADRs dropped by $8.39 to close at $37.99 on September 26, 2008, and dropped another $4.83 to close at $33.16 on the next trading day of September 29, 2008. (Id at ¶ 68.)

On October 3, 2008, Aracruz filed another Form 6-K with the SEC announcing that the “fair value” of the company’s currency derivative contracts as of September 30, 2008, was negative 1.95 billion reads, or negative $1.02 billion. (Id. at ¶ 72.) The disclosure was signed by Aguiar. (Id.) Following this announcement, Aracruz’s ADRs declined $7.84 to close at $23.40 on October 3, 2008, and declined an additional $8.22 to close at $15.18, on the next trading day, October 7, 2008. (Id. at ¶ 73.) Aracruz subsequently filed additional 6-K forms with the SEC announcing Zagury was being replaced as CFO by Valdir Roque (“Roque”), the company was cancelling plans to pay interest on capital to shareholders, and the company’s third quarter results which included a $1 billion charge related to the currency transactions. (Id. at ¶¶ 74-76.) In October 2008, several credit rating agencies announced they were downgrading Aracruz’s investment grade. (Id. at ¶¶ 94, 96, 99.)

On November 4, 2008, Aracruz filed another Form 6-K with the SEC announcing that the company had unwound 97% of its current derivative contracts, resulting in a loss of $2.13 billion. (Id at IT 78.) On November 18, 2008, Aracruz announced that Roque had resigned as CFO. (Id at ¶ 79.) On November 25, 2008, Aracruz announced that a majority of shareholders had voted to institute legal action in Brazil against Zagury for “engaging in derivative transactions above and beyond the limits provided for in the company’s Financial Policy.” (Id at ¶ 80.) On November 28, 2008, Aracruz announced the resignation of seven committee or Board of Directors members. (Id. at ¶ 81.)

Plaintiff brings this action for violations of the federal securities laws “on behalf of all persons who purchased or otherwise acquired Aracruz AJDRs on the NYSE during the Class Period and who were damaged thereby.” (Id. at ¶ 115.)

On November 13, 2009, Aracruz filed its motion seeking to dismiss the Complaint pursuant to the PSLRA and Rules 9(b), 12(b)(5), and (6) of the Federal Rules of Civil Procedure. On October 15, 2010, the Individual Defendants also moved to dismiss the Complaint based on the PSLRA and Rules 9(b), 12(b)(2), (5), and (6). Zagury additionally moved to dismiss the Complaint based on forum non conveniens or to stay the proceedings under the doctrine of international abstention.

On July 22, 2010, the Court authorized alternative service of process on the Individual Defendants pursuant to Rule 4(f) of the Federal Rules of Civil Procedure. (See D.E. 65.) Specifically, the Court authorized a “dual-track” approach to service of process enabling Plaintiff to serve the Individual Defendants by means of personal service and registered mail in Brazil, along with its efforts to effect service via the Inter-American Convention on Letters Rogatory and Additional Protocol (“Inter-American Convention”).

On August 16, 2011, in response to the Court’s Order to Show Cause (D.E. 107), Plaintiff filed a Notice of Status of Service of Process for Defendants Carlos Alberto Vieira, Carlos Augusto Lira Aguiar, and Isac Roffe Zagury, indicating all three Individual Defendants had now been served pursuant to the Inter-American Convention. (See D.E. 108.)

II. Discussion

A. Zagury’s Motion to Strike

Zagury’s Motion to Strike seeks to strike three documents submitted by Plaintiff in response to his motion to dismiss the Complaint. First, Zagury seeks to strike the affidavit of Alexandre Teixiera Gomes dated October 22, 2010 (the “Affidavit”), filed as proof of service as to Zagury. (See D.E. 92-2.) Second, Zagury moves to strike the declaration of Fabiano Defenti dated November 5, 2010 (the “Declaration”), also filed as proof that service of process was perfected upon Zagury. Zagury believes the Affidavit and Declaration both contain portions that include inadmissible hearsay, scandalous matter, and refer to documents not in evidence. Finally, Zagury seeks to strike the report issued by the CVM (“CVM Report”), as inappropriate for the Court’s consideration under Rule 12(b)(6) and as lacking the evidentiary requirements for foreign records set forth in Rule 44(a)(2) of the Federal Rules of Civil Procedure and Rule 902(3) of the Federal Rules of Evidence.

In response, Plaintiff claims the Motion to Strike is untimely under Rule 12(f)(2) as it was filed after he filed his reply in support of his motion to dismiss and more than twentyone days after he was served with the documents. Plaintiff also asserts the Court should take judicial notice of the CVM Report, as it corroborates facts alleged in the Complaint and comes from an authoritative source as the CVM is the equivalent of Brazil’s Securities and Exchange Commission. Finally, Plaintiff argues the Affidavit and Declaration are properly considered at this stage because they demonstrate Zagury has used intimidation and threats of physical violence to evade service of process.

In reply, Zagury urges his Motion to Strike was timely filed within twenty-one days of the CVM Report and should be considered on the merits. Zagury reiterates that the CVM Report consists of inadmissible hearsay and argues that judicial notice is improper under Rule 201 of the Federal Rules of Evidence. Moreover, Zagury contends the Affidavit and Declaration are prejudicial and disparage his reputation.

Rule 12(f) provides that, “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” With regard to timing, Rule 12(f) provides the Court may act “on its own” or “on motion made by a party either before responding to the pleading or, if a response is not allowed, within 21 days after being served with the pleading.” Striking allegations from a pleading “is a drastic remedy to be resorted to only when required for the purposes of justice,” and only when the allegations to be stricken have “no possible relation to the controversy.” Augustus v. Bd. of Pub. Instruction, 306 F.2d 862, 868 (5th Cir.1962) ; Jackson v. Grupo Industrial Hotelero, S.A., 2008 WL 4648999 (S.D.Fla. Oct. 20, 2008).

Rule 201 of the Federal Rules of Evidence governs judicial notice of “adjudicative facts,” or the facts of the particular case. Fed. R. Evid. 201(a) & advisory committee’s Note to Subdivision (a). A judicially noticed fact “must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or , (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). The Court must take judicial notice if requested by a party and “supplied with the necessary information.” Fed. R. Evid. 201(d). Furthermore, “[i]n a civil action or proceeding, the court shall instruct the jury to accept as conclusive any fact judicially noticed.” Fed. R. Evid. 201(g).

The Motion to Strike is denied. As an initial matter, the Individual Defendants have now all been served pursuant to the Inter-American Convention. As such, the Motion to Strike is moot as to the Affidavit and the Declaration as the Court no longer need consider their contents. Additionally, to the extent the CVM Report is a “pleading” for purposes of Rule 12(f), the Court declines to strike or take judicial notice of such report. The Motion to Strike is timely with regard to the CVM Report as it was filed within twenty-one days of it being served and was referenced in Zagury’s reply. Nevertheless, there is no reason at this point in the litigation to strike the CVM Report as redundant, immaterial, impertinent, or scandalous. Moreover, Plaintiff concedes that it cannot offer the contents of the CVM Report for the truth of the matter asserted. Rather, Plaintiff states that it is “simply offering the CVM Report to show that the CVM (along with other governmental agencies) have launched investigations into Aracruz based on the Company’s wildly speculative currency wagers” and that this lends support to an inference of scienter. The existence of the underlying CVM investigation and CVM Report, issued two years .after the alleged false statements, provides little additional support for an inference of scienter. Plaintiff fails to explain why the Court would need to take judicial notice of the CVM Report at this stage in order to establish the fact that authorities in Brazil have initiated an investigation into Aracruz’s derivative transactions. The CVM Report primarily consists of an evaluation of the appropriateness of settlement proposals submitted by various former Aracruz executives. Finally, the CVM Report was neither referenced nor attached to the Complaint, is not central to Plaintiffs claims, and does not clarify the contents of the Complaint. As such, the Court’s consideration of its contents for purposes of the various motions to dismiss would be improper. See Fed. Ins. Co. v. Bonded Lightning Prot. Sys., Inc., 2008 WL 5111260 at *3 (S.D.Fla. Dec. 3, 2008). Accordingly, the Court similarly declines to take judicial notice at this time except to the extent that the Court takes notice of the existence of the CVM investigation.

B. Aracruz’s Motion

Aracruz contends the Complaint should be dismissed because: (1) Aracruz is not amenable to service of process in the United States; (2) Plaintiff fails to plead with particularity what misstatements Aracruz made; (3) Plaintiff fails to adequately plead scienter; (4) Plaintiff fails to plead any facts demonstrating causation; (5) Aracruz’s statements regarding its currency derivative trading were non-actionable forward-looking statements accompanied by ample and meaningful cautionary statements; and (6) there is no factual basis for Plaintiffs market manipulation claim.

1. Service of Process

Plaintiff served Aracruz by delivering copies of the original complaint (D.E. 1), to several law firms representing Aracruz in the United States including Green-berg Traurig LLP (“Greenberg”), Puglisi & Associates (“Puglisi”), and White & Case LLP (“W & C”).

First, Aracruz claims it is not amenable to service in the United States because it never authorized Greenberg or anyone else to accept service of process on its behalf in the United States pursuant to Rule 4(h)(1)(B) of the Federal Rules of Civil Procedure. Although Aracruz stated in a Form 20-F filed with the SEC that “[o]ur agent for service of process in the United States is Greenberg Traurig, LLP,” Aracruz states that it simultaneously disclosed that “it may not be possible for investors to effect service of process within the U.S. upon us or our directors, executive officers or such experts.” (See D.E. 35-1 at 11, 13.) Aracruz further argues that the scope of Greenberg’s agency relationship is limited by a 2007 Amended and Restated Deposit Agreement between Aracruz and Citibank N.A. (Aracruz’s Motion at 16.) In support, Aracruz attaches a declaration from Ross Kaufman, on behalf of Greenberg, indicating that the law firm never agreed to accept service of process. (Id. at 17.) Similarly, Aracruz argues that it never appointed or authorized Puglisi to accept service of process aside from its designation of Puglisi as its representative for purposes of Rule 6(a) of the Securities Act of 1933. Because Puglisi’s role as a designated authorized representative relates only to Aracruz’s registration statement and duties under the 1933 Act and such role is distinct from that of an agent for purposes of service process, Aracruz argues service of Puglisi is inadequate under Rule 4(h)(1)(B). Finally, Aracruz argues it never authorized or appointed attorney Glenn M. Kurtz, an attorney with W & C, to act as its agent for service of process. As such, Aracruz believes the Complaint should be dismissed for insuffident service of process under Rule 12(b)(5).

In response, Plaintiff cites to the March 31, 2008, Form 20-F signed by Aguiar and Zagury as conclusive of Aracruz’s appointment of Greenberg as its agent to receive service of process. Additionally, Plaintiff notes that Aracruz designated CT Corporation as its “agent for service of process in the United States” in its 20-F forms filed between the years 2003 and 2007. (D.E. 47 at 11.) Moreover, Plaintiff contends that Aracruz submitted an unsigned and incomplete version of the Amended and Restated Deposit Agreement with Citibank.

In reply, Aracruz highlights Plaintiffs concession that service on Puglisi and W & C was insufficient. Aracruz further relies upon the language of the Deposit Agreement (which it contends was signed) and the argument that Plaintiff, as a third-party, would not be entitled to rely upon any waiver of service provision in that agreement. (D.E. 49 at 9.)

Rule 12(b)(5) sets forth the mechanism for challenging a complaint for insufficient service of process. Fed. R. Civ. P. 12(b)(5). Rule 4(h)(1)(B) provides that a foreign corporation must be served “by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and — if the agent is one authorized by statute and the statute so requires — by also mailing a copy of each to the defendant.” Fed.' R. Civ. P. 4(h)(1)(B).

The Court finds service of process was sufficient under Rule 4(h)(1)(B). Aracruz unambiguously appointed Greenberg as “[o]ur agent for service of process in the United States” in its Form 20-F dated March 31, 2008. Unlike in future SEC filings, Aracruz did not limit the scope of this authorization. Aracruz took advantage of registering and selling securities in the United States and the Court does not find it unreasonable to hold Aracruz to its authorization of Greenberg for service of process in its SEC filings. Accordingly, the Court finds service was proper and Aracruz’s Rule 12(b)(5) argument is without merit.

2. Section 10(b) and Rule 10b-5 Claim Against Aracruz

a. Pleading Requirements

The Federal Rules of Civil Procedure generally require a plaintiff to set forth'a “short and plain statement of his claim showing that the pleader is entitled to relief’ in order to “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Ml. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Fed.R.Civ.P. 8(a)(2)). Hence, while a complaint subject to a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, the complaint must provide the grounds for the plaintiffs “entitlement to relief’; labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Id. “Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint’s allegations are true.” Id. (citations omitted). In evaluating a motion to dismiss, courts adopt a “two-pronged approach” whereby they first (1) eliminate any allegations in the complaint that are merely legal conclusions and then (2) where there are well-pleaded factual allegations, ‘‘assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir.2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. Finally, “[o]n a motion to dismiss a claim of violation of the federal securities laws, the court may ‘take judicial notice ... of relevant public documents required to be filed with the SEC, and actually filed.’ ” Sherleigh Assocs., LLC v. Windmere-Durable Holdings, Inc., 178 F.Supp.2d 1255, 1268 (S.D.Fla.2000) (citing Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1278 (11th Cir.1999)).

Plaintiffs securities fraud claims are also subject to the heightened pleading requirements of Rule 9(b) and the PSLRA. Rule 9(b) requires fraud to be plead “with particularity,” but provides that “[m]alice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed.R.Civ.P. 9(b). This requirement is satisfied “if the complaint sets forth ‘(1) precisely what statements were made in what documents or oral representations or what omissions were made, and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and (3) the content of such statements and the manner in which they misled the plaintiff, and (4) what the defendants obtained as a consequence of the fraud.’ ” Garfield v. NDC Health Carp., 466 F.3d 1255, 1262 (11th Cir.2006) (citing Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194, 1202 (11th Cir.2001)). The PSLRA provides that a plaintiff who alleges violations of Section 10(b) shall “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information or belief, the complaint shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l). Additionally, the PSLRA provides that a plaintiff must “state with particularity facts giving rise to a strong inference that the defendants acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2).

Section 10(b) of the Exchange Act makes it 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 — ... (b) To 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 Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

15 U.S.C. § 78j(b). Rule 10b-5 states that,

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. “Section 10(b) was designed to protect investors involved in the purchase and sale of securities by requiring full disclosure.” SEC v. DCI Telecomms., Inc., 122 F.Supp.2d 495, 498 (S.D.N.Y.2000) (citing Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 477-78, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977)). The scope of liability is the same under Section 10(b) and Rule 10b-5. See SEC v. Merchant Capital, LLC, 483 F.3d 747, 766 n. 17 (11th Cir.2007); SEC v. Zandford, 535 U.S. 813, 816 n. 1, 122 S.Ct. 1899, 153 L.Ed.2d 1 (2002). “‘To allege securities fraud under Rule 10b-5, a plaintiff must show: 1) a misstatement or omission, 2) of a material fact, 3) made with scienter, 4) on which plaintiff relied, 5) that proximately caused his injury.’ ” Garfield, 466 F.3d at 1261 (quoting Bryant, 187 F.3d at 1281).

b. Misstatements or Omissions

Aracruz argues that Plaintiff has failed to plead with sufficient particularity any false or misleading statements. First, Aracruz contends Plaintiff has not alleged any facts demonstrating the Disclosures were false or misleading at the time they were made. In other words, simply because Aracruz lost money on its currency derivative contracts in September 2008, it does not necessarily follow that Aracruz entered into contracts “far larger than necessary” that violated the company’s internal policies, or that the Disclosures lacked a reasonable basis, in the first and second quarters of 2008. Aracruz offers that the real continued to appreciate against the U.S. dollar immediately following June 30, 2008, and third quarter contracts may have led to the eventual loss in September given the structure of the transactions. (D.E. 36 at 21-22.) According to Aracruz, many of the derivative contracts had “knock-out” provisions designed such that they would automatically terminate upon the appreciation of a currency reaching a certain level. Aracruz characterizes Plaintiffs claims as more akin to “fraud by hindsight.” (Id. at 22-23.) Second, Aracruz contends Plaintiffs allegation that the Disclosures failed to announce that the company’s currency contracts were “larger than necessary” is vague and there are no facts demonstrating that Aracruz’s disclosed positions were incorrect at the time. Third, with regard to Aracruz’s financial and internal control policies, Aracruz argues Plaintiff fails to plead with particularity how and when those policies were violated. Moreover, Aracruz notes that Plaintiff quotes certain language from a Financial Policy published on the company’s website that was updated on June 26, 2009, and there is no indication the policy in place at the relevant time period contained the same language regarding “non-speculative hedging.” (Id. at 26.) Aracruz further argues that violation of its own policies would only establish mismanagement, and not fraud, and cites to In re Winn-Dixie Stores, Inc. Securities Litigation, 531 F.Supp.2d 1334 (M.D.Fla.2007). Fourth, with regard to Aracruz’s failure to warn investors of a lack of internal controls, Aracruz argues such allegations cannot support a securities fraud claim and are in any event contradicted by Plaintiffs simultaneous allegations that the company’s Finance Committee and Board of Directors maintained close supervision. Finally, with regard to Aracruz’s statements about the company’s financial condition, Aracruz points out that the Complaint itself alleges Aracruz’s financial condition was not negatively impacted by the derivative contracts until September 2008. Aracruz further contends that the disclosures regarding significant past financial gains from the transactions should have alerted a reasonable investor to the fact that substantial risk was also present.

Plaintiff responds that it has pled Aracruz’s misstatements with sufficient particularity. First, Plaintiff asserts that the company’s losses directly relate to the Disclosures and Aracruz’s losses must have arisen from contracts entered into prior to the period immediately before September 2008. Plaintiff additionally contends that given the nature of the derivative transactions, investors might well have assumed that any profits made in prior quarters were offset by losses in its sales contracts. Second, Plaintiff asserts the false statements were directly related to the fraudulent scheme. Relying upon In re Sadia, S.A. Securities Litigation, 643 F.Supp.2d 521 (S.D.N.Y.2009), Plaintiff states that Aracruz’s disclosure of the extent of its derivative trading was neither conspicuous nor in close proximity to its description of the trading as non-speculative and risk-reducing. (D.E. 47 at 24.) Third, Plaintiff argues it has sufficiently alleged that Aracruz’s failure to disclose its lack of adherence to its internal policies constitutes a material misstatement. Plaintiff further points to Zagury’s public statements that he knew of Aracruz’s losses three weeks prior to the September 6-K and Aracruz’s own admission in the 6-K that it may have exceeded the limits set forth in its financial policy, as facts supporting Aracruz’s alleged lack of adequate internal controls. Finally, Plaintiff clarifies that with regard to Aracruz’s financial position at the time of the disclosures, it either knew or should have known that a rapid depreciation of the real would cause massive losses.

In reply, Aracruz argues that Plaintiff cannot dispute that the company’s derivative contracts entered into between April and August 2008 were profitable. Aracruz further points to the complexity of the derivative transactions as evidence that mismanagement, and not securities fraud, is the most plausible explanation for the company’s derivative losses. Regarding whether such contracts were “far larger than necessary,” Aracruz believes Plaintiff has conceded it cannot demonstrate the falsity of the statements made. Furthermore, relying upon In re Citigroup Securities Litigation, 330 F.Supp.2d 367 (S.D.N.Y.2004), Aracruz argues that violation of internal policy does not establish a basis for a securities fraud claim and Plaintiff has yet to allege when and how Aracruz’s internal policies were violated in any event. Finally, Aracruz contends its financial disclosures were accurate as snapshots of its then-existing condition and also included sufficient cautionary language regarding the risks inherent in its currency derivative trading.

The district court in In re Sadia dealt with a very similar set of claims and circumstances. 643 F.Supp.2d 521. In that case, a major Brazilian frozen food producer and distributor engaged in currency hedging to mitigate lost profits on future sales contracts. When the real plunged against the dollar in September 2008, the company lost approximately $410 million on its derivative contracts. In its first and second quarter 6-Ks, the company described its hedging activity as a “form of mitigating exchange rate risk.” 643 F.Supp.2d at 528. The company also disclosed in a Form 20-F that its policies “prohibit speculative trading” and the company “does not use swap contracts for trading on speculative purposes.” Id. The plaintiffs in In re Sadia brought nearly identical claims that the defendant mischaracterized its hedging exposure as risk-reducing and non-speculative while its derivative positions were in reality “larger than necessary,” misstated its compliance with the company’s internal hedging policy, misstated the existence of adequate internal controls, and misstated the cornpany’s financial condition. The defendant moved to dismiss the complaint pursuant to Rules 12(b)(6), 9(b), and the PSLRA.

Ultimately, the court in In re Sadia found plaintiffs had sufficiently pled some of their claims but not others. Because the company had “repeatedly characterized its currency hedging activity as risk-reducing and non-speculative,” these representations “were both consistent throughout the Class Period and in line with the common use of currency hedging contracts,” and the disclosures of the total amounts of the derivative contracts was neither conspicuous nor in close proximity to the company’s alleged misstatements, the Court found the plaintiffs had adequately alleged a material misstatement had been made with regard to the company’s éxposure. The court in In re Sadia further found that the company’s failure to reveal that it had entered into currency hedging contracts in violation of its internal hedging policy also sufficiently alleged a Rule 10b-5 claim. Id. at 532. Specifically, the court distinguished In re Citigroup and found “there is considerable authority for the proposition that a company’s failure to follow an internal policy can form the basis for an inference of recklessness.” Id. Thus, the plaintiffs’ claim based upon the failure to disclose non-compliance with internal hedging policies also constituted a valid claim. Nevertheless, the court believed plaintiffs’ claim that the company should have disclosed a lack of adequate internal controls was contradicted by its allegations of meticulous company oversight and therefore could not form the basis of a Rule 10b-5 claim. Id. at 533. Finally, the court found the plaintiffs had not alleged facts supporting their claim that the company had misstated its financial condition where there were no facts demonstrating the condition of the company was affected until the real declined in August 2008, or after the alleged misstatements. Id. at 533-34.

The Court finds the analysis in In re Sadia highly persuasive and concludes that a similar result is appropriate in this case. Aracruz issued statements in its SEC filings depicting its currency hedging practice as a protective measure and one consistent with a reasonable investor’s understanding of currency hedging. The Disclosures state that, “[t]he Company’s foreign currency risk and interest rate management strategy may use derivative transactions to protect against foreign exchange and interest rate volatility.” (Complaint at ¶¶ 33, 55) (emphasis added). The July 2008 earnings report further depicts the company’s strategy as, “[protecting the company’s exposure to the local currency, according to the financial policy approved by the Board and outlined on Aracruz’s website, the management maintained its strategy of hedging the cash flow and balance sheet exposure to the local currency, using derivative instruments to protect against foreign exchange and local interest rate exposure.” Moreover, Plaintiff alleges that the Financial Policy referenced was readily available to investors on the company’s website and further painted the company’s hedging practice as conservative, using language such as there must be, “linkage to an effective exposure (non-speculative hedging),” there is “no leveraging involved,” the “asset side objective is the same as the risk factor that is to be protected,” and that “engaging in structured financial transactions with built-in derivatives is strictly prohibited.” The crux of Plaintiff’s Complaint is that this was not the case and Aracruz was in fact engaging in highly speculative currency derivative trading. Statements depicting the company’s practice as necessary to “protect” and as “non-speculative,” are inconsistent with the $2.1 billion loss Aracruz eventually suffered as a result of its currency derivative trading. Additionally, like in In re Sadia, there was no conspicuous or simultaneous disclosure of the full extent and nature of the company’s derivative contracts. Thus, the Court finds Plaintiff states a valid claim based on Aracruz’s statements regarding the nature and extent of its currency hedging activities.

The Court also finds that Plaintiff states a valid claim based on Aracruz’s failure to disclose that its currency derivative contracts had exceeded the company’s own internal policies. As stated above, Aracruz’s July 2008 earnings report references the company’s Financial Policy and advises investors the policy can be found on the company’s website. Aracruz’s Financial Policy described the company’s practice in terms consistent with a typical hedging practice. The Financial Policy also set limits on the company’s total exposure to futures contracts based on U.S. Dollars, as acknowledged in the company’s September 26, 2008, 6-K. Plaintiff additionally alleges that the company’s website also described a “Financial Strategy” specifying that the company entered into forward foreign exchange contracts “to protect against market risks” and “to minimize currency risk exposure.” (Complaint at ¶59.) Aracruz’s alleged failure to disclose that it in fact was entering into currency derivative transactions that exceeded limitations imposed in its own Financial Policy (while simultaneously directing investors to rely upon and review such policy) and also violated the stated purpose and scope of such transactions as delineated in the company’s policies, constitutes a valid basis for a securities fraud claim. Plaintiff is not alleging that Aracruz should have disqlosed its own mismanagement. Rather, the crux of the claim is that Aracruz was advising investors regarding the nature of its currency hedging and directing them to rely upon risk assurances set forth in the company’s own policies, but failed to disclose that it was in fact not following those policies. Thus, the statements render the company’s guidance to rely upon the company’s own internal policies misleading. As such, the Court finds Plaintiff has sufficiently alleged a claim based upon Aracruz’s failure to disclose its non-compliance with the company’s financial policy.

Nevertheless, as in In re Sadia, the Court finds Plaintiff fails to state a claim based upon any alleged failure to disclose inadequate internal controls or the company’s statements about its financial condition. Plaintiff consistently contradicts its claim that Aracruz lacked adequate internal controls. In the Complaint, Plaintiff contends the company’s executive officers, Board of Directors, and committee members all had full knowledge of the currency transactions and approved them. Plaintiff also alleges the Financial Committee was very active in monitoring the derivative transactions. Additionally, Plaintiff has not alleged any facts demonstrating that Aracruz’s statements regarding the financial condition of the company were inaccurate when issued. The deterioration of the company’s financial condition did not occur until after the July 2008 disclosures when the real depreciated dramatically against the U.S. dollar. There are no facts alleged supporting the conclusion that the financial condition of the company was inaccurately depicted at the time of the Disclosures. Accordingly, the Court finds Plaintiff fails to state a claim based upon an alleged failure to disclose a lack of adequate internal and financial controls or the failure to disclose that the company’s statements about its financial condition and future business prospects lacked any reasonable basis when made.

Moreover, the Court finds Plaintiff has failed to plead fraud with particularity as to those statements related to Aracruz’s then-existing exposure. For example, Plaintiff fails to allege how Aracruz’s statements in April 2008 or July 2008 regarding its currency derivative transactions and exposure for that period were false or misleading. Araeruz stated that:

During the three-month period ended March 31, 2008 the Company recognized gains of US$ 7.0 million on swap transactions (TJLP or interest long-term rate against the U.S. Dollar). There were no such derivative instruments for the three-month period ended March 31, 2007. As of March 31, 2008, the notional amounts of. these swaps totaled US$ 345.4 million and the result oustand [sic] balance was an asset of US$ 36.2 million.

The April.2008 earnings report contained statements by Zagury that:

At the end of the 1 Q08, we increased the level of our cash flow currency protection, to a $270 million short position in dollars, representing 5 months of future exposure, which generated a positive impact of $4 million in the quarter. We also continued to swap financial liabilities from “TJLP plus spread” into “dollar coupon” fixed rates, which generated a positive impact of $7 million during the period.

It is also - important to note that the exchange rate impact will continue to shape the market pulp business, as the devaluation of the American dollar persists, leading either to price increases or to additional closures by local producers unable to absorb the increased costs.

The Financial Income in the quarter was $10.2 million higher than in the 4Q07, mainly due to the favorable results of our gains on derivative transactions, which amounted to $13.1 million in the 1Q08 (4Q07: $3.5 million). When compared to the same period of last year, it was $21.1 million lower, mainly due to lower gains on derivative transactions (1Q07: $33.1 million).

* * *

Similarly, Araeruz made the following statements in July 2008:

We increased the level of our cash flow currency protection to a short position of $360 million at the end of the 2Q08 ($270 million at the end of the 1 Q08), representing 6 months of future exposure, which generated a positive impact of $46 million in the quarter. In the first half of the year, the cash flow protection provided a gain of $15/t (when divided by the targeted full year production volume), thereby mitigating the negative impact of the Brazilian currency’s appreciation against the dollar.

* * *

Plaintiff has not alleged any facts suggesting these statements were false or misleading. Rather, Plaintiff infers the statements were false after-the-fact because of the devastating losses occurring in September 2008. Nevertheless, these alleged false statements pertained to Aracruz’s trading prior to June 2008. One cannot presume that Aracruz’s exposure must have been different than as stated simply because it suffered losses in the future. In sum, Plaintiff does not allege any facts suggesting these statements were untrue at the time they were made. As such the PSLRA’s requirement that the Complaint “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information or belief, the complaint shall state with particularity all facts on which that belief is formed,” has not been met and Plaintiff fails to plead fraud with the requisite particularity with regard to Aracruz’s statements of the company’s recorded currency derivative contracts and exposure.

Similarly, Aracruz’s statements in its July 2008 6-K that, “[t]he exposure of U.S. Dollar denominated liability does not represent a risk from an economic and financial standpoint, because the future payment in local currency of such liability is offset by operating revenue which is expressed in U.S. Dollars since almost all sales originate from exportation” is not false or misleading. (See Complaint at ¶ 55.) Plaintiff selectively quotes the first clause of the statement and attempts to relate it to the preceding sentence that, “[t]he Company operates internationally and is exposed to market risk from foreign exchange and interest rate volatility.” (Id.) However, as can be seen from reading the second clause of the statement, it is unrelated to the company’s assessment of its risk relating to foreign currency derivative contracts. The statement explains that liabilities owed in U.S. dollars do not present a significant issue for the company where the majority of its revenue is received in that currency. Although the statement is somewhat unwieldy and confusing, it does not relate to Aracruz’s foreign currency derivative exposure or otherwise provide a basis for alleging securities fraud.

In sum, the only potentially actionable false or misleading statements pled with particularity are Aracruz’s statements in April and July that, “[t]he Company’s foreign currency risk and interest rate management strategy may use derivative transactions to protect against foreign exchange and interest rate volatility,” and its statement in the July earnings report that, “[protecting the company’s exposure to the local currency, according to the financial policy approved by the Board and outlined on Aracruz’s website, the management maintained its strategy of hedging the cash flow and balance sheet exposure to the local currency, using derivative instruments to protect against foreign exchange and local interest rate exposure.”

c. Scienter

Aracruz argues Plaintiff has failed to plead scienter with particularity as required by the PSLRA and Rule 9(b). First, Aracruz argues that Plaintiffs reliance on the purported financial motives of its executives is insufficient to establish scienter. Next, Aracruz argues that the company’s alleged close monitoring of its currency derivative exposure does not support' its knowledge that the statements issued in its disclosures were false or severely reckless. Finally, Aracruz contends that the news articles and sources relied upon by Plaintiff fail to suggest knowledge or severe recklessness, but rather, if anything, poor business judgment or mismanagement.

In response, Plaintiff claims it has raised sufficient circumstantial evidence of knowledge or severe recklessness that is at least as compelling as any other inferences. Plaintiff' cites to various indicia of knowledge or severe recklessness such as the company shareholders’ lawsuit against Zagury, Zagury’s accusations that the Board of Directors were complicit, Zagury’s statements that a presentation was made to the Board of Directors including information about the currency derivative contracts in June 2008, Zagury’s statements that the transactions were periodically supervised and approved by the Finance Committee, the September 26, 2008 6-K’s announcement that the company’s exposure may have exceeded internal limits, the resignation of the Board Chairman, CFO, and several other members of the Board of Directors, as well as the sheer magnitude of the exposure. Plaintiff further relies upon In re Sadia, in which the district court found similar circumstances indicative of scienter.

In reply, Aracruz contends it has offered two inferences that are more plausible than that raised by Plaintiff: (1) that based on the structure of the currency derivative contracts at issue Aracruz’s losses were caused by transactions entered into after the first and second quarters; and (2) that Aracruz was simply one of many corporations that exercised poor judgment or management in entering into currency derivative contracts they did not fully understand. Relying upon In re Nokia Oyj (Nokia Corp.) Securities Litigation, 423 F.Supp.2d 364 (S.D.N.Y.2006), Aracruz further argues that Plaintiff fails to particularly allege what information was communicated to the Board of Directors and Finance Committee, as well as when and how such information demonstrates these individuals knew or should have known about the company’s trading practices. (D.E. 49 at 20.) Aracruz also argues that the magnitude of the losses is insufficient to infer scienter. Finally, Aracruz takes issue with Plaintiffs “selective quotations” of Zagury’s statements to the press. (Id. at 21-22.)

As stated previously, the PSLRA provides that a plaintiff must “state with particularity facts giving rise to a strong inference that the defendants acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). “This standard requires courts to take into account ‘plausible opposing inferences.’ ” Matrixx Initiatives, Inc. v. Siracusano, — U.S. -, 131 S.Ct. 1309, 1324, 179 L.Ed.2d 398 (2011) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 323, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007)). “A complaint adequately pleads scienter under the PSLRA ‘only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.’ ” Id. (citing Tellabs, 551 U.S. at 324, 127 S.Ct. 2499). This entails a “holistic” evaluation of the allegations. Id.

The Eleventh Circuit has characterized this as a “stringent” standard and one that requires a plaintiff to “plead ‘with particularity facts giving rise to a strong inference’ that the defendants either intended to defraud investors or were severely reckless when they made the allegedly materially false or incomplete statements.” Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1238 (11th Cir.2008). The Eleventh Circuit has defined “severe recklessness” in this context to be “limited to those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and that present a danger of misleading buyers or sellers which is either known to thé defendant or is so obvious that the defendant must have been aware of it.” Garfield, 466 F.3d at 1264 (internal citations omitted). Allegations of motive and opportunity may be relevant to a showing of severe recklessness but are insufficient standing alone to prove scienter. Bryant, 187 F.3d at 1285-86. In examining whether a corporate defendant possessed the requisite scienter for a Section 10(b) claim, the Court should look to the state of mind of the individual corporate officials responsible for the statement. See Mizzaro, 544 F.3d at 1254; Southland See. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 366 (5th Cir.2004). The Court may also aggregate the factual allegations in evaluating the inference of scienter. Edward J. Goodman Life Income Trust v. Jabil Circuit, Inc., 594 F.3d 783, 791- (11th Cir.2010) (citing Phillips v. Scientific-Atlanta, Inc., 374 F.3d 1015, 1017 (11th Cir.2004)).

As in In re Sadia, Plaintiff alleges sufficient circumstantial evidence supporting a strong inference that Aracruz acted with severe recklessness when it made the alleged misstatements. These allegations include Zagury’s statements to the press that the Finance Committee closely supervised and monitored the company’s hedging exposure on a daily basis and that this committee was responsible for reporting such information to the Board of Directors. Plaintiff also cites Zagury’s statements that the company’s aggressive hedging practices began in the first quarter of 2008 and the Board of Directors was informed of the company’s derivative practices at a meeting in June 2008. Plaintiff also alleges that Zagury, who is responsible for several of the alleged misstatements in the company’s