Plaintiff does not allege that Mr. Smith failed to file the periodic statements of ownership mandated by Section 16(a) and Rule 16a-3 with the SEC.11/ 10/ Rule 16a-3 provides that an initial statement by an insider is to be made on Form 3, and subsequent statements of changes in beneficial ownership are to be made on Form 4 or Form 5. 17 C.F.R. § 240.16a-3. 11/ Cases holding a defendant liable for violating Section 16(a) generally involve instances where an insider fails to file such periodic reports.

While materially false SEC filings may trigger liability under other sections of the securities laws, such as Sections 10(b) and 17(a) (which have been asserted against Mr. Smith), Section 16(a) and the Rules thereunder say 14/ Rule 16a-3 provides that an initial statement by an insider is to be made on Form 3, and subsequent statements of changes in beneficial ownership are to be made on Form 4 or Form 5. 17 C.F.R. § 240.16a-3. 15/ Cases holding a defendant liable for violating Section 16(a) generally involve instances where an insider fails to file such periodic reports.

This Case 1:08-cv-02764-LAK Document 65 Filed 05/29/2008 Page 8 of 18 9 conclusion is further buttressed by the fact that the grants were reported to the SEC on Form 4, (see, e.g., sec.gov/Archives/edgar/data/277948/000027794807000106/xslF345X02/edgar.xml), which is the form on which insiders are required to report all transactions in the Issuer's securities. 17 C.F.R. § 240.16a-3(g)(1). Moreover because Directors are covered persons under the policy they have special pre-clearance obligations for all transactions, whether within or without the blackout period.