Full opinion text
OPINION LECHNER, District Judge. This class action arises from the initial public offering of securities in Hughes Capital Corporation (“Hughes Capital”) on or prior to 25 August 1986 pursuant to a registration statement (the “Hughes Registration Statement") declared effective by the Securities Exchange Commission (the “SEC”) on 5 May 1986 and amended by post-effective filings on 8 May, 6 June and 14 July 1986. The basis for this dispute is the finding of the SEC that the Hughes Registration Statement contained material omissions and misrepresentations of fact. This finding led the SEC to issue a stop order on 20 July 1987 (the “Stop Order”) suspending the effectiveness of the Hughes Registration Statement. Plaintiffs Jerry Wayne Wiley (“Wiley”) and Charles P. Moraglia (“Moraglia”) (collectively the “Plaintiffs”) filed this class action on 19 July 1988. Wiley and Morag-lia are the name Plaintiffs in this class action and are proceeding individually and on behalf of a putative class of similarly situated persons who purchased the securities of Hughes Capital between 25 August 1986 and 20 July 1987 (the “Aftermarket”). The putative class has yet to be certified pursuant to Rule 23 of the Federal Rules of Civil Procedure. The Class Action Complaint and Demand for Jury Trial (the “Complaint”), which was refiled on 4 April 1989, names as defendants Hughes Capital, the principals of Hughes Capital and the principals of the brokerage firm of F.D. Roberts Securities, Inc. (the “Roberts Firm”), which acted as underwriter and market maker with respect to the Hughes Capital public offering pursuant to the Hughes Registration Statement. Additional defendants include the law firm of Calvo, Bofshever & Perry, which was primarily responsible for preparing the Hughes Registration Statement, as well as John Doe and Richard Roe, Inc., who are unknown directors or officers of Hughes Capital or the Roberts Firm. The Complaint contains eight counts alleging violations of federal and state securities laws and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”). Briefly stated, Counts One through Eight of the Complaint assert violations of: Section 12(2) of the Securities Act of 1933 (the “1933 Act”), 15 U.S.C. § 111 (2) (“Count One”); Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (the “1934 Act”), 15 U.S.C. § 78j(b), 17 C.F.R. 240.10b-5 (“Count Two”); Section 24(a)(1) of the New Jersey Uniform Securities Law (“NJUSL”), N.J.Stat.Ann. 49:3-71(a)(l) (“Count Three”); Section 24(a)(2) of the NJUSL, N.J.Stat.Ann. 49:3-71(a)(2) (“Count Four”); Section 517.221(1) of the Florida Securities and Investor Protection Act (“FISPA”), Fla.Stat.Ann. § 517.211(1) (“Count Five”); Section 517.221(2) of the FISPA, Fla.Stat. Ann. § 517.211(2) (“Count Six”); Section 1962(b) of RICO, 18 U.S.C. § 1962(b) (“Count Seven”); and Section 1962(c) of RICO, 18 U.S.C. § 1962(c) (“Count Eight”). Presently before the court are the motions of the principals of the Roberts Firm to dismiss the Complaint as against them. For purposes of this Opinion, the moving defendants will be referred to collectively as the “Roberts Defendants.” Defendants Perfetti, Galiardo, Green-berg, Lieb and Weiss have moved to dismiss the Complaint pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. Defendant Knoblauch, although not alleged to be a principal of the Roberts Firm, has joined in that motion. Defendant Kanoff has joined in the motion to the extent that it challenges the specificity of the Complaint and compliance with the statute of limitations. Defendant Tucker has filed a motion on his own behalf arguing for dismissal of the Complaint on the same grounds as asserted by the other defendants. Defendant Fiorese has not joined in these motions or filed a motion on his own behalf. The Plaintiffs filed a consolidated opposition brief to the motions of the Roberts Defendants. This motion is decided on the basis of the papers submitted pursuant to Fed.R.Civ.P. 78. Facts as Alleged in the Complaint The Complaint consists of 164 separately numbered paragraphs purporting to set forth the various elements of Plaintiffs’ eight claims. Paragraphs 35 to 109 of the Complaint, which are contained in Count Two and incorporated by reference into Counts Three through Eight, allege in detail the components of a scheme to manipulate the price of Hughes Capital securities and defraud purchasers of Hughes Capital securities. The Stop Order of the SEC, which explains in detail the existence of the scheme, is incorporated by reference into the Complaint and made a part thereof. Complaint, ¶ 81. The Complaint explains the purpose of the scheme as follows: 40. In or about August 1985, defendants Reifler, Beall, Mascólo and other individuals attended a series of meetings over the course of a weekend at a country club in Boca Raton, Florida. In those meetings, defendant Reifler proposed that he, defendant Beall and defendant Mascolo form or acquire an entity whose securities would be sold to the public and whose nominal business would be to acquire and hold other corporate entities. 41. Defendant Reifler further proposed that he, defendant Beall and defendant Mascolo identify and proceed to personally obtain control of suitable acquisition targets. Defendant Reifler explained that the participants in such a scheme would be able to obtain stock in the publicly traded vehicle in exchange for their stock in the entities it would acquire. He further explained that they could enrich themselves by either selling that stock to the public, or by using it to collateralize personal loans. Complaint, ¶¶ 40-41. Pursuant to the scheme outlined in the Complaint, defendants Reifler, Beall and Mascolo agreed to acquire Hughes Capital as a “shell” company for purposes of holding the securities of targeted acquisition companies. The former owners of Hughes Capital had filed a form S-18 with the SEC on 19 August 1985 for a planned public offering of securities but, due to the death of one of the former owners of the company, the public offering was dropped and the company was to be sold. In December 1985, Reifler and Beall negotiated a stock purchase agreement to purchase Hughes Capital. Rather than execute the stock purchase agreement themselves, however, Reifler, Beall and Mascolo induced and directed certain nominees to execute the stock purchase agreement and to tender funds belonging to Reifler, Beall and Mas-colo, in the acquisition of Hughes Capital. Complaint, Till 38-48. In January 1986, Reifler, Beall and Mas-colo began to meet with counsel for Hughes Capital to discuss amendments to the Hughes Registration Statement. These meetings resulted in the filing of a first amendment to the Hughes Registration Statement on 28 February 1986, which changed the stock-to-warrant ratio of each unit to be offered by Hughes Capital from 1:3 to 1:21. Pursuant to the first amendment, the securities of Hughes Capital included 90,000 units, each of which consisted of one share of common stock priced at $2.00 per share, seven class A warrants exercisable at $2.50 per share, seven class B warrants exercisable at $3.50 per share and seven class C warrants exercisable at $4.50 per share. Complaint, HU 8, 49. The first amendment to the Hughes Registration Statement failed to disclose the stock purchase agreement by which defendants Reifler, Beall and Mascolo obtained control of Hughes Capital through the nominee purchasers and failed to disclose their roles in the management of Hughes Capital and in the preparation of the amended Hughes Registration Statement. Complaint, ¶ 49. In or about March 1986, defendant Knob-lauch agreed with Reifler, Beall and Masco-lo to act as nominal owner and chairman of the board of directors of Hughes Capital and signed a stock purchase agreement similar to the one executed by the nominee ' purchasers. On 17 April 1986, Hughes Capital filed a second amendment to the Hughes Registration Statement, disclosing Knoblauch’s alleged acquisition of Hughes Capital but failing to disclose the roles of Reifler, Beall and Mascolo in the ownership and operation of the company. Complaint, ¶¶ 50-53. On 5 May 1986, the SEC declared the Hughes Registration Statement to be effective. On 6 June 1986, Hughes filed its first post-effective amendment to the Hughes Registration Statement reflecting that the Roberts Firm would underwrite the Hughes Capital public offering on a best efforts, all or none basis. The agreement with the Roberts Firm was negotiated by Fiorese, Galiardo and Kanoff on behalf of the Roberts Firm. Fiorese was hired as a consultant to meet with Roberts Firm representatives and to promote Hughes Capital securities to clients of the Roberts Firm. Complaint, 1111 57-60. In or about July 1986, Reifler, Beall, Mascolo and Knoblauch identified four entities which they intended to have Hughes Capital acquire after it completed its public offering. The four targeted companies were Conserdyne Corp. (“Conserdyne”), Flat Rock Developers, Inc. (“Flat Rock”), Susan LaChance Interior Design, Inc. (“La-Chance Designs”) and Insuranshares of America, Inc. (“Insuranshares”). The intention to purchase target companies was not disclosed to the SEC by Hughes Capital or the Roberts Firm. In addition, the defendants failed to disclose that Knoblauch was the majority shareholder of Conser-dyne and that Reifler and Beall were officers and directors of, and with Mascolo had control over, Flat Rock, LaChance Designs and Insuranshares. Complaint, ¶¶ 54-56. Throughout the summer of 1986, Reifler, Beall and persons directly under their control arranged to purchase in the names of various nominees at least eighty-eight percent of the securities to be sold in the public offering of Hughes Capital, despite the agreement with the Roberts Firm that the public offering would be a best efforts, all or none offering. In furtherance of this scheme, on 12 August 1986 Galiardo and Perfetti, officers of the Roberts Firm, opened thirty-three new accounts at the Roberts Firm in the names of nominees under the control of Reifler, Beall, Masco-lo, Victor, Ackerman and LaChance. Fiorese stated to representatives of the Roberts Firm that the initial public offering of Hughes Capital would not be available for purchase by clients of the Roberts Firm because it would be acquired by Hughes Capital. Fiorese told brokers at the Roberts Firm, however, that Hughes Capital securities would be available for purchase by clients of the Roberts Firm in the Aftermarket. These plans were not disclosed in the Hughes Registration Statement. Complaint, ¶¶ 61-67. The entire public offering of Hughes was purchased for the nominee accounts which Galiardo and Perfetti had opened at the Roberts Firm by the time escrow was broken on 25 August 1986. The $130,000 purportedly paid by the nominees for the Hughes Capital securities actually came from the funds of Reifler, Beall, LaChance and Ackerman. Complaint, ¶¶ 69-71. The Complaint states the Hughes Registration Statement failed to disclose the following components of the scheme to defraud: (a)... the roles of defendants Reifler, Beall and Mascolo as promoters, controlling persons of defendant Hughes [Capital] and statutory underwriter of the Hughes [Capital] Securities; (b) ... the fact that defendant Knob-lauch also discharged the duties of president of Hughes Chemical Corp., an entity controlled by defendants Reifler, Beall, Mascolo, LaChance, Victor, John Doe and Richard Roe, Inc.; (c) ... that defendant Hughes [Capital] had identified four specific acquisition targets, namely [Conserdyne, Flat Rock, LaChance Designs and Insuranshares], prior to making the public offering of Hughes [Capital] Securities; (d) ... that the officers and directors of defendant Hughes [Capital] had taken preliminary steps to execute letters of intent to merge with Conserdyne, Flat \ Rock, [LaChance Designs] and Insurans-hares prior to closing of the public offering for defendant Hughes; (e) ... that defendant Knoblauch was the majority shareholder of Conserdyne, that defendants Reifler and Beall were officers, directors and controlling persons of Flat Rock, [LaChance Designs] and Insuranshares, and that defendant Mascolo was the controlling person of Insuranshares; and (f) ... that at least eighty-eighr (88%) percent of the Hughes [Capital] Securities would in fact be sold to defendants Reifler, Beall, LaChance, Ackerman, Victor, John Doe and Richard Roe, Inc. rather than members of the public so as to manipulate the price of Hughes [Capital] securities in the aftermarket. Complaint, 1124. After the public offering closed on 25 August 1986, a public relations firm which had been hired by Reifler, Beall and Knob-lauch in July 1986 issued press releases announcing the planned acquisition of the four pre-arranged acquisition candidates. These announcements did not mention that the acquisition candidates were owned by affiliates or control persons of Hughes Capital. The announcements falsely stated that the acquisition candidates were viable companies and that Hughes Capital had funds to acquire the target companies. In addition, the announcements falsely stated that Hughes Capital had entered into a letter of intent to complete the acquisition of Conserdyne. Complaint, ¶¶ 83-84. Immediately after the closing of the Hughes Capital public offering on 25 August 1986, the 90,000 shares of common stock included as part of the units were detached from the warrants and resold to the Roberts Firm at a price of $2.25 per share. The warrants remained in the nominee accounts controlled by Reifler, Beall, LaChance, Mascolo, Victor and Ackerman. By the close of the first day of trading in the Aftermarket, the price of Hughes Capital common stock rose to $6.50 per share. By 4 September, the price was as high as $8.50. Complaint, ¶¶ 91, 95. The Roberts Firm sold short numerous shares of Hughes Capital common stock in the Aftermarket and, on or about 9 September 1986, covered its short position by converting warrants held in the nominee accounts. By 12 September 1986, the Roberts Firm sold to its retail customers all the inventory of Hughes Capital common stock it had acquired from the nominee accounts. The Roberts Firm accounted for 99.8% of trading in Hughes Capital stock from the 25th to the 29th of August 1986 and 84.3% and 77.9% in October and November 1986, respectively. The Roberts Firm maintained the price of Hughes Capital common stock at the $7.00 to $8.50 range through 1 December 1986. Complaint, MI 91-95. The Complaint alleges Lieb was responsible for operations at the Roberts Firm and was the individual primarily in charge of approving order tickets executed by the trading department. Lieb initialed every trading ticket approved by him. When Lieb was unsure whether to approve a particular trade Kanoff, as principal in charge of compliance, initialed the ticket. Complaint, ¶ 90. The Complaint alleges Galiardo, Perfetti, Lieb, Kanoff and Fiorese participated in the fraudulent scheme by ma[king] false and misleading statements to their customers and omittpng] to state material facts regarding the placement of the Hughes [Capital] Securities in nominee accounts and [the Roberts Firm’s] domination and control of the market and its access to Hughes [Capital] warrants; and disseminating] to their retail customers false and misleading information in [the Hughes Registration Statement] and in other statements supplied by Hughes [Capital’s] disclosed and undisclosed control persons, which they knew, or were reckless in not knowing, were false and misleading.... Complaint, 11 98. The Complaint also alleges the Roberts Firm, Fiorese, Galiardo and Perfetti had actual knowledge of the facts which constituted the scheme to defraud. Complaint, 111177-78. The Complaint does not state the roles which defendants Greenberg, Tucker and Weiss are alleged to have played in the -, scheme. The Complaint does not discuss these individuals beyond merely naming them as defendants and alleging they were directors, officers or controlling persons of the Roberts Firm. Complaint, 111130, 103. Facts Submitted by Way of Affidavit In addition to the factual allegations of the Complaint, the parties have submitted affidavits which expand upon the circumstances surrounding the sale of Hughes Capital securities. By way of the Richards Affidavit, the Roberts Defendants have submitted the interrogatory answers of Plaintiffs Wiley and Moraglia, copies of press releases relating to the SEC investigation of the sale of Hughes Capital securities and the Stop Order. The Stop Order, on which the Plaintiffs base the allegations of the Complaint, describes in detail the factual findings of the SEC which lead to the issuance of the Stop Order. Richards Aff., Ex. H. The press releases and other documents contained in the Richards Affidavit indicate that the SEC issued an order which suspended the trading of Hughes Capital securities for ten days in February of 1987 (the “Suspension Order”), resulting in a significant drop in the price of Hughes Capital. Richards Aff., Exs. C-G. According to another affidavit submitted by the Roberts Defendants, the Roberts Firm ceased to sell Hughes Capital securities as a market maker and ceased to recommend any purchases of those securities to its customers as of 31 December 1986. Weiss Aff., ¶ 4. In opposition to the motions of the Roberts Defendants, the Plaintiffs have submitted the Schlesinger Affidavit, appended to which are the criminal informations against Reifler, Kanoff and Weiss and the transcripts of their pleas of guilty to those informations. The criminal informations against those three defendants allege violations of Rule 10b-5 of the 1934 Act. The information against Kanoff indicates he was president, director of compliance and a shareholder and director of the Roberts Firm. Schlesinger Aff., Ex. E. The information against Weiss indicates he was a partner, treasurer and ultimately president of the Roberts Firm. Id., Ex. F. The factual circumstances on which the informations are based arise from fraudulent practices at the Roberts Firm, including the use of nominee accounts, false books and excessive mark-ups, in connection with the sale of stock in several startup companies including Hughes Capital. The information against Reifler concerns his role in the sale of Hughes Capital securities and the conspiracy with principals at the Roberts Firm. IcL, Ex. D. At his plea of guilty to the information, Reifler admitted he and his co-conspirators (1) agreed to purchase Hughes Capital as a shell corporation with no assets for a blind pool public offering of securities, (2) arranged for the Roberts Firm to underwrite the public offering (3) placed the entire public offering in thirty-three nominee accounts at the Roberts Firm, through which Reifler and his co-conspirators directed trading activity of Hughes Capital securities and shared in the profits, (4) employed the Roberts Firm to use pressure to sell the securities in the Aftermarket at inflated prices and (5) participated in meetings with organized crime figures and principals of the Roberts Firm to discuss Fiorese’s role in the sale of Hughes Capital. Schlesinger Aff., Ex. A (Transcript of Proceedings, dated 15 August 1989) at 13-14. Reifler testified the Roberts Firm arbitrarily increased and manipulated the Aftermarket price of Hughes Capital securities and thereafter exercised the warrants to generate large profits. Reifler stated the Roberts Firm had charged excessive and undisclosed markups and received great profits in exchange for its participation in the fraud. Reifler also admitted the Hughes Registration Statement failed to disclose the activity in which the Roberts Firm had been involved and that the Roberts Firm dominated trading of Hughes Capital securities in the Aftermarket. Id. at 15-19. Kanoff, who was president, director and shareholder of the Roberts Firm, admitted at his guilty plea that “between around March 15th, 1985 and February 1989 [he] did agree and conspire with others including Fred Galiardo, Leonard Tucker, John Perfetti, Al Lieb, Albert Weiss and others to use and employ manipulative and deceptive devices and contrivances in connection with the purchase and sale of securities at [the Roberts Firm]_” Id., Ex. B (Transcript of Proceedings, dated 27 September 1989) at 18. Kanoff further admitted that “Galiardo, the Chairman of the Board of [the Roberts Firm], directed that cash be generated out of [the Roberts Firm] to pay organized crime figures who maintained undisclosed interests in [the Roberts Firm].” Id. at 19. Kanoff acknowledged he and brokers at the Roberts Firm concealed material information from the investing public, such as the facts that the Roberts Firm controlled, dominated and arbitrarily established the market for Hughes Capital securities, that principals and employees of the Roberts Firms had undisclosed interests in the Hughes Capital securities and that the Roberts Firm was actively manipulating the prices of such securities and charged excessive markups resulting in large trading profits. Kanoff also stated: “Tucker, an officer and partner of [the Roberts Firm] who became Chairman of the Board of [the Roberts Firm], exerted control over many of the companies which [the Roberts Firm] brought public through relative or friends that were controlling shareholders, officers or employees.” Id. at 28. Finally, Kanoff admitted he benefitted from the manipulation of Hughes Capital securities, knew the stock would sell for an inflated price in the Aftermarket and was aware his co-conspirators concealed their beneficial interests in the stock which they were recommending over the telephone at inflated prices. The Plaintiffs have also submitted the guilty plea of defendant Weiss. Weiss, a partner, treasurer and ultimately president of the Roberts Firm, admitted that he, Tucker, Galiardo, Lieb, Perfetti, Kanoff and others used manipulative devices in connection with the sale of securities at the Roberts Firm. He acknowledged the use of material misrepresentations, maintenance of false books and records, manipulation of stock prices and use of nominee accounts by himself and his co-conspirators to obtain illegal profits from the sale of stock at the Roberts Firm. In addition, Weiss admitted “various co-conspirators lined up [A]ftermarket sales to investors at inflated prices and prepared [AJftermarket order tickets before the purported public offering in the particular ... stock was closed.” Id., Ex. C at 21. Weiss also admitted: With respect to the false books and records, ... at the instructions of Fred Galiardo, who was Chairman of the Board of [the Roberts Firm], [Weiss] did arrange for the payment of fictitious bonus and salary payment in order to generate money which was passed in the form of cash to individuals [he] understood were connected with organized crime. Id. at 22. While the guilty plea transcripts elaborate on the roles of the individual Roberts Defendants in the scheme to defraud, Greenberg is never mentioned. His participation, if any, in the management of the Roberts Firm or in the specific actions relating to the sale of Hughes Capital securities remains unexplained. Neither the Complaint nor the extraneous materials submitted by the parties inculpates Green-berg in the conduct at issue. Discussion The Roberts Defendants have moved to dismiss all Counts of the Complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted. In addition, the Roberts Defendants seek to dismiss the federal securities law claims for failure to comply with the statute of limitations or, in the alternative, seek dismissal with leave to replead consistent with the specificity requirements of Fed.R.Civ.P. 9(b). Because dismissal under Rule 12(b)(6) results in a determination on the merits at an early stage in the Plaintiffs’ cause, they are afforded the safeguard of having all of their allegations taken as true and all reasonable factual inferences drawn in their favor. Wisniewski v. Johns-Manville Corp., 759 F.2d 271, 273 (3d Cir.1985); Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir.1977). “[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). Accord Cruz v. Beto, 405 U.S. 319, 321, 92 S.Ct. 1079, 1081, 31 L.Ed.2d 263 (1972); Angelastro v. Prudential-Bache Sec., 764 F.2d 939, 944 (3d Cir.1985), cert. denied, 474 U.S. 935, 106 S.Ct. 267, 88 L.Ed.2d 274 (1985). When making a determination under Rule 12(b)(6), the court cannot consider matters outside the pleadings. In this case, the parties have submitted affidavits in connection with the motions of the Roberts Defendants. When either or both parties presents extraneous material as part of their motion or opposition, the court has the discretion to accept the extraneous material and convert the Rule 12(b)(6) motion to one for summary judgment pursuant to Fed.R.Civ.P. 56. Fed.R.Civ.P. 12(b); Rose v. Bartle, 871 F.2d 331, 339-40 (3d Cir.1989); Elysian Fed. Sav. v. First Interregional Equity, 713 F.Supp. 737, 740 (D.N.J.1989); 5 C. Wright & A. Miller, Federal Practice and Procedure § 1366 at 678 (West 1969 & Supp.1989). The Plaintiffs request conversion of the Rule 12(b)(6) motions of the Roberts Defendants to Rule 56 motions for summary judgment “to a limited extent.” Plaintiffs’ Brief at 5. The Plaintiffs, however, do not indicate what the “limited extent” should be. While the Richards Affidavit relates only to the issue of compliance with the statute of limitations on Counts One and Two of the Complaint, the Weiss Affidavit contains information relating to the substantive allegations of the Complaint. In apparent contradiction of the request to convert the motion “to a limited extent,” the Plaintiffs submitted the Schlesinger Affidavit, attached to which are the criminal informations against and guilty plea transcripts of defendants Reifler, Kanoff and Weiss for crimes related to the claims in this lawsuit. The submission of the Schlesinger Affidavit directly impacts the substantive issues raised by the Rule 12(b)(6) motion of the Roberts Defendants. Because affidavits have been submitted in support of and in opposition to the Rule 12(b)(6) motions of the Roberts Defendants, the motions are converted to Rule 56 motions for summary judgment. Elysian Fed.Sav., 713 F.Supp. at 740. The requirement of Rule 12(b) that “the parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56” has been satisfied. Fed.R.Civ.P. 12(b). Both sides have had ample opportunity to submit affidavits and, indeed, they have taken advantage of this opportunity. The request for conversion to Rule 56 was presented in the opposition papers of the Plaintiffs along with the Schlesinger Affidavit; the Roberts Defendants did not object to this request in their reply papers. To prevail on a motion for summary judgment, the moving party must establish “there is no genuine issue as to any material fact and that [it] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The district court’s task is to determine whether disputed issues of fact exist, but the court cannot resolve factual disputes in a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2510-11, 91 , L.Ed.2d 202 (1986). All evidence submitted must be viewed in a light most favorable to the party opposing the motion. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Although the summary judgment hurdle is a difficult one to overcome, it is by no means insurmountable. As the Supreme Court has stated, once the party seeking summary judgment has pointed out to the court the absence of a fact issue, Matsushita, 475 U.S. at 586-87, 106 S.Ct. at 1356 (emphasis in original, citations and footnotes omitted). its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.... In the language of the Rule, the non-moving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’ ... Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial’ The Court elaborated on the standard in Anderson v. Liberty Lobby, Inc.: “If the evidence [submitted by a party opposing summary judgment] is merely color-able ... or is not significantly probative ... summary judgment may be granted." 477 U.S. at 249-50, 106 S.Ct. at 2511 (citations omitted). The Supreme Court went on to note in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986): “One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and we think it should be interpreted in a way that allows it to accomplish this purpose.” Id. at 323-24, 106 S.Ct. at 2553 (footnote omitted). Thus, once a case has been made in support of summary judgment, the party opposing the motion has the affirmative burden of coming forward with specific facts evidencing a need for trial. See Fed.R.Civ.P. 56(e). A. Statute of Limitations Under Federal Securities Laws An action based on Section 12(2) of the 1933 Act must be brought “within one year after discovery of the untrue statement or omission, or after such discovery should have been made by the exercise of reasonable diligence." 15 U.S.C. § 77m. Liability of a controlling person under Section 15 of the 1933 Act is derivative of Section 12(2) and the limitations period is therefore the same. Herm v. Stafford, 663 F.2d 669, 679 (6th Cir.1981); Insurance Consultants of America v. Southeastern Ins. Group, 746 F.Supp. 390, 404-05 (D.N.J.1990); Hill v. Equitable Trust Co., 562 F.Supp. 1324, 1341 (D.Del.1983). The one year limitations period is also applicable to claims under Section 10(b) and Rule 10b-5 of the 1934 Act. McCarter v. Mitcham, 883 F.2d 196, 202 (3d Cir.1989); Gatto v. Meridan Medical Assoc., 882 F.2d 840 (3d Cir.1989), cert. denied, — U.S.-, 110 S.Ct. 1136, 107 L.Ed.2d 1041 (1990); In re Data Access Systems Securities Litigation, 843 F.2d 1537, 1550 (3d Cir.) (in banc), cert. denied, 488 U.S. 849,109 S.Ct. 131, 102 L.Ed.2d 103 (1988); Elysian Fed. Sav., 713 F.Supp. at 741. Counts One and Two must be dismissed if the Plaintiffs, in exercising reasonable diligence, knew or should have known of the existence of the alleged fraud of the Roberts Defendants more than one year prior to 19 July 1988, the date the Complaint was originally filed. The Plaintiffs argue the Complaint is timely because it was filed within one \ year after 20 July 1987, the date the SEC issued the Stop Order which suspended the effectiveness of the Hughes Registration Statement. The Plaintiffs argue it was the Stop Order which triggered the statute of limitations and Plaintiffs, using reasonable diligence, had no way of knowing of the fraud involved in the sale of Hughes Capital securities prior to its disclosure in the Stop Order. The Roberts Defendants argue the statute of limitations runs not from “ ‘the time at which a plaintiff becomes aware of all of the various aspects of the alleged fraud, but rather [from] the time at which plaintiff should have discovered the general fraudulent scheme.' ” Arneil v. Ramsey, 550 F.2d 774, 780 (2d Cir.1977) (quoting Berry Petroleum Co. v. Adams & Peck, 518 F.2d 402, 410 (2d Cir.1975)) (emphasis added); see Elysian Fed. Sav., 713 F.Supp. at 745; Bradford-White Corp. v. Ernst & Whinney, 699 F.Supp. 1085, 1091 (E.D.Pa.1988), rev’d on other grounds, 872 F.2d 1153 (3d Cir.), cert. denied, — U.S.-, 110 S.Ct. 542, 107 L.Ed.2d 539 (1989); Gruber v. Price Waterhouse, 697 F.Supp. 859, 863-64 (E.D.Pa.1988). The statute of limitations is said to commence when the plaintiff learns of the facts underlying the basis of his cause of action, not the existence of the cause of action itself. Bradford-White Corp., 699 F.Supp. at 1091. Relying on the often repeated rule that securities Plaintiffs may not leisurely await prosecution of their claims in defiance of “storm warnings,” Elysian Fed. Sav., 713 F.Supp. at 745; see Cook v. Avien, Inc., 573 F.2d 685, 697 (1st Cir.1978); Klein v. Bower, 421 F.2d 338, 343 (2d Cir.1970); Gruber, 697 F.Supp. at 863, the Roberts Defendants argue the Plaintiffs’ claims are time barred because the Plaintiffs were put on inquiry notice of the fraud as early as 13 February 1987 and failed to act on their claims until the SEC issued the Stop Order. The Roberts Defendants claim that on 13 February 1987 the SEC issued the Suspension Order, which suspended trading in Hughes Capital securities for ten days and warned to Hughes Capital investors notifying them of inadequate disclosure and unusual market activity in the stock. Richards Aff., Ex. C. As further notice of the possibility of fraud, the Roberts Defendants note that in the weeks following the suspension in trading, the price of Hughes Capital stock plunged from a high of $14.00 per share in February 1987 to between $5.00 and $8.00 per share. Id., Ex. F. Notification of the suspension of trading was disseminated through several publications, including the SEC Docket, SEC News Digest, Reuters and PR newswire. Id., Ex. D, E & F. In addition, Hughes Capital issued a press release referring to and attempting to explain the suspension of trading. Id., Ex. G. In determining whether a plaintiff exercised due diligence in investigating fraud, factors to be considered include “the existence of a fiduciary relationship, concealment of the fraud, opportunity to detect it, position in the industry, sophistication and expertise in the financial community, and knowledge of related proceedings.” Elysian Fed. Sav., 713 F.Supp. at 745. In addition, the court must consider “the nature of the misleading statements alleged, the opportunity to discover the misleading nature of the statements, and the subsequent actions of the parties.” Cook, 573 F.2d at 696-97. Count Two of the Complaint alleges the 20 July 1987 Stop Order “disclosed for the first time that the named defendants had intentionally and recklessly violated federal and state registration and anti-fraud full disclosure statutes.” Complaint, ¶ 108. The only allegation in Count One of the Complaint pertaining the statute of limitations is the following conclusory statement: This suit has been brought by the named plaintiffs on behalf of themselves and the putative class within the one year/three year statute of limitations provided for actions brought under Section 12(2) of the 1934 Act. Complaint, ¶ 34. The Complaint contains no allegations relating to discovery of the alleged fraud of the defendants. The Roberts Defendants argue these conclusory allegations are insufficient to plead compliance with the statute of limitations and the Complaint should be dismissed. In Krome v. Merrill Lynch & Co., 637 F.Supp. 910, vacated in part on other grounds, 110 F.R.D. 693 (S.D.N.Y.1986), the court stated: 637 F.Supp. at 914; see also Alfaro v. E.F. Hutton & Co., 606 F.Supp. 1100, 1112 (E.D.Pa.1985); Hill v. Der, 521 F.Supp. 1370, 1389 (D.Del.1981); Kroungold v. Triester, 407 F.Supp. 414, 419 (E.D.Pa.1975). To adequately plead compliance with this requirement, the plaintiff must set forth: (1) the time and circumstances of the discovery of the fraudulent statement; (2) the reasons why it was not discovered earlier (if more than one year has lapsed); and (3) the diligent efforts which plaintiff undertook in making or seeking such discovery. The Roberts Defendants are correct in pointing out the complete absence of any allegation in the Complaint relating to the facts or circumstances surrounding the Plaintiffs’ discovery of the fraud at Hughes Capital. While the allegations of the Complaint with regard to the discovery of the alleged fraud are sparse and, at least as to Count One, fall below the standards for adequate pleading of compliance with the statute of limitations, dismissal of the Complaint is not warranted. As Plaintiffs argue, the data submitted by the Roberts Defendants in connection with this motion create a factual issue as to why the Plaintiffs did not discover the fraud prior to the issuance of the Stop Order. While it is clear the Stop Order put the Plaintiffs on actual notice of the fraud in connection with the sale of Hughes Capital securities, there is a genuine issue of material fact as to whether preceding events were sufficient to establish inquiry notice. Attached to the Richards Affidavit, which was submitted by the Roberts Defendants, are copies of the deposition transcripts of Wiley and Moraglia. These transcripts state that, subsequent the issuance of the Stop Order, the Plaintiffs learned of the fraud in connection with the sale of Hughes Capital securities upon receiving notification from counsel in or about April or May of 1988. Richards Aff., Exs. A & B (interrogatory answers 47(c), 48-52). The Suspension Order, which was issued on 13 February 1987, did not state the grounds or specific facts upon which it was based. It notified investors that there appeared to be a “lack of current, adequate and accurate public information concerning the company’s business operations and recent unusual market activity in the company’s stock.” Richards Aff., Ex. C. While this may have given rise to suspicion on the part of investors in Hughes Capital, the company immediately issued a press release attempting to conceal the existence of fraudulent activity. The press release stated “the company [was] not aware of the cause of any recent unusual market activity in the company’s stock” and discussed the recent “completion” of a purported merger with Conserdyne and the termination of purported letters of intent to acquire Insuranshares, LaChance Designs and Flat Rock. Richards Aff., Ex. E. At no time prior to release of the 20 July 1987 Stop Order was there disclosure of the factual allegations on which the Complaint is based. Compare Insurance Consultants of America, 746 F.Supp. at 410 (holding securities fraud claims to be untimely because plaintiffs were on notice of facts of fraud more than one year prior to -i commencement of action). If the events prior to issuance of the Stop Order put the Plaintiffs on inquiry notice, then it remains to be determined whether the Plaintiffs could have uncovered the fraud in the face of attempts by management of Hughes Capital to cover up the fraud. This factual question cannot be decided on the basis of the partial record presently before the court. See, e.g., Alfaro, 606 F.Supp. at 1111; Hill v. Equitable Bank Nat’l Ass’n, 599 F.Supp. 1062, 1077 (D.Del.1984); see also Kubik v. Goldfield, 479 F.2d 472, 477 (3d Cir.1973); Cook, 573 F.2d at 697. The Plaintiffs bear the burden of proof of compliance with the statute of limitations. ITG, Inc. v. Price Waterhouse, 697 F.Supp. 867, 870 (E.D.Pa.1988) (citing Cook, 573 F.2d at 695). Although the Plaintiffs have barely met this burden by relying entirely on the submissions of the Roberts Defendants, there exists a genuine issue of material fact as to whether the Plaintiffs did or should have uncovered the fraud prior to 20 July 1987. The motion of the Roberts Defendants to dismiss Counts One and Two of the Complaint is converted to a motion for summary judgment and denied. B. Claims Under the 1933 Act 1. Section 12(2) The Roberts Defendants argue Plaintiffs’ claims under Section 12(2) of the 1933 Act must be dismissed for failure to allege privity with the individual Roberts Defendants. The Roberts Defendants base their argument as to Section 12(2) on precedent of the Third Circuit in Collins v. Signetics Corp., 605 F.2d 110 (3d Cir.1979), which held that a plaintiff may sue only the immediate seller from which he purchased a security. Id. at 113. In their opening brief, the Roberts Defendants neglected to recognize that the Supreme Court disposed of the requirement of privity from liability under section 12(1) of the 1933 Act in Pinter v. Dahl, 486 U.S. 622, 108 S.Ct. 2063, 100 L.Ed.2d 658 (1988). In so doing, the Court explicitly referred to and quoted from the Collins case as among the authorities which the Court declined to follow. Id. at 644, 108 S.Ct. at 2077. In Pinter, the Court ruled: “A natural reading of the statutory language [of section 12(1)] would include in the statutory seller status at least some persons who urged the buyer to purchase.” Id. (emphasis added). The Court further explained: “The language and purpose of § 12(1) suggest that liability extends only to the person who successfully solicits the purchase, motivated at least in part by a desire to serve his own financial interests or those of the securities owner.” Id. at 647, 108 S.Ct. at 2079. Because the critical language of Section 12(1) is identical to that of Section 12(2) and because the policies of the securities laws, as discussed by the Supreme Court, favor disclosure, the Third Circuit has held there is “no reason to distinguish the scope of ‘seller’ for purposes of § 12(1) and § 12(2).” Craftmatic Securities Litigation v. Kraftsow, 890 F.2d 628, 635 (3d Cir.1989). Thus, the privity requirement of Collins has been squarely rejected; the Third Circuit now follows the reasoning of Pinter for purposes of Section 12(2). Id. at 636. Without explicitly acknowledging the error in their opening argument, the Roberts Defendants nevertheless claim the Plaintiffs have failed to alleged facts sufficient to hold the Roberts Firm liable as a solicitor of offers on Hughes Capital securities under Pinter. Roberts Defendants’ Reply Brief at 2-5. In the Third Circuit, “[t]he purchaser must demonstrate direct and active participation in the solicitation of the immediate sale to hold the issuer liable as a § 12(2) seller.” Craftmatic, 890 F.2d at 636 (emphasis added). The focus of the inquiry is on the alleged solicitor’s relationship to the purchaser, not the degree of his involvement in the sales transaction and its surrounding circumstances. Id. It is clear the Roberts Firm was a direct and active participant in the solicitation of the sale of Hughes Capital securities. The plea transcripts of Weiss, Kanoff and Greenberg, which were submitted by the Plaintiffs in opposition to these motions, establish the active participation of the Roberts Firm in the solicitation of purchasers of Hughes Capital securities. The Complaint generally and specifically alleges the Roberts Firm, as managing underwriter and market maker for Hughes Capital, was a direct participant in the distribution of the Hughes Registration Statement which contained the allegedly false and misleading statements on which this lawsuit is based. Complaint, ¶ 14. Representatives of the Roberts Firm are alleged to have opened nominee accounts into which all of the proceeds of the initial public offering of Hughes Capital were deposited. Complaint, !M 65-66. The Roberts Firm dominated and controlled the offer and sale of Hughes Capital securities in the Aftermarket. Complaint, ITU 92-95. The Roberts Firm also purchased shares from the nominees accounts and resold them at inflated prices to its clients. These allegations are supported by the Stop Order of the SEC, which is incorporated into the Complaint. The Roberts Defendants submitted the Weiss Affidavit which states: “As of December 31, 1986, [the Roberts Firm] had ceased to sell securities of Hughes Capital Corporation as a market maker and ceased to recommend any purchases of those securities by its customers as a market maker.” Weiss Aff., H 4. The Plaintiffs, however, have submitted the transcript of Weiss’s guilty plea, at which he admitted the Roberts Firm sold securities through February 1989: Q. Is it true that between on or about July 1985 and February 1989 you did agree and conspire with others, including Leonard Tucker, Fred Galiardo, Al Lieb, John Perfetti, Sheldon Kanoff and others to use and employ manipulative and deceptive devices and contrivances in connection with the purchase and sale of securities at [the Roberts Firm]? A. Yes, your Honor. Schlesinger Aff., Ex. C (Transcript, dated 27 September 1989, at 16) (emphasis added). The criminal information against Weiss also states the Roberts Firm acted as underwriter and market maker of Hughes Capital and other companies between July 1985 and February 1989. Id., Ex. F. In addition, Weiss admitted at his guilty plea that he intended to and in fact did benefit from these activities. These submissions create a genuine issue of material fact and prevent the summary disposition of claim for liability of the Roberts Firm under Section 12(2). 2. Section 15 The Plaintiffs allege in the Complaint that the individual Roberts Defendants are “controlling persons” of the Roberts Firm and, as such, are liable for any Section 12(2) violations of the Roberts Firm pursuant to Section 15. The Roberts Defendants argue the Plaintiffs cannot sustain a claim under section 15 because they f?’l to allege the Roberts Defendants are controlling persons of the Roberts Firm or the Roberts Defendants were culpable participants in the fraud regarding the sale of Hughes Capital securities. The Plaintiffs argue, however, the plea transcripts of defendants Reifler, Kanoff and Weiss not only admit their individual participation in the securities fraud, but also inculpate de- x fendants Fiorese, Tucker, Galiardo, Perfet-ti and Lieb. Controlling person liability exists where the defendant has direct or indirect power over the management or policies of a person, in this case the Roberts Firm. Rochez Bros., Inc. v. Rhoades, 527 F.2d 880, 890 (3d Cir.1975). The law is unsettled whether the status of a defendant as an officer or director of a Section 12(2) violator, without the additional allegation that such defendant had actual control over the controlled person, is sufficient to establish a claim of controlling person liability under Section 15. Cammer v. Bloom, 711 F.Supp. 1264, 1293 (D.N.J.1989). The Third Circuit appears to embrace a lenient pleading rule, to the extent it gives “heavy consideration to the power or potential power to influence and control the activities of a person, as opposed to the actual exercise thereof.” Rochez Bros., Inc., 527 F.2d at 890 (emphasis added); see Cammer, 711 F.Supp. at 1295 (citing Rochez Bros., Inc. and Gould v. American-Hawaiian S.S. Co., 535 F.2d 761, 779 (3d Cir.1976)). However, it is clear that for liability to exist, the controlling person must have been a “culpable participant” in the fraud perpetrated by the controlled person. Rochez Bros., Inc., 527 F.2d at 890 (citing Lanza v. Drexel & Co., 479 F.2d 1277, 1299 (2d Cir.1973)); see also Sharp v. Coopers & Lybrand, 649 F.2d 175, 185 (3d Cir.1981), cert. denied, 455 U.S. 938, 102 S.Ct. 1427, 71 L.Ed.2d 648 (1982); Gould, 535 F.2d at 780; Laven v. Flanagan, 695 F.Supp. 800, 809 (D.N.J.1988). The Roberts Defendants urge this court to adopt a standard of pleading which would require the Plaintiffs to allege not only control by status, but also actual control of the Roberts Firm to survive a motion to dismiss. Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1441 (9th Cir.1987). It is unnecessary, however, to rule precisely on the issue of whether the Third Circuit would adopt the two-part pleading test of Wool. The materials set forth in the affidavits submitted by the parties present factual data which, viewed in a light most favorable to the Plaintiffs, create a genuine issue of material fact as to whether the Roberts Defendants were control persons of the Roberts Firm and were culpable participants in the scheme to defraud. The Wool case acknowledges the test of control should be “construed liberally and flexibly.” Id. Moreover, “where ... the corporate officers are a narrowly defined group charged with the day-to-day operations of a public corporation, it is reasonable to presume that these officers had the power to control or influence the particular transactions giving rise to the securities violation.” Id. Indeed, where the Plaintiffs allege fraud perpetrated by means of “group published” documents such as prospectuses and registration statements, “it is reasonable to presume that these are the collective actions of the corporate officers.” Id. at 1442. The Complaint states the Roberts Defendants were officers and directors of the Roberts Firm. Complaint, 1116 & 30. Count One of the Complaint does not name individual Roberts Defendants in connection with the allegedly fraudulent conduct of the Roberts Firm, but it is alleged: [u]nless some different basis of liability is specifically asserted with respect to any individual named defendant, liability of each of the named defendants is predicated upon the proposition that each of them, acting alone or in concert with the others, initiated, joined in, became a member of, or otherwise negligently, recklessly and/or knowingly materially advanced, aided and abetted an unlawful agreement to violate the registration and anti-fraud full disclosure requirements of Section 12(2) ... Complaint, II21. In addition, Count One states the Roberts Firm failed to act with due diligence or acted with reckless disregard in ascertaining the existence of false and misleading statements in the Hughes Registration Statement. Complaint, 1125. The narration of events on which Count Two of the Complaint is based implicate all the Roberts Defendants in culpable conduct with the exception of Greenberg, Tucker and Weiss, who are never named in the substantive allegations of Count Two. Complaint, 1111 58-59, 66, 71, 73, 79, 90, 96-98. The affidavits submitted in connection with this motion implicate Tucker and Weiss in the conduct at issue in this case. Greenberg is the only Roberts defendant who is not implicated as having had knowledge of or participating in the affairs of the Roberts Firm. Weiss admitted at his guilty plea that, as partner and treasurer of the Roberts Firm, he personally participated in the fraudulent scheme described in the Complaint, and in so doing implicated the other Roberts Defendants, except Greenberg, by specific references to their actions. Schlesinger Aff., Ex. C passim. Kanoff stated at his guilty plea that “Tucker, an officer and partner of [the Roberts Firm] who became Chairman of the Board of [the Roberts Firm], exerted control over many of the companies which [the Roberts Firm] brought public through relative or friends that were controlling shareholders, officers or employees.” Id., Ex. B at 28. Kanoff also implicated Galiar-do, Perfetti, Lieb and Weiss in the fraudulent scheme. Greenberg, however, is never mentioned in the plea transcripts of Rei-fler, Weiss or Kanoff. None of the documentation submitted in connection with these motions suggests Greenberg played any role in the scheme to defraud investors of Hughes Capital. Greenberg’s involvement in this case is limited to two references to him in the Complaint: he is a named defendant and he is alleged to be a controlling person of the Roberts Firm. The conclusory allegation that he is a controlling person, however, is without support in the record. The Plaintiffs have failed to meet their burden of coming forward with specific facts in support of the allegations of the Complaint as they concern Greenberg’s role in the fraud. The extraneous material submitted by the Plaintiffs does not even support the allegation that Greenberg was a director, shareholder or officer of the Roberts Firm. As a matter of law, it cannot be said that Greenberg is a controlling person of the Roberts Firm; nor can it be said that he was personally responsible for the Plaintiffs’ injuries. Accordingly, summary judgment is granted in favor of Greenberg as to Count One of the Complaint. Summary judgment is denied as to the other Roberts Defendants. The facts discussed above raise genuine issues of material fact as to whether the Roberts Defendants, other than Greenberg, were controlling persons of the Roberts Firm. As this is a corporate fraud case involving violations of the disclosure requirements applicable to the Hughes Registration Statement, it is reasonable to presume the actions of the Roberts Firm were the actions of the Roberts Defendants. Wool, 818 F.2d at 1442. “Whether a defendant is a controlling person within the meaning of federal securities law is a question of fact.” In re Worlds of Wonder Securities Litigation, 694 F.Supp. 1427, 1435 (N.D.Cal.1988). This prevents granting summary judgment as to the remaining Roberts Defendants. In addition, because the record is not complete at this point, the Plaintiffs are given leave to replead at a later date to include more specific allegations against Greenberg, if appropriate and pursuant to Fed.R.Civ.P. 11. C. Claims Under the 193b Act Section 10(b) of the 1934 Act, and Rule 10b-5 promulgated thereunder, proscribe fraudulent conduct in the sale of securities. To prevail in an action brought under Rule 10b-5(b), Plaintiffs must establish six elements: (1) a false representation of (2) a material (3) fact, (4) defendant’s knowledge of its falsity and his intention that the Plaintiffs rely on it, (5) the Plaintiffs’ reasonable reliance thereon and (6) his resultant loss. Zlotnick v. TIE Communications, 836 F.2d 818, 821 (3d Cir.1988); Peil v. Speiser, 806 F.2d 1154, 1160 (3d Cir.1986); Elysian Fed. Sav., 713 F.Supp. at 741; Cammer, 711 F.Supp. at 1276. To establish a violation of Rules 10b-5(a) or (c), Plaintiffs must demonstrate that the Roberts Defendants employed any device, scheme or artifice to defraud or that they engaged in any act practice or course of business which operated or would operate as a fraud or deceit upon the Plaintiffs. Hilgeman v. National Ins. Co., 547 F.2d 298 (5th Cir.1977). Recklessness, as opposed to actual intent, suffices for a 10b-5 violation. Eisenberg v. Gagnon, 766 F.2d 770, 777 (3d Cir.), cert. denied, 474 U.S. 946, 106 S.Ct. 342, 88 L.Ed.2d 290 (1985); Cook, 573 F.2d at 692. The Roberts Defendants argue Count Two of the Complaint fails to allege that they acted with the requisite scienter, that the Plaintiffs reasonably relied on any manipulative or deceptive device employed by the Roberts Defendants, or that damage resulted therefrom. 1. Scienter A claim alleging fraud must describe with particularity the facts upon which such claim is based. Saporito v. Combustion Engineering, Inc., 843 F.2d 666, 673 (3d Cir.1988) vacated on other grounds, 489 U.S. 1049, 109 S.Ct. 1306, 103 L.Ed.2d 576 (1989). Rule 9(b) of the Federal Rules of Civil Procedure states: In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally. Id. Scienter under Rule 10b-5, as a “condition of mind,” may be averred generally to meet the pleading requirements of Rule 9(b). Id.; see Kronfeld v. First Jersey Nat’l Bank, 638 F.Supp. 1454, 1465 (D.N.J.1986); Alfaro, 606 F.Supp. at 1105. The requirements of Rule 9(b) are to be construed liberally. Craftmatic Securities Litigation, 890 F.2d at 645; Christidis v. First Pennsylvania Mortgage Trust, 717 F.2d 96, 100 (3d Cir.1983). Rule 9(b) must be harmonized with the flexibility permitted under Rule 8 of the Federal Rules of Civil Procedure. Seville Indus. Machinery v. Southmost Machinery Corp., 742 F.2d 786, 792 (3d Cir.1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1179, 84 L.Ed.2d 327 (1985). That Rule requires a “short and plain statement” with each pleading being “simple, concise and direct.” Fed.R.Civ.P. 8; see Simcox v. San Juan Shipyard, Inc., 754 F.2d 430, 440 (1st Cir.1985) (“Rule 9 must be read in conjunction with Rule 8 which provides that a complaint should not be struck for the failure to follow a form if the nature of the claim is apparent.”). The particularity requirement of Rule 9(b) does not require that a complaint read like a laundry list of dates, times and persons involved in the underlying transaction. As the Third Circuit explained in Seville: Rule 9(b) requires plaintiffs to plead with particularity the “circumstances” of the alleged fraud in order to place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior. It is certainly true that allegations of “date, place or time” fulfill these functions, but nothing in the rule requires them. Plaintiffs are free to use alternative means of injecting precision and some measure of substantiation into their allegations of fraud. 742 F.2d at 791. As long as the Complaint sets forth enough information to provide factual support for Plaintiffs’ allegations, it meets the standard set forth in Seville. ^ This is particularly true where the complaint involves allegations of corporate fraud where “plaintiffs cannot be expected to have personal knowledge of the details of corporate internal affairs.” Craftmatic Securities Litigation, 890 F.2d at 645; see Wool, 818 F.2d at 1439. An overly restrictive reading of the requirements of Rule 9(b) would permit “sophisticated defrauders” to avoid liability if it is possible to conceal the details of their actions. Craft-matic Securities Litigation, 890 F.2d at 645. At a minimum the Plaintiffs must allege the information necessary to disclose the fraud lies within the control of the Roberts Defendants and such an allegation must be accompanied by “a statement of the facts upon which the allegations are based.” Id. A general allegation of scienter is sufficient to meet the requirements of Rule 9(b) of the Federal Rules of Civil Procedure in case under Rule 10b-5 of the 1934 Act. Kronfeld, 638 F.Supp. at 1465 (allegation that defendants “had actual knowledge of the materially false and misleading statements and omissions set forth above or acted with reckless disregard for the truth” is sufficient to meet general pleading requirements for Rule 10b-5 purposes); Alfaro, 606 F.Supp. at 1105 (conclusory allegation of scienter sufficient to meet pleading requirement of Rule 9(b) in Rule 10b-5 case). Count Two of the Complaint states the Roberts Firm, “as managing underwriter for the public offering of the Hughes [Capital] Securities, had actual knowledge or in reckless disregard of the facts should have known of the Rule 10b-5 violations_” Complaint, ¶ 77. This allegation is sufficient to allege scienter on the part of the Roberts Firm. The Roberts Defendants argue, however, Count Two does not allege scienter of the individual Roberts Defendants because the Complaint does not set forth the roles of each individual Roberts defendant in the scheme to defraud, particularly as to Greenberg, Tucker and Weiss, who are never mentioned in the factual allegations of Counts One or Two. Except as to Greenberg, the argument of the Roberts Defendants is rejected for two reasons. The first reason to reject the argument is that the Complaint, the conclusions of SEC in the Stop Order and the transcripts of the guilty pleas of defendants Reifler, Kanoff and Weiss contain more than enough information to put all of the Roberts Defendants, other than Green-berg, on notice of their alleged involvement in the scheme to defraud. The Complaint bases the allegation that Fiorese, Galiardo and Perfetti had actual knowledge of the fraud on specific facts by reference to the Stop Order. Count Two explains the roles of Lieb and Kanoff