MEMORANDUM OPINION & ORDER Plaintiff Washington State Investment Board alleges that Defendants Odebrecht S.A. (“Odebrecht”), Construtora Norberto Odebrecht S.A. (“Norberto”), and Odebrecht Engenharia e Construção S.A. (“Engenharia”) engaged in and concealed a massive bribery scheme, and made material misstatements in connection with the sale of securities to Plaintiff. Plaintiff asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act, Rule 10b-5, and Washington and New York state law. On May 20, 2020, this Court granted in part and denied in part Defendants’ motion to dismiss the First Amended Complaint (“FAC”). See Washington State Inv. Bd. v. Odebrecht S.A. (“Odebrecht I”), 461 F. Supp. 3d 46 (S.D.N.Y. 2020). Plaintiff then filed the Second Amended Complaint (“SAC”). Defendants have now moved to dismiss the SAC in part, pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). (Dkt. No. 87) For the reasons stated below, Defendants’ motion will be granted in part and denied in part. BACKGROUND1 The background of this litigation is set forth in detail in Odebrecht I. See 461 F. Supp. 3d at 55-59. A brief summary follows below. I. PARTIES Plaintiff Washington State Investment Board (the “Board”) “is a state agency responsible for the prudent investment and management of public trust and public employee retirement funds.” (SAC (Dkt. No. 86) 45) Defendant Odebrecht “is a holding company headquartered in Brazil that, through various subsidiaries and operating entities, conducts business in construction, engineering, infrastructure, chemicals, utilities and real estate…in Brazil and throughout 27 other countries, including the United States.” (Id. 46) Defendant Norberto is “a wholly owned subsidiary of Defendant Odebrecht, primarily engaging in the construction of large-scale infrastructure and other public works projects” around the world. (Id. 47) On March 31, 2015, Odebrecht reorganized, and Defendant Engenharia “took over [Norberto's] role as the consolidator of Odebrecht’s construction subsidiaries.” (Id. 48) Engenharia has since become “a guarantor of the [securities] bought by [P]laintiff.” (Id.) II. FACTS A. The Bribery Scheme In 2006, Defendants created “a standalone division within [D]efendant [Norberto] called the Division of Structured Operations,” which was utilized to conceal communications and the movement of funds in furtherance of a massive international bribery scheme. (Id. 58-65) “The total amount of bribes paid through the Division of Structured Operations over a nine-year period was…$3.3 billion.” (Id. 65) These bribes resulted in “at least $3.336 billion in ill-gotten benefits.” (Id. 57) Odebrecht CEO Marcelo Odebrecht “dictated who participated in the scheme” and chose the head of the Department of Structured Operations, which was staffed in part by Odebrecht employees. (Id.
25, 59) The Department of Structured Operations “maintained a detailed ‘shadow budget’ through a computer system known as ‘My WebDay’ that tracked payments, payment requests and other bribe-related information.” (Id. 60) Over time, Hilberto Mascarenhas Alves da Silva Filho (“Mascarenhas”) — the head of the Department of Structured Operations — became concerned that the steady expansion of the bribery scheme made detection likely. He repeatedly expressed concern to Marcelo Odebrecht that the bribe amounts were “growing brutally” and that the bribery scheme was “suicide.” (Id. 96 (quotation marks omitted)) In 2014, Marcelo Odebrecht directed that the Department of Structured Operations be moved out of Brazil. (Id. 97) B. The Notes During the bribery scheme, Defendants marketed notes to investors (the “Notes”). (Id. 1) “The Notes include the following securities issued by defendant Odebrecht Finance and guaranteed by [Norberto]: (i) 7.125 percent notes due 2042 (the ’7.125 percent Notes’); (ii) 4.375 percent notes due 2025 (the ’4.375 percent Notes’); (iii) 8.25 percent notes due 2018 (the ’8.25 percent Notes’); and (iv) 5.25 percent notes due 2029 (the ’5.25 percent Notes’).” Plaintiff purchased more than $100 million of the Notes between June 21, 2012 and February 4, 2015. (Id.
