Opinion ID: 785790
Heading Depth: 4
Heading Rank: 4

Heading: Access to Confidential Information

Text: 95 Finally, Plaintiffs allege that Andersen's access to Intrenet's confidential information supports a strong inference of scienter. According to the Complaint, Andersen's personnel were regularly present at Intrenet's corporate headquarters throughout the class period and had continual access to, and knowledge of, Intrenet's confidential financial and business information. These allegations, by themselves, are not enough to raise a strong inference of scienter because such allegations are insufficiently concrete to support such an inference. See, e.g., Kennilworth Partners L.P. v. Cendant Corp., 59 F.Supp.2d 417, 429 (D.N.J.1999) ([S]tatement[s that] could be made in relation to the auditor of every corporation are insufficient to plead scienter, for [i]f it were sufficient..., it might make every auditor liable in cases of securities fraud.). However, while the mere fact that an auditor has access to a company does not necessary mean that it was aware of alleged fraud at the company, the greater the auditor's access to and involvement with the company's operations, the more support an inference of scienter takes on. MicroStrategy, 115 F.Supp.2d at 653. 96 Accordingly, the Court takes into account Andersen's access to Intrenet's information, but even so doing, no strong inference of Andersen's scienter arises. Viewing in totality Andersen's access, along with the allegations of internal control deficiencies, GAAP and GAAS violations, and red flags, we do not believe that the most plausible inference to draw in these circumstances is that Andersen knew of or recklessly disregarded the alleged material misstatements and omissions in Intrenet's financial statements. Plaintiffs repeatedly attempt to bolster their allegations by pointing out that the outside consultant quickly discovered the accounting irregularities, yet they offer almost no specific factual details regarding the consultant's work. For these reasons, the Section 10(b) and Rule 10b-5 claims against Andersen are properly dismissed. 97