1982) ("economic prognostication, though faulty, does not,
without more, amount to fraud.") (internal quotation omitted).
While plaintiffs contend that defendant had access to facts that
contradict these generally optimistic reports, other than by
reference to plaintiffs' theory of Conseco's scheme, plaintiffs
fail to "specifically identify the reports or statements
containing this information." Novak, 216 F.3d at 309.
In connection with the two amendments to the Investment Banking
Agreement used to provide Sands with fees for the placement of
the Convertible Bonds and for the Public Offering, as stated
previously, there is nothing inherently fraudulent about an
underwriter's motive to earn fees. See, e.g., Acito, 47 F.3d at
54; Ellison, 36 F. Supp.2d at 639; Fisher, 1996 WL 563141, at
*6. Sands earned these fees in connection with actual and
documented transactions — e.g., the placement of the bonds and
facilitation and underwriting activities for the Public Offering.
Allegations that plaintiffs believe the fee amounts and
arrangements to be "unusual," without more, is insufficient to
Third, plaintiffs contend that the relationship between Conseco
and Sands supports allegations of scienter. However, as discussed
in the Court's previous opinion, allegations of a close
relationship fail to establish the kind of circumstantial
evidence necessary to support a claim of fraudulent or reckless
intent. See Schnell, 43 F. Supp.2d at 449. In addition, a desire
by Sands to maintain that relationship is not unlike its desire
to earn underwriting fees, discussed supra, and, similarly, is
not sufficient to satisfy the pleading requirements for scienter.
Finally, plaintiffs' argue that Appel's supposed role in
dealing with Sands provides circumstantial support for Sands'
fraudulent intent. It is not clear to this Court how an
allegation that one of NALF's major shareholders had been
disciplined by the NASD helps to establish the requisite level of
scienter required by the PSLRA. Even if Sands knew of Appel's
problem with the NASD, this Court is not persuaded that the
nature of its purported contacts with Appel, as set forth in the
Amended Complaint, provides an inference that Sands may have
behaved with the level of scienter required by the PSLRA.
In sum, plaintiffs' allegations in the Amended Complaint,
considered either in the aggregate or individually, fail to set
forth facts that "give rise to a strong inference of fraudulent
intent," In re Time Warner, 9 F.3d 259, 268 (2d Cir. 1993)
(internal quotations omitted), and, consequently, are
insufficient to satisfy the scienter requirements for securities
fraud under 10(b) or Rule 10b-5. See Novak, 216 F.3d at 311;
15 U.S.C. § 78u-4(b)(2).
For the foregoing reasons, the Amended Complaint is dismissed.
As plaintiffs have been provided opportunities to correct the
deficiencies of the original Complaint, but have failed to do so,
the dismissal is with prejudice. The Clerk of the Court is
directed to dismiss the Amended Complaint with prejudice.