UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

HEAVY & GENERAL LABORERS’ ) 

LOCAL 472 & 172 PENSION AND ) 

ANNUITY FUNDS et al., individually ) 

and on behalf of all others similarly situated, ) 

 ) 

Plaintiff, ) 

) No. 20 C 2176 

 v. ) 

) Judge Sara L. Ellis 

FIFTH THIRD BANCORP, GREG D. ) 

CARMICHAEL, and TAYFUN TUZUN, ) 

) 

Defendants. ) 

 

OPINION AND ORDER

 An individual shareholder brought this putative securities class action lawsuit on behalf 

of herself and all others who purchased common stock in Fifth Third Bancorp (“Fifth Third”) 

from November 9, 2016 through March 6, 2020 (the “Class Period”), alleging that Defendants 

Fifth Third and its officers Greg D. Carmichael and Tayfun Tuzun engaged in federal securities 

fraud. After the Court appointed putative class member Heavy & General Laborers’ Local 472 

& 172 Pension and Annuity Funds as Lead Plaintiff, it filed a consolidated complaint, in which it

alleged that Defendants Fifth Third, Carmichael, and Tuzun violated §§ 10(b) and 20(a) of the 

Securities Exchange Act of 1934 (the “Exchange Act”), codified at 15 U.S.C. §§ 78j(b) and 

78t(a), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. The Court dismissed the consolidated 

complaint for failure to sufficiently allege scienter. Lead Plaintiff filed an amended consolidated 

complaint, which Defendants now move to dismiss. Because Lead Plaintiff fails to sufficiently 

plead false statements or omissions and fails to allege facts that give rise to a strong inference of 

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scienter on the part of any Defendant, the Court grants Defendants’ motion to dismiss with 

prejudice. 

BACKGROUND1

I. The Parties

 Heavy & General Laborers’ Local 472 & 172 Pension and Annuity Funds is based in 

Newark, New Jersey, and the Court appointed it Lead Plaintiff on June 29, 2020. Lead Plaintiff

purchased shares of Fifth Third common stock during the Class Period. 

Fifth Third, headquartered in Cincinnati, provides financial services to corporations,

individuals, and non-profits, including an assortment of checking, savings, and money market 

accounts, wealth management solutions, payments and commerce solutions, insurance services, 

and credit products such as commercial loans and leases, mortgage loans, credit cards, 

installment loans, and auto loans. Fifth Third also operates full-service banking centers and 

ATMs across Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, 

Georgia, North Carolina, and South Carolina. 

 During the Class Period, Carmichael served as Fifth Third’s President and Chief 

Executive Officer. He also took over as the Chairman of the Board of Directors in January 2018. 

Likewise, Tuzun served as Fifth Third’s Executive Vice President and Chief Financial Officer

during the Class Period. 

II. The Consumer Financial Protection Bureau (the “CFPB”) Investigation into Fifth 

Third’s Sales Practices

During a 2015 CFPB investigation, Fifth Third disclosed that bank employees had 

opened unauthorized credit card accounts. In November 2016, the CFPB issued a Civil 

1 The Court takes the facts in the background section from Lead Plaintiff’s amended consolidated

complaint and presumes them to be true for the purpose of resolving Defendants’ motion to dismiss. See 

Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019–20 (7th Cir. 2013). 

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Investigation Demand (“CID”) addressed to Carmichael that notified Fifth Third of an 

investigation into its sales practices. The CID sought information on sales practices including,

“opening an account for any product or service offered by the Company without the knowledge 

and consent of a consumer,” “changing, without the consumer’s knowledge and consent, the type 

of account or service in which the consumer is enrolled,” and “engaging in unauthorized 

transactions on behalf of a consumer.” Doc. 75 ¶ 60. Between 2017 and 2019, the CFPB issued

five additional CIDs to Fifth Third requesting information on the use of unauthorized accounts 

and predatory consumer practices. 

Fifth Third responded by providing nearly a half-billion data points, thousands of 

documents, and witness testimony—“an immense effort that necessitated the active involvement 

of both Carmichael and Tuzan.” Id. ¶ 61. In 2017, Fifth Third admitted to the CFPB that it had 

opened consumer financial products without authorization every year from 2010 to 2017. As

part of the investigation, Fifth Third admitted to: (1) knowing, by at least 2010, that employees 

had opened unauthorized accounts; and (2) detecting, from 2010 to 2017, around 1,100 

unauthorized accounts; and identifying (during the course of the CFPB investigation) an 

additional 800 consumers entitled to relief for unauthorized accounts. Fifth Third also admitted

to almost 400 instances of (1) changing consumer account-types without consent; (2) falsely

representing terms and conditions to induce consumers to accept, change, or enroll in products or 

services; (3) using consumer credit reports without an authorized purpose; or (4) falsifying 

consumer-contact information and assigning personal-identification numbers without

authorization to further unauthorized customer enrollment. Fifth Third further admitted

unauthorized customer enrollment in services and products, including overdraft protection and 

prepaid debit cards, in the years 2015 and 2016.

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III. The CFPB Enforcement Action

In 2020, the CFPB filed an enforcement action against Fifth Third, seeking to stop 

ongoing violations of consumer protection statutes. In the complaint, the CFPB alleged that 

“[e]ven after learning of unauthorized Fifth Third consumer-financial products by 2008, Fifth 

Third failed to change its sales practices to avoid consumer harm.” Id. ¶ 63. Instead, Fifth 

Third: “continued to foster sales practices that were likely to cause unauthorized products and

services;” “failed to take steps to determine and address a root cause of unauthorized accounts, 

which was consistently said by employees to be intense sales pressure;” and “failed to close 

known loopholes in its collection of proof of consumer authorization, thereby making it easy for 

employees to open accounts without” valid customer approval. Id. The complaint alleged that 

Fifth Third used a “cross-sell” strategy to increase the total number of products and services to 

existing customers and “an incentive-compensation program that rewarded managers and their 

subordinate employees for selling new products and services to existing customers.” Id. ¶ 86. 

The CFPB complaint also stated that, by 2010 at the latest, Fifth Third “was aware that 

employees were opening” unauthorized customer products and services “in order to achieve sales 

goals or obtain incentive rewards.” Id. The CFPB also claimed that Fifth Third opened deposit

and credit card accounts without customers’ knowledge or consent and imposed “aggressive”

sales goals for its employees to enroll consumers in its online banking services. Id. ¶ 87.

The CFPB asserted that by 2009, Fifth Third noticed an increase in unauthorized credit

cards issued to consumers. It also stated that Fifth Third knew of the practice of opening lines of 

credit on consumers’ deposit accounts without knowledge or consent by June 2010, “when senior 

management was notified of an increase in the number of calls by employees to the internal 

whistleblower hotline regarding the unauthorized opening of . . . lines of credit.” Id. ¶ 88. The 

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complaint further alleged that, even after learning of the unauthorized consumer-financial

products and services, Fifth Third continued to push sales practices that likely would cause the 

opening of unauthorized services or products.

CFPB filed an amended pleading in the enforcement action detailing additional 

allegations against Fifth Third, including that Fifth Third knew that its admissions “understate

the real number of unauthorized account openings and other improper sales conduct” and that 

there are “hundreds of thousands” of accounts “that bear indicia of non-authorization.” Id. ¶ 94. 

The amended complaint states: “Fifth Third admitted in 2017 that it had opened consumerfinancial products without consumer authorization during each year from 2010 to 2017” and that 

Fifth Third disclosed unauthorized credit card accounts during the CFPB’s investigation in 2015. 

Id. The amended complaint alleges that, by at least 2010, senior management had notice of 

unauthorized lines of credit from an increase in employee calls to a whistleblower hotline. Id.

¶ 95. Furthermore, according to the amended complaint, members of Fifth Third’s senior 

management knew of internal data that would have been useful to identify unauthorized accounts 

“for at least years 2010 to 2021,” but “chose not to attempt to identify unauthorized consumerfinancial products” beyond those previously disclosed “because greater identification might 

cause Fifth Third reputational and financial harm.” Id. The amended complaint also discusses 

internal correspondence from executives within Carmichael’s direct line of report that details 

illicit sales practices and states that such practices were widely known. Id. 

According to Lead Plaintiff, the CFPB also concluded that Fifth Third failed to take 

remedial action and created obstacles to identifying the unauthorized accounts, such as relying 

on customers to report the fraud, recording the conduct as improper only if it was vetted through 

a lengthy process, and knowing that employees feared retaliation for reporting. Id. ¶ 41. Fifth 

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Third has acknowledged that certain indicia—including minimum funding, fake email addresses, 

statement suppression and new-account funding from an existing account, all of which Lead 

Plaintiff alleges occurred here—could indicate a potentially unauthorized deposit. 

IV. Revelations Concerning Fifth Third’s Sales Practices as a Result of the CFPB 

Investigation

In conjunction with a venue dispute in the CFPB lawsuit, the parties publicly disclosed 

portions of Fifth Third documents and witness testimony in redacted form. For example, the 

CFPB highlighted a June 2010 internal email from an individual the CFPB identified as Fifth 

Third’s “head of retail banking” that the Chicago “leadership team have a reputation of less than 

desirable sales management practices” and that “[b]ullying and threats are often used to achieve 

results.” Id. ¶ 98. The email further stated that “there have been consistent problems around 

unauthorized credit card sales in Chicago.” Id. An additional email from a former regional 

manager of Fifth Third stated that “[Fifth Third] had a fraud issue within the Center and upon 

investigation discovered that [redacted name] had knowledge and allowed other employees to 

use each other’s terminals and IDs to conduct transactions (in some cases for themselves).” Id.

¶ 99. In a resignation letter that the CFPB identified as sent to “bank management,” a Fifth Third

employee discussed “witnessing unethical and predatory banking practices.” Id. ¶ 100. The 

banker specifically told Fifth Third’s management, “I would consider many of the sales practices 

and tactics used [at Fifth Third] to be predatory. Many of these sales practices were brought to 

us by the regional and market management. They are openly discussed on our conference calls.” 

Id. The letter also identified “[p]olicies such as ‘everyone should have 2-3 checking accounts’, 

or people ‘upgrading’ (switching existing MasterCard customers to Visa rewards) credit cards

for customer[s] without telling them they are applying for new credit” and noted that Fifth Third

was “becoming a ‘predatory’ institution.” Id.

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Further, the CFPB summarized deposition testimony as showing that Fifth Third

internally investigated cases of what it called “gaming,” which includes “opening unauthorized 

accounts but is broadly defined as the ‘manipulation or concealment of accounts or activities 

with intent to deceive either customer or bank for personal gain,’ including ‘goal attainment, 

financial gain, retention of position, etc.’” Id. ¶ 101. The CFPB also identified that “Fifth Third 

admits that from 2010 to 2016 it opened more than 1,000 accounts without . . . authorization,” 

further commenting that “[t]here is substantial evidence that Fifth Third’s admission understates 

its problem, and Fifth Third continued to drive sales without implementing a systematic way to 

detect unauthorized accounts.” Id. As with the documents filed in conjunction with the venue 

dispute, the parties also withheld deponents’ names. 

Former Fifth Third employees also described unethical practices driven by sales-goal 

pressure. According to a former Fifth Third employee who worked from July 2001 to July 2020 

at branches in Illinois, as late as 2020, Fifth Third’s regional bank managers used financial 

incentives to entice branch managers to meet sales goals for credit card applications. Another 

unidentified former employee also asserted that employees who did not reach their goals were 

under threat of losing their jobs and that employees knew that the only way to meet new account 

goals was to open fake accounts. This former employee also reported on unethical practices 

linked to opening unauthorized credit cards.

V. Fifth Third’s Stock Sales and Acquisition of MB Financial

In March 2019, Fifth Third completed a $4.7 billion acquisition of MB Financial, a 

Chicago-based company. MB Financial shareholders approved the acquisition in part based on 

Fifth Third’s Registration Statement, which highlighted the historical performance of its 

common stock. Fifth Third had to use that common stock to fund 90% of the $4.7 billion 

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acquisition price because Fifth Third did not have sufficient capital to complete the acquisition 

with cash. As such, Fifth Third issued approximately 131 million new shares of common stock 

that, as of March 22, 2019, traded at the price of $24.62 per share.

In that same year, in September, Fifth Third sold 10 million preferred shares at $25.00 

per share. The prospectus for the offering incorporated risk factors from Fifth Third’s FY 2018

Form 10-K and noted that Fifth Third would use the proceeds from the offering for general 

corporate purposes, including repurchases of shares of its common stock. As a result of this 

offering, Fifth Third raised $242 million. 

Fifth Third disclosed the CFPB investigation and anticipated lawsuit in its FY 2019 Form

10-K on March 2, 2020. Fifth Third’s stock price dropped from $22.20 on March 6 to $18.30 on 

March 9, a $3.90 per share decline. Although the market was declining on March 9, Fifth 

Third’s stock price fell more than the market as a whole and the stock price of peer banks. Fifth 

Third’s stock continued to decline, losing 28% per share between March 9 and March 12. 

VI. Carmichael and Tuzun’s Incentive Compensation and Stock Sales

According to the 2017 Definitive Proxy Statement, Fifth Third’s executive compensation 

structure used pay-for-performance incentive compensation, with stock price growth, 

performance relatives to peers, and a risk performance assessment the key components in 

determining executives’ incentive compensation. 

The incentive compensation Carmichael received for 2016, 2017, and 2018 exceeded his 

annual salary. In total, during the Class Period, Carmichael collected over $23.4 million in 

incentive-based compensation, representing more than 88% of his total compensation. As of 

March 2020, Fifth Third cut Carmichael’s incentive compensation by $2.4 million when 

compared to the $9,849,976 he received in incentive compensation and stock awards in 2019. 

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The incentive compensation Tuzun received for 2016, 2017, and 2018 also exceeded his annual 

salary. During the Class Period, Tuzun collected a total of $6.2 million in incentive-based 

compensation, representing more than 79% of his total compensation. 

During the Class Period, Carmichael sold more than $5.8 million of his Fifth Third stock, 

26% in total. As reflected in the chart below, Carmichael sold his Fifth Third stock at prices that 

were 22% to 104% higher than where the stock price traded following the March 2020 disclosure

of the CFPB investigation and lawsuit.

Id. ¶ 191. Over the eighteen months before the start of the Class Period and in the six months 

following the end of the Class Period, however, Carmichael did not sell any of his Fifth Third 

stock.

VII. Defendants’ Allegedly False and Misleading Statements and Omissions

During the Class Period, which began on November 9, 2016, when Fifth Third filed its 

Form 10-Q quarterly report with the SEC, Lead Plaintiff alleges that Defendants made false and 

misleading statements and material omissions concerning Fifth Third’s: (1) business practices 

and risk management systems; (2) Code of Business Conduct and Ethics; (3) product crossselling and consumer business; (4) employee incentive compensation; and (5) risk disclosures.

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A. Fifth Third’s Risk Management Practices

Lead Plaintiff first asserts that Defendants made misleading statements and material

omissions in Fifth Third’s Form 10-Qs and Form 10-Ks concerning its purported risk practices 

for managing regulatory compliance risk. In its 3Q 2016 Form 10-Q, Fifth Third stated: 

Regulatory compliance risk is defined as the risk of legal or 

regulatory sanctions, financial loss, or damage to reputation as a 

result of noncompliance with (i) applicable laws, regulations, rules 

and other regulatory requirements (including but not limited to the 

risk of consumers experiencing economic loss or other legal harm 

as a result of noncompliance with consumer protection laws, 

regulations and requirements); (ii) . . . codes of conduct; and 

(iii) principles of integrity and fair dealing applicable to Fifth 

Third’s activities and functions.

Id. ¶ 106. In that same form, Fifth Third listed its risk management practices as 

follows:

• Fifth Third focuses on managing regulatory compliance risk in

accordance with the Bancorp’s integrated risk management 

framework, which ensures consistent processes for identifying,

assessing, managing, monitoring, and reporting risks.

• The current regulatory environment, including heightened 

regulatory expectations and material changes in laws and

regulations, increases compliance risk. 

• To mitigate compliance risk, Compliance Risk Management 

provides independent oversight to ensure consistency and 

sufficiency in the execution of the program, and ensures that lines 

of business, regions and support functions are adequately 

identifying, assessing and monitoring compliance risks and 

adopting proper mitigation strategies. . . . Additionally, 

Compliance Risk Management implements key compliance 

programs and processes including but not limited to, risk

assessments, key risk indicators, issues tracking, regulatory 

compliance testing and monitoring . . .

• Compliance Risk Management provides independent oversight to 

ensure that an enterprise-wide framework, including processes and 

procedures, are in place to comply with applicable laws, 

regulations, rules and other regulatory requirements; internal 

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policies and procedures; and principles of integrity and fair dealing 

applicable to the Bancorp’s activities and functions. The Bancorp 

focuses on managing regulatory compliance risk in accordance 

with the Bancorp’s integrated risk management framework, which 

ensures consistent processes for identifying, assessing, managing, 

monitoring and reporting risks.

Id. ¶ 107.

On February 24, 2017, Fifth Third filed its FY 2016 Form 10-K, signed by Carmichael 

and Tuzun. The form contained the same statements about the bank’s regulatory compliance risk 

management practices as in the 3Q 2016 Form 10-Q. The Company’s FY 2017 and 2018 Form 

10-Ks also contained nearly identical statements about Fifth Third’s purported regulatory 

compliance risk management practices.

Fifth Third’s FY 2017 Form 10-K further identified the “core principles of risk 

management that are used to ensure [Fifth Third] is operating in a safe and sound manner.” Id.

¶ 109. The form identified these “core principles” of risk management as:

• Ensur[ing] Fifth Third’s products and services are designed, 

delivered and maintained to provide value and benefit to its 

customers and to Fifth Third, and that potential opportunities 

remain aligned to the core customer base. The Bancorp does not 

offer products or services that are not appropriate for its customers

• Act[ing] with integrity in all activities.

• Focus[ing] on providing operational excellence by providing 

reliable, accurate and efficient services to meet customer’s needs.

• Conduct[ing] business in compliance with all applicable laws, 

rules and regulations and in alignment with internal policies and 

procedures.

Id.. 

Lead Plaintiff alleges that these statements were materially false and misleading and 

omitted material facts because Defendants failed to disclose: (1) the unauthorized accounts and 

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sales practices and the CFPB investigation, “which had been ongoing since at least 2008 and 

necessitated the intervention of corporate headquarters (including the involvement of the 

Individual Defendants)”; (2) senior management’s failure to remediate these illegal sales 

practices; (3) the CFPB investigation and “Defendants’ conscious failure to remediate” the sales 

practices “since November 2016;” (4) Fifth Third’s admission of the opening of unauthorized 

accounts during the CFPB investigation in 2015 and 2017; and (5) the likely CFPB enforcement 

action and “extreme regulatory, legal, reputational and financial peril” to Fifth Third because of 

the investigation, admissions, and failure to remediate. Id. ¶ 112.

B. Fifth Third’s Code of Business Conduct and Ethics

As of 2016, Fifth Third maintained a Code of Business Conduct and Ethics, which it

amended several times during the Class Period and filed with the SEC on Current Report Form 

8-Ks so that investors were informed of its practices. The Code applied to all officers, directors,

and employees of Fifth Third, including but not limited to Fifth Third’s principal executive 

officer (Carmichael), principal financial officer (Tuzun), principal accounting officer, and 

controller. 

The purported misleading statements in the 2016 Code, filed with the SEC on Current 

Report Form 8-K on March 16, 2016, were, in pertinent part: 

• We must all deal honestly, ethically, fairly and in good faith with 

Fifth Third’s customers, shareholders, employees, suppliers, 

regulators, business partners, competitors and others. We may not 

take unfair advantage of anyone through manipulation, 

concealment, abuse of privileged or confidential information, 

misrepresentation, fraudulent behavior or any other unfair dealing 

practice.

• Employees, customers, shareholders and communities must know 

that Fifth Third conducts all activities with the highest standards 

and unquestioned integrity. They have to know by our actions that 

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they can trust us, and we have to show by our actions that we 

provide something different; something of value.

• Our Purpose is to listen to customers and inspire them with smart 

financial solutions that continually improve their lives and the 

well-being of our communities. Relationships are at the heart of 

our Purpose, and what could be more personal than that? This is 

not a mere collection of words, but rather a blueprint for how we 

are to conduct ourselves. We ask questions. We listen. We 

inspire. We focus on continual improvement – for customers, for 

communities and for ourselves.

• Employees are expected and required to take appropriate steps to 

address issues that subject the bank to risk of potential regulatory, 

reputational or legal harm.

Id. ¶ 114.

Fifth Third adopted an amended and restated Code on September 19, 2017, which it filed 

as an exhibit to the 2017 Form 8-K filed with the SEC. The 2017 Code included a statement 

from Carmichael, noting, “Doing the right thing is central to our ability to achieve our Vision to 

be the One Bank people most value and trust. It’s a commitment that inspires us to create a great 

customer experience . . . . It is a commitment that forms the bedrock of Fifth Third’s reputation 

as a respected corporate citizen. And it is a commitment that begins with each Fifth Third 

employee.” Id. ¶ 115. The alleged misleading statements in the 2017 Code were:

• Fifth Third believes that fair and honest business practices are 

essential to keeping our customer at the center of everything we 

do. We should always act in the best interest of our customers. 

Unethical business practices, such as incentive gaming, falsifying 

documents or inflating performance results, are strictly prohibited. 

You are prohibited from manipulating records, opening accounts 

without customer authorization, offering customers unnecessary 

products and falsifying records or applications in order to benefit 

yourself or other employees of Fifth Third.

• Fifth Third is committed to providing customers with financial 

products and services in ways that avoid the use of any practices 

that could be deemed predatory, unfair, deceptive or abusive.

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• Fifth Third Bancorp is committed to minimizing the impact of 

internal and external fraud to both Fifth Third and our customers. 

Every employee at every level of the Bancorp is accountable and 

expected to do their part to protect Fifth Third and our customers 

from fraudulent activity. There is zero tolerance for internal fraud 

within Fifth Third’s organization and internal fraudulent activity 

must be referred to Bank Protection when suspected. Failure to 

report fraudulent activity exposes Fifth Third to regulatory and 

compliance violations and could lead to significant financial

penalties and additional fraud losses.

• Employees must not engage in deceptive or dishonest business 

practices, such as misrepresenting products or offering customers 

inaccurate or insufficient information about products in order to 

benefit personally.

• A fundamental part of our commitment to integrity is adhering to 

the letter and the spirit of applicable laws, regulations and Bancorp 

policies. All employees are required to fully comply with all 

applicable laws, rules and regulations, as well as with all Fifth 

Third policies and procedures.

Id. ¶ 115. 

In September 2018, Fifth Third amended the Code again, which it filed with its 2018 and 

2019 Current Report Form 8-Ks. The 2018 Code included the same message from Carmichael 

as found in the 2017 Code and further stated:

• Fifth Third believes that fair and honest business practices are 

essential to keeping our customer at the center of everything we 

do. We should always act in the best interest of our customers.

• Unethical business practices are strictly prohibited. Examples of 

such activities include, but are not limited to:

 Incentive gaming

 Falsifying documents or inflating performance results

 Manipulating records

 Opening bogus or fake accounts

 Opening accounts or selling products without customer 

authorization

 Offering customers unnecessary products

 Falsifying records or applications in order to benefit 

yourself or other employees of Fifth Third 

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• Fifth Third is committed to providing customers with financial 

products and services in ways that avoid the use of any practices 

that could be deemed predatory, unfair, deceptive or abusive.

• Fifth Third Bancorp is committed to minimizing the impact of

internal and external fraud to both Fifth Third and our customers. 

Every employee at every level of the Bancorp is accountable and 

expected to do [their] part to protect Fifth Third and our customers 

from fraudulent activity. There is zero tolerance for internal fraud 

within Fifth Third’s organization and internal fraud activity must 

be referred to Bank Protection when suspected. Failure to report 

fraudulent activity exposes Fifth Third to regulatory and 

compliance violations and could lead to significant financial 

penalties and additional fraud losses.

Id. ¶ 116. 

Lead Plaintiff alleges that these statements were false and misleading and omitted 

material facts because the assertedly prohibited unethical practices were already taking place at 

Fifth Third and the CFPB was already investigating the same. Lead Plaintiff also alleges that 

these statements were false because Defendants failed to disclose the same five factors 

enumerated for the business practices and risk management statements. Compare id. ¶ 112 with

¶ 118.

C. Product Cross-Selling, Consumer Business, and Customer Relations

Lead Plaintiff also asserts that Defendants made false and misleading statements 

concerning Fifth Third’s product cross-selling, consumer business, and customer relations. Fifth 

Third’s FY 2016, 2017, and 2018 Form 10-Ks, all signed by Carmichael and Tuzun, stated that

Fifth Third was “taking advantage of cross-sell opportunities” generated by synergies formed by 

its business segments. Id. ¶ 119–121.

On December 7, 2016, Carmichael and Tuzun presented at the Goldman Sachs US 

Financial Services Conference. Carmichael spoke to investors regarding Fifth Third’s consumer 

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growth strategy, stating that Fifth Third was “looking for a more balanced growth between our 

consumer and our commercial businesses” and “[t]o that end, we are focused on growing our 

credit card and unsecured personal lending businesses. Both of these businesses have attractive 

return profiles and growth potential.” Id. ¶ 122. 

On January 24, 2017, Fifth Third hosted an earnings conference call to discuss the 

Company’s 4Q 2017 financial results, in which Carmichael talked about how Fifth Third’s

consumer growth strategy of growing credit cards and consumer loans would “allow us to 

achieve a better balance between commercial and consumer loan growth.” Id. ¶ 123. During the 

call, Carmichael commented:

[W]e have a great business model. We have the right businesses 

that we are in, right, and we do a fantastic job of going to the 

market and our people do a fantastic job of going to the market 

really as one bank – Fifth Third. 

And it is really about harvesting the full relationships of the 

customer relationships on the consumer side, on the commercial 

side. It is about providing the right products and services to our 

customers and really being the one bank our customers most value 

and trust. We have worked hard to put that model in place across

our franchise. So we feel very good about that. 

And really our strong brand and our footprint is extremely 

important to us and we are going to continue to focus on our brand 

equity in the marketplace. But when you look at it across the

board we have strong earnings capacity, we have a great team in 

place, we have invested heavily in the right products. We made 

some strategic moves recently that position us well for the future. 

And I think we will have the products, the services and the team to

deliver on that in the market.

Id. 

On March 7, 2017, Carmichael and Tuzun presented at the RBC Capital Markets 

Financial Institutions Conference, where Carmichael again discussed with analysts and investors 

Fifth Third’s consumer growth strategy, stating, “[g]rowth in credit cards and other consumer

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loans should allow us to achieve a better balance between commercial and consumer loan 

growth.” Id. ¶ 124. He also stated that Fifth Third “takes pride in” its ranking “as the second 

most trusted company for retail banking,” noting that Fifth Third “believe[s] in putting the 

customer at the center of everything we do” and that “[i]n addition to being a trusted partner, we 

have received high customer satisfaction scores and our mobile offerings have received a number 

of accolades.” Id.

On December 7, 2017, Fifth Third hosted an Investor Day for analysts and investors. 

During the conference, Carmichael discussed the customer experience, stating that “[i]t starts 

with the financial needs analysis, and we dive deep into understanding the needs of that 

customer. . . . Once again, we can’t be a great bank if we don’t focus on taking care of the 

customer, and we measure this very carefully. We got to make sure that we have products that 

are seamless, convenient, fast, that they’re tailored to meet the customer needs.” Id. ¶ 125.

Carmichael also emphasized that “[v]alue and trust is extremely important.” Id. During that 

same call, Philip McHugh, a Fifth Third executive vice president, emphasized the bank’s 

customer-focus for sales, and Frank R. Forrest, Fifth Third’s Chief Risk Officer, discussed at 

length the Company’s risk management practices. He stated:

• We have enhanced risk management programs and processes 

across the firm. And through all these actions, we are now 

achieving strong and consistent results, and we are exceptionally 

well positioned to perform through the next cycle.

• [W]e are managing the risk across the company today 

exceptionally well.

• We’ve improved expertise in the most significant areas of risk that 

face our industry and our company. That includes . . . customer 

practices. . . .

• I’m now going to talk a little bit about culture and how we manage 

conduct risk. We all know that conduct risk, ethics, how we

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handle our customer relationships, how we treat our employees, 

it’s all been headline risk. We’ve read a lot about it. Conduct risk 

at Fifth Third Bank is well managed, and it’s in alignment with our 

core values. It is foundational in everything we do to have a strong 

risk culture and a One Bank strategy that Greg just covered. We

have a corporate responsibility and reputation office that provides

oversight in governance of key areas that drive our culture, and 

that includes ethics and diversity and community commitment and 

safeguarding the reputation of the company, which is one of my 

primary responsibilities. All of these areas are critical elements of 

our company’s culture, and we closely monitor these activities and 

report them to the Board and to management and to our regulators.

• The last consumer portfolio I want to talk briefly about is card. It’s 

$2.2 billion today. It’s 6% of our overall consumer portfolio. But 

we have a strategy that you’ll hear about to grow this portfolio 

within our appetite with a measured and a managed approach. 

We’ve been actually recruiting industry experts recently to help us 

grow the business within our defined risk profile, and we see some 

opportunity here, and we are advancing the use of analytics to

improve our credit decisioning on the card business.

Id. ¶¶ 126–127. Carmichael and Tuzun participated on the call and did not correct these 

statements by McHugh and Forrest.

Fifth Third hosted an earnings conference call with investors on October 23, 2018, which 

Carmichael and Tuzun attended, to discuss its 3Q 2018 financial results. During the call,

Carmichael told investors that “[o]ur third priority is to pursue profitable organic growth 

opportunities in our key businesses. In addition to our branch network optimization initiative to

drive improved household, deposit, and revenue growth across our retail footprint, we’re also 

prioritizing organic growth opportunities across all areas of the franchise.” Id. ¶ 129. On 

January 22, 2019, Fifth Third again hosted an earnings conference call with investors to discuss 

its 4Q and 2018 financial results, with Carmichael stating that “we continue to invest in organic 

growth opportunities, including the previously communicated branch network optimization.” Id.

¶ 130. 

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Lead Plaintiff alleges that these statements were false and misleading and omitted 

material facts because Defendants failed to disclose the same five factors enumerated for the 

business practices statements, risk management statements, and the Code. Compare id. ¶¶ 112, 

118, with ¶ 131.

D. Incentive Compensation

Lead Plaintiff also asserts that Defendants made false and misleading statements 

concerning Fifth Third’s incentive compensation. On March 9, 2017, Fifth Third filed a Proxy 

Statement with the SEC, reviewed by Carmichael and Tuzun, that stated:

• The Company endeavors to attract and retain the best people in the 

financial services industry and motivate them to fulfill the 

Company’s Vision of becoming the One Bank that people most 

value and trust. We intend to accomplish this in the way that we 

consider our shareholders’ long-term interests, by establishing 

compensation programs that reward our people for delivering 

products our customers highly value, and avoiding excessive risk. 

Our compensation philosophy comprises the following guiding 

principles:

 Manage risk effectively within incentive programs 

designed to pay for performance. 

 Align compensation with long-term shareholder 

interests. 

 Provide strong oversight of executive pay. 

 Conduct recurring processes that ensure strategic and 

fiscal soundness along with balanced risk taking.

• We incorporate formulaic and discretionary risk-balancing 

mechanisms, which outline specific metrics for modifying payouts 

to discourage unnecessary or imprudent risk-taking actions.

• In December 2015, the Committee, in conjunction with the Risk 

and Compliance Committee, reviewed our executive and other 

incentive programs. Based on the provisions and actions above, 

the Committee concluded that their design and/or metrics do not 

encourage unnecessary and/or inappropriate risk taking.

Id. ¶ 132. 

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The 2018 Proxy Statement, which Carmichael and Tuzun again reviewed, discussed Fifth 

Third’s compensation plan in similar terms, stating in part:

• At Fifth Third, we endeavor to attract and retain the best people 

and motivate them to fulfill the Company’s Vision of becoming the 

One Bank that people most value and trust. We intend to 

accomplish this in the way that we consider our shareholders’ 

long-term interests, by establishing compensation programs that 

reward our people for delivering products and services our 

customers highly value, and for avoiding excessive risk.

• We believe it is critical to bring a multi-faceted strategy toward 

mitigating risk in incentive plans. We incorporate formulaic and 

discretionary risk-balancing mechanisms, which include specific 

metrics for modifying payouts to discourage taking unnecessary or 

imprudent risks.

• In February 2017, the Committee, in conjunction with the Risk and 

Compliance Committee, reviewed our executive and other 

incentive programs. Based on the provisions and actions above, 

the Committee concluded that their design and/or metrics do not 

encourage taking unnecessary or inappropriate risk.

Id. ¶ 133. 

The 2019 Proxy Statement, reviewed by Carmichael and Tuzun, contained similar 

information on Fifth Third’s compensation plan, stating:

• Our compensation methodology and structure centers on our 

compensation philosophy, which comprises the following guiding 

principles:

 Manage risk effectively within incentive programs 

designed to pay for performance.

 Align compensation with long-term shareholder 

interests.

 Provide strong oversight of executive compensation.

 Conduct recurring processes that ensure strategic and 

fiscal soundness along with balanced risk taking.

• We believe it is critical to bring a multi-faceted strategy toward 

mitigating risk in our compensation programs and incentive plans. 

We incorporate formulaic and discretionary risk-balancing 

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mechanisms, which include specific metrics for modifying payouts 

to discourage taking unnecessary or imprudent risks.

• In December 2018, the Committee met jointly with the Risk and 

Compliance Committee to review our executive and other 

incentive programs. Based in part on the provisions and actions

above, the Committee concluded that the design and/or metrics of 

such programs do not encourage taking unnecessary or 

inappropriate risk.

Id. ¶ 134. 

Lead Plaintiff alleges that these statements were false and misleading and omitted 

material facts because Defendants failed to disclose incentive compensation programs that 

rewarded managers and employees for selling new products and services to existing customers, 

and that those incentive plans were not properly implemented and monitored and therefore 

created incentives for misconduct. Lead Plaintiff also alleges that these statements were false 

because Defendants failed to disclose the same five factors as the other categories of alleged 

false statement. Compare id. ¶¶ 112, 118, 131, with ¶ 135.

E. Fifth Third’s Risk Disclosures

Lead Plaintiff also asserts that Defendants made misleading statements and material 

omissions in its Form 10-Qs and 10-Ks regarding the risks Fifth Third faced. Fifth Third filed its 

3Q 2016 Form 10-Q, which Carmichael and Tuzun signed, shortly after it received the CFPB’s 

CID. The 3Q 2016 Form 10-Q stated that there “have been no material changes made during the

third quarter of 2016 to any of the risk factors as previously disclosed in the Bancorp’s most 

recent annual report and subsequent periodic reports as filed with the SEC.” Id. ¶ 136. Fifth 

Third had most recently listed its risk factors in its FY 2015 Form 10-K (filed February 25, 2016) 

and 2Q 2016 Form 10-Q (filed August 5, 2016). These forms included the following language 

with respect to risk factors:

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• Fifth Third’s actual or alleged conduct in activities, such as lending 

practices, data security, corporate governance and acquisitions, 

may result in negative public opinion and may damage Fifth

Third’s reputation. Actions taken by government regulators and 

community organizations may also damage Fifth Third’s 

reputation.

• Fifth Third and/or its affiliates are or may become involved from 

time to time in information-gathering requests, reviews, 

investigations and proceedings (both formal and informal) by 

governmental regulatory agencies and law enforcement authorities, 

as well as self-regulatory agencies, regarding their respective

businesses.

• Compliance with the rules and policies adopted by the CFPB may 

limit the products Fifth Third may permissibly offer to customers, 

or limit the terms on which those products may be issued, or may 

adversely affect Fifth Third’s ability to conduct its business as 

previously conducted.

• Like other large financial institutions and companies, Fifth Third is 

also subject to risk from potential employee misconduct, including 

noncompliance with policies and improper use or disclosure of 

confidential information.

• [T]he CFPB . . . [has] the authority to compel or restrict certain 

actions by Fifth Third and its banking subsidiary, Fifth Third Bank. 

. . . In the wake of the most recent global financial crisis, Fifth 

Third and other financial institutions more generally have been

subjected to increased scrutiny from government authorities, 

including bank regulatory authorities, stemming from broader 

systemic regulatory concerns, including with respect to . . . 

consumer compliance and other prudential matters and efforts to 

ensure that financial institutions take steps to improve their risk 

management and prevent future crises.

• [G]overnment authorities, including the bank regulatory agencies, 

are also pursuing aggressive enforcement actions with respect to 

compliance and other legal matters involving financial activities, 

which heightens the risks associated with actual and perceived 

compliance failures.

Id. ¶ 136. 

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Fifth Third made substantially similar representations in its 2016 Form 10-K (filed 

February 24, 2017), 2017 Form 10-K (filed February 28, 2018), and 2018 Form 10-K (filed 

March 1, 2019), all of which Carmichael and Tuzun signed. 

Lead Plaintiff alleges that these statements were false and misleading and omitted 

material facts because Defendants discussed future, potential risks while failing to disclose 

material adverse facts that were known and had already occurred. As an example, Lead Plaintiff 

alleges that Defendants disclosed risk from potential employee misconduct, while failing to 

disclose that Defendants: (1) “had been forced to intervene in the Bank’s Chicago operations as a 

result of widespread consumer abuses;” (2) “had known about more than 1,000 unauthorized 

account openings since 2010;” (3) admitted to illegal business practices in 2015 and 2017; and 

(4) knew the CFPB was investigating these and other issues. Id. ¶ 139. Lead Plaintiff also 

alleges that these statements were false because Defendants failed to disclose the same five 

factors as for the other categories of alleged false statements. Compare id. ¶¶ 112, 118, 131, 135

with ¶ 138.

VIII. Additional Scienter Allegations 

Lead Plaintiffs allege that scienter may be inferred from Carmichael and Tuzun’s roles at 

Fifth Third. Carmichael was COO from 2006 to 2015, Bank President in 2012, and CEO in 

2015. Carmichael joined the Board in 2015 and became Chairman of the Board in 2018. As 

COO, Carmichael was responsible for Fifth Third’s “risk environment and growth, customer 

service levels, . . . and promotion of core values of accountability.” Id. ¶ 156. As CEO, 

Carmichael was similarly responsible for, among other things, Fifth Third’s risk environment 

and promoting core values. Lead Plaintiffs allege that Fifth Third “held [Carmichael] out to 

investors as the person in charge of promoting fair and honest business practices in the Bank’s 

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consumer business,” citing his introductory messages in the 2017, 2018, and 2019 Codes that 

stated “[d]oing the right thing is central to our ability to achieve our Vision to be the One Bank 

people most value and trust.” Id. ¶ 158. Carmichael also informed investors in conference calls 

during the Class Period that his focus was on growing Fifth Third’s credit card business, 

providing the right products and services, and being a bank that consumers value and trust. 

Carmichael was part of the Enterprise Risk Management Committee of the Board, “to which 

Defendants told investors the Bank reported and escalated all compliance issues and suspicious 

activity by its employees.” Id. ¶ 159. Tuzun held a series of roles including: Senior Vice 

President and Assistant Treasurer (2010); Treasurer (2011-2013); and CFO (2013 to 2010). As 

CFO, Tuzun was responsible for, among other things, Fifth Third’s risk management and 

compliance and promotion of core values of accountability and integrity. Lead Plaintiff cites 

Fifth Third’s 10-K and 10-Q forms for the statement that the bank reported and escalated 

compliance issues to senior management and the Board. Carmichael and Tuzun’s annual 

incentive compensation was “set in reference to risk management and compliance goals and 

fealty to the Bank’s purported ‘core values’ of integrity and accountability.” Id. ¶ 160. Both 

Carmichael and Tuzun signed the 2017 10-K, “which told investors that the Bank’s ‘core’

operational ‘principles’ included, among other purported core business practices, ‘not offer[ing] 

products or services that are not appropriate for [Fifth Third’s] customers.” Id. 

Lead Plaintiff also alleges that scienter can be inferred from Carmichael and Tuzun’s 

roles in investigating employee misconduct. Carmichael was COO, leading Fifth Third’s Retail 

Bank and affiliate offices. “[A]s early as 2010,” Carmichael had a role in “responding internally 

to widespread employee misconduct at the Bank.” Id. ¶ 161. Lead Plaintiff cites a June 2010 

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internal email from “Fifth Third’s head of retail banking,”2 acknowledging problems at the 

Chicago office including “less than desirable sales management practices,” bullying and threats, 

and “consistent problems around unauthorized credit card sales.” Id. The CFPB identifies 

Carmichael as overseeing Fifth Third’s retail banking, data maintenance and use, and sales and 

investigative practices in 2010. Tuzun was Assistant Treasurer in 2010, involved in gathering, 

reporting, and reviewing financial results from Chicago offices, and “thus, he would have likely 

been apprised of the undisclosed illicit sales scandal.” Id. ¶ 162. The CFPB concluded that by 

June 2010 senior management had been notified of an increase in internal whistleblower hotline 

calls about unauthorized lines of credit and that the bank, by 2010, was aware that employees 

were opening unauthorized consumer products to achieve sales goals or incentives. The CFPB 

amended complaint alleges that senior management were aware of data that could have identified 

unauthorized accounts (for at least years 2010 to 2021) but chose not to identify additional 

accounts to avoid reputational and financial harm. 

Lead Plaintiff further alleges that scienter can be inferred from Carmichael and Tuzun’s 

roles in responding to the CFPB’s investigation. The 2016 to 2019 CIDs were addressed to 

Carmichael personally and informed him of the specific sales practices at issue. Fifth Third

produced “a half-billion data points, thousands of documents, and extensive witness testimony”

in response to the CIDs. Id. ¶ 163. Fifth Third responded to the investigation by admitting, in 

2017, that it had opened unauthorized consumer products every year from 2010 to 2017, which,

Lead Plaintiff alleges, “confirms that the Individual Defendants knew about the Bank’s 

unauthorized consumer-financial products problem before and during the class period.” Id.

¶ 164. Fifth Third also admitted that it: (1) received hundreds of customer complaints about 

2 Lead Plaintiff does not allege that Carmichael was this “head of retail banking” or that he received this 

email. 

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illicit sales practices; (2) knew contemporaneously that its employees opened more than 1,000

unauthorized accounts from 2010 to 2016 (the CFPB investigation found that number to be 

substantially understated); (3) knew of more than 400 instances of misuse of email addresses to 

facilitate sales of unauthorized products; and (4) enrolled customers in overdraft protection 

without their consent in 2015 and 2016. In 2015, Fifth Third disclosed unauthorized credit card

accounts to the CFPB. Lead Plaintiff alleges “it is highly implausible that Carmichael –

responsible for overseeing the Bank’s regulatory response and broader risk management

activities at the time – was not involved in Fifth Third’s written admissions of misconduct to the 

CFPB,” and that Tuzun, as CFO, would almost certainly have known of the admissions or was 

directly involved. Id. ¶ 166. 

Lead Plaintiff also alleges that scienter can be inferred from Fifth Third’s public

statements throughout the Class Period, which included risk management statements in Form 10-

Qs and 10-Ks explaining that compliance issues were escalated to senior management and the 

Board, as well as Carmichael and Tuzun’s certifications of the Forms 10-K and 10-Q that they 

had evaluated the Bank’s risk management processes and had disclosed any material weakness 

therein or any fraud “that involves management or other employees who have a significant role 

in [Fifth Third’s] internal control over financial reporting.” Id. ¶ 172. Lead Plaintiff further 

alleges that Fifth Third’s Code, filed with the SEC, discussing reporting and compliance creates 

an inference of scienter, especially because Fifth Third added a prohibition on “[o]pening bogus 

or fake accounts” in the 2019 iteration and did not disclose that it had already admitted to the

CFPB that it had opened unauthorized accounts. Id. ¶ 181. Lead Plaintiff further alleges that 

statements made by the Bank’s Chief Risk Officer Frank Forrest at a December 2017 investor

day assuring investors that “we closely monitor” risk and report it to the Board and regulators, in 

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the wake of the Wells Fargo unauthorized account scandal, creates an inference of scienter. The 

2020 Proxy Statement also stated Carmichael’s role in reporting and escalating risk issues: “he 

drove accountability for a culture of strong risk management and regulatory results.” Id. ¶ 182. 

Finally, Lead Plaintiff pleads that scienter can be inferred from the departure of numerous 

senior executives, including: Chief Risk Officer Frank Forrest in January 2020 (less than three 

months before the CFPB enforcement action was disclosed); Chairman and CEO of Fifth Third

Bank (Chicago) Mitchell Feiger in May 2020; Director Jerry W. Burris in July 2020; Executive 

Vice President and former Head of the Consumer Bank Phil McHugh in October 2020; and CFO 

Tuzun in November 2020 (who resigned to become CFO at BMO Financial Group). Forrest sold 

$3 million in Fifth Third stock in the three years after the first CFPB CID. 

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not 

its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 

1990). In considering a Rule 12(b)(6) motion, the Court accepts as true all well-pleaded facts in 

the plaintiff’s complaint and draws all reasonable inferences from those facts in the plaintiff’s 

favor. Kubiak v. City of Chicago, 810 F.3d 476, 480–81 (7th Cir. 2016). To survive a Rule

12(b)(6) motion, the complaint must assert a facially plausible claim and provide fair notice to 

the defendant of the claim’s basis. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007); Adams v. City of Indianapolis, 742 F.3d 720, 728–29 (7th 

Cir. 2014). 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.” 

Iqbal, 556 U.S. at 678.

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Securities fraud claims must also satisfy Rule 9(b)’s particularity requirement, which 

requires a party to “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 

9(b); Cornielsen v. Infinium Cap. Mgmt., LLC, 916 F.3d 589, 598 (7th Cir. 2019); AnchorBank, 

FSB v. Hofer, 649 F.3d 610, 614–15 (7th Cir. 2011). “This ordinarily requires describing the 

‘who, what, when, where, and how’ of the fraud, although the exact level of particularity that is 

required will necessarily differ based on the facts of the case.” AnchorBank, 649 F.3d at 615 

(citation omitted). 

Congress further heightened the pleading standards for securities fraud claims when it 

enacted the Private Securities Litigation Reform Act (“PSLRA”) “[a]s a check against abusive 

litigation by private parties” in securities fraud suits. Tellabs, Inc. v. Makor Issues & Rights, Ltd. 

(“Tellabs II”), 551 U.S. 308, 313 (2007). The PSLRA requires “complaints alleging securities 

fraud [to] ‘state with particularity facts giving rise to a strong inference that the defendant acted 

with the required state of mind.’” Cornielsen, 916 F.3d at 598–99 (quoting 15 U.S.C. § 78u4(b)(2)(A)). The PSLRA also requires “[a]ny complaint alleging a material misstatement or 

omission [to] ‘specify each statement alleged to have been misleading’ and the ‘reason or 

reasons why the statement is misleading.’” Id. at 599 (quoting 15 U.S.C. § 78u-4(b)(1)). On

motion by a defendant, the Court must dismiss a complaint that does not meet these 

requirements. 15 U.S.C. § 78u-4(b)(3)(A). 

ANALYSIS

Lead Plaintiff’s amended consolidated complaint sets forth two claims: first, Lead 

Plaintiff alleges that all Defendants have violated § 10(b) of the Exchange Act and SEC Rule 

10b-5 and second, Lead Plaintiff seeks to hold Carmichael and Tuzun individually liable under 

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§ 20(a) of the Exchange Act as “controlling persons” of Fifth Third. Defendants move to 

dismiss both claims.

I. Section 10(b) Claim (Count I)

Defendants argue that Lead Plaintiff does not satisfy the pleading requirements to assert 

its claim for securities fraud under § 10(b) of the Exchange Act. Section 10(b) and SEC Rule 

10b-5 “prohibit fraudulent or misleading statements of material fact in connection with the 

purchase or sale of a security.” Walleye Trading LLC v. AbbVie Inc., 962 F.3d 975, 977 (7th Cir. 

2020). Section 10(b) prohibits the “use or employ, in connection with the purchase or sale of 

any security . . . [of] any manipulative or deceptive device or contrivance in contravention of” 

the SEC’s rules and regulations. 15 U.S.C. § 78j(b). Relevant here, Rule 10b-5 implements 

§ 10(b) by making it unlawful to “make any untrue statement of a material fact or to omit to state 

a material fact necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading . . . in connection with the purchase or sale of any 

security.” 17 C.F.R. § 240.10b-5(b). 

To state a claim under § 10(b) and Rule 10b-5(b), a plaintiff must allege that “(1) the 

defendant made a false statement or omission (2) of material fact (3) with scienter (4) in 

connection with the purchase or sale of securities (5) upon which the plaintiff justifiably relied 

(6) and that the false statement proximately caused the plaintiff’s damages.” Fryman v. Atlas 

Fin. Holdings, Inc., 462 F. Supp. 3d 888, 896 (N.D. Ill. 2020) (citations omitted). Defendants

seek dismissal of the § 10(b) claim on the basis that Lead Plaintiff fails to sufficiently plead any 

actionable misstatement or omission of material fact and on the independent and sufficient basis 

that Lead Plaintiff does not allege facts to support a strong inference of scienter on the part of 

any Defendant. 

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A. Material Misrepresentation or Omission

Lead Plaintiff must sufficiently allege that Fifth Third made materially misleading 

statements. The allegedly fraudulent statements, made in Fifth Third’s public SEC filings and 

investor calls, fall into four categories: (1) business practices, risk management systems, and risk 

environment; (2) Code of Business Conduct and Ethics; (3) product cross-selling and consumer 

practices and relations; and (4) incentive compensation. Lead Plaintiff’s theory is that these

statements were false when made because Fifth Third had a duty to disclose: the CFBP 

investigation; the bank’s admissions, during the course of the investigation, of unauthorized sales 

practices; and the conscious failure of senior management to identify additional misconduct and 

remediate those practices.

“[F]irms are entitled to keep silent (about good news as well as bad news) unless positive 

law creates a duty to disclose.” Gallagher v. Abbott Lab’ys, 269 F.3d 806, 808 (7th Cir. 2001). 

A duty may arise when a defendant chooses to make a statement. Stransky v. Cummins Engine 

Co., 51 F.3d 1329, 1331 (7th Cir. 1995) (“If one speaks, he must speak the whole truth.”

(quoting Ackerman v. Schwartz, 947 F.2d 841, 848 (7th Cir. 1991))). “An omission renders a 

statement materially misleading when it creates an ‘impression of a state of affairs that differs in

a material way from the one that actually exists.’” Kelsey v. Allin, No. 14 C 7837, 2016 WL 

825236, at *4 (N.D. Ill. Mar. 2, 2016) (citation omitted); see 17 C.F.R. § 240.10b-5(b)

(prohibiting “omit[ting] to state a material fact necessary in order to make the statements made, 

in the light of the circumstances under which they were made, not misleading”). This is an 

objective inquiry, considering whether a reasonable investor would have received a false 

impression from the statement given the context and manner in which Defendants presented the 

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statement. Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 575 U.S. 175, 

186–87 (2015).

As an initial matter, Fifth Third did not have a general duty to disclose the CFPB 

investigation. The existence of the CFPB investigation, on its own, “does not trigger a 

generalized duty to disclose.” In re Lions Gate Ent. Corp. Sec. Litig., 165 F. Supp. 3d 1, 12 

(S.D.N.Y. 2016). “[S]ecurities laws generally do not impose [] a duty upon publicly traded 

corporations to confess to uncharged, unadjudicated claims of wrongdoing.” Société Générale

Sec. Servs., GbmH v. Caterpillar, Inc., No. 17 CV 1713, 2018 WL 4616356, at *6 (N.D. Ill. 

Sept. 26, 2018) (citing Anderson v. Abbott Lab’ys., 140 F. Supp. 2d 894, 906 (N.D. Ill.), aff’d 

sub nom. Gallagher v. Abbott Lab’ys., 269 F.3d 806 (7th Cir. 2001)). Similarly, Fifth Third did 

not have a duty to disclose that it participated in the investigation by providing information and 

documents and identifying unauthorized activity. Lewis v. YRC Worldwide Inc., No. 1:19-CV0001, 2020 WL 1493915, at *10 (N.D.N.Y. Mar. 27, 2020) (participation in nine-year DOJ 

investigation, including providing “hundreds of thousands of pages of documents” and engaging 

in settlement discussions, did not create a generalized disclosure duty). Rather, Lead Plaintiff

must identify “with particularity the facts—known to the speaker at the time—that render [each] 

statement false or misleading.” Constr. Workers Pension Fund-Lake Cnty. & Vicinity v. 

Navistar Int’l Corp., 114 F. Supp. 3d 633, 651 (N.D. Ill. 2015).

1. Business Practices, Risk Management System, Risk Environment

Lead Plaintiff argues that Fifth Third “repeatedly represented the effectiveness of the 

Company’s risk management practices,” yet failed to state that these risk management practices 

were not sufficient because employees opened unauthorized accounts (as disclosed to the CFPB 

in 2015 and 2017). In specific, Lead Plaintiff first points to a statement in Fifth Third’s 3Q 2016 

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Form 10-Q (repeated in its 2016 10-K, 2017 10-K, and 2018 10-K), which, when read in its 

entirety, states: 

To mitigate compliance risk, Compliance Risk Management 

provides independent oversight to ensure consistency and 

sufficiency in the execution of the program, and ensures that lines

of business, regions and support functions are adequately 

identifying, assessing and monitoring compliance risks and 

adopting proper mitigation strategies . . . . 

Doc. 85 at 14 (citing Doc. 75 ¶ 107b). Lead Plaintiff emphasizes the two uses of “ensure” as 

indicating that these are misrepresentations as to the effectiveness of Fifth Third’s risk 

management practices. However, this statement about an oversight program designed to 

“mitigate” compliance risk through consistent business practices is general and aspirational, and 

therefore not actionable. See City of Taylor Police & Fire Ret. Sys. v. Zebra Techs. Corp., 8 F. 

4th 592, 595 (7th Cir. 2021) (statement not misleading when it did not make any “concrete 

assertion”); Singh v. Cigna Corp., 918 F.3d 57, 63–64 (2d Cir. 2019) (“simple and generic 

assertions about having ‘policies and procedures’ and allocating ‘significant resources’” would 

not mislead a reasonable investor). In fact, this statement clearly acknowledges the potential for 

noncompliance (something that needs to identified, mitigated, and monitored), and it does not 

present the type of specific, factual statement of compliance that courts have found to be 

misleading.

3 See Ross v. Career Educ. Corp., No. 12 C 276, 2012 WL 5363431, at *6–7 (N.D. 

Ill. Oct. 30, 2012) (statements that regulatory problems were “behind us,” when placed in context 

of alleged continuing problematic practices, sufficiently alleged falsity).

Second, Lead Plaintiff alleges that Fifth Third’s stated core principles that it will:

“conduct business in compliance with all applicable laws, rules and regulations;” act “with 

3 The parties dispute the number of unauthorized accounts opened within the Class Period, and Lead 

Plaintiff’s allegations in this respect are not clear (see discussion, infra.). However, even assuming a 

large portion of the “hundreds of thousands” of potentially unauthorized accounts fell within the Class 

Period, this general statement about risk management procedures is not specific enough to be actionable.

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integrity in all activities;” and not “offer products or services that are not appropriate for its 

customers,” were false because of the unauthorized accounts. But again, these are the kinds of 

non-specific “puffery” on which no reasonable investor would rely. See Plumber & Steamfitters 

Loc. 773 Pension Fund v. Danske Bank A/S, 11 F. 4th 90, 103 (2d Cir. 2021) (“‘General 

declarations about the importance of acting lawfully and with integrity’ are inactionable puffery, 

especially when expressed in aspirational terms.” (citation omitted)); Singh, 918 F.3d at 60

(“[B]anal and vague corporate statements affirming the importance of regulatory compliance

. . . . do not invite reasonable reliance. They are not, therefore, materially misleading, and so 

cannot form the basis of a fraud case.”); ECA, Loc. 134 IBEW Joint Pension Tr. of Chi. v. JP 

Morgan Chase Co., 553 F.3d 187, 206 (2d Cir. 2009) (“The statements are too general to cause a 

reasonable investor to rely upon them.”).

Lead Plaintiff also points to Chief Risk Officer Frank Forrest’s statements at December 

2017 Investor Day to the effect that Fifth Third was doing a good job managing risk, arguing that

these statements were misleading. Doc 75 ¶ 127 (“[W]e are managing the risk across the 

company today exceptionally well”; “Conduct risk at Fifth Third Bank is well managed, and it’s 

in alignment with our core values.”). But Forrest’s statements are generalized, generic opinions

and could not be the basis of a reasonable investor’s decision. City of Warren Police & Fire Ret. 

Sys. v. Zebra Techs. Corp., No. 19 C 5782, 2020 WL 6118571, at *6 (N.D. Ill. Oct. 16, 2020) 

(statements that system was “functioning really well” and “working well for us” were optimistic 

puffery); W. Palm Beach Firefighters’ Pension Fund v. Conagra Brands, Inc., 495 F. Supp. 3d 

622, 649–650 (N.D. Ill. 2020) (characterizations of portfolio’s strength and growth potential 

were nonactionable opinion). Furthermore, Lead Plaintiff does not allege that Forrest did not 

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honestly believe that opinion when he gave it in December 2017. Conagra, 495 F. Supp. 3d at 

650 (explaining that a statement of opinion is only false if not honestly held).

Lead Plaintiff argues that Fifth Third’s risk disclosure statements such as “Fifth Third is

also subject to risk from potential employee misconduct” materially misled investors because 

Fifth Third knew at the time about unauthorized accounts. Again, this statement is too general to 

be actionable. And it is true on its face: employee misconduct potentially puts an institution at 

risk. Washtenaw Cnty. Emps.’ Ret. Sys. v. Walgreen Co., No. 15-CV-3187, 2016 WL 5720375, 

at *6 (N.D. Ill. Sept. 30, 2016) (“[D]efendants’ statement was that there were measures to 

‘mitigate’ the risk, not to ‘eliminate’ it.”). No reasonable investor would conclude that, in 

making this disclosure, Fifth Third promised that no employee misconduct had ever occurred. 

See Howard v. Arconic Inc., 395 F. Supp. 3d 516, 552 (W.D. Pa. 2019) (“[A] reasonable investor 

reading the 10-K risk disclosures would not conclude that [defendant] faced no legal or 

compliance risks, or that the risk management and compliance programs [defendant] had adopted 

were completely adequate to prevent all such risks.” (emphasis in original)).

Finally, Lead Plaintiff argues the CFPB complaint’s allegations that Fifth Third “senior 

management” chose not to fully identify and remediate the unauthorized accounts make the 

bank’s statements about risk management false. This allegation is vague, and neither the CFPB 

nor Lead Plaintiff plead that Carmichael or Tuzun personally participated in this scheme to

consciously undercount unauthorized accounts, much less that either of them knew of the scheme 

when he signed the SEC filings. The stronger inference from Fifth Third’s participation in the 

years long CFPB investigation (and the multiple disclosures during that investigation) is that the 

bank was actively identifying unauthorized accounts.

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2. Code of Business Conduct and Ethics

Lead Plaintiff argues that statements in Fifth Third’s 2016 to 2019 Code of Business 

Conduct and Ethics, adopted by the Board (which included Carmichael), were misleading 

because Fifth Third did not contemporaneously disclose the employee misconduct and senior 

management’s willful ignorance of its scope. The Code is a guide for Fifth Third employees, 

and it lays out expectations for employee conduct in line with corporate principles. Doc. 86-4.4

Lead Plaintiff points to statements such as “There is zero tolerance for internal fraud within Fifth 

Third’s organization” and the strict prohibition on “[o]pening bogus or fake accounts,” calling 

them unqualified, specific, and outright false. 

However, when placed in context, these statements are aspirational, general prohibitions 

on employee behavior and therefore not actionable: “Fifth Third is committed to minimizing the

impact of internal and external fraud to both Fifth Third and our customers . . . . There is zero 

tolerance for internal fraud . . . and internal fraudulent activity must be referred to Bank 

Protection when suspected;” “Fifth Third believes that fair and honest business practices are 

essential . . . . Unethical business practices, such as incentive gaming . . . are strictly prohibited. 

You are prohibited from manipulating records, opening accounts without customer authorization 

. . . .” Id. at 7, 8; see In re Braskew S.A. Sec. Litig., 246 F. Supp. 3d 731, 755 (S.D.N.Y. 2017) 

(explaining “statements within such codes tend to be explicitly aspirational” and qualified). The 

2016 Code statement—“Employees, customers, shareholders and communities must know that 

Fifth Third conducts all activities with the highest standards and unquestioned integrity,” Doc. 

75 ¶ 114(b))—is similarly general and would not be interpreted by a reasonable investor as any 

4 Defendants attach excerpts from the Code to their reply in support of their motion to dismiss. Although 

the Court normally cannot consider extrinsic evidence without converting a motion to dismiss into one for 

summary judgment, Jackson v. Curry, 888 F.3d 259, 263 (7th Cir. 2018), the Court may consider

“documents that are central to the complaint and are referred to in it” in ruling on a motion to dismiss,

Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013).

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kind of guarantee. See Desai v. Gen. Growth Props., Inc., 654 F. Supp. 2d 836, 859 (N.D. Ill.

2009) (agreeing that “a company’s adoption and publication of a code of ethics does not imply 

that all of its directors and officers are in compliance with that code”); Singh, 918 F.3d at 63 

(“Ethics statements, which amount to general declarations about the importance of acting 

lawfully and with integrity” are “inactionable puffery”); Emps. Ret. Sys. of Providence v. 

Embraer S.A., 16 Civ. 6277, 2018 WL 1725574, at *4 (S.D.N.Y. Mar. 30, 2018) (“Because a 

code of ethics is inherently aspirational, it simply cannot be that every time a violation of that 

code occurs, a company is liable under federal law for having chosen to adopt the code at all.”

(citation omitted) (internal quotation marks omitted)).

Lead Plaintiff argues that these statements are specific enough to be actionable. 

However, these are not the kinds of factual representations that courts have found support a 

claim of materiality. See Flynn v. Exelon Corp., No. 19 C 8209, 2021 WL 1561712, at *9 (N.D. 

Ill. Apr. 21, 2021) (statements such as “‘We never request, offer or accept any form of payment 

or incentive intended to improperly influence a decision.’ . . . . take the Code of Conduct and 

Corporate Guidelines out of the realm of nonactionable aspirational statements and into the 

realm of statements regarding the Company’s conduct and implies compliance”); Holwill v. 

AbbVie, Inc., No. 1:18-CV-06790, 2020 WL 5235005, at *4 (N.D. Ill. Sept. 1, 2020) (code 

statement that “We never offer or provide anything of value to healthcare professionals or other 

individuals to inappropriately influence their medical judgment or purchasing or prescribing 

practices in favor of an AbbVie product” was material in light of allegations of kickback 

scheme); Zebra, 8 F. 4th at 595 (CEO’s statement was “vague optimism,” not a “concrete 

assertion”); In re Signet Jewelers Ltd. Sec. Litig., No. 16 Civ. 6728, 2018 WL 6167889, at *17 

(S.D.N.Y. Nov. 26, 2018) (statements that company based employment decisions solely on merit 

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and had a confidential reporting process were misleading in light of allegations of sexual 

harassment and retaliation). The highlighted statements from Fifth Third’s Code do not assert 

that the bank was in compliance or that employees had not opened unauthorized accounts; rather, 

these proscriptions for employee behavior, couched in “belief,” “expectations,” and 

“commitment,” Doc. 86-4 at 4, 7, 10, are aspirational and therefore not actionable.

3. Product Cross-Selling and Consumer Practices and Relations

Next, Lead Plaintiff argues that Fifth Third’s statements about its consumer-growth 

strategy, which included expanding its credit card business and “harvesting” customer 

relationships, while “putting the customer at the center of everything we do,” were misleading 

because the bank did not disclose the unauthorized account activity “instrumental to those 

strategies.” Doc. 85 at 28. Fifth Third’s general statements reflecting an intent to grow its 

business (“we are focused on growing our credit card business”; “we are prioritizing organic 

growth opportunities,” Doc. 75 ¶¶ 122, 129) and commitment to its customers are the kind of 

vague, optimistic statements that do not support a securities fraud claim. See, e.g., In re Ford 

Motor Co. Sec. Litig., Class Action, 381 F. 3d 563, 570–71 (6th Cir. 2004) (corporate statements 

about commitment to quality and consumer-focus not material); Conagra, 495 F. Supp. 3d at 

651–52 (general statements promising growth not specific enough to be material); St. Lucie Cnty. 

Fire Dist. Firefighters’ Pension Tr. Fund v. Motorola, Inc., No. 10 C 427, 2011 WL 814932, at 

*8 (N.D. Ill. Feb. 28, 2011) (“The Court finds Zander’s general commitment to growth to be 

immaterial corporate puffery.”); Plumbers & Pipefitters Loc. Union No. 630 Pension-Annuity Tr. 

Fund v. Allscripts-Misys Healthcare Sols., Inc., 778 F. Supp. 2d 858, 872 (N.D. Ill. 2011)

(“empty” statements predicting growth did not contain substantive information sufficient to base 

an investment decision).

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Lead Plaintiff asserts Carmichael’s statement (in SEC quarterly and annual reports) that 

Fifth Third was “taking advantage of cross-sell opportunities generated by synergies formed by 

the Company’s business segments,” Doc. 75 ¶¶ 119–121, was false because the bank failed to 

disclose that employees were opening unauthorized accounts to meet cross-sell goals. 

Defendants dispute the context of this statement, arguing that it refers to cross-selling 

opportunities “across different business segments” such as Consumer Lending and Wealth and 

Asset Management, rather than a retail cross-sell strategy. Lead Plaintiff does not address this 

contention directly; rather, again relying on the CFPB amended complaint, it clarifies that it 

alleges Fifth Third’s retail cross-sell goals were designed to increase revenue and consumer 

retention rather than to meet customer needs.

5

 The Court does not need to address the context

dispute to conclude that the “cross-sell” statement is not specific enough to make it material. 

Lead Plaintiff seeks to analogize this statement to the Wells Fargo fake-accounts scandal; 

however, there plaintiffs alleged that Wells Fargo repeatedly “attributed its financial success to 

its cross-selling strategy,” while knowingly citing falsified numbers (that reflected millions of 

unauthorized accounts) as proof. See Hefler v. Wells Fargo & Co., No. 16-CV-05479-JST, 2018 

WL 1070116, at *6 (N.D. Cal. Feb. 27, 2018). Carmichael’s statement about “opportunities”

and “synergies” does not rise to that level. Fifth Third’s statement describes “taking advantage”

of a business strategy. It does not make concrete representations that might make it the kind of 

substantive statement upon which an investor would rely. See, e.g., Holwill, 2020 WL 5235005, 

at *6 (statements attributing drug’s success to sales and marketing misleading in light of 

kickback scheme); In re CenturyLink Sales Pracs. & Sec. Litig., 403 F. Supp. 3d 712, 720 (D. 

5 Lead Plaintiff cites additional CFPB allegations about Fifth Third’s failure to tell consumers about the 

cross-sell goals and that the bank was working in its own financial interest, not theirs. Doc. 85 at 29. 

However, these allegations come from the CFPB amended complaint, and Lead Plaintiff did not 

incorporate them into its own amended consolidated complaint. It is therefore inappropriate for the Court 

to consider them here.

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Minn. 2019) (repeated attribution of sales growth to legitimate practice misleading because the 

illegal practice “was widespread, systemic and knowingly encouraged by CenturyLink’s 

impossible-to-meet quota system”).

4. Incentive Compensation

Lead Plaintiff alleges that Fifth Third’s statements in SEC Proxy Statements that its 

incentive compensation was aligned with shareholder interests and did not encourage

inappropriate risk was misleading because the bank did not properly implement or monitor the 

compensation system, which in fact rewarded unauthorized account openings. Defendants argue

that these statements, when placed in their proper context as a description of executive 

compensation, do not implicate the alleged incentivizing of branch employees. The Court 

agrees. The 2019 Proxy Statement discusses Fifth Third’s executive compensation program, its 

methodology and structure, and risk-mitigation features. Lead Plaintiff argues that certain 

phrases such as “executive and other incentive programs” and “reward[ing] our people” make 

this Statement section apply to branch-level employees. However, a review of the entire 

document makes clear that it refers to executive compensation. Omnicare, 575 U.S. at 190

(“[A]n investor reads each statement within such a document, whether of fact or of opinion, in 

light of all its surrounding text[.]”). The phrase “executive and other incentive programs” occurs 

within a description of a Committee that “focuses on the attraction and retention of key 

executives” that met with the Compliance Committee to review “executive and other incentive 

programs.” Doc. 84-12 at 6. This does not “on its face” describe branch-level employees as 

Lead Plaintiff suggests. Doc. 85 at 30. And “reward[ing] our people” is too general to convert 

this executive compensation disclosure into an actionable statement that could have misled 

investors about retail account incentives.

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Lead Plaintiff has not sufficiently alleged that Fifth Third made materially misleading 

statements. 

B. Scienter

To meet the scienter requirement, Lead Plaintiff must allege with particularity facts 

giving rise to a strong inference that each defendant acted with the required state of mind.

Cornielsen, 916 F.3d at 601–02. For the § 10(b) claim, “that state of mind is ‘an intent to 

deceive, demonstrated by knowledge of the statement’s falsity or reckless disregard of a 

substantial risk that the statement is false.’” Pension Tr. Fund for Operating Eng’rs v. Kohl’s 

Corp., 895 F.3d 933, 936 (7th Cir. 2018) (quoting Higginbotham v. Baxter Int’l, Inc., 495 F.3d 

753, 756 (7th Cir. 2007)). Courts define “recklessness” in this context as “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.” City of Livonia Emps.’ 

Ret. Sys. & Loc. 295/Loc. 851 v. Boeing Co., 711 F.3d 754, 756 (7th Cir. 2013) (citations 

omitted). “Alleging that a defendant should have known about fraud is not enough to show that 

the defendant was reckless.” In re Chi. Bd. Options Exch. Volatility Index Manipulation 

Antitrust Litig., 435 F. Supp. 3d 845, 861 (N.D. Ill. 2020). 

The PSLRA requires a plaintiff to “satisfy a heightened standard of plausibility” in 

pleading scienter. Kohl’s, 895 F.3d at 936. The plaintiff must “state with particularity facts

giving rise to a strong inference that the defendant acted with the required state of mind” for

“each act or omission alleged to violate this chapter.” 15 U.S.C. § 78u-4(b)(2)(A) (emphasis 

added). To meet this “strong inference” standard, “an 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.” Tellabs II, 551 U.S. at 314. In determining whether a 

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complaint has met this standard, the Court must account for “plausible, nonculpable explanations 

for the defendant’s conduct” and weigh them against the strength of the inferences in favor of 

scienter. Id. at 323–24; Pugh v. Tribune Co., 521 F.3d 686, 693 (7th Cir. 2008). In the end, the 

Court must determine whether all the facts set forth in the amended consolidated complaint, 

accepted as true and taken collectively, “give rise to a strong inference of scienter.” Tellabs II, 

551 U.S. at 322–23, 326. 

As discussed above, Lead Plaintiff argues that Defendants made false and misleading 

statements and material omissions concerning Fifth Third’s (1) business practices, risk

management systems, and risk disclosures; (2) Code of Business Conduct and Ethics; (3) product 

cross-selling and consumer business; and (4) employee incentive compensation. It must allege 

facts showing that Defendants “had the requisite scienter at the time that they made each 

allegedly fraudulent statement.” In re NeoPharm, Inc. Sec. Litig., No. 02 C 2976, 2007 WL 

625533, at *6 (N.D. Ill. Feb. 23, 2007). Moreover, because Lead Plaintiff contends that Fifth 

Third, Carmichael, and Tuzun all violated § 10(b), it must plead a strong inference of scienter 

with respect to each Defendant. See Cornielsen, 916 F.3d at 601–02 (“PSLRA references to ‘the 

defendant’ may only reasonably be understood to mean ‘each defendant’ in multiple defendant 

cases.” (citation omitted) (internal quotation marks omitted)); Pugh, 521 F.3d at 692–95, 697–98 

(where the plaintiffs alleged that both a corporate defendant and its executive officers violated

§ 10(b), addressing separately whether the plaintiffs had adequately pleaded scienter for the 

individual officers and the corporate defendant). 

“[T]he corporate scienter inquiry must focus on ‘the state of mind of the individual 

corporate official or officials who make or issue the statement (or order or approve it or its 

making or issuance, or who furnish information or language for inclusion therein, or the like) 

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rather than generally to the collective knowledge of all the corporation’s officers and employees 

acquired in the course of their employment.’” Pugh, 521 F.3d at 697 (quoting Makor Issues & 

Rights, Ltd. v. Tellabs Inc. (“Tellabs III”), 513 F.3d 702, 708 (7th Cir. 2008)). Because the only 

relevant actors here are Carmichael and Tuzun6, the Court does not separately address Fifth 

Third’s scienter. Rather, to the extent that the Court concludes that Lead Plaintiff has 

sufficiently pleaded the required scienter for either Carmichael or Tuzun, the Court finds that 

that it can also infer Fifth Third’s scienter from the same allegations. The Court, therefore, 

proceeds to consider Lead Plaintiff’s asserted bases for scienter. 

1. Knowledge of or Reckless Disregard for Class Period Misconduct

As discussed above, Lead Plaintiff must allege facts sufficient to allow a “strong 

inference” of scienter—i.e. knowledge or reckless disregard of the falsehood of—each purported 

misleading statement by each Defendant at the time the statement was made. See Cornielsen, 

916 F.3d at 601–02; Pugh, 521 F.3d at 692–95, 697–98. Lead Plaintiff argues that the amended 

consolidated complaint raises a strong inference that Defendants “knew of a persistent

unauthorized account problem fostered by abusive sales-management practices,” Doc. 85 at 30, 

and that such knowledge made Fifth Third’s public statements about risk management and sales

practices fraudulent. 

To support the inference of knowledge, Lead Plaintiff points to the following alleged 

facts: 

6 The amended consolidated complaint also includes statements by former Chief Risk Officer Forrest and 

former Executive Vice President Philip McHugh. Because Lead Plaintiff does not discuss scienter with 

respect to these officers in its opposition to Defendants’ motion to dismiss, the Court only considers

arguments regarding the scienter of Carmichael and Tuzun. Firestone Fin. Corp. v. Meyer, 796 F.3d 822, 

825 (7th Cir. 2015) (“[A] party generally forfeits an argument or issue not raised in response to a motion 

to dismiss.”). 

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• A June 2010 internal email to “corporate headquarters” about 

unauthorized credit card sales in Chicago and undesirable sales 

practices; 

• Fifth Third received hundreds of customer complaints about illegal 

sales practices between 2010 and 2016, and these complaints likely 

underreport the problem; 

• Fifth Third disclosed more than 1,000 unauthorized accounts to the

CFPB during a 2015 investigation;

• CFPB CIDs in 2016 through 2019, addressed to Carmichael, 

addressed unauthorized account openings and sales practices;

• Fifth Third disclosed to the CFPB, in 2017, that it had opened

unauthorized customer products every year from 2010 to 2017;

• “Throughout that time [2010 to 2017], Defendants fostered (or at 

minimum tolerated) the sales-management practices and incentive

policies that spawned unauthorized accounts, which continued 

until at least 2020 (¶18).”

Doc. 85 at 32.

As an initial matter, the June 2010 email, 2015 disclosure of 1,000 unauthorized

accounts, and 2010 to 2016 consumer complaints all occurred before (or, some unknown number 

of consumer complaints just within) the Class Period, and therefore cannot support a strong 

inference that Carmichael or Tuzun knew that public statements made during the Class Period

were materially false. Smallen v. Western Union Co., 950 F.3d 1297, 1314 (10th Cir. 2020) (preclass period statement did not allow inference of knowledge of on-going, class period legal 

violations). And while knowledge of pre-class period facts can be relevant to the analysis, see In 

re Scholastic Corp. Sec. Litig., 252 F.3d 63, 72 (2d Cir. 2001) (considering pre-class period sales 

data as relevant to what executives should have predicted for class period sales), these facts, even 

taken together, simply do not support Lead Plaintiff’s conclusion that there were persistent

account problems or a culture of abusive sales practices. The fact of unauthorized accounts

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(1,000 or an unknown number opened over seven years) and hundreds of customers complaints

only supports the inference that a relatively small number of unauthorized accounts existed, 

rather than a bank-wide, persistent problem that would have been escalated to Carmichael or 

Tuzun. See Boca Raton Firefighters’ & Police Pension Fund v. DeVry Inc., No. 10 C 7031, 

2012 WL 1030474, at *10 (N.D. Ill. Mar. 27, 2012) (“diffuse” allegations of fraudulent activity 

insufficient). That Fifth Third disclosed these accounts while also producing documents and 

testimony in the CFPB investigation undercuts Lead Plaintiff’s assertion that Fifth Third 

consciously underreported or refused to look for instances of misconduct. See Pugh, 521 F.3d at 

694 (rejecting plaintiff’s conclusory allegation about weak internal controls as “fraud by

hindsight”). 

Finally, the allegation that Carmichael or Tuzun fostered sales-management practices that

encouraged unauthorized accounts is wholly conclusory, without any facts to link this allegation

to either Defendant, much less to explain what actions they took, when, or how they encouraged

an illegal sales culture. Even a non-PSLRA fraud case requires the ‘who, what, when, where, 

and how’ of the fraud.” AnchorBank, 649 F.3d at 615 (citation omitted).

To its amended consolidated complaint, Lead Plaintiff adds the new allegation (copied 

from the CFPB’s amended complaint) that “hundreds of thousands of Fifth Third accounts bear 

indicia of non-authorization,” including accounts minimally funded and deactivated within 90 

days, credit cards issued but never activated, and products opened with Fifth Third email 

addresses. Doc 75 ¶¶ 43, 52, 55, 56, 94. That is a more substantial allegation than hundreds of 

complaints or 1,000 accounts. However, Lead Plaintiff does not explain exactly when these 

accounts were opened. Compare id. ¶ 94 (citing “deficient bank practices” from 2008 to at least 

2020), with id. ¶¶ 52, 55, 57, 58 (alleging problems “since 2010” and in 2013, 2015, and 2017). 

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This requires the Court to speculate as to what percentage of these accounts fall within the Class 

Period. See Wolfe v. Aspenbio Pharma, Inc., 587 F. App’x 493, 498 (10th Cir. 2014) (refusing to 

“speculate” or “stack” inferences). The CFPB’s accusation of accounts with “indicia of nonauthorization” does not support a strong inference that Carmichael or Tuzun knew about those 

unauthorized accounts. Higginbotham, 495 F.3d at 758 (“Accusations differ from proof; 

business executives are not charged with ‘knowing’ the truth of whatever any public official

anywhere in the world may assert.”). Lead Plaintiff also pleads the new allegation that, during 

the CFPB investigation, Fifth Third identified an additional 800 consumers with unauthorized 

accounts and 400 instances of abusive practices. Doc. 75 ¶ 62. Again, the amended consolidated 

complaint in this litigation does not state whether these additional 800 accounts were opened

during the Class Period. 

However, even if these new allegations, combined with the previously pled disclosure of 

unauthorized accounts, can be said to show persistent, large-scale problems in the Class Period, 

the amended consolidated complaint does not support a reasonable inference, much less a strong 

one, that Carmichael or Tuzun personally knew about these problems. The only direct link to 

either Defendant is that the CFPB CIDs were addressed to Carmichael. But all Carmichael’s 

assumed receipt of the CIDs demonstrates is that he knew of the investigation, not necessarily of 

the problem itself. See Higginbotham, 495 F.3d at 758 (“[T]here is a big difference between 

knowing about the reports . . . and knowing that the reports are false.”). 

Similarly, the Court cannot infer scienter based on Carmichael and Tuzun’s executive 

positions, Board committee membership, or job responsibilities. “[S]cienter may not rest on the 

inference that defendants must have been aware of the misstatement based on their positions 

within the company.” Arbitrage Event-Driven Fund v. Tribune Media Co., No. 18 C 6175, 2020 

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WL 60186, at *10 (N.D. Ill. Jan. 6, 2020) (citation omitted); accord Plumbers & Pipefitters Loc. 

Union 719 Pension Fund v. Zimmer Holdings, Inc., 673 F. Supp. 2d 718, 747 (S.D. Ind. 2009) 

(“[R]espective positions within the company prove nothing about fraud or knowledge thereof but 

rather are exactly the type of generalized allegations the court must disregard under the PSLRA.” 

(citation omitted)), aff’d, 679 F.3d 952 (7th Cir. 2012). Lead Plaintiff’s generalized allegations 

that Carmichael sat on the Enterprise Risk Management Committee and CFO Tuzun was 

responsible for risk management compliance do not support a strong inference of knowledge of 

unauthorized sales practices, much less the required scienter that Fifth Third’s challenged public 

statements were false. Cf. Hedick v. Kraft Heinz Co., No. 19-cv-1339, 2021 WL 3566602, at *12 

(N.D. Ill. Aug. 11, 2021) (detailed allegations of information presented at board meetings 

attended by defendants supported inference of scienter); Desai, 654 F. Supp. 2d at 860 (when 

“the company’s very survival was at stake,” defendants were presumed to know whether or not 

the company could “refinance its looming debt”). Likewise, Carmichael and Tuzun’s signatures 

on SEC filings and certifications, without additional details supporting knowledge that the 

statements were false, “add nothing substantial to the scienter calculus.” In re Baxter Int’l Inc. 

Sec. Litig., 19 C 7786, 2021 WL 100457, at *15 (N.D. Ill. Jan. 12, 2021). The amended 

consolidated complaint does not present sufficient facts to create an inference that Carmichael or 

Tuzun had knowledge of the alleged sales activity.

2. CFPB Litigation 

Lead Plaintiff next argues that the CFPB’s ongoing litigation against Fifth Third supports 

an inference of scienter. Government investigations can help to reinforce allegations of scienter. 

See In re Akorn, Inc. Sec. Litig., 240 F. Supp. 3d 802, 820 (N.D. Ill. 2017) (“That the SEC and 

DOJ initiated investigations provides additional support for finding that scienter has been 

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adequately pleaded.”). But making such an inference on its own strikes the Court as improperly 

inferring fraud by hindsight. See Société Générale, 2018 WL 4616356, at *3 (the PSLRA’s 

heightened pleading requirements are intended “to discourage claims of so-called fraud by 

hindsight” (citations omitted) (internal quotation marks omitted)); see also W. Palm Beach 

Firefighters’ Pension Fund v. Conagra Brands, Inc., No. 19-CV-01323, 2020 WL 6118605, at

*25 (N.D. Ill. Oct. 15, 2020) (“The Seventh Circuit has emphasized that ‘hindsight’ cannot be 

the ‘only basis’ of a proposed scienter inference, since there is no ‘fraud by hindsight.’” (citing 

Higginbotham, 495 F.3d at 759)). “Courts in this district have declined to allow plaintiffs to use 

a must have known theory as an end-run around the requirement that plaintiffs set forth 

particularized facts to suggest that defendants acted knowingly or recklessly.” Conagra, 2020 

WL 6118605, at *25 (citations omitted). Further, Lead Plaintiff points to nothing in the CFPB 

litigation that suggests that Carmichael or Tuzun had personal knowledge of any problematic 

practices at the time they made the statements at issue. Lead Plaintiff characterizes the CFPB as 

presenting “conclusions” and “findings” in its amended complaint; however, the Court does not 

find it appropriate to give the CFPB complaint any additional weight or to infer scienter from

conclusory allegations made in another litigation, especially statements that do not specifically 

name Carmichael or Tuzun or detail their personal knowledge. See In re Herbal Supplements 

Mktg. & Sales Pracs. Litig., No. 15-CV-5070, 2017 WL 2215025, at *6 (N.D. Ill. May 19, 2017) 

(treating factual allegations from government investigation as properly pleaded allegations in

private complaint); K.H. Through Murphy v. Morgan, 914 F.2d 846, 848 (7th Cir. 1990) 

(“reminding the reader that allegations in a complaint are not proven facts”).

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3. Motive

Lead Plaintiff further argues that Carmichael and Tuzun had a financial motive to conceal 

the fraud, and that these motive allegations contribute to a strong inference of scienter. A

plaintiff may use “motive and opportunity or circumstantial evidence to establish scienter under 

the PSLRA, as long as those facts support a strong inference that the defendant acted recklessly

or knowingly.” Chu v. Sabratek Corp., 100 F. Supp. 2d 815, 823 (N.D. Ill. 2000) (citations 

omitted). Lead Plaintiff first focuses on Carmichael and Tuzun’s incentive compensation, 

arguing that they stood to profit from concealing ongoing problems with unauthorized accounts 

and the resulting CFPB investigation. The amended consolidated complaint shows that, in 

addition to their regular compensation, Carmichael collected nearly $23.4 million in incentivebased compensation during the Class Period, whereas Tuzun made $6.2 million. When Fifth 

Third disclosed the account problems and the resulting CFPB investigation in March 2020, 

Carmichael’s incentive compensation for 2019 dropped by $2.4 million and Tuzun’s by 12%. 

But these allegations do not contribute to a strong inference of scienter. Allegations 

regarding a corporate officer’s motivation to earn bonuses, stock, or other compensation “are too 

common among corporations and their officers to be considered evidence of scienter.” In re 

Bally Total Fitness Sec. Litig., No. 04 C 3530, 2006 WL 3714708, at *9 (N.D. Ill. July 12, 2006); 

see Plumbers & Pipefitters Loc. Union 719 Pension Fund v. Zimmer Holdings, Inc., 679 F.3d 

952, 956 (7th Cir. 2012) (an alleged incentive to improve bonuses and increase the value of stock 

options was “too generic to satisfy” Tellabs II). Rather, if courts accepted the motive to reap 

higher compensation “as sufficient to establish scienter, most corporate executives would be 

subject to such allegations, and the heightened pleading requirements for these claims would be 

meaningless.” Davis v. SPSS, Inc., 385 F. Supp. 2d 697, 714 (N.D. Ill. 2005); see also Kohl’s, 

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895 F.3d at 939–40 (“[A] generalized motive common to all corporate executives is not enough 

to establish scienter. Otherwise, ‘virtually every company in the United States that experiences a 

downturn in stock price could be forced to defend securities fraud actions.’” (quoting Zucco

Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1005 (9th Cir. 2009))). Indeed, “[t]he desire to 

increase the value of a company and attain the benefits that result, such as meeting analyst 

expectations and reaping higher compensation, are basic motivations not only of fraud, but of 

running a successful corporation.” Davis, 385 F. Supp. 2d at 714. Therefore, because Lead 

Plaintiff does not tie Carmichael and Tuzun’s incentive compensation specifically to the 

challenged practices, with it instead just generally tied to the overall value of the company, the 

Court cannot infer scienter from Fifth Third’s incentive compensation plan.

Lead Plaintiff also advances the theory that Carmichael’s stock trades evidence his 

motive to commit fraud. “Insider trading alone does not raise an inference of scienter,” however.

Id.; see also Silverman v. Motorola, Inc., No. 07 C 4507, 2008 WL 4360648, at *13 (N.D. Ill. 

Sept. 23, 2008). Instead, “[t]he sale must be suspicious in scope or timing” to support such an 

inference. Davis, 385 F. Supp. 2d at 715. Carmichael’s sales within the Class Period do not 

meet this criteria. Although Lead Plaintiff points out that Carmichael sold a quarter of his shares 

during the Class Period, it includes no allegations to suggest why that sale should be suspect. 

And although Carmichael did not trade eighteen months before or six months afterwards, the 

sales during the Class Period show similar gaps of time in between trades. Lead Plaintiff points

out that Carmichael sold an additional 155,143 shares after the Class Period (before the CFPB 

filed its amended complaint), but again, Lead Plaintiff has failed to tie the timing of the sale to 

any specific misleading or false statements or to allege anything specific except that a sale was 

made. Without additional context to suggest that Carmichael’s stock sales were suspicious or 

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unusual, the Court does not find they support a strong inference of scienter. See Higginbotham, 

495 F.3d at 759 (“[A]bsence of sales by other managers . . . implied that nothing was thought to 

be out of the ordinary.”); Davis, 385 F. Supp. 2d at 714–15 (“The strength of an inference 

depends on how closely it follows from a fact. Without more, an executive’s sale of stock does 

not lead to the conclusion that he engaged in fraud.”).

Having examined Lead Plaintiff’s arguments concerning scienter individually and

collectively, the Court cannot find sufficient allegations giving rise to a strong inference of 

scienter on either Carmichael’s or Tuzun’s part. As a result, the Court also cannot impute 

scienter to Fifth Third. 

II. Section 20(a) Claim (Count II) 

 Lead Plaintiff also alleges that Carmichael and Tuzun violated § 20(a) of the Exchange 

Act as “controlling persons” of Fifth Third. “Section 20(a) provides a basis for holding 

individuals liable for acts of securities fraud if they control other individuals or businesses that 

violate the securities laws.” Allscripts-Misys Healthcare, 778 F. Supp. 2d at 886 (citing 15 

U.S.C. § 78t). However, “to state a claim under § 20(a), a plaintiff must first adequately plead a 

primary violation of securities laws—here, a violation of § 10(b) and Rule 10b-5.” Pugh, 521 

F.3d at 693. Because Lead Plaintiff has failed to adequately plead its § 10(b) claim, its claim for 

control person liability under § 20(a) also fails at this stage. Id. at 698 (“[B]ecause the plaintiffs

have not adequately alleged the direct liability of any defendant [under § 10(b) and Rule 10b-5], 

their § 20(a) claim was also correctly dismissed.”); Fryman, 462 F. Supp. 3d at 891, 905 

(dismissing § 20(a) claims against the corporate defendant’s CEO and CFO where the plaintiffs 

failed to adequately plead § 10(b) claims). 

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III. Dismissal With Prejudice

Because Lead Plaintiff has had several opportunities to state a valid claim and further 

amendment would be futile, the Court dismisses the amended consolidated complaint with

prejudice. See Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 734–35 (7th Cir. 2014)

(affirming dismissal with prejudice of first amended complaint after initial complaint was 

dismissed without prejudice); Pirelli Armstrong Tire Corp., Retiree Med. Benefits Tr. v. 

Walgreen Co., No. 09 C 2046, 2010 WL 624709, at *1 (N.D. Ill. Feb. 18, 2010) (dismissing 

amended complaint with prejudice after previous dismissal of ICFA and unjust enrichment 

claims without prejudice), aff’d, 631 F.3d 436 (7th Cir. 2011).

CONCLUSION

For the foregoing reasons, the Court grants Defendants’ motion to dismiss [83]. The 

Court dismisses the amended consolidated complaint with prejudice. The Court enters judgment 

for Defendants and terminates this case.

Dated: May 24, 2022 ______________________

SARA L. ELLIS

United States District Judge

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