                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

SECURITIES AND EXCHANGE                
COMMISSION,
                 Plaintiff-Appellee,
                v.                           No. 07-56542
PLATFORMS WIRELESS                            D.C. No.
INTERNATIONAL CORPORATION;                 CV-04-02105-JTM
WILLIAM C. MARTIN; ROBERT D.
PERRY; FRANCOIS M. DRAPER;
CHARLES B. NELSON,
            Defendants-Appellants.
                                       

SECURITIES AND EXCHANGE                
COMMISSION,
                Plaintiff-Appellant,
                                             No. 09-55039
                v.
                                               D.C. No.
PLATFORMS WIRELESS                         3:04-cv-02105-
INTERNATIONAL CORPORATION;                     JM-AJB
WILLIAM C. MARTIN; ROBERT D.
                                               OPINION
PERRY; FRANCOIS M. DRAPER;
CHARLES B. NELSON,
             Defendants-Appellees.
                                       
        Appeal from the United States District Court
           for the Southern District of California
         Jeffrey T. Miller, District Judge, Presiding

                  Argued and Submitted
            June 8, 2010—Pasadena, California

                     Filed July 27, 2010

                            10725
10726       SEC v. PLATFORMS WIRELESS INT’L CORP.
     Before: Dorothy W. Nelson and Ronald M. Gould,
          Circuit Judges, and David D. Dowd, Jr.,
                   Senior District Judge.*

                   Opinion by Judge Gould




  *The Honorable David D. Dowd, Jr., Senior United States District
Judge for the Northern District of Ohio, sitting by designation.
            SEC v. PLATFORMS WIRELESS INT’L CORP.        10731




                         COUNSEL

Stanley C. Morris (argued), Corrigan & Morris LLP, Santa
Monica, California; Thoms M. Brown, Kenneth P. White, and
George P. Schiavelli, Brown, White & Newhouse LLP, Los
Angeles, California for defendant-appellant and cross-
appellee William C. Martin.

Daniel L. Rasmussen, Benjamin A. Nix, and Erik M. Ander-
sen, Payne & Fears LLP, Irvine, California, for defendant-
appellant and cross-appellee Platforms Wireless International
Corp.

Mark Pennington (argued), David M. Becker, Mark D. Cahn,
Michael A. Conley, and Catherine A. Broderick, Securities
and Exchange Commission, Washington, D.C., for plaintiff-
appellee and cross-appellant Securities and Exchange Com-
mission.


                         OPINION

GOULD, Circuit Judge:

   This appeal concerns a civil enforcement action filed by the
Securities and Exchange Commission (“SEC”). After con-
cluding that there were securities law violations, the district
court entered a final judgment under Federal Rule of Civil
Procedure 54(b) pursuant to a partial summary judgment
against Platforms Wireless International Corporation
(“Platforms”) and William Martin (“Martin”), its former
Chairman and CEO. The district court held that Martin and
Platforms sold unregistered securities to the public in viola-
10732        SEC v. PLATFORMS WIRELESS INT’L CORP.
tion of the registration provisions of Section 5 of the Securi-
ties Act of 1933, 15 U.S.C. § 77e, and that they issued a
fraudulent press release in August 2000 in violation of Sec-
tion 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.
§ 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated
thereunder. The district court ordered Platforms and Martin
jointly and severally to disgorge about $1.75 million in pro-
ceeds from the sales that violated Section 5, plus almost $1
million in prejudgment interest. The court denied summary
judgment on the SEC’s allegations that Martin and Platforms
also violated Section 10(b) and Rule 10b-5 by issuing five
other press releases between May 2000 and March 2001. Mar-
tin and Platforms appeal the partial summary judgment and
disgorgement order; the SEC cross-appeals the partial denial
of summary judgment. We affirm the partial summary judg-
ment and disgorgement order, and we dismiss as moot the
SEC’s cross-appeal.

                                 I

   Platforms is an Oklahoma corporation whose stock is not
registered with the SEC under the Securities Act of 1933
(“Securities Act”). Since March 2000, Platforms’ stock has
been traded on the Pink Sheets, now known as Pink Quote, an
inter-dealer electronic quotation and trading system for regis-
tered and unregistered securities.1

   At relevant times Platforms was working to develop a new
technology, called the “ARC System,” to provide cellular
communications services to large geographic territories. Plat-
forms represented that its ARC System would be a low-cost
alternative to ground-based cellular antenna towers or satel-
lites. The ARC System was to be comprised of two compo-
nents: (1) a portable antenna payload, which would receive
radio frequency signals from devices such as cellphones and
  1
  See OTCMarkets.com, About Pink OTC Markets, http://
www.otcmarkets.com/pink/about/index.jsp (last visited May 28, 2010).
             SEC v. PLATFORMS WIRELESS INT’L CORP.           10733
consolidate and relay those signals to ground stations; and (2)
aircraft to carry the antenna payload, either several airplanes
flying in rotating shifts or an aerostat (a lighter-than-air air-
craft). It is undisputed that Platforms never built or tested a
completed ARC System, although by March 5, 2001, it had
built and conducted limited ground-based testing on a proto-
type payload.

  Between 1998 and January 17, 2000, William Martin
owned and operated a sole proprietorship called Intermedia
Video Marketing Company (“Intermedia”). During that time,
Martin provided consulting services to Platforms as an
employee of Intermedia, but he was otherwise unaffiliated
with Platforms. Martin alleges that in exchange for those con-
sulting services, Intermedia earned at least 17.45 million
unregistered shares of Platforms stock but that those shares
were not then issued to Intermedia.2

   Martin became the Chairman and CEO of Platforms in
March 2000. Before that event, in January 2000, Martin trans-
ferred his ownership interest in Intermedia to his former wife
as part of a divorce settlement. Martin remained an officer of
Intermedia after the transfer and continued to take actions on
behalf of Intermedia, including: (1) applying for a business
Visa credit card for Intermedia; (2) executing a document that
authorized Martin to transfer and sell “any and all . . . securi-
ties . . . in the name of or owned by” Intermedia; (3) keeping
open and using a joint Intermedia/Platforms checking
account; and (4) selling Platforms stock from a brokerage
account registered to “Intermedia Video Marketing Corp.;
Attn: William C. Martin.” Martin executed some of the above
documents in his capacity as Intermedia’s “President” or
“President and CEO.”
  2
   The SEC conceded for purposes of summary judgment that Intermedia
earned and “beneficially owned” the shares.
10734        SEC v. PLATFORMS WIRELESS INT’L CORP.
   In August of 2000, Platforms issued a press release declar-
ing that Platforms “Unveils New Airborne Wireless Commu-
nications ‘ZeroGravity AeroStructures.’ ” The press release
described technical details and performance characteristics of
five discrete AeroStructure models. When the press release
was issued, Platforms had only a description of how the ARC
System would operate and did not have prototypes built, nor
even the money to build a prototype.

   In two transactions in September 2000 and February 2001,
Platforms transferred 17.45 million of the unregistered shares
to Intermedia in payment for its consulting services. Three
million of those shares were issued to Francois Draper, Plat-
forms’ then-Executive Vice President, Chief Operating Offi-
cer, and Chief Technology Officer. The remaining 14.45
million shares went to Benefit Consultants, a company affili-
ated with Charles Nelson, Platforms’ Chief Financial Officer
and a member of its board of directors. When the shares were
issued, Intermedia executed documents transferring its “bene-
ficial ownership” of those shares to Draper and Benefit Con-
sultants. Platforms’ General Counsel, Forrest Walworth
Brown (“Brown”), issued opinion letters stating that the trans-
fers complied with a safe harbor from Securities Act registra-
tion violations. Shortly after receiving the shares, Draper and
Benefit Consultants sold them to the public.

   The SEC alleges, and the defendants do not dispute, that
the proceeds from Draper’s and Benefit Consultants’ public
stock sales totaled $1,756,861. Martin testified that the shares
were sold with the understanding that the money would pay
for Platforms’ operating expenses and other obligations,
including certain employee salaries. It is not disputed that at
least some of the money was thus spent.

   The SEC filed this civil enforcement action in federal dis-
trict court in October 2004 against Platforms, Martin, and sev-
eral other Platforms officers and directors.3 The SEC alleged
  3
   The other officers and directors entered into consent judgments with
the SEC and are not parties to this appeal.
              SEC v. PLATFORMS WIRELESS INT’L CORP.                 10735
that Platforms, Martin, and Draper violated Section 5 of the
Securities Act by selling to the public the 17.45 million
unregistered Platforms securities “beneficially owned” by Inter-
media.4 The SEC further alleged that the defendants commit-
ted securities fraud in violation of Section 10(b) of the
Securities Exchange Act of 1934 (“Exchange Act”) and Rule
10b-5 by issuing six materially misleading press releases
between May 2000 and March 2001, including the August
2000 press release suggesting that a working ARC System
had been developed when none in fact existed.5

   In a series of orders, the district court granted the SEC par-
tial summary judgment on its Section 5 claim, and on its Sec-
tion 10(b) claim based on the August 2000 press release. First,
in a January 2007 order, the district court granted the SEC’s
motion for summary judgment on the Section 5 claim. It con-
cluded that the SEC had established prima facie Section 5 vio-
lations by showing that unregistered securities were sold to
the public without an exemption. The court further concluded
that because Martin controlled Intermedia at the time of the
transactions, and because the defendants did not take reason-
able care to assure that Intermedia was not an underwriter, the
17.45 million in stock transfers did not qualify for a registra-
tion exemption. Then, in an April 2007 order, the district
court granted in part the SEC’s motion for summary judgment
on the Section 10(b) claims based on four of the six press
releases, including the August 2000 press release, and denied
summary judgment on the two remaining press releases. In a
subsequent order, the district court held Martin and Platforms
jointly and severally liable for the Section 5 violations and
ordered them to disgorge the total proceeds from the sales,
$1,756,861, plus prejudgment interest.6 Interest was calcu-
  4
    We hereinafter refer to this as the “Section 5” claim.
  5
    We hereinafter refer to these claims as “Section 10(b)” claims.
  6
    The district court also imposed civil monetary penalties on Martin and
Platforms, and an injunction against them prohibiting, inter alia, further
violations of the securities laws. Those penalties are not at issue in this
appeal.
10736       SEC v. PLATFORMS WIRELESS INT’L CORP.
lated according to the federal tax underpayment rate set forth
in 26 U.S.C. § 6621(a)(2), which is higher than the treasury-
bill rate declared in 28 U.S.C. § 1961. The treasury-bill rate
is the rate typically used in most cases for prejudgment inter-
est calculation.

   The defendants moved for reconsideration of the summary
judgments under Federal Rules of Civil Procedure 59(e) and
60(b), alleging defects in the district court’s decisions. Among
these defects, the defendants alleged that the district court had
used the wrong standard for “reckless” scienter under Section
10(b) and Rule 10b-5 by determining only whether the mis-
representations in the press releases were objectively unrea-
sonable, rather than “deliberately reckless” in accord with our
decision in In re Silicon Graphics Inc. Securities Litigation,
183 F.3d 970 (9th Cir. 1999). The district court granted the
motion in part and ordered supplemental briefing with respect
to the “deliberate recklessness” standard, but denied the
reconsideration motion with respect to the other issues raised.

   On April 3, 2008, the district court partially vacated its
April 2007 summary judgment on the SEC’s Section 10(b)
claims. The district court reaffirmed, under the “deliberate
recklessness” standard, summary judgment on the August
2000 press release. The district court then concluded, how-
ever, that there were genuine issues of material fact whether
the defendants had acted with “deliberate recklessness” with
respect to the other three press releases on which summary
judgment had been previously granted.

   The SEC was left with a summary judgment on its Section
5 claim and one of its six Section 10(b) claims. The SEC then
moved for entry of final judgment under Federal Rule of Civil
Procedure 54(b), indicating its satisfaction with the relief
awarded and its intent to abandon the remaining Section 10(b)
claims if the judgment was affirmed on appeal. The district
court granted the SEC’s motion, finding “no just reason for
further delay.”
             SEC v. PLATFORMS WIRELESS INT’L CORP.             10737
  Martin and Platforms timely appealed, and the SEC timely
cross-appealed. Martin and Platforms challenge the summary
judgments on the Section 5 claim and the Section 10(b) claim
based on the August 2000 press release, the disgorgement
order, the calculation of prejudgment interest, and the denial
of their motion for reconsideration. The SEC by its cross-
appeal challenges the denial of summary judgment on the
remaining five press releases.

                                 II

  [1] Platforms questions the propriety of the district court’s
Rule 54(b) judgment resting on the underlying partial sum-
mary judgment. Rule 54(b) permits a district court to enter
judgment on “fewer than all” claims or parties where there is
“no just reason for delay.” Fed. R. Civ. P. 54(b); Am. States
Ins. Co. v. Dastar Corp., 318 F.3d 881, 889-90 (9th Cir.
2003). A properly entered Rule 54(b) judgment is a “final”
appealable judgment for purposes of 28 U.S.C. § 1291. Id.

   Reviewing the propriety of a district court’s Rule 54(b) cer-
tification is a two-step process. AmerisourceBergen Corp. v.
Dialysist W., Inc., 465 F.3d 946, 954 (9th Cir. 2006). In the
first step, we review de novo “such factors as the interrela-
tionship of the claims so as to prevent piecemeal appeals.” Id.
(quotation marks omitted). “The second step . . . requires an
assessment of the equities [under] the ‘substantial deference’
standard, reversing the district court[’s Rule 54(b) certifica-
tion] only if we find the district court’s conclusions clearly
unreasonable.” Id. Analyzing a Rule 54(b) judgment requires
a “pragmatic approach” with focus “on severability and effi-
cient judicial administration.” Cont’l Airlines, Inc. v. Good-
year Tire & Rubber Co., 819 F.2d 1519, 1525 (9th Cir. 1987).

   [2] We conclude that the district court properly entered a
Rule 54(b) final judgment on the Section 5 and Section 10(b)
claims on which it granted summary judgment.7 The SEC
  7
   We express no opinion whether 28 U.S.C. § 1291 confers jurisdiction
to review the denial of summary judgment on the SEC’s Section 10(b)
10738         SEC v. PLATFORMS WIRELESS INT’L CORP.
expressly indicated to the district court that it was satisfied
with the partial summary judgment and the relief it received,
and that it did not wish to pursue its remaining Section 10(b)
claims. Moreover, as noted above, all other defendants in the
matter have settled with the SEC. The Rule 54(b) judgment
therefore ended all litigation in the case, and it will not “inevi-
tably come back to this court on the same set of facts.” Wood
v. GCC Bend, LLC, 422 F.3d 873, 879 (9th Cir. 2005). In
light of the above, the district court’s decision was neither
“clearly unreasonable” nor inequitable. The district court’s
judgment is final pursuant to 28 U.S.C. § 1291, and we have
jurisdiction to review the issues raised by Martin and Plat-
forms on direct appeal.

                                    III

   We now consider the defendants’ challenge to the district
court’s grant of partial summary judgment on the SEC’s Sec-
tion 5 and Section 10(b) claims. We review summary judg-
ments de novo, construing the evidence in the light most
favorable to the nonmoving party. SEC v. Talbot, 530 F.3d
1085, 1090 (9th Cir. 2008).

                                    A

   [3] Sections 5(a) and (c) of the Securities Act, 15 U.S.C.
§§ 77e(a), (c), make it unlawful to offer or sell a security in
interstate commerce if a registration statement has not been
filed as to that security, unless the transaction qualifies for an

claims relating to five press releases. See Safe Flight Instrument Corp. v.
McDonnell-Douglas Corp., 482 F.2d 1086, 1093 (9th Cir. 1973)
(“Ordinarily the denial of a motion for summary judgment is not appeal-
able, even where there has been an express direction and determination of
the kind called for by Rule 54(b) . . . .”). The SEC has elected not to pur-
sue its cross-appeal if the partial summary judgment is affirmed. Because
we uphold the partial summary judgment, we dismiss the cross-appeal as
moot.
            SEC v. PLATFORMS WIRELESS INT’L CORP.          10739
exemption from registration. The district court held, and the
parties do not dispute, that the chain of transactions leading
to the sale to the public of 17.45 million unregistered Plat-
forms securities was a prima facie violation of Section 5. The
parties dispute only whether the transactions qualified for an
exemption from the registration requirement.

   The registration requirement arose with the 1933 Securities
Act. It was designed to be a principal statutory tool for pro-
tecting the public. The mischief aimed at was rampant fraud
in the sale of securities to the financially unsophisticated pub-
lic. See Securities Act of 1933, Pub. L. No. 73-22, pmbl., 48
Stat. 74, 74 (1933) (stating that the purpose of the Act is “to
prevent frauds in the sale” of securities); 1 Thomas Lee
Hazen, The Law of Securities Regulation 34 (6th ed. 2009).
By imposing a registration requirement, Congress put the bur-
den on companies issuing securities to inform truthfully the
public about themselves and the securities being issued. A.C.
Frost & Co. v. Coeur D’Alene Mines Corp., 312 U.S. 38, 40
(1941); Milton H. Cohen, “Truth in Securities” Revisited, 79
Harv. L. Rev. 1340, 1345 (1966). Companies that have regis-
tered securities under the Securities Act must also abide a
regime of regular reporting of material information estab-
lished in the Securities Exchange Act of 1934. See 15 U.S.C.
§§ 78l, 78m, 78o(d).

  Most securities litigation in modern times focuses not on
registration, but rather on whether disclosures by companies
were accurate or, to the contrary, withheld or misstated infor-
mation. See, e.g., Stoneridge Inv. Partners, LLC v. Scientific-
Atlanta, 552 U.S. 148 (2008); Tellabs, Inc. v. Makor Issues &
Rights, Ltd., 551 U.S. 308 (2007); Dura Pharm., Inc. v.
Broudo, 544 U.S. 336 (2005); Gustafson v. Alloyd Co., 513
U.S. 561 (1995); Musick, Peeler & Garrett v. Employers Ins.
of Wausau, 508 U.S. 286 (1993); Lampf, Pleva, Lipkind,
Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991); Basic
Inc. v. Levinson, 485 U.S. 224 (1988); Schreiber v. Burlington
N., Inc., 472 U.S. 1 (1985); Herman & MacLean v. Huddles-
10740       SEC v. PLATFORMS WIRELESS INT’L CORP.
ton, 459 U.S. 375 (1983); Siracusano v. Matrixx Initiatives,
Inc., 585 F.3d 1167 (9th Cir. 2009); Rubke v. Capitol Bancorp
Ltd., 551 F.3d 1156 (9th Cir. 2009); S. Ferry LP, No. 2 v. Kil-
linger, 542 F.3d 776 (9th Cir. 2008); Lipton v. Pathogenesis
Corp., 284 F.3d 1027 (9th Cir. 2002). When a company fails
entirely to register its securities and nonetheless proceeds to
sell them generally to the public, however, the entire system
of mandatory public disclosure is evaded to public detriment.

   In reviewing the Section 5 claim here, we note that the “Su-
preme Court has long instructed that securities law places
emphasis on economic reality and disregards form for sub-
stance.” SEC v. M & A W., Inc., 538 F.3d 1043, 1053 (9th Cir.
2008). We are concerned with whether in substance Platforms
issued its securities to the public without a registration or
exemption.

   [4] “Once the SEC introduces evidence that a defendant
has violated the registration provisions, the defendant then has
the burden of proof in showing entitlement to an exemption.”
SEC v. Murphy, 626 F.2d 633, 641 (9th Cir. 1980) (citing
SEC v. Ralston Purina Co., 346 U.S. 119, 126 (1953)).
Exemptions from registration provisions are construed nar-
rowly “in order to further the purpose of the Act: To provide
full and fair disclosure of the character of the securities, and
to prevent frauds in the sale thereof.” Id. (quoting Securities
Act of 1933, ch. 38, Tit. 1, 48 Stat. 74 (1933)) (punctuation
omitted).

   The defendants allege that two registration exemptions are
applicable in this case. First, they argue that there is a genuine
issue of material fact whether the transfer of ownership from
Intermedia to Draper and Benefit Consultants qualified for an
exemption under Securities Act Section 4(1), 15 U.S.C.
§ 77d(1), because, the defendants’ argument runs, Intermedia
was not an “affiliate” of Platforms as defined in 17 C.F.R.
§ 230.144(a)(1). Second, they argue that even if Intermedia
was an affiliate of Platforms, there is a genuine issue of mate-
            SEC v. PLATFORMS WIRELESS INT’L CORP.          10741
rial fact whether the issuance of shares by Platforms qualified
for an exemption under Securities Act Section 4(2), 15 U.S.C.
§ 77d(2), because they took reasonable care to assure that
Intermedia was not an underwriter. See 17 C.F.R.
§ 230.502(d). We address each exemption in turn.

                                1

   [5] Section 4(1) of the Securities Act exempts from regis-
tration “transactions by any person other than an issuer,
underwriter, or dealer.” 15 U.S.C. § 77d(1). Because Plat-
forms was an “issuer,” its issuance of shares cannot qualify
for this exemption. See 15 U.S.C. § 77b(a)(4) (defining “issu-
er” as “every person who issues or proposes to issue any
security”). It is undisputed, however, that Intermedia, Draper,
and Benefit Consultants were not “issuers” or “dealers.” See
id. §§ 77b(a)(4), 77b(a)(12) (defining “dealer” as “any person
who engages . . . as agent, broker, or principal, in the business
of offering, buying, selling, or otherwise dealing or trading”
in securities). The transfer of ownership of Platforms’ stock
from Intermedia to Draper and Benefit Consultants could
thereby qualify for this exemption if Intermedia, Draper, and
Benefit Consultants were not “underwriters.”

   [6] The definition of “underwriter” in the Securities Act is
expansive. Section 2(a)(11), 15 U.S.C. § 77b(a)(11), defines
underwriter to mean “any person who has purchased from an
issuer with a view to, or offers or sells for an issuer in connec-
tion with, the distribution of any security . . . .” “Underwriter
status is not dependent on a formal underwriting agreement or
even compensation for serving as an underwriter. Any inter-
mediary between the issuer and the investor that is an essen-
tial cog in the distribution process may be a statutory
underwriter.” Thomas Lee Hazen, Federal Securities Law 44
(2d ed. 2003).

  [7] Rule 144 establishes several explicit safe harbors that
qualify for the Section 4(1) exemption. If a transaction com-
10742         SEC v. PLATFORMS WIRELESS INT’L CORP.
plies with the requirements of Rule 144, the parties involved
are deemed not to fall within the statutory definition of under-
writers for purposes of the transaction. 17 C.F.R. § 230.144.
When the transactions at issue took place, Rule 144(k) permit-
ted a person to resell securities without restriction under cer-
tain circumstances if that person was not an “affiliate” of the
issuer at the time of the sale or within the three months pre-
ceding the sale. 17 C.F.R. § 230.144(k) (2001); M & A W.,
538 F.3d at 1046 n.1. “Affiliate” is defined as “a person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
such issuer.” 17 C.F.R. § 230.144(a)(1).

   [8] The defendants allege that the transactions between
Intermedia, Draper, and Benefit Consultants qualified for a
Rule 144(k) safe harbor.8 The district court concluded, how-
ever, that there was no genuine issue of material fact that Plat-
forms and Intermedia were under Martin’s “common control”
at the time of the sale and in the three months preceding it,
rendering Intermedia an affiliate of Platforms and destroying
eligibility for the Rule 144(k) safe harbor. On appeal, Martin
and Platforms do not dispute that Martin, as Platforms’ acting
CEO, controlled Platforms at relevant times. And so the crux
of the appeal turns on whether Martin controlled Intermedia.

   Rule 144 does not define “control.” However, Rule 405 of
Regulation C contains an identical definition of “affiliate” and
defines “control.” See SEC v. Kern, 425 F.3d 143, 149 (2d
Cir. 2005) (using Rule 405’s definition of “control” to inter-
pret Rule 144). “The term control (including the terms con-
trolling, controlled by and under common control with) means
the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a per-
  8
    Rule 144(k) is not the only safe harbor contained in Rule 144. See M
& A W., 538 F.3d at 1051 n.7. The parties do not contend that the transac-
tions met the requirements of any other Rule 144 provisions, and we are
aware of none that might apply.
              SEC v. PLATFORMS WIRELESS INT’L CORP.                  10743
son, whether through the ownership of voting securities, by
contract, or otherwise.” 17 C.F.R. § 230.405. “ ‘Control’ is
not to be determined by artificial tests, but is an issue to be
determined from the particular circumstances of the case.
Under Rule 405 . . . it is not necessary that one be an officer,
director, manager, or even shareholder to be a controlling per-
son. Further, control may exist although not continuously and
actively exercised.” Pennaluna & Co. v. SEC, 410 F.2d 861,
866 (9th Cir. 1969) (citation omitted); see also United States
v. Corr, 543 F.2d 1042, 1050 (2d Cir. 1976) (stating that con-
trol is “a question of fact which depends upon the totality of
the circumstances including an appraisal of the influence upon
management and policies of a corporation by the person
involved”).

   [9] We agree with the district court that there is no genuine
issue of material fact that Martin controlled Intermedia at the
time of the transactions. These points, as we see the record,
are critical: It is undisputed that Martin was an officer of
Intermedia at the time of the transfers, and that he then repre-
sented himself to be its President and CEO. The SEC also
produced evidence to establish that Martin was not a mere tit-
ular officer of Intermedia after the ownership transfer to his
former wife in January 2000.9 For example, in February 2000,
   9
     We reject defendants’ claim that the district court erred by considering
new evidence of Intermedia’s affiliate status submitted with the SEC’s
reply brief in support of summary judgment. Ordinarily, “where new evi-
dence is presented in a reply to a motion for summary judgment, the dis-
trict court should not consider the new evidence without giving the non-
movant an opportunity to respond.” Provenz v. Miller, 102 F.3d 1478,
1483 (9th Cir. 1996) (punctuation omitted). However, the defendants pre-
viously had explicitly admitted in their answer to the complaint that Mar-
tin controlled Intermedia, and the SEC had no reason to know that the
issue would be contested until defendants first denied their admission in
their memorandum in opposition to summary judgment. Accordingly, it
was not unfair to let the SEC address this issue in its reply brief. More-
over, the defendants did not object to the SEC’s new evidence and had two
months before oral argument on the summary judgment motion to submit
10744         SEC v. PLATFORMS WIRELESS INT’L CORP.
Martin applied for a business Visa credit card on behalf of
Intermedia and signed the document as Intermedia’s “Presi-
dent & CEO.” An October 2000 “Certification of Corporate
Authorization to Transfer” document “authorize[s] and
empower[s]” Martin “to transfer, convert, endorse, sell,
assign, set over and deliver any and all . . . securities . . . in
the name of or owned by” Intermedia, and was executed by
Martin in his capacity as “President” of Intermedia. In
November 2000, Martin’s personal assistant at Platforms,
Kate Marshall, wrote checks to Intermedia from a checking
account labeled “Intermedia Video Marketing Corp; Inter-
media/Platforms Acct A.” Also in November 2000, Martin
sold Platforms stock from a brokerage account registered to
“Intermedia Video Marketing Corp.; Attn: William C. Mar-
tin.”

   [10] Perhaps most importantly, Martin has never disputed
that the specific transactions at issue in this case were orches-
trated under his direction. For example, in his May 2001
deposition, Martin described the stock that Platforms trans-
ferred to Draper and Benefit Consultants as “basically stock
that’s mine,” stating that “[Platforms] owes me a large
amount of stock” and that “what I did was authorize [Plat-
forms] to make a loan to Benefit Consultants.”

   The defendants argue that the transfer of ownership of
Intermedia from Martin to his former wife raises a genuine
factual issue of control. We disagree. Ownership is one means
of control, but it is not the only means, and multiple persons
can exercise control simultaneously. Martin’s position as a
top-ranking officer of Intermedia with the explicit power to

rebuttal evidence. At oral argument on the summary judgment motion, the
defendants’ attorney was specifically asked by the trial judge, “Where is
the evidence of [Martin’s former wife’s] control before the Court,” to
which defendants’ attorney responded, “all we have is the transfer [of
ownership].”
               SEC v. PLATFORMS WIRELESS INT’L CORP.            10745
direct the specific share transfers at issue establishes control
resting on Martin’s title and role in the company. That conclu-
sion is not contradicted by the mere fact of an ownership trans-
fer.10

   The defendants next contend that attorney Brown’s opinion
letters stating that Intermedia was not an affiliate of Platforms
also raise a genuine issue of fact on control. We reject this
argument. Brown’s letters, offering only legal opinions, and
premised on the information provided by defendants, do not
bear on the issue of Intermedia’s affiliate status.

  Finally, the defendants contend that Martin’s affidavit, in
which he denies controlling Intermedia following the owner-
ship transfer to his former wife, raises a genuine factual issue
of control. Martin’s affidavit states in part:

       6. My former wife informed me that she intended
       to close the outstanding business of Intermedia, liq-
       uidate the company, and discontinue ongoing busi-
       ness operations as soon as practicable. Based on her
       statements, I no longer considered Intermedia to be
       an operating business, and it did not even occur to
       me that I might, or should, resign as an officer.

         ...

       8. After I was hired by Platforms, I was no longer
       involved or participated in any decision making, or
       exercise any control over Intermedia. It is my belief
       that, if I had tried to exercise any form of control,
       my former wife had the legal right to, and would
       have, prevented me from doing so. She gradually
       proceeded to liquidate the company.
  10
    Consistent with this conclusion, at oral argument on the SEC’s sum-
mary judgment motion, defendants’ counsel stated that Martin’s former
wife “was not trying to gain control of the company to run it.”
10746          SEC v. PLATFORMS WIRELESS INT’L CORP.
   We agree with the district court that Martin’s affidavit does
not raise a genuine issue of material fact whether he con-
trolled Intermedia. Control is based on whether a person had
“possession . . . of the power to direct or cause the direction
of the management and policies” of the company. 17 C.F.R.
§ 230.405. That Martin’s wife planned to liquidate Inter-
media, that Martin no longer considered Intermedia to be an
operating company, and that it did not occur to him to resign
as an officer of Intermedia, are statements of subjective belief
irrelevant to the control issue because they do not address
Martin’s power to direct the actions of Intermedia after the
ownership transfer to his wife. Martin’s affidavit states that he
was “no longer involved or participated in any decision mak-
ing,” that he no longer “exercised” any control over Inter-
media, and that his wife would have prevented him from
exercising control had he attempted to do so, but Martin has
given no evidence to support these general, conclusory asser-
tions, nor has he rebutted the normal inference to be taken
from his proven abilities to get a company credit card and to
direct transfer of stock.11 The SEC has introduced specific evi-
dence that Martin continued to act in his official capacity as
Intermedia’s President and CEO after the ownership transfer.
By contrast, Martin’s conclusory statements do not set out
“specific facts” raising a genuine issue over whether Martin
was CEO and President of Intermedia in name-only.12 See Fed
R. Civ. P. 56(e)(2); FTC v. Publ’g Clearing House, Inc., 104
F.3d 1168, 1170-71 (9th Cir. 1997) (holding that the president
  11
      Martin has not, for example, offered to explain or otherwise rebut any
of the specific acts evincing his control over Intermedia after transfer of
ownership to his wife. Nor has he offered evidence of instances where his
former wife blocked his attempts to exercise control.
   12
      The defendants argue the district court improperly discredited Mar-
tin’s affidavit at summary judgment as self-serving. See SEC v. Phan, 500
F.3d 895, 909 (9th Cir. 2007) (“In most cases . . . that an affidavit is self-
serving bears on its credibility, not on its cognizability for purposes of
establishing a genuine issue of material fact.” (brackets omitted)). We
need not reach this issue because Martin’s affidavit, even if credited, does
not raise a genuine issue of material fact.
              SEC v. PLATFORMS WIRELESS INT’L CORP.                 10747
of a company cannot raise a genuine issue of material fact that
she was president in name only by introducing “[a] conclu-
sory, self-serving affidavit, lacking detailed facts and any sup-
porting evidence”).

   [11] The SEC has adduced evidence showing that Martin
controlled Intermedia at the time of the stock transfers. The
defendants have not adduced relevant evidence giving rise to
a genuine issue for trial on this point. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323-25 (1986). We hold that Inter-
media was an affiliate of Platforms at the time of the transac-
tions, and the transactions do not qualify for the Rule 144(k)
safe harbor.13

   Our conclusion that the Rule 144 safe harbor does not
apply to these transactions is reinforced by the purposes
underlying Securities Act registration. Of paramount impor-
tance is the protection of investors through public disclosure
of information necessary to make informed investment deci-
sions. See SEC v. Ralston Purina, 346 U.S. 119, 124 (1953).
“Section 4(1) was intended to exempt only trading transac-
tions between individual investors with relation to securities
already issued,” not to exempt distributions by issuers. SEC
v. Chinese Consol. Benevolent Ass’n, 120 F.2d 738, 741 (2d
Cir. 1941). Strictures placed on transactions involving “affili-
ates” prevent those possessing superior access to information
and the power to compel registration from abusing their privi-
leged position to foist unregistered securities on an unwitting
public. See, e.g., M & A W., 538 F.3d at 1053. Martin’s rela-
tionship with Intermedia put him in the position to issue large
quantities of unregistered Platforms’ stock through Inter-
  13
    The defendants argue that the district court abused its discretion by
denying leave to amend their answer to allege that Intermedia was not
Platforms’ affiliate. Because we hold that there is no genuine issue of
material fact that Intermedia was Platforms’ affiliate, amendment would
have been futile. The district court therefore did not abuse its discretion
in denying the defendants leave to amend. See Knappenberger v. City of
Phoenix, 566 F.3d 936, 942 (9th Cir. 2009).
10748       SEC v. PLATFORMS WIRELESS INT’L CORP.
media. He so did. To allow Intermedia’s participation in the
transaction to shield Martin and Platforms from their Section
5 registration obligations would do violence to the spirit of the
Section 4(1) exemption and reward an unsound theory of
compliance with Rule 144. “In view of the objectives and pol-
icies underlying the Act, [Rule 144] shall not be available to
any individual or entity with respect to any transaction which,
although in technical compliance with the provisions of the
rule, is part of a plan by such individual or entity to distribute
or redistribute securities to the public.” Notice of Adoption of
Rule 144, 37 Fed. Reg. 591, 595 (Jan. 13, 1972). The need to
protect the public from unregistered securities sales by issuers
and those acting in concert with them counsels us to deny the
defendants the protection of Rule 144.

   Ordinarily, failure to qualify for the Rule 144 safe harbor
does not automatically prevent a transaction from qualifying
for the broader Section 4(1) exemption. In this case however,
Intermedia’s affiliate status precludes any eligibility for the
exemption. See SEC v. Cavanagh, 445 F.3d 105, 111 n.12 (2d
Cir. 2006) (observing that affiliates of an issuer are ordinarily
“outside the coverage of Section 4(1)”). Because Intermedia
was an “affiliate” of Platforms at the time the transactions
took place, by definition it necessarily also qualified as an “is-
suer” for the limited purpose of defining underwriters under
Section 2(a)(11). See 15 U.S.C. § 77b(a)(11) (“As used in this
paragraph the term ‘issuer’ shall include . . . any person under
direct or indirect common control with the issuer.”). Having
acquired the securities from an “issuer” with an aim to distrib-
ute those securities to the public, Draper and Benefit Consul-
tants are rendered underwriters, making the transaction
ineligible for the Section 4(1) exemption.

                                2

  [12] Section 4(2) of the Securities Act, 15 U.S.C. § 77d(2),
exempts from registration “transactions by an issuer not
involving any public offering.” “[T]he applicability of [Sec-
            SEC v. PLATFORMS WIRELESS INT’L CORP.         10749
tion 4(2)] should turn on whether the particular class of per-
sons affected need the protection of the [Securities] Act. An
offering to those who are shown to be able to fend for them-
selves is a transaction ‘not involving any public offering.’ ”
Ralston Purina, 346 U.S. at 125. Stated another way, a lim-
ited distribution to highly sophisticated investors, rather than
a general distribution to the public, is not a public offering.

   [13] SEC-promulgated Regulation D creates a safe harbor
within this exemption by defining certain transactions as non-
public offerings. McGonigle v. Combs, 968 F.2d 810, 825
n.19 (9th Cir. 1992); Revision of Certain Exemptions, Securi-
ties Act Release No. 6389, 24 S.E.C. Docket 1166 (March 8,
1982). To qualify for Regulation D safe harbors, the issuer
must comply with Rule 502(d) and “exercise reasonable care
to assure that the purchasers of the securities are not under-
writers within the meaning of section 2(11) of the Act.” 17
C.F.R. § 230.502(d). Rule 502(d) defines “reasonable care” in
this way:

    (1) Reasonable inquiry to determine if the purchaser
    is acquiring the securities for himself or for other
    persons;

    (2) Written disclosure to each purchaser prior to sale
    that the securities have not been registered under the
    Act and, therefore, cannot be resold unless they are
    registered under the Act or unless an exemption from
    registration is available; and

    (3) Placement of a legend on the certificate or other
    document that evidences the securities stating that
    the securities have not been registered under the Act
    and setting forth or referring to the restrictions on
    transferability and sale of the securities.

    While taking these actions will establish the requisite
    reasonable care, it is not the exclusive method to
    demonstrate such care.
10750       SEC v. PLATFORMS WIRELESS INT’L CORP.
Id. The parties agree that the transactions here do not qualify
for the Section 4(2) exemption unless Platforms and Martin
complied with Rule 502(d) and took reasonable care to assure
that Platforms was not issuing securities to an underwriter.
Martin and Platforms concede that they took none of the three
actions explicitly enumerated in Rule 502(d). They argue that
there is, nonetheless, a genuine issue of material fact whether
they took reasonable care under Rule 502(d) because (1) a
fact-finder could conclude that the defendants reasonably
relied on Brown’s opinion letter stating that Intermedia was
not an affiliate of Platforms, and because (2) Intermedia was
not, in fact, an underwriter.

   We agree with the district court that there is no genuine
issue of material fact that the defendants did not exercise rea-
sonable care as defined in Rule 502(d). First, even assuming
that “reasonable care” in Rule 502(d) might encompass reli-
ance on a good faith legal opinion, Brown’s letters do not
opine that Intermedia was not an affiliate of Platforms. Both
letters state that Brown had “relied on” the assumption that
Intermedia was not an affiliate of Platforms, a fact “which
[Platforms] has furnished to me and represented to be true and
correct.” Certainly, the defendants were not entitled to rely on
a conclusion of law that they themselves provided, and the
defendants have adduced no other evidence of any affirmative
steps taken to assure that Intermedia was not an underwriter.

   [14] Second, whether or not Intermedia was in fact a statu-
tory underwriter does not bear on whether defendants exer-
cised reasonable care under Rule 502(d). Registration
exemptions are to be narrowly construed in favor of disclo-
sure. Murphy, 626 F.2d at 641. By its plain terms, Rule 502(d)
required Platforms and Martin to “exercise” reasonable care
to “assure” that Intermedia was not an underwriter, having
thereby “demonstrated” reasonable care through their “ac-
tions.” 17 C.F.R. § 230.502(d). Rule 502(d)’s ostensible pur-
pose is to influence the actions of issuers; its protection
becomes necessary only if the transferee of the securities does
            SEC v. PLATFORMS WIRELESS INT’L CORP.          10751
in fact act as an underwriter and distribute the securities to the
public. See, e.g., Interpretative Releases, Securities Act
Release No. 33-5121, 1970 WL 116591 (December 30, 1970)
(“It is essential that the issuer of the securities take careful
precautions to assure that a public offering does not result
through resales of securities purchased in transactions
[exempt under Section 4(2)], for, if in fact the purchasers do
acquire the securities with a view to distribution, the seller
assumes the risk of possible violation of the registration
requirements of the Act . . . .”). Persons with access to mate-
rial nonpublic information about Platforms sold 17.45 million
unregistered securities to those without access to such infor-
mation, and the defendants took no steps to prevent those
transactions from occurring. On those facts, the defendants
cannot establish that they exercised reasonable care to assure
that Intermedia was not an underwriter.

  [15] The transactions were not registered under Section 5
and no exemption applies. We affirm the summary judgment
on the Section 5 claim.

                                B

   Section 10(b) of the Securities Exchange Act makes it
unlawful for any person to employ “any manipulative or
deceptive device or contrivance in contravention of such rules
and regulations as the Commission may prescribe.” 15 U.S.C.
§ 78j(b). Rule 10b-5, promulgated under Section 10(b), makes
it unlawful, in connection with the purchase or sale of a secur-
ity, to “make any untrue statement of a material fact or to
omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under
which they were made, not misleading.” 17 C.F.R. § 240.10b-
5(b).

   [16] A violation of Section 10(b) and Rule 10b-5 is estab-
lished if the defendant (1) made a material misrepresentation
or omission (2) in connection with the purchase of a sale or
10752       SEC v. PLATFORMS WIRELESS INT’L CORP.
security (3) with scienter (4) in interstate commerce. Phan,
500 F.3d at 907-08. An omitted fact is material “if there is a
substantial likelihood that the disclosure of the omitted fact
would have been viewed by the reasonable investor as having
significantly altered the total mix of information made avail-
able.” Id. at 908 (quotation marks omitted)). Scienter can be
established by intent, knowledge, or in some cases “reckless-
ness.” Hollinger v. Titan Capital Corp., 914 F.2d 1564,
1568-69 (9th Cir. 1990) (en banc).

   On appeal, the defendants challenge the summary judgment
on the SEC’s Section 10(b) and Rule 10b-5 claim based on
the August 2000 press release. They contend that there are
genuine issues of material fact whether the press release was
materially misleading and whether it was issued with reckless
scienter.

                              1

   The parties dispute what degree of subjective recklessness
is necessary to establish scienter under Section 10(b) and Rule
10b-5. Both agree that some degree of subjective understand-
ing of the risk of misleading others is required. The SEC
argues that the defendants need only have been aware that the
misleading statement was made and have knowledge of the
facts that made it “objectively obvious” that the statement was
misleading. The defendants argue that liability further
requires that the defendant have been subjectively aware of
the risk that the statement could be misleading, i.e. that the
defendant must have acted “deliberately.”

   In Hollinger, 914 F.2d 1564, we adopted “the standard of
recklessness articulated by the Seventh Circuit in Sundstrand
Corp. v. Sun Chem. Corp.” Id. at 1569. That definition states:

    Reckless conduct may be defined as a highly unrea-
    sonable omission, involving not merely simple, or
    even inexcusable negligence, but an extreme depar-
            SEC v. PLATFORMS WIRELESS INT’L CORP.        10753
    ture from the standards of ordinary care, and which
    presents a danger of misleading buyers or sellers that
    is either known to the defendant or is so obvious that
    the actor must have been aware of it. . . . [T]he dan-
    ger of misleading buyers must be actually known or
    so obvious that any reasonable man would be legally
    bound as knowing, and the omission must derive
    from something more egregious than even ‘white
    heart/empty head’ good faith.

Hollinger, 914 F.2d at 1569 (citations omitted).

   In Sundstrand, the Seventh Circuit subdivided its reckless-
ness definition into two parts: (1) an objective test, analyzed
according to whether the misrepresentation was “known or so
obvious that any reasonable man would be legally bound as
knowing,” and (2) a subjective test, requiring more than
“white heart/empty head” good faith. 553 F.2d 1033, 1045 &
nn.19-20 (7th Cir. 1977). The Seventh Circuit elaborated on
the subjective test as follows:

    This is a subjective test with the requirement of
    something more than ‘inexcusable negligence’ . . . .
    Thus if a trial judge found, for example, that a defen-
    dant genuinely forgot to disclose information or that
    it never came to his mind, etc., this prong of the
    [recklessness test] would defeat a finding of reck-
    lessness even though the proverbial ‘reasonable
    man’ would never have forgotten.

Id. at 1045 n.20.

   We revisited Hollinger in In re Silicon Graphics Inc.
Securities Litigation, 183 F.3d 970 (9th Cir. 1999), while
addressing the standard for pleading under the Private Securi-
ties Litigation Reform Act of 1995 (“PSLRA”). Silicon
Graphics concluded that Hollinger had adopted a “deliberate
recklessness” standard:
10754       SEC v. PLATFORMS WIRELESS INT’L CORP.
    Our definition of recklessness, as taken from Sundst-
    rand, strongly suggests that we continued to view it
    as a form of intentional or knowing misconduct. We
    used the words “known” and “must have been
    aware,” which suggest consciousness or deliberate-
    ness. Indeed, we expressly acknowledged our own
    prior statement that “recklessness is a form of intent
    rather than a greater degree of negligence.”

Id. at 976-77 (citing Hollinger, 914 F.2d at 1569). We have
since observed, however, that “[b]ecause the PSLRA did not
alter the substantive requirements for scienter under § 10(b),
. . . the standard on summary judgment or JMOL remains
unaltered by [Silicon Graphics].” Howard v. Everex Sys., Inc.,
228 F.3d 1057, 1064 (9th Cir. 2000).

   In Gebhart v. SEC, 595 F.3d 1034 (9th Cir. 2010), our most
recent case to address the issue of reckless scienter, we con-
cluded that scienter requires “either knowledge of falsity or
conscious recklessness.” Id. at 1041 n.10. “Scienter . . . is a
subjective inquiry. It turns on the defendant’s actual state of
mind.” Id. at 1042. Thus, “although we may consider the
objective unreasonableness of the defendant’s conduct to raise
an inference of scienter, the ultimate question is whether the
defendant knew his or her statements were false, or was con-
sciously reckless as to their truth or falsity.” Id.

   [17] These precedents lead us inescapably to two conclu-
sions. First, Gebhart, interpreting Silicon Graphics and Hol-
linger, makes it clear that scienter requires either “deliberate
recklessness” or “conscious recklessness,” and that it includes
“a subjective inquiry” turning on “the defendant’s actual state
of mind.” 595 F.3d at 1041-42. Evidence showing that the
defendants did not appreciate the gravity of the risk of mis-
leading others is relevant to such a determination. See id. at
1042 n.11 (holding that “the factfinder must consider the
direct and circumstantial evidence as a whole” to determine
              SEC v. PLATFORMS WIRELESS INT’L CORP.                  10755
whether the defendant “consciously disregarded the risk” that
the statements were false).

   [18] Second, despite our first conclusion, a defendant ordi-
narily will not be able to defeat summary judgment by the
mere denial of subjective knowledge of the risk that a state-
ment could be misleading. Summary judgment requires a
statement that is materially misleading such that no reason-
able jury could conclude otherwise. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248-50 (1986). Moreover, the
statement must present a danger of misleading buyers or sell-
ers “that is either known to the defendant or is so obvious that
the actor must have been aware of it.” Hollinger, 914 F.2d at
1569. When the defendant is aware of the facts that made the
statement misleading, “he cannot ignore the facts and plead
ignorance of the risk.” Makor Issues & Rights, Ltd. v. Tellabs
Inc., 513 F.3d 702, 704 (7th Cir. 2008); see also Vucinich v.
Paine, Webber, Jackson & Curtis, Inc., 739 F.2d 1434, 1436
(9th Cir. 1984) (“Summary judgment is generally inappropri-
ate when mental state is an issue, unless no reasonable infer-
ence supports the adverse party’s claim.” (emphasis added)).
Stated another way, if no reasonable person could deny that
the statement was materially misleading, a defendant with
knowledge of the relevant facts cannot manufacture a genuine
issue of material fact merely by denying (or intentionally dis-
regarding) what any reasonable person would have known.

                                     2

   With this scienter standard in mind, we turn to the merits
of the summary judgment on the Section 10(b) and Rule 10b-
5 claim based on the August 2000 press release.14
  14
     In their motion for reconsideration, the defendants submitted twenty-
eight new evidentiary exhibits and a new declaration by Martin. The dis-
trict court declined to consider this evidence because it was not before it
during the original summary judgment proceeding. On appeal, the defen-
dants argue that Ninth Circuit Rule of Appellate Procedure 30-1.4(a)(xi)
permits us to consider this new evidence. We disagree. Rule 30-1.4(a)(xi)
establishes criteria for the inclusion of record evidence in the excerpts of
record. It does not authorize us to consider extra-record evidence.
10756       SEC v. PLATFORMS WIRELESS INT’L CORP.
   First, the district court concluded that the press release was
materially misleading because it “only permits the conclusion
that Platforms was announcing it had actually developed a
viable ARC system.” It is undisputed that at the time of the
press release, Platforms had only a design of the system, had
no operational prototype, and did not have the money to build
a prototype. On appeal, the defendants argue that a genuine
issue of material fact exists because the press release could be
interpreted in a manner consistent with the nascent state of the
ARC System and of Platforms’ finances.

   [19] We reject the defendants’ argument. No reasonable
person could read the press release and infer anything other
than that a functioning ARC System existed. The press release
is titled “Platforms Unveils New Airborne Wireless Commu-
nications ‘Zer0Gravity AeroStructures.’ ” It speaks in the
present tense, stating, for example, that “the Zer0Gravity
AeroStructure is a large, manned, helium-filled,
aerodynamically-shaped airship structure,” and that “[t]he
Aerodynamic shape and skin of the AeroStructure are resis-
tant to inclement weather conditions.” It makes performance
assertions about the ARC System, stating that it resists winds
“of up to 90 MPH,” and that “[t]his important new develop-
ment has enabled Platforms to: (i) improve System opera-
tional efficiency and cost-effectiveness, reducing ARC System
fixed-wing operating costs by 40 percent.” The release is nine
pages long in small font and discusses, in detail, five specific
models of AeroStructure, describing their particular perfor-
mance characteristics, including their service coverage areas
and maximum service capacities. Considered as a whole, the
press release leaves the unmistakable impression that the
ARC System exists. By contrast to the true facts, this press
release was deceptive, an absolute and unequivocal falsehood.

   The defendants’ alternative interpretation of the press
release is not plausible. The statements relied on by defen-
dants, read in context, do not dampen the clear impression
that a functioning ARC System exists and has been tested.
            SEC v. PLATFORMS WIRELESS INT’L CORP.        10757
The defendants analogize the press release’s description of the
ARC System to Boeing’s practice of issuing press releases
about a new model of airliner. However, the defendants are
not Boeing and the ARC System is not an airplane. Unlike
Boeing, defendants had not successfully launched prior air-
craft models. Unlike Boeing, defendants did not have ample
capital available to further their ends. Whatever Boeing’s
practices may be, the comparison between Platforms’ ARC
System and a well-known company producing a new model
with proven technology is inapt and irrelevant. Nor do Plat-
forms’ subsequent press releases correct, or even attempt to
correct, the misleading statements and material omissions in
the August 2000 press release.

   [20] Second, the district court concluded that because Mar-
tin knew Platforms did not have an operating prototype, there
was no genuine issue of material fact that Martin acted with
deliberate recklessness by issuing the August 2000 press
release. We agree. Martin admitted in his deposition that
when the press release was given, Platforms did not have the
ARC System but rather only “the description and definition of
how the system would operate”; that Platforms had never pro-
duced a “commercial version” of the antenna payload; that
Platforms had not purchased an aerostat; and that it had never
manufactured the completed product. A finished, tested prod-
uct is almost certainly the single most important piece of
information for an investor deciding whether to invest in a
start-up company. The defendants cannot plausibly argue that
omitting the fact that the ARC System did not exist was not
a “highly unreasonable omission.” See Hollinger, 914 F.2d at
1569. Martin argues that he nonetheless subjectively believed
that the press release was not misleading, but for the reasons
stated above, we have concluded that no reasonable juror
could credit that assertion. If such a self-serving assertion
could be viewed as controlling, there would never be a suc-
cessful prosecution or claim for fraud. Similarly, the defen-
dants argue that “companies in related industries typically
tailor products for customers over the course of months” and
10758       SEC v. PLATFORMS WIRELESS INT’L CORP.
that Platforms personnel “considered acquisition of an aero-
stat to be reasonably simple.” But even if Martin had these
things in mind, it doesn’t negate that Martin knew that Plat-
forms had not produced a complete, field-tested ARC System,
and that he authorized the materially misleading press release
suggesting that Platforms had in fact done so. Because no rea-
sonable juror could conclude that Martin was not conscious of
the risk that the press release would be misinterpreted, we
conclude that Martin was deliberately reckless in issuing this
press release.

   [21] We hold that there is no genuine issue of material fact
that the August 2000 press release was materially misleading
and issued with deliberate recklessness. The summary judg-
ment as to the August 2000 press release is affirmed.

                              IV

   Platforms and Martin next challenge the district court’s
order holding them jointly and severally liable for disgorge-
ment of about $1.75 million in proceeds from the sales of
unregistered Platforms securities in violation of Section 5. We
review orders of disgorgement for an abuse of discretion. SEC
v. JT Wallenbrock & Assocs., 440 F.3d 1109, 1113 (9th Cir.
2006).

                              A

   [22] “[A] district court has broad equity powers to order
the disgorgement of ill-gotten gains obtained through the vio-
lation of the securities laws. Disgorgement is designed to
deprive a wrongdoer of unjust enrichment, and to deter others
from violating securities laws by making violations unprofit-
able.” SEC v. First Pac. Bancorp, 142 F.3d 1186, 1191 (9th
Cir. 1998) (quotation marks and citations omitted). “[T]he
amount of disgorgement should include all gains flowing
from the illegal activities.” JT Wallenbrock, 440 F.3d at 1114
(quotation marks omitted). Disgorgement need be “only a rea-
            SEC v. PLATFORMS WIRELESS INT’L CORP.          10759
sonable approximation of profits causally connected to the
violation.” First Pac. Bancorp, 142 F.3d at 1192 n.6.

    The SEC “bears the ultimate burden of persuasion that its
disgorgement figure reasonably approximates the amount of
unjust enrichment.” SEC v. First City Fin. Corp., 890 F.2d
1215, 1232 (D.C. Cir. 1989); see also First Pac. Bancorp, 142
F.3d at 1192 n.6. Once the SEC establishes a reasonable
approximation of defendants’ actual profits, however, we join
our sister circuits and hold that the burden shifts to the defen-
dants to “demonstrate that the disgorgement figure was not a
reasonable approximation.” First City Fin., 890 F.2d at 1232;
see also SEC v. Happ, 392 F.3d 12, 31 (1st Cir. 2004); SEC
v. Lorin, 76 F.3d 458, 462 (2d Cir. 1996) (per curiam). We
place this burden on the defendants because information is not
“obtainable at negligible cost.” First City Fin., 890 F.2d at
1231. The defendants are more likely than the SEC to have
access to evidence establishing what they paid for the securi-
ties, if anything, to whom the proceeds from the sales were
distributed, and for what purposes the proceeds were used.
And although “[p]lacing the burden on the defendants of
rebutting the SEC’s showing of actual profits . . . may result
. . . in actual profits becoming the typical disgorgement mea-
sure,” we conclude that “the risk of uncertainty should fall on
the wrongdoer whose illegal conduct created that uncertain-
ty.” Id. at 1232.

   The district court did not abuse its discretion in adopting
the SEC’s disgorgement figure. The SEC calculated the
amount of proceeds obtained from the illegal sale of 17.45
million unregistered securities: $1,756,861. The calculations
were a precise sum of all of the proceeds from the sales, and
the SEC provided spreadsheets illustrating the sales, dates,
and totals. The defendants do not dispute that these were the
total proceeds. We conclude that this was a reasonable
approximation of the profits obtained from the unlawful sales.

  [23] The defendants attempt to distinguish “profits” from
“proceeds” and contend that the SEC should have attempted
10760       SEC v. PLATFORMS WIRELESS INT’L CORP.
a “more reasonable approximation of profits.” But they do not
explain what, if anything, was not “profit” in the $1.75 mil-
lion in proceeds received from the sales of unregistered secur-
ities. There is no evidence in the record, and the defendants
do not contend, that they paid cash value for the newly-issued
shares. To the extent that any cash value was paid, the defen-
dants could have easily produced that evidence to rebut the
SEC’s proposed disgorgement amount. Assuming that the
securities were paid as compensation for services rendered,
we do not see evidence of substantial value: Platforms was a
low-priced penny-stock, the securities were unregistered and
could not be sold to the public at all, and Platforms did not
have any source of income or assets, rendering any such value
speculative and small. Nor, and importantly, did the defen-
dants produce any evidence of such a valuation of stock given
in compensation for services. Accordingly, and given this fail-
ure of proof from defendants, it was not an abuse of discretion
for the district court to conclude that the entire proceeds from
the sale were a “reasonable approximation” of the profits
from the transactions.

   Similarly, the defendants’s reliance on the Seventh Cir-
cuit’s decision in SEC v. McNamee, 481 F.3d 451 (7th Cir.
2007), is misplaced. In McNamee, the Seventh Circuit vacated
a contempt-of-court fine comprising the total proceeds earned
from unlawful sales of unregistered securities in violation of
a temporary restraining order. The Seventh Circuit concluded
that because a contempt-of-court fine “compensates the com-
plainant for losses sustained,” full repayment of the proceeds
would exceed the damage caused since the securities still
retained some value. Id. at 456-58 (brackets omitted). Unlike
the damages at issue in McNamee, however, the purpose of a
disgorgement remedy is to prevent unjust enrichment and to
make securities law violations unprofitable, not to compensate
victims. Allowing the defendants to retain any money from
the unlawful transactions would allow them to unjustly profit
from exchanging unregistered securities for cash at public
market prices.
            SEC v. PLATFORMS WIRELESS INT’L CORP.         10761
   Martin and Platforms next argue that the disgorgement
amount should have been limited to the amount of proceeds
that they personally received from the unlawful sales. They
rely on Hateley v. SEC, 8 F.3d 653 (9th Cir. 1993). In Hate-
ley, a broker dealer and two officers of a securities firm were
ordered to disgorge 100% of the profits obtained based on an
illegal agreement, even though the agreement itself appropri-
ated to them only 10% of the profits as a commission. Id. at
655-56. We held that it was error to order disgorged more
than the amount the individuals ultimately received, because
“the very agreement that [was] the source of their liability”
also limited their ill-gotten gains, and we “must view the
agreement as a whole and cannot single out the aspects of it
that are favorable to the SEC’s position and disregard the
parts that are not.” Id.

   In contrast, in JT Wallenbrock & Associates, 440 F.3d
1109, we distinguished Hateley and rejected an argument sim-
ilar to the one now made by the defendants. In JT Wallen-
brock, the defendants had raised more than $250 million
through the fraudulent sale of unregistered promissory notes.
See 440 F.3d at 1111-12. The district court held each of the
defendants jointly and severally liable and ordered disgorge-
ment of a substantial portion of that amount. Id. at 1113. On
appeal, the defendants argued that Hateley required the dis-
trict court to exclude from the amount of disgorgement
amounts that they had reinvested and had not kept for them-
selves. Id. at 1116. We disagreed, distinguishing Hateley on
the grounds that “there was no preexisting agreement limiting
the defendants to only a share of the ill-gotten gain or requir-
ing them to pay a portion of the proceeds to third parties.” Id.
“The manner in which [the defendant] chose to spend the ille-
gally obtained funds has no relevance to the disgorgement
calculation . . . .” Id.

  [24] The district court did not abuse its discretion by hold-
ing Martin and Platforms liable for all proceeds from the
unlawful sales. A person who controls the distribution of ille-
10762         SEC v. PLATFORMS WIRELESS INT’L CORP.
gally obtained funds is liable for the funds he or she dissi-
pated as well as the funds he or she retained. See id. The
defendants argue that the SEC “cited no evidence that Martin,
Platforms, or Intermedia ever controlled the sales proceeds.”
But it is undisputed that the 17.45 million Platforms shares
sold were beneficially owned by Intermedia, and we have
determined that Martin controlled Intermedia. Unlike the
defendants in Hateley, Martin had control over when and by
whom the securities would be sold and hence how the pro-
ceeds would be used.

                                    B

   [25] The district court held Martin and Platforms jointly
and severally liable for the full disgorgement amount.
“[W]here two or more individuals or entities collaborate or
have a close relationship in engaging in the violations of the
securities laws, they have been held jointly and severally lia-
ble for the disgorgement of illegally obtained proceeds.” First
Pac. Bancorp, 142 F.3d at 1191. Martin does not dispute that
he and Platforms had a “close relationship” and collaborated
in the Section 5 violations. He argues, however, that the dis-
trict court erred because he did not “personally benefit” from
the violations by receiving money or other remuneration.

   [26] We hold that the district court did not abuse its discre-
tion in holding Martin jointly and severally liable with Plat-
forms. We have never held that a personal financial benefit is
a prerequisite for joint and several liability.15 Rather, we have
held defendants jointly and severally liable in cases where, for
example, the defendants “used all of the investors’ funds to
operate their . . . scheme and invest in speculative business
ventures, all to the defendants’ benefit.” JT Wallenbrock, 440
  15
     Martin relies on First Pacific Bancorp, but that decision rejects a
defendant’s argument that he received no personal financial benefit from
the transaction without ever addressing whether a personal financial bene-
fit is required. See 142 F.3d at 1192.
            SEC v. PLATFORMS WIRELESS INT’L CORP.         10763
F.3d at 1117; see also id. at 1114 (holding the defendants lia-
ble for disgorging money they did not personally receive
because “[r]ather than put their own money at risk, the defen-
dants benefitted from the use of investors’ money to spend at
the defendants’ discretion”). It is undisputed that the proceeds
from the securities sales were used to pay Platforms’ operat-
ing expenses and compensation to Platforms employees, and
that at the time the securities were sold to the public, Martin
had sunk over $2 million of his own money into Platforms.
Martin therefore benefitted from the Section 5 violations by
keeping Platforms afloat, defraying further investment of his
own money, and protecting his substantial personal financial
interest in the company. Even if some personal financial bene-
fit to Martin were required, Martin’s financial stake in Plat-
forms’ survival qualifies.

   [27] Moreover, 15 U.S.C. § 77o by its express terms holds
all controlling persons jointly and severally liable for viola-
tions of Section 5, without regard to their degree of personal
benefit. Martin orchestrated the unlawful transactions and had
control of the proceeds via his control of Platforms and Inter-
media. It is not inequitable to require Martin jointly to share
the burden of restoring the illegally obtained monies, even if
he did not allocate them to himself. See SEC v. First Jersey
Sec., Inc., 101 F.3d 1450, 1475 (2d Cir. 1996) (holding that
where a firm’s owner and chief executive officer collaborated
in unlawful conduct leading to securities law violations, “it is
within the discretion of the court to determine that the owner-
officer too should be subject, on a joint and several basis, to
the disgorgement order”); see also First Pac. Bancorp, 142
F.3d at 1191-92. The district court did not abuse its discretion
by imposing joint and several liability on Martin and Plat-
forms.

                               V

  The defendants next challenge the district court’s award of
$974,586 in prejudgment interest. We review prejudgment
10764         SEC v. PLATFORMS WIRELESS INT’L CORP.
interest awards for an abuse of discretion. Simeonoff v. Hiner,
249 F.3d 883, 894 (9th Cir. 2001).

   The defendants contest the district court’s decision to cal-
culate interest based on the rate provided in 26 U.S.C. § 6621
for tax underpayment, rather than the treasury-bill rate pro-
vided in 28 U.S.C. § 1961 for post-judgment interest on
money judgments in civil cases. Ordinarily, 28 U.S.C. § 1961
“is to be used for the calculation of prejudgment interest
unless the equities of a particular case demand a different rate.”16
In re Nucorp Energy, Inc., 902 F.2d 729, 734 (9th Cir. 1990)
(quotation marks omitted).

   [28] The district court did not abuse its discretion by calcu-
lating prejudgment interest based on the tax-underpayment
rate. The SEC has adopted the tax underpayment rate for pre-
judgment interest on orders of disgorgement in all administra-
tive proceedings. See SEC Rules and Regulations, 60 Fed.
Reg. 32,738, 32,788 (June 23, 1995) (codified at 17 C.F.R.
§ 201.600(b)). We conclude that the SEC’s reasoning on this
issue is persuasive. The defendants unlawfully received
money from investors by distributing unregistered securities
to the public in violation of Section 5. This was the rough
equivalent of receiving “an interest free loan” from investors.
See id. The proper measurement of the benefit of the “loan”
is the interest rate the defendants would have otherwise paid
to finance their business operations with a comparable, unse-
cured loan. Id. The interest rate reflected in Section 6621, “a
widely published, floating rate based on a fixed margin above
the rate for treasury bills,” is a reasonable proxy for the inter-
est rate that would ordinarily be charged on an unsecured
loan. Id.
  16
     Courts in our circuit have, on occasion, calculated prejudgment inter-
est in SEC enforcement actions using the Section 1961 rate. See, e.g., SEC
v. M & A W., No. C-01-3376 VRW, 2005 WL 2988963, at *2 (N.D. Cal.
Oct. 31, 2005), rev’d, SEC v. M & A W., Inc., 538 F.3d 1043 (9th Cir.
2008).
            SEC v. PLATFORMS WIRELESS INT’L CORP.          10765
   The defendants also argue that the SEC has not shown
equitable reasons for departing from the 28 U.S.C. § 1961
rate. We conclude, however, that Section 1961 provides an
appropriate interest rate in this case. The treasury-bill rate in
Section 1961 reflects the interest rate paid for lending money
to the U.S. Government, not for borrowing money. First Jer-
sey Sec., 101 F.3d at 1476-77. It is therefore “not an appropri-
ate measure of prejudgment interest to charge in remedial
proceedings, where the purpose of the prejudgment interest is
to deny a wrongdoer any economic benefit from his viola-
tions.” SEC Rules and Regulations, 60 Fed. Reg. at 32,788.
By imposing a lower interest rate than the one reflected in
Section 6621, the defendants would benefit from their unlaw-
ful conduct by obtaining their $1.75 million “loan” from
investors at a below-market rate.

    [29] The defendants still further argue that the district
court improperly calculated prejudgment interest from the
date of the sales of securities to the public, rather than from
the date the SEC filed its complaint. We hold that the district
court did not abuse its discretion by imposing prejudgment
interest from the date the securities were sold in violation of
Section 5. “Even if defendants were correct that the present
litigation was protracted through some fault of the SEC,
defendants plainly had the use of their unlawful profits for the
entire period . . . . Given the remedial purpose of the statute,
the goal of depriving culpable defendants of their unlawful
gains, and the lack of any unfairness to defendants, we see no
abuse of discretion in the court’s order.” First Jersey Sec.,
101 F.3d at 1477.

                               VI

   Platforms contends that the district court improperly denied
its motion for reconsideration under Federal Rules of Civil
Procedure 59(e) and 60(b). We review the denial of a motion
for reconsideration for an abuse of discretion. United Nat’l
Ins. Co. v. Spectrum Worldwide, Inc., 555 F.3d 772, 780 (9th
10766       SEC v. PLATFORMS WIRELESS INT’L CORP.
Cir. 2009). Reconsideration under Rule 59(e) is appropriate
“if (1) the district court is presented with newly discovered
evidence, (2) the district court committed clear error or made
an initial decision that was manifestly unjust, or (3) there is
an intervening change in controlling law.” Id. (quotation
marks omitted). Rule 60(b) allows a district judge to provide
relief from a final judgment on the grounds of, inter alia,
“mistake, inadvertence, surprise, or excusable neglect,”
“newly discovered evidence that, with reasonable diligence,
could not have been discovered in time to move for a new
trial under Rule 59(b),” or “any other reason that justifies
relief.” Id.

   Platforms first urges that the district court abused its discre-
tion by stating that “scienter is not an element of a § 5 viola-
tion” when in fact scienter can be considered when granting
or denying injunctive relief. We reject this argument. Plat-
forms admits in the same paragraph in its brief that the district
court included a scienter finding in its original ruling.

   Platforms next argues that the district court abused its dis-
cretion by denying defendants an opportunity to respond to
the new evidence of Intermedia’s affiliate status submitted in
the SEC’s reply brief during the Section 5 summary judgment
proceeding. However, as earlier explained, the district court
did not err by considering the SEC’s new evidence, and the
defendants had an adequate opportunity to respond but did not
do so. Nor have the defendants pointed to any “newly discov-
ered evidence” that was previously unknown to them or
unavailable during the original summary judgment proceed-
ing. See Frederick S. Wyle Prof’l Corp. v. Texaco, Inc., 764
F.2d 604, 609 (9th Cir. 1985).

   Platforms also contends that the district court abused its
discretion in denying its Rule 60(b) motion based on former
counsel Rebecca Wilson’s “excusable neglect”—namely her
failure to submit evidence on the issue of Intermedia’s affili-
ate status or move to amend their answer to correct the admis-
            SEC v. PLATFORMS WIRELESS INT’L CORP.          10767
sion prior to the SEC’s summary judgment motion. “The
determination of whether neglect is excusable is at bottom an
equitable one, taking account of all relevant circumstances
surrounding the party’s omission.” Lemoge v. United States,
587 F.3d 1188, 1192 (9th Cir. 2009) (quotation marks omit-
ted). At least four factors are considered: “(1) the danger of
prejudice to the opposing party; (2) the length of the delay
and its potential impact on the proceedings; (3) the reason for
the delay; and (4) whether the movant acted in good faith.” Id.
In some circumstances, the prejudice a denial would cause to
the movant must also be considered, but it is not a factor that
must be assessed “in each and every case.” Id. at 1195.

   The district court did not abuse its discretion in rejecting
the claim of excusable neglect. The district court concluded
that prejudice to the parties was in equipoise, but questioned
the defendants’ good faith because the evidence of Inter-
media’s affiliate status was available to the defendants, and
because the defendants’ own admission was the cause of the
SEC’s failure to raise the issue sooner. It also concluded that
the proffered reason for the delay—a change in counsel and
new counsel’s reliance on the SEC’s framing of the issues—
was not a reasonable excuse. These conclusions are not “illog-
ical, implausible, or without support in inferences that may be
drawn from facts in the record.” See United States v. Hinkson,
585 F.3d 1247, 1251 (9th Cir. 2009) (en banc). Wilson had
four months before the SEC’s summary judgment motion to
submit evidence or retract the admission and did not do so.
Wilson was not entitled to rely on the SEC’s “framing” of
Intermedia’s affiliate status given that it was the defendants’
own admission that led to such “framing.” “[C]lients must be
held accountable for the acts and omissions of their attor-
neys,” and Platforms “cannot now avoid the consequences of
the acts or omissions” of its counsel. Pioneer Inv. Servs. Co.
v. Brunswick Assocs. Ltd., 507 U.S. 380, 396-97 (1993).

   [30] We hold that the district court did not abuse its discre-
tion by denying the motion for reconsideration.
10768      SEC v. PLATFORMS WIRELESS INT’L CORP.
                            VII

   We affirm the summary judgment on the SEC’s Section 5
claim and on the Section 10(b) and Rule 10b-5 claim based
on the August 2000 press release, the order of disgorgement
and prejudgment interest, and the denial of the motion for
reconsideration. Because the SEC has elected to abandon its
challenge to the denial of summary judgment on its other Sec-
tion 10(b) and Rule 10b-5 claims, we dismiss the SEC’s cross
appeal as moot.

 JUDGMENT AFFIRMED. CROSS-APPEAL DIS-
MISSED.
