                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


STEVE HARRIS; DENNIS F. RAMOS,           No. 10-56014
AKA Dennis Ramos; DONALD
HANKS; JORGE TORRES; ALBERT                 D.C. No.
CAPPA , On Behalf of Themselves          2:07-cv-05442-
and All Others Similarly Situated,          PSG-PLA
              Plaintiffs - Appellants,

                  v.                       OPINION

AMGEN , INC.; AMGEN
MANUFACTURING , LIMITED ; FRANK
J. BIONDI, JR.; JERRY D. CHOATE ;
FRANK C. HERRINGER ; GILBERT S.
OMENN ; DAVID BALTIMORE ; JUDITH
C. PELHAM ; KEVIN W. SHARER;
FREDERICK W. GLUCK; LEONARD D.
SCHAEFFER; CHARLES BELL;
JACQUELINE ALLRED ; AMGEN PLAN
FIDUCIARY COMMITTEE; RAUL
CERMENO ; JACKIE CROUSE;
FIDUCIARY COMMITTEE OF THE
AMGEN MANUFACTURING LIMITED
PLAN ; LORI JOHNSTON ; MICHAEL
KELLY ,
              Defendants - Appellees,

DENNIS M. FENTON ; RICHARD
NANULA ; THE FIDUCIARY
COMMITTEE; AMGEN GLOBAL
2                       HARRIS V . AMGEN

 BENEFITS COMMITTEE; AMGEN
 FIDUCIARY COMMITTEE,
                      Defendants.


         Appeal from the United States District Court
             for the Central District of California
         Philip S. Gutierrez, District Judge, Presiding

                   Argued and Submitted
          February 17, 2012—Pasadena, California

                        Filed June 4, 2013

    Before: Jerome Farris and William A. Fletcher, Circuit
    Judges, and Edward R. Korman, Senior District Judge.*

                 Opinion by Judge W. Fletcher




 *
   The Honorable Edward R. Korman, Senior United States District Judge
for the Eastern District of New York, sitting by designation.
                         HARRIS V . AMGEN                              3

                           SUMMARY**


                               ERISA

    Reversing the dismissal of an ERISA class action brought
by current and former employees of Amgen, Inc., and an
Amgen subsidiary, the panel held that a presumption of
prudence did not apply and that, in the absence of the
presumption, the plaintiffs sufficiently alleged violation of
defendants’ fiduciary duties regarding two employer-
sponsored pension plans.

    Agreeing with the Second Circuit, the panel concluded
that the plan terms did not require or encourage the defendant
fiduciaries to invest primarily in employer stock.
Accordingly, the presumption of prudence articulated in
Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir.
2010), did not apply to a claim that defendants acted
imprudently and violated their duty of care by continuing to
provide Amgen common stock as an investment alternative
when they knew or should have known that the stock was
being sold at an artificially inflated price due to material
omissions and misrepresentations, as well as illegal off-label
sales. The panel held that, in the absence of the presumption,
the first amended class action consolidated complaint stated
a claim for violation of the duty of care.

     The panel also held that the plaintiffs sufficiently alleged
that defendants violated their duties of loyalty and care by
failing to provide material information to plan participants

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4                     HARRIS V . AMGEN

about investment in the Amgen Common Stock Fund. The
panel stated that defendants’ duties of loyalty and care to plan
participants under ERISA, with respect to company stock,
were not less than the duties they owed the general public
under securities laws. The panel held that the plaintiffs, like
other investors in publicly traded stock, could rely on a
rebuttable presumption of reliance based on the “fraud-on-
the-market” theory.

    Finally, the panel held that Amgen was an adequately
alleged fiduciary of the Amgen Plan.


                         COUNSEL

Stephen J. Fearon, Jr. and Garry T. Stevens, Jr., Squitieri &
Fearon, LLP, New York, New York; Stephen M. Fishback
and Daniel L. Keller, Keller, Fishback & Jackson, LLP,
Tarzana, California; Francis M. Gregorek, Betsy C. Manifold,
and Rachele R. Rickert, Wolf Haldenstein Adler Freeman &
Herz, LLP, San Diego, California, Mark C. Rifkin (argued),
Wolf Haldenstein Adler Freeman & Herz, LLP, New York,
New York; and Thomas James McKenna, Gainey &
McKenna, New York, New York, for Appellants.

Emily Seymour Costin, Sheppard Mullin Richter & Hampton,
LLP, Washington, D.C.; Steven Oliver Kramer and Jonathan
David Moss, Sheppard Mullin Richter & Hampton, LLP, Los
Angeles, California; Jonathan Rose, Alston & Bird, LLP,
Washington, D.C.; John Nadolenco, Mayer Brown, LLP, Los
Angeles, California; Brian David Netter, Mayer Brown, LLP,
Washington, D.C.; and Robert P. Davis (argued), Mayer
Brown, LLP, New York, New York, for Appellees.
                     HARRIS V . AMGEN                       5

                         OPINION

W. FLETCHER, Circuit Judge:

    Plaintiffs, current and former employees of Amgen, Inc.
(“Amgen”) and its subsidiary Amgen Manufacturing, Limited
(“AML”), participated in two employer-sponsored pension
plans, the Amgen Retirement and Savings Plan (the “Amgen
Plan”) and the Retirement and Savings Plan for Amgen
Manufacturing, Limited (the “AML Plan”) (collectively, “the
Plans”). The Plans were employee stock-ownership plans
that qualified as “eligible individual account plans”
(“EIAPs”) under 29 U.S.C. § 1107(d)(3)(A). All of the
plaintiffs’ EIAPs included holdings in the Amgen Common
Stock Fund, one of the investments available to plan
participants. The Amgen Common Stock Fund held only
Amgen common stock.

    After the value of Amgen common stock fell, plaintiffs
filed an ERISA class action against Amgen, AML, Amgen’s
board of directors, and the Fiduciary Committees of the Plans
(collectively, “defendants”), alleging that defendants
breached their fiduciary duties under ERISA. The district
court dismissed Amgen as a defendant from the suit on the
ground that it was not a fiduciary. It dismissed the complaint
against the other defendants, who were fiduciaries, after
applying the “presumption of prudence” articulated in Quan
v. Computer Sciences Corp., 623 F.3d 870 (9th Cir. 2010).
Alternatively, even assuming the absence of the presumption,
it dismissed on the ground that defendants did not violate
their fiduciary duties.

   We reverse. We conclude that the presumption of
prudence does not apply, and that, in the absence of the
6                    HARRIS V . AMGEN

presumption, plaintiffs have sufficiently alleged violation of
the defendants’ fiduciary duties. We further conclude that
Amgen is an adequately alleged fiduciary of the Amgen Plan.

                       I. Background

    The following narrative is taken from the complaint and
documents that provide uncontested facts. On a motion to
dismiss, we assume the allegations of the complaint to be
true. See Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
551 U.S. 308, 322 (2007).

   Amgen is a global biotechnology company that develops
and markets pharmaceutical drugs. AML, a wholly owned
subsidiary of Amgen, operates a manufacturing facility in
Puerto Rico. To provide retirement benefits to their
employees, Amgen set up the Amgen Plan on April 1, 1985.
AML set up the AML Plan in 2002 and it became effective on
January 1, 2006.

    The Plans are covered by the Employee Retirement
Income Security Act (“ERISA”). Both qualify as “individual
account plans.” See 29 U.S.C. § 1002(34). Plan participants
contribute a portion of their pre-tax compensation to
individual investment accounts. They receive benefits based
solely upon their contributions, adjusted for any gains and
losses in assets held by the Plans. Participants may contribute
up to thirty percent of their pre-tax compensation. They may
select from a number of investment funds offered by the
Plans. One of those is the Amgen Common Stock Fund,
which holds only Amgen stock. Amgen stock constituted the
largest single asset of both Plans in 2004 and 2005.
                     HARRIS V . AMGEN                       7

    This litigation arises out of a controversy concerning
Amgen drugs used for the treatment of anemia. Anemia is a
condition in which blood is deficient in red blood cells or
hemoglobin. Causes of anemia include an iron-deficient diet,
excessive bleeding, certain cancers and cancer treatments,
and kidney or liver failure. In the early 1980s, Amgen
scientists discovered how to make artificial erythropoietin, a
protein formed in the kidneys that stimulates erythropoiesis,
the formation of red blood cells. After this discovery, Amgen
commercialized the manufacture of a class of drugs known as
erythropoiesis-stimulating agents (“ESAs”) to treat anemia.

    In 1989, the Federal Drug Administration (“FDA”)
approved Amgen’s first commercial ESA, epoetin alfa, for
the treatment of anemia associated with chronic kidney
failure. Amgen marketed epoetin alfa for approved uses
under the brand name EPOGEN (“Epogen”), and licensed
patents to Johnson & Johnson (“J&J”) to develop additional
marketable uses. J&J obtained FDA approval between 1991
and 1996 to market epoetin alfa under the brand name
PROCRIT (“Procrit”) for anemia associated with
chemotherapy and HIV therapies, for chronic kidney
diseases, and for pre-surgery support of anemic patients. J&J
had exclusive marketing rights for Procrit under its licensing
agreement with Amgen.

    Sometime before 2001, Amgen developed a new ESA,
darbepoetin alfa, whose sales by Amgen were not restricted
by J&J’s exclusive marketing rights for Procrit. Darbepoetin
alfa, marketed as Aranesp, lasts longer in the bloodstream
than epoetin alfa. The FDA approved Aranesp for treatment
of anemia associated with chronic kidney failure and cancer
chemotherapy. Aranesp has taken significant market share
from J&J’s Procrit. At the time the complaint was filed,
8                    HARRIS V . AMGEN

Aranesp “control[led] half the market” for non-dialysis ESA.
Sales of EPOGEN and Aranesp have been “core to
[Amgen’s] survival and success,” making up roughly half of
Amgen’s $14.3 billion in revenue in 2006.

    In the late 1990s and early 2000s, several clinical trials
raised safety concerns regarding the use of ESAs for
particular anemic populations. In 1998, the Normal
Hematocrit Study tested the efficacy of ESAs on anemia
patients with pre-existing heart disease. The study was
terminated because the test group experienced statistically
significant higher rates of blood clotting. In 2003 and early
2004, two trials — ENHANCE and BEST — tested ESAs on
cancer patients in Europe. The ENHANCE trial showed
shorter progression-free survival and shorter overall survival
of head and neck cancer patients for the ESA group than the
placebo group. The BEST trial was terminated after four
months because breast cancer patients in the group taking
epoetin alfa had a higher rate of death than those in the
placebo group.

    ENHANCE and BEST did not test the safety of ESAs for
the specific uses and doses for which they had been approved
in the United States. In March 2004, the FDA published
notice in the Federal Register that the Oncology Drug
Advisory Committee (“ODAC”), an FDA-sponsored group of
oncology experts, would convene in May 2004 to discuss
safety concerns about Aranesp. In April, before the ODAC
meeting, an Amgen spokesperson stated during a conference
call with investors, analysts, and plan participants that “the
focus [of the ODAC meeting] was not on Aranesp” and that
“the safety for Aranesp has been comparable to placebo.”
                     HARRIS V . AMGEN                       9

    During its two-day meeting with ODAC, the FDA urged
Amgen to conduct further clinical trials to test the safety of
ESAs for uses that had already been approved by the FDA.
Amgen made a presentation at the meeting outlining what it
called the “Amgen Pharmacovigilance Program,” consisting
of five ongoing or planned clinical trials testing Aranesp “in
different tumor treatment settings.” Amgen’s Vice President
for Oncology Clinical Development described the Amgen
program as the “responsible and credible approach to
definitively resolv[e] the questions raise[d]” by the FDA.

    One of the trials under Amgen’s program was the Danish
Head and Neck Cancer Group (DAHANCA) 10 Trial. The
DAHANCA 10 Trial tested whether high doses of Aranesp
could help shrink tumors in patients receiving radiation
therapy for head and neck cancer. On October 18, 2006,
DAHANCA investigators temporarily halted the study “due
to information about potential unexpected negative effects.”
Amgen was informed of the temporary halt of the study on or
near that day. Amgen did not disclose that the DAHANCA
10 Trial had been temporarily halted.

    An analysis of the halted DAHANCA 10 Trial was
completed on November 28, 2006. The principal investigator
reported that “[b]ased on these outcome results the
DAHANCA group concluded that the likelihood of a reverse
outcome, i.e. that Aranesp would be significantly better than
in control[,] was almost non-existing.” The DAHANCA 10
Trial was permanently terminated on December 1, 2006.
DAHANCA investigators concluded that “there is a small but
significant poor outcome in the patients treated with Aranesp”
in that tumor growth was worse for patients who took
Aranesp compared to patients who did not. Amgen was
10                   HARRIS V . AMGEN

informed in December 2006 that the study had been
permanently terminated.

    Another clinical trial, CHOIR, raised additional safety
concerns about ESAs. The CHOIR trial investigated the
safety of epoetin alfa (EPOGEN) when used to treat chronic
kidney disease patients. The safety monitoring board for
CHOIR terminated the trial when a higher incidence of death
and cardiovascular hospitalization was observed among
epoetin alfa users. Yet another clinical trial, CREATE, tested
the benefit provided by Roche Pharmaceuticals’s ESA in
raising hemoglobin levels in patients with chronic kidney
disease. On November 16, 2006, Roche announced that the
results of the CREATE trial “clearly show that there is no
additional cardiovascular benefit from treating to higher
hemoglobin levels in this patient group.”

    On November 20, Amgen posted a public statement
responding to the CHOIR and CREATE trials. Amgen wrote,
“A very substantial body of evidence, developed over the past
17 years, demonstrates that anemia associated with chronic
kidney disease can be treated safely and effectively with
EPOGEN and Aranesp when administered according to the
Food and Drug Administration (FDA)-approved dosing
guidelines.” Two weeks later, Amgen issued a press release
to correct “what the company believes are misleading and
inaccurate news reports regarding the use of its drugs.”
Amgen reiterated, “EPOGEN and Aranesp are effective and
safe medicines when administered according to the Food and
Drug Administration (FDA) label.”

   Amgen also conducted its own clinical trial, the “103
Study.” 103 Study tested Aranesp in 939 patients with
anemia secondary to cancer. The FDA later described the
                     HARRIS V . AMGEN                       11

103 Study as “demonstrat[ing] significantly shorter survival
rate[s] in cancer patients receiving ESAs as compared to
th[o]se receiving transfusion support.” However, during a
January 2007 conference call, an Amgen representative
described the 103 Study as not demonstrating a “statistically
significant adverse [e]ffect of Aranesp on overall mortality in
this patient population.” He said that “the risk benefit ratio
for Aranesp in these extremely ill patients with anemia
secondary to malignancy is, at best, neutral and perhaps
negative.” During what may have been the same conference
call, discussing Amgen’s fourth-quarter earnings on January
25, an Amgen representative stated, in response to concerns
expressed about the 103 Study, that “we have a well
established risk benefit profile.”

    During a February 16, 2007, investor conference call,
defendant Kevin Sharer, Amgen’s President, Chief Executive
Officer, and Chairman of the Board, stated, “We strongly
believe, as we have consistently stated, that Aranesp and
EPOGEN are safe and effective medicines when used in
accordance with label indications.” During a March
conference call, defendant Sharer reiterated, “When we look
at the totality of data, we believe our products are safe and
effective when used on-label.” On March 9, 2007, Amgen
posted a statement on the company website available to plan
participants under the title “Amgen’s Statement on the Safety
of Aranesp (darbepoetin alfa) and EPOGEN (Epoetin alfa)”:

       Aranesp (darbepoetin alfa) and EPOGEN
       (Epoetin alfa) have favorable risk/benefit
       profiles in approximately four million patients
       with chemotherapy-induced anemia or CKD
       when administered according to the FDA-
       approved dosing guidelines.
12                   HARRIS V . AMGEN

    Amgen engaged in extensive marketing, encouraging both
on- and off-label uses of its ESAs. Amgen trained its sales
representatives to ask questions that steered doctors to
discussions about off-label uses. In an Amgen sales
personnel manual, Amgen gave an “expanded list” of
“excellent questions” to ask doctors in order to move the
discussions toward off-label uses. Examples include, “What
is keeping you from using Aranesp in all your MDS/HIV/CIA
patients?” MDS is myelodysplastic syndrome, an illness
often resulting in anemia. The FDA has never approved
Aranesp to treat MDS or HIV patients.

    Amgen created a speakers program in which Amgen paid
for dinners at which “expert” speakers talked to physicians
and other providers about off-label uses for Aranesp.
Speakers program events were not accredited as continuing
medical education seminars conducted by an independent
medical association. Amgen paid not only the speakers but
also the doctors and other medical providers who attended the
events. The $1,000 payments to physician attendees were
“paid from [Amgen’s] marketing budget.”

     Amgen educated medical providers about the profit they
could obtain by prescribing its ESAs. Before January 1,
2005, Medicare calculated drug reimbursement rates based on
the average wholesale price (“AWP”) of drugs. Medical
providers could purchase Amgen’s ESAs at a price lower
than the AWP, but could charge Medicare the AWP. Amgen
created spreadsheets and other tools to help providers
calculate the profit. Amgen also encouraged doctors to use
its ESAs inefficiently. For example, it encouraged doctors to
deliver Epogen intravenously rather than subcutaneously,
because an intravenous delivery of the drug requires a
substantially larger dose to achieve the same effect.
                     HARRIS V . AMGEN                     13

     Amgen marketing efforts were successful. For example,
Amgen’s worldwide sales of Aranesp increased fourteen
percent during the first quarter of 2007 compared to the same
quarter in 2006. Amgen told investors on several occasions
that its marketing practices were proper. In public SEC
filings, Amgen stated that it marketed its products only for
on-label uses. In December 2006, in response to negative
publicity about off-label uses, Amgen issued a press release
“intended to clarify Amgen’s position on the use of EPOGEN
and Aranesp and to correct what the company believes are
misleading and inaccurate news reports regarding the use of
its drugs.” The company clarified that “Amgen only
promotes the use of EPOGEN and Aranesp consistent with
the FDA label.” On a January 2007 conference call, Amgen
stated that “our promotion [of EPOGEN] has always been
strictly according to our label, we do not anticipate a major
shift in clinical practice.”

    In February 2007, The Cancer Letter published an article
entitled “Amgen Didn’t Tell Wall Street About Results of
[DAHANCA] Study.”           The article reported that the
DAHANCA trial had been temporarily halted due to the
“significantly inferior therapeutic outcome from adding
Aranesp to radiation treatment of patients with head and neck
cancer.” On February 23, the Associated Press announced
that the USP DI, an influential drug reference guide, had
delisted Aransep as a treatment for anemia in cancer patients
not undergoing chemotherapy. On February 27, the New
York Times published an article stating:

       New studies are raising questions about
       whether drugs that have been used by millions
       of cancer patients might actually be harming
       them. The drugs, sold by Amgen, Roche, and
14                   HARRIS V . AMGEN

       Johnson & Johnson, are used to treat anemia
       caused by chemotherapy and meant to reduce
       the need for blood transfusions and give
       patients more energy. But the new results
       suggest that the drugs may make the cancer
       itself worse. . . . [S]ome cancer specialists and
       securities analysts say the new information
       may make doctors more cautious in using the
       drugs, which have combined sales for the
       three companies exceeding $11 billion and
       have been heavily promoted through efforts
       that include television commercials.

    On March 9, the FDA mandated a “black box” warning
for off-label use of Aranesp and Epogen. A black box
warning is the strongest warning the FDA can require. Cf.
21 C.F.R. § 201.57(c)(1) (2012). The black box warning
read:

       Recently completed studies describe an
       increased risk of death, blood clots, strokes,
       and heart attacks in patients with kidney
       failure where ESAs were given at higher than
       recommended doses. In other studies, more
       rapid tumor growth occurred in patients with
       head and neck cancer who received these
       higher doses. In studies where ESAs were
       given at recommended doses, an increased
       risk of death was reported in patients with
       cancer who were not receiving chemotherapy
       and an increased risk of blood clots was
       observed in patients following orthopedic
       surgery.
                      HARRIS V . AMGEN                       15

    On March 21, 2007, two House of Representatives
subcommittees opened an investigation into the safety profile
of Aranesp and Epogen as well as into Amgen’s off-label
marketing practices. The Chairs of those two subcommittees
“ordered” Amgen to halt direct-to-consumer advertising and
physician incentives pending further FDA action. On May 8,
the FDA noted on its website that Aranesp and Epogen “were
clearly demonstrated to be unacceptable” in high doses. On
May 10, ODAC reconvened and voted to restrict the use of
ESAs, to expand existing warnings, and to require ESA
manufacturers to conduct further studies.

    Defendant Sharer, Amgen’s President and CEO, told a
Wall Street Journal reporter in an interview that 2007 was the
“most difficult [year] in [Amgen’s] history.” According to
Sharer, there was an “unexpected $800 million to $1 billion
hit to operating income due to safety concerns” about
Aranesp. Sales of Aranesp decreased by fifty percent.

    Amgen stock, and thus the Amgen Common Stock Fund,
lost significant value as a result of these safety concerns. The
class period runs from May 4, 2005, to March 9, 2007.
Amgen common stock was at its high of $86.17 on
September 19, 2005. On February 16, 2007, when The
Cancer Letter published its article revealing that Amgen had
not been forthcoming about the result of the DAHANCA 10
Trial, Amgen stock sold for $66.73. When ODAC voted to
restrict the use of ESA drugs, on or shortly after May 10, the
price of Amgen stock dropped to $57.33, the class period
low. Between September 19, 2005 and the ODAC vote, the
price of Amgen stock dropped $28.83, or thirty-three percent.

    On August 20, 2007, plaintiffs Steve Harris, a participant
in the Amgen Plan, and Dennis Ramos, a participant in the
16                    HARRIS V . AMGEN

AML Plan, filed a complaint alleging that defendants
breached their fiduciary duties under ERISA. The district
court dismissed Harris’s claims for lack of standing, on the
ground that Harris no longer owned assets in the Amgen Plan
on the date he filed his complaint. Harris v. Amgen, Inc.,
573 F.3d 728, 731 (9th Cir. 2009). The court dismissed
Ramos’s claims without leave to amend on the ground that he
had failed to identify the proper fiduciaries of the AML Plan.
Id. We reversed, holding that Harris had standing as a
“participant” of the Amgen Plan during the Class Period, and
that Ramos should have been allowed to amend the
complaint. Id.

   The complaint now at issue is the First Amended Class
Action Consolidated Complaint (“FAC”), filed on March 23,
2010, by five plaintiffs, including Harris and Ramos. The
FAC alleges six counts of violation of fiduciary duty under
ERISA against Amgen, AML, nine Directors of the Amgen
Board (“the Directors”), and the Plans’ Fiduciary Committees
and their members. The district court dismissed the FAC
against Amgen on the ground that it was not a fiduciary. It
dismissed the FAC against the remaining defendants under
Rule 12(b)(6) for failure to state a claim.

    In a separate class action simultaneously pending before
the same district judge, investors in Amgen common stock
claimed violations of federal securities laws based on the
same alleged facts as in the ERISA action now before us. In
a careful thirty-five page order, the district court concluded
that the investors had sufficiently alleged material
misrepresentations and omissions, scienter, reliance, and
resulting economic loss to state claims under Sections 10(b)
and 20(a) of the 1934 Exchange Act. See 15 U.S.C.
§§ 78j(b), 78t(a). The district court certified a class based on
                     HARRIS V . AMGEN                       17

the facts alleged in the complaint. We affirmed the district
court’s class certification in Conn. Ret. Plans & Trust Funds
v. Amgen, Inc., 660 F.3d 1170 (9th Cir. 2011). The Supreme
Court affirmed in Amgen, Inc. v. Conn. Ret. Plans & Trust
Funds, __ U.S.__, 133 S. Ct. 1184 (2013).

   For the reasons that follow, we reverse the district court’s
decision in the ERISA case before us.

                  II. Standard of Review

    “We review de novo the district court’s grant of a motion
to dismiss under Rule 12(b)(6), accepting all factual
allegations in the complaint as true and construing them in
the light most favorable to the nonmoving party.” Skilstaf,
Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir.
2012). “[C]ourts must consider the complaint in its entirety,
as well as other sources courts ordinarily examine when
ruling on Rule 12(b)(6) motions to dismiss, in particular,
documents incorporated into the complaint by reference, and
matters of which a court may take judicial notice.” Tellabs,
Inc., 551 U.S. at 322. We then determine whether the
allegations in the complaint and information from other
permissible sources “plausibly suggest an entitlement to
relief.” Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009); Starr v.
Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) (quoting Iqbal).

                       III. Discussion

     Congress enacted ERISA to provide “minimum standards
. . . assuring the equitable character of [employee benefit]
plans and their financial soundness.” 29 U.S.C. § 1001(a).
These minimum standards regulate the “conduct,
responsibility, and obligation for fiduciaries of employee
18                    HARRIS V . AMGEN

benefit plans . . . .” Id. § 1001(b). “Congress painted with a
broad brush, expecting the federal courts to develop a ‘federal
common law of rights and obligations’ interpreting ERISA’s
fiduciary standards.” Bins v. Exxon Co. U.S.A., 220 F.3d
1042, 1047 (9th Cir. 2000) (en banc) (citation omitted).

     The Supreme Court has established certain interpretive
rules specific to ERISA’s fiduciary duties. These duties,
including those governing fiduciary status, “draw much of
their content from the common law of trusts, the law that
governed most benefit plans before ERISA’s enactment.”
Varity Corp. v. Howe, 516 U.S. 489, 496 (1996). ERISA
reflects a “congressional determination that the common law
of trusts did not offer completely satisfactory protection.” Id.
at 497. The law of trusts “often . . . inform[s]” but does “not
necessarily determine the outcome of” an interpretation of
ERISA’s fiduciary duties. Id. The common law of trusts
offers “only a starting point” that must yield to the “language
of the statute, its structure, or its purposes,” if necessary. Id.

    We first address the sufficiency of the FAC against each
properly named fiduciary. We then address whether the
plaintiffs have adequately alleged that Amgen is a fiduciary.

                 A. Sufficiency of the FAC

   The district court dismissed all six counts of the FAC
under Rule 12(b)(6). Plaintiffs have appealed only the
dismissal of Counts II through VI.

                          1. Count II

   Plaintiffs allege in Count II that defendants acted
imprudently, and thereby violated their duty of care under
                      HARRIS V . AMGEN                       19

29 U.S.C. § 1104(a)(1)(B), by continuing to provide Amgen
common stock as an investment alternative when they knew
or should have known that the stock was being sold at an
artificially inflated price. Defendants contend that they are
entitled to a “presumption of prudence” under Quan v.
Computer Sci. Corp., 623 F.3d 870 (9th Cir. 2010). They
contend that if this presumption is applied, their action in
continuing to provide Amgen stock as an investment
alternative was prudent. Defendants contend, further, that
their action was prudent even if the presumption of prudence
does not apply.

               a. Presumption of Prudence

     In Quan, we agreed with several of our sister circuits that
the “presumption of prudence” applies to certain investment
decisions by ERISA fiduciaries. See 623 F.3d at 880–81
(citing Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995)); see
also In re Citigroup ERISA Litig., 662 F.3d 128, 138 (2d Cir.
2011); Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243, 254
(5th Cir. 2008); Kuper v. Iovenko, 66 F.3d 1447, 1457 (6th
Cir. 1995). The question presented in Quan was whether the
prudent investor standard that is normally applicable to
ERISA fiduciaries should apply to fiduciaries of plans that
invest in stock of an employee’s company.

    The basic problem may be seen in the text of ERISA
itself. In relevant part, it provides:

       (a) Prudent man standard of care

       (1) fiduciary shall discharge his duties with
       respect to a plan solely in the interest of the
       participants and beneficiaries and —
20                     HARRIS V . AMGEN

       ...

             (B) with the care, skill, prudence, and
             diligence under the circumstances then
             prevailing that a prudent man acting in a
             like capacity and familiar with such
             matters would use in the conduct of an
             enterprise of a like character and with like
             aims;

             (C) by diversifying the investments of the
             plan so as to minimize the risk of large
             losses, unless under the circumstances it is
             clearly prudent not to do so . . .

             ...

       (2) In the case of an eligible individual
       account plan . . . , the diversification
       requirement of paragraph (1)(C) and the
       prudence requirement (only to the extent that
       it requires diversification) of paragraph (1)(B)
       is not violated by acquisition or holding of
       qualifying employer real property or
       qualifying employer securities . . . .

29 U.S.C. § 1104. On the one hand, Congress desired to
protect plan investments of employees. It therefore specified
that the prudent man standard of care requires a fiduciary to
diversify investments held by a plan. See id. § 1104(a)(1)(B)
and (C). On the other hand, Congress desired to permit
employers to provide loyalty incentives to their employees.
It therefore specified that the prudent man diversification
requirement is not violated when an employer’s stock is
                      HARRIS V . AMGEN                       21

acquired or held in an employee’s individual account plan.
See id.§ 1104(2). However, Congress did not specify that
anything other than a failure to diversify is exempt from the
prudent man standard of care.

    For reasons we explained in detail in Quan, we adopted
the presumption of prudence, first articulated by the Third
Circuit in Moench, to reconcile the tension between
Congress’ two desires. We held that a fiduciary is entitled to
a presumption that he has been a prudent investor “when plan
terms require or encourage the fiduciary to invest primarily
in employer stock.” Quan, 623 F.3d at 881 (emphasis added).
We applied the Moench presumption of prudence to ERISA
stock ownership plans, whether they are “eligible individual
account plans” (“EIAPs”) or “employee stock ownership
plans” (“ESOPs”). Id.; see also 29 U.S.C. § 1107(d)(3)(A),
(d)(6). We held that the terms of the plan at issue in Quan
satisfied the “required or encouraged” criterion of Moench
because the plaintiffs had not shown “that the Committee had
discretion to halt purchases of [the employer’s] common
stock or to invest Plan assets that were required to be invested
in the [employer’s] stock fund in other assets instead.”
623 F.3d at 884.

    The Amgen and AML Plans are EIAPs. The parties agree
that the question before us is whether the Plans “required or
encouraged” the fiduciaries to invest in Amgen stock. To
answer that question, we look to the written terms of the
Plans. Because the terms of the Plans differ in only
immaterial respects, we quote only from the Amgen Plan.

   Article 6.1 of the Amgen Plan provides:
22                   HARRIS V . AMGEN

       All contributions to the Plan made pursuant to
       Articles 4 and 5 shall be paid to the Trust fund
       established under the Plan.           All such
       contributions shall be invested as provided
       under the terms of the Trust Agreement,
       which may include provision for the
       separation of assets into separate Investment
       Funds, including a Company Stock Fund.

(emphasis added). The Summary Plan Description specifies
twenty-five separate “Investment Funds” in which
participants can invest their money. The twenty-fourth fund
on the list is a “Company Stock Fund,” referred to in the Plan
Description as the “Amgen Common Stock Fund.” The
Amgen Common Stock Fund holds only Amgen common
stock. Article 6.2 of the Plan provides that plan participants
may invest no more than fifty percent of their funds in the
Company Stock Fund. If a plan participant fails to designate
a fund, the default is an investment in “the Fidelity Freedom
Fund that is appropriate based on the Participant’s date of
birth.”

    There is no language in the Plans requiring that a
Company Stock Fund be established as an available
investment for plan participants. Cf. Restatement (Second) of
Trusts, § 227 cmt. t (“If [a trustee] is merely authorized to
make certain investments, he has a privilege but not a duty to
make such investments.”). Nor is there language in the Plans
requiring that a Company Stock Fund, once established, be
continued as an available investment. Defendants therefore
do not contend that the Plans require them to provide a
Company Stock Fund as an investment alternative. They
contend only that the Plans encourage them to do so. If
defendants are right that the terms of the Plans encourage
                      HARRIS V . AMGEN                       23

them to invest in a Company Stock Fund, they are entitled
under Quan to a presumption of prudence.

    Defendants make four arguments. None is persuasive.
First, defendants point out that the Plans specifically refer to
a Company Stock Fund as a permissible investment, but
specifically refer to no other company’s stock. Defendants
are correct in their description of the Plans. But an explicit
statement that plan fiduciaries may offer a Company Stock
Fund as an investment to participants does not tell us that
they were encouraged to do so within the meaning of the
presumption of prudence. Under the common law of trusts,
“[a]n authorization by the terms of the trust to invest in a
particular type of security does not mean that any investment
in securities of that type is proper. The trustee must use care
and skill and caution in making the selection.” Restatement
(Second) of Trusts, § 227 cmt. v. We agree with the Second
Circuit, which recently concluded that almost identical plan
language does not give rise to the presumption of prudence.
In Taveras v. UBS AG, 708 F.3d 436 (2d Cir. 2013), the court
wrote:

       [I]t is likely that many EIAPs will, when
       possible, provide their fiduciaries a
       discretionary means by which to offer plan
       participants the ability to invest in the
       employer’s stock. If the presumption of
       prudence was triggered in every instance
       where the EIAP plan document, as here,
       simply (1) named and defined the employer’s
       stock in the plan document’s terms, and (2)
       allowed for the employer’s stock to be offered
       by the plan’s fiduciaries on a discretionary
       basis to plan participants, then we are hard
24                   HARRIS V . AMGEN

       pressed to imagine that there exists any EIAP
       that merely offered the option to participants
       to invest in their employer’s stock whose
       fiduciaries would not be entitled to the
       presumption of prudence.

Id. at 445 (emphasis in original).

    Second, defendants point out that the Plans contain
provisions regulating the purchase, transfer, and distribution
of Amgen stock, as well as providing voting rights to plan
participants holding such stock. Here, too, defendants are
correct in their description of the Plans, but incorrect in the
conclusion they draw. Some of the provisions to which
defendants point discourage rather than encourage investment
in Amgen stock. For example, a participant’s holding in the
Amgen Common Stock Fund may not exceed fifty percent of
a participant’s total holdings. Holdings in other funds are not
subject to any maximum percentage. Plans also restrict the
frequency and timing of the sale of Amgen stock in order to
comply with Section 16(b) of the Securities Exchange Act of
1934. The remaining provisions on which Amgen relies are
simply irrelevant to the issue before us.

    Third, defendants state in their brief that the record
“clearly indicates that it was the company’s ‘longstanding
practice and intent that the inclusion of Amgen Inc. common
stock is part of the Plan design.’” The language quoted by
defendants comes from a summary description of an
amendment to the AML Plan that took effect in 2008, after
this lawsuit was filed. Defendants do not quote in their brief
the actual language of the amendment which they contend
“clearly indicates” the “longstanding practice and intent” of
the Plans. The language of the 2008 amendment is:
                     HARRIS V . AMGEN                      25

       The Company Stock Fund will be an
       Investment Fund under the Plan. The
       Fiduciary Committee shall designate other
       Investment Funds from time to time for
       investment of Participant’s Accounts,
       provided that the Fiduciary Committee may
       not eliminate the Company’s Stock Fund as
       an Investment Fund.

(emphasis added). As we noted above, the earlier language
(in effect during the class period) provides only that a
Company Stock Fund “may” be included as an available
investment. The language in the 2008 amendment provides
that a Company Stock Fund “will be” an available
investment, and further specifies that this Fund “may not [be]
eliminate[d].”    This new language hardly reflects a
“longstanding practice and intent.”

    Fourth, defendants contend that the Plans would have to
have been amended in order to make Amgen stock
unavailable to plan participants. We see nothing in the Plans
to support defendants’ contention.

    We conclude that defendants were neither required nor
encouraged by the terms of the Plans to invest in Amgen
stock, and that they are not entitled to a presumption of
prudence. The normal prudent man standard therefore
applies to defendants’ investment decisions as fiduciaries
under the Plans.

           b. Prudent Man Standard of Care

    ERISA requires that a fiduciary perform duties under a
plan “with the care, skill, prudence, and diligence under the
26                   HARRIS V . AMGEN

circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
aims.” 29 U.S.C. § 1104(a)(1)(B). This standard governs a
fiduciary’s decision to allow investment of plan assets in
employer stock. Quan, 623 F.3d at 878–79. “This is true,
even though the duty of prudence may be in tension with
Congress’s expressed preference for plan investment in the
employer’s stock.” Id. at 879 (internal quotation marks
omitted).     A “myriad of circumstances” surrounding
investments in company stock could support a violation of the
prudence requirement. In re Syncor, 516 F.3d at 1102. “‘A
court’s task in evaluating a fiduciary’s compliance with this
standard is to inquire whether the individual trustees, at the
time they engaged in the challenged transactions, employed
the appropriate methods to investigate the merits of the
investment and to structure the investment.’” Quan, 623 F.3d
at 879 (quoting Wright, 360 F.3d at 1097) (alterations and
quotation marks omitted).

     In Syncor, we held that “[a] violation [of the prudent man
standard] may occur where a company’s stock . . . was
artificially inflated during that time by an illegal scheme in
which the fiduciaries knew or should have known, and then
suddenly declined when the scheme was exposed.” In re
Syncor, 516 F.3d at 1102. In Syncor, the company was a
fiduciary that knowingly made cash bribes to doctors in
Taiwan in violation of the Foreign Corrupt Practices Act.
Upon disclosure of these illegal payments, Syncor’s stock
price lost nearly half its value. “Despite these illegal
practices, the [fiduciaries] allowed the Plan to hold and
acquire Syncor stock when they knew or had reason to know
of Syncor’s foreign bribery scheme.” Id. at 1098. We held
on appeal from summary judgment that “there is a genuine
                     HARRIS V . AMGEN                       27

issue whether the fiduciaries breached the prudent man
standard by knowing of, and/or participating in, the illegal
scheme while continuing to hold and purchase artificially
inflated Syncor stock for the ERISA Plan.” Id. at 1103.

    Count II alleges that defendants knew or should have
known about material omissions and misrepresentations, as
well as illegal off-label sales, that artificially inflated the
price of the stock while, at the same time, they continued to
offer the Amgen Common Stock Fund as an investment
alternative to plan participants. The district court held that,
even without the assistance of the presumption of prudence,
defendants were entitled to dismissal of Count II under Rule
12(b)(6).

    Defendants make five arguments in favor of dismissal.
Again, none is persuasive. First, defendants contend that
investments in Amgen stock during the class period were not
imprudent “because Amgen was not even remotely
experiencing severe financial difficulties during that time,
and remains a strong, viable, and profitable company today.”
This argument is beside the point. Amgen was not
“experiencing severe financial difficulties” during the
relevant time period in part because of the very actions about
which plaintiffs are now complaining, that were producing
large but unsustainable profits. Further, Amgen may now be
a “strong, viable, and profitable company,” but that does not
mean that the price of Amgen stock was not artificially
inflated during the class period.

    Second, defendants contend that the decline in price in
Amgen stock was insufficient to show an imprudent
investment by the fiduciaries. They write, “[A]s the District
Court correctly held, this ‘relatively modest and gradual
28                    HARRIS V . AMGEN

decline in the stock price’ does not render the investment
imprudent.” As an initial matter, we note that the proper
question is not whether the investment results were
unfavorable, but whether the fiduciary used “‘appropriate
methods’” to investigate the merits of the transaction. Quan,
623 F.3d at 879 (quoting Wright, 360 F.3d at 1097); see also
Kirschbaum, 526 F.3d at 254 (explaining that the “test of
prudence is one of conduct, not results”); Bunch v. W.R.
Grace & Co., 555 F.3d 1, 7 (1st Cir. 2009) (same). But
defendants’ argument fails even on its own terms. Their
argument is foreclosed by the district court’s decision in the
federal securities class action against Amgen based on the
same alleged sequence of events. See Conn. Ret. Plans &
Trust Funds v. Amgen, Inc., 660 F.3d 1170 (9th Cir. 2011),
aff’d Amgen Inc. v. Conn. Ret. Plans & Trust Funds,
__ U.S.__, 133 S. Ct. 1184 (2013). If the alleged
misrepresentations and omissions, scienter, and resulting
decline in share price in Connecticut Retirement Plans were
sufficient to state a claim that defendants violated their duties
under Section 10(b), the alleged misrepresentations and
omissions, scienter, and resulting decline in share price in this
case are sufficient to state a claim that defendants violated
their more stringent duty of care under ERISA.

    Third, quoting Kirschbaum, 526 F.3d at 253, 256,
defendants contend that

        [w]hen, like here, retirement plans are at
        issue, courts must be mindful of “the long-
        term horizon of retirement investing, as well
        as the favored status Congress has granted to
        employee stock investments in their own
        companies.” . . . [H]olding fiduciaries liable
        for continuing to offer the option to invest in
                     HARRIS V . AMGEN                       29

       declining stock would place them in an
       “untenable position of having to predict the
       future of the company stock’s performance.
       In such a case, [a fiduciary] could be sued for
       not selling if he adhered to the plan, but also
       sued for deviating from the plan if the stock
       rebounded.”

Defendants’ reliance on Kirschbaum is misplaced. The court
wrote in that case, “The Plan documents, considered as a
whole, compel that the Common Stock Fund be available as
an investment option for employee-participants.”
Kirschbaum, 526 F.3d at 249. The concerns expressed in
Kirschbaum have little bearing on the case before us. Here,
unlike in Kirschbaum, the fiduciaries of the Amgen and AML
Plans were under no such compulsion. They knew or should
have known that the Amgen Common Stock Fund was
purchasing stock at an artificially inflated price due to
material misrepresentations and omissions by company
officers, as well as by illegal off-label marketing, but they
nevertheless continued to allow plan participants to invest in
the Fund.

     Fourth, quoting In re Computer Sciences Corp., ERISA
Litig., 635 F. Supp. 2d 1128, 1136 (C.D. Cal. 2009), aff’d
623 F.3d 870 (9th Cir. 2010), defendants contend that if the
Amgen Fund had been “remove[d] . . . as an investment
option,” this action “may have brought about ‘precisely the
result [P]laintiffs seek to avoid: a drop in the stock price.’”
It is unclear how much the price of Amgen stock would have
declined if the Amgen Common Stock Fund had been
removed as an investment option during the period when the
price was artificially inflated. Removing the Fund as an
investment option would not have meant liquidation of the
30                   HARRIS V . AMGEN

Fund. It would have meant only that while the share price
was artificially inflated, plan participants would not have
been allowed to invest additional money, and that the Fund
would therefore not have purchased additional shares at the
inflated price. Given the relatively small number of Amgen
shares that would not have been purchased by the Fund in
comparison to the enormous number of actively traded
shares, it is extremely unlikely that this decrease in the
number of shares purchased, considered alone, would have
had an appreciable negative impact on the share price.

     It is true that removing the Amgen Common Stock Fund
as an investment option would have sent a negative signal to
the wider investing public, and that such a signal may well
have caused a drop in the share price. But several factors
mitigate this effect. The efficient market hypothesis
ordinarily applied in stock fraud cases suggests that the
ultimate decline in price would have been no more than the
amount by which the price was artificially inflated. Further,
once the Fund was removed as an investment option,
employees would have been prevented from making
additional investments in the Fund while the price remained
artificially inflated. Finally, the fiduciaries’ obligation to
remove the Fund as an investment option was triggered as
soon as they knew or should have known that the share price
was artificially inflated. That is, defendants violated their
fiduciary duties under ERISA at more or less the same time
some of them violated their duties under the federal securities
laws. If the defendants had timely complied with their duties
under ERISA, there would have been little or no artificial
increase in the share price before the Fund was removed as an
investment option. In the actual event, however, defendants
continued to authorize the Fund as an investment option for
                     HARRIS V . AMGEN                       31

a considerable time after they knew or should have known
that the share price was artificially inflated.

    Fifth, defendants argue that “they could not have removed
the Amgen Stock Fund based on undisclosed alleged adverse
material information — a potentially illegal course of action.”
(emphasis in original). Defendants misunderstand the nature
of their duties under federal law. As we noted in Quan,
“[F]iduciaries are under no obligation to violate securities
laws in order to satisfy their ERISA fiduciary duties.” Quan,
623 F.3d at 882 n.8. The central problem in this case is that
Amgen officials, many of whom are defendants here, made
material misrepresentations and omissions in violation of the
federal securities laws. Compliance with ERISA would not
have required defendants to violate those laws; indeed,
compliance with ERISA would likely have resulted in
compliance with the securities laws. If defendants had
revealed material information in a timely fashion to the
general public (including plan participants), thereby allowing
informed plan participants to decide whether to invest in the
Amgen Common Stock Fund, they would have
simultaneously satisfied their duties under both the securities
laws and ERISA. See Cal. Ironworkers Field Pension Trust
v. Loomis Sayles & Co., 259 F.3d 1036, 1045 (9th Cir. 2001)
(“ERISA imposes upon fiduciaries a general duty to disclose
facts material to investment issues.”); Acosta v. Pac. Enter.,
950 F.2d 611, 619 (9th Cir. 1991) (holding that a fiduciary is
affirmatively required to “inform beneficiaries of
circumstances that threaten the funding of benefits”).
Alternatively, if defendants had made no disclosures but had
simply not allowed additional investments in the Fund while
the price of Amgen stock was artificially inflated, they would
not thereby have violated the prohibition against insider
32                    HARRIS V . AMGEN

trading, for there is no violation absent purchase or sale of
stock.

    We therefore conclude that plaintiffs have sufficiently
alleged that defendants have violated the duty of care they
owe as fiduciaries under ERISA.

                         2. Count III

    Plaintiffs allege in Count III that defendants violated their
duty of loyalty and care under 11 U.S.C. §§ 1104(a)(1)(A)
and (B) by failing to provide material information to plan
participants about investment in the Amgen Common Stock
Fund. Defendants contend that they have limited obligations
under ERISA to disclose information to plan participants, and
that their disclosure obligations do not extend to information
that is material under the federal securities laws. Defendants
contend, further, that plaintiffs have not alleged detrimental
reliance by plan participants on defendants’ omissions and
misrepresentations. Finally, defendants contend that their
omissions and misrepresentations, if any, were not made in
their fiduciary capacity. For the reasons that follow, we
disagree.

    To some extent, the analysis for Count II overlaps with
the analysis for Count III. We have already established that
we must analyze defendants’ duty of care without resort to
the presumption of prudence under Quan. We have also
established that there is no contradiction between defendants’
duty under the federal securities laws and ERISA. Indeed,
properly understood, these laws are complementary and
reinforcing.
                     HARRIS V . AMGEN                       33

    Defendants’ first contention is that they owe no duty
under ERISA to provide material information about Amgen
stock to plan participants who must decide whether to invest
in such stock. In other words, defendants contend that their
fiduciary duties of loyalty and care to plan participants under
ERISA, with respect to company stock, are less than the duty
they owe to the general public under the securities laws.
Defendants are wrong, as we made clear in Quan:

       We have recognized [that] . . . “[a] fiduciary
       has an obligation to convey complete and
       accurate information material to the
       beneficiary’s circumstance, even when a
       beneficiary has not specifically asked for the
       information.” Barker [v. Am. Mobil Power
       Corp., 64 F.3d 1397, 1403 (9th Cir. 1995)].
       “[T]he same duty applies to ‘alleged material
       misrepresentations made by fiduciaries to
       participants regarding the risks attendant to
       fund investment.’” Edgar [v. Avaya Inc.,
       503 F.3d 340, 350 (3d Cir. 2007)].

Quan, 623 F.3d at 886. We specifically endorsed the Third
Circuit’s definition of materiality in Quan. We wrote, “[A]
misrepresentation is ‘material’ if there was a substantial
likelihood that it would have misled a reasonable participant
in making an adequately informed decision about whether to
place or maintain monies in a particular fund.” Id. (quoting
Edgar, 503 F.3d at 350) (internal quotation marks omitted).

    Defendants’ second contention is that plaintiffs have
failed to show that they relied on defendants’ material
omissions and misrepresentations. Defendants contend that
plaintiffs must show that they actually relied on the omissions
34                   HARRIS V . AMGEN

and misrepresentations. It is well established under Section
10(b) that a defrauded investor need not show actual reliance
on the particular omissions or representations of the
defendant. Instead, as the Supreme Court explained in Erica
P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179
(2011), the investor can rely on a rebuttable presumption of
reliance based on the “fraud-on-the-market” theory:

       According to that theory, “the market price of
       shares traded on well-developed markets
       reflects all publicly available information,
       and, hence, any material misrepresentations.”
       [Basic, Inc. v. Levinson, 485 U.S. 224, 246
       (1988)]. Because the market “transmits
       information to the investor in the processed
       form of a market price,” we can assume, the
       Court explained [in Basic], that an investor
       relies on public misstatements whenever he
       “buys or sells stock at the price set by the
       market.” Id.[] at 244, 247.

Erica P. John Fund, 131 S. Ct. at 2185; see also Conn. Ret.
Plans & Trust, 133 S. Ct. 1184 (2013). We see no reason
why ERISA plan participants who invested in a Company
Stock Fund whose assets consisted solely of publicly traded
common stock should not be able to rely on the fraud-on-the-
market theory in the same manner as any other investor in
publicly traded stock.

    Defendants’ final contention is that statements made by
defendants to the Securities and Exchange Commission were
not made in their fiduciary capacity, and therefore cannot be
considered in an ERISA suit for breach of fiduciary duty. We
do not think it matters whether defendants’ statements were
                      HARRIS V . AMGEN                       35

made to the SEC in their corporate capacity, their fiduciary
capacity, or some other capacity. Irrespective of the capacity
in which the misleading statements were made, defendants
made them, and they were factored into the price of Amgen
stock. They may therefore be used to show that defendants
knew or should have known that the price of Amgen shares
was artificially inflated, and to show that plaintiffs
presumptively detrimentally relied on defendants’ statements
under the fraud-on-the-market theory.

                    3. Counts IV and V

     The district court correctly concluded that Counts IV and
V are derivative of Counts II and III. Because we reverse the
district court’s dismissal of Counts II and III, we also reverse
its dismissal of Counts IV and V. See In re Gilead Sciences
Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

                        4. Count VI

    Count VI alleges that defendants caused the Plans directly
or indirectly to sell or exchange property with a party-in-
interest, in violation of 29 U.S.C. § 1106(a). Specifically,
Count VI alleges that Amgen and AML are parties-in-interest
that concealed material information in order to inflate the
price of Amgen stock sold to the Plans. In relevant part,
29 U.S.C. § 1106(a)(1) provides,

       A fiduciary with respect to a plan shall not
       cause the plan to engage in a transaction, if he
       knows or should know that such transaction
       constitutes a direct or indirect –
36                    HARRIS V . AMGEN

           (A) sale or exchange, or leasing, of any
           property between the plan and a party in
           interest; . . .

           (D) transfer to, or use by or for the
           benefit of a party in interest, of any assets
           of the plan[.]

A party in interest includes “any fiduciary” of a plan or “an
employer” of the plan beneficiaries. 29 U.S.C. § 1002(14).

    Defendants did not argue in the district court that Count
VI fails to state a prohibited transaction claim under
§ 1106(a)(1). Nor do they raise this argument on appeal.
Instead, defendants argue that 29 U.S.C. § 1108(e) exempts
the sale of employer stock from the restrictions of
§ 1106(a)(1).

    Section 1108(e) specifies that § 1106 does not prohibit the
purchase or sale of employer stock if, as relevant here, (1) the
sale price was the “price . . . prevailing on a national
securities exchange”; (2) no commission is charged for the
transaction, and (3) the plan is an EIAP. 29 U.S.C.
§§ 1107(d)(5), (e)(1), 1108(e).

    In Howard v. Shay, 100 F.3d 1484, 1488 (9th Cir. 1996),
we held that because § 1108(e) is an affirmative defense, a
defendant has the burden to prove its applicability. We
explained, “A fiduciary who engages in a self-dealing
transaction pursuant to 29 U.S.C. § [1106(a)] has the burden
of proving that he fulfilled his duties of care and loyalty and
that the ESOP received adequate consideration [under
§ 1108(e)].” Id.; see also Marshall v. Snyder, 572 F.2d 894,
900 (2d Cir. 1978) (“The settled law is that in [prohibited
                     HARRIS V . AMGEN                       37

self-dealing transactions] the burden of proof is always on the
party to the self-dealing transaction to justify its fairness
[under a statutory exception].”). Citing Howard, the Eighth
Circuit has held that a plaintiff need not plead in his
complaint that a transaction was not exempt under § 1108(e).
See Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 600–01
(8th Cir. 2009); see also Jones v. Bock, 549 U.S. 199, 211–12
(2007) (holding that a plaintiff need not plead the absence of
an affirmative defense, even a defense like exhaustion of
remedies, which is “mandatory”).

    Because the existence of an exemption under § 1108(e) is
an affirmative defense, we can dismiss Count VI based on the
§ 1108(e) exemption only if the defense is “clearly indicated”
and “appear[s] on the face of the pleading.” 5B Charles Alan
Wright & Arthur R. Miller, Federal Practice & Procedure
§ 1357 (3d ed. 2004); see also Jones, 549 U.S. at 215 (citing
Wright & Miller for rule that affirmative defense must appear
on the face of the complaint). Here, we cannot say that the
face of the complaint clearly indicates the availability of a
§ 1108(e) defense.

          B. Amgen as Properly Pled Fiduciary

    Amgen argues that it is not a fiduciary under the Plan
because it has delegated its discretionary authority. “To be
found liable under ERISA for breach of the duty of prudence
and for participation in a breach of fiduciary duty, an
individual or entity must be a ‘fiduciary.’” Wright v. Or.
Metallurgical Corp., 360 F.3d 1090, 1101 (9th Cir. 2004). In
defining a fiduciary, ERISA says,

       a person is a fiduciary with respect to a plan to
       the extent (i) he exercises any discretionary
38                    HARRIS V . AMGEN

       authority or discretionary control respecting
       management of such plan or exercises any
       authority or control respecting management or
       disposition of its assets . . . or (iii) he has any
       discretionary authority or discretionary
       responsibility in the administration of such
       plan.

29 U.S.C. § 1002(21)(A). “We construe ERISA fiduciary
status ‘liberally, consistent with ERISA’s policies and
objectives.’” Johnson v. Couturier, 572 F.3d 1067, 1076 (9th
Cir. 2009) (quoting Ariz. State Carpenters Pension Trust
Fund v. Citibank, 125 F.3d 715, 720 (9th Cir. 1997)).
Whether a defendant is a fiduciary is a question of law we
review de novo. See Varity Corp. v. Howe, 516 U.S. 489, 498
(1996).

    Under ERISA, a “named fiduciary” is “a fiduciary who is
named in the plan instrument.” 29 U.S.C. § 1102(a)(2). The
Amgen Plan provides that Amgen is “the ‘named fiduciary,’
‘administrator[,]’ and ‘plan sponsor’ of the Plan (as such
terms are used in ERISA).” ERISA grants a named fiduciary
broad authority to “control and manage the operation and
administration of the plan.” 29 U.S.C. § 1102(a)(1).
“Generally, if an ERISA plan expressly provides for a
procedure allocating fiduciary responsibilities to persons
other than named fiduciaries under the plan, the named
fiduciary is not liable for an act or omission of such person in
carrying out such responsibility.” Ariz. State Carpenters,
125 F.3d at 719–20 (citing 29 U.S.C. § 1105(c)(2)).

    Amgen argues that it delegated authority to trustees and
investment managers. Section 15.1 of the Plan provides, “To
the extent that the Plan requires an action under the Plan to be
                     HARRIS V . AMGEN                      39

taken by the Company [Amgen], the party specified in this
Section 15.1 shall be authorized to act on behalf of the
Company.” Section 15.1 says nothing about delegation to
trustees and investment managers. Rather, it explains that the
Fiduciary Committee has the authority, on behalf of the
Company, to “review the performance of the Investment
Funds . . . and make recommendations” and to “otherwise
control and manage the Plan’s assets.” In the absence of a
Fiduciary Committee, the Global Benefits Committee will
perform these tasks. Section 14.2 of the Plan governs the
relationship between Amgen (“the Company”) and the
trustees and managers. It provides:

            The Trustee shall have the exclusive
       authority and discretion to control and manage
       assets of the Plan it holds in trust, except to
       the extent that . . . the Company directs how
       such assets shall be invested [or] the
       Company allocates the authority to manage
       such assets to one or more Investment
       Managers. Each Investment Manager shall
       have the exclusive authority to manage,
       including the authority to acquire and dispose
       of, the assets of the Plan assigned to it by the
       Company, except to the extent that the Plan
       prescribes or the Company directs how such
       assets shall be invested. Each Trustee and
       Investment Manager shall be solely
       responsible for diversifying, in accordance
       with Section 404(a)(1)(C) of ERISA, the
       investment of the assets of the Plan assigned
       to it by the Committee, except to the extent
       that the plan prescribes or the Committee
       directs how such assets shall be invested.
40                   HARRIS V . AMGEN

    ERISA requires that a trustee hold plan assets in trust for
plan participants. 29 U.S.C. § 1103(a). A trustee has
“exclusive authority and discretion to manage and control the
assets of the plan” subject to two exceptions. Id. The first
exception is that a plan may “expressly provide[] that the
trustee or trustees are subject to the direction of a named
fiduciary who is not a trustee.” Id. § 1103(a)(1). Under this
exception, a named fiduciary with the power to direct trustees
is a fiduciary with authority to manage plan assets. The
second exception is that an “investment manager,” duly
licensed as an investment adviser under federal or state law,
may also be appointed to manage plan assets in lieu of the
trustee. Id. §§ 1002(38)(B), 1103(a)(2).

    There is no question that Amgen appointed a trustee.
However, nothing in the record indicates that Amgen
appointed an investment manager. Neither ERISA nor the
Plan requires that an investment manager be appointed. Even
if Amgen had appointed an investment manager, the Plan
makes clear that the trustee and any investment manager do
not have complete control over investment decisions. See
29 U.S.C. § 1002(21)(A)(i) (defining a person with “any
authority or control” over plan assets to be a fiduciary)
(emphasis added); cf. Gelardi v. Pertec Comp. Corp.,
761 F.2d 1323, 1325 (9th Cir. 1985) (finding delegation
where defendant “retained no discretionary control”)
(emphasis added), overruled on other grounds in Cyr v.
Reliance Standard Life Ins. Co., 642 F.3d 1202, 1207 (9th
Cir. 2011).

    Section 15.1 of the Plan, which authorizes the Fiduciary
Committee to take action on behalf of Amgen, does not
preclude fiduciary status for Amgen. In Madden v. ITT Long
Term Disability Plan for Salaried Empl., 914 F.2d 1279, 1284
                      HARRIS V . AMGEN                        41

(9th Cir. 1990), we held that the company had delegated
authority to an administration committee where the plan
provided that the Committee had “‘responsibility for carrying
out all phases of the administration of the Plan’” and had the
“‘exclusive right . . . to interpret the Plan and to decide any
and all matters arising hereunder.’” (emphasis omitted). This
language contains two features absent from the language in
the Amgen Plan. First, it delegates responsibility for all
phases of administering the plan, rather than responsibility
“to the extent that the Plan requires an action . . . to be taken
by the Company. Second, and more important, it provides
the Committee the exclusive right to make decisions under
the plan. The Amgen Plan merely authorizes the Fiduciary
Committee to act on behalf of Amgen. It neither provides
exclusive authority to the Committee, nor precludes Amgen
from acting on its own behalf.

    Other courts have found a company’s grant of exclusive
authority to a delegate and an express disclaimer of authority
to be critical. In Maher v. Massachusetts General Hospital
Long Term Disability Plan, 665 F.3d 289 (1st Cir. 2011), the
First Circuit held that a hospital had delegated its fiduciary
duties when the plan stated, “‘The Hospital shall be fully
protected in acting upon the advice of any such agent . . . and
shall not be liable for any act or omission of any such agent,
the Hospital’s only duty being to use reasonable care in the
selection of any such agent.’” Id. at 292. In Costantino v.
Washington Post Multi-Option Benefits Plan, 404 F. Supp. 2d
31 (D.D.C. 2005), the district court for the District of
Columbia found delegation when the plan granted the plan
administrator “‘sole and absolute discretion’” to carry out
various Plan duties. Id. at 39 n.8. Given that ERISA allows
fiduciaries to have overlapping responsibilities under a plan,
a clear grant of exclusive authority is necessary for proper
42                    HARRIS V . AMGEN

delegation by a fiduciary. See 29 U.S.C. § 1102(a)(1)
(“[O]ne or more named fiduciaries . . . jointly or severally . . .
have authority to control and manage the operation and
administration of the plan”); see also 1 ERISA Practice and
Litigation § 6:5 (“Those who wish to avoid liability exposure
through allocation of plan responsibilities to others must
therefore take pains to ensure that their documents fully
authorize the contemplated delegation.”).

    Because the Plan contains no clear delegation of exclusive
authority, we reverse the district court’s dismissal of Amgen
from the case as a non-fiduciary.

                          Conclusion

    We conclude that defendants are not entitled to a
presumption of prudence under Quan, that plaintiffs have
stated claims under ERISA in Counts II through VI, and that
Amgen is a properly named fiduciary under the Amgen Plan.
We therefore reverse the decision of the district court and
remand for further proceedings consistent with this opinion.

     REVERSED and REMANDED.
