Full opinion text
OPINION AND ORDER WILLIAM C. CONNER, Senior District Judge. Plaintiffs bring this class action on behalf of all individuals who purchased common stock of The Leslie Fay Companies, Inc. (“Leslie Fay” or “the Company”) between February 4, 1992 and April 5, 1993 (the “Class Period”). The Amended Complaint asserts claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against a number of Leslie Fay’s officers and directors and BDO Seidman (“BDO”), the Company’s outside auditor. This court denied BDO’s motion to dismiss pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. See In re The Leslie Fay Companies, Inc. Securities Litigation, 871 F.Supp. 686 (S.D.N.Y.1995); In re The Leslie Fay Companies, Inc. Securities Litigation, 835 F.Supp. 167 (S.D.N.Y.1993). BDO then filed cross-claims and third-party claims against officers and directors of Leslie Fay. The action is presently before the court on various TPDs’ motions to dismiss pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons discussed below, TPDs’ motions are granted in part and denied in part. BACKGROUND Plaintiffs allege that from 1990 through 1992, the officers and directors of Leslie Fay, a well-known manufacturer of women’s apparel, engaged in a fraudulent scheme designed to deceive the investing public as to its financial viability. Plaintiffs further allege that BDO participated in this scheme by attesting to the accuracy of financial disclosures that it knew, or recklessly failed to discover, were false and misleading. Plaintiffs allege that to support its public misrepresentations, Leslie Fay altered company financial records in two ways. First, the Company manipulated its books, chiefly the general ledger, to overstate assets and understate liabilities. Leslie Fay utilized these misstatements to conceal shortfalls from divisional budgeted goals. Second, Leslie Fay further altered its books and records by, among other things, manipulating inventory counts, classifications, costs, accounts payable, and expenses to substantiate these accounting irregularities. In all, the fraud involved several hundred journal entries, made in more than one hundred different general ledger accounts, occurring over an extended period of time, and involving at least 15 Leslie Fay employees. The overall result of this scheme was that in the years 1990 through 1992, respectively, Leslie Fay’s gross profits were overstated by $3 million (1.1%), $12.4 million (5.1%), and $35 million (18.9%), and its per-share earnings by $0.15 (10.9%), $0.48 (44.9%), and $1.84 (347.2%), while its pretax income over the three-year period was overstated by a total of $75 million. Leslie Fay retained BDO to provide independent auditing services for the years ending December 29, 1990 and December 28, 1991. BDO issued unqualified opinions for each of those years, which were included in Leslie Fay’s 1990 and 1991 Form 10-K reports and 1990 and 1991 Annual Reports to Shareholders, respectively, attesting to the accuracy of Leslie Fay’s financial statement schedules and their conformity with Generally Accepted Accounting Principles (“GAAP”). In addition, BDO certified that it performed its audits in accordance with Generally Accepted Auditing Standards (“GAAS”). Based on the pervasiveness of the manipulation described above, plaintiffs allege that BDO either knew or was reckless in failing to discover that its unqualified opinions were wholly unfounded. On February 1, 1993, the Company announced that it had requested that the board of directors’ audit committee commence an investigation into “accounting irregularities” which might cause Leslie Fay to restate previously reported earnings for 1991 and to eliminate any profit for 1992. The Company suspended Corporate Controller Donald Ke-nia pending the outcome of- the investigation, but Leslie Fay’s CEO, John Pomerantz, insisted, in a widely distributed press release, that the financial viability of the Company was not in jeopardy. On the same day Leslie Fay’s General Counsel, Herman Gordon, announced that the audit committee would investigate inaccurate entries involving an overstatement of inventory and a reduction of the cost of goods sold. As a result of this announcement, trading in Leslie Fay stock was suspended and at the end of the trading day the stock had fallen to $7% per share from its close of $12 per share on the previous day. On February 2,1993, it was reported that Kenia had admitted that he and 15 other employees of the Company’s Wilkes-Barre, Pennsylvania offices had been falsifying invoices for over one year, and the Company announced that the false entries began in the last quarter of 1991 and continued through all of 1992.' Upon announcing his fraud, Kenia stated that he was coming forward because the discrepancies caused by the falsifications had become too large to hide. On February 16, 1993, Leslie Fay announced that it had commenced an investigation into possible false SEC filings made by the Company, and on March 26, 1993, it was announced that Leslie Fay was the subject of a Commission investigation as well. On March 22, 1993, Paul Polishan, CFO of the Company, took a leave of absence pending the final outcome of the Audit Committee report. Finally, on April 5, 1993, Leslie Fay filed a voluntary bankruptcy petition under Chapter 11 of the Federal Bankruptcy Code, and in response, its common stock price fell to $2.75 per share. After the overstatements were revealed by the Audit Committee on February 26, 1993, BDO withdrew its 1991 opinion. Plaintiffs’ class action followed. BDO's motion to dismiss was denied by this court. See In re The Leslie Fay Companies, Inc. Securities Litigation, 871 F.Supp. 686 (S.D.N.Y.1996). BDO then filed cross-claims and third-party claims against various officers and directors of Leslie Fay, asserting contribution claims under the federal securities laws and common law claims for negligent misrepresentation, unjust enrichment and mutual mistake. See supra n. 1. The case is presently before the court on motions to dismiss submitted by various TPDs. DISCUSSION On motions to dismiss, we have a limited task. The factual allegations in the cross-claims and third-party claims must be accepted as true, and must be construed favorably to third-party plaintiff BDO. A motion to dismiss pursuant to Rule 12(b)(6) should be granted only if it appears beyond doubt that third-party plaintiff can prove no set of facts entitling it to relief. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Goldman v. Belden, 754 F.2d 1059, 1065 (2d Cir.1985). I. Statute of Limitations As a preliminary matter, we address Odyssey’s statute of limitations defense to BDO’s claim for contribution under section 10(b). Odyssey argues that the Supreme Court’s holdings in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991), and Musick, Peeler & Garrett v. Employers Ins. of Wausau, 508 U.S. 286, 294-300, 113 S.Ct. 2085, 2090-92, 124 L.Ed.2d 194 (1993), “mean that the common law rule on the accrual of a cause of action for contribution is not applicable to claims for contribution by a violator of § 10(b) of the 1934 Act.” Mem. of Law in Support of the Motion of Third-Party Defendants Steven M. Friedman, Jack Nash, Lester Pollack and Odyssey Partners, L.P. to Dismiss the Third-Party Complaint of BDO Seidman, at 12 (“Odyssey Motion”). In Lampf, the Supreme Court held that the applicable statute of limitations for a section 10(b) suit was to be borrowed from section 9(e) of the 1934 Act. 501 U.S. at 364 n. 9, 111 S.Ct. at 2782 n. 9. Section 9(e) provides: Any person who willfully participates in any act or transaction in violation of subsections (a), (b), or (c) of this section, shall be liable to any person who shall purchase or sell any security at a price which was affected by such act or transaction.... Every person who becomes liable to make any payment under this subsection may recover contribution as in cases of contract from any person who, if joined in the original suit, would have been liable to make the same payment. No action shall be maintained to enforce any liability created under this section, unless brought within one year after the discovery of the facts constituting the violation and within three years of such violation. 15 U.S.C. § 78i(e) (emphasis added). In the present ease, BDO filed its cross-claims and third-party claims on March 29,1995. Odyssey argues that (1) BDO had notice of the facts underlying its claims more than one year prior to March 29,1995; and, (2) in any case, the statute of limitations bars all claims arising out of events that occurred before March 30, 1992 (effectively barring all claims asserted by BDO because all relevant events purportedly occurred prior to March 30, 1992). In the only case known to this court that has addressed the issue of the applicable statute of limitations for a claim of contribution under section 10(b), Ades v. Deloitte & Touche, 1993 WL 362364 (S.D.N.Y. Sept. 17, 1993), Judge Sweet rejected the same argument that is asserted now by Odyssey. In Ades, investors alleged section 10(b) claims against Deloitte & Touche which, in turn, filed third-party claims against others. Some of the third-party defendants moved to dismiss based on the argument Odyssey makes here: The Supreme Court, in Lampf, had created a new statute of limitations for contribution claims. Id. at *15. Judge Sweet distinguished Lampf on the ground that “Lampf does not address the question of the statute of limitations for a contribution claim or in any other way change the existing rule, which is that an action for contribution accrues at the time a judgment is entered against the direct defendant and is paid by him.” Id. at *16. Odyssey urges that Judge Sweet did not properly read Lampf in conjunction with Musick, Peeler to arrive at the conclusion that federal law has displaced common law principles with respect to contribution and limitations questions under section 10(b). In Musick, Peeler, the Supreme Court held that there was an implied right of action for contribution under section 10(b). 508 U.S. at 298-300, 113 S.Ct. at 2092. The Supreme Court found support for its conclusion in sections 9 and 18 of the 1934 Act. Odyssey argues that the one year after discovery/three years after violation limitation in section 9(e) — the limitation period applied in Lampf — must therefore apply to contribution claims under section 10(b). Odyssey may be correct that Lampf displaced common law principles with respect to limitations questions involving direct section 10(b) claims, and that Musick, Peeler ruled that there is an implied federal right of action for contribution arising out of section 10(b). That does not mean, however, that these cases displaced common law principles ■with respect to limitations questions as they relate to section 10(b) contribution claims. The Lampf Court chose to apply the language of section 9(e) rather than that of section 18(c) (three years after violation, not three years after such cause of action accrued), Lampf, 501 U.S. at 364 & n. 9, 111 S.Ct. at 2782 & n. 9, but that Court addressed only the statute of limitations applicable to section 10(b) direct claims, not section 10(b) contribution claims. The Musick, Peeler Court inferred a cause of action for contribution from both sections 9 and 18 of the 1934 Act; the Court did not reach the question whether one section or the other would control the applicable statute of limitations for contribution claims. The section 18(e) rule that begins the limitations period upon accrual is consistent with the longstanding rule governing the accrual of contribution claims. In the absence of any authority supporting the idea that Lampf alters the long-standing rule governing the accrual of contribution claims, we decline to change that rule. Ades, 1993 WL 362364, at *16. We agree with Judge Sweet that Lampf, even when read in conjunction with Musick, Peeler, does not compel a conclusion that the applicable statute of limitations for a section 10(b) contribution claim is the one-year/ three-years from the time of violation rule of section 9(e). The Division Presidents seem to think that the facts that the plaintiffs (1) dismissed their action as to Ward and Zipp and (2) never named Levine a defendant somehow affect the statute of limitations issue. These facts do not change the outcome as to them. For the reasons just discussed, BDO’s right to contribution has not yet accrued so that the statute of limitations has not yet begun to run on BDO’s section 10(b) contribution claim. Furthermore, “[t]he goal of the securities laws is not just to compensate persons who have been defrauded but also to deter violations of those laws. This goal is advanced by a recognition of liability for contribution among joint offenders and by a recognition that liability does not depend on the plaintiffs having elected to proceed against all those who have offended.” Ades, 1993 WL 362364, at *9 (citing Tucker v. Arthur Anderson & Co., 646 F.2d 721, 727 n. 7 (2d Cir.1981)). II. Section 10(b) and Rule 10b-5 Contribution Rule 10b-5, promulgated under section 10(b), makes it unlawful “for any person, directly or indirectly ... [t]o employ any device, scheme, or artifice to defraud, ... [t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made ... not misleading, or ... [t]o 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. This provision provides an implied cause of action where defendants made a knowing misrepresentation or omission of material fact in connection with the purchase or sale of a security which caused plaintiffs’ loss. To state a claim under section 10(b), a plaintiff must allege acts indicating an intent to deceive, manipulate, or defraud. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 192 n. 7, 96 S.Ct. 1375, 1380 n. 7, 47 L.Ed.2d 668 (1976). Furthermore, a claimant must show scienter by proving either actual knowledge or recklessness. Aaron v. S.E.C., 446 U.S. 680, 696, 100 S.Ct. 1945, 1955-56, 64 L.Ed.2d 611 (1980); Sirota v. Solitron Devices, Inc., 673 F.2d 566, 575 (2d Cir.), cert. denied, 459 U.S. 838, 103 S.Ct. 86, 74 L.Ed.2d 80 (1982). It is well established that the right of contribution for violations of the federal securities laws exists among “joint tortfeasors.” See Greene v. Emersons, Ltd., 102 F.R.D. 33, 36 (S.D.N.Y.1983), aff'd sub nom. Kenneth Leventhal & Co. v. Joyner Wholesale Co., 736 F.2d 29 (2d Cir.1984); see also Tucker, 646 F.2d at 727 n. 7 (“[Ujnder the securities laws, a person who has defrauded the plaintiff in violation of those laws may be liable for contribution to another person who has similarly defrauded the plaintiff.”). Considerably less well-settled, however, is the question of how to define “joint tortfeasor” in this context. The Second Circuit has expressly declined to reach this issue in at least one opinion. See Kenneth Leventhal & Co., 736 F.2d at 31 n. 1. A. Joint Tortfeasors District court cases have defined “joint tortfeasors” in one of two ways. According to Connecticut National Bank v. Reliance Insurance Co., 704 F.Supp. 506 (S.D.N.Y.1989), the majority view among the district courts in the Second Circuit appears to be that contribution among “joint tortfea-sors” under the federal securities laws is limited to “joint participants” in the fraud alleged by plaintiff. 704 F.Supp. at 509; see also Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 1993 WL 478115, *5 (S.D.N.Y. Nov. 12, 1993) (“The standard for contribution under § 10(b) requires that the defendants allege that [the third-party defendant] ‘knowingly participated’ in the fraud against the plaintiff.”); In re Crazy Eddie Securities Litigation, 740 F.Supp. 149, 152 (E.D.N.Y.1990) (“The courts in this circuit have interpreted [the joint tortfeasor] requirement to limit contribution to ‘joint participants] in the fraud alleged by plaintiff,’ and not to embrace also concurrent, independent actors.”) (citing Connecticut Nat. Bank, 704 F.Supp. at 509; Greene, 102 F.R.D. at 36; Stratton Group, Ltd. v. Sprayregen, 466 F.Supp. 1180, 1185 (S.D.N.Y.1979)). Several courts outside this Circuit also have concluded that contribution in section 10(b) cases is only available among parties who knowingly paticipate in the same fraud. See Stowell v. Ted S. Finkel Investment Servcs., Inc., 641 F.2d 323, 325-26 (5th Cir.1981) (for contribution under federal securities laws there must be allegations of joint securities act wrongdoing); Alexander Grant & Co. v. McAlister, 669 F.Supp. 163, 166 (S.D.Ohio 1987) (allegation of independent and concurrent action not sufficient under federal securities laws for contribution). Other district courts, including this court, have applied a more expansive definition, holding that contribution among “joint tort-feasors” under the federal securities laws is available among independent tortfeasors so long as the parties are concurrently liable for damages. See, e.g., Ades, 1993 WL 362364; McCoy v. Goldberg, 778 F.Supp. 201 (S.D.N.Y.1991) (Conner, J.); Marrero v. Abraham, 473 F.Supp. 1271, 1277-78 (E.D.La.1979). These courts reason that there is no logical distinction between joint participants and parties who concurrently but independently cause damage by violating section 10(b). Of course, TPDs urge this court to adopt the more restrictive definition, and BDO the more expansive. In Greene, 102 F.R.D. 33, a case often cited for the more restrictive definition of “joint tortfeasors,” Judge Haight reasoned that since the wrong contemplated by the securities laws is fraud, then contribution would lie only between knowing participants in the same fraud. 102 F.R.D. at 36. This situation is distinguishable, he asserted, from those involving common law tort cases of property damage where independent or concurrent acts of negligence may have contributed to a party’s ultimate injury. Id. Consequently, Judge Haight concluded that “[tjhere is no place for this broader concept of contribution in anti-fraud securities cases.” Id. On the other hand, in Marrero, 473 F.Supp. at 1277-78, the court concluded that contribution under federal securities laws was available among independent, concurrent tortfeasors. It reasoned that since the purpose of contribution is to allow a fair allocation of damages among wrongdoers, a distinction between joint participants working on a common scheme and those who concurrently and independently cause damage to a party made no logical sense. 473 F.Supp. at 1277-78. See also Jordan v. Madison Leasing Co., 596 F.Supp. 707, 711 (S.D.N.Y.1984) (a finding of “joint liability” under the federal securities laws is based “on common liability to the injured party and not necessarily upon the same tort”). We do not disagree with Judge Haight’s analysis that a purpose of the federal securities laws is to deter the commission of fraud in connection with the sale and purchase of securities. We therefore agree that an expansive definition of “joint tortfeasor” under the federal securities laws to include independent tortfeasors who are unconnected to the underlying fraudulent securities scheme is inappropriate. The more expansive definition adopted in Marrero and its progeny, however, do not conflict with Judge Haight’s analysis. In Marrero, unlike the cases applying the more restrictive definition of “joint tortfea-sors,” the third-party complaint alleged a violation of the federal securities laws by the third-party defendants. Marrero, 473 F.Supp. at 1276. The court held that these concurrent though independent violations of federal securities laws merited a more expansive definition of “joint tortfeasors” than one requiring joint participation. It was the allegation that two independent violations of Rule 10b-5, one alleged in the complaint and one alleged in the third-party complaint, had combined to produce a single injury to the plaintiff which formed the basis for the district court’s reasoning. Marrero, 473 F.Supp. at 1277. Allowing contribution in such circumstances is consistent, we believe, with Judge Haight’s concern that contribution under the federal securities laws be limited to those engaged in the kind of fraud that the securities laws contemplate. Cf. Tucker, 646 F.2d at 727 n. 7 (contribution available from one who “similarly defrauded” plaintiff). As this court noted in McCoy, at least one court in the Southern District of New York has interpreted Tucker to mean that the definition of “joint tortfeasor” for the purpose of a claim for contribution under the federal securities laws does not necessarily require joint participation. In Department of Economic Development v. Arthur Andersen & Co., 747 F.Supp. 922 (S.D.N.Y.1990), Judge Stewart explained Tucker as follows: [I]n stating that the securities law contribution claim in Tucker was proper, Judge Kearse implicitly had to have also concluded that an independent securities law violation committed by the Tucker third-party defendants against the plaintiff was also adequately alleged. 747 F.Supp. at 934. Thus interpreting Tucker, Judge Stewart lent his support to the view, originally articulated in Marrero, 473 F.Supp. at 1277-78, that the existence of two alleged independent violations of Rule 10b-5, one alleged in the complaint and one alleged in the third-party complaint, combining to produce a single injury to the plaintiff, may form the basis for a contribution claim under the federal securities laws. In Department of Economic Development, no such allegations were made, and thus the third-party plaintiffs’ contribution claim was dismissed. Relying in part on Judge Stewart’s well reasoned analysis, we thus adopted in McCoy a definition of “joint tortfeasors” which includes independent tort-feasors who concurrently cause the same injury to plaintiff. TPDs in the instant case, as did third-party defendants in McCoy (citing Stratton, 466 F.Supp. at 1187, and Greene, 102 F.R.D. at 36), argue that BDO had failed to allege that TPDs knowingly participated in the underlying fraud. As stated in McCoy, both these cases are distinguishable; in each, third-party plaintiffs failed to allege that the third-party defendants had violated the securities laws and had participated in the underlying fraud: [T]he Third-Party Complaint clearly alleges that ‘Third-Party Defendants, in connection with plaintiffs purchase of the units ... employed devices, schemes or artifices to defraud, made untrue statements of material facts and omitted to state other material facts ... all in violation of Section 10(b) of the 1934 Act and Rule 10b-5 promulgated thereunder.’ T.P.C. ¶ 39. The Third-Party Complaint also alleges that Phoenix Leasing ‘had actual knowledge’ of its allegedly false and misleading statements and that ‘[plaintiffs losses were proximately caused by third-party defendants’ representations and omissions.’ Id. As Judge Haight noted in Greene, the wrong to be deterred by the federal securities laws is fraud in the connection with the sale and purchase of securities. See Greene, 102 F.R.D. at 36; see also Department of Economic Dev., [747 F.Supp.] at 933. Here, the Third-Party Complaint alleges just such a fraud on the part of third-party defendants. Thus allowing contribution in the present matter is entirely consistent with Greene and Stratton. To require, as third-party defendants urge, a definition of ‘joint tortfeasor’ that is narrow enough to eliminate Phoenix Leasing would be virtually to eviscerate the right of contribution under Section 10(b). Accordingly, the Court denies the instant motion to dismiss third-party plaintiffs contribution claim under Section 10(b). McCoy, 778 F.Supp. at 204-06. At least one court has explicitly endorsed our view expressed in McCoy. See Ades, 1993 WL 362364. In Ades, the third-party defendant (relying on Connecticut National Bank, Greene, and Stratton) asserted the same argument pressed by TPDs in the instant ease: “Because it and [third-party plaintiff] did not knowing[ly] commit the same fraud upon the Plaintiffs, [third-party defendant] and [third-party plaintiff] do not qualify as ‘joint’ tortfeasors and [third-party plaintiff] is barred from asserting a right of contribution against [third-party defendant].” Ades, 1993 WL 362364, at *14. The court applied this court’s reasoning articulated in McCoy: Bolar, like the partnerships in McCoy, attempts to rely on the language in two older cases, Stratton Group, Ltd. v. Sprayregen, 466 F.Supp. 1180, 1187 (S.D.N.Y.1979) (“a necessary predicate for contribution ... is an allegation that [the third-party defendant] was a joint participant in the fraud alleged in the main action”), and Greene v. Emersons, Ltd., 102 F.R.D. 33, 36 (S.D.N.Y.1983) (holding “that contribution lies only between knowing participants in the same fraud”), aff'd on other grounds by Kenneth Leventhal & Co., 736 F.2d 29 (in which, as noted above, the Second Circuit declined to reach this issue). However, these decisions are distinguishable: “in each, third-party plaintiffs failed to allege that the third-party defendants had violated the securities laws and had participated in the underlying fraud.” McCoy, 778 F.Supp. at 204-05. Id., at *14. Because we conclude that the definition of joint tortfeasors includes independent and concurrent tortfeasors who similarly defrauded plaintiffs, we dismiss TPDs’ arguments that BDO has failed to state a cause of action for contribution under section 10(b) for failure to allege joint participation. We conclude that defining “joint tortfea-sors” to include independent tortfeasors who concurrently cause the same harm to plaintiffs furthers the purposes of federal securities laws. It is well established that recklessness is sufficient to constitute scienter under section 10(b). See, e.g., Breard v. Sachnoff & Weaver, Ltd., 941 F.2d 142, 144 (2d Cir.1991); IIT v. Cornfeld, 619 F.2d 909, 923 (2d Cir.1980) (Friendly, J.); Rolf v. Blyth, Eastman, Dillon & Co., 570 F.2d 38, 44 (2d Cir.), cert. denied, 439 U.S. 1039, 99 S.Ct. 642, 58 L.Ed.2d 698 (1978). As we previously ruled, the Amended Complaint’s “red flag” warnings about certain accounting irregularities and BDO’s failure to investigate these irregularities support plaintiffs’ allegations of recklessness on the part of BDO in a manner sufficient to survive a motion to dismiss. See In re The Leslie Fay Companies, Inc. Securities Litigation, 871 F.Supp. 686 (S.D.N.Y.1995). To bar contribution on the ground that one of the alleged tortfeasors acted with recklessness and therefore could not be a knowing joint participant would make no sense given that an allegation of recklessness is sufficient to assert a cause of action for direct liability. Indeed, the Supreme Comb, in focusing upon the harm which the securities laws were designed to deter, did not imply a need to find a deliberate conspiracy among tort-feasors. “The violation of the securities laws gives rise to the lOb-S private cause of action, and the question before us is the ancillary one of how damages are to be shared among persons or entities already subject to that liability,” Musick, Peeler, 508 U.S. at 292, 113 S.Ct. at 2088. Therefore, “the approach to the issue should not turn on how ‘joint tortfeasor’ is defined but rather on an assessment of the goals of both the securities laws and contribution.” Department of Economic Development, 747 F.Supp. at 933. Here BDO alleges that all TPDs participated in material fraudulent misrepresentations about Leslie Fay — the same fraud on which liability is asserted against BDO — made to the plaintiffs, upon which the plaintiffs relied and which affected the market price of Leslie Fay’s stock. Although the alleged joint participation of BDO and TPDs in the misrepresentations about Leslie Fay’s financial condition may not have been “knowing” according to the allegations in BDO’s cross-claims and third-party claims, they are “joint” in the sense that the alleged actions of both similarly defrauded plaintiffs. TPDs’ implication that BDO’s action for contribution should be dismissed for lack of standing is meritless. TPDs make reference to the fact that the Connecticut National Bank court held, in the alternative, that the third-party plaintiff did not have standing to sue under the securities laws because third-party plaintiff was not alleged to have purchased or sold any securities. This “alternative holding” conflicts with the Supreme Court’s holding in Musick, Peeler that a defendant in a securities fraud case has a claim for contribution as a matter of right. In addition, Second Circuit decisions which have held there is a right to contribution under section 10(b) have assumed without discussion that the party asserting the right need not be a purchaser or seller of securities. Tucker, 646 F.2d at 727 (accountants permitted to bring third-party complaint against officer of issuer corporation); Sirota, 673 F.2d at 578 (right of accountants to assert contribution claims against issuer upheld). “A claim for contribution is a derivative claim. Contribution is concerned only with the apportionment of liability among persons all liable for the plaintiffs’ harm, not to liability for wrongs committed by such against each other.” Ades, 1993 WL 362364, at *15. Finally, TPDs invoke relief under Central Bank of Denver, N. A., v. First Interstate Bank of Denver, N.A., — U.S. -, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994), where the Supreme Court eliminated aiding and abetting liability under section 10(b). The Supreme Court left unanswered, however, where to draw a line between secondary and primary liability. Although it made clear that giving aid to a person who commits securities fraud violations is not within the statute, the Supreme Court added: Because the text of § 10(b) does not prohibit aiding and abetting, we hold that a private plaintiff may not maintain an aiding and abetting suit under § 10(b). The absence of § 10(b) aiding and abetting liability does not mean that secondary actors in the securities markets are always free from liability under securities Acts. Any person or entity, including a lawyer, accountant, or bank, who employs a manipulative device or makes a material misstatement (or omission) on which a purchaser or seller of securities relies may be liable as a primary violator under 10b-5, assuming all of the requirements for primary liability under Rule 10b-5 are met_ In any complex securities fraud, moreover, there are likely to be multiple violators; this case, for example, respondents names four defendants as primary violators. — U.S. at -, 114 S.Ct. at 1455 (emphasis in original). Our conclusion is consistent with Central Bank because BDO alleges that TPDs directly committed violations of the securities laws. B. Rule 9(b) TPDs contend that BDO’s claims under section 10(b) do not allege scienter with sufficient particularity under Fed.R.Civ.P. 9(b). Rule 9(b) requires that the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other conditions of mind of a person may be averred generally. Fed.R.Civ.P. 9(b). In most cases, the rules merely require the plaintiff to plead a “short and plain statement” setting forth the allegations and grounds for relief. Fed.R.Civ.P. 8. The Second Circuit has held that the requirements of Rule 9(b) and Rule 8(a) “must be read together.” Ouaknine v. MacFarlane, 897 F.2d 75, 79 (2d Cir.1990); DiVittorio v. Equidyne Extractive Indus., 822 F.2d 1242, 1247 (2d Cir.1987). The particularity requirement serves three purposes: (1) it affords the defendants fair notice of the facts upon which the claim is based; (2) it safeguards the defendants’ reputation and goodwill from unfounded charges; and (3) it discourages “strike suits.” IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1057 (2d Cir.1993), cert. denied, — U.S. -, 115 S.Ct. 86, 130 L.Ed.2d 38 (1994). “[T]he relaxation of Rule 9(b)’s specificity requirement for scienter ‘must not be mistaken for license to base claims of fraud on speculation and eonclusory allegations.’ ” Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994) (citations omitted). Thus, the Second Circuit requires plaintiffs to allege facts that give rise to a strong inference of fraudulent intent. Id. In order to properly allege scienter under Section 10(b), a plaintiff must allege facts that either show that the defendant had motive and opportunity to commit fraud or constitute strong circumstantial evidence that the defendant acted knowingly or recklessly. Id. at 1128. In the case at hand, BDO contends that TPDs harmed plaintiffs by making material misstatements and by failing to disclose accounting irregularities, of which TPDs were aware, or recklessly failed to discover. BDO also contends that any fraud for which BDO may ultimately become liable is directly tied to the even greater fraud committed by TPDs. For example, BDO has alleged that the Odyssey Investors violated Section 10(b) and Rule 10b-5 promulgated thereunder, by engaging with Senior Management in, or participating in, a plan or scheme and common course of conduct to artificially inflate the market price of Leslie Fay’s stock and making misstatements and omissions regarding the Company and its financial condition. Each Individual Third-Party Defendants knew, or was reckless in failing to know, that Leslie Fay’s 1990 and 1991 financial statements and other financial disclosures were not fairly presented in accordance with GAAP. Odyssey-TPC ¶ 170. As for Hechler, BDO has alleged that he, along with others, “recklessly disregarded clear warnings [sic] signs that Leslie Fay’s financial statements were false and misleading and that the representations which had been made to BDO in connection with the audits of its financial statements were likewise false and misleading.” SM-CC ¶ 235. Furthermore, BDO has alleged that the Division Presidents have primary liability arising out of their contribution to the financial misstatements which appeared in annual reports, 10-Ks and 10-Qs, and prospectuses for the years 1990 and 1991. BDO asserts that the Division Presidents knew that they were submitting material misstatements to be incorporated in the consolidated financial results of Leslie Fay. BDO also asserts that the Division Presidents are liable for failing to correct materially false and misleading statements which they knew to be false at the time they made them. The Division Presidents argue that, while Ward and Zipp were corporate officers, they were not spokesmen for the Company and did not control corporate policy or communications to shareholders or the investing public. Mem. of Law in Support of Motion by Third-Party Defendants Arthur S. Levine, John A. Ward, and Gerald P. Zipp to Dismiss BDO Seidman’s Third Party Compl., at 7 (“Division Presidents MTD”). Furthermore, they argue that Levine held no corporate title and also did not control corporate policy or communications to shareholders or the investing public. Id. “The responsibility of each of the Division Presidents was limited to their respective divisions.” Id. “Overseeing all of the divisions with responsibility for setting corporate policy and being corporate spokesmen were, as BDO has termed them, “Senior Management”: John J. Pomerantz (“Pomerantz”), the Chief Executive Officer; Alan Golub, the Chief Operating Officer; and Paul F. Polishan (“Polishan”), the Chief Financial Officer, who for organizational purposes were all in the Corporate division.” Id. The Division Presidents argue that the actions alleged in BDO’s third-party claims are insufficient to establish liability because (1) the Division Presidents cannot be held accountable based solely on their status as “officers” of the Corporation because the Division Presidents did not hold positions of corporate policy or spokespersons and (2) the Division Presidents did not draft, issue or sign any of the Company’s public financial documents. The Division Presidents rely on In re Union Carbide Corp. Consumer Products Business Securities Litigation, 666 F.Supp. 547 (S.D.N.Y.1987), for the proposition that there must be some personal liability on their part for any misrepresentation, deception, or nondisclosure, beyond the mere fact that they have titles of “officers.” However, that case can be readily distinguished because the plaintiffs in that case failed to allege any action on the part of the officers that had any relationship to allegedly false and misleading statements in connection with the sale of securities: [T]he Court finds no factual basis presented for the plaintiffs’ broad, conclusory allegations that the defendants] engaged in any scheme to defraud, made any misleading statements, or engaged in frauds or deceits with respect to the issuance or sale of the [securities]. Furthermore, the facts alleged do not support the plaintiffs’ more specific allegations that these defendants participated in the preparation, dissemination, or issuance of materially misleading documents allegedly issued by [the company]- Finding no allegation of participation or direct involvement by [the officers] in the drafting, editing or issuance of the relevant documents, this Court concludes that the facts alleged are insufficient to support an allegation of a primary violation of Rule 10b-5 by either [officer]. 666 F.Supp. at 560. That court accepted defendants’ argument that “they lacked the authority to disclose or to correct such documents or statements.” Id. at 563. [The Court] rejects the notion ... that [the officers], whose responsibilities to Union Carbide were in the area of manufacture of home and automotive products, had' a corporate duty, ex officio, to disclose or to correct any misleading statements contained in union Carbide documents prepared for the corporation by others, or to disclose or to correct any misrepresentations or omissions with respect to the purchase or sale of Union Carbide securities made by others, although they may have had apparent or statutory authority to do so, if so advised. Our Circuit has held that, in the absence of direct participation in a securities violation, an outside director of a corporation has no duty to disclose adverse material facts or information to those prospective purchasers. 666 F.Supp. at 563. In the case at hand, however, BDO has alleged that the Division Presidents are liable for the misstatements which they knowingly made and which were expressed to plaintiffs in public financial documents. BDO has alleged sufficient facts that, if proven true, could lead a jury reasonably to conclude that the Division Presidents recklessly made misstatements concerning financial results that they knew would mislead investors. The fact that the Division Presidents were not responsible for consolidating and gathering the financials, and did not sign any of the public documents does not absolve them of liability. For example, Count I of the third-party complaint against the Division Presidents alleges that the Division Presidents violated section 10(b) and Rule 10b-5 by engaging with Senior Management in, or participating in, a plan or scheme and common course of conduct to artificially inflate the market price of Leslie Fay’s stock and making misstatements and omissions regarding the Company and its financial condition. [Zipp, Ward and Levine] knew, or were reckless in failing to know, that Leslie Fay’s 1990 and 1991 financial statements and other financial disclosures were not fairly presented in accordance with GAAP. DP-TPC, ¶ 174. Furthermore, as to contribution claims asserted against the Division Presidents as well as against other moving TPDs, BDO incorporates by reference all the preceding paragraphs that identify what statements were made by whom, and when they were made. See SR-CC ¶¶ 173, 176; Odyssey-TPC ¶¶ 168, 172; DP-TPC ¶¶ 172, 176. BDO alleges sufficient facts that show that the defendant had motive and opportunity to commit fraud or constitute strong circumstantial evidence that the defendant acted knowingly or recklessly. III. Section 20 BDO invokes section 20 of the Securities Exchange Act of 1934 to assert liability against the Odyssey Investors and Hechler for contribution as controlling persons for violation of section 10(b). Odyssey and He-chler move to dismiss BDO’s section 20(a) claim for failure to allege “control person” liability. Section 20(a) of the 1934 Act provides that [e]very person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. 15 U.S.C. § 78t(a). To establish a claim under section 20, a plaintiff must allege (1) a primary violation, (2) scienter, and (3) control of the primary violator by the defendant. Robbins v. Moore Medical Corp., 788 F.Supp. 179, 188 (S.D.N.Y.1992). Control is defined by the Securities and Exchange Commission as “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.” 17 C.F.R. § 240.12b-2. The Odyssey Investors argue that (1) control status cannot be inferred simply from positions as outside directors; (2) membership on the Audit Committee is not sufficient to give rise to an inference of power to control management; and (3) ownership of a non-controlling share of stock, by definition, cannot give rise to an inference of control over management. The Odyssey Investors first assert that an individual’s status as a corporate director, standing alone, is insufficient to impose liability under section 20. See Kimmel v. Labenski, 1988 WL 19229 (S.D.N.Y. Feb. 10, 1988) (dismissing section 20(a) claim against outside directors who were members of the board’s audit committee and signed the company’s Form 10-K reports). The Odyssey Investors argue that the intent of the Congress in enacting section 20 “was obviously to impose liability only on those directors who fall within its definition of control and who are in some meaningful sense culpable participants in the fraud perpetrated by controlled persons.” Lanza v. Drexel & Co., 479 F.2d 1277, 1299 (2d Cir.1973). Odyssey then argues that BDO alleges no facts indicating that the Odyssey Investors’ combined 12% “non-eontrolling” percentage of stock ownership gave them the ability to control the activities of management. Odyssey Motion, at 10. However, Treadway Cos. v. Care Corp., 638 F.2d 357 (2d Cir.1980) (company’s largest shareholder, owning 14% of company’s stock, was not a “controlling shareholder” and did not have “control of corporation” for purpose of deciding whether or not he had to share a “control premium” upon his sale of stock with other shareholders), cited favorably by Odyssey, is not dispositive. The Second Circuit merely upheld the district court’s “specific” finding that the 14% shareholder did not have control of the corporation. 638 F.2d at 377; see also id., at 377 n. 39 (“The court noted that in December 1977 [the 14% shareholder] had requested that he be made Chairman of [the company’s] board of directors, but that the other directors refused this request.”). We do not believe that that court ruled that a 14% ownership interest is per se non-eontrolling. In any case, BDO does not rest solely on a 12% stock ownership in support of its section 20 “controlling person” claim; nor does BDO assert liability based solely on the Odyssey Investors’ positions as outside directors. In short, Odyssey attempts to isolate various indicia of control and argue that each, by itself, does not establish control person liability. Of course, we must consider the total effect of the various indicia of control in combination. As noted in Robbins: The law governing the sufficiency of pleadings of scienter by controlling persons is unclear. Eighteen years ago the Court of Appeals for this Circuit ruled that a plaintiff must allege that thé alleged controlling persons were “in some meaningful sense culpable participants in the fraud perpetrated by controlled persons,” Gordon v. Burr, 506 F.2d 1080, 1085-86 (2d Cir.1974) (reversing finding of control person liability for want of evidence of defendant’s knowledge of or participation in fraud), a ruling that has retained some vitality. See, e.g., Brickman v. Tyco Toys, Inc., 731 F.Supp. 101, 106 (S.D.N.Y.1990). Other well-reasoned opinions in this District, however, have argued that § 20 “now only requires that the plaintiff allege and prove control, leaving it to the defendant to plead and prove good faith and lack of participation.” Healey v. Chelsea Resources Ltd., 736 F.Supp. 488, 495 (S.D.N.Y.1990) (Carter, J.) (citing Marburg Management, Inc. v. Kohn, 629 F.2d 705, 716 (2d Cir.), cert. denied sub nom. Wood Walker & Co. v. Marbury Management, Inc., 449 U.S. 1011, 101 S.Ct. 566, 66 L.Ed.2d 469 [ (1980) ]). See also Borden, Inc. v. Spoor Behrins Campbell & Young, 735 F.Supp. 587, 590 (S.D.N.Y.1990) (Conner, J.). 788 F.Supp. at 188. The Robbins court concluded that the complaint in question was adequate because “[i]t recite[d] the position of each individual defendant at [the company] (all were directors or officers during at least part of the class period) and identified] those defendants who signed statements made by the company or otherwise issued statements alleged to be misleading [and went] on to aver their knowing or reckless participation in the alleged scheme.... ” Id. BDO has alleged that each TPD signed at least one of the allegedly fraudulent documents, which, BDO argues, supports the inference that defendants exercised a degree of control over the company’s operations and representations. Such allegations are sufficient at the pleadings stage under § 20(a). Id. at 189; Borden, Inc. v. Spoor Behrins Campbell & Young, 735 F.Supp. 587, 588-91 (S.D.N.Y.1990) (Conner, J.); In re The Leslie Fay Companies, Inc. Securities Litigation, 1993 WL 438927, *5 (S.D.N.Y. Oct. 27, 1993) (Conner, J.) (“To properly allege control person liability under section 20(a) of the Securities and Exchange Act of 1934, plaintiffs need only allege that defendants either directly or indirectly held the power to exercise control over the primary violator.”). BDO alleges that each of the Odyssey Investors (Friedman, Nash and Pollack) and Hechler served as directors and reviewed and signed SEC filings containing fraudulent financial information. In addition, BDO specifically alleges that the Odyssey Investors were in a position to control and influence Leslie Fay’s business and operations, particularly as to accounting and financial reporting policies. For example, BDO alleges: During the class period, third-party defendants Friedman, Nash, Pollack, Tarnopol, and Odyssey were in a position to control and influence the business activities, accounting policies, practices and financial reporting of the Company, as well as the disclosures made by the Company in its press releases and SEC filings.... [T]hey were in a position to direct and influence the activities of Senior Management and prevent the commission of the fraud, but recklessly disregarded the material misstatements or omissions in the Company’s 1990, 1991 and 1992 financial statements and in its SEC filings, press releases and other public statements during the class period, as a result of which the Company itself violated Section 10(b) of the 1934 Act and Rule 10b-5 promulgated thereunder and they personally benefit-ted. Odyssey-TPC ¶ 206; see also SM-CC ¶¶ 254-58 (claim against Hechler). When viewing all the indicia of control in their entirety, we conclude that BDO has alleged sufficient facts to withstand Odyssey’s and Hechler’s challenge that “control” has not been sufficiently alleged to support a section 20(a) “control person” claim. IY. Section 12 BDO’s claim against Friedman and Odyssey under section 12 of the 1933 Securities Act, 15 U.S.C. § 77Z, must be dismissed. Section 12(2) provides Any person who ... offers or sells a security ... by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable to the person purchasing such security from him.... 15 U.S.C. § 111 (2). As discussed above, BDO has alleged sufficient facts in its complaint to infer fraud on the part of Friedman and Odyssey to make them joint tortfeasors with respect to plaintiffs’ section 10(b) claim against BDO. However, joint tortfeasor liability under section 10(b) allows BDO to assert claims against others who “similarly defrauded” plaintiffs. Tucker, 646 F.2d at 727 n. 7. A section 10(b) claim does not encompass fraud similar to a section 12 claim. It should be noted that plaintiffs do not, and could not, assert a claim under section 12. Under section 12(2), a plaintiff may recover only from its immediate seller. Cortec Indus. v. Sum Holding L.P., 949 F.2d 42, 49 (2d Cir.1991), cert. denied sub nom. Cortec Indus. v. Westinghouse Credit Corp., 503 U.S. 960, 112 S.Ct. 1561, 118 L.Ed.2d 208 (1992). See also Pinter v. Dahl, 486 U.S. 622, 642, 108 S.Ct. 2063, 2076, 100 L.Ed.2d 658 (1988) (“At the very least ... the language of § 12(1) contemplates a buyer-seller relationship not unlike traditional contractual privity. Thus, it is settled that § 12(1) imposes liability on the owner who passed title, or other interests in the security, to the buyer for value.”). Neither plaintiffs nor BDO alleges that plaintiffs purchased Leslie Fay stock directly from TPDs. This claim, therefore, does not fall within the reach of BDO’s claim for contribution. BDO’s pleas to equity cannot overcome the statutory limitations imposed by Congress in section 12(2). V. Negligent Misrepresentation Odyssey argues that BDO’s claim for negligent misrepresentation must be dismissed because (1) it is a disguised indemnity claim and (2) it fails to allege that the Odyssey Investors made any statement whatsoever which could constitute a misrepresentation. The Division Presidents add that BDO’s claim against them must be dismissed for failure to satisfy the privity requirement of a claim for negligent misrepresentation. A. “Indemnity Claim in Disguise” It is well settled, and BDO does not dispute, that a violator of section 10(b) may not seek indemnification. See Globus v. Law Research Service, Inc., 418 F.2d 1276, 1288 (2d Cir.1969), cert. denied, 397 U.S. 913, 90 S.Ct. 913, 25 L.Ed.2d 93 (1970); see also Greenwald v. American Medcare Corp., 666 F.Supp. 489, 493 (S.D.N.Y.1987) (“[N]o party who has himself knowingly and wilfully violated the federal securities laws may obtain indemnity from another violator of those laws.”). Odyssey characterizes BDO’s negligent misrepresentation claim as an impermissible indemnity claim in disguise. Odyssey Motion, at 14. Odyssey argues that if the allegations of the Amended Complaint are true, BDO has violated section 10(b), and BDO’s damages will be the result of its own violations of federal securities laws. Odyssey Reply, at 22. BDO responds that its claim for negligent misrepresentation is not a claim for indemnity because its claim is based on a duty owed by Odyssey to BDO to provide honestly information that BDO requested, not based on joint liability to the plaintiffs, where one injurer tries to shift the blame to another injurer. If BDO was harmed by receipt of false information from Odyssey, and if BDO was completely without fault as to plaintiffs’ claim for violation of section 10(b), BDO may possess' an independent claim for misrepresentation. See Greenwald, 666 F.Supp. at 493 (“[N]o party who has himself knowingly and wilfully violated the federal securities laws may obtain indemnity from another violator of those laws.... [Third-party plaintiff], however, claims that he was totally without fault and did not himself violate the federal securities laws.... Accordingly, [third-party plaintiff] is entitled to an opportunity to prove that he was without fault and is therefore entitled to indemnity.”). BDO argues that it suffered cognizable harms as a result of Odyssey’s negligent misrepresentations, including incorrect and unfavorable publicity, harm to BDO’s tusiness and reputation, and litigation costs and attorneys’ fees. The issue whether an auditor’s negligent misrepresentation claim can be sustained, independent of a claim for indemnity, was addressed by the Seventh Circuit in Cenco Inc. v. Seidman & Seidman, 686 F.2d 449 (7th Cir.), cert. denied, 459 U.S. 880, 103 S.Ct. 177, 74 L.Ed.2d 145 (1982), where, as alleged here, the management of a corporation perpetrated a massive fraud, and shareholders sued the auditors (and others). The auditors settled with the shareholders, and then asserted a fraud claim against the company based on misrepresentations by corporate officials. At trial, the district court dismissed the fraud claim on the ground that the auditor was “just seeking indemnification from a codefendant, which ... is not allowed in a Rule 10b-5 ease.” Id. at 457. The Seventh Circuit reversed, holding that the auditor’s claim for fraud and any claim for indemnity were separate claims. Id. at 457-58. Judge Posner explained: [indemnity is a remedy of one wrongdoer against another; and [the auditor’s] claim is that it was a victim rather than a wrongdoer. It is true that it paid several millions to the class plaintiffs, but it never admitted wrongdoing or was adjudicated a wrongdoer. Therefore, if it can prove that [the company] defrauded it into issuing false audit reports which in turn exposed it to liability to the class plaintiffs, the amount it paid to settle with the class would be a permissible item of damages. Id. at 457-58. Odyssey cites Greene v. Emersons Ltd., 1985 WL 1989 (S.D.N.Y. June 28, 1985), for the proposition that, even if BDO is exonerated at trial, its request for indemnification for the cost of defending itself against claims arising out of its own alleged wrongdoing is not allowed. See id. at *2 (“[I]f it appears that a defendant, in part at least, is defending himself against claims of his own wrongdoing, then the traditional American Rule bars him from recovering his legal expenses from another, even if his defense is eventually upheld.”). Odyssey disputes BDO’s argument that “its negligent misrepresentation claim rests on the premise that it has been dragged into this litigation solely due to its reliance on various ‘representations’ made to it by company officials — that its involvement is due to the ‘tort of another.’ ” Odyssey Motion, at 22. Odyssey asserts that plaintiffs have alleged that BDO violated various specific provisions of GAAS and GAAP, including allegations that BDO failed to exercise due professional care, failed to obtain a sufficient understanding of the internal control system, failed to obtain sufficient evidentiary materia], failed to conduct subsequent events procedures with the proper level of professional skepticism, failed to inquire into numerous questionable journal entries, failed to inquire into the Company’s methodology for calculating its chargeback reserves, and falsely advised the audit committee and the Board of Directors that the company’s controls were satisfactory. See Odyssey Motion, at 22. Odyssey argues that, “‘[gjiven the present plaintiffs’ allegations of [the auditor’s] own independent misconduct, it is difficult to conceive of [the auditor] as facing a cause of action which exists only because of the tort of another.’ [E]ven if the allegations of the Amended Complaint are not true, and BDO is exonerated at trial, ‘it has no viable claim that the conduct of other wrongfully involved [it] in this litigation with plaintiffs.’” Id., at 28 (quoting Cortec Indus. v. Sum Holding L.P., 1994 WL 722708, *3 (S.D.N.Y. Dec. 30, 1994). It should be noted, however, that Judge Haight in Cortee, 1994 WL 722708, was faced with the issue whether a court-approved settlement would bar a “tort of another” claim from a non-settling defendant for attorneys fees from settling defendants. Id. at *1. That is not the claim that is asserted by BDO. We conclude that Greene, 102 F.R.D. 33, and the cases upon which it relied, Safeway Stores v. Chamberlain Protective Servcs., Inc., 451 A.2d 66 (D.C.App.1982); Weston v. Globe Slicing Machine Co., 621 F.2d 344 (9th Cir.1980), are distinguishable from the instant case, but for reasons other than those expressed by BDO. These cases address whether an exception to the normal “American Rule” that each party shall bear its own costs is available to joint tortfeasors in certain circumstances. BDO does not simply seek indemnification for its attorneys fees. BDO has identified other harms that it has suffered due to Odyssey’s alleged negligent misrepresentation in connection with this lawsuit. For example, BDO alleges that it suffered harm to its business and reputation as a result of its involvement in this litigation — involvement which was allegedly caused by Odyssey’s negligent misrepresentations to BDO. BDO alleges that it suffered cognizable harm due to Odyssey’s misrepresentations, not that TPDs should pay for BDO’s attorneys’ fees because BDO was forced to defend a suit charging BDO and Odyssey as joint tortfeasors, and BDO was wholly absolved of any liability on the merits. On a motion to dismiss, we draw all inferences favorably to BDO, and we accept as true all factual allegations in BDO’s claims. At this stage, we deem it premature to dismiss BDO’s claim for negligent misrepresentation based on the argument that it is an impermissible claim for indemnity in disguise. If BDO’s allegations are proven true, then it has been harmed by TPDs’ misrepresentations, and may seek redress. B. Rule 9(b) Odyssey argues that BDO’s claim against Odyssey fails to allege any purported misrepresentation made by Odyssey, or to plead it with particularity. A claim for negligent misrepresentation must comply with the pleading requirement of Rule 9(b). See, e.g., Garcia v. Spanish Broadcasting System, Inc., 1993 WL 177936, *3 (S.D.N.Y.1993) (dismissing negligent misrepresentation count for failure to comply "with Rule 9(b)); Philan Ins. Ltd. v. Frank B. Hall & Co., 748 F.Supp. 190, 197 (S.D.N.Y.1990) (same). Rule 9(b) requires that “[i]n all averments of fraud ... the circumstances constituting fraud ... shall be stated with particularity.” Fed.R.Civ.P. 9(b). According to Ross v. A.H. Robins Co., 607 F.2d 545, 557 (2d Cir.1979), cert. denied, 446 U.S. 946, 100 S.Ct. 2175, 64 L.Ed.2d 802 (1980), the heightened pleading requirement serves three important purposes: First, it assures the defendant of “‘fair notice of what the plaintiffs claim is and the grounds upon which it rests.’ ”_ Secondly, the specificity requirement grows out of “the