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positions, and signed routine corporate filings. Such general allegations are insufficient

to give rise to a strong inference of scienter. For instance, plaintiff’s allegations that

individual defendants Kane, Simon, and Whitney took advantage of the Company’s

“inflated” stock price by selling some of their own shares fails to create an inference of

scienter at least as, or more, compelling than any opposing inference one

could draw from the facts alleged. See Tellabs, 127 S. Ct. at 2510; CAC at ¶¶ 129,

131, 132.

To the extent that plaintiff relies on stock sales to infer fraudulent intent, he must

allege facts that show that the stock sales were “unusual” or “suspicious.” In making

this determination, the courts look to: (1) the amount and percentage of shares sold by

insiders; (2) the timing of the sales; and (3) whether the sales were consistent with the

insider’s prior trading history. In re Smith Gardner Sec. Litig., 214 F. Supp. 2d 1291,

1303-1304 (S.D. Fla. 2002). In Smith Gardner, the plaintiff claimed that the stock sales

by the individual defendants created a strong inference of scienter. The court rejected

this argument, stating that “Plaintiffs fail to provide the trading history for each

Defendant. It is unclear whether the trades made by the individual defendants during

the class period were routine or extraordinary. The Court is being asked to assess this

information in a vacuum.” Id. at 1304. The court reasoned that the stock sales are not

themselves inherently suspicious, and that “Plaintiffs’ allegations raise only issues of

motive and opportunity, which this Circuit has held are insufficient, without more, to

raise a strong inference of scienter.” Id.

Here, the mere fact that certain individual defendants sold shares of Company

stock is not indicative of scienter unless such sales were unusual in scope or timing,


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