Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02917/USCOURTS-cand-3_07-cv-02917-1/pdf.json

Parties Involved:
Applied Micro Circuits Corporation
Defendant
William E. Bendush
Defendant
David M. Rickey
Defendant
Leon S. Segen
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LEON S. SEGEN,

 Plaintiff,

 v.

DAVID M. RICKEY, et al.

Defendants. /

No. C07-02917 MJJ

ORDER GRANTING DEFENDANTS’

MOTIONS TO DISMISS

INTRODUCTION

Before the Court are three Motions to Dismiss, one brought by each of the three Defendants

in this action, Applied Micro Circuits Corporation (“AMCC”), David M. Rickey (“Rickey”) and

William E. Bendush (“Bendush”) (collectively, “Defendants”). (Docket Nos. 5, 9, 12.) For the

following reasons, the Court GRANTS Defendants’ Motions to Dismiss.

FACTUAL BACKGROUND

The material allegations in Plaintiff’s Complaint (Docket No. 1, “Complaint”) are as follows.

Plaintiff is a New York resident who is the owner of common stock of AMCC. (Complaint ¶

1.) Rickey is the former Chairman, CEO and President of AMCC, a Delaware Corporation, and

Bendush is the former Senior Vice President and CEO of AMCC. (Id. ¶¶ 3-4.) Rickey and

Bendush, who were officers of AMCC at the relevant times, received option grants from AMCC. 

(Id. ¶ 30.) The options included grants to Rickey on January 19, 2000 (4,000,000 options),

December 21, 2000 (800,000 options) and July 11, 2001 (400,000 options); and grants to Bendush

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on March 8, 2000 (360,000 options), December 21, 2000 (125,000 options) and July 11, 2001

(85,000 options). (Id.) Rickey and Bendush engaged in sales of AMCC’s stock within six months

of acquiring these option grants. (Id. ¶ 31.) Rickey and Bendush also improperly claimed, in a

Form 4 or Form 5 filed with the SEC, that the above transactions were exempt from § 16(b) liability

pursuant to SEC Rule 16b-3(d). (Id ¶ 10.) 

At all relevant times, the Compensation Committee of AMCC consisted of three nonemployee members of AMCC’s Board of Directors. (Id. ¶ 12.) It was the Compensation

Committee’s province to approve option grants to AMCC’s executives. (Id.) The Compensation

Committee permitted AMCC’s management, including Rickey and Bendush, to grant options to

certain employees. (Id.)

In 2006, AMCC’s Audit Committee began a formal investigation of AMCC’s stock option

granting practices and on January 17, 2007, AMCC filed a Form 10-K with the SEC reporting the

results of an investigation by the Audit Committee relating to past stock grants. (Id. ¶¶ 18-19.) The

Form 10-K reported, inter alia, that AMCC had improperly dated certain stock option grants, the

Compensation Committee did not approve certain option grants and certain approvals were undated. 

(Id. ¶¶ 19-20.) 

AMCC’s filing gave Plaintiff notice of this issue and led him to file suit, on June 5, 2007,

against Defendants, pursuant to § 16(b). Plaintiff alleges that the option grants were not approved

by the shareholders in accordance with Rule 16b-3(d)(2) or approved by the Board or an authorized

committee of the Board in a manner that satisfies the requirements of Rule 16(b)-3(d)(1). (Id. ¶¶ 10,

14-15, 17.) Instead, the option grants were a product of a backdating scheme unknown to the Board

and not approved by it. (Id. ¶ 17.) In addition, Defendants did not properly disclose the option

grants at issue in this action. (Id. ¶ 27.) Defendants now seek to dismiss Plaintiff’s complaint.

LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal

sufficiency of a claim. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Generally, dismissal is

proper only when the plaintiff has failed to assert a cognizable legal theory or failed to allege

sufficient facts under a cognizable legal theory. See SmileCare Dental Group v. Delta Dental Plan

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of Cal., Inc., 88 F.3d 780, 782 (9th Cir. 1996); Balisteri v. Pacifica Police Dep’t, 901 F.2d 696, 699

(9th Cir. 1988); Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). In

pleading sufficient facts, however, a plaintiff must suggest his or her right to relief is more than

merely conceivable, but plausible on its face. See Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955,

1974 (2007).

In considering a 12(b)(6) motion, the Court accepts the plaintiff's material allegations in the

complaint as true and construes them in the light most favorable to the plaintiff. See Shwarz v.

United States, 234 F.3d 428, 435 (9th Cir. 2000). Because the focus of a 12(b)(6) motion is on the

legal sufficiency, rather than the substantive merits of a claim, the Court ordinarily limits its review

to the face of the complaint. See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th

Cir. 2002). However, matters properly presented to the court, such as those attached to the

complaint and incorporated within its allegations, may be considered as part of the motion to

dismiss. See Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir.

1989). Where a plaintiff fails to attach to the complaint documents referred to therein, and upon

which the complaint is premised, a defendant may attach to the motion to dismiss such documents in

order to show that they do not support the plaintiff’s claim. See Pacific Gateway Exchange, 169 F.

Supp. 2d at 1164; Branch v. Tunnell, 14 F.3d 449, 44 (9th Cir. 1994) (overruled on other grounds). 

Thus, the district court may consider the full texts of documents that the complaint only quotes in

part. See In re Stay Electronics Sec. Lit., 89 F.3d 1399, 1405 n.4 (1996), cert denied, 520 U.S. 1103

(1997). 

ANALYSIS

A. Section 16(b) Liability

“Congress enacted § 16(b) as part of the Securities Exchange Act of 1934 to prevent

corporate insiders from exploiting their access to information not generally available to others.” 

Dreiling v. American Express Company, 458 F.3d 942, 946 (9th Cir. 2006) (citation and quotations

omitted). Section 16 contains two separate provisions. Section 16(a) requires that all officers,

directors, and large shareholders report to the SEC any changes in their “beneficial ownership” of

equity securities of their corporations. 15 U.S.C. § 78p(a). Section 16(b) imposes liability on such

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“insiders” for short-swing transactions in such securities. 15 U.S.C. § 78p(b). Section 16(b)

provides in relevant part:

For the purpose of preventing the unfair use of information which may

have been obtained by such beneficial owner, director, or officer by

reason of his relationship to the issuer, any profit realized by him from

any purchase and sale, or any sale and purchase, of any equity security

of any issuer (other than an exempted security) within any period of

less than six months . . . shall inure to and be recoverable by the issuer,

irrespective of any intention on the part of such beneficial owner[.]

15 U.S.C. § 78p(b). “Section 16(b) flatly prohibits a class of transactions in which the possibility of

abuse was believed to be intolerably great, and does so by imposing a strict prophylactic rule with

respect to insider short-swing trading.” Dreiling, 458 F.3d at 947.

There are however, limits to the reach of § 16(b). Section 16(b) does not cover any

transaction “which the Commission by rules and regulations may exempt as not comprehended

within the purpose of this subsection.” Id. Securities and Exchange Commission (“SEC”) Rule 16b3(d) sets forth three exemptions to § 16(b) liability. See 17 C.F.R. § 240.16b-3. When a transaction

falls within one of these exemptions, there is no liability under § 16(b). See Dreiling, 458 F. 3d at

947-48. Specifically, the SEC exempts certain issuer-to-insider stock option grants from liability so

long as the stock option grants falls into one of the following categories:

(1) The transaction is approved by the board of directors of the issuer, or a committee

of the board of directors that is composed solely of two or more Non-Employee

Directors;

(2) The transaction is approved or ratified, in compliance with section 14 of the Act,

by either: the affirmative votes of the holders of a majority of the securities of the

issuer present, or represented, and entitled to vote at a meeting duly held in

accordance with the applicable laws of the state or other jurisdiction in which the

issuer is incorporated; or the written consent of the holders of a majority of the

securities of the issuer entitled to vote; provided that such ratification occurs no later

than the date of the next annual meeting of shareholders; or

(3) The issuer equity securities so acquired are held by the officer or director for a

period of six months following the date of such acquisition, provided that this

condition shall be satisfied with respect to a derivative security if at least six months

elapse from the date of acquisition of the derivative security to the date of disposition

of the derivative security (other than upon exercise or conversion) or its underlying

equity security.

17 C.F.R. § 240.16b-3(d). The Ninth Circuit has held that the creation of these exemptions by the

SEC was a valid exercise of their rulemaking authority under § 16(b). See Dreiling, 458 F. 3d at

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947-48. 

B. Plaintiff Alleges That a Backdating Scheme Undermined The Approval of Grants.

As a preliminary matter, the Court clarifies Plaintiff’s allegations. Plaintiff ultimately alleges

that Defendants are liable under § 16(b) and the option grants are not exempt under Rule 16b-3(d). 

To support this argument Plaintiff appears to plead two different versions of the facts. On one hand,

Plaintiff pleads that the Compensation Committee or the Board approved the option grants but was

unaware of the backdating scheme so their approval did not satisfy the requirements of approval

under Rule 16b-3(d)(1). (See Complaint ¶¶ 17, 19, 20.) On the other hand, Plaintiff’s pleading can

be read as loosely alleging that neither the Board nor the Compensation Committee approved the

option grants at issue. 

While pleading in the alternative is allowed, Plaintiff cannot plead contradictory versions of

the facts. Here, the gravamen of Plaintiff’s Complaint is the former theory: that the Compensation

Committee or Board approved the option grants but lacked information about the backdating scheme

and failed to dispatch its gatekeeper functions effectively. Plaintiff does not allege, in the literal

sense, that approval was not provided. Rather, the Complaint repeatedly states that neither the

Board nor the Compensation Committee approved the grants in advance or approved them as

required by Rule 16b-3(d)(1). (See ¶¶ 11, 14, 17.) In addition, the Complaint alleges that the grants

could not have been sufficiently approved in advance because they were the product of a backdating

scheme. (See ¶¶ 17, 21.) Therefore, the Court understands Plaintiff as alleging that the grants were

approved but the backdating scheme undermined the efficacy of the approval.

C. Plaintiff’s Complaint is Exempt From Section 16(b) Liability.

Defendants seek to Dismiss Plaintiff’s Complaint because the challenged transactions are

exempt from § 16(b) and because Plaintiff’s claims are time-barred by the applicable two-year

statute of limitations. Finding that Defendants are exempt from § 16(b) liability under 17 C.F.R. §

240.16b-3(d)(1), the Court need not reach Defendants’ other arguments.

The first exemption under § 16(b), set forth in Rule 16b-3(d)(1), exempts transactions that

are “approved by the board of directors of the issuer, or a committee of the board of directors that is

composed solely of two or more Non-Employee Directors.” 17 C.F.R. § 240.16b-3(d)(1). 

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 AMCC’s Form 10-K, submitted by Defendant AMCC as Exhibit A to the Bish Declaration and quoted by Plaintiff

in his Opposition, was referenced in Plaintiff’s Complaint and the Court may therefore properly take judicial notice of this

document. See e.g., Hal Roach Studios, Inc, 896 F.2d at 1555 n.19. The Court does not consider or rely on the other exhibits

produced by Defendants and therefore denies Defendant AMCC’s Request for Judicial Notice as to the remainder of the

exhibits.

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Defendants contend that Plaintiff’s Complaint must be dismissed because the stock option grants at

issue were approved by AMCC’s Compensation Committee and thus are exempt under this

provision. (AMCC Mem. at 7-8; Bendush Mem. at 6-8 ; Rickey Mem. at 3-6.) 

As discussed above, Plaintiff alleges, and clarifies in this Motion, that the transactions at

issue were not approved in accordance with the gatekeeping criteria of Rule 16b-3(d) and thus the

exemption does not apply. (Plf.’s Opp. at 1.) Plaintiff relies on the Form 10-K filed by AMCC, to

argue that the approval of the grants at issue did not occur in advance of the date actually listed on

the stock option grant because of a backdating scheme at AMCC.1

 (See Plf.’s Opp. at 4-5; 10;

Complaint ¶¶ 21-22.) 

Defendants also perceive Plaintiff’s Complaint as alleging a second theory as to why the

exemption does not apply: that the AMCC Compensation Committee never approved the challenged

grants because it had impermissibly delegated the gatekeeping functions of Rule 16b-3(d)(1) and put

“the fox in charge of the henhouse.” (AMCC Mem. at 9-11; Bendush Mem. at 8; Complaint ¶ 14.) 

Plaintiff does, however, concede that the Compensation Committee, whose job it was to approve

option grants, consisted of three non-employee members of AMCC’s Board of Directors. Section

16(b) does not require anything further of this Committee. Plaintiff’s real contention, it appears, is

the same as his first theory - that the approval given by the Committee was not sufficient under Rule

16b-3(d)(1). The Court’s reading of Plaintiff’s allegations is consistent with the fact that Plaintiff

did not respond to Defendants’ description of Plaintiff’s “second theory” in his Opposition, but

rested his entire argument on the first theory. Resolution of Plaintiff’s first theory, therefore,

resolves the “second theory” set forth in Defendants’ briefs.

The Court is therefore confronted with the question of whether the allegation of an

insufficient approval of stock option grants by a properly-constituted committee is exempt under 

Rule 16b-3(d)(1). This same question was recently confronted in Roth v. Reyes, No. 06-2786, 2007

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 In Roth II, the court dismissed Plaintiff’s second amended complaint. In an earlier order, Roth v. Reyes, No. 06-

2786, WL 518621 (N.D. Cal. Feb. 13, 2007), the court dismissed Plaintiff’s first amended complaint. Both orders are cited

here and are thus referred to as Roth I and Roth II for ease of reference.

3

 The portion Plaintiff cites, footnote 32, states:

Rule 16b-3(d)(2). With respect to shareholder, board and Non-Employee Director committee approval, Rule

16b-3(d) requires approval in advance of the transaction. Shareholder approval must be by either: the

affirmative votes of the holders of a majority of the securities of the issuer present, or represented, and

entitled to vote at a meeting duly held in accordance with the applicable laws of the state or other jurisdiction

in which the issuer is incorporated; or the written consent of the holders of the majority of the securities of

the issuer entitled to vote. Shareholder ratification, consistent with the same procedural conditions, may

confer the exemption only if such ratification occurs no later than the date of the next annual meeting of

shareholders following the transaction.

• The officer or director to hold the acquired securities for a period of six months following the date of

acquisition. [FN33]

70 Fed. Reg. 46,080, 46,082 n.32 (Aug. 9, 2005)

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WL 2470122 (N.D. Cal. Aug. 27, 2007) (“Roth II”).2 In that case Judge Breyer rejected Plaintiff’s

argument that Rule 16b-3(d)(1) requires approval in advance of the date actually listed on the stock

option grant and refused to adopt an unwarranted expansion of § 16(b). Roth II, 2007 WL 2470122,

at *6. This Court similarly rejects Plaintiff’s argument here.

As a starting point, the plain language of Rule 16b-3(d)(1) requires nothing other than that

the Board, or the appropriate Committee, “approve” the grant. See 17 C.F.R. § 240.16b-3(d)(1). 

Plaintiff argues, however, that “approval” requires more than simply approving the option. In

support of this argument Plaintiff relies on Roth II and several “adopting releases” issued by the

SEC. See, e.g., Ownership Reports and Trading by Officers, Directors and Principal Security

Holders, 70 Fed. Reg. 46,080, 46,082 n.32 (Aug. 9, 2005). Roth II, as noted above, comes to the

exact opposite conclusion from the theory Plaintiff advances. Roth II, 2007 WL 2470122, at *6. 

The adopting releases also do not support Plaintiff’s contentions. First, the only specific

section of the adopting release that Plaintiff cites states that Rule 16b-3(d) requires “approval in

advance of the transaction.” See Ownership Reports and Trading by Officers, Directors and

Principal Security Holders, Release 33-8600 (2005), 70 Fed. Reg. 46080, 46082-84 n. 32 (Aug. 9,

2005). The Court reads this statement just as the Roth II court did.3

 “The Court reads the SEC’s

construction as pertaining to the approval in advance of the insiders’ receipt of the stock option, and

not as requiring approval in advance of the date actually listed on the stock option grant.” Roth II,

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 The 1996 adopting release confirms that “Rule 16b-3(d) requires an issuer board to approve the specific insiderissuer transaction for which the exemption is sought.” Dreiling, 458 F.3d at 954 (emphasis in original); see Ownership

Reports and Trading by Officers, Directors and Principal Security Holders, Release 34-37260 (1996), 61 Fed. Reg. 30376,

30381 (June 14, 1996). Here, Plaintiff does not allege that a plan was approved, without sufficient detail, and such details

were later acted upon without subsequent approval. Thus this gloss on the meaning of “approval” does not advance Plaintiff's

arguments.

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2007 WL 2470122, at *6. Finally, even if the text of the adopting release supported Plaintiff’s

argument, the Court again agrees with the Roth court that it is “implausible that unexplained dicta in

the SEC’s adopting releases would somehow implicitly proscribe the granting of backdated stock

options.” Id. 

At oral argument, Plaintiff’s counsel directed the Court generally to a number of SEC

adopting releases, some of which were also cited for general support in the briefs. Plaintiff contends

that these documents support the proposition that the Court should vet the required “approval” and

should require, among other things, that the grants were approved in advance. The Court, having

reviewed the relevant adopting releases, finds this contention unavailing. First, the adopting releases

do not state that the courts should scrutinize the approval of an option grant any further than to

require “approval” of specific insider-issuer transactions. Next, the only direct exposition in the

adopting releases on the contours of what “approval” requires is found in the 1996 adopting release

and does not support Plaintiff’s contentions or allegations.4

Plaintiff, therefore, lacks support for the proposition that the Court should require more than

“approval” by the Board, or an appropriate committee, of a specific grant to an insider. In addition,

expanding the reach of § 16(b), as Plaintiff advocates, is not in keeping with the purpose of the

statute. As the Roth II court stated, 

To be clear, by backdating stock options, a company clearly exploits a certain type of

information- to wit, information about how the market behaved yesterday. And it is

only by virtue of their position within the company that insiders are able to exploit this

hindsight and [obtain] more profitable options. But the information exploited is not

itself inside information, and therefore, even though Defendants may have used their

privileged position for their own benefit, or for the benefit of other employees, (or

even, arguably, for the company’s benefit), their conduct does not implicate the

specific danger that Congress sought to mitigate with Section 16(b). 

Roth II, 2007 WL 2470122, at *3. Instead, § 16(b) imposes a “strict prophylactic rule with respect

to insider, short-swing trading.” See Dreiling, 458 F.3d at 947 (quoting Foremost-McKesson, Inc. v.

Provident Sec. Co., 423 U.S. 232, 251 (1976). In applying § 16(b) liability, the Court is not required

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to venture down the path of determining what types of approval are subject to liability, or when, as is

the allegation here, an approval given by a properly-constituted committee to an insider may be

undermined by other circumstances. Thus, while liability under § 16(b) may be both under- and

over-inclusive, the SEC exempted board-approved insider-issuer trades because they satisfied 

“objective gate-keeping conditions” and did not “give rise to an intolerable level of speculative

abuse.” Dreiling, 458 F.3d at 948, 951. It is not for this Court to change the scope of the statute. 

The Court also considers whether Plaintiff can cure the deficiency found by the Court if

granted leave to amend. Here, Plaintiff alleges that neither the Board nor the Compensation

Committee could have sufficiently approved the options because they did not know about the

backdating scheme. Plaintiff, therefore, has pleaded a theory that runs directly into the exemption

for approved insider-issuer grants. The Court finds, therefore, that Plaintiff cannot plead around the

exemption and leave to amend is inappropriate. 

Moreover, Dreiling supports the Court’s conclusion in this regard. See Dreiling, 458 F.3d at

954-55. In Dreiling, the Ninth Circuit reversed and remanded a district court’s determination that an

insider-issuer transaction was exempt under Rule 16b-3(d). Id. at 955. In that case, the Circuit held

that a complaint alleging that the board issued grants to an entity without knowledge that the entity

was deputized as an insider was not exempted under Rule 16b-3(d) and should not have been

dismissed on that ground. Id. at 954-55. As the Court noted, “[i]f a board does not know that one of

its directors is a deputy for another corporation, and thus a potential conduit for inside information,

the board would have no reason for special vigilance . . . and . . . would not effectively serve its

gatekeeping function and ensure accountability.” Id. at 954 (quotations omitted). In Dreiling,

however, the Circuit clarified that it was not expanding the requirements under Rule 16b-3(d), but

rather applying the written elements of the rule, there the party’s status as an insider. Id. at 955. 

Here, unlike Dreiling, Plaintiff effectively pleads that all of the elements of the exemption under

Rule 16b-3(d) are met, but that one of them, approval, was insufficiently performed or was later

undermined. The Court, however, as discussed above, is not at liberty to require more than the

elements set forth in Rule 16b-3(d)(1). Therefore, unlike Dreiling, Plaintiff cannot state a claim, or

in this case re-plead to state a claim, without again running headlong into the exemption. Leave to

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 Defendants contend that the Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”) pleading standard, and not the

Federal Rule of Civil Procedure 8 (“Rule 8”) standard, should apply to this case. Rule 9(b) provides that, “[i]n all averments

of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Fed. R. Civ. P. 9(b).

Defendants argue that Plaintiff's complaint sounds in fraud and thus is subject to the heightened pleading requirements of

Rule 9(b). (See AMC Mem. at 3.) Defendants rely on a Ninth Circuit case that held, in a Securities Act section 11 claim,

that when fraud is not an essential element of a claim, “a plaintiff may nonetheless be subject to Rule 9(b)’s particularity

mandate if his complaint ‘sounds in fraud.’” In re Daou, 411 F.3d 1006, 1027-28 (9th Cir. 2005). A district court, in a very

similar case, recently found that the holding in In re Daou applies to § 16 claims in which “the theory of liability hinges on

alleged misrepresentations by the insiders in their Section 16(a) disclosures.” Roth v. Reyes, C 06-2786, 2007 WL 518621,

at *8 (N.D. Cal. Feb. 13, 2007) (“Roth I”). Plaintiff, on the other hand, argues that the heightened Rule 9(b) standard does

not apply here because § 16(b) does not implicate any issues of fraud or mistake and does not involve scienter or any moral

culpability. (Plf.’s Opp. at 8.) 

Given the Court’s finding that the Complaint alleges a backdating scheme, the Court is inclined to find, as did the

court in Roth I, that Plaintiff's Complaint sounds in fraud and thus Plaintiff must meet the heightened pleading standard of

Rule 9(b). However, because resolution of the pleading standard is unnecessary to the outcome of this Motion, the Court

need not rule on this issue.

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amend is, therefore, inappropriate.

 In addition, Plaintiff fails to plead, much less plead with particularity under Rule 9(b), the

factual allegations supporting the fraudulent scheme that the Complaint alleges.5

 Plaintiff, however,

is not entitled to re-plead because the transaction, even if more sufficiently pleaded, is exempted

from liability under § 16(b). As discussed above, there is no support for the finding that a fraudulent

scheme undoes or undermines an appropriate body’s approval of a grant to an insider. The scope of

§ 16(b) liability simply does not extend to the conduct alleged in this Complaint.

In sum, Plaintiff brings this action under § 16(b), but seeks to hold AMCC liable for

backdating, not short-swing trading. In his complaint, Plaintiff states that the SEC has not had

occasion to publicly interpret this exemption in the context of the growing scandal surrounding the

backdating of options. (Complaint ¶ 24.) Plaintiff continues to argue, in his Complaint, why § 16(b)

should be interpreted by the SEC and this Court to apply to backdated grants. (Id.) This Court,

however, is not the place for those arguments. Instead, applying the current law, the Court finds that

the facts alleged show that the stock option grants to Defendants are exempt under Rule 16(b)-

3(d)(1) and thus Defendants are not liable under § 16(b). The Court therefore need not reach

Defendants’ other contentions that the stock option grants are exempted under 16(b)-3(d)(3) and that

the claims are barred by the two-year statute of limitations and not equitably tolled.

//

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CONCLUSION

For the foregoing reasons, the Court GRANTS Defendants’ Motions to Dismiss. The Clerk

of the Court is directed to close the file.

IT IS SO ORDERED.

Dated: February 29, 2008 

MARTIN J. JENKINS

UNITED STATES DISTRICT JUDGE

Case 3:07-cv-02917-MJJ Document 25 Filed 02/29/08 Page 11 of 11