OPINION AND ORDER

WILLIAM S. DUFFEY, JR., District Judge.

This matter is before the Court on the SunTrust Defendants'1 Motion for Reconsideration [128], Defendant Ernst & Young LLP's ("E & Y") Motion for Reconsideration [129], SunTrust Defendants' Motion for Rule 11 Sanctions Against Plaintiff and Plaintiff's Counsel [139], and E & Y's Motion for Private Securities Litigation Reform Act ("PSLRA") and Rule 11 Sanctions Against Plaintiff and Plaintiff's Counsel [140].

I. BACKGROUND2

Plaintiff Belmont Holdings Corporation ("Belmont" or "Plaintiff") brings this purported class action under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the "1933 Securities Act"), 15 U.S.C. §§ 77k, 77l, and 77o, relating to the issuance of Defendant SunTrust Capital IX's 7.785% Trust Preferred Securities (the "Securities"). SunTrust Banks, Inc. ("SunTrust") initially offered the Securities to the public in February 2008 (the "Offering"). SunTrust issued the Securities pursuant to an October 18, 2006, Registration Statement, as amended by a February 27, 2008, Prospectus Supplement (collectively, the "RS/P"), which incorporated by reference SunTrust's Form 10-K for the year ended December 31, 2007 (the "2007 10-K").3

On November 30, 2009, Plaintiff filed its consolidated complaint in this action (the "Complaint"). Plaintiff alleged that, at the time of the Offering in 2008, the U.S. housing market was already "wildly out of control and bleeding into all the financial markets." (Compl. ¶ 13). Plaintiff further alleged that, to raise capital, SunTrust issued the Securities, but "negligently incorporated [into the RS/P] false and misleading information about [its] capital and reserves, and its ability to manage and control risk," and thus misled investors about the nature of SunTrust's exposure to high-risk housing market loans. (Id. ¶ 13, 16, 72). The original Complaint noted that after the Offering, SunTrust sought help from the government and accepted almost $5 billion from the Troubled Asset Relief Program ("TARP").

The Complaint alleged that the 2007 10-K, which the RS/P incorporated, underestimated SunTrust's allowance for loan and lease loss reserves ("ALLL") and provision for loan loss ("Provision"). SunTrust stated in the 2007 10-K that:

(Id. ¶ 99).

(Id. ¶ 100).

(Id. ¶ 101).

(Id. ¶ 102).

(Id. ¶ 106).

On January 29, 2009, each Defendant moved to dismiss the original Complaint for failure to state a claim. On September 10, 2010, 2010 WL 3545389, the Court issued an Order granting the Defendants' motions to dismiss. The Court, however, allowed Plaintiff to file an amended complaint.

On October 8, 2010, Plaintiff filed its First Amended Consolidated Complaint (the "Amended Complaint"). Plaintiff's Amended Complaint alleges that Defendants: (1) failed to adequately reserve for SunTrust's mortgage-related exposure (losses); (2) failed to accurately increase SunTrust's ALLL or the Provision as prudent accounting required; (3) failed to disclose information concerning SunTrust's capital and mortgage-related assets; and (4) failed to disclose material weaknesses in SunTrust's internal controls. (Am. Compl. ¶ 98).

Plaintiff's Amended Complaint centers on allegations similar to those asserted in the Original Complaint,4 but adds a number of clarifying allegations to support that the RS/P was misleading because it did not adequately disclose SunTrust's ALLL and that SunTrust's loan loss reserves were insufficient to cover SunTrust's loan losses. Plaintiff's Amended Complaint also relies upon a central claim that SunTrust knew its financial data, upon which ALLL and loan losses were determined, was flawed and that SunTrust knowingly relied upon flawed data to determine its ALLL, loan loss, and loan loss reserves. Plaintiff claims that SunTrust knew its reliance on flawed data would result in misleading financial information being included in the RS/P. Plaintiff's support for these claims rests on information provided by SunTrust's former Group Vice President of Risk Management, Scott Trapani.

In Plaintiff's Amended Complaint, Plaintiff generally alleges that, through the end of 2007:(1) Trapani told the SunTrust Defendants that the ALLL and Provision were inadequate before the Offering; (2) Trapani had conversations and meetings with several of the SunTrust Defendants regarding the insufficiency of ALLL and the Provision; (3) SunTrust's loan loss reserves were insufficient to cover its losses; (4) SunTrust's internal controls were dysfunctional; and (5) SunTrust knew or recklessly ignored several problems with its data used to calculate its exposure to potential loan losses. (Id. ¶¶ 10, 13, 102, 127-29, 139, 143). Plaintiff contends that based on these circumstances, SunTrust knew that it was unable "to track mortgage delinquencies from internal data due to [SunTrust's] data integrity issues" and that senior SunTrust officers "knew that SunTrust's loan loss reserve models were flawed as a result of the data integrity issues." (Id. ¶ 10).

Plaintiff's Amended Complaint alleges further that, knowing its financial data was flawed, the SunTrust Defendants made a variety of false and misleading statements in its SEC filings, including:

These alleged misleading statements, Plaintiff claims, are the by-product of SunTrust's unreliable and flawed financial data collection and storage systems. Plaintiff alleges that SunTrust's "data integrity issues across the entire portfolio of [SunTrust's] assets `clearly' negatively impacted SunTrust's ability to accurately forecast loan loss reserves and contributed to the Company being under reserved throughout fiscal 2007" (id. ¶ 119), which, in turn, caused the end-of-year 2007 financial reports that were incorporated into the RS/P to be misleading.

In support of its 1933 Securities Act claims, Plaintiff relies on Trapani's knowledge of the data integrity issues and Trapani's personal knowledge of what SunTrust's officers knew about those data integrity issues and the financial data produced.

Plaintiff alleges in its Amended Complaint that SunTrust conducted two quarterly meetings to set the ALLL: the Reserve Working Group Meeting ("RWG") and the ALLL Committee Meeting. (Id. ¶ 130). Trapani chaired the RWG Meeting and participated in the ALLL Committee Meeting. (Id.). Prior to the RWG Meeting, Trapani would meet with RWG committee members to discuss the probability of defaults and exposure from their respective business groups. (Id. ¶ 133). At the RWG Meeting, the committee discussed the probability of defaults and issued a recommended ALLL that the ALLL Committee would use in setting SunTrust's ALLL. (Id. ¶ 135).

After the RWG Meeting, Trapani would participate in the ALLL Committee Meeting. The ALLL Committee considered the RWG committee's recommendation, but it ultimately decided the ALLL that SunTrust published in its SEC filings. (Id. ¶ 136). In December 2007, the ALLL Committee rejected and lowered the ALLL recommended by the RWG. (Id. ¶ 139).

Plaintiff's Amended Complaint also alleges, based principally on information provided by Trapani, that the data SunTrust used to calculate its potential loan losses was not reliable. Plaintiff claims that "no one at SunTrust" trusted the data because it was inconsistent and incomplete. (Id. ¶¶ 116-17). Plaintiff contends that because the underlying data used in these calculations was "garbage," SunTrust's process to calculate loan losses in various asset groups and, as a result, the ALLL, was flawed, resulting in inaccurate ALLL levels throughout 2007, which were thus misleadingly represented in the December 2007 10-K and February 2008 RS/P.5 (Id. ¶ 137). Specifically, Plaintiff alleges that SunTrust's ALLL, "as reported in its financial statements on Form 10-Q's and Form 10-K's at the end of 2007 was materially inadequate and did not reflect the high risk of losses inherent in its real estate loan portfolio which included determining HELOC product lines." (Id. ¶ 163). Plaintiff alleges that "at the end of 2007, SunTrust was required under GAAP ... to increase its ALLL calculation for a significant portion of those bad loans," and failing to do so caused SunTrust to violate GAAP and issue "false financial statements at the end of 2007 because its ALLL reserve was understated." (Id. ¶ 165).

Plaintiff also alleges that E & Y wrongfully issued clean audit opinions at the end of 2007, knowing of SunTrust's internal control failures and flawed financial data and thus knowing the ALLL calculations were unreliable. (Id. ¶ 198). Plaintiff also alleges that E & Y wrongfully consented to inclusion of its audit report for SunTrust's financial statements in the February 27, 2008, Prospectus. By doing so, and knowing the financial statements did not conform with GAAP, Plaintiff claims E & Y is liable for any damages caused by SunTrust's misleading financial statements in the RS/P.

On March 21, 2011, the Defendants each moved to dismiss Plaintiff's Amended Complaint [112, 113, 114].6

On September 7, 2011, the Court denied the SunTrust Defendants' Motion to Dismiss [112], denied the Underwriter Defendants'7 Motion to Dismiss [113], and granted in part and denied in part E & Y's Motion to Dismiss [114].8

In its September 7th Order, the Court found that Plaintiff must sufficiently allege subjective falsity in its claims because statements of opinions or belief "are actionable only if they are both objectively and subjectively false." Washtenaw Cnty. Emp. Ret. Sys. v. Wells Real Estate Inv. Trust, Inc., Civil Action No. 1:07-CV-862-CAP, 2008 WL 2302679, at *8 (N.D.Ga. Mar. 31, 2008) (citing Va. Bankshares v. Sandberg, 501 U.S. 1083, 1095, 111 S.Ct. 2749, 115 L.Ed.2d 929 (1991)); Rubke v. Capitol Bancorp Ltd., 551 F.3d 1156, 1162 (9th Cir.2009) ("Because these fairness determinations are alleged to be misleading opinions, not statements of fact, they can give rise to a claim under section 11 only if the complaint alleges with particularity that the statements were both objectively and subjectively false or misleading."); Fait v. Regions Fin. Corp., 712 F.Supp.2d 117, 120 (S.D.N.Y.2010) (adequate reserves for predicted loan loss is not a matter of objective fact but are statements of opinions of value of loans that would prove to be uncollectible in the future and complaint must allege defendants did not truly hold opinions when they were made public); In re CIT Grp. Inc. Sec. Litig., 349 F.Supp.2d 685, 689 (S.D.N.Y.2004) ("[Statements about defendants' belief in the adequacy of loan loss reserves could be actionable if it is alleged that defendants did not actually believe the loan loss reserves were adequate, or if defendants had no reasonable factual basis for their belief."); Podany v. Robertson Stephens, Inc., 318 F.Supp.2d 146, 154 (S.D.N.Y. 2004) ("[P]roving the falsity of [a statement of opinion] is the same as proving scienter, since [a statement of opinion] cannot be false at all unless the speaker is knowingly misstating his truly held opinion."); (September 7th Order at 22-23); see also Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1247 (11th Cir.2008) ("Because scienter is an essential element of a securities fraud claim, [a plaintiff's] allegations must create a strong inference — again, one that is `cogent and compelling' — that the individual defendants knew about the alleged fraud (or were severely reckless in not knowing about it) when they made the purportedly false or misleading statements.").

The Court also found that:

(September 7th Order at 17-20).

The Court noted that Plaintiff's Amended Complaint alleged subjective falsity against the SunTrust Defendants based on its claim that Trapani's statements show senior SunTrust executives knew the data upon which the loan losses and ALLL were based were materially deficient and unreliable, and thus SunTrust knew it had understated its loan losses and misrepresented its ALLL in the December 2007 10-K and February 2008 RS/P. (Id. at 12). The Court noted that Plaintiff's Amended Complaint specifically alleges, based on statements attributable to Trapani, that:

(September 7th Order at 25).

The Court further acknowledged that Plaintiff's Amended Complaint alleges, again based on statements attributable to Trapani, that SunTrust had difficulties collecting accurate data for use in determining its ALLL and loan loss Provision and that:

(September 7th Order at 26).

In light of the allegations in Plaintiff's Amended Complaint, the Court found in its September 7th Order that Plaintiff had sufficiently pled subjective falsity with the particularity required by Federal Rule of Civil Procedure 9(b)9 for its claims against the SunTrust Defendants to survive at the motion to dismiss stage because:

(Id. at 27-28).

Implicit in the Court's September 7th Order denying Defendants' Motions to Dismiss was the Court's accepting as true Plaintiff's claim that Trapani had personal knowledge regarding Defendants Chancy, Wells, Fortin, and Panther's subjective knowledge of the falsity of SunTrust's statements about the ALLL and Provision when those statements were made in the December 2007 10-K and February 2008 RS/P. (Id. at 8 n. 5, 25-28, 28 n. 10). Recognizing Plaintiff's reliance on Trapani's alleged personal knowledge, the Court noted:

(Id. at 28 n. 10).

The Court also recognized the possibility that Trapani did not have personal knowledge of events at SunTrust at the end of 2007 based on the SunTrust Defendants' assertion that "Trapani ceased working at SunTrust in August 2007 when he `was placed on administrative leave ... and never returned to work.'" (Id. at 8 n. 5). In light of the SunTrust Defendants' assertion about Trapani not returning to work after August 2007, the Court stated that it:

(Id.).

On or about September 18, 2011, after the Court denied Defendants' Motions to Dismiss based on Plaintiff's claim that Trapani had personal knowledge that the SunTrust Defendants subjectively knew the ALLL and Provision statements were false when they were made in December 2007 and February 2008, the SunTrust Defendants' counsel contacted Trapani. After determining that Trapani was not represented by counsel, the SunTrust Defendants' counsel assisted Trapani in drafting two declarations (the "First Trapani Declaration" and "Second Trapani Declaration"), which were signed on September 20, and 26, 2011, respectively.

On September 28, 2011, the SunTrust Defendants filed the First and Second Trapani Declarations in this action [127]. Trapani states in his First Declaration, under penalty of perjury, that:

(First Trapani Decl. ¶¶ 3-7).

In his Second Declaration, Trapani, again under penalty of perjury, states:

(Second Trapani Decl. ¶¶ 4-8).

On September 28, 2011, the SunTrust Defendants and E & Y also filed their Motions for Reconsideration [128, 129]. The Underwriter Defendants joined the SunTrust Defendants' Motion for Reconsideration [132]. The SunTrust Defendants assert that the First and Second Trapani Declarations establish that Trapani did not, and does not, have personal knowledge of the subjective falsity of any statements by the SunTrust Defendants after August 27, 2007, and that the Court should reconsider its September 7th Order and dismiss all claims against the SunTrust Defendants. E & Y moved for reconsideration on the grounds that the Court erred in construing Plaintiff's Amended Complaint as stating a Section 11 claim against E & Y for any purported statements other than its audit opinions, because Plaintiff's Amended Complaint predicates E & Y's Section 11 liability exclusively on E & Y's audit opinions.

On October 17, 2011, Plaintiff filed its responses to the SunTrust Defendants and E & Y's Motions for Reconsideration. Plaintiff attached, to its response to the SunTrust Defendants' Motion for Reconsideration, a declaration from its investigator, Desiree Monty Torres, who interviewed Trapani before Plaintiff's original Complaint was prepared (the "Torres Declaration"). The Torres Declaration chronicles Plaintiff's investigator's prior interviews with Trapani and asserts that the content of the First and Second Trapani Declarations is in some ways in conflict with what Trapani previously represented to Plaintiff's investigator during those interviews — and, by extension, the information upon which Plaintiff relied when drafting its Complaint and Amended Complaint. The Torres Declaration also, for the first time, identifies an additional anonymous witness at SunTrust, a Business Analyst in its Risk Management group, who supposedly corroborated certain unspecified statements Plaintiff's claim Trapani made to its investigator during its interviews with him.

On November 3, 2011, the SunTrust Defendants and E & Y filed their Motions for Sanctions pursuant to Federal Rule of Civil Procedure 11 and the PSLRA on the grounds that Plaintiff's allegations in the Amended Complaint, based on statements purportedly made by Trapani to Plaintiff's investigator, were fabricated and alleged without a reasonable basis or inquiry [139, 140].

On November 16, 2011, Trapani signed a third declaration under the penalty of perjury (the "Third Trapani Declaration," collectively the "Trapani Declarations"). The Third Trapani Declaration explains the circumstances under which he was initially contacted and interviewed by Plaintiff, how he was contacted by and provided the First and Second Trapani Declarations to SunTrust Defendants' counsel, and the extent of his contacts and interactions with his attorney during this litigation. The Third Trapani Declaration does not revise, challenge, or call into question the accuracy of Trapani's statements in either the First or Second Trapani Declarations.

II. DISCUSSION

A. Standard for reconsideration

A district court has the discretion to revise or reconsider interlocutory orders at any time before final judgment has been entered. See Fed.R.Civ.P. 54(b); Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1315 (11th Cir.2000); McCoy v. Macon Water Auth., 966 F.Supp. 1209, 1222 (M.D.Ga.1997). The Court does not reconsider its orders as a matter of routine practice. Local Rule 7.2 E., N.D.Ga. The Court's Local Rules require the parties file any such motions for reconsideration "within twenty-eight (28) days after entry of the order or judgment." Id. The Local Rules also provide that "[p]arties and attorneys for the parties shall not file motions to reconsider the court's denial of a prior motion for reconsideration." Id.

Motions for reconsideration are left to the sound discretion of the district court and are to be decided "as justice requires." See Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 806 (11th Cir.1993); Cobell v. Norton, 355 F.Supp.2d 531, 539 (D.D.C.2005) ("asking `what justice requires' amounts to determining, within the Court's discretion, whether reconsideration is necessary under the relevant circumstances"); United States ex rel. Corsello v. Lincare, Inc., Civil Action No. 1:98-CV-0204-ODE, 2003 WL 25714876, at *6 (N.D.Ga. June 2, 2003). Motions for reconsideration are generally appropriate where there is: (1) newly discovered evidence; (2) an intervening development or change in controlling law; or (3) a need to correct a clear error of law or fact. See Jersawitz v. People TV, 71 F.Supp.2d 1330, 1344 (N.D.Ga.1999); Pres. Endangered Areas of Cobb's History, Inc. v. U.S. Army Corps of Eng'rs, 916 F.Supp. 1557, 1560 (N.D.Ga. 1995), aff'd, 87 F.3d 1242 (11th Cir.1996). A motion for reconsideration should not be used to present the Court with arguments already heard and dismissed, or to offer new legal theories or evidence that could have been presented in the previously-filed motion. Bryan v. Murphy, 246 F.Supp.2d 1256, 1259 (N.D.Ga.2003); see also Pres. Endangered Areas, 916 F.Supp. at 1560 ("A motion for reconsideration is not an opportunity for the moving party and their counsel to instruct the court on how the court `could have done it better' the first time.").

In the securities litigation context, where there is a higher scienter pleading standard under the PSLRA, a district court may reconsider an order denying a motion to dismiss, even where the defendant relies upon extrinsic evidence outside the pleadings, when a manifest factual error was made by the court based on "fraud [by the plaintiff], carelessness by [plaintiff's] counsel [in making its factual allegations], or by the court's own misperception of the facts." See Mizzaro, 544 F.3d at 1247; City of Livonia Emps.' Ret. Sys. v. Boeing Co., Civil Action No. 09 C 7143, 2011 WL 824604, at *3-*5 (N.D.Ill. Mar. 7, 2011).10 This is especially true where the plaintiff does not, and cannot, dispute the existence of the "false information concerning [a confidential witness'] position and his personal knowledge" upon which the district court erroneously relied when ruling on the original motion to dismiss. See id.; cf. In re Dynex Capital, Inc. Sec. Litig., No. 05 Civ. 1897(HB)(DF), 2011 WL 2581755, at *4 (S.D.N.Y. Apr. 29, 2011) (reconsideration appropriate "in the face of clear and undisputed evidence that the confidential witnesses who had supposedly provided the basis for allegations of scienter had not actually worked at the defendant company at the relevant time and had no personal knowledge of the statements attributed to them").

B. Reconsideration of dismissal of the claims against the SunTrust Defendants

The Court's September 7th Order relied on and accepted as true Plaintiff's assertion that Trapani had personal knowledge of the SunTrust Defendants knowledge regarding the falsity of the ALLL and Provision statements at the end of 2007 and in early 2008. Trapani has since filed declarations that clearly demonstrate that he did not have personal knowledge of the SunTrust Defendants' subjective knowledge regarding the ALLL and Provision because he ceased working at SunTrust on August 28, 2007. These declarations, which are new evidence of a manifest factual error caused, at best, by Plaintiff's counsel's carelessness — which is discussed below — present the Court with the opportunity to correct its September 7th Order, which was based on its misperception of the facts due to Plaintiff's carelessness, and ensure justice is done. See Region 8 Forest Serv. Timber Purchasers Council, 993 F.2d at 806; City of Livonia Emps.' Ret. Sys., 2011 WL 824604, at *3-*5; Lincare, Inc., 2003 WL 25714876, at *6; Jersawitz, 71 F.Supp.2d at 1344; Pres. Endangered Areas, 916 F.Supp. at 1560.

Plaintiff, in a scattershot of arguments in its response to the SunTrust Defendants' Motion for Reconsideration, asserts that the Court should disregard the Trapani Declarations and deny the SunTrust Defendants' motion because the declarations are recantations, the declarations are not new evidence that was previously unavailable to the SunTrust Defendants, and there are disputes of fact between the Trapani Declarations and the Torres Declaration that make dismissal of Plaintiff's claims inappropriate. Plaintiff also claims that there are factual allegations in its Amended Complaint that do not rely upon Trapani's personal knowledge that support its claims regarding the SunTrust Defendants' subjective knowledge of the falsity of the December 2007 and February 2008 statements about the ALLL and Provision.

Plaintiff further asserts, for the first time on reconsideration, that Trapani's statements to Plaintiff's investigator also are based on hearsay information from other confidential persons who reported information to Trapani about events at SunTrust after Trapani left SunTrust's employment. Plaintiff argues the Court should now accept that this uncorroborated, hearsay information from confidential sources, purportedly known by Trapani, is an acceptable basis upon which to base its fraud allegations in the Amended Complaint. None of these arguments are sufficient to preclude this Court from considering the Trapani Declarations or granting the SunTrust Defendants' Motion for Reconsideration.

1. Whether the Trapani Declarations are recantations or new evidence

Trapani's declarations are not recantations of testimony because he has not previously testified or given an inconsistent statement regarding his personal knowledge of events at SunTrust after August 2007. See In re Davis, 565 F.3d 810, 825 (11th Cir.2009) (citing cases).11 The Trapani Declarations are new evidence because the facts in them were unavailable prior to the filing of the Court's September 7th Order due to Trapani's refusal to provide additional information without a court order and the unavailability of the discovery process pursuant to the stay requirements of the PSLRA. See 15 U.S.C. § 78u-4(b)(3)(B); Williams v. Obstfeld, 314 F.3d 1270, 1275 n. 6 (11th Cir.2002); (Order of Feb. 17, 2011, at 5-13).12

2. Whether the Trapani Declarations create disputes of fact and issues of credibility

Although seemingly in conflict, there are also no disputed facts between the Trapani Declarations and the Torres Declaration regarding Trapani's lack of personal knowledge of the SunTrust Defendant's subjective knowledge of the truth of the ALLL and Provision statements at the end of 2007 and in early 2008. The Trapani Declarations and the Torres Declaration are consistent in that they both clearly establish that Trapani did not have personal knowledge after August 28, 2007, regarding whether the SunTrust Defendants subjectively knew at the end of 2007 and in early 2008 that the ALLL and Provision statements were false. In fact, he did not have any knowledge of the ALLL or Provision determination or the reliability of the data and other information on which the ALLL or Provision were evaluated or determined.

The statements from the Torres Declaration regarding what Trapani knew after he was placed on administrative leave on August 28, 2007, further support the conclusion that Trapani did not have any personal knowledge regarding what the SunTrust Defendants subjectively knew at the end of 2007 and in February 2008 regarding the veracity of the ALLL and Provision statements. The Torres Declaration includes a number of statements made by Trapani to Plaintiff's investigator regarding events or business activities at SunTrust after he was being placed on administrative leave, none of which provide support for Plaintiff's allegation in its Amended Complaint that the SunTrust Defendants knew their statements about the ALLL and Provision were false in December 2007 and February 2008. (Torres Decl. ¶¶ 44, 54, 58, 59, 72, 75).

Paragraph 44 of the Torres Declaration does not support Plaintiff's allegations because it only states that Trapani learned from some unidentified person at SunTrust after he was placed on administrative leave that "the ALLL Committee lowered the reserves recommended by the Reserve Working Group in December 2007." (Id. ¶ 44).

Paragraph 54 of the Torres Declaration states: "Based on his review of SunTrust's public filings, Mr. Trapani stated that SunTrust reserves to total loans ratio was 0.97 at the end of 2007, 1.79 at the end of 2008, and 2.63 in 2009." (Id. ¶ 54). Paragraph 54 also contains Trapani's opinion that "SunTrust needed to be carrying reserves in the range of 1.75 to 2 percent at the end of 2007 to be adequately reserved for probable and identified losses." (Id.). These reviews of documents and statements of Trapani's opinion based on information known to him months before the ALLL and Provision were determined at the end of 2007 do not support Plaintiff's allegations regarding the purported subjective falsity of the SunTrust Defendants' statements.

Paragraph 58 of the Torres Declaration generally states that Trapani was involved in discussions with the SunTrust Defendants regarding SunTrust being under-reserved. (Id. ¶ 58). Paragraph 58 does not state that Trapani knew, or could have known, that any SunTrust Defendant had subjective knowledge that SunTrust was under-reserved after Trapani's last day on August 28, 2007.(Id.).

Similarly, paragraph 59 of the Torres Declaration states that until Trapani went on administrative leave on August 28, 2007, Trapani claimed that Fortin knew SunTrust was under-reserved and represented that after he left SunTrust that Fortin also knew SunTrust was under-reserved. (Id. ¶ 59). However, paragraph 59 does not provide any support for Plaintiff's allegation that Trapani knew, after being placed on administrative leave on August 28, 2007, Fortin's subjective knowledge regarding whether SunTrust was under-reserved in December 2007 or February 2008.(Id.). The statement attributed to Trapani by Plaintiff's investigator in the Torres Declaration that Trapani knew, after his departure in August 2007, that Fortin knew SunTrust was under-reserved is speculation and not a factual assertion based on Trapani's personal knowledge. It is at most opinionated extrapolation disguised as an allegation of fact.

In paragraph 72(c) of the Torres Declaration, Plaintiff claims that Trapani stated his opinion during an interview with Plaintiff's investigator "that he informed [the SunTrust Defendants' counsel] during his discussions with him that SunTrust was likely under-reserved through the fourth quarter of 2007 because the delinquencies were rising so fast and SunTrust was so under-reserved as of the third quarter 2007 (i.e., as of August 28, 2007), that there would have had to have been a significant trend reversal or an obvious significant increase in reserves for the reserves to be deemed adequate." (Id. ¶ 72) (emphasis added). This statement attributed to Trapani by Plaintiff's investigator states, at most, Trapani's speculation about what happened after Trapani left SunTrust. It does not provide support for Plaintiff's allegation that the SunTrust Defendants subjectively knew that the ALLL and Provision statements were false in December 2007 and February 2008. (Id.).

In paragraph 75 of the Torres Declaration, Plaintiff claims that in a September 24, 2010, interview, Trapani "represented that he learned of certain decisions made by the ALLL committee regarding lowering the reserves recommended by the Reserve Working Group in December 2007 from an individual who still worked at SunTrust as a Business Analyst." (Id. ¶ 75). Notably, Plaintiff does not assert that Trapani learned that the SunTrust Defendants subjectively knew that the statements about the ALLL were false in December 2007 or February 2008, but only that he was told certain business decisions were made in December 2007.1314 (Id.). Like the other statements Plaintiff's attribute to Trapani in the Torres Declaration, this assertion does not support Plaintiff's allegation that the SunTrust Defendants subjectively knew that the ALLL and Provision statements were false at the end of 2007 and in early 2008. (Id.).

The Court finds that the alleged statements by Trapani that are recounted in the Torres Declaration do not support Plaintiff's allegation that the SunTrust Defendants subjectively knew that its ALLL and Provision statements were false in December 2007 or early 2008. The Torres Declaration and Trapani Declarations are consistent with each other, Trapani's credibility is not at issue on this point, and any claimed differences between the Declarations do not alter the indisputable conclusion that Trapani lacks any personal knowledge of the SunTrust Defendants' knowledge and beliefs after August 2007.

3. Whether other statements by anonymous witnesses support Plaintiff's allegation of subjective falsity

Plaintiff additionally claims that even if the Trapani Declarations are considered and its allegations in Plaintiff's Amended Complaint based on Trapani's alleged statements and knowledge are disregarded, statements by other unidentified witnesses support those allegations. (Am. Compl. ¶¶ 103-112, 139). The Court has again reviewed Plaintiff's Amended Complaint and there are no statements attributed to any anonymous confidential source, besides Trapani, that support the proposition that the SunTrust Defendants subjectively knew that the statements in the ALLL and Provision were false at the end of 2007 or early 2008.15

Plaintiff also now contends that Trapani's knowledge of SunTrust's business practices at the end of 2007 and what transpired after he departed on August 28, 2007, is based on conversations he had with people who worked there after he left on administrative leave. (Pls.' Resp. to SunTrust Defs.' Mot. for Reconsideration at 8 n. 5; Am. Compl. ¶ 139). The Trapani Declarations, of course, do not disclose that Trapani had conversations after August 28, 2007, with persons employed by SunTrust who were knowledgeable about the ALLL and Provision determination at end of year 2007 or February 2008. Even if the allegations were based on information purportedly known by persons other than Trapani — a claim for which there is no support in the Amended Complaint — none of the allegations in Plaintiff's Amended Complaint that are based on any of Trapani's second-hand knowledge of SunTrust's business practices regarding the ALLL can be construed as providing support for Plaintiff's allegation that the SunTrust Defendants subjectively knew that their ALLL and Provision statements were false in December 2007 or February 2008. Trapani is unequivocal in his declarations that he had "no knowledge from any source regarding SunTrust's ALLL, reserves, provision, or any other aspect of SunTrust's operations or financial affairs after August 28, 2007," and did not have any "knowledge from any source regarding what opinions or beliefs [Defendants] held regarding the appropriate level of SunTrust's ALLL, reserves or provision, or any other aspect of SunTrust's operations or financial affairs as of December 31, 2007," or thereafter. (Second Trapani Decl. ¶¶ 4-8).

The Court finds that the declarations constitute new evidence and that the Court should correct the manifest factual error, caused at least by Plaintiff's counsel's carelessness, that it relied upon in its September 7th Order regarding Trapani's knowledge of the subjective falsity of the SunTrust Defendants' knowledge regarding the ALLL and Provision statements in December 2007 and February 2008. The Court further finds that Plaintiff's allegation that the SunTrust Defendants subjectively knew the ALLL and Provision statements were false in December 2007 or February 2008 is not supported by the allegations in the Amended Complaint, is based on mere conclusory statements, and fails to meet the Twombly plausibility test. Plaintiff's allegations regarding the subjective falsity of the SunTrust Defendants' statements about the ALLL and Provision are conclusory and unsupported, and it would constitute a manifest injustice upon the SunTrust Defendants to not reconsider the September 7th Order in light of the new evidence presented to the Court. In doing so, the Court concludes that Plaintiff's Section 11 claims, and by extension the Section 12 and 15 claims that rely upon the Section 11 claims, are required to be dismissed with prejudice.16

C. Reconsideration of dismissal of the claims against E & Y

The Court previously determined, and Plaintiff does not contest, that Plaintiff's "claims against E & Y are based on whether the ALLL and Provision were believed by SunTrust entity Defendants and individual SunTrust Defendants Chancy, Wells, Fortin, and Panther to be true" because those claims are based on E & Y having consented to the incorporation of its audit report in the December 2007 10-K and February 2008 RS/P. (Pl.'s Opp. to Def. E & Y's Mot. for Reconsideration at 9; Order of Sept. 7, 2011, at 31). Having found on reconsideration that Plaintiff fails to state a Section 11 claim against the SunTrust Defendants based on their subjective knowledge that the ALLL and Provision were false at year-end 2007, the Court also finds that, to the extent Plaintiff asserts claims against E & Y based on E & Y having consented to the incorporation of its audit report in the December 2007 10-K and February 2008 RS/P, Plaintiff fails to state a Section 11 claim against E & Y.

E & Y also seeks relief on reconsideration on the grounds that Plaintiff's Amended Complaint does not allege a Section 11 claim against E & Y for statements other than its audit opinions. E & Y asserts that Plaintiff brings claims against it based exclusively on E & Y's allegedly false audit opinions and, because the Court found Plaintiff's Amended Complaint sounds in fraud, Plaintiff has failed to plead its claims against E & Y with the particularity required by Federal Rule of Civil Procedure 9(b) or plead facts indicating the audit opinions were subjectively false when issued. (September 7th Order at 18-20).17

The Court agrees that Plaintiff's Amended Complaint states claims against E & Y based only on its audit opinions. (Am. Compl. ¶ 196; see also Pl.'s Consolidated Opp'n to Defs.' Mot. to Dismiss [117] at 37). In pleading its claim against E & Y regarding the falsity of these opinions, Plaintiff's Amended Complaint, at most, alleges that unknown representatives of E & Y were present at ALLL committee meetings where discussions occurred regarding lowering of SunTrust's ALLL and therefore its audit opinions must be false because it purportedly relied on SunTrust's ALLL and Provision determinations and representations that SunTrust "maintained ... effective internal controls over financial reporting, based on the COSO criteria." (Am. Compl. ¶¶ 58, 196-204).18 We now know that any meetings E & Y personnel might have attended, and upon which the Amended Complaint is based, had to have taken place before August 28, 2007.

A plaintiff in a securities fraud action who asserts claims against an accountant based on the accountant's audit opinions is required to allege, with particularity, that the opinions issued were subjectively false — that is that the accountants did not actually believe their opinions when they were issued. See Washtenaw Cnty., 2008 WL 2302679, at *8 (citing Va. Bankshares, 501 U.S. at 1095, 111 S.Ct. 2749); Rubke, 551 F.3d at 1162; Fait, 712 F.Supp.2d at 120; In re CIT Grp. Inc. Sec. Litig., 349 F.Supp.2d at 689; Podany, 318 F.Supp.2d at 154.

The scant allegations in Plaintiff's Amended Complaint fail to state a claim that the E & Y audit opinions were subjectively false when issued and fail to satisfy the requirements of Federal Rule of Civil Procedure 9(b) by failing to specify the who, what, where, when, and how regarding the development and falsity of E & Y's audit opinions.19

The Court finds Plaintiff's claims in its Amended Complaint against E & Y only include assertions that E & Y's statements about its audit opinions were false. (Am. Compl. ¶¶ 58, 95-96, 194-215). The Court further finds Plaintiff's allegations regarding E & Y's audit opinions are conclusory, if not speculative, and Plaintiff's Amended Complaint does not sufficiently allege particularized facts regarding the subjective falsity of E & Y's audit opinions or facts to satisfy the requirements of Federal Rule of Civil Procedure 9(b). Plaintiff fails to state a claim for relief in its Amended Complaint against E & Y, and, on reconsideration, E & Y's Motion to Dismiss is granted.

D. Sanctions

Federal Rule of Civil Procedure 11 requires that every pleading or motion filed by an attorney contain "claims, defenses, and other legal contentions [that] are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;" and all "factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery." Fed. R.Civ.P. 11(b).

Federal Rule of Civil Procedure 11 authorizes the district court to impose sanctions if a party files pleadings that contain factual contentions that the party knows to be untrue. Id. at 11(c). Rule 11 also requires that parties engage in a reasonable inquiry to determine that the information presented to the court is true. Id. at 11(b). The Rule provides that the district court, on its own initiative, may require a party to "show cause" why its conduct has not violated Rule 11(b). Id. at 11(c)(3). Imposing sanctions pursuant to Rule 11 is committed to the district court's discretion. See Attwood v. Singletary, 105 F.3d 610, 612 (11th Cir.1997).20 Before sanctions are imposed, however, due process requires notice and an opportunity to respond. Id. at 613; see also Fed.R.Civ.P. 11(c).

The Eleventh Circuit has instructed that "a court confronted with a motion for Rule 11 sanctions first determines whether the party's claims are objectively frivolous — in view of the facts or law — and then, if they are, whether the person who signed the pleadings should have been aware that they were frivolous; that is, whether he would have been aware had he made reasonable inquiry." Jones v. Int'l Riding Helmets, Ltd., 49 F.3d 692, 695 (11th Cir.1995); see also Kaplan v. DaimlerChrysler, A.G., 331 F.3d 1251, 1255 (11th Cir.2003) ("courts determine whether a reasonable attorney in like circumstances could believe his actions were factually and legally justified"). This determination is to be "gleaned from facts and law known or available to the attorney at the time of filing." See id.

The PSLRA also requires that:

15 U.S.C. § 78u-4(c). If a party is determined to have violated Rule 11, the PSLRA requires that sanctions be imposed after giving "such party or attorney notice and an opportunity to respond." Id.

The Court may also award sanctions pursuant to its general power to "manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases." Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (internal quotations omitted). The Court has the inherent power to impose sanctions against attorneys or clients, or both, who act "`in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Byrne v. Nezhat, 261 F.3d 1075, 1106 (11th Cir.2001) (quoting Chambers, 501 U.S. at 45-46, 111 S.Ct. 2123), abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008). The threshold inquiry for whether sanctions should be imposed is a finding of bad faith. Byrne, 261 F.3d at 1106 (quoting Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.1998) ("[t]he key to unlocking a court's inherent power is a finding of bad faith.")). "Because the court's inherent power is so potent, it should be exercised with restraint and discretion." Byrne, 261 F.3d at 1106 (internal quotation marks omitted).

The record before the Court regarding Plaintiff's counsel's conduct is troubling. Having reviewed the Amended Complaint and briefing on Defendants' motions to dismiss and for reconsideration, the Court reaffirms that it was led to believe by Plaintiff's counsel that Trapani had knowledge of Defendants' actual review of data upon which the ALLL and Provision were determined in late 2007 and as represented in public disclosures in February 2008. Plaintiff's counsel carelessly — or cleverly — led the Court to believe in the Amended Complaint, and its response to Defendants' Motions to Dismiss, that Trapani's knowledge was personal and current through the end of 2007. That was not true. The question is under what circumstances would counsel for Plaintiff make these representations to the Court — representations that were the underpinning of the Court's decision in its September 7th Order. A remaining question is why Plaintiff did not, immediately after the September 7th Order was docketed, advise the Court that Trapani, as represented by the SunTrust Defendants, had left SunTrust's employ in late August 2007.

Plaintiff offers a laundry list of excuses to explain its conduct. For example, it now claims its Amended Complaint actually was, in part, based on other anonymous current and former SunTrust employees — even though neither the Amended Complaint nor Plaintiff's response to Defendants' Motions to Dismiss disclosed or suggested its reliance on these other sources. Plaintiff also claims it relied entirely on information reported to it by its investigators — Worms & Hirsch, Inc., including its interviews with Trapani. Plaintiff's counsel suggests that it would be unethical for lawyers for plaintiffs to have personally interviewed Trapani because it could subject them to be witnesses in this litigation — a dubious and unprecedented interpretation of any professional ethics code.21 This laundry list of explanations and excuses is itself disturbing.

It appears here that no lawyer representing Plaintiff ever met with or interviewed Trapani about what he knew, whether he was credible, or even how long he actually worked for SunTrust and the currency of his knowledge. For whatever legitimate or perceived reason, Plaintiff's counsel decided to rely exclusively on its investigators and believed it was appropriate to do so without further inquiry.

The Torres Declaration chronicles the statements Plaintiff's investigator attributed to Trapani and which she apparently reported to Plaintiff's counsel. The information Torres reported arguably supported Plaintiff's contention that Trapani had personal knowledge of SunTrust's operations through the end of 2007. The question is whether the decision to rely on an investigator was merely careless or whether it was a self-serving calculation, and, if so, whether the result was the filing of a pleading that violated Rule 11. This is a close, difficult issue.

Having closely examined the Torres Declaration, it appears Torres did not include in her report to Plaintiff's counsel information that made clear that Trapani had no personal knowledge of events at SunTrust after he was placed on administrative leave in August 2007. Rather, the Torres Declaration supports a conclusion that Plaintiff's counsel relied upon the information Torres misleadingly reported as factual support for the claims that were made by Plaintiff in the original Complaint and subsequent pleadings. Only now, with the benefit of the Trapani and Torres Declarations, is it clear that Trapani did not have the knowledge Plaintiff's claimed he did in their pleadings. The Court also notes that Trapani had refused to give additional information without a court order and discovery had largely been stayed — preventing either party from conducting additional fact development, verifying the statements reported to Plaintiff by its investigator and contained in its original Complaint, or verifying the SunTrust Defendants' contention — raised at the time Plaintiff filed its Amended Complaint — that Trapani lacked personal knowledge of events at SunTrust beyond August 2007. See McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552, 1563 (11th Cir.1992) (in assessing reasonableness of party's inquiry, a court may consider extent to which factual development requires discovery, complexity of facts, and legal issues involved); see also Fed.R.Civ.P. 11 Adv. Comm. Notes to 1993 ("sometimes a litigant may have good reason to believe that a fact is true or false but may need discovery, formal or informal, from opposing parties or third persons to gather and confirm the evidentiary basis for the allegation"). The Court thus finds, albeit reluctantly, that at the time Plaintiff filed its pleadings, Plaintiff erroneously, at least carelessly, or perhaps under the cover of plausible deniability, assumed that Trapani, based on his position and contacts at SunTrust as reported by its investigator, had personal knowledge of events at SunTrust through the end of 2007.22

In hindsight and with the benefit of the Torres and Trapani Declarations — as the chart attached to the SunTrust Defendants' Motion for Sanctions amply demonstrates — the positions Plaintiff took in its Amended Complaint were misleading or, at least, unsupported. See Jones, 49 F.3d at 695 ("The prohibition against using hindsight to determine whether a pleading had a reasonable basis when filed is intended to protect parties who file pleadings which appear well-grounded when filed, but which discovery or subsequent investigation reveals to be meritless."). Although a close and reluctant call, the Court is simply not able to conclude on the facts here that Plaintiff's conduct violated Rule 11 or rises to the level of bad faith such that sanctions are appropriate.23

III. CONCLUSION

For the foregoing reasons,

IT IS HEREBY ORDERED that the SunTrust Defendants' Motion for Reconsideration [128] and E & Y's Motion for Reconsideration [129] are GRANTED. Plaintiff's claims against all Defendants are DISMISSED.

IT IS FURTHER ORDERED that the SunTrust Defendants' Motion for Rule 11 Sanctions Against Plaintiff and Plaintiff's Counsel [139] and E & Y's Motion for PLSRA and Rule 11 Sanctions Against Plaintiff and Plaintiff's Counsel [140] are DENIED.