                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

DONALD JOHNSON, individually and        
on behalf of all others similarly
situated,                                     No. 04-56997
                  Plaintiff-Appellee,
                v.                             D.C. No.
                                            CV-03-05986-FMC
JAMES D. ALJIAN; KIRK KERKORIAN;               OPINION
TRACINDA CORPORATION,
           Defendants-Appellants.
                                        
        Appeal from the United States District Court
            for the Central District of California
      Florence Marie Cooper, District Judge, Presiding

                   Argued and Submitted
           January 8, 2007—Pasadena, California

                     Filed June 20, 2007

Before: Diarmuid F. O’Scannlain, Andrew J. Kleinfeld, and
            Milan D. Smith, Jr., Circuit Judges.

               Opinion by Judge O’Scannlain




                             7395
                      JOHNSON v. ALJIAN                 7397


                        COUNSEL

Eric Landau, McDermott Will & Emery LLP, Irvine, Califor-
nia, argued the cause for defendants-appellants James D.
Aljian, Kirk Kerkorian, and Tracinda Corporation; Shawn M.
Harpen, McDermott Will & Emery LLP, Irvine, California,
and Terry Christensen and Eric P. Early, Christensen, Miller,
Fink, Jacobs, Glasser, Weil & Shapiro, LLP, Los Angeles,
California, were on the brief.

Christopher L. Nelson, Schiffrin & Barroway, LLP, Radnor,
Pennsylvania, argued the cause for plaintiff-appellee Donald
Johnson; Katharine M. Ryan, Schiffrin & Barroway, LLP,
Radnor, Pennsylvania, and Christopher Kim and Lisa J. Yang,
Lim, Ruger & Kim, LLP, Los Angeles, California, were on
the brief.
7398                        JOHNSON v. ALJIAN
                                OPINION

O’SCANNLAIN, Circuit Judge:

   We must decide a case of first impression involving insider
trading liability under the federal securities laws.

                                      I

   On August 21, 2003, Donald Johnson,1 on behalf of himself
and all other persons who purchased the common stock of
DaimlerChrysler AG (“DaimlerChrysler”) on nine different
dates between March 19, 1999, and June 11, 1999, brought
this as-yet-uncertified securities fraud class action against
James D. Aljian, Kirk Kerkorian, and Tracinda Corporation.2
Kerkorian is an executive and sole shareholder of Tracinda.3
Aljian is an executive of Tracinda and a member of the Daim-
lerChrysler Shareholder Committee.

  The amended complaint4 alleges (1) illegal insider trading
against all defendants in violation of Section 10(b)5 of the
   1
     Although Johnson is the named plaintiff in this case, the district court
appointed Glenn Rumsey to be the lead plaintiff on November 20, 2003.
We refer to the plaintiff-appellee as “Johnson.”
   2
     We refer collectively to defendants-appellants Aljian, Kerkorian, and
Tracinda as the “defendants.”
   3
     “In determining whether the complaint states a claim upon which relief
could be granted, we assume the facts alleged in the complaint to be true.”
Brody v. Transitional Hosps. Corp., 280 F.3d 997, 998 (9th Cir. 2002).
   4
     The amended complaint was filed on January 23, 2004, and states sub-
stantially similar allegations of insider trading and the same causes of
action as the initial complaint filed on August 21, 2003.
   5
     Section 10(b) makes it “unlawful for any person . . . . [t]o use or
employ, in connection with the purchase or sale of any security registered
on a national securities exchange or any security not so registered, . . . any
manipulative or deceptive device or contrivance in contravention of such
rules and regulations as the [Securities Exchange] Commission may pre-
scribe.” Exchange Act § 10(b), 15 U.S.C. § 78j(b).
                            JOHNSON v. ALJIAN                           7399
Exchange Act of 1934 (“Exchange Act”), and Rules 10b-56
and 10b5-17 promulgated thereunder; (2) control person liabil-
ity against Aljian and Kerkorian based on Section 20(a)8 of
the Exchange Act; and (3) contemporaneous trading liability
against all defendants based on Section 20A of the Exchange
Act.9

   The amended complaint alleges that Aljian attended a
DaimlerChrysler Shareholder Committee Meeting, where he
was given a board report entitled “DaimlerChrysler Operative
Planning 1999-2001” and marked “strictly confidential.” The
report projected a “significant” decline in free cash flows. The
amended complaint further claims that Aljian placed the
report in Tracinda’s central files, which were readily accessi-
ble to Kerkorian. The amended complaint does not allege that
Aljian informed Kerkorian of the projected decline in free
cash flows, but alleges that he knew that Kerkorkian had
unrestricted access to the report.
  6
     Rule 10b-5 makes it “unlawful for any person . . . [t]o employ any
device, scheme, or artifice to defraud . . . . in connection with the purchase
or sale of any security.” Rule 10b-5, 17 C.F.R. § 240.10b-5.
   7
     Rule 10b5-1 “defines when a purchase or sale constitutes trading ‘on
the basis of’ material nonpublic information in insider trading cases
brought under Section 10(b) of the Act and Rule 10b-5 thereunder.” Rule
10b5-1, 17 C.F.R. § 240.10b5-1.
   8
     Section 20(a) provides in relevant part that “[e]very person who,
directly or indirectly, controls any person liable under any provision of
this chapter or of any rule or regulation thereunder shall also be liable
jointly and severally with and to the same extent as such controlled person
to any person to whom such controlled person is liable.” Exchange Act
§ 20(a), 15 U.S.C. § 78t(a).
   9
     Specifically, the amended complaint asserts a claim against Tracinda
and Kerkorian based on Section 20A(a), which imposes liability on per-
sons who engage in insider trading for damages suffered by individuals
who trade contemporaneously with the insider. Exchange Act § 20A(a), 15
U.S.C. § 78t-1(a). The first amended complaint also asserts a claim against
Aljian based on Section 20A(c), which imposes joint and several liability
on tippers. Exchange Act § 20A(c), 15 U.S.C. § 78t-1(c).
7400                      JOHNSON v. ALJIAN
   The amended complaint also alleges that, with the benefit
of such insider information, Tracinda sold approximately 7.6
million shares of DaimlerChrysler stock between March 19,
1999, and June 11, 1999. Finally, the amended complaint
alleges that when DaimlerChrysler announced a decline in
cash flows in July 1999, the price of its shares dropped.

   The defendants filed a motion to dismiss, arguing that (1)
the claims for violation of Sections 10(b) and 20(a) were
time-barred; (2) the amended complaint lacked the particular-
ity required by Fed. R. Civ. P. 9(b) and the Private Securities
Litigation Reform Act of 1995, 15 U.S.C. § 78u-4; (3) the
amended complaint failed to establish the elements of insider
trading, including scienter, materiality, loss causation, undis-
closed “inside” information; and (4) the claim under Section
20A could not survive dismissal of the Section 10(b) claim,
which served as the sole predicate violation. The district court
granted the motion to dismiss with prejudice the Sections
10(b) and 20(a) claims as barred by the applicable statute of
limitations, but denied the motion to dismiss the Section 20A
claim. Johnson v. Aljian, 394 F. Supp. 2d 1184, 1203 (C.D.
Cal. 2004).

   The district court certified the issue involving the Section
20A claim for interlocutory appeal pursuant to 28 U.S.C.
§ 1292(b), and we granted the defendants’ petition for permis-
sion to appeal.

                                   II

   The defendants argue on appeal that the district court erred
by not dismissing the Section 20A claim. The defendants con-
tend that Section 20A requires an actionable10 predicate viola-
tion of the Exchange Act. Although the Section 20A claim
was timely filed under its own period of limitations, the Sec-
  10
    By “actionable,” we simply mean that the predicate violation must not
be time-barred under its own period of limitations.
                          JOHNSON v. ALJIAN                       7401
tion 10(b) claim—the sole predicate violation of the Exchange
Act in this case—was not independently actionable because
the claim has been dismissed as time-barred under its separate
period of limitations. Therefore, the defendants urge, the dis-
trict court should have also dismissed the Section 20A claim.

                                  A

   Our analysis must begin with the statutory language.
United States v. TRW Rifle 7.62X51mm Caliber, 447 F.3d
686, 689 (9th Cir. 2006). When interpreting Section 20A, we
must give words their ordinary or plain meaning. Id. “[W]e
follow the common practice of consulting dictionary defini-
tions to clarify their ordinary meaning[ ] and look to how the
terms were defined at the time [the statute] was adopted.” Id.
(internal quotation marks omitted) (alterations in original).
We also recognize the “cardinal rule of statutory construction
that significance and effect shall, if possible, be accorded to
every word.” Wash. Market Co. v. Hoffman, 101 U.S. 112,
115 (1879). But interpreting a statute “is a holistic endeavor.”
United Sav. Ass’n of Tex. v. Timbers of Inwood Forest
Assocs., Ltd., 484 U.S. 365, 371 (1988). We therefore look
not only to the “language itself, [but also to] the specific con-
text in which that language is used, and the broader context
of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S.
337, 341 (1997).

                                   B

  [1] Section 20A provides a cause of action against “[a]ny
person who violates any provision of this chapter or the rules
or regulations thereunder by purchasing or selling a security
while in possession of material, nonpublic information.”
Exchange Act § 20A(a).11 Section 20A also includes an
  11
    Because Section 20A(a) and (c) both require a predicate violation of
the Exchange Act, or the rules promulgated thereunder, our analysis
applies equally to both subsections.
7402                         JOHNSON v. ALJIAN
express statute of limitations,12 which provides that “[n]o
action may be brought under this section more than 5 years
after the date of the last transaction that is the subject of the
violation.” Exchange Act § 20A(b)(4).

   The term “violates” in Section 20A is crucial. Claims under
Section 20A are derivative and therefore require an indepen-
dent violation of the Exchange Act. See Lipton v. Pathogene-
sis Corp., 284 F.3d 1027, 1035 n.15 (9th Cir. 2002); see also
In re Advanta Corp. Sec. Litig., 180 F.3d 525, 541 (3d Cir.
1999); Jackson Nat’l Life Ins. Co. v. Merrill Lynch & Co., 32
F.3d 697, 703 (2d Cir. 1994); In re VeriFone Sec. Litig., 11
F.3d 865, 872 (9th Cir. 1993). The defendants claim that “the
statute is clear: a viable predicate violation is required.” But
the defendants seek to introduce an additional requirement
into the text. Nowhere do we find in the statute such modify-
ing or restricting terms as “viable,” “actionable,” or “timely.”

   [2] Webster’s Third New International Dictionary, the edi-
tion in print when Congress enacted Section 20A in 1988,
  12
     “Although the distinction between statutes of limitations and statutes
of repose is often blurred, statutes of limitations differ from statutes of
repose because the former ‘bars plaintiff[s] from bringing an already
accrued claim after a specified period of time,’ whereas the latter ‘termi-
nates a right of action after a specific time, even if the injury has not yet
occurred.’ ” Fields v. Legacy Health Sys., 413 F.3d 943, 952 n.7 (9th Cir.
2005) (citation omitted) (alteration in original). There is some disagree-
ment whether Section 20A’s five-year period of limitations is a statute of
repose or a statute of limitations. See Short v. Belleville Shoe Mfg. Co.,
908 F.2d 1385, 1391 (7th Cir. 1990) (“Section 20A, by contrast, appears
to be an ordinary statute of limitations. The SEC believes that it is a statute
of repose as well as a statute of limitations, but it is not so clear to us. The
language is in the traditional form of a statute of limitations, and the Solic-
itor General did not cite any legislative history indicating that it is more
potent than the usual variety.” (citation omitted)). Because we do not
believe our conclusion depends on this distinction and because Section
20A titles the provision “Statute of limitations,” we will refer to Section
20A’s period of limitations as a “statute of limitations” without deciding
the matter.
                            JOHNSON v. ALJIAN                           7403
defines the verb “violates” to mean breaking or disregarding
the law. Webster’s Third New Int’l Dictionary 2554 (3d ed.
1986); see also Black’s Law Dictionary 1408 (5th ed. 1979)
(defining “violation” to mean “[i]njury; infringement; breach
of right, duty, or law”). When, for example, someone asks if
a person “violated” the speeding law, she is ordinarily under-
stood as inquiring whether that person disregarded the posted
speed limit, not whether a timely action commenced or a suc-
cessful prosecution resulted. We believe that the term “vio-
lates” ordinarily is understood to mean that a person has
satisfied the essential elements13 of the proscribed act regard-
  13
    The defendants contend that the statute of limitations is an element of
Section 10(b), citing Central Bank of Denver, N.A. v. First Interstate Bank
of Denver, N.A., 511 U.S. 164, 172 (1994), and Musick, Peeler & Garrett
v. Employers Insurance of Wausau, 508 U.S. 286, 295 (1993). But in those
cases the Court simply refers to the statute of limitations as a general
dimension of Section 10(b), not an essential element of the claim. Indeed,
the Court recently explained in Dura Pharmaceuticals, Inc. v. Broudo, 544
U.S. 336 (2005), that “[i]n cases involving publicly traded securities and
purchases or sales in public securities markets, the action’s basic elements
include: (1) a material misrepresentation (or omission), (2) scienter, i.e.,
a wrongful state of mind, (3) a connection with the purchase or sale of a
security, (4) reliance, often referred to in cases involving public securities
markets (fraud-on-the-market cases) as ‘transaction causation,’ (5) eco-
nomic loss, and (6) ‘loss causation,’ i.e., a causal connection between the
material misrepresentation and the loss.” Id. at 341-42 (citations omitted).
The defendants’ argument that the statute of limitations is an element of
Section 10(b) fails.
   Nor do we believe that the statute of limitations becomes transformed
as an element of such a claim pursuant to the archaic rule “ ‘that, when
the very statute which creates the cause of action also contains a limitation
period, the statute of limitations not only bars the remedy but also destroys
the liability, and therefore the plaintiff must plead and prove facts showing
that he is within the statute.’ ” Cook v. Avien, Inc., 573 F.2d 685, 695 (1st
Cir. 1978) (quoting 3 Louis Loss, Securities Regulation 1742 (2d ed.
1961)). We followed such general rule in Toombs v. Leone, 777 F.2d 465
(9th Cir. 1985), holding that “the plaintiff must affirmatively plead suffi-
cient facts in his complaint to demonstrate conformity with the statute of
limitations” if he is to make out a violation of Section 12 of the Securities
Act of 1933. Id. at 468.
  This rule has incurred forceful, and we think justified, criticism. In Tre-
genza v. Great American Communications Co., 12 F.3d 717 (7th Cir.
7404                         JOHNSON v. ALJIAN
less of whether an action is commenced within the applicable
statute of limitations or whether a traffic citation was issued.
Indeed, we have employed this common understanding of the
term with respect to an action under Section 10(b), the predi-
cate violation in this case. For example, in Ambassador Hotel
Co., Ltd. v. Wei-Chuan Investment, 189 F.3d 1017 (9th Cir.
1999), we explained:

     [T]o prove violation of either Section 10(b) or Rule
     10b-5, the private plaintiff must demonstrate that the
     alleged fraud occurred “in connection with the pur-
     chase or sale of a security”. Once this foundational
     requirement has been met, the plaintiff must prove
     five elements: 1. misrepresentation (or omission,

1993), the Seventh Circuit stated that “[t]o the extent that the rule has per-
sisted, it has done so by blind inertia” and that “[i]t is time that it was dis-
carded.” Id. at 719. Pursuant to Fed. R. Civ. P. 8(c), the statute of
limitations is an affirmative defense. We recognize, however, that the Pri-
vate Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4, may
require a plaintiff to plead certain facts with particularity, which may
establish that the action is time-barred. But the Supreme Court recently
explained in Jones v. Bock, 127 S. Ct. 910 (2007), that even though “the
complaint is subject to dismissal for failure to state a claim” because the
“allegations . . . show that relief is barred by the applicable statute of limi-
tations, . . . that does not make the statute of limitations any less an affir-
mative defense.” Id. at 920.
   Notwithstanding that such a disapproved pleading rule may survive in
this circuit with respect to Section 12, we are convinced that it is inappli-
cable to Section 10(b) because, at least in this case, that statute creates no
express period of limitations. See Lampf, Pleva, Lipkind, Prupis & Peti-
grow v. Gilbertson, 501 U.S. 350, 364 (1991) (creating a uniform statute
of limitations for an implied cause of action under Section 10(b) because
that statute failed to provide an express period of limitations), superseded
in part by statute, 28 U.S.C. § 1658(b); see also Tregenza, 12 F.3d at 719
(rejecting the argument that a statutorily mandated statute of limitations
“is an element of the claim itself” because such argument is “a conclusion
rather than an explanation, and an especially dubious one where as in this
case the statute of limitations isn’t even found in the statute that creates
the substantive right”). In any event, we remain unpersuaded that the stat-
ute of limitations is an element of Section 10(b).
                          JOHNSON v. ALJIAN                        7405
       where there exists some duty to disclose); 2. materi-
       ality; 3. scienter (intent to defraud or deceive); 4.
       reliance; and 5. causation. The plaintiff must prove
       both actual cause (“transaction causation”) and prox-
       imate cause (“loss causation”).

Id. at 1025 (citations omitted) (emphasis added).14 Accord-
ingly, we are persuaded that the plain meaning of the term
“violates” does not require that the predicate claim be filed
within its own period of limitations.

   [3] That the predicate violation need not itself be actionable
is further supported by the statutory language of other provi-
sions of the Exchange Act. In particular, the statute of limita-
tions applicable to Section 10(b), the predicate violation in
this case, measures the period of limitations in relation to the
“violation.” A Section 10(b) claim “must be commenced
within one year after the discovery of the facts constituting
the violation and within three years after such violation.”
Lampf, 501 U.S. at 364 (emphasis added), superseded in part
by statute, 28 U.S.C. § 1658(b) (“[A] private right of action
that involves a claim of fraud, deceit, manipulation, or con-
trivance in contravention of a regulatory requirement concern-
ing the securities laws . . . may be brought not later than the
earlier of—(1) 2 years after the discovery of the facts consti-
tuting the violation; or (2) 5 years after such violation.”); see
also Exchange Act § 9, 15 U.S.C. § 78i(e) (“No action shall
be maintained to enforce any liability created under this sec-
tion, unless brought within one year after the discovery of the
facts constituting the violation and within three years after
such violation.”). Because the period of limitations is mea-
sured from the point of violation, it challenges common sense
to conclude that a person only “violates” Section 10(b) if an
action is commenced within that period.
  14
    See also, e.g., United States v. Smith, 155 F.3d 1051, 1063 (9th Cir.
1998) (“A violation of Rule 10b-5 comprises four elements: a (1) mislead-
ing (2) statement or omission (3) of a ‘material’ fact (4) made with
scienter.” (emphasis added)).
7406                       JOHNSON v. ALJIAN
   [4] Finally, the defendants’ interpretation effectively treats
Section 20A’s own five-year statute of limitations under the
present statutory scheme “as surplusage—as words of no con-
sequence.” Ratzlaf v. United States, 510 U.S. 135, 140 (1994).
We know of no possible predicate violation, and the defen-
dants cite none, with a limitations period that is longer than
Section 20A’s five-year period. Thus, accepting the defen-
dants’ interpretation would effectively render Section 20A’s
express statute of limitations meaningless because the under-
lying predicate violation’s statute of limitations would always
dictate the period of limitations for a Section 20A action
under the present statutory scheme.15 Only if Section 20A is
independently governed by its own statute of limitations will
that provision retain meaning.

                                    C

  The defendants raise two additional arguments that require
our attention.

                                     1

   [5] Relying on Jackson National Life Insurance Co. v. Mer-
rill Lynch & Co., 32 F.3d 697, the defendants contend that the
Second Circuit interpreted Section 20A contrary to our analy-
sis in this case. The defendants read too much into Jackson
   15
      At the time Congress enacted Section 20A in 1988, Section 10(b) con-
tained no uniform period of limitations. Courts borrowed the period of
limitations for Section 10(b) from the most analogous state cause of action
before the Supreme Court adopted a uniform period of limitations in 1991.
Lampf, 501 U.S. at 355, 364. Under the previous borrowing scheme, the
defendants’ interpretation of Section 20A would not render the express
statute of limitations meaningless because a Section 20A claim could be
time-barred under its own five-year statute of limitations, but the underly-
ing Section 10(b) claim could be actionable under the applicable state stat-
ute of limitations. Nevertheless, as discussed above, nothing in the
statutory language evidences Congress’s intent that Section 20A claims be
time-barred whenever the predicate violation is time-barred.
                        JOHNSON v. ALJIAN                     7407
National. There, the court held that Section 20A of the
Exchange Act entails a predicate violation of the Exchange
Act in the context of rejecting an attempt to base a Section
20A claim on violations of Sections 11 and 12(2) of the
Securities Act of 1933. Id. at 704. But this conclusion neces-
sarily followed from Section 20A’s express requirement of a
violation “of this chapter or the rules or regulations thereun-
der.” Exchange Act § 20A(a) (emphasis added). The reference
to “this chapter” is to the Exchange Act, not the Securities Act
of 1933. Jackson Nat’l, 32 F.3d at 703.

   The Second Circuit also explained that the statute of limita-
tions applicable to Sections 11 and 12(2), “after setting out
the one-year ‘inquiry notice’ period,” imposes a three-year
absolute period of limitations on claims premised under those
sections. Id. at 704 (citing 15 U.S.C. § 77m). The court
explained that “Congress added § 20A . . . to remedy the very
specific problems inherent in prosecuting insider trading
cases” and “the five-year limitations period recognizes the
difficulties of ferreting out evidence sufficient to prosecute
insider trading cases.” Id. at 703 (internal quotation marks
omitted). The court reasoned that “[b]ecause the difficulties of
pleading and proving scienter and the other elements of a
Rule 10b-5 action do not similarly impede claims under §§ 11
and 12(2) of the ’33 Act, it would skew the legislative balance
of interests to apply § 20A’s five year limitations period to the
lower threshold of liability applicable to the initial distribution
of securities under the ’33 Act.” Id. at 704. Accordingly, the
court concluded that allowing a Section 20A claim based on
a violation of Sections 11 or 12(2) of the Securities Act of
1933 “would put us in conflict with Congress’s evident intent
not to permit underwriter and issuer liability to extend beyond
the three-year horizon.” Id. The defendants claim that this is
significant because Section 10(b), the predicate violation in
this case, contains a similar three-year period of limitations.
We are unpersuaded. First, as the district court recognized,
“[u]nlike the claims presented in Jackson, the claims asserted
in this action implicate the problems inherent in advancing
7408                   JOHNSON v. ALJIAN
insider trading claims.” Johnson, 394 F. Supp. 2d at 1195.
Moreover, our interpretation presents no threat to Congress’s
evident intent or the legislative balance of interests because
Section 10(b) is a cause of action created by the courts and,
at least in this case, operates under a court-imposed period of
limitations.

  [6] Accordingly, our interpretation of Section 20A is not
contrary to the Second Circuit’s well-reasoned decision in
Jackson National.

                               2

   The defendants’ reliance on In re VeriFone Securities Liti-
gation, 11 F.3d 865, is also misplaced. The defendants argue
that in VeriFone we “acknowledged that if plaintiffs ‘have
failed to allege an actionable independent underlying viola-
tion of the [Exchange Act], they similarly cannot maintain a
claim under § 20A.’ ” But we only acknowledged that the
plaintiffs in that case conceded this point. Id. at 872
(“Shareholders concede that if they have failed to allege an
actionable independent underlying violation of the [Exchange
Act], they similarly cannot maintain a claim under § 20A.
Accordingly, in light of our conclusion that no violation of the
[Exchange Act] has been stated, the § 20A claim was properly
dismissed.” (emphasis added)). Moreover, in VeriFone the
predicate violation collapsed because the plaintiffs failed to
establish a material omission, an essential element of a Sec-
tion 10(b) violation. Id. at 871. Our interpretation does not
disturb the established requirement that the plaintiff plead and
prove the essential elements of the predicate violation to
maintain an action under Section 20A.

                              III

   [7] In sum, we conclude that to maintain a claim under Sec-
tion 20A, a plaintiff need not plead an actionable predicate
                      JOHNSON v. ALJIAN                   7409
violation. Accordingly, the district court did not err in deny-
ing the defendants’ motion to dismiss the Section 20A claim.

  AFFIRMED.
