Opinion ID: 785790
Heading Depth: 5
Heading Rank: 3

Heading: Access to Information

Text: 61 To buttress the argument that the Individual Defendants knew of or recklessly disregarded adverse information about Intrenet when making representations about the Company to the public, Plaintiffs point to their top-level positions within Company. During the putative class period, Chandler first served as Intrenet's Executive Vice President and Chief Operating Officer, and after June 12, 2000, was the Company's President and Chief Executive Officer until the end of the class period, all this time serving as a director as well. Meanwhile, Jackson was Intrenet's President and Chief Executive Officer from June 1999 to June 12, 2000, when he became Chairman of the Board of Directors. Jackson also served as a director throughout the putative class period. Plaintiffs maintain that by virtue of their positions within the Company, the Individual Defendants had access to all of Intrenet's financial information and controlled the content of all the Company's public statements and SEC filings. The Individual Defendants' access to Intrenet's financial information, Plaintiffs argue, works in favor of drawing a strong inference of scienter with respect to the alleged misrepresentations or omissions in the Company's public communications. 62 Contrary to Plaintiffs' assertions, fraudulent intent cannot be inferred merely from the Individual Defendants' positions in the Company and alleged access to information. As even the authorities which Plaintiffs cite indicate, the Complaint must allege specific facts or circumstances suggestive of their knowledge. Without more, Plaintiffs fail to meet the PSLRA requirement to state with particularity facts giving rise to a strong inference of scienter. See, e.g., In re Peritus Software Servs., Inc. Secs. Litig., 52 F.Supp.2d 211, 228 (D.Mass.1999) (general allegations that a defendant, through his board membership or executive position, had actual knowledge of false statements or reckless disregard for the truth are insufficient to raise strong inference of scienter). While it is true that high-level executives can be presumed to be aware of matters central to their business's operation, In re Complete Management, Incorporated Securities Litigation, 153 F.Supp.2d 314, 325-36 (S.D.N.Y.2001), in this case it cannot be said that the alleged misrepresentations or omissions pertained to central, day-to-day operational matters. Instead, they turn largely on accounting issues, predominantly at the ADS subsidiary, which the Court has already determined are relatively arcane in nature and scope. While the Individual Defendants' positions are relevant to the analysis of whether they are control persons for purposes of Section 20(a), on their own they do not bear strongly on the scienter analysis. Here, as in Comshare, Plaintiffs allege no facts to show that [the Individual Defendants] knew or could have known of the errors, or that their regular procedures should have alerted them to the errors sooner than they actually did. 183 F.3d at 553. 63