(dissenting in part). Defendant Montana Board of Investments (MBOI) claims that plaintiff Deutsche Bank Securities, Inc. (DBSI) and/or its client traded the Pennzoil-Quaker State Company 2009 bonds based on material nonpublic information, a concededly valid defense to DBSI’s breach of contract claim. The majority concludes, however, that MBOI presented no evidence of insider trading, apart from a “coincidence in timing,” and thus the Appellate Division did not abuse its discretion in rejecting MBOI’s request for additional discovery (majority op at 74). I respectfully dissent.
To establish its insider trading defense, MBOI must demonstrate that
“(1) the tipper possessed material nonpublic information regarding a publicly trade [d] company; (2) the tipper disclosed this information to the tippee [DBSI]; (3) the tippee traded in securities while in possession of the information; (4) the tippee knew or should have known that the tipper had violated a fiduciary duty by providing the information to the tippee; and (5) the tippee benefitted from the disclosure of the information by the tipper” (Securities & Exch. Commn. v Franco, 253 F Supp 2d 720, 726 [SD NY 2003]).
In Securities & Exch. Commn. v de Castilla (184 F Supp 2d 365, 376 [SD NY 2002]), the Securities and Exchange Commission (SEC) opposed the defendants’ motion for summary judgment on insider trading claims. The SEC had no “direct” evidence of the existence of “inside information,” but was relying on “the circumstances, the timing, and the nature of the relationships” (id.). The court described the case as follows:
“Prior to the tender offer announced on January 24, 2000, the market had started to move, with trading increasing 110% on January 19 over the previous day’s volume and more than doubling over the next two days. Whether this movement resulted from inside information, market perception, or shrewd judgment was the issue presented to the SEC. Certainly the circumstantial evidence warranted the investigation. Only after full discovery could [defendant’s] knowledge, or lack of it, be determined” (id.).
While the court in de Castilla granted summary judgment to the defendants because there was direct evidence that they *76could, not have had inside information at the time of the attacked purchases, this does not detract from the message of the case. Insider trading claims often rely on circumstantial evidence and require “full discovery” (see also Securities & Exch. Commn. v Hahn Truong, 98 F Supp 2d 1086, 1098 [SD NY 2000] [“The summary judgment tool filters out cases in which plaintiffs rely entirely upon conclusory assertions and speculative allegations to state a claim for relief. After a respectable period of time for discovery through interrogatories, requests for admissions, requests for the production of documents, and depositions, reliance upon pure speculation is unacceptable. Plaintiffs are required to garner either direct or circumstantial evidence to back up their legal claims” (internal quotation marks and citation omitted)]; Azurite Corp. Ltd. v Amster & Co., 844 F Supp 929 [SD NY 1994] [dismissing insider trading claims only after allowing full discovery], affd 52 F3d 15 [2d Cir 1995]).
Although “[t]he timing of the trade as ‘evidence’ of impropriety does not of itself create a triable issue of fact regarding illegal conduct by DBSI” (majority op at 74), MBOI does not rely solely on timing. MBOI presented evidence showing that the price DBSI offered for MBOI’s Pennzoil bonds on March 25, 2002 — $94,669 per $100 face value — was above the fair market value for these junk bonds. Specifically, the Bloomberg Professional service’s estimate of fair market value did not exceed $91.81 per $100 face value during the period January 25, 2002 through March 25, 2005.
Moreover, MBOI did not simply invent the insider trading defense after DBSI sued for breach of contract. On March 26, 2002, MBOI immediately informed DBSI that “[Y]ou need to break the trade — the buyer had inside information” and that the trade was therefore “unethical & probably illegal.” MBOI certainly may have been mistaken, but it has never had an adequate opportunity to investigate its legitimate suspicions through discovery (see e.g. Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 194 [1968] [“It is almost impossible to state in detail the circumstances constituting a fraud where those circumstances are peculiarly within the knowledge of the party against whom the defense is being asserted”]). This is because DBSI did not respond fully to MBOI’s interrogatories, and moved for summary judgment while MBOI’s demand for depositions was pending.
While comity does not require us to dismiss this claim, comity does call upon us to afford the benefit of the doubt to MBOI, a *77sister state’s agency charged with oversight over state pension and other state funds. Based, among other things, on DBSI’s representation that it could “trade the balance [of Pennzoil bonds] with one phone call,” MBOI believes that DBSI was buying, at least in part, for a client. If DBSI was, indeed, trading for a client, it was clearly premature to dismiss MBOI’s insider trading defense based on the affidavits of DBSI’s employee and former employee, who could only (and unsurprisingly did) deny their own advance knowledge of Shell Oil Company’s acquisition of Pennzoil. In short, MBOI deserves the opportunity, at the very least, to depose these two witnesses and to obtain meaningful responses to its outstanding discovery demands.
Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo and R.S. Smith concur with Chief Judge Kaye; Judge Read dissents in part in a separate opinion.
Order affirmed, etc.