ENDORSEMENT

LORETTA A. PRESKA, District Judge.

By notice of motion filed April 23, 2002, defendants Perry Corp. and Richard C. Perry (collectively, the "Perry defendants") moved to dismiss this action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, defendants' motion is denied.

I. Background

In this action, plaintiff Deborah Donoghue ("Donoghue") alleges that the defendants, acting as a "group" under standards applicable to Section 13(d) of the Securities Act of 1934 (the "Act"), 15 U.S.C. § 78m(d), realized short-swing trading profits that must be disgorged and paid over to Genomica, Inc. pursuant to Section 16(b) of the Act, 15 U.S.C. § 78p(b). (Plaintiff's Complaint, hereafter "Compl.;" Plaintiff's Memorandum of Law in Opposition to Perry Corp.'s and Richard Perry's Motion to Dismiss, hereafter "Pl's Opp. Br.," at 1).

The facts, as alleged by plaintiff and accepted as true for the purposes of the instant motion, are as follows. Defendant Perry Corp. provided asset management services to defendants John Does One and Two, principally through the efforts of defendant Richard C. Perry, who is Perry Corp.'s president, sole director and sole stockholder. (Compl. ¶ 3). John Does One and Two were the beneficial owners of discretionary trading accounts managed by Perry Corp. and Richard C. Perry. (Compl. ¶ 4). According to plaintiff's complaint, defendants John Does One and Two, along with the Perry Defendants, were members of a "group" pursuant to Section 13(d) of the Act. (Compl. ¶ 5). The group, at all times relevant, beneficially owned more than ten percent of the outstanding stock of Genomica Corp. (Id.). By virtue of membership in the group, all members of the group were, at all times relevant, each beneficial owners of more than ten percent of Genomica Corp. (Id.).

On January 4, 2002, plaintiff filed a complaint, which is the subject of the instant motion. In her complaint, plaintiff makes two claims for relief. The first claim arises out of the purchase of 130,000 shares of Genomica Corp. on November 20, 2001, by the Perry defendants "acting on behalf of JOHN DOES ONE AND TWO and for the direct and indirect pecuniary benefit of all members of the group." (Compl. ¶ 10). Between November 26, 2001 and November 30, 2001, those defendants sold 291,000 shares of the common stock of Genomica Corp., all at higher prices than the above-mentioned purchases. (Compl. ¶ 11). By reason of those purchases and sales, defendants realized short-swing profits on the Genomica Corp. stock. (Compl. ¶ 12).

The second claim arises out of the purchase and sale or sale and purchase, during a period continuing through December 28, 2001, of equity securities of Genomica Corp. within six months of each other. (Compl. ¶ 13). These transactions were also consummated by the Perry defendants "acting on behalf of JOHN DOES ONE AND TWO and for the direct and indirect pecuniary benefit of all members of the group." (Id.). By reason of those purchases and sales or sales and purchases, defendants again received short-swing profits. (Compl. ¶ 14).

At the Rule 16 conference, plaintiff was given a final opportunity to amend but elected to stand on the present complaint.

On April 23, 2002, the Perry defendants filed a motion to dismiss the complaint, asserting that they, as registered investment advisors, are not "beneficial owners" subject to disgorgement under Section 16(b). (Docket Nos. 6, 7).

II. Discussion

Section 16(b) prohibits a beneficial owner of an equity security from realizing a short-swing profit, i.e., a profit from the purchase and sale of such securities within a six-month period. See 15 U.S.C. § 78p(b). To bring an action under § 16(b), plaintiff must plead:

(1) a purchase of securities, (2) a sale of securities, (3) that the purchase and sale were done by a beneficial owner, director, or officer, and (4) that the purchase and sale took place within a six-month period.

Morales v. Auspex Systems, Inc., 00 Civ. 1173, 2001 U.S. Dist. LEXIS 2617, at *3 (S.D.N.Y. Mar. 15, 2001). Pursuant to Rule 16a-1(a)(1)(v), investment advisors are excluded from the definition of beneficial owners when the securities involved are held for the benefit of third parties or in customer or fiduciary accounts. 17 C.F.R. § 240.16a-1(a)(1)(v); Auspex, 2001 U.S. Dist. LEXIS 2617, at *4-5. As the court in Auspex noted, however, an investment advisor "can still be liable under § 16(b) if plaintiff can establish that [the investment advisor] is a member of a group, one or more members of which is not exempt under § 16(b), because the exemption for investment advisors applies only if all the members of the group fall within the exemption." Id. at *5.

In Morales v. Quintel Entm't, Inc., the Court of Appeals declared that "the key inquiry" in determining the existence of a group for § 13(d) purposes "is whether [the defendants] `agreed to act together for the purpose of acquiring, holding, voting or disposing of'" the relevant stock. 249 F.3d 115, 123-24 (2d Cir. 2001) (internal citations omitted). The Court held that the plain language of § 13(d) — whose standards 3 are grafted onto the standards for beneficial ownership under § 16(b), see id. at 128-29 — mandates only an agreement "`for the purpose of acquiring, holding, or disposing of securities,' 15 U.S.C. § 78m(d)(3)." Id. at 124. Under the Court's holding in Quintel, there is no "mandate that the narrow object of acquiring, holding, voting, or disposing of securities must itself serve a broader purpose of seeking corporate control or otherwise exerting influence over corporate affairs." Id. at 124-25. Moreover, "[w]hether the requisite agreement exists is a question of fact." Id. at 124.

Thus, the question for this Court is whether the pleadings, with all reasonable inferences drawn in the light most favorable to the plaintiff — the non-moving party — could be read to plead the elements of a "group." See United Magazine Co. v. Murdoch Magazines Distrib., Inc., 00 Civ. 3367, 2003 U.S. Dist. LEXIS 1440, at *2 (S.D.N.Y. Feb. 3, 2003) ("On a motion to dismiss, a court must accept as true all of the facts alleged in the complaint, and must draw all reasonable inferences in the light most favorable to the non-moving party."). The parties agree that a district court deciding a motion to dismiss a complaint alleging a securities law violation may review and consider "`public disclosure documents required by law to be and which actually were filed with the SEC. . . .'" Hinerfeld v. United Auto Group, 97 Civ. 3533, 1998 WL 397852, at *4 (S.D.N.Y. July 15, 1998) (quoting Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991); see also San Leandro Emergency Med. Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 808-09 (2d Cir. 1996) (upholding consideration, on motion to dismiss, of the full text of documents partially quoted in the complaint).

Here, the plaintiff has satisfied the threshold requirements for pleading a "group," if just barely. Plaintiff has pleaded that the discretionary accounts beneficially owned by John Does One and Two were managed by the Perry Defendants and 4 that Richard C. Perry is the president, sole director and sole shareholder of Perry Corp. See Compl. ¶¶ 3-4. She has also pleaded that defendants were members of a "group," a legal conclusion which I need not accept as true if it is unsupported by the facts. Id. at ¶ 5. The Schedule 13G with respect to October 31, 2001 (Ex. C to the Affidavit of Dennis G. Block sworn to on April 23, 2001 (the "Block Aff.")), states that it is filed on behalf of Perry Corp., Richard C. Perry and Perry Partners International and that "Perry Corp. is a private investment firm, Richard C. Perry is the President and sole stockholder of Perry Corp., and Perry Partners International Inc. is a private investment fund managed by Perry Corp." Id. at 5. The Schedule 13D with respect to November 20, 2001 (Ex. B to the Block Aff.), states that it is filed on behalf of Perry Corp. and Richard C. Perry, that Perry is "President, sole director and sole stockholder of Perry Corp." and that "[t]he [Genomica] shares were acquired by two or more private investment funds for which Perry Corp. acts as a general partner and/or investment advisor. Id. at 4. Drawing all inferences in plaintiff's favor permits the inference that the trading at issue was by entities for which Perry Corp., through Richard C. Perry, its sole director and shareholder, is general partner. Thus, the inference may be drawn that the securities at issue were all held for the benefit of Richard C. Perry, Perry Corp. or an investment fund in which Perry Corp. is general partner. Those securities would not be held by Perry Corp. "for the benefit of third parties," and, therefore, the investment advisor exemption does not apply. See 17 C.F.R. § 240.16a-1(a)(1)(v); see also Auspex, 2001 U.S. Dist. LEXIS 2617, at *4-5. Those facts also permit the inference that the entities at issue entered into an agreement to acquire, hold, vote or dispose of the securities through their common officer/partner, Richard C. Perry. See Strauss v. American Holdings, Inc., 902 F. Supp. 475, 480 (S.D.N.Y. 1995) (where individual controlled both a corporation and a general 5 partnership, complaint permitted inference of acting together as a group); America's Best Cinema Corp. v. Fort Wayne Newspapers, Inc., 347 F. Supp. 328, 331-32 (agreement involving common officer of two entities); see also Schaffer v. Soros, 92 Civ. 1233, 1994 U.S. Dist. LEXIS 9886, at *24-26 (S.D.N.Y. July 20, 1994).

For plaintiff ultimately to prevail in this action, she will need to make a considerably more particularized, specified and extensive showing that defendants operated as a group for § 13(d) and § 16(b) purposes. In short, plaintiff has a long row to hoe. However, at this stage of the proceedings, her pleadings are more than "barebones" allegations; as such, defendants are not entitled to dismissal of plaintiff's claims under Rule 12(b)(6). See Auspex, 2001 U.S. Dist. LEXIS 2617, at *6 ("barebones allegation" insufficient to state a cause of action under § 16(b)).

III. Conclusion

The motion to dismiss (docket no. 6) is denied. Counsel shall appear for a conference on April 8, 2003 at 4:30 pm.

SO ORDERED.