DiLeo, for every write-down, there is always someone who says the company should have acted sooner. In this case, Plaintiffs only assert that the company should have reported the impairment three to six months before it actually did so. Furthermore, as noted by Defendants, even if Exelon had not recorded the $10 million gain and had recorded the $36 million charge, EPS would still have been in the projected target range for the first two quarters of 2001. (R. 20, Defs.' Reply at 18 n. 24.) Plaintiffs' GAAP violations allege relatively modest amounts of improperly recorded gains and losses when compared to the hundreds of millions of dollars the company was earning each quarter. In short, the allegations involving Corvis do not raise a strong inference of scienter, as required by the PSLRA.
Finally, Plaintiffs' allegations that Exelon failed to timely record impaired goodwill in the amount of $243 million also fail because they are not plead with particularity and do not give rise to a strong inference of scienter. Plaintiffs allege that the value of Enterprises was impaired as early as June 30, 2001 due to Enterprises' investment in the declining telecommunications industry, including Corvis, but that Exelon waited until March 31, 2002 to report the charge. The allegations, however, largely lack detail as to which businesses or assets were impaired and by how much and why the write down was necessary after the first half of 2001, all necessary elements of pleading fraud with particularity. Rather, the allegations strike the Court as ones of fraud by hindsight; Plaintiffs do not allege any specifics on the amount of write-downs that should have been taken in 2001, but point to the $243 million charge in the first quarter of 2002 and argue that it should have been taken sooner, without allegations to support this contention. Such generalized allegations cannot raise an inference of scienter. Cf. In re Revlon Secs. Litig., No. 99 Civ 10192, 2001 WL 293820, *1 (S.D.N.Y. Mar. 27, 2001) (denying in part motion to dismiss securities fraud action where plaintiffs plead particularized allegations that defendant falsified financial results through the recognition of "revenue" from false sales and the failure to timely write down excess and obsolete inventory and alleged that overstatements of net income were between 22% and 655%).
In short, Plaintiffs' GAAP allegations lack particularity and do not give rise to a strong inference of scienter. In addition, because Plaintiffs fail to plead a primary cause of action under § 10 and Rule 10b-5, Plaintiffs' § 20(a) claims against the individual Defendants as controlling persons also fail. See Geinko v. Padda, No. 00 C 5070, 2001 WL 1163728, at *9 (N.D.Ill. Sept. 28, 2001).
In this era of focused attention on issues of corporate fraud and responsibility, the Court has very carefully reviewed Plaintiffs' complaint. Nonetheless, the complaint fails on various grounds. Defendants' earnings projections were accompanied by sufficient cautionary language such that the statements fall under the first prong of the PSLRA's safe harbor. In addition, Plaintiffs fail to plead facts that give rise to a strong inference of scienter as required by the PSLRA-actual knowledge with respect to the forwardlooking statements and recklessness with respect to the remaining statements. The Court recognizes that leave to amend should be granted freely, but in this case, any amendment to the instant complaint would be futile. The extensive cautionary language bars any claims based on the projections, and the GAAP violations are essentially timing issues, which the Seventh Circuit suggests cannot constitute fraud. DiLeo, 901 F.2d at 626. As such, the Court grants Defendants' motion to dismiss with prejudice. (R. 17-1.) The Clerk of the Court is instructed to enter a final judgment, pursuant to Federal Rule of Civil Procedure 58, in favor of Defendants.