The courts have used two tests to resolve these issues: the "conduct" test and the "effects" test. See Ohman v. Kahn, 685 F. Supp. 1302, 1305-06 (S.D.N.Y. 1988). If the allegations of the complaint satisfy either of these tests, the Court has subject matter jurisdiction over the claims against Hall Mexico, PWS, Fielding and RBH Bermuda. (a) The Conduct Test

Moreover, we note that case law has allowed the supplementation of proper allegations of violations of the False Claims Act with information obtained during discovery. See United States ex rel. Galmines v. Novartis Pharm. Corp., 88 F.Supp.3d 447, 451 (E.D. Pa. 2015) (granting leave to amend and noting that "it would make little sense not to allow a relator to obtain these details [about the start and end date of a fraud] during discovery and amend her complaint accordingly.") (emphasis added); see also Ohman v. Kahn, 685 F.Supp. 1302, 1308 n.3 (S.D.N.Y. 1988) ("Because some of the allegations currently satisfy rule 9(b), this case is clearly going to proceed through discovery. If plaintiffs cannot be more specific now concerning these materials, they might be able to do so at the end of discovery. At that time, the Court would entertain a motion to amend the complaint to include any misrepresentations or omissions unearthed during discovery."); see generally Capitol Records v. MP3tunes, LLC, 2009 WL 3364036, at *10 (S.D.N.Y. Oct. 16, 2009) (granting leave to amend and finding no undue delay in raising the new claims, in part, "[b]ecause [the new claims'] factual predicate emerged during discovery.").F. Undue Delay as to Filing of Motion

See O'Driscoll, 1983 WL 1360, *5 (acts in the United States to conceal churning scheme were found not to constitute the direct cause of plaintiff's loss); Butte Mining PLC v. Smith, 876 F. Supp. 1153 (D.Mont. 1995), aff'd, 76 F.3d 287 (9th Cir. 1996). Compare Ohman v. Kahn, 685 F. Supp. 1302, 1306 (S.D.N.Y. 1988). The communications made while Carr was in Florida were only ancillary to the initial fraud in London and therefore can not be said to have directly caused plaintiff's loss.

Corporate officials making stock offerings general partners offering limited partnerships, and principals in general may be considered insiders for the purposes of Rule 9(b). Stevens, 694 F. Supp. at 1061, citing DiVittorio, 822 F.2d at 1247-48; Luce, 802 F.2d at 49; Ohman v. Kahn, 685 F. Supp. 1302 (S.D.N.Y. 1988). Independent contractors, such as lawyers and accountants, are generally not considered insiders absent specific allegations of insider status.

See Tobias, 709 F. Supp. at 1275. But see Ohman v. Kahn, 685 F. Supp. 1302, 1310 (S.D.N.Y. 1988) (stating that, while there are strong arguments against the Kirshner result, it remains the law of the circuit and must be followed). Such an anomalous result should be avoided absent binding precedent requiring that finding.

The requirement of a demand on directors is designed to afford the derivative corporation the opportunity to pursue the action itself, prevent strike suits by minority shareholders, and minimize undue interference with corporate management. See Ohman v. Kahn, 685 F. Supp. 1302, 1306 (S.D.N.Y. 1988). However, a demand on directors need not be made where it would be futile.

There are, however, courts here which have adhered to Kirshner. E.g., Ohman v. Kahn, 685 F. Supp. 1302, 1310 (S.D.N Y 1988) (Keenan, J.); In re Wedtech Corp., 85 B.R. 285, 292 (S.D.N.Y. 1988); Toberoff v. B-J, Inc., Fed.Sec.L.Rep. (CCH), ¶ 93,611 at 97,740, 1988 WL 5355 (S.D.N.Y. 1988) (Keenan, J.); Dannenberg v. Dorison, 603 F. Supp. 1238, 1241-42 n. 5 (S.D.N Y 1985) (Sprizzo, J.); Fund of Funds, Ltd. v. Arthur Andersen Co., 545 F. Supp. 1314, 1354 n. 20 (S.D.N.Y. 1982) (Stewart, J.).

While certain courts have felt bound to follow the Kirshner holding, the path this Court initially chose in Savino, the Court is aware of no recent voice substantively arguing the correctness of the conclusion that section 17(a) carries with it an implied private right of action. See e.g. Ohman v. Kahn, 685 F. Supp. 1302, 1310 (S.D.N.Y. 1988) (Court felt bound to follow Kirshner "despite strong arguments against [its] result"). Upon reexamination of this question the Court concludes, in agreement with numerous recent decisions that have considered the merits of this issue, that no private right action exists under section 17(a).

According to plaintiffs, however, instead of ceasing to function, defendants' enterprise is ongoing because it involves "a never-ending pyramid" which allows defendants to conceal fraud and ensure large fees into the future. In this sense, plaintiffs argue that it is similar to Ohman v. Kahn, 685 F. Supp. 1302 (S.D.N.Y. 1988) (Keenan, J.) and County of Suffolk v. Long Island Lightning Co., 685 F. Supp. 38 (E.D.N.Y. 1988) (Weinstein, J.), where RICO claims were upheld. However, Ohman and County of Suffolk are distinguishable.

Luce, supra, 802 F.2d at 55 (citations omitted). Although persons such as corporate officials making stock offerings or general partners offering limited partnerships may be considered insiders for the purposes of Rule 9(b), see DiVittorio v. Equidyne Extractive Industries, 822 F.2d 1242, 1247-48 (2d Cir. 1987) (partners, subsidiaries of the partnership, affiliates, controlling stockholders, officers or directors of partnerships are insiders); Luce, supra, 802 F.2d 49 (partners and principals in partnerships are insiders); Ohman v. Kahn, 685 F. Supp. 1302 [current] Fed.See.L.Rep. (CCH) ¶ 93,740 (S.D.N.Y. 1988) (principals of corporation offering shares), it is less clear whether attorneys or accountants may be held under this relaxed standard of pleading, see DiVittorio, supra, 822 F.2d at 1249 (lawyers and accountants not held when complaint does not sufficiently allege insider status and when not specifically linked to fraudulent misrepresentation or omission); The Limited, Inc. v. McCrory Corp., 683 F. Supp. 387, 394 (S.D.N.Y. 1988) (accountant who certified audited balance sheet upon which shareholders equity was based in establishing stock purchase price was not an insider but was held liable on other grounds); Cohen v. Goodfriend, 665 F. Supp. 152, 156-47 (E.D.N.Y. 1987) (attorney who prepared offering materials which contain misrepresentations may be held). Additionally, allegations of fraud in general may not be pleaded on information and belief unless the matters stated are "peculiarly within the opposing party's knowledge."