# In Re Alstom SA Securities Litigation > District Court, S.D. New York · December 22, 2005 · 406 F. Supp. 2d 433 URL: https://www.frixlaw.com/law-library/cases/2323344 ## Case - **Full name:** In Re ALSTOM SA SECURITIES LITIGATION - **Court:** District Court, S.D. New York - **Decided:** December 22, 2005 - **Citations:** 406 F. Supp. 2d 433 - **Precedential status:** Published - **Opinion:** Opinion by Marrero - **Judges:** Marrero - **Cited by:** 150 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2323344 ## How later opinions describe it (automated extraction) - explaining that recklessness is typically established when a plaintiff specifically alleges that a defendant was aware of facts or had access to information contradicting public statement, or failed to review or check information that he or she had a duty to monitor - stating that conduct is reckless when it represents an extreme departure from the standards of ordinary care, to the extent that a danger was either known to the defendant or so obvious that the defendant must have been aware of the danger - finding that plaintiffs had not pled culpable participation as to the controlling persons where they “have not alleged any facts supporting a strong inference of any extreme conduct that even approximates recklessness.... ” - finding scienter adequately pled when the plaintiffs alleged that “the entity executing the financing arrangements[ ] had access to information about those arrangements and chose not to disclose them to the public” - stating that plaintiff must allege that defendant “(1) committed a deceptive or manipulative act, (2) with scienter, that (3 ## Opinion text DECISION AND ORDER MARRERO, District Judge. TABLE OF CONTENTS I. INTRODUCTION..........................................................443 II. BACKGROUND...........................................................444 III. SECTION 10(b) OF THE EXCHANGE ACT AND RULE 10b-5................444 A. LEGAL STANDARD...................................................444 1. Misleading Statement or Omission....................................445 2. Scienter...........................................................445 a. Motive and Opportunity..........................................446 b. Conscious Misbehavior or Recklessness............................446 3. Causation..........................................................447 B. DISCUSSION.........................................................447 1. Group Pleading.....................................................448 2. Marine Fraud......................................................450 a. Material Misstatements Alleged Concerning the Marine Fraud........450 b. Rule 9(b) Particularity...........................................454 c. Scienter as to Marine Fraud......................................455 (i) Scienter of Alstom ........................................455 (ii) Scienter as to Officer Defendants ...........................459 d. Causation as to the Marine Fraud.................................460 3. ATI Fraud.........................................................461 a. Material Misstatements Alleged Concerning the ATI Fraud..........461 b. Scienter Concerning the ATI Fraud...............................469 . (i) Scienter as to ATI.........................................469 (ii) Scienter as to Alstom......................................470 (a) Motive and Opportunity................................470 (b) Conscious Misbehavior or Recklessness Concerning the ATI Fraud......................................470 (iii) Scienter as to Officer Defendants for the ATI Fraud...........472 c. Causation......................................................473 4. Applicability of Scheme Liability......................................474 IV. SECTION 18 OF THE EXCHANGE ACT....................................477 A. LEGAL STANDARD...................................................477 1. Documents Filed Pursuant to the Exchange Act........................479 2. Actual Reliance.....................................................479 3. Scienter...........................................................480 B. DISCUSSION.........................................................480 1. False or Misleading Statement Contained in a Document Filed Pursuant to the Exchange Act......................................480 a. Documents Filed Pursuant to the Exchange Act.....................480 (i) Form 6-K................................................481 (ii) November 6, 2001 Press Release............................481 (iii) Form F-3...................;............................481 (iv) Forms 20-F..............................................482 b. Filed Documents Containing False or Misleading Statements with Respect to Any Material Fact...................................482 V. SECTION 20(A) OF THE EXCHANGE ACT.................................485 A. LEGAL STANDARD...................................................486 1. Primary Violation...................................................486 *443 2. Control of the Primary Violator.......................................486 3. Culpable Participation...............................................489 a. Plaintiffs Must Plead Culpable Participation........................489 b. Culpable Participation Requires a Showing of At Lease Recklessness.................................................490 B. DISCUSSION.........................................................492 1. Alcatel ............................................................492 a. Primary Violation...............................................492 b. Control........................................................492 c. Culpable Participation...........................................493 d. Conclusion.....................................................493 2. Bilger.............................................................493 a. Primary Violation...............................................493 b. Control........................................................493 c. Culpable Participation...........................................496 d. Conclusion.........................................■............496 3. Newey............................................................496 a. Primary Violation...............................................496 b. Control........................................................497 c. Culpable Participation...........................................498 d. Conclusion.....................................................498 4. Kron..............................................................498 a. Primary Violation...............................................498 b. Control........................................................499 c. Culpable Participation...........................................500 d. Conclusion.....................................................500 5. Jaffre.............................................................500 a. Primary Violation..................:............................500 b. Control........................................................500 c. Culpable Participation...........................................501 d. Conclusion.....................................................501 6. Rambaud-Measson and Janovec......................................501 a. Primary Violation...............................................501 b. Control.........................................................501 c. Culpable Participation...............................•............502 (i) Culpable Participation is Adequately Pled....................504 d. Conclusion.....................................................506 VI. ORDER ..................................................................506 I. INTRODUCTION Lead plaintiffs in this class action filed the Consolidated Amended Complaint for Violations of the Federal Securities Laws, dated June 18, 2004 (the “Complaint”), alleging violations of both the Securities Act of 1933, 15 U.S.C. § 77a et seq. (the “Securities Act”), and the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq. (the “Exchange Act”). On September 30, 2004, all Defendants moved to dismiss the Complaint, asserting numerous jurisdictional, statute of limitations and substantive objections. Because of the breadth of issues raised in their various submissions, the Court considers Defendants’ motions in separate rulings. In the companion opinions issued separately, the Court adjudicates all motions contesting the jurisdiction of this Court to hear the dispute as to certain parties (“Alstom I”) In re Alstom SA Sec. Litig., 406 F.Supp.2d 346 , 2005 WL 3500477 (S.D.N.Y.2005) and the statute of limitations issues raised under Rule 12(b)(6) (“Alstom II”) In re Alstom SA Sec. Litig., 406 F.Supp.2d 402 , 2005 WL 3534471 (S.D.N.Y.2005). In this decision, to be referred to as “Alstom III,” the *444 Court addresses Defendants’ motions to dismiss the claims brought under Section 10(b), Section 18, and Section 20(a) of the Exchange Act. II. BACKGROUND All of the background information relevant to this decision is contained in the prior companion opinions issued on this date, Alstom I and Alstom II. Familiarity with those opinions and all factual statements, citations to the record and court filings, and legal determinations contained therein is assumed. III. SECTION 10(b) OF THE EXCHANGE ACT AND RULE 10b-5 A. LEGAL STANDARD An assessment of the sufficiency of a claim of fraud brought under the securities laws implicates a statutory and regulatory framework involving Section 10(b) of the Exchange Act, Rule 10b-5, Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”) and the pleading standards required by the Private Securities Litigation Reform Act (the “PSLRA” or the “Act”). In pertinent part, Section 10(b) of the Exchange Act declares it unlawful for any person, directly or indirectly, by the use of any means of interstate commerce, the mails, or national securities exchange: to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 15 U.S.C. § 78¡j(b). Rule 10b-5, promulgated by the Securities and Exchange Commission (the “SEC”) to implement Section 10(b), “more specifically delineates what constitutes a manipulative or deceptive device or contrivance.” Press v. Chemical Inv. Servs. Corp., 166 F.3d 529 , 534 (2d Cir.1999). Under Rule 10b-5, it is unlawful for any person, directly or indirectly, by the use of any means specified in Section 10(b): (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240 .10b-5 (1999). When allegations of securities fraud are premised on misleading statements, plaintiffs must plead facts demonstrating a violation of Section 10(b) and Rule 10b-5(b). To state a claim for relief under these provisions, plaintiffs must allege that the defendant “made a materially false statement or omitted a material fact, with scienter, and that the plaintiffs reliance on the defendant’s action caused injury to the plaintiff.” Ganino v. Citizens Utils., Co., 228 F.3d 154 , 161 (2d Cir.2000). Plaintiffs’ pleadings in cases alleging violations of Section 10(b) and Rule 10b-5 must also satisfy the heightened pleading requirements set forth in Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”), which requires that “in all averments of fraud or mistake, the circumstances concerning fraud and mistake shall be stated with particularity.” Fed.R.Civ.P. 9(b). In addition, the passage of the PSLRA in 1995 altered the landscape of securities litigation by, among other things, requiring that *445 plaintiffs alleging securities fraud specify each statement that they contend is misleading and the reason that the statement is misleading, and that they particularize pleadings as to scienter. See Pub.L. No. 104-67, 109 Stat. 737 (1995) (codified at 15 U.S.C. §§ 77k, 77l, 77z-l, 77z-2, 78a, 78j-1, 78t, 78u, 78u-4, 78u-5). The enhanced pleading standards of the PSLRA are set forth in sections 21D(b)(1) and 21D(b)(2) of the Act. Section 21D(b)(1) requires that in connection with any private action arising under the statute in which plaintiffs allege to have been misled by defendants’ untrue statements or omissions of material fact the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed. 15 U.S.C. § 78u-4(b)(1) (“Subsection (b)(1)”). Section 21D (b)(2) mandates that in actions under the statute in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall, with respect to each act or omission alleged to violate this title, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind. 15 U.S.C. § 78u-4(b)(2) (“Subsection (b)(2)”). Section 21D(b)(3)(A) mandates dismissal of complaints which fail to satisfy the pleading standards promulgated in Subsections (b)(1) and (b)(2). See 15 U.S.C. § 78u-4(b)(3)(A) (“Subsection (b)(3)(A)”). In combination, these statutes and rules set forth the hurdles a plaintiff must clear in order to state a claim for a Section 10(b) violation. 1. Misleading Statement or Omission As noted above, a plaintiffs first obligation in pleading a securities fraud claim based on misrepresentations is to allege that the defendant made a false or misleading statement, or an omission of material information. See Acito v. IMC-ERA Group, 47 F.3d 47 , 52 (2d Cir.1995). Whether information is material is evaluated from the viewpoint' of a reasonable investor: [T]here must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available. Basic Inc. v. Levinson, 485 U.S. 224, 231-32 , 108 S.Ct. 978 , 99 L.Ed.2d 194 (1988) (quoting TSC Indus. v. Northway, Inc., 426 U.S. 438, 449 , 96 S.Ct. 2126 , 48 L.Ed.2d 757 (1976)). Furthermore, allegations of omission will not support a claim for securities fraud unless the defendant had a duty to disclose the information. The Second Circuit has held that “one circumstance creating a duty to disclose arises when disclosure is necessary to make prior statements not misleading.” In re Time Warner, Inc. Sec. Litig., 9 F.3d 259, 268 (2d Cir.1993). 2. Scienter The PSLRA requires that the complaint allege sufficient facts to support a “strong inference” of the requisite state of mind. A plaintiff can fulfill this scienter requirement through one of two methods: “(a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.” Kal-nit v. Eichler, 264 F.3d 131, 138-39 (2d Cir.2001) (quotation marks and internal citations omitted). *446 In the Second Circuit, plaintiffs bringing claims under Section 10(b) and Rule 10b-5 have long been required to state with particularity “facts that give rise to a strong inference of fraudulent intent.” Acito, 47 F.3d at 52. Thus Congress, in passing the PSLRA, codified the “strong inference” pleading standard for scienter that was established in this Circuit. See Novak v. Kasaks, 216 F.3d 300 , 308 (2d Cir.2000); In re Interpublic Sec. Litig., No. 02 Civ. 6527, 2003 WL 21250682 , at *10 (S.D.N.Y. May 29, 2003) (“The PSLRA raised the nationwide pleading standard for securities fraud but did not alter the level of pleading previously required by the Second Circuit.” (citations omitted)). Though the No-vak court explicitly noted that lower courts and litigants “need and should not employ or rely on magic words such as ‘motive and opportunity,’ ” it did advise that this Circuit’s case law “may be helpful in providing guidance as to how the ‘strong inference’ standard may be met.” Novak, 216 F.3d at 311. In practice, courts in this Circuit have continued, in the wake of the PSLRA’s passage, to evaluate pleadings for facts demonstrating either (i) motive and opportunity, or (ii) conscious misbehavior or recklessness, and to look to this Circuit’s case law from both before and after the PSLRA’s passage for guidance when undertaking this analysis. See Kal-nit, 264 F.3d at 138-139 (specifically noting that the Second Circuit’s two methods for proving scienter survive the passage of the PSLRA). 1 a. Motive and Opportunity In order to support a “strong inference” of fraudulent intent, plaintiffs’ allegations of motive must “entail concrete benefits that could be realized by one or more of the false statements and wrongful nondisclosures alleged.” Kalnit, 264 F.3d at 138-139 (internal citations omitted). Motives that can be ascribed to “virtually all corporate insiders,” or “any publicly owned, for profit endeavor” are not sufficient to support a claim of fraud. Id.; Chill v. General Elec. Co., 101 F.3d 263 , 267 (2d Cir.1996). Examples of general motives which fail to support a strong inference of scienter include “(1) the desire for the corporation to appear profitable and (2) the desire to keep stock prices high to increase officer compensation.” Kalnit, 264 F.3d at 139 . b. Conscious Misbehavior or Recklessness Where plaintiffs fail to allege scienter through motive and opportunity, the securities fraud claim may still be sufficiently stated by allegations demonstrating “strong circumstantial evidence of conscious misbehavior or recklessness.” Id. at 138-39 (internal citations omitted). As set forth in In re Carter-Wallace, Inc. Sec. Litig., To survive dismissal under the conscious misbehavior theory, the [plaintiffs] must show that they alleged reckless conduct by the [defendants], which is, at the least, conduct which is highly unreasonable and [] represents an extreme departure from the standards of ordinary care to the extent that the danger was either known to the defendant or so obvious that the defendant must have been aware of it. 220 F.3d 36 , 39 (2d Cir.2000) (internal citations omitted); see also Chill, 101 F.3d at 269 (noting that in some cases “[a]n *447 egregious refusal to see the obvious, or to investigate the doubtful” may give rise to an inference of recklessness (quoting Goldman v. McMahan, Brafman, Morgan & Co., 706 F.Supp. 256, 259 (S.D.N.Y.1989))). The concept of recklessness necessarily introduces imprecision and matters of degree into measures of culpability in actions brought under Rule 10b-5. See Novak, 216 F.3d at 308 (“Recklessness is harder to identify with such precision and consistency.”). Nonetheless, concrete guidance can be gleaned by looking to the facts in cases in which pleadings have been analyzed for allegations constituting recklessness on the part of the defendants. In Novak, the Second Circuit reviewed this Circuit’s pre-PSLRA case law in order to give further content to the recklessness analysis. The court specifically highlighted cases in which the factual allegations demonstrated that defendants (1) possessed knowledge of facts or access to information contradicting their public statements; or (2) “failed to review or check information that they had a duty to monitor, or ignored obvious signs of fraud.” Id. at 308 (internal citations omitted); see also Livent II, 151 F.Supp.2d at 412. The Circuit Court cautioned, however, that its jurisprudence concerning securities fraud based on reckless conduct encompassed certain important limitations on the scope of liability. First, the court has refused to allow plaintiffs to proceed with allegations of “fraud by hindsight.” No-vak, 216 F.3d at 309 (citing Stevelman v. Alias Research Inc., 174 F.3d 79, 85 (2d Cir.1999)); Acito, 47 F.3d at 53 (allegations that defendants should have anticipated future events and made earlier disclosures did not suffice to make out a claim of fraud). Second, corporate managers are not obligated to portray business performance and prospects in unduly cautious or gloomy terms in public pronouncements, as long as their representations are consistent with reasonably available data. See Novak, 216 F.3d at 309 (citing Stevelman, 174 F.3d at 85 ; Shields v. Citytrust Bancorp, 25 F.3d 1124, 1129-30 (2d Cir.1994)). Third, the Novak court reaffirmed limits on the scope of liability for failure to monitor alleged fraudulent conduct of third persons or, more relevant in this case, corporate subsidiaries. See Novak, 216 F.3d at 309; Chill, 101 F.3d at 269-70 (failure of a parent company to regard the extraordinary profitability of its subsidiary as signaling problems compelling further investigation does not constitute adequate grounds for a finding of recklessness sufficient for liability under Section 10(b)). 3. Causation Finally, to state a claim for securities fraud, a plaintiff must plead both transaction causation and loss causation. See Lentell v. Merrill Lynch & Co., 396 F.3d 161, 172 (2d Cir.2005). Transaction causation requires a showing that the plaintiff “relied upon defendant’s allegedly fraudulent conduct in purchasing or selling securities,” while loss causation is pled through facts alleging “that defendant’s conduct caused, at least in part, plaintiffs loss.” In re GeoPharma, Inc. Sec. Litig., No. 04 Civ. 9463, 2005 WL 2431518, at *6, n. 86 (S.D.N.Y., Sept.30, 2005). The Second Circuit has recently elaborated on the loss causation element, finding that a plaintiff must allege that “the loss be foreseeable and that the loss be caused by the materialization of the concealed risk.” Lentell, 396 F.3d at 173 . B. DISCUSSION The Complaint alleges Section 10(b) violations against a number of Defendants in connection with their roles in the Marine Fraud, the Turbine Fraud and the ATI *448 Fraud. 2 Specifically, Plaintiffs have alleged Section 10(b) violations against: Al-stom, Alstom USA, ATI, Alcatel and the Officer Defendants (Bilger, Newey, Kron, Jaffre, Milner, Janovec and Rambaud-Measson). Many of these claims have been disposed of in the Court’s statute of limitations ruling, which held that all claims relating to the Turbine Fraud are time-barred, and that all claims against Alcatel, ATI, Alstom USA, and Milner 3 relating to the Marine Fraud are also time-barred. See Alstom II, Section IV. B.2. In addition, because Plaintiffs have alleged no facts regarding Alcatel’s role in the ATI Fraud, in which no misleading statements were made until November of 2002, which was more than a year after Alcatel had sold all of its shares in Alstom, there are no grounds supporting Section 10(b) liability against Alcatel for the ATI Fraud. Therefore, this claim is also dismissed. Thus the only remaining Section 10(b) claims are against (i) Alstom and the Officer Defendants (with the exception of Milner) in connection with both the Marine Fraud and the ATI Fraud, and (ii) ATI and Alstom USA as regards the ATI Fraud. The Court will first address the overarching issue of group pleading, and will then turn to the remaining Section 10(b) claims relating to the Marine Fraud and the ATI Fraud. 1. Group Pleading While Plaintiffs have alleged specific misstatements on the part of some of the Officer Defendants, they make no such allegations with regal'd to other Officer Defendants. 4 In addition, the only misleading statement attributed directly to Kron by Plaintiffs relates only to the Turbine Fraud. (See Compl. ¶ 277.) As the Court has dismissed claims relating to that fraud as untimely, there are no remaining statements which Kron is alleged to have made directly. The Complaint alleges, however, that the Officer Defendants are liable for the false and misleading statements which were published by the “group,” as the Officer Defendants “were responsible for creating, reviewing, and/or approving” the statements “before they were disseminated to the investing public.” {Id. ¶ 371.) Defendants, relying on Southland Securities Corp. v. INSpire Insurance Solutions, Inc., 365 F.3d 353 (5th Cir.2004), as well as numerous cases in this District, contend that group pleading has been foreclosed by the enactment of the PSLRA, in light of its language requiring that untrue statements or omissions be set forth with particularity as to “the defendant,” as opposed to “the defendants.” 15 U.S.C. § 78u-4(b). The Court rejects this contention. The group pleading doctrine arose out of recognition that “plaintiffs charging fraud with respect to corporate utterances seldom have access, prior to the commencement of discovery, to information permitting identification of the partic *449 ular officers, directors and employees who bear personal responsibility for the utterances in question,” and thus courts have allowed plaintiffs, for pleading purposes only, to “rely on a presumption that statements in prospectuses, registration statements, annual reports, press releases and other group published information, are the collective works of those individuals with direct involvement in the everyday business of the company.” In re BISYS Sec. Litig., 397 F.Supp.2d 430, 438 (S.D.N.Y. 2005) (internal citations omitted). This Court finds that this reasoning remains cogent and that the group pleading doctrine has survived the passage of the PSLRA. See id. at 439 n. 42 (collecting cases permitting group pleading after the passage of the PSLRA). pleading doctrine against a particular defendant the complaint must allege facts indicating that the defendant was a corporate insider, with direct involvement in day-to-day affairs, at the entity issuing the statement. See id. at 440-41 ; In re Oxford Health Plans, Inc. Sec. Litig., 187 F.R.D. 133, 142 (S.D.N.Y.1999). Here, Plaintiffs allege that each of the Officer Defendants held a high level position with the company during some portion of the class period, but none of the named Officer Defendants held those positions for the entire duration of the class period. For statements to be attributable to the Officer Defendants individually, the Complaint must allege that the statements were made at a time when the particular defendant held a high level position indicating that he was an insider, with direct involvement in day-to-day affairs, at the entity issuing the statement. See In re Flag Telecom Hldgs., Ltd. (“Flag I"), 308 F.Supp.2d 249 , 266 n. 7 (S.D.N.Y.2004). Accordingly, the Court will apply the group pleading doctrine to the Officer Defendants only with respect to statements made during the portion of the class period in the course of which each particular defendant held such a position. See In re BISYS, at 441. Specifically, Plaintiffs can invoke the group pleading doctrine against Bilger only as to statements made by Alstom between the beginning of the class period and January 1, 2003, during which time he served as CEO for Alstom. {See Compl. ¶ 39.) Plaintiffs can invoke the doctrine against Jaffre with respect to statements made by Alstom between July of 2002 and the close of the class period, during which time he served as CFO of Alstom. (Id. ¶ 41.) Jaffre joined the company in February of 2002 as an Advisor to then CEO Bilger. {Id.) However, because the Complaint does not specifically allege facts indicating that Jaffre was an insider who would have had a significant corporate role in the drafting of group-published information prior to his appointment to the CFO position, the Court limits the applicability to the doctrine to Jaffre to the time period beginning in July 2002 and ending at the close of the class period. The position of “Advisor to the CEO” is not, without any further description of official duties and relationships to other corporate officers and functions, a sufficiently high-level position to enable the Court to infer insider status. Plaintiffs can invoke the doctrine against Kron with respect to statements made by Alstom between January 1 of 2003 and the close of the class period, during which time he served as CEO of Alstom, replacing Bilger. {Id. ¶ 40.) The Complaint also alleges that Kron was appointed to the Board in July of 2001, and that he served on the Audit Committee of the Board “during the Class Period.” (Id.) Allegations of membership on an Audit Committee may, in certain circumstances, provide a basis for liability under the group pleading doctrine, but here the allegation as to Kron’s membership on the *450 Audit Committee is too vague, both as to Kron’s particular role on the Audit Committee and the timeframe of his service, 5 to allow group pleading to be invoked. Plaintiffs can invoke the.doctrine against New-ey with respect to statements made by Alstom between the beginning of the class period and July 3, 2002, during which time he served as Senior Executive Vice President and CFO of Alstom. (Id. ¶ 42.) Finally, both Janovec and Rambaud-Measson are alleged to have held high level positions at ATI (Vice President of Finance and Senior Vice President respectively) until June 30, 2003, when they were suspended pending the investigation of the alleged accounting improprieties at ATI. (Id. ¶¶ 44 — 45.) The Complaint does not include any allegations suggesting that these ATI officers were insiders of Alstom, or had day-to-day involvement in the affairs of the parent company, which is separated from its ATI subsidiary by several levels of corporate organization. (See id. ¶¶ 37, 38.) Thus, the Court finds that the group pleading doctrine may not be invoked to hold these defendants liable for the statements of Alstom. Further, as is discussed in detail in Section III.B.3.a (Material Misstatements Alleged Concerning the ATI Fraud), infra, absent more particularized pleading in this regard, the Court declines to extend the group pleading doctrine to hold Janovec and Ram-baud-Measson accountable for any statements which are found to be attributable to ATI. While group pleading allows Plaintiffs to rely on the presumption that certain types of statements (prospectuses, registration statements, annual reports, press releases and other group published information) were made by the Officer Defendants, there is no corresponding pre- sumption as to the state of mind of the Defendants with regard to the statements. Thus, though “the group pleading doctrine may be sufficient to link the individual defendants to the allegedly false statements, [Plaintiffs]- must also allege facts sufficient to show that the Defendants had knowledge that the statements were false at the time they were made.” In re Citigroup, Inc. Sec. Litig., 330 F.Supp.2d 367, 381 (S.D.N.Y.2004). In the section of the opinion addressing the particular fraud to which Defendants’ statements relate, the Court will analyze the scienter of the Officer Defendants with regard to the statements that they are properly alleged to have made. 2. Marine Fraud a. Material Misstatements Alleged Concerning the Marine Fraud As the fastest growing business at Alstom in 1999 through 2000, the company’s Marine division sales drew positive analyst and investor attention during this period. (See Compl. ¶ 71.) Alstom’s growth in this area was fueled in significant part by Renaissance’s orders for eight cruise ships, which were delivered during the time period between June 1998 and February 2001. (See id. ¶ 73.) Purchases of ships by other cruise lines such as Royal Carribean Limited, Princess Cruises, Festival Cruises, and Radisson Seven Seas France also contributed to Alstom’s remarkable growth. (See id. ¶¶ 163-64, 183-84). This growth included an increase in sales from € 830 million in 1999 to € 1.3 billion in 2000, as well as a dramatic upturn in the Marine division’s operating income, from €25 million in 1999 to €70 million in 2000. (Id. ¶¶ 71-72.) *451 Plaintiffs allege that Alstom’s failure to disclose the important fact that Alstom itself was the guarantor of loans used by Renaissance and other cruise lines to purchase Alstom’s ships (through what are known as “vendor financing” arrangements) amounts to a material omission. (See, e.g., id. ¶ 103-08.) Plaintiffs also allege that, by failing to disclose the loan guarantees extended to Renaissance and other customers, Alstom violated U.S. GAAP, in particular the provisions regarding proper accounting for contingencies. (Id. ¶¶ 138-43.) Alstom’s response argues that (i) the company disclosed the vendor financing arrangements in certain SEC filings, and (ii) Plaintiffs’ allegations amount to pleading fraud by hindsight. Specifically, the Complaint alleges that the statements Alstom made regarding the Marine division in each of its 1999, 2000, and 2001 Forms 20-F, 6 as well as a number of press releases, and the 2001 Form F-3 Registration Statement (filed with the SEC in connection with the Secondary Offering), 7 were materially misleading. (See, e.g., id. ¶¶ 103-04, 165-71, 211-12.) The failure to disclose is also alleged to have significantly impacted the public’s perception of the company’s debt profile. 8 While the large number of misstatements alleged in the Complaint precludes a description of each statement here, examples from Al-stom’s 1999 Form 20-F convey the tone of the statements at issue. The 1999 Form 20-F lists six Renaissance cruise ships on a list of “Current Significant Orders” for the company’s biggest shipyard. (Id. ¶ 164.) The 1999 Form 20-F also includes the following statements about the cruise ship industry and Alstom’s business with Renaissance: (1) “During 1998, firm orders were received worldwide for 17 cruise ships and 12 ships were delivered” (Id. ¶ 163); (see also Alstom’s Form 20-F, Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended March 31, 1999, filed with the SEC on August 3, 1999 (“1999 Form 20-F”), at 46-47, included as Ex. A.1 in the J.A.), (2) “While three principle [sic] groups of cruise ship operators ... continue to dominate the market for very large ships, recent orders of medium-size ships have noticeably expanded the luxury market, which until recently was underdeveloped. The best example of this growth is the increase in fleet development by [Renaissance] Cruises Inc. and by Radisson Seven Seas” (Id.), (3) “Alstom has focused on cruise ships and ranks third in that industry worldwide, based upon its delivery of 14 cruise ships since 1987” (Id.), and (4) “Recent cruise ship deliveries include the R.One and R.Two for Renaissance, delivered in June 1998 and November 1998, respectively” (id.). Plaintiffs allege that statements of a similar nature regarding Alstom’s cruise ship orders were included in Alstom’s 2000 and 2001 Forms 20-F, as well as a number of press releas *452 es. 9 (See, e.g., id. at ¶¶ 170-71, 183-84, 205, 215.) The Registration Statement filed by Alstom in connection with the Secondary Offering reported that the Marine division had been “awarded orders for three major cruise ships,” going on to state that: “Consequently, the order backlog stands at a record level of € 3.9 billion and comprises 12 cruise ships, two high speed ferries and two surveillance frigates.” (Id. ¶ 205.) Alstom argues that its marine vendor financing arrangements were disclosed in the Consolidated Financial Statements included in its 1999, 2000 and 2001 Forms 20-F, which were filed with the SEC. Al-stom points to language in a footnote titled “Financing Arrangements,” which appears, with nearly identical text, in each of the 1999, 2000, and 2001 Forms 20-F. In the 1999 Form 20-F, the footnote appears 102 pages after the rosy statements cited by Plaintiffs in their allegations, and never mentions Renaissance or any other particular cruise ship company, or the term “vendor financing.” Specifically, the footnote states, under the heading “Leasing Entities,” that Alstom has “eight special purpose leasing activities, relating to seven cruise liners and sixty locomotives.” (1999 Form 20-F, Note 21, at F-29, at 151.) The footnote also contains a table of “summarized combined balance sheets for [the] special leasing companies[J” which includes a line item for “borrowings.” Id. The text following the table states the amounts of “leasing activities directly financed” by the company, and also states the total amount for borrowings which are insured. Id. Alstom also points to a footnote appearing in its 1999, 2000, and 2001 Forms 20-F, setting forth the company’s “Commitments and Contingencies,” which lists the amounts of “guarantees given on financial debt.” (See, e.g., 1999 Form 20-F, Note 24 at F-36, at 158.) There is no further description of what these guarantees relate to, or whose debt the footnote refers to. See id. There is no indication that this number is related to Marine division customers. 10 See id. Alstom argues that these footnotes constitute sufficient disclosure about the cruise ship financing arrangements. The Court finds that a reasonable investor would indeed be interested in knowing that Alstom, which had issued buoyant reports about its Marine division’s orders and sales, was also the guarantor of the substantial loans Renaissance and other Marine division customers were using to pay for the ships they purchased from *453 Alstom, and would view those commitments, if known, as altering the “total mix” of information made available about Alstom’s finances. Basic, 485 U.S. at 23132 , 108 S.Ct. 978 ; In re Time Warner, 9 F.3d at 268 (“A duty to disclose arises whenever secret information renders prior public statements materially misleading[.]”) Contrary to Alstom’s assertions, the vaguely worded footnotes appearing in each of the 1999, 2000 and 2001 Forms 20-F cannot be deemed adequate disclosure of the vendor financing arrangements, as an investor would not know from reading the footnotes the critical underlying information about Alstom’s vendor financing relationship with Renaissance and the other cruise lines to which it had extended financing. Specifically, the footnotes say nothing about the identity and financial soundness of the ship companies whose loans were being guaranteed, the size of the underlying financing provided to these specific customers, or the effect of those contingent liabilities on Alstom’s own liquidity and overall business condition. 11 Indeed, the Complaint alleges that financial professionals were taken by surprise following Alstom’s initial press release explaining its exposure in the aftermath of the Renaissance bankruptcy. (See Compl. ¶¶ 104-06 (citing a Reuters report which quoted a Paris-based broker saying: “We didn’t know Alstom was involved in credit guarantee [sic] for its ships,” and quoting a Deutsche Bank engineering analyst as stating: “This appears to have been a contingent liability which was not disclosed in the Alstom report and accounts.”).) As discussed above, an omission is actionable when the failure to disclose renders a statement misleading. See In re Time Warner, 9 F.3d at 268 . Here, Alstom’s affirmative statements regarding its robust cruise ship sales were rendered misleading by the omission of information about Alstom’s role in financing the purchases by Renaissance and other Marine division customers. One analyst report quoted in the Complaint succinctly summarizes the relevance of the vendor financing to Alstom’s affirmative statements about its Marine division growth, stating that in light of the eventual vendor financing disclosures, “we question the quality of the turnaround the [Marine division] achieved in the last years, as it seems to have happened on the back of vendor financing.” (Comply 106). Alstom’s statements about Renaissances’s orders, as well as those of other cruise lines, indicated strong demand for Alstom’s ships, without disclosing that this demand was in fact bolstered by Alstom’s own financing of the cruise line companies’ loans. The omission of adequate disclosure of the loan financing “affirmatively creat[ed] an impression of a state of affairs that differ[ed] in a material way from the one that actually exist[ed],” and therefore it is actionable. Brody v. *454 Transitional Hosps. Corp., 280 F.3d 997, 1006 (9th Cir.2002). Alstom next argues that even if the footnote included in the Forms 20-F did not constitute adequate disclosure of the vendor financing arrangements, Plaintiffs’ pleading still fails because the company was not obligated to provide detailed disclosure of the financing, and its failure to do so only becomes material with the benefit of hindsight. The Second Circuit has held that “[Corporate officials need not be clairvoyant; they are only responsible for revealing those material facts reasonably available to them.” Novak, 216 F.3d at 309 (internal citations omitted). Alstom argues that Renaissance’s collapse following the terrorist attacks of September 11, 2001, and its subsequent (and nearly immediate) bankruptcy filing could not have been anticipated by Alstom when it failed to disclose the vendor financing arrangements with Renaissance. Following this reasoning, Alstom claims that its failure to disclose cannot support liability; as the company could not have known the significance of the omissions prior to September 11, 2001 and the bankruptcy, and any allegation that it should have constitutes a pleading of fraud by hindsight. The Court disagrees. The duty to disclose the omitted vendor financing arrangements did not hinge on Renaissance’s eventual bankruptcy filing. The material information omitted by Al-stom was that its strong sales of cruise ships to Renaissance and other companies was facilitated by its financing of loans for those purchasers. The omission may have mislead investors both as to the actual market demand for Alstom’s ships as well as to the risk exposure that the financing had created for the company and the actual amount of potential liabilities Alstom had outstanding, and thus Alstom’s true financial picture. 12 This alleged deception, in itself, gave rise to the duty to disclose. See In re Time Warner, 9 F.3d at 268 . That the risk was realized after Renaissance’s bankruptcy filing is not the determining consideration as to whether or not the information should have been disclosed. Rather, the realization of the risk is, at least in part, the cause of the losses Plaintiffs allege. b. Rule 9(b) Particularity Alstom also argues that Plaintiffs have failed to meet the pleading requirements set forth in Rule 9(b) with regard to the alleged misleading statements. Rule 9(b) requires that, with regard to claims of fraud, the Complaint “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Rombach v. Chang, 355 F.3d 164, 170 (2d Cir.2004). Alstom argues that the Complaint fails to “explain why the statements made were fraudulent” because the Complaint uses nearly identical boilerplate explanations as to why each *455 of the alleged statements regarding the company’s Marine division was misleading. (See Alstom Mem., at 29-30.) The Complaint, following each statement by Alstom it alleges to be misleading as it relates to the Marine division, includes the following explanation as to why the statement was misleading: “[The statements] were materially false and misleading because, unbeknownst to the investing public, Alstom had artificially inflated demand for its cruise ships by secretly guaranteeing hundreds of millions of euros in loans third parties made to Renaissance and other Alstom customers for the purchase of Al-stom ships. Thus, the orders and backlog for Alstom cruise ships reflected financing offered to financially unstable customers, not strong demand for Alstom’s ships.” (See, e.g., Compl. ¶ 188.) When the misstatement alleged by Plaintiffs appears in a financial statement, the explanation then refers the reader to the section of the Complaint outlining Defendants’ alleged GAAP violations. (See, e.g., id. ¶ 216.) The Court finds that this method of pleading is adequate to meet the requirements of Rule 9(b). The explanation given by Plaintiffs may be boilerplate, but it nonetheless adequately describes the fraud alleged and the misleading aspects of the statements. Although the Complaint, which spans 135 pages, may be cumbersome in its organization, it must be looked at in its entirety for the sufficiency of its allegations. The pleadings must be read in the light most favorable to Plaintiffs, and reasonable inferences must be drawn in their favor. Here, while the boilerplate explanation as to why the statements are misleading is conclusory in itself, facts supporting its basis are pled in separate sections of the Complaint. 13 (See, e.g., Compl. at ¶¶ 104-06, 138-43, 292-96 (pleading facts demonstrating that loan guarantees were not disclosed, that demand for cruise ships was fostered by financing arrangements, and that Renaissance was financially unstable.).) These allegations are sufficient to meet the pleading requirements of Rule 9(b), as support for the charge that defendant’s statements were misleading. See In re Tyco Int’l, Ltd. MDL Litig., No. MDL 02-1335-B, 02-266-B, 2004 WL 2348315 , at *9 (D.N.H. Oct.14, 2004) (finding that though difficult to decipher, the Complaint, which “list[ed] all misleading statements in one section but describ[ed] accounting schemes that make statements misleading in different sections” complied with PSLRA’s requirement that plaintiff explain why each specifically identified statement is misleading). Further, Plaintiffs’ pleading technique is sufficient to address the policy considerations underlying Rule 9(b), which are: “to provide a defendant with fair notice of a plaintiffs claim, to safeguard a defendant’s reputation from improvident charges of wrongdoing, and to protect á defendant against the institution of a strike suit.” Shields, 25 F.3d at 1128 . c. Scienter as to Marine Fraud (i) Scienter of Alstom It is not enough for Plaintiffs to have adequately pled a harmful omission on the part of Alstom; for the non-disclosure to be actionable they must also allege facts *456 giving rise to a strong inference of fraudulent intent. The Complaint alleges scienter as to Alstom through both methods of pleading available to Plaintiffs: (i) motive and opportunity, and (ii) conscious misbehavior or recklessness. Alstom argues that the Complaint fails to allege sufficient facts to support its claim under either of the two methods. While allegations of scienter are governed by the heightened pleading requirements of the PSLRA and Rule 9(b), “[wjhether a given intent existed is generally a question of fact.” Press, 166 F.3d at 538 (noting also that “[t]he Second Circuit has been lenient in allowing scienter issues to withstand summary judgment based on fairly tenuous inferences.”). In addition, where the question of intent is at issue, matters are “peculiarly within the defendant’s knowledge,” and thus Rule 9(b)’s pleading standards are less stringent. Liberty Ridge LLC v. RealTech Sys. Corp., 173 F.Supp.2d 129, 136 (S.D.N.Y.2001). When viewing the pleadings in the light most favorable to Plaintiffs and drawing all reasonable inferences in their favor, it is at least arguable that Alstom deliberately omitted adequate information about its vendor financing arrangements from its public statements, and thus portrayed the performance of its Marine division far more favorably than the full facts warranted. In cases in which scienter is-pled in part by alleging that the defendant “knew facts or had access to information suggesting that their public statements were not accurate,” the scienter analysis is closely aligned with the analysis as to misleading statements. Flag I, 308 F.Supp.2d at 259 (citing Novak, 216 F.3d at 311). The Court must consider the misstatement “and determine whether plaintiff has pleaded facts demonstrating that the statement or omission was false or misleading and that [the defendant] had access to information indicating that it was.” Id. Here, Plaintiffs have alleged that Alstom, because it was the entity executing the financing arrangements, had access to information about those arrangements and chose not to disclose them to the public. (See Compl. ¶ 292.) 14 In these circum *457 stances, Alstom “knew or, more importantly, should have known that they were misrepresenting material facts related to the corporation,” and scienter is adequately pled. Novak, 216 F.3d at 308 (internal citations omitted). The Court notes that, while not necessary to substantiate the finding of scienter, Plaintiffs’ allegations as to Alstom’s knowledge of Renaissance’s precarious financial condition further bolster their claims asserting recklessness and conscious misbehavior. In various sections of the Complaint, Plaintiffs allege that Alstom “knew that Renaissance was likely to default because of lost business and poor pricing decisions.” (Compl. ¶ 292, see also id. ¶ 107.) The facts alleged to support this claim include: (1) in the late 1990s Renaissance made a business decision to pursue direct bookings, alienating travel agents in the process, which resulted in reduced earnings for the company in 1999 and 2000, (2) because of these losses, Renaissance was restructured in 2001, 15 through a deal with Malvern Maritime (an investment concern of which Alstom was a beneficial owner) and a subsidiary of Credit Suisse First Boston, 16 (3) even after the *458 restructuring, analysts believed that Renaissance’s long term debt exceeded one billion dollars, and (4) analyst reports and quotes indicated that the bankruptcy was not surprising, as Renaissance was debt-ridden and had been losing money. 17 (Compl.¶¶ 293-295.) These factual allegations demonstrate that Alstom’s failure to disclose the loan guarantees became increasingly unreasonable as its alleged awareness of Renaissance’s financial troubles increased. 18 The risks associated with extending hundreds of millions of euros of guarantees to a financially unstable customer, sales to whom had fueled tremendous growth in the company’s fastest growing division, are significant. Furthermore, the facts describing Alstom’s increasing access to information about Renaissance’s financial condition suggest that Alstom was aware that its financing arrangements posed an expanding risk to the company. This risk is “the danger” which was allegedly known to Alstom and which was “highly unreasonable” for the company to not disclose. In re Carter-Wallace, 220 F.3d at 39 (internal citations omitted) (recklessness is alleged by facts demonstrating that “the danger was either known to the defendant or so obvious that the defendant must have been aware of it.”). Thus, it became more and more reckless for Alstom to continue to tout the sales of its Marine division as the attendant risks mounted and were not publicly revealed. Furthermore, even if Alstom was not aware of Renaissance’s instability early in the relationship, Plaintiffs have alleged sufficient facts to raise a strong inference that Alstom should have known of the risk Renaissance faced by the middle of 2001. In light of this awareness, the failure of Alstom to disclose the loan guarantees in its 2001 Form 20-F, *459 filed in July of 2001, while boasting about the success of its Marine division in that document, was sufficiently egregious to satisfy the recklessness prong of the scien-ter test. (See Compl. ¶ 215.) (ii) Scienter as to Officer Defendants With regard to the individual defendants, the Court finds that scienter for the Marine Fraud has been adequately pled as to Bilger and Newey, based on allegations of strong circumstantial evidence of conscious misbehavior. 19 Plaintiffs have alleged that Bilger and Newey, as CEO and CFO of Alstom, signed SEC filings containing misrepresentations regarding the Marine division. (Compl.¶¶ 162, 183, 204, 215.) Plaintiffs have also alleged that the Marine division was extremely important to Alstom as it was the company’s fastest growing unit, and also because the favorable perception of this division allowed Alstom to borrow money it needed to finance its other business. (See Compl. ¶¶ 71 -72.) In order to sign the SEC filing documents, Bilger and Newey had a “duty to familiarize themselves with the facts relevant to the core operations of [Alstom].” Teamsters Local Freight Div. Pension Fund v. Bombardier Inc., et al, 05 Civ. 1898, 2005 WL 2148919 , at *63 (S.D.N.Y. September 6, 2005). Given the extent of the vendor financing (allegedly € 1.2 billion for Marine division customers), and the importance of the Marine division to Alstom’s overall profile and liquidity during the relevant period, Bilger and Newey should have been aware of the loan guarantees. 20 See id.; see also Cosmas v. Hassett, 886 F.2d 8, 13 (2d Cir.1989) (finding that defen *460 dants’ statement that sales to the People’s Republic of China constituted a significant new source of revenue for the company gave rise to a strong inference that the directors of the company knew of that country’s import restrictions since they “eliminated a potentially significant source of income for the company”). The Complaint’s allegations as to the direct involvement of both Newey and Bilger in the day-to-day operations of the company (see Compl. ¶ 366), as well as the magnitude of the Marine customer financing arrangements, and the significant length of time (several years) during which the arrangements were not disclosed, together could enable a reasonable fact finder to draw a strong inference of recklessness, at the least, on the part of these two defendants. See In re Atlas Air Worldwide Hldgs., 324 F.Supp.2d at 497 (holding that it is reasonable to impute knowledge to a signatory of SEC filings directly involved in the day-to-day operations of the company); In re American Bank Note Holographics Sec. Litig., 93 F.Supp.2d 424, 448 (S.D.N.Y.2000) (finding scienter allegation sufficient as to CFO and Comptroller where the defendants were, because of their positions, “uniquely situated” to control the revenue recognition procedures, and the revenues had been overstated for a period of two years in repeated SEC filings). 21 d. Causation as to the Marine Fraud To maintain their claim under Section 10(b) and Rule 10b-5, Plaintiffs must also plead both transaction causation and loss causation. Here, the Complaint alleges that transaction causation, generally understood as reliance, is established through the “fraud on the market” theory. (See Compl. ¶¶ 329-330.) This theory was described in Basic : The fraud on the market theory is based on the hypothesis that, in an open and developed securities market, the price of a company’s stock is determined by the available material information regarding the company and its business ... Misleading statements will therefore de *461 fraud purchasers of stock even if the purchasers do not directly rely on the misstatements ... The causal connection between the defendants’ fraud and the Plaintiffs’ purchase of stock in such a case is no less significant than in a case of direct reliance on misrepresentations. 485 U.S. at 241-42 , 108 S.Ct. 978 (alterations in original) (quoting Peil v. Speiser, 806 F.2d 1154, 1160-61 (3d Cir.1986)). “Pleading that the defendants perpetrated a fraud on the market ... fulfills a plaintiffs transaction causation pleading requirement.” In re GeoPharma, at 443, n. 86. Thus, Plaintiffs’ allegations of transaction causation are sufficiently pled. Plaintiffs’ allegations regarding the Marine Fraud are also sufficient to support a claim of loss causation. The Complaint states that on the day before Alstom’s September 27, 2001 disclosure of its financing for Renaissance, the stock was trading on the Paris Exchange at € 18.06. The stock price then fell to € 13.20 on the day of the announcement. (Comply 108). Alstom made a second an-. nouncement, on October 1, 2001, revealing that its total exposure for the Renaissance financing was € 684 million, and that Renaissance was not the only Marine division customer to which it had extended loans. The press release revealed that, in fact, the company had “current commitments of €589 million in respect of other cruise ships already delivered to other ship owners[.]” Id. Following this second press release, the stock price dropped further to € 9.20 on the Paris Exchange on October 3, 2001. {Id. ¶¶ 108, 233). 22 Alstom’s failure to disclose its vendor financing liabilities concealed not only the risk it bore as a guarantor of those loans, but also that at least some of the growth in its Marine division was illusory. When this information was disclosed in the two press releases that followed the Renaissance bankruptcy, Alstom’s stock price dropped. Thus, Plaintiffs have sufficiently alleged that there was “a false or misleading statement, which caused an artificial inflation of the stock, followed by a dissipation of that inflation after corrective disclosures were made.” In re GeoPharma, at 453. On a motion to dismiss, this allegation of loss causation is sufficient. Because the Complaint successfully alleges that Alstom made statements omitting material facts, with scienter, and that Plaintiffs’ reliance on those statements caused their losses, Plaintiffs’ Section 10(b) claims based on the Marine Fraud are adequately pled as to Alstom, Bilger, and Newey. 3. ATI Fraud a. Material Misstatements Alleged Concerning the ATI Fraud Plaintiffs contend that “after being badly hurt by the disclosures of its vendor financing scheme and the costs of repairing the defective turbines, Alstom tried to *462 keep the company afloat by committing yet another accounting fraud, this time in its Transport division.” (Compl. ¶ 116.) This alleged fraud entailed hiding millions of dollars of costs incurred in connection with railcar contracts performed by ATI, in particular a contract with New Jersey Transit (“NJT”), which ATI allegedly intentionally underbid in 1999. (Id. ¶ 308.) These accounting improprieties resulted in an overstatement of income of € 167 million in Alstom’s 2003 accounting statements. (See id. & 116-17.) The accounting irregularities first came to light when an anonymous letter was sent to the SEC, the FBI and ATI, prompting investigations by those agencies as well as an internal investigation on the part of Alstom, conducted by the firm of Hughes, Hubbard & Reed LLP. (Id. & 119.) According to Plaintiffs, after announcing the discovery of the accounting irregularities on June 30 of 2003, Alstom initially stated that it would record a € 51 million after-tax charge, but later disclosed that this number was insufficient as the fraud had resulted in an inflation of € 167 million. (Id. & 119-120.) The specific statements which are alleged to have been materially misleading to investors are included in a November 5, 2002 Press Release 23 filed with the November 2002 Form 6-K (Id. ¶¶ 268-72), in the November 2002 Form 6-K itself 24 (Id. ¶ 160), and in Alstom’s 2003 Annual Report, which was furnished to the SEC on June 2, 2003 on Form 6-K. 25 (Id. & & 281-82.) Specifically, the November 2002 press release reported that the Transport division’s operating income and operating margin for the first half of fiscal year 2003 were € 90 million and 3.9 percent, respectively. (Id. ¶ 269.) Plaintiffs allege that, in fact, because of the accounting improprieties at ATI, the operating income and margin were artificially inflated by approximately € 167 million. (Id. ¶ 270.) The press release is also alleged to be misleading because of Bilger’s statements that “the positive dynamics of transport” could help offset troubles in other areas. (Id. ¶¶ 271-72.) The June 2003 Form 6-K is alleged to have been misleading because it reported that, while Alstom had an overall operating loss of € 434 million, the Transport division recorded an operating income of € 49 million. (Id. ¶ 281.) However, the company’s losses were allegedly understated by approximately € 167 million, because of the ATI Fraud. (Id. ¶ 282.) In addition, the 2003 Form 6-K was allegedly *463 misleading because the Transport division was not, as reported, operating at a profit, but rather had sustained an operating loss of € 118 million. (Id.) Plaintiffs have also alleged that, by failing to properly disclose the cost overruns, Alstom violated GAAP. (Id. ¶¶ 157-61.) 26 Plaintiffs assert that these alleged statements are materially misleading, in that they misrepresented to inventors the profitability of Alstom’s Transport division and the company’s earnings. The majority of Defendants charged with Section 10(b) liability on the basis of these statements have done little to argue otherwise, instead focusing their arguments on the contention that they cannot be held liable on this basis. ATI, Alstom USA, Janovec and Rambaud-Measson argue that they did not actually make the statements, and that for this reason they cannot be held liable under Section 10(b). In making this argument, ATI, Alstom USA, and Janovec rely in significant part on Wright v. Ernst & Young LLP, 152 F.3d 169 (2d Cir.1998). 27 There, the Second Circuit, in a case involving the issue of an auditor’s liability for the statements of its client, held that “a defendant must actually make a false or misleading statement in order to be held liable under Section 10(b).” Id. at 175 . In contrast, Alstom, which cannot argue that it did not make the statements, as they are found in its financial reports and press *464 releases, contends that it cannot be found liable under Section 10(b) because allegations of a parent company’s dissemination of information provided to it by a subsidiary are not sufficient to demonstrate scienter. The Court will address the arguments related to each of these defendants in turn. Plaintiffs argue that ATI is liable for the reporting of materially misleading financial information to Alstom, even though the information was communicated to investors only through Alstom’s consolidated financial statements and an Alstom press release, and not directly by ATI. In support of their argument, Plaintiffs cite In re Kidder Peabody Sec. Litig., 10 F.Supp.2d 398 (S.D.N.Y.1998), which was decided prior to Wright . There, the court held that a subsidiary can be held liable for false financial data provided by the subsidiary and incorporated into the financial statements of the parent when the subsidiary was “the original and knowing source of a misrepresentation” and “knew or should have known that [the] misrepresentation would be communicated to investors[.]” 10 F.Supp.2d at 407 . ATI argues that this holding does not survive the Wright decision. The Court disagrees. The Second Circuit’s holding in Wright followed the Supreme Court’s decision in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 , 114 S.Ct. 1439 , 128 L.Ed.2d 119 (1994), which held that there is no private cause of action against mere aiders and abettors under Section 10(b). Wright involved a plaintiffs claims against an auditor, Ernst & Young, with regard to a press release issued by one of Ernst & Young’s clients, describing that client’s financial results. The press release at issue expressly stated that the results were “unaudited.” Id. at 172 . The Court, noting that the press release “did not attribute any assurances to Ernst & Young and in fact did not mention Ernst & Young at all,” found that “Ernst & Young neither directly nor indirectly communicated misrepresentations to the investors.” Wright, 152 F.3d at 175 . Because the press release was issued “without a whisper of Ernst & Young involvement,” the Circuit Court found that plaintiffs could not claim that they had relied on the auditor’s representations. Id. at 176 . Thus, the court stated that: “a defendant must actually make a false or misleading statement in order to be held [primarily] liable under Section 10(b). Anything short of such conduct is merely aiding and abetting, and no matter how substantial that aid may be, it is not enough to trigger [primary] liability under Section 10(b).” Id. at 175 (quoting Shapiro v. Cantor, 123 F.3d 717, 720 (2d Cir. 1997)). Because the auditors had not actually made a statement that Plaintiffs could have relied on, they could not be held liable under Section 10(b). Id. at 175 (“[A] secondary actor cannot incur primary liability under the Act for a statement not attributed to that actor at the time of its dissemination.”). By adopting this “bright line” rule requiring that the defendant “actually make a false or misleading statement,” the Second Circuit intended to avoid the circumvention of Central Bank. Id. The Court finds that Wright did not abrogate the rule followed in Kidder Peabody, and that a careful reading of the cases supports a finding that when a subsidiary provides false or misleading financial information to a parent, knowing that the information will be communicated to investors, it can be held liable for the statements made by the parent. Cf. Gabriel Capital, L.P. v. NatWest Fin., Inc., 94 F.Supp.2d 491, 508-510 (S.D.N.Y.2000) (analyzing plaintiffs claims in light of both Wright and Kidder Peabody, and conclud *465 ing that plaintiffs’ claims should be dismissed because they had failed to allege that the defendant subsidiary was the source of the alleged misrepresentations). First, Wright does not foreclose the possibility of primary liability where the statement made was not communicated directly to the investor by the original source, but instead was communicated indirectly. See Wright, at 152 F.3d at 175 (recognizing that “[t]here is no requirement that the alleged violator directly communicate misrepresentations to [investors] for primary liability to attach”); see also Seippel v. Sidley, Austin, Brown & Wood, LLP, 399 F.Supp.2d 283, 294 (S.D.N.Y.2005) (‘Wright does not require that a defendant directly communicate the alleged misrepresentation to the plaintiff.”). Further, the Wright court sought to avoid holding Ernst & Young primarily liable “in spite of its clearly tangential role in the alleged fraud,” as this “would effectively revive aiding and abetting liability under a different name[.]” Wright, 152 F.3d at 175 . In Kidder Peabody, there was no suggestion that the subsidiary had played a “tangential role” in the fraud. In fact, the subsidiary was the entity at which the actual fraud had occurred and the source of the misleading financial information communicated to investors by GE, the parent company. The same is true here, as the alleged fraud originated at ATI and ATI was the alleged source of the misleading information published by Alstom. 28 In these circumstances, the holding in Wright does not preclude a finding of potential liability on the part of ATI. This conclusion is supported by the Second Circuit’s subsequent decision in In re Scholastic Corp. Sec. Litig., 252 F.3d 63 (2d Cir.2001). Scholastic concluded that a company executive could be charged with primary liability for misleading disclosures, even though the operative complaint in that case did not attribute specific misleading disclosures to him, because the complaint alleged that he personally disseminated misleading statements, was “primarily responsible for Scholastic’s communications with investors and industry analysts,” and “was involved in the drafting, producing, reviewing and/or disseminating of the false and misleading statements issued by Scholastic.” 252 F.3d at 75-76 . While Scholastic does not discuss, or cite, the Wright decision, it appears to allow a finding of Section 10(b) liability where a plaintiff alleges that the defendant was responsible for making the statement, even if the defendant was not identified as the speaker at the time of dissemination. See id.; see also In re Global Crossing, Ltd. Sec. Litig., 322 F.Supp.2d 319, 331 (S.D.N.Y.2004). Several courts have noted the tension between Wright and Scholastic, in that Wright requires that the statement, if communicated indirectly, be attributed to its source at the time of the dissemination, and Scholastic permits liability despite a *466 lack of specific attribution. See, e.g., PIMCO Advisors, 341 F.Supp.2d at 466 (noting tension between cases); In re Global Crossing, 322 F.Supp.2d at 331 (“While Scholastic might indicate some relaxation of Wright’s requirement ... it does not provide any guidance as to when a statement not attributed to a defendant might cross the line into a primary violation.”). However, the cases are consistent in that neither jeopardizes Central Bank’s limitation on aider and abettor liability, as the defendant CFO in Scholastic was alleged to have made misstatements and thus played a role exceeding that of an aider and abettor. See In re Scholastic, 252 F.3d at 75-76 ; see also In re Global Crossing, 322 F.Supp.2d at 334 (allowing primary liability to attach to auditor defendant where allegations that the defendant “prepared” or “helped create” the false statements issued by company “place its involvement well beyond the realm of ‘aiding and abetting’ liability precluded by Central Bank”). As discussed above, ATI’s alleged role, as the source of the false information, also extends beyond the realm of aiding and abetting. 29 Thus, the Court concludes that the Complaint’s allegations with regard to ATI are sufficient to state a claim for Section 10(b) liability. First, the Complaint does allege (albeit in a meandering manner) that ATI made a statement, in the form of its financial results, which was communicated to Alstom for incorporation into Alstom’s financial results. Further, it is plausible and reasonable to infer that investors, when relying on Alstom’s financial results, which consolidated the results of its subsidiaries, implicitly relied on the financial information provided by the subsidiary itself. Accordingly, Plaintiffs have sufficiently alleged that ATI was the “original and knowing” source of the alleged mis *467 representations, and, because investors could — at least constructively — attribute this information to the subsidiary, ATI can be held liable under Section 10(b). 30 See In re Global Crossing, 322 F.Supp.2d at 333 n. 14. (noting that a rule requiring the plaintiff to demonstrate that the public could “attribute a misleading statement (at least indirectly) to the secondary actor at the time it is issued ... emphasizes constructive, rather than actual, attribution— a concept consistent with the Second Circuit’s emphasis on reliance.” (emphasis in original, internal citations omitted)); In re Kidder Peabody, 10 F.Supp.2d at 407 . With regard to Janovec and Ram-baud-Measson, the Court reaches the opposite conclusion. The Complaint fails to allege facts sufficient to demonstrate that these Defendants “made a statement” within the meaning of Wright . First, as currently drafted, there are no specific allegations in the Complaint regarding either Janovec’s or Rambaud-Measson’s role in the preparation of ATI’s financial statements or reports, or alleging that these officers signed any financial reports. While the Complaint contends that Jano-vec and Rambaud-Measson “created the false illusion that ATI’s operating margin and cost cutting strategies had far exceeded the mandate set forth in the Restore Value plan,” (Comply 306) there is no factual support explaining how or when or where Janovec and Rambaud-Measson created this illusion. That these defendants held positions as Senior Vice President and Vice President of Finance at ATI may be a starting point for a claim of liability, but these titles do not, without additional facts, support a logical inference that those defendants were responsible for the drafting, production, reviewing, or dissemination -of the information communicated by ATI to Alstom. 31 Plaintiffs allege no facts to suggest that it was these officers, and not other officers of ATI, who were primarily responsible for communicating financial results to Al-stom. 32 This failure in pleading distinguishes this case from Scholastic, cited by Plaintiffs, where the officer defendant was held liable for statements that he was not alleged to have directly made because the *468 Complaint claimed that he “was involved in the drafting, producing, reviewing and/or disseminating” the false or misleading statements at issue. In re Scholastic, 252 F.3d at 75-76 ; see also PIMCO Advisors, 341 F.Supp.2d at 467 (concluding that it would “overstep the limitations imposed by Wright to charge, [the defendant] with primary liability for statements the Complaint does not allege he personally drafted or communicated to others[,]” and noting that the complaint “fail[ed] to assert that [the defendant] had primary responsibility for development or communication of any of the misleading statements.”). Furthermore, the Court declines to extend the group pleading doctrine to the statements allegedly communicated by Ja-novec and Rambaud-Measson to Alstom. While the doctrine may be invoked to link officers of a company with statements made directly to investors by that company, here the Court would have to apply the doctrine to the officers of a subsidiary, for statements which were issued to the public by the parent. Even though the Court has found that the Complaint sufficiently alleges that the “original and knowing source” of the relevant information communicated in those statements was ATI, the Court will not automatically impute those statements to Janovec and Rambaud-Measson merely by reason of their titles. To do so in this case would not comport with Second Circuit precedent, as there is no reason alleged to support a finding that those defendants were personally responsible for the misleading information provided to Al-stom by ATI. 33 However, because it is conceivable that upon fuller consideration Plaintiffs may be able to plead facts sufficient to fill in the gaps the Court identifies as regards this aspect of Plaintiffs’ Section 10(b) claims, the Court will grant leave to replead. Plaintiffs also argue in their brief that Alstom USA, as the holding company which owned 100 percent of ATI’s stock, was able to control ATI’s actions because ATI was its agent, and thus Alstom USA can be held liable for the actions of ATI. (See Pls. Opp. Mem., at 49.) Under federal securities laws, a principal may be held liable for the acts of its agent. See, e.g., In re Parmalat Sec. Litig. ("Parmalat I”), 375 F.Supp.2d 278, 290 (S.D.N.Y.2005). Further, an agency relationship exists under New York law 34 “when there is agreement between the principal and the agent that the agent will *469 act for the principal and the principal retains a degree of control over the agent.” Id. (further noting that “[t]he element of control often is deemed the essential characteristic of the principal-agent relationship”). Stock ownership is one method of demonstrating control. See id. at 292 ; see also Lipsky v. Commonwealth United Corp., 551 F.2d 887, 898 (2d Cir.1976) (where a subsidiary is wholly owned by a parent, New York courts might pierce the corporate veil either under agency theory or by ignoring the corporate existence of the subsidiary). In addition, the pleading of the existence of an agency relationship need not meet the heightened standards of Rule 9(b) or the PSLRA, as the agency is not, in itself, an allegation of fraud. Thus, the agency allegations must be pled only in accordance with Rule 8, which requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a); see also Parmalat I, 375 F.Supp.2d at 291 . Plaintiffs’ claims against Alstom USA fail, however, because even under Rule 8’s pleading standards, Plaintiffs do not sufficiently allege this theory of liability. The Complaint’s only factual allegations as to Alstom USA are that it is the wholly-owned subsidiary of Alstom, and that ATI is the wholly-owned subsidiary of Alstom USA. (See Compl. ¶¶ 37-38.) The Complaint also alleges that “Alstom, Alstom USA, ATI and Alcatel are liable for each of the statement of the Officer Defendants through the principles of respondeat superior.” (Id. ¶ 371.) There are no additional allegations discussing the relationship between ATI and Alstom USA, or even a conclusory allegation that Alstom USA is liable for the acts of ATI as its agent. In their brief, Plaintiffs argue that they do not “[contend] that Alstom USA is liable because the individual defendants in this action were its agent,” but rather that “ATI was Alstom USA’s agent as its wholly owned subsidiary and, as such, Alstom USA is liable under traditional principles of agency as the parent of ATI for ATI’s wrongdoing.” (See Pls. Opp. Mem., at 49.) However, as Plaintiffs fail to articulate this claim in their Complaint, it cannot be a basis for liability. See Wright, 152 F.3d at 178 (noting that a party may not amend pleadings through statement in its motion brief). In addition, there can be no liability against Alstom USA for the statements of the Officer Defendants based on the theory of respondeat superior, as the Complaint does not allege that any of the Officer Defendants were the employees (or agents) of Alstom USA. Plaintiffs fail to allege any grounds upon which to base their claims against Alstom USA. However, in this regard, too, it is not inconceivable for Plaintiffs to amend the Complaint to address the deficiencies cited in this discussion. Accordingly, the Court will grant leave to replead these claims. Lastly, Plaintiffs argue that Janovec, Rambaud-Measson, and Alstom USA are each liable for the ATI Fraud because of their participation in a fraudulent scheme or course of conduct. For the reasons set forth in Section III.B.4 (Applicability of Scheme Liability), infra, the Court rejects all claims based on this theory of liability with regard to the ATI fraud. b. Scienter Concerning the ATI Fraud (i) Scienter as to ATI The facts Plaintiffs allege regarding the ATI Fraud are sufficient to demonstrate ATI’s scienter. Indeed, ATI does not assert otherwise, focusing its argument instead on its contention that it did not make a statement. The Complaint alleges that € 167 million in costs were excluded from ATI’s financial statements because of, as described in an Alstom press release, “the understatement of actual costs in *470 curred, including the non-recognition of costs incurred in anticipation of shifting them to other contracts, and by the understatement of forecast costs to completion.” (Compl. ¶ 119.) These claims are sufficient to raise a strong inference that ATI “knew or, more importantly, should have known that they were misrepresenting material facts related to the corporation” through its understatement of costs, Novak, 216 F.3d at 308, 311, as ATI allegedly was aware of the cost overruns (see Compl. ¶¶ 311-13). (ii) Scienter as to Alstom (a) Motive and Opportunity The Complaint fails to allege that Alstom had a sufficient motive to orchestrate the accounting improprieties at ATI. Plaintiffs set forth various and shifting theories with regard to the ATI Fraud, none of which advances a claim that Alstom acted with scienter. For example, while Plaintiffs allege that the ATI Fraud was motivated by Alstom’s desire to “keep the company afloat” following the Marine and Turbine Frauds, which were not disclosed until 2001 and 2002 (at the earliest), they also claim that the ATI Fraud began with the purposeful underbidding of the NJT contract in 1999. (See, e.g., Compl. ¶ 116-17, 308-311.) The Complaint also asserts that the ATI Fraud was motivated by a desire to meet the corporate goals set by Alstom’s “Restore Value” Program, which was announced in March of 2002. (Id. ¶ 303-304.) Despite this confusion, it is clear that the only motive alleged with regard to Alstom for the ATI Fraud is the claim that Alstom engaged in the fraud “in order to keep the company afloat” in the wake of the disclosure of the Marine Fraud and the Turbine Fraud. (Compl. ¶ 7; see also ¶¶ 116, 304.) However, the Complaint does not allege any facts to support the assertion that Alstom believed that the ATI Fraud was critical to the company’s financial survival. Indeed, as the Court has noted elsewhere in this opinion (see Section III.B.4. (Applicability of Scheme Liability), infra) and in Alstom I, the Complaint does not allege sufficient facts to support the claim that the ATI Fraud originated at Alstom in an effort to redeem the company’s tarnished image. Rather, the facts asserted in the Complaint, when read liberally, support an inference that the ATI Fraud was motivated by ATI’s desire to appear profitable and thus comply with Alstom’s company-wide “Restore Value” program. Furthermore, to the extent that the Complaint does contend that the ATI Fraud enabled Alstom to point to a profitable division during a period when the failures of its other divisions had severely tarnished its image (see Compl. ¶ 117), this motive is insufficient to raise an inference of scienter under Second Circuit precedent. As the Second Circuit stated in Chill, [t]he motive to maintain the appearance of corporate profitability, or of the success of an investment, will naturally involve benefit to a corporation, but does not entail concrete benefits.... In both [Acito] and [San Leandro] we held that, if scienter could be pleaded on that basis alone, virtually every company in the United States that experiences a downturn in stock price could be forced to defend securities fraud actions. 101 F.3d at 268 (internal citations omitted). Perhaps recognizing the difficulty of pleading motive as to Alstom, Plaintiffs devote greater energy to arguing that Alstom either knew or should have known of the ATI Fraud. The Court now turns to this contention. (b) Conscious Misbehavior or Recklessness Concerning the ATI Fraud As noted above, Alstom argues that it cannot be held liable for its statements *471 incorporating ATI’s financial results because there are insufficient allegations of scienter to support this claim. Relying on Chill, which found that a parent corporation’s failure to investigate further into reports of “success, [or] even the extraordinary success” at a subsidiary company whose financial results the parent had publicly reported was not sufficient to allege scienter, Alstom claims that there are insufficient facts to demonstrate that Alstom knew, or was reckless in not knowing, that ATI’s financial results were false. Chill, 101 F.3d at 270. Chill is analogous to the facts of this case. There, GE had reported the financial results of Kidder Peabody, a subsidiary of one of GE’s operating businesses, GE Capital Services. Those results were artificially inflated because of a fraud perpetuated by an employee of Kidder Peabody. Plaintiffs argued that GE’s reporting of the false earnings had been highly unreasonable or reckless because GE had failed to investigate further upon becoming aware of Kidder’s inflated results. The Second Circuit rejected the plaintiffs’ argument, finding that GE’s failure to “equate record profits with misconduct [could not] be said to be reckless,” and that while GE may have been guilty of mismanagement, the plaintiffs’ allegations were insufficient to support a finding of fraudulent intent by means of the recklessness prong. Id. Here, Plaintiffs point to the statements made by Alstom after the discovery of the fraud as evidence of the company’s scienter. In those statements, Alstom admits that a fraud occurred at ATI, referring to the “accounting improprieties” and “accounting irregularities” that occurred at the subsidiary and the resulting significant understatement of costs in ATI’s accounts. (Compl.¶¶ 119, 121, 124.) The existence of these statements, however, does nothing to advance Plaintiffs’ argument that Alstom knew about the fraud prior to receiving the anonymous letter that prompted its internal investigation. Statements by a parent company acknowledging the fraud of a subsidiary after that fraud has been discovered do not, without more, raise any reasonable inference that the parent knew about the fraud in advance and nonetheless proceeded to make the statements public. On the contrary, the facts alleged by Plaintiffs — that Alstom conducted an internal investigation into the fraudulent accounting (Id. ¶ 119), reorganized operations in the United States Transport division (Id. ¶¶ 124, 128), and made repeated statements to the public describing the discovery and then the extent of the accounting improprieties (Id. ¶¶ 119, 121, 124) — more plausibly suggest that Alstom took the approach that would be reasonably followed by any prudent corporation when confronted with this type of crisis. The other factual allegations made by Plaintiffs in support of their contention that Alstom knew about the fraud at ATI are sparse, and also unavailing. The Complaint alleges that sometime after March of 2002, Janovec traveled to Paris to inform the company about cost overruns. (Id. ¶ 317.) The source of this allegation is ATI’s former director of purchasing, who had “heard” of Janovec’s trip from “an ATI employee.” (Id.) The Complaint also alleges that ATI’s “Project Management Plan” for the NJT project, a contract which ATI won in 1999 by allegedly intentionally underbidding competitors, stated that Alstom’s Board of Directors had “oversight responsibilities” for the performance of the contract. (Id. ¶ 22.) These allegations are too vague to demonstrate the scienter required for fraud on the part of Alstom. Defendants first argue that the description of the source of the allegation regarding Janovec’s trip fails to demonstrate “the probability that a person in the position occupied by the *472 source would possess the information alleged,” Novak, 216 F.3d at 314, as the actual source of the information is described in the Complaint only as an “ATI employee.” Putting aside whether information provided by a confidential source who is merely repeating what he or she heard from an inadequately described third party is sufficient to support a factual allegation, the Court finds that the allegation regarding Janovec’s trip to Paris is too lacking in specificity to support a finding of scienter. There is no allegation as to the extent of the conversation between Janovec and Alstom, the degree of costs described by Janovec, or who Janovec met with at Alstom. There is certainly no allegation that, upon hearing the news of cost overruns from Janovec, Alstom conspired with Janovec to hide the costs in ATI’s accounting. This allegation is too vague to demonstrate that Alstom .had notice of the degree of cost overruns at ATI such that Alstom should have known that ATI’s favorable results were fraudulent. While Alstom arguably may have been negligent in not investigating ATI’s results more carefully, this failure is insufficient to support a finding of liability under Section 10(b). See Chill, 101 F.3d at 270 (“[P]laintiffs fail to allege facts to support a finding that GE was faced with sufficient information such that its failure to further investigate Kidder’s ... trading practices constituted recklessness.”). The allegation that Alstom’s Board had “oversight responsibilities” for the NJT contract pursuant to that contract’s Project Management Plan, is also insufficient. There are no allegations as to 'what this “oversight” consisted of, what information Alstom might have or should have received regarding the contract as a result of this oversight, or even if this provision of the Project Management Plan was complied with. Thus, there can be no reasonable inference that Alstom, as a result of this provision, had information about the NJT cost overruns, let alone a supportable strong inference of fraudulent intent in connection with the reporting of those costs. The facts alleged here, like those in Chill, cannot support a sufficient inference of recklessness on Alstom’s part. (iii) Scienter as to Officer Defendants for the ATI Fraud The only Officer Defendants that the Complaint successfully alleges to have made a statement with regard to the ATI Fraud are Bilger (for the November 2002 statements), Kron (for the June 2003 statement) and Jafire (for all three statements alleged in connection with this fraud). 35 For the same reasons outlined in the Court’s analysis of Alstom’s scienter, the Court finds that the Complaint fails to allege fraudulent intent as to these officers with regard to the ATI cost overrun statements. There are not sufficient allegations of “concrete benefits” that these defendants could have expected to gain as a result of the ATI Fraud, nor are there allegations supporting a strong inference that these Officers knew or should have known about, or had access to information regarding, the ATI Fraud. *473 Although Jaffre signed the November 7, 2002 Form 6-K (Compl.¶ 268), which included the filing of a press release alleged to convey misleading statements about the Transport division, as well as the June 2003 Form 6-K (Id. ¶ 281), which stated that the Transport division was operating at a profit when in fact it was operating at a loss, these facts do not sufficiently support a sufficient finding of scienter in these circumstances. While, as discussed in Section III.B.2.c(ii) (Scienter as to Officer Defendants), supra, the signing of SEC filings creates a “duty [for the Officer signing the document] to familiarize [herself] with the facts relevant to the core operations of [the company],” Teamsters Local Freight Div. Pension Fund, 2005 WL 2148919 , at *63, ATI’s business is not alleged to be a “core operation” of Alstom. According to Alstom’s 2003 financial statements, all Transport division sales in North America, where ATI is one of two transport-related Alstom subsidiaries, constituted approximately 2.6 percent of Alstom’s total sales in that year. (See 2003 Form 20-F, at 33 (listing Alstom’s total 2003 sales by division), 69 (listing geographic breakdown of Transport division sales, with North America division sales listed as 11 percent of Transport division total sales.)) While ATI and its earnings are certainly significant to Al-stom, Plaintiffs do not allege sufficient facts to suggest that this subsidiary can be considered of such critical importance to Alstom that a strong inference could be raised as to Jaffre’s scienter with regard to the ATI Fraud. 36 c. Causation The Complaint’s allegations with regard to the ATI Fraud are sufficient to support a claim for transaction and loss causation at the pleading stage. As discussed in Section III.B.2.d (Causation as to the Marine Fraud), supra, Plaintiffs’ allegation that Defendants perpetrated a fraud on the market (Compl.¶¶ 329-30) are sufficient to fulfill the transaction causation requirement at this stage of the litigation. See In re GeoPharma, 2005 WL 2431518 , at *6 n. 86. Loss causation is also adequately pled, as Plaintiffs allege that “the price of Alstom shares dropped after the ATI improprieties were revealed on June 30, 2003,” and that the share value dropped even further after Alstom’s August 6, 2003 announcement that the extent of the accounting improprieties were greater than initially realized and that the company would be forced to reduce its earnings by an additional € 100 million. *474 (Compl.¶¶ 122, 125, 284.) Plaintiffs further assert that financial analysts attributed the drop in Alstom’s share value to the announcement of ATI’s accounting irregularities. (Id. ¶ 123.) These allegations of loss causation are sufficient to survive a motion to dismiss. See In re GeoPharma, 399 F.Supp.2d at 453-54. The Complaint successfully alleges that ATI made material misrepresentations, with scienter, and that Plaintiffs suffered losses because of their reliance on those statements. Accordingly, Plaintiffs’ Section 10(b) claims for the losses suffered as a consequence of the ATI Fraud are sustained as against ATI, and dismissed as against all other Defendants, except insofar as leave to replead is granted as described above. 4. Applicability of Scheme Liability In addition to claiming liability for the alleged misleading statements made by Defendants, Plaintiffs posit an alternate theory of liability based on Defendants’ alleged use of a manipulative or deceptive device or participation in a scheme to defraud. Plaintiffs argue that Defendants are liable not only under subsection (b) of Rule 10b-5, which prohibits “the making of an untrue statement of a material fact and the omission to state a material fact,” but also under subsections (a) and (c), which allow suit against defendants who, with scienter, employ a “device, scheme or artifice to defraud,” or engage in an “act, practice, or course of business which operates or would operate a fraud or deceit upon any person.” 17 C.F.R. § 240 .10b-5. To state a claim based on conduct violating Rule 10b-5(a) and (c), plaintiff must allege (1) that the defendant committed a deceptive or manipulative act, (2) in furtherance of the alleged scheme to defraud, (3) with scienter, and (4) reliance. See In re Global Crossing, 322 F.Supp.2d at 336 (citation omitted). 37 Thus, a claim of liability for violations of Rule 10b-5(a) or (c) does not require an allegation that the defendant made a statement, as liability is premised on a course of deceptive conduct undertaken by the defendant, rather than on misrepresentations or omissions. Because of this standard, claims of liability under subsection (a) and (c) of Rule 10b-5 need not comport with Subsection (b)(1) of the PSLRA, *475 which requires that a plaintiff set forth each statement alleged to have been misleading, and facts giving rise to this belief. See In re Initial Pub. Offering Sec. Litig., 241 F.Supp.2d 281 , 385 n. 100 (S.D.N.Y. 2003). However, Subsection b(2) of the PSLRA, requiring that the plaintiffs plead facts demonstrating a “strong inference” of scienter does apply to claims asserting scheme liability. See id. Courts have held that a plaintiff may not cast claims of misrepresentations as claims under Rule 10b-5(a) and (c) and thus evade the pleading requirements imposed in misrepresentation cases. See Schnell v. Conseco, Inc., 43 F.Supp.2d 438, 447-48 (S.D.N.Y.1999) (refusing to characterize allegations as market manipulation claims where alleged “scheme to defraud” consisted largely of an aggregation of material misrepresentations to inflate stock, such as research reports containing misrepresentations of the underlying facts and use of false names to solicit investors). Furthermore, a plaintiff may not seek to hold a defendant liable for misleading statements under subsections (a) and (c) by alleging that the defendant is liable for the misleading statements because he or she was a participant in a scheme through which the statements were made. Under these provisions, a defendant can be held liable only for “specific false statements to the extent that it can be said to have made those statements under Rule 10b-5(b).” See In re Global Crossing, 322 F.Supp.2d at 337 n. 17; see also Parmalat II, 376 F.Supp.2d at 503 (noting that the application of subsections (a) and (c) of Rule 10b-5 “is not a backdoor into liability for those who help others make a false statement or omission in violation of subsection (b) of Rule 10b-5.”). 38 Nonetheless, it is possible for liability to arise under both subsection (b) and subsections (a) and (c) of Rule 10b-5 out of the same set of facts, where the plaintiffs allege both that the defendants made misrepresentations in violations of Rule 10b-5(b), as well as that the defendants undertook a deceptive scheme or course of conduct that went beyond the misrepresentations. The subsections provide alternate mechanisms of pleading a primary violation of Section 10(b). Thus, even if a defendant who did not make any statements in connection with a particular fraud may not be held liable for fraudulent misrepresentations under subsection (b), that defendant may still be held liable under subsections (a) and (c) if it is alleged that they participated in scheme that encompassed conduct beyond misrepresentations. Because the Court has already determined that Plaintiffs have successfully stated a claim for liability under Section 10(b) against Alstom, Bilger and Newey for the misleading statements made with regard to the Marine Fraud, it need not address the potential applicability of scheme liability under subsections (a) and (c) to this fraud. 39 With regard to ATI, *476 the Court has determined that Plaintiffs have stated a Section 10(b) claim against ATI for the misleading misrepresentations ATI made, and thus the Court need not consider whether or not participation in a fraudulent scheme has been alleged as to ATI. Further, because the Court has found that Alstom, Bilger, Kron and Jaffre did not have scienter with regard to the ATI fraud, those defendants also may not be held liable pursuant to Rule 10b-5(a) and (c). However, there remains the possibility of liability pursuant to subsections (a) and (c) for those defendants (Janovec, Rambaud-Measson, and Alstom USA) that the Court determined did not “make a statement” for purposes of liability under Section 10(b) with regard to the ATI Fraud. For such liability to exist, Plaintiffs must allege that the fraud at ATI consisted of a scheme or deceptive course of conduct that encompassed more than the making of the misrepresentations. As noted above, a plaintiff cannot state a claim under Rule 10b-5(a) and (c) by pointing to fraudulent statements and claiming that the defendants were part of a scheme to make those statements, as this method of pleading would result in the circumvention of the Second Circuit’s attribution requirements and Central Bank’s prohibition of aider and abettor liability. In the instant case, the Court concludes that the Complaint fails to state a claim for relief pursuant to Rule 10b-5(a) or (c) with regard to the ATI Fraud. The allegations related to the ATI Fraud concern the nondisclosure of the cost overruns at ATI. The Complaint fails to allege that there was a scheme to defraud that went beyond the misrepresentations themselves. See Par-malat II, 376 F.Supp.2d at 505 (rejecting claims of liability where the transactions pointed to “were not shams” and finding that the arrangements “therefore were not intentions, projects, or schemes with the tendency to deceive. Any deeeptiveness resulted from the manner in which Parma-lat or its auditors described the transactions on Parmalat’s balance sheets and elsewhere.”). While the Complaint alleges that the cost overruns arose out of a contract between ATI and NJT, which was allegedly intentionally underbid by ATI in 1999, this claim does not support a finding that the ATI fraud consisted of a manipulative or deceptive scheme that was undertaken in 1999. Indeed, the Complaint alleges that the NJT contract was underbid by ATI in order to “fill in business and keep the workforce running.” (Compl. ¶ 312.) As the Court discussed in Alstom I, intentional underbidding of a contract is not, in and of itself, fraudulent. Further, the reasons alleged by Plaintiffs for the underbidding do not provide any support for a claim that the underbidding was fraudulent. Nowhere in the Complaint is it alleged that ATI underbid the NJT contract in 1999 with the intention of understating costs related to the contract sever *477 al years later, in order to artificially inflate Alstom’s financial statements. While such an allegation might support a claim that the ATI Fraud was a scheme undertaken in 1999 in order to perpetrate a fraud on investors, the Complaint does not assert such a theory. 40 The costs arising out of ATI’s contracts were not, in and of themselves, deceptive. It was only the deliberate non-disclosure of these costs that gave rise to the alleged fraud. Thus the Court finds that Plaintiffs have failed to plead the deceptive scheme theory of liability with regard to the ATI Fraud. This conclusion forecloses any claim for liability arising out of the ATI Fraud for those defendants (Janovec, Rambaud-Measson, and Alstom USA) who did not “make a statement” in relation to that fraud. See In re Global Crossing, 322 F.Supp.2d at 337 (“Subsection (a) and (c) may only be used to state a claim against [the defendant] for the underlying deceptive devices or frauds themselves, and not as a short cut to circumvent Central Bank’ s limitations on liability for a secondary actor’s involvement in making misleading statements.”) (internal citation omitted.) Thus, the Court’s analysis of Plaintiffs’ claims for scheme liability does not alter its findings as to which claims survive Defendants’ motion to dismiss. Plaintiffs’ Section 10(b) claims relating to the Marine Fraud survive against Alstom, Bilger and Newey. Plaintiffs’ Section 10(b) claims relating to the ATI fraud survive against ATI only. All other Section 10(b) claims are dismissed, except insofar as leave to replead is granted as described above. IV. SECTION 18 OF THE EXCHANGE ACT A. LEGAL STANDARD Section 18 (“Section 18”) of the Exchange Act creates a private cause of action against any person' who makes or causes to be made materially misleading statements in reports or other documents filed pursuant to the Exchange Act, unless that person can prove that he or she acted in good faith and without knowledge that the statement was false or misleading. 41 *478 See 15 U.S.C. § 78r(a); Ernst & Ernst v. Hochfelder, 425 U.S. 185 , 211 n. 31, 96 S.Ct. 1375 , 47 L.Ed.2d 668 (1976). The statute covers materially false and misleading omissions as well. See Ross v. A.H. Robins Co., Inc., 607 F.2d 545, 555-56 (2d Cir.1979) (“A plaintiff seeking recovery under s[ection] 18 ... must ... plead and prove that a document filed with the Commission contains a material misstatement or omission.”); In re Caesars Palace Sec. Litig., 360 F.Supp. 366 , 386 n. 19 (S.D.N.Y.1973). To state a claim under Section 18, a plaintiff must plead that (1) a false or misleading statement was contained in a document filed pursuant to the Exchange Act (or any rule or regulation thereunder); (2) defendant made or caused to be made the false or misleading statement; (3) plaintiff relied on the false statement; and (4) the reliance caused loss to the plaintiff. See In re Stone & Webster, Inc. Sec. Litig., 414 F.3d 187,193 (1st Cir.2005); Ross, 607 F.2d at 552-53 (discussing reliance element); Lindner Dividend Fund, Inc. v. Ernst & Young, 880 F.Supp. 49, 56 (D.Mass.1995) (discussing reliance and damage elements); Gross v. Diversified Mortgage Investors, 438 F.Supp. 190, 195 (S.D.N.Y.1977) (discussing reliance and filing elements). 42 *479 1. Documents Filed Pursuant to the Exchange Act Section 18 applies only to documents filed pursuant to the Exchange Act. See 15 U.S.C. § 78r(a) (creating liability for misstatements in documents filed “pursuant to this chapter or any rule or regulation thereunder or any undertaking contained in a registration statement as provided in subsection (d) of section 78o of this title”) (emphasis added); Ross, 607 F.2d at 551 (noting that Section 18 creates private remedy for false or misleading statements contained in documents “filed with the S.E.C. pursuant to the 1934 Act”). Thus, the provision does not apply to filings made solely under the 1933 Act or any other of the securities laws. See Gross, 438 F.Supp. at 196 (dismissing Section 18 claims that relied on a prospectus filed as part of a registration statement pursuant to Securities Act, not Exchange Act); see also Hagert v. Glickman, Lurie, Eiger & Co., 520 F.Supp. 1028, 1033 (D.C.Minn. 1981) (holding that a claim made under Section 18 of the 1934 Act must be based on reliance on documents filed pursuant to the 1934 Act, and dismissing Section 18 claims where plaintiffs conceded that the documents relied upon- — -registration statement, prospectus, and annual report— were filed pursuant to the 1933 Act); For-restal Village, Inc. v. Graham, No. 74-881, 1976 WL 758 , Fed. Sec. L. Rep. 95,428 (D.D.C. Jan.30, 1976) (dismissing Section 18 claim based on prospectus because prospectus was not filed pursuant to 1934 Act). In addition, SEC regulations expressly exempt certain filings from the provisions of Section 18. See, e.g., 17 C.F.R. § 240 .13a-16(c) (exempting Form 6-K furnished pursuant to Rule 13a-16); 17 C.F.R. § 240 .15d-16(c) (exempting Form 6-K furnished pursuant to Rule 15d — 16); 17 C.F.R. §§ 240 .14a-3(c) — (d), 240.14c-3(b) (exempting annual reports sent to shareholders unless report is incorporated into proxy solicitation materials or other filed reports by reference; subjecting the annual report to Section 18 liability if it is prepared pursuant to Form 10-K and Form 10-KSB and submitted in satisfaction of the proxy solicitation rules); 17 C.F.R. §§ 240 .13a-13(d), 240.15d-13(e) (exempting financial information on Form 10-Q and Form 10-QSB); 17 C.F.R. § 240 .12g3-2(b)(4) (exempting certain information filed by foreign private issuers); 17 C.F.R. § 240 .17h-2T(c)(5) (exempting certain information filed by brokers or dealers); see also Heit v. Weitzen, 402 F.2d 909, 915-16 (2d Cir.1968) (holding that an annual report submitted to the SEC was not a filed document within the meaning of Section 18 because 17 C.F.R. § 240 .14a-3(c) exempted it from Section 18’s provisions, but that the Form 10K submitted to SEC was a filed document within the meaning of Section 18, because the exemption provision applied only to copies of the annual report that accompanied the 10K report but not the 10K report itself). 2. Actual Reliance Section 18 requires actual, or what has sometimes been referred to as “eyeball,” reliance. See Ross, 607 F.2d at 552-53 ; Heit, 402 F.2d at 916 ; Gross, 438 F.Supp. at 195 (“[PJlaintiffs have failed to allege that they actually read the filed document or documents. Such ‘eyeball reliance’ is required under § 18.”). Thus, to state a claim under Section 18, plaintiffs must allege that they actually read and relied on the filed document. Constructive reliance is not sufficient. See Heit, 402 F.2d at 916 ; Gross, 438 F.Supp. at 195 . *480 3. Scienter Contrary to the argument made by certain of the Defendants in the matter at hand, Section 18, unlike Section 10(b), does not require a plaintiff to plead scienter. Instead, the burden of proving the defendants’ state of mind falls upon the defendant in the form of a defense: A plaintiff seeking recovery under section] 18 [rather than section 10(b) ] faces a significantly lighter burden. He must merely plead and prove that a document filed with the Commission contains a material misstatement or omission. If he can show reliance on the statement, liability is established, unless by the very terms of section 18, the person sued shall prove that he acted in “good faith and had no knowledge that such statement was false or misleading.” As is readily apparent this difference may prove critical. A plaintiff unable to allege those specific facts necessary under Fed.R.Civ.P. 9(b) which would raise a strong inference of scienter ... would not be able to establish a prima facie case under sfection] 10(b). The very same plaintiff, however, could proceed under s[ection] 18. Ross, 607 F.2d at 555-56 ; see also In re Stone & Webster, 414 F.3d at 193 (“Under [Section 18], unlike Rule 10b-5, a plaintiff bears no burden of proving that the defendant acted with any particular state of mind. The state of mind with which the defendant acted enters the case instead as a defense.”); Magna Inv. Corp. v. John Does One Through Two Hundred, 931 F.2d 38, 40 (11th Cir.1991) (same). B. DISCUSSION In Alstom II the Court dismissed as time-barred all Plaintiffs’ claims relating to the Turbine Fraud, and all Section 18 claims related to the Marine Fraud. Thus, the only remaining Section 18 claims are those that involve the ATI Fraud. Plaintiffs have asserted Section 18 claims against Alstom, Alstom USA, ATI, Bilger, Kron, Jaffre, Newey, Rambaud-Measson, Janovec, and the “Director Defendants,” who Plaintiffs define in Paragraph 53 of the Complaint as Bilger, Purves, Esser, Halbron, Mayo, Simpson and Tchuruk. (Compl. Section E.) Plaintiffs have not asserted Section 18 claims against Milner, Alcatel or the Underwriter Defendants. 1. False or Misleading Statement Contained in a Document Filed Pursuant to the Exchange Act This element of Section 18 contains two parts: (1) a false or misleading statement; (2) the false or misleading statement is contained in a document filed pursuant to the Exchange Act. Because the second element is dispositive as to most of Plaintiffs’ Section 18 claims, the Court addresses it first. a. Documents Filed Pursuant to the Exchange Act The Complaint, in its recitation of GAAP violations and of “Defendants’ Materially False and Misleading Statements,” alleges that the following documents contain materially false or misleading statements related to the ATI Fraud: (1) the November 13, 2002 Form 6-K (Compl. ¶¶ 160 — 61); (2) a November 6, 2001 press release (Compl. ¶¶ 236-37); (3) a November 5, 2002 press release filed on the November 7, 2002 Form 6-K (Compl. ¶¶ 268-72); and (4) the June 2, 2003 Annual Report filed on Form 6-K (Compl. ¶¶ 28182). In the section of the Complaint comprising the Section 18 “Count,” Plaintiffs incorporate these previous allegations (Compl. ¶ 374), and in addition, allege materially false or misleading statements in *481 “documents filed with the S.E.C. by Al-stom, including filings made on Form 20-F, Form 6-K, and F-3.” (Compl. ¶ 376.) Finally, the Section 18 Count also alleges that Plaintiffs relied on (1) “Annual Reports on Form 20-F for the years ending March 31, 1999 through March 31, 2002 and the financial statements contained therein”; (2) “Current Reports on Form 6-K diming the Class Period”; 43 and (3) “Registration Statements on Form F-3, and corresponding Prospectuses, filed between January and March 2001.” (Compl. ¶ 377.) (i)Form 6-K Although Form 6-K is required by the Exchange Act for certain foreign private issuers, see 17 C.F.R. §§ 240 .13a-16, 240.15d-16, 249.306, SEC regulations expressly exempt Form 6-K from forming a basis for Section 18 liability. See 17 C.F.R. § 240 .13a-16(c) (“Reports furnished pursuant to this rule shall not be deemed to be ‘filed’ for the purpose of section 18 of the Act or otherwise subject to the liabilities of that section.”); 17 C.F.R. § 240 .15d-16(c) (“Reports furnished pursuant to this rule shall not be deemed to be ‘filed’ for the purpose of section 18 of the Act or otherwise subject to the liabilities of that section.”). Thus, Alstom’s November 13, 2002 Form 6-K (Compl. ¶¶ 160-61), November 5, 2002 press release filed on Form 6-K on November 7, 2002 (Compl. ¶¶ 268-72), June 2, 2003 Annual Report filed on Form 6-K (Compl. ¶¶ 281-82), or any other Form 6-K cannot form a basis for Section 18 liability. Plaintiffs in effect concede this point, for in their briefs they do not even attempt to argue that a Form 6-K could provide the basis for a Section 18 claim, but simply state that this argument “does little 'to assist defendants’ cause, since defendants concede that Alstom’s Form 20-F’s form a proper basis for plaintiffs’ Section 18 claim.” (Pis.’ Exchange Act Opp’n Mem., at 76.) (ii) November 6, 2001 Press Release Plaintiffs allege that the November 6, 2001 press release contains materially false and misleading statements as to ATI (Compl. ¶¶ 236-37), but do not allege that it was filed pursuant to the Exchange Act. Accordingly, this document cannot form the basis for Plaintiffs’ Section 18 claims. (iii) Form F-3 Plaintiffs also attempt to base their Section 18 claim on materially false or misleading statements in Form F-3 and corresponding prospectuses. (Compl. ¶ 376.). However, Plaintiffs do not allege any misstatements or omissions related to the ATI Fraud in the Form F-3 or its associated prospectuses. Instead, the 2001 Form F-3, which is the only Form F-3 mentioned in the Complaint, is alleged to be misleading for reasons related to the Turbine and Marine Frauds. (Compl. ¶ 210.) More fundamentally, however, Form F-3 is filed pursuant to the Securities Act, not the Exchange Act. See 17 C.F.R. § 239.33 (“Form F-3, for registration under the Securities Act of 1933 of securities of certain foreign private issuers offered pursu *482 ant to certain types of transactions”). It therefore cannot serve as a basis for liability under Section 18 of the Exchange Act. See Gross, 438 F.Supp. at 196 (dismissing Section 18 claims that relied on a prospectus filed as part of registration statement pursuant to Securities Act, not Exchange Act). Plaintiffs essentially concede this point as well, for they do not provide a counter-argument, but instead simply respond that the Forms 20-F provide a proper basis for the Section 18 claims. (Pis.’ Exchange Act Opp’n Mem., at 76.) (iv) Forms 20-F Plaintiffs also assert Section 18 claims based on Alstom’s Forms 20-F from 1999 through 2002. (Compl. ¶ 377.) A Form 20-F is filed pursuant to the Exchange Act, see 17 C.F.R. § 249 .220f (“Form 20-F, registration of securities of foreign private issuers pursuant to section 12(b) or (g) [of the Exchange Act], annual and transition reports pursuant to sections 13 and 15(d), and shell company reports required under Rulé 13a-19 or 15d — 19”), and thus clearly can form the basis for a Section 18 claim. Defendants contend that none of the alleged misrepresentations as to ATI are contained in the Forms 20-F. This argument is addressed in the next section, which analyzes whether the filed documents contain false and misleading statements with respect to any material facts. b. Filed Documents Containing False or Misleading Statements With Respect to Any Material Fact As discussed above, among the documents alleged to form the basis for Plaintiffs’ Section 18 causes of action, only the Forms 20-F can support such claims. Defendants argue that none of the alleged misrepresentations as to ATI are contained in the Forms 20-F. Indeed, in their catalogue of “Materially False and Misleading Statements,” (Compl. ¶¶ 162 — 287), Plaintiffs do not identify any way that the Forms 20-F are misleading as a result of the ATI Fraud. Paragraph 165 explains that the 1999 Form 20-F was materially false and misleading because it did not disclose costs associated with turbine defects. (Compl. ¶ 165.) Paragraph 185 explains that the 2000 Form 20-F was materially false and misleading because it did not disclose costs associated with turbine defects and because Alstom had artificially inflated demand for its cruise ships. (Compl. ¶ 185.) Paragraph 216 similarly explains that the 2001 Form 20-F was materially false and misleading because it did not disclose costs associated with turbine defects and because Alstom had artificially inflated demand for its cruise ships. (Compl. ¶ 216.) Paragraph 264 explains that the 2002 Form 20-F was materially false and misleading because it did not disclose costs associated with turbine defects. (Compl. ¶ 264.) Thus, the Complaint alleges misrepresentations in the Forms 20-F only with respect to the Marine and Turbine Frauds. 44 By way of contrast, in the Forms 6-K, which cannot serve as a basis for Section 18 liability, Plaintiffs expressly allege misrepresentations related to the ATI Fraud. See, e.g., Compl. ¶ 282 (“The statements in the 2003 Annual Report were materially false and misleading because the Company’s operating income and net income losses were understated ... as a result of the fraudulent accounting at ATI.”). Under the heightened pleading standards of the PSLRA and Federal Rule *483 of Civil Procedure 9(b), which the Court determined in Alstom II apply to the Complaint because Plaintiffs’ pleadings “sound in fraud,” see discussion in Alstom II, Section IV.A.1, 45 the Complaint therefore does not state a claim under Section 18 for the alleged ATI Fraud. 46 *484 Plaintiffs attempt to overcome this defect in their pleading by arguing that “even though the problems [relating to ATI] were not disclosed until 2003, the Complaint alleges that those problems existed for many years prior, rendering the earlier 20F Forms materially inaccurate.” (Pis.’ Exchange Act Opp’n Mem., at 74 n. 39.). As an example, they point to Paragraph 124 of the Complaint. (Id.) This argument fails for several reasons. First, Paragraph 124 does not allege that problems at ATI existed for many years prior to 2003. Instead, it addresses alleged improprieties that affected “fiscal 2003 earnings” and “fiscal 2004 earnings.” (Compl.¶ 124.) Nor does the Complaint elsewhere clearly allege earlier problems at ATI. Although Plaintiffs at one point allege that the ATI Fraud involved, in part, understating costs incurred in connection with a 1999 contract (Compl.¶ 308), Plaintiffs elsewhere concede that this underbidding was motivated by a non-ffaudulent reason: a desire to keep a work force employed (Compl.¶ 311). Moreover, the Court has rejected this theory of the fraud and has held that any conduct prior to the March 14, 2002 announcement of the Restore Value cannot have been related to the ATI Fraud. See Alstom I; see also supra n. 40. Second, and more fundamentally, even if the ATI Fraud had begun earlier, and even if other sections of the Complaint had pointed to those earlier problems, this method of pleading would not satisfy the PSLRA and Federal Rule of Civil Procedure 9(b). Under the heightened pleading standards of the PSLRA, the complaint must specify each statement alleged to have been misleading and the reason or reasons why the statement is misleading. 15 U.S.C. § 78u-4(b)(1); Rombach, 355 F.3d at 170 . In addition, because Plaintiffs’ Section 18 claim sounds in fraud for pleading purposes, Federal Rule of Civil Procedure 9(b) requires those claims to be stated with particularity. The Second Circuit has interpreted this particularity requirement to mean to that the complaint must “ ‘(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.’ ” Rombach, 355 F.3d at 170 (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993)). Plaintiffs’ attempt to substitute allegations of misconduct set forth in other forms and commu *485 nications for the required explanation of why a statement in Form 20-F is misleading is not appropriate. Although, as noted in the Court’s discussion of Plaintiffs’ 10(b) claims, supra Section III.B.2.b, a boilerplate explanation of why a statement is misleading may be appropriate provided that it is coupled with fuller explanations earlier in the Complaint, here the allegations do not contain even a boilerplate explanation as to how the ATI Fraud affected the Forms 20-F. 47 The reference to GAAP violations does not save Plaintiffs’ Complaint. In addition to alleging that the Forms 20-F are misleading because of issues related to vendor financing and turbine defects, the Complaint also states that each Form 20-F is materially false and misleading “as a result of the GAAP violations set forth in Section VI.” (Compl. ¶¶ 165, 185, 216, 284.) Section VI does contain alleged GAAP violations that relate to the ATI Fraud. (Compl. ¶¶ 157-161.) However, those alleged violations relate solely to Alstom’s preparation of its 6-K forms. (See, e.g., ¶ 160 (“The November 13, 2002 Form 6-K was materially untrue insofar as Alstom’s financial results were materially overstated and not prepared in conformity with GAAP.”).) In contrast, the Forms 20-F are linked to GAAP violations solely for reasons related to the Marine and Turbine frauds. (Compl. ¶¶ 153-56). Thus, the reference to GAAP violations does not provide any explanation of how the Forms 20-F are misleading as a result of the ATI Fraud. In addition, Plaintiffs allege in the Complaint that the ATI Fraud impacted only fiscal year 2003 results. (Compl. ¶¶ 7, 116-29, 157-61, 236-37, 265-71, 281-84, 304-07, 372(f), 389.) However, the 1999-2002 Forms 20-F did not report fiscal year 2003 results. Indeed, the Form 20-F filed on May 24, 2002, which is the most recent Form 20-F of those alleged to give rise to a Section 18 claim, contains an annual report for the fiscal year ending March 31, 2002. (See 2002 Form 20-F, included as Ex. A.4 in the J.A.) Thus, even reading the Complaint in the light most favorable to Plaintiffs, the Court finds that the Complaint does not provide any sufficient explanation of how the Forms 20-F are misleading in a way that relates to the only fraud in the case with remaining Section 18 claims — the ATI Fraud. The Complaint therefore does not state a claim under Section 18 for the ATI Fraud. Plaintiffs’ explanat [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2323344. Public record. Not legal advice.