the SEC in connection with the attempted sale and offering of over $33 million in
EduTrades public offering stock. Plaintiffs further allege that Ehrhardt Keefe
participated in the drafting, preparation, and/or approval of the various public and
shareholder and investor reports and other communications. Because of its role,
plaintiff alleges that Ehrhardt Keefe had access to the adverse undisclosed information
about Whitney’s business prospects and financial condition and performance as
particularized herein and knew (or disregarded with severe recklessness) that these
adverse facts rendered the positive representations made by defendants materially
false and misleading. See CAC at ¶ 14-15.
Finally, plaintiff alleges that the Auditor Defendant, because of its position with
the Company, was able to and did control the content of the various SEC filings, press
releases and other public statements pertaining to the Company during the Class
Period. The Auditor Defendant was provided with copies of the documents alleged
herein to be materially false and misleading prior their issuance and/or had the ability
and/or opportunity to prevent their issuance or cause them to be corrected.
Accordingly, plaintiff alleges that the Auditor Defendant is responsible for the accuracy
of the public reports and releases and therefore primarily liable for the representations.
See CAC at ¶ 16.
C. The Press Releases and Plaintiff’s Theories of Fraud
As indicate above, plaintiff’s claims revolve around a broad array of alleged
misrepresentations that allegedly were “revealed” when the Company issued two press
releases, in November and December 2006, announcing the pendency of an
investigation by the Securities and Exchange Commission (the “SEC”) and receipt of a