OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

I. INTRODUCTION

Lead plaintiff Gino Ströker brings this putative securities fraud class action on behalf of himself and all purchasers of Canadian Superior Energy Inc. ("Canadian Superior") common stock between January 14, 2008 and February 17, 2009 (the "Class Period"). Ströker asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 promulgated thereunder, against five former officers of Canadian Superior — Craig McKenzie, Gregory S. Noval, Michael F. Coolen, Leigh Bilton, and Leif Snuthun (collectively, "The Officers"). The Officers now move to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. For the reasons set forth below, The Officers' motion is granted in part and denied in part.

II. BACKGROUND

A. Parties

Canadian Superior is an Alberta-based company engaged "in the exploration for, acquisition, development, and production of petroleum and natural gas . . . in western Canada, offshore Nova Scotia, offshore Trinidad and Tobago, the United States, and North Africa." Canadian Superior common stock was traded on the American Stock Exchange ("AMEX") at all times during the Class Period. Because Canadian Superior "sought protection under Canadian bankruptcy and reorganization laws and has since reorganized," the Complaint does not name Canadian Superior as a defendant.

Defendant McKenzie served as Canadian Superior's Chief Executive Officer ("CEO") between October 1, 2007 and December 4, 2008 and as a Director of Canadian Superior's Board of Directors between November 15, 2007 and December 4, 2008. Defendant Noval served as Chairman and CEO of Canadian Superior from August 2000 to October 2004. Noval then served as Executive Chairman of Canadian Superior between June 26, 2007 and April 24, 2009. Defendant Coolen served as President and Chief Operating Officer ("COO") of Canadian Superior from April 2006 to sometime prior to April 2009, and as a director of Canadian Superior's Board of Directors from November 2005. By April 2009, Coolen was additionally serving as Canadian Superior's CEO, although exactly when he acquired that title is unclear.

Defendant Snethun served as a Vice President for Canadian Superior's Western Canada operations from March 2008 to April 30, 2009. Since April 30, 2009, Snethun has served as President and COO of Canadian Superior. Defendant Bilton served as a Vice President for Canadian Superior's Western Canada operations between February 5, 2008 and April 29, 2009 and has served as COO since April 29, 2009.

B. The Joint Venture in Intrepid Block 5(c)

Canadian Superior entered into a Production Sharing Contract ("PSC") with the government of Trinidad and Tobago on July 20, 2005. The PSC granted Canadian Superior the right, beginning Autumn 2007, to drill wells in an offshore area known as Intrepid Block 5(c). Canadian Superior then entered into a Participation Agreement with another oil and gas exploration company, Challenger Energy Corp. ("Challenger"), that gave Challenger the "right to earn a 25% interest in the PSC." In order to earn the twenty-five percent interest, Challenger agreed to pay one-third of the drilling project's costs. An August 11, 2007 amendment to the Participation Agreement stated that "Canadian Superior shall use its best efforts to convey to [Challenger] a 25% interest in the [PSC], subject to approval by the Ministry [of Energy of Trinidad and Tobago], within 90 days from the date of this letter."

In August 2007, Canadian Superior and Challenger announced that BG International Limited ("BG") — "a global energy company similarly engaged in the exploration, development and production of oil and natural gas" — would participate in the Intrepid Block drilling project as a Joint Venture pursuant to a Farm-In Agreement with Canadian Superior and a Joint Operating Agreement ("JOA") with Canadian Superior and Challenger. Although Challenger's twenty-five percent interest in the Joint Venture remained subject to assignment by Canadian Superior, Challenger was nevertheless a party to and was bound by the JOA. Regarding the obligations between Canadian Superior and BG, the JOA stated,

As between BG[] and [Canadian Superior], prior to [assignment of interest to Challenger], and notwithstanding anything in the Challenger Agreement, [Canadian Superior] shall have be [sic] fully responsible for all obligations and liabilities in respect of a 70% Participating Interest and BG[] shall under no circumstances be required to enforce, or make claim in respect of, any obligation or liability of [Challenger] under the any [sic] agreement between [Canadian Superior] and [Challenger] in respect of [Challenger's] rights to such Participating Interest.

Canadian Superior and its partners (collectively, "The Companies") "spudded" — i.e., began drilling — the Victory well, the first of three planned-for wells ("Victory," "Bounty," and "Endeavour") on June 28, 2007. The Companies discovered natural gas at the Victory well on June 14, 2008. The Companies spudded the Bounty Well on February 20, 2008 and discovered natural gas on August 13, 2008. Drilling began on the Endeavour well on August 28, 2008.

C. Events Leading to Canadian Superior's Bankruptcy

On February 9, 2009, BG sought an order from a Calgary court appointing Deloitte as "Receiver and Manager of Canadian Superior's rights, interests, duties and obligations as Operator [of the Joint Venture] under the JOA, pending BG becoming Operator." BG submitted the affidavit of Ewen Denning ("Denning Affidavit") in support of its Application to Appoint an Interim Receiver. The Denning Affidavit and its exhibits revealed that Canadian Superior was in severe financial trouble and that neither Canadian Superior nor Challenger had the funds to meet their outstanding obligations to the Joint Venture.

Denning's Affidavit stated that BG conducted an audit of Canadian Superior in November and December 2008 and found that Canadian Superior had violated the JOA's accounting procedures by (1) failing to maintain separate bank accounts; (2) commingling BG's funds with those of Canadian Superior; and (3) failing to account for interest. Denning further revealed that Maersk Contractors ("Maersk"), the drilling contractor operating the rig, had not received, as of January 26, 2009, a payment of $12,075,000.00 due January 2. Letters attached to the Denning Affidavit showed that Maersk was threatening to remove its rig from Intrepid Block 5(c) if it did not receive payment — an event that BG estimated would cost the Joint Venture a year of delay and thirty-five million dollars in additional expenses. The Denning Affidavit additionally stated that Canadian Superior first informed BG on February 2, 2009 that the Minister of Energy of Trinidad and Tobago had rejected Challenger's twenty-five percent interest in the Joint Venture.

Finally, the Denning Affidavit stated BG's position as to the economic viability of the three wells in the Intrepid Block. With regard to the Victory well, Denning stated that "tests indicated that there are only limited reserves connected to the well and it is BG[]'s view that the Victory well is likely to be a sub-economic discovery." Regarding the Bounty well, Denning stated,

In BG[]'s opinion, the Bounty discovery on its own is not economic. BG[] believes that the Bounty well may become economic if the Endeavour Well discovers sufficient reserves to make the joint development of the two prospects together economic by reason of costs savings realized through shared infrastructure.

And with respect to the Joint Venture overall, Denning stated that "BG[]'s opinion is that the currently discovered reserves in the Intrepid Block are below the economic threshold for development."

On February 11, 2009, the District of Calgary appointed Deloitte as Interim Receiver of Canadian Superior's interest in the Joint Venture. When Canadian Superior announced the Interim Receivership on February 12, 2009, the AMEX price of Canadian Superior's common stock fell forty-four percent from $0.90 per share to $0.40 per share. The stock fell an additional thirty percent, from $0.54 per share to $0.38 per share, on February 17, 2009, when Canadian Superior announced that Canadian Western had demanded repayment of monies outstanding under Canadian Superior's forty-five million dollar credit facility. Canadian Superior filed for protection under Canada's bankruptcy laws on March 6, 2009.

D. Allegedly False and Misleading Statements of Omissions

1. Test Results at the Victory and Bounty Wells

Ströker alleges that The Officers issued over twenty materially false and misleading statements between January 14, 2008 and February 17, 2009. Many of these statements reported positive test results — indicating that the wells would be productive and/or economical to develop — from either the Victory well, the Bounty well, or both.

a. The Victory Well

Canadian Superior issued a press release on January 14, 2008, in which McKenzie reported "positive" initial test results from the Victory well, stating, "The 'Victory' well has an estimated flowing rate of over 100 mmscf/d of natural gas and is condensate rich. . . . The flowing wellhead pressure on a restricted basis and bottomhole pressures are comparable or better than other producing wells and fields in the immediate area." McKenzie reported further positive results from the Victory well testing in a February 4, 2008 press release, and stated that "[Canadian Superior] estimate[s] on a preliminary basis that the 'Victory' discovery contains up to 1.1 tcf gross natural gas sales reserves with associated liquid natural gas of 3.70 million barrels, with the most likely case being 615 bcf gross sales reserves with associated natural gas liquids of 2.37 million barrels." A March 31, 2008 press release reported further positive results from the Victory well and stated that "[Canadian Superior] estimates that the well is capable of producing at sales gas flow rates of well over 100 mmcf/d from the lower zone alone."

Ströker claims that the statements regarding the Victory well were false and misleading by omitting material facts because "The Officers [] only reported the positive test results for the Victory well but failed to report other essential data, such as initial and final flowing rates and pressure and the shut-in pressure build-up data, which indicated there were only limited reserves connected to the well and that the well would likely be a sub-economic discovery." The assessment that the Victory well was likely to be sub-economic derives from the Denning Affidavit. Ströker further claims that The Officers knew of this "other essential data" at the time they reported the positive test results from the Victory well.

b. The Bounty Well

In a press release issued August 13, 2008, Noval stated, "We are very pleased with the results of the 'Bounty' well and production testing indicates that we have drilled one of the best natural gas wells offshore Trinidad and Tobago." In that same press release, McKenzie stated, "I am confident the 'Bounty' well will initially produce at approximately 200 mmcf/of sales natural gas. . . . This compares favorably with production from the nearest analogous filed, Dolphin Deep. . . ." On January 23, 2009, a press release quoted Coolen as stating, with respect to all three wells, "Having information from three successful wells along with extensive 3D seismic coverage we have over the block and the nearby fields really makes a difference and encourages us to initiate the further appraisal of resources discovered."

Ströker alleges that these statements were false and misleading because The Officers knew that the Bounty well "on its own would not be economic to develop" — an important factor given the probable "sub-economic" nature of the Victory well. Ströker bases his claims as to the Bounty well's

economic viability on the Denning Affidavit.

2. Violation of the JOA's Accounting Procedures

Ströker further claims that Canadian Superior's statements regarding the Joint Venture were materially false and misleading throughout the Class Period because The Officers failed to disclose that Canadian Superior was violating the JOA by failing to comply with the JOA's mandated accounting procedures. Ströker alleges that Canadian Superior's failure "to maintain a separate joint account for funds associated with the JOA;" its commingling of "funds received from BG with Canadian Superior's general funds;" and its failure "to maintain the joint funds in a separate interest-bearing account," "jeopardiz[ed] [Canadian Superior's] role in the Joint Venture."

3. Financial Liability Under the JOA

Nearly every Canadian Superior press release regarding the Joint Venture included the following description of the participating parties' interests and obligations vis-à-vis the Joint Venture:

Canadian Superior is paying 26-2/3% of the Block 5(c) exploration cost to maintain a 45% working interest in Block 5(c), with its partners, BG [], a wholly owned subsidiary of the BG Group plc, paying 40% for a 30% working interest and Challenger [] paying a 33-1/3% for a 25% working interest through Canadian Superior.

Ströker contends that this statement was false and misleading because Canadian Superior was in reality liable for sixty percent of the Joint Venture's costs, because "Challenger Energy was required to, but never did, receive approval from the Minister [of Energy of Trinidad and Tobago] prior to participating in the drilling on Intrepid Block 5(c)."

4. Inability to Satisfy Financial Obligations to the Joint Venture and Failure to Pay Maersk

Ströker finally alleges that Canadian Superior's statements from November 2008 through January 2009 were each materially false and misleading because Canadian Superior failed to disclose that it lacked sufficient funds to meet its obligations to the Joint Venture and did not have a reasonable probability of being able to raise additional funds. Moreover, Ströker alleges that Canadian Superior failed to disclose the risk that Maersk would abandon the rig due to non-payment.

III. LEGAL STANDARD

A. Motion to Dismiss

When reviewing a motion to dismiss pursuant to Rule 12(b)(6), the court must "accept as true all of the factual allegations contained in the complaint" and "draw all reasonable inferences in the plaintiff's favor." However, the court need not accord "[l]egal conclusions, deductions or opinions couched as factual allegations . . . a presumption of truthfulness."

In deciding a motion to dismiss, the court is not limited to the face of the complaint. The court "may [also] consider any written instrument attached to the complaint, statements or documents incorporated into the complaint by reference, legally required public disclosure documents filed with the SEC, and documents possessed by or known to the plaintiff and upon which it relied in bringing the suit."

1. Pleading Requirements

"Federal Rule of Civil Procedure 8(a)(2) requires . . . 'a short and plain statement of the claim showing that the pleader is entitled to relief.'" To survive a 12(b)(6) motion to dismiss, the allegations in the complaint must meet the standard of "plausibility." A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Plausibility "is not akin to a probability requirement;" rather, plausibility requires "more than a sheer possibility that a defendant has acted unlawfully." Pleading a fact that is "merely consistent with a defendant's liability" does not satisfy the plausibility standard.

2. Securities Fraud

"Securities fraud claims are subject to heightened pleading requirements that the plaintiff must meet to survive a motion to dismiss." These heightened pleading requirements are imposed by Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act (the "PSLRA").

a. Rule 9(b)

A complaint alleging securities fraud must satisfy Rule 9(b)'s requirement that "the circumstances constituting fraud . . . be stated with particularity." "This pleading constraint serves to provide a defendant with fair notice of a plaintiff's claim, safeguard his reputation from improvident charges of wrongdoing, and protect him against strike suits." To comply with the requirements of Rule 9(b), a plaintiff 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." "Allegations that are conclusory or unsupported by factual assertions are insufficient."

b. The PSLRA

The PSLRA requires plaintiffs to state with particularity "both the facts constituting the alleged violation, and the facts evidencing scienter, i.e., the defendant's intention to deceive, manipulate, or defraud." The PSLRA specifies that the plaintiffs must "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." When evaluating allegations of scienter, the court must look at the complaint as a whole and "take into account plausible opposing inferences."

"[A]n inference of scienter must be more than merely plausible or reasonable — it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent." In other words, a plaintiff must present a "strong inference" of scienter. The inference need not, however, be "irrefutable, i.e., of the 'smoking-gun' genre, or even the most plausible of competing inferences." The inquiry on a motion to dismiss is as follows: "When the allegations are accepted as true and taken collectively, would a reasonable person deem the inference of scienter at least as strong as any opposing inference?" "If the plaintiff alleges a false statement or omission, the PSLRA also requires that '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.'"

B. Section 10(b) and Rule 10b-5

To state a claim under Rule 10b-5 for misrepresentations, a "plaintiff must allege that the defendant (1) made misstatements or omissions of material fact, (2) with scienter, (3) in connection with the purchase or sale of securities, (4) upon which the plaintiff relied, and (5) that the plaintiff's reliance was the proximate cause of its injury."

1. Misstatements or Omissions of Material Fact

In order to satisfactorily allege misstatements or omissions of material fact, a complaint must "state with particularity the specific facts in support of [plaintiffs'] belief that [defendants'] statements were false when made." In situations "[w]here plaintiffs contend defendants had access to contrary facts, they must specifically identify the reports or statements containing this information." Mere "allegations that defendants should have anticipated future events and made certain disclosures earlier than they actually did do not suffice to make out a claim of securities fraud."

Certain statements are protected by the PSLRA's safe harbor provision and the bespeaks caution doctrine. Under the PSLRA's safe harbor provision, forward-looking statements are deemed immaterial and non-actionable when they are accompanied by "meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statements." "To avail themselves of safe harbor protection under the meaningful cautionary language prong, defendants must demonstrate that their cautionary language was not boilerplate and conveyed substantive information." Moreover, statements are not protected where defendants "had no basis for their optimistic statements and already knew (allegedly) that certain risks had become reality." Similarly, under the judicially created bespeaks caution doctrine, "alleged misrepresentations . . . are deemed immaterial as a matter of law [if] it cannot be said that any reasonable investor could consider them important in light of adequate cautionary language. . . ." Under the "truth-on-the-market" doctrine, information already known on the market is also immaterial. Statements may also be deemed immaterial as merely vague expressions of optimism or puffery. Lastly, pleadings based on fraud by hindsight are not actionable as a matter of law.

2. Scienter

A plaintiff may plead scienter by "alleging facts (1) showing that the defendants had both motive and opportunity to commit the fraud or (2) constituting strong circumstantial evidence of conscious misbehavior or recklessness." "Sufficient motive allegations entail concrete benefits that could be realized by one or more of the false statements and wrongful nondisclosures alleged." "Motives that are generally possessed by most corporate directors and officers do not suffice; instead, plaintiffs must assert a concrete and personal benefit to the individual defendants resulting from the fraud." "To prove liability against a corporation . . . a plaintiff must prove that an agent of the corporation committed a culpable act with the requisite scienter, and that the act (and accompanying mental state) are attributable to the corporation."

"Where motive is not apparent, it is still possible to plead scienter by identifying circumstances indicating conscious behavior by the defendant, though the strength of the circumstantial allegations must be correspondingly greater." Under this theory of scienter, a plaintiff must show that the defendant's conduct is "at the least, conduct which is highly unreasonable and which 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." "To state a claim based on recklessness, plaintiffs may either specifically allege defendants' knowledge of facts or access to information contradicting defendants' public statements, or allege that defendants failed to check information they had a duty to monitor."

3. Loss Causation

To satisfy the fifth prong of a Section 10b-5 claim, a plaintiff must plead loss causation. Loss causation is "the proximate causal link between the alleged misconduct and the plaintiff's economic harm." "A misrepresentation is 'the proximate cause of an investment loss if the risk that caused the loss was within the zone of risk concealed by the misrepresentations. . . .'" "To plead loss causation," therefore, "the complaint[] must allege facts that support an inference that [defendants'] misstatements and omissions concealed the circumstances that bear upon the loss suffered such that plaintiffs would have been spared all or an ascertainable portion of that loss absent the fraud."

C. Section 20(a)

"To establish a prima facie case of control person liability, a plaintiff must show (1) a primary violation by the controlled person, (2) control of the primary violator by the defendant, and (3) that the defendant was, in some meaningful sense, a culpable participant in the controlled person's fraud." "Allegations of control are not averments of fraud and therefore need not be pleaded with particularity." Thus, "'[a]t the pleading stage, the extent to which the control must be alleged will be governed by Rule 8's pleading standard.'"

D. Amendments to Pleadings

"Rule 15(a) provides that, other than amendments as a matter of course, a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." "[W]hether to permit a plaintiff to amend its pleadings is a matter committed to the Court's sound discretion." However, the Supreme Court has explained that

[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules require, be "freely given."

Accordingly, "'[i]t is the usual practice upon granting a motion to dismiss to allow leave to replead.'"

IV. DISCUSSION

A. Defendants Bilton and Snethun

The Complaint does not attribute any false or misleading statement to either Bilton or Snethun. Indeed, the Complaint fails to identify any connection between either Bilton or Snethun — who both presided, apparently exclusively, over Canadian Superior's operations in Western Canada — and the Joint Venture offshore Trinidad and Tobago. Although the Complaint is hardly clear on this point, Ströker apparently relies on Bilton and Snethun's alleged status as "senior executive officers and/or directors" to allege that Bilton and Snethun are liable for misstatements made by others.

The Second Circuit, in its recent decision in Pacific Investment Management Co. LLC v. Mayer Brown LLP (" PIMCO"), considered, but did not decide, whether a corporate insider may be held liable under Section 10(b) and Rule 10b-5 for statements not specifically attributed to that corporate insider. PIMCO did not foreclose liability in such cases, nor did it provide much guidance as to the circumstances under which this indirect corporate insider liability might arise. However, PIMCO's broader discussion of the attribution requirement in securities fraud cases establishes that reliance is of central importance in considering whether to extend liability to defendants who did not make the statements at issue. The Second Circuit suggested that a plaintiff might be able to show that she relied on a corporate insider's known role in issuing public statements — thus providing a basis for liability absent direct attribution. The Second Circuit ultimately declined to guarantee that such a showing is possible, and PIMCO certainly does not suggest that the requisite reliance would be presumed in every case.

Based on the Second Circuit's analysis in PIMCO, I conclude that Ströker has failed to plausibly allege that Bilton and Snethun are liable for any misstatements issued by Canadian Superior, McKenzie, Noval, or Coolen. Ströker provides no facts to show that Bilton or Snethun had a discernible role in issuing Canadian Superior's public statements, let alone facts to show that he or any other investor relied on Bilton or Snethun's role in issuing those public statements. As such, the Section 10(b) and Rule 10b-5 claims against Bilton and Snethun are dismissed.

B. Defendants McKenzie, Noval, and Coolen: Section 10(b) and Rule 10b-5

1. Misstatements or Omissions of Material Fact

The Officers argue that many statements regarding the wells are non-actionable because (1) "allegations of falsity are speculative and do not adequately specify how the statement was false when made," and (2) because the statements are forward-looking and "accompanied by meaningful cautionary language" and were not "made or approved by [an executive] officer with actual knowledge . . . that the statement was false or misleading." The Officers further contend that their failure to disclose Canadian Superior's violations of the JOA's accounting procedures is shielded by the "truth-on-the-market" doctrine due to prior disclosures of Canadian Superior's accounting control problems. The Officers also invoke the truth-on-the-market doctrine to argue that Canadian Superior's tenuous financial state had been sufficiently revealed to the market in late 2008. Finally, The Officers claim that Canadian Superior's representations of its financial obligations under the JOA were accurate.

Ströker counters that statements regarding the wells are indeed actionable because (1) the Complaint's allegations of falsity specify how the statements were false or misleading by pointing to specific documents that contradicted The Officers public statements, (2) many of The Officers' statements were not forward-looking because they either stated existing facts or incorporated forward-looking aspects with existing facts, and (3) any forward-looking statements were accompanied solely by boilerplate disclaimers and were made with actual knowledge that they were false or misleading. Ströker next argues that The Officers could not have publicly disclosed Canadian Superior's breach of the JOA's accounting procedures because the terms of the JOA were not public during the Class Period. Ströker also asserts that disclosures of Canadian Superior's financial difficulties failed to reveal the extent of Canadian Superior's troubles, and that this was the case precisely because The Officers failed to disclose the problems Canadian Superior faced vis-à-vis the Joint Venture. Finally, Ströker contends that characterizations of the extent of Canadian Superior's liability under the JOA were inaccurate and misleading because Canadian Superior did not reveal that it was ultimately responsible for Challenger's share of the costs under the JOA. For the reasons discussed below, I find that all of the alleged misstatements are adequately pled, with the exception of misstatements of Canadian Superior's liability under the JOA, which are not attributed to any Officer.

a. Statements Regarding the Wells

Ströker identifies actionable misstatements and omissions regarding the wells. The Complaint adequately specifies how the statements regarding the Victory and Bounty wells were false or misleading when made. The Complaint alleges, relying on the Denning Affidavit, that the statements regarding the Victory well were false and misleading when made because unreported test results would have "indicated that there were only limited reserves connected to the well and that the well would likely be a sub-economic discovery."

The Officers argue that this statement is impermissibly vague because it fails to identify how low the reserves needed to be in order to render the well uneconomic. However, the level of reserves needed to render a well economic varies from well to well and depends on company-specific information, such as "capital development and operating costs." Because such information is known only to Canadian Superior and The Officers, Ströker cannot be expected to allege this information prior to discovery. At this early stage, the Denning Affidavit provides an adequate factual basis for Ströker's allegations that The Officers' statements regarding the Victory well were false and misleading when made.

With respect to the Bounty well, Ströker sufficiently alleges, based on the Denning Affidavit, that The Officers' statements were false and misleading because "the Bounty discovery on its own would not be economic to develop," an important fact given the sub-economic status of the Victory well. The Officers claim that this allegation is flatly contradicted by the fact that BG later purchased forty-five percent of Canadian Superior's interest in the Joint Venture. According to The Officers, this purchase demonstrates that BG had greater faith in the economic viability of the Joint Venture than expressed in the Denning Affidavit. However, any apparent contradiction between Denning's sworn statement, which was authorized by and made on behalf of BG, and BG's later conduct at most raises an issue of fact that cannot be decided at the motion to dismiss stage. Accordingly, Ströker has adequately alleged that the statements

regarding the Bounty well were false and misleading when made.

Nor does the PSLRA safe harbor provision for forward-looking statements render these alleged misstatements non-actionable. Many of the alleged misstatements are not forward-looking because they either state a present or historical fact alone or incorporate forward-looking aspects into statements of present or historical fact. For instance, all statements in which The Officers report being "encouraged by" or "pleased with" some aspect of the Joint Venture's progress are statements of The Officers' present views. And many of the statements regarding well testing are simply statements of present or historical fact. Statements reporting test results from the wells and predicting future well performance based on those results incorporate forward-looking aspects into statements of present fact.

Moreover, none of the statements identified in the Complaint were accompanied by meaningful cautionary language. The cautionary language The Officers identify amounts to an identical blanket, boilerplate disclaimer appended to every Canadian Superior statement issued during the Class Period. Though this disclaimer mentioned myriad, general factors — such as natural gas prices or environmental hazards — that might cause actual results to differ from Canadian Superior's projections, the disclaimer provided no company-specific information, failed to link any specific projections to specific risks, and remained constant throughout the Class Period, even as the risks confronting Canadian Superior changed.

Finally, as discussed below under scienter, Ströker adequately alleges that The Officers had no basis for optimistic statements regarding the wells and actually knew that the risks that the wells would contain limited reserves and/or be uneconomic to develop had already materialized when they made their optimistic statements. As such, the PSLRA safe harbor does not apply to any of the forward-looking statements to the limited extent they may exist. b. Statements Regarding Compliance with and Liability Under the JOA

Ströker has adequately alleged that The Officers failed to disclose that Canadian Superior was violating the JOA by failing to adhere to the JOA's accounting procedures, thereby jeopardizing Canadian Superior's role in the Joint Venture. In opposition, The Officers point to Canadian Superior's 2007 Management's Discussion and Analysis ("MD A") as conclusive proof that Canadian Superior had disclosed its ongoing accounting control problems to the market. This disclosure makes no mention of the Joint Venture or the JOA. Thus, The Officers had not previously disclosed that their accounting problems left Canadian Superior in violation of the JOA, and the truth-on-the-market defense is consequently unavailing.

Ströker also sufficiently alleges that Canadian Superior misrepresented its obligations under the JOA by failing to disclose the true extent of its liability. The Officers argue that Canadian Superior was never financially liable for Challenger's portion of the Joint Venture's costs, because Canadian Superior could pursue remedies against Challenger to recover Challenger's share

of the costs in the event Challenger defaulted under the JOA. But this does not obviate the fact that the express terms of the JOA hold Canadian Superior solely responsible for a seventy percent interest in the Joint Venture pending assignment of a twenty-five percent interest to Challenger that never occurred. In fact, Coolen stated that BG considered Canadian Superior to be "directly liable" for the seventy percent interest, which suggests that this interpretation of the JOA is a plausible one. Again, The Officers' argument at most raises a question of fact to be decided at a later stage in this litigation.

c. Statements Regarding Canadian Superior's Inability to Meet Its Financial Obligations to the Joint Venture in Late 2008

Finally, The Officers cannot, at this stage, invoke the truth-on-the-market doctrine to avoid liability for their failure to disclose Canadian Superior's inability to meet its obligations to the Joint Venture between November 2008 (when the problems arose) and January 2009. Though Canadian Superior did disclose that it was experiencing liquidity problems in its Third Quarter 2008 MD A, filed November 2008, these disclosures made no mention of potential problems with the Joint Venture, and certainly did not disclose that Canadian Superior lacked sufficient funds to meet its obligations to the Joint Venture. Moreover, Canadian Superior issued a distinctly upbeat press release on January 23, 2009, in which Coolen discussed plans to begin developing the three "successful" wells. The January 23 press release does not so much as hint that the Joint Venture faced any financial shortfalls, even though the unpaid twelve million dollar Maersk invoice was by that point twenty-one days past due. Although The Officers may eventually establish that the market was fully aware of Canadian Superior's financial state by November 2008, the Complaint's allegations of misstatements or material omissions regarding Canadian Superior's inability to meets its financial obligations to the Joint Venture are sufficient to survive a motion to dismiss. 2. Scienter

The Officers argue that Ströker fails to adequately plead scienter based on conscious misbehavior or recklessness because the Complaint does not identify specific reports or documents to support its allegation that The Officers either "'knew facts or had access to information suggesting that their public statements were not accurate.'" The Officers further contend that the Complaint fails to allege a factual basis for allegations of conscious misbehavior or recklessness as to each defendant. The Officers finally claim that the Denning Affidavit does not support an inference that The Officers knew their statements regarding the wells were false at the time the statements were issued.

Ströker argues that (1) the Complaint alleges with adequate specificity that The Officers knew facts suggesting their public statements were not accurate, (2) the Complaint sufficiently alleges a factual basis for scienter as to each defendant, and (3) the Denning Affidavit supports a strong inference that The Officers knew of or had access to negative results from the wells at the time of the testing. Ströker additionally argues that The Officers' positions at Canadian Superior and the importance of the Joint Venture to Canadian Superior's core operations further support a strong inference of scienter. As discussed below, I find that Ströker adequately alleges scienter as to all The Officers for all statements attributed to them, with the exception of the failure to disclose that Canadian Superior's accounting problems left the company in breach of the JOA.

a. Knowledge of or Access to Contrary Facts

The Complaint satisfactorily identifies specific reports or documents that would have indicated that The Officers' public statements regarding the wells and Canadian Superior's inability to meets its financial obligations beginning late 2008 were inaccurate. Regarding the wells, the Complaint does considerably more than allege that a set of unspecified contrary facts must have been available to someone, somewhere inside Canadian Superior. Rather, the Complaint claims that these allegedly negative test results accompanied the results that were reported. The Officers surely relied on some sort of document or report — as opposed to raw, unanalyzed data — in reporting the test results contained in their public

statements. And it is probable that these documents or reports contained the allegedly negative tests results that The Officers allegedly withheld, as well as the positive tests results that The Officers reported. Moreover, Ströker notes that The Officers, by virtue of their experience as senior officers of an oil and gas exploration company, may be reasonably assumed to have been competent to interpret any test results presented to them.

Ströker also adequately identifies specific reports or documents suggesting that The Officers' statements regarding Canadian Superior's financial condition vis-à-vis the Joint Venture in late 2008 were inaccurate. The Complaint specifically identifies the Maersk invoice presented to Canadian Superior in November 2008 and Coolen's admission that Canadian Superior lacked sufficient funds to meet its obligations in November 2008. It is plausible that The Officers knew, but failed to disclose, that Canadian Superior could not pay its vendors beginning November 2008.

With respect to the JOA accounting procedures, however, Ströker fails to allege facts indicating that The Officers knew, or ought to have known, that Canadian Superior's accounting controls were not in compliance with the JOA. Although The Officers were undoubtedly aware of the JOA's accounting requirements, there are no factual allegations to support the inference that they were aware that Canadian Superior's actual accounting procedures were defective. Thus, the Complaint fails to allege that any of The Officers had knowledge that Canadian Superior was in breach of the JOA.

b. Scienter as to Each Defendant

Ströker adequately alleges a factual basis for scienter as to each defendant. McKenzie, Noval, and Coolen each made direct statements regarding test results from the wells throughout the Class Period. It is highly plausible that each Officer had knowledge of and access to the test results on which their own public statements were based. Thus, there is a factual basis for the allegation that each Officer knew of the negative test results accompanying the positive results contained in his public statements. As for allegations regarding Canadian Superior's inability to meet its financial obligations to the Joint Venture beginning November 2008, the Coolen Affidavit supports a strong inference that Coolen — the only defendant who made public statements regarding the Joint Venture from November 2008 on — was aware of Canadian Superior's financial difficulties vis-à-vis the Joint Venture.

However, because Ströker bases his Rule 10b-5 claim on omissions and selective disclosures, Ströker must do more than allege that The Officers were aware of negative test results and looming financial shortfalls. Rather, Ströker's allegations must give rise to an inference that The Officers were reckless (or consciously misbehaving) in failing to disclose or only partially disclosing these facts. I find that the Complaint successfully raises such an inference.

Regarding the wells, the Complaint alleges that The Officers suppressed negative facts and highlighted positive ones to create the distorted and misleading impression that Canadian Superior was well on its way to developing one of the most successful natural gas production sites offshore Trinidad and Tobago. The Complaint further alleges that had test results from the well been reported in full, the resulting impression of the Joint Venture's prospects would have been considerably bleaker. These allegations give rise to a strong inference that The Officers were reckless, and not merely negligent, in touting positive results from the wells, while simultaneously failing to disclose the negative results that would have undermined The Officers' confident statements regarding the Joint Venture's prospects.

Regarding The Officers' — or more specifically, Coolen's — failure to disclose Canadian Superior's inability to meet its obligations to the Joint Venture beginning November 2008, Ströker alleges that Coolen made several highly optimistic statements about the Joint Venture's progress and plans from November 2008 through January 2009. Coolen made these statements even though the following risks to the Joint Venture had become a reality: (1) Canadian Superior did not have sufficient funds to meet its financial obligations to the Joint Venture, (2) Challenger was in default under the JOA, and (3) Maersk was not going to be paid on time and had not been paid by the end of January 2009. These realities manifestly threatened the viability of the Joint Venture. For Coolen to have issued unguardedly optimistic statements about the Joint Venture's future in the face of these threats raises a strong inference of his recklessness or conscious misbehavior.

c. The Denning Affidavit

The Officers finally argue that Denning's February 2009 statements regarding the wells and the economic viability of the Joint Venture do not support a strong inference of The Officers' scienter for "an entire year prior to [February 2009]." The Officers correctly note that the Denning Affidavit is not precise as to when exactly test results indicated that the Victory well was likely to be sub-economic and that the Bounty well was not worth developing on its own. Nevertheless, the Denning Affidavit may be reasonably read to indicate that The Officers would have known of negative test results and their import for the Joint Venture at the time of testing. Thus, The Officers' timing argument is insufficient to defeat a strong inference of scienter throughout the Class Period. Overall, the inference that The Officers were actually aware of contrary facts that made their public statements inaccurate and misleading and were reckless in failing to disclose these negative facts is at least as compelling as any other inference and is sufficient to raise a strong inference of scienter at the motion to dismiss stage.

3. Loss Causation

To allege loss causation, Ströker must allege that The Officers' "misstatements and omissions concealed the circumstances that bear upon the loss suffered such that plaintiffs would have been spared all or an ascertainable portion of that loss absent the fraud." Ströker alleges that The Officers misrepresentations concealed significant risks that materially jeopardized the success of the Joint Venture and Canadian Superior's role in it — namely, that the Victory and Bounty wells were not economically viable, that Canadian Superior was in breach of the JOA, that Canadian Superior was exposed to liability for a seventy percent interest in the Joint Venture because Challenger's twenty-five percent interest had never been assigned, and that Canadian Superior was unable to meet its financial obligations to the Joint Venture. Ströker claims that these concealed risks significantly increased the risk that the Joint Venture would fail, and indeed the Joint Venture did fail as far as Canadian Superior and its shareholders were concerned when Canadian Superior's interest in the Intrepid

Block project was placed in receivership on February 11, 2009. The market reacted harshly to this news, and Canadian Superior's stock dropped forty-four percent on the day the receivership was announced. Ströker further alleges that the failed participation in the Joint Venture caused Western Canada to demand repayment of its credit facility, leading to an additional thirty percent stock decline on February 17, 2009. Because failure of the Joint Venture was within the "zone of risk concealed by the misrepresentations," and because Canadian Superior's stock dropped precipitously in response to the corrective disclosure, Ströker's loss causation claims are sufficient to survive a motion to dismiss.

C. Section 20(a)

1. Primary Violation

The Officers move to dismiss the control person liability claims on the ground that Ströker has failed to allege a primary violation by any controlled person. However, Ströker successfully states a claim for primary violations of Section 10(b) and Rule 10b-5, with only three exceptions: First, Ströker's primary liability claims against Bilton and Snethun fail because the Complaint fails to attribute any actionable misstatements to either individual. Second, the Complaint fails to attribute misstatements regarding Canadian Superior's financial liability under the JOA to any named defendant, thus precluding any named defendant's primary liability for those misstatements. Third, the Complaint fails to allege scienter as to any named defendant regarding the failure to disclose that Canadian Superior's faulty accounting procedures left the company in breach of the JOA.

Because the Complaint does not allege any primary violation by either Bilton or Snethun, any section 20(a) claims against the remaining Officers regarding Bilton or Snethun's conduct must be dismissed. However, The Officers may still be liable as control persons for misstatements regarding Canadian Superior's liability under the JOA and the failure to disclose Canadian Superior's breach of the JOA's accounting procedures if the Complaint successfully alleges that Canadian Superior would have been liable under Section 10(b) and Rule 10b-5.

Earlier in this opinion I concluded that but for the failure of attribution, misstatements of Canadian Superior's liability under the JOA were actionable. Because these misstatements, contained in Canadian Superior press releases, were manifestly attributable to the company, the misstatements are actionable as to Canadian Superior. Moreover, I find that the Complaint adequately alleges Canadian Superior's scienter as to misstatements of liability under the JOA, as it is utterly implausible that senior corporate officers — including McKenzie, Noval, and Coolen — would not have been aware of the true terms of the JOA, which suggested that public statements regarding the division of interest under the JOA were inaccurate. As the breach of the JOA was material in light of Canadian Superior's other, consistently positive statements regarding the Joint Venture, the Complaint raises a strong inference that some senior officer within Canadian Superior was reckless in failing to disclose the fact of the breach. And Ströker adequately alleges that the company's misstatements of the extent of Canadian Superior's liability under the JOA caused at least part of his loss. Accordingly, the Complaint sufficiently alleges a primary violation by Canadian Superior based on misstatements of the company's liability under the JOA.

The Complaint does not, however, adequately plead a primary violation by Canadian Superior as to the failure to disclose its breach of the JOA's accounting procedures. Just as the Complaint makes no allegations to suggest whether or when The Officers knew that Canadian Superior's accounting procedures were faulty and in violation of the JOA, the Complaint makes no such allegations as to any senior officer or anyone else inside the company. As such, any Section 20(a) claims based on the failure to disclose Canadian's Superior violation of JOA accounting procedures must be dismissed.

2. Control Person

Having adequately alleged primary violations — except as to Bilton and Snethun and the accounting failures — Ströker must also allege "control of the primary violator by the defendant." The Officers challenge control solely as to Bilton and Snethun on the grounds that the Complaint fails to allege how either Bilton or Snethun — neither of whom appear to have been senior officers during the Class Period and who each presided over operations in Western Canada throughout the Class Period — were in a position to control Canadian Superior's statements regarding the Intrepid Block 5(c) Joint Venture. Indeed, the Complaint's sole mentions of Bilton and Snethun are a description of their titles and allegations that each sold Canadian Superior stock within the Class Period. Because the Complaint contains literally no factual allegations that would support an inference that Bilton or Snethun were control persons under Section 20(a), all claims for

control person liability against Bilton and Snethun must be dismissed. Ströker nevertheless successfully states a claim for control person liability against McKenzie, Noval, and Coolen, as each was a senior officer and member of Canadian Superior's Board of Directors during the Class Period, and as such "possessed 'the power to direct or cause the direction of the management and policies of [Canadian Superior].'"

D. Plaintiffs Who Purchased on a Foreign Exchange

The parties concede that the Supreme Court's recent decision in Morrison v. National Australia Bank Ltd. forecloses any potential class members who purchased Canadian Superior common stock on a foreign exchange — in this case, the Toronto Stock Exchange ("TSX") — from recovering in this action. The parties are correct that Morrison prevents such plaintiffs from recovering in this Court, and the claims of any potential class members who purchased Canadian Superior common stock on a foreign exchange are therefore dismissed.

E. Leave to Replead

Although leave to replead is typically granted, repleading should not be permitted when amendment would be futile. Thus, in light of Morrison, Ströker may not amend his complaint to seek to include plaintiffs who purchased Canadian Superior stock on a foreign exchange.

Amendment would not, however, be futile with respect to the other claims dismissed by this Order. Ströker might be able to allege new facts providing a factual basis for attributing misstatements to either Bilton or Snethun or facts supporting a finding that Bilton or Snethun were control persons under Section 20(a). Ströker could also allege facts that would attribute misstatements regarding Canadian Superior's liability under the JOA to one or more of the The Officers, as well as facts supporting an inference of The Officers' scienter

regarding breaches of the JOA's accounting procedures. Because amendment to these claims would not be futile, I grant Ströker leave to replead his claims as to (1) Bilton and Snethun's liability under Sections 10(b) and 20(a); (2) actionable misstatements by The Officers regarding the extent of Canadian Superior's liability under the JOA; (3) scienter as to failure to disclose accounting failures that violated the JOA; and (4) any corresponding Section 20(a) claims as to (1)-(3).

V. CONCLUSION

For the reasons discussed above, The Officers' motion is granted in part and denied in part. Any claims on behalf of potential class members who purchased Canadian Superior shares on a foreign exchange are dismissed with prejudice. All claims against Bilton and Snethun are dismissed without prejudice and with leave to amend. Finally, all claims derived from misstatements of Canadian Superior's liability under the JOA or relating to the failure to disclose accounting failures in breach of the JOA are dismissed without prejudice and with leave to amend. Any amended complaint must be filed within thirty (30) days of the date of this Order. The Clerk of the Court is directed to close this motion (Docket No. 41). A conference is scheduled for Tuesday, August 24, 2010 at 4:30 p.m.

SO ORDERED: