Grand Jury subpoena. The November 21, 2006 press release reads in relevant part:
[Whitney] announced today that on the evening of November 14, 2006, it had been notified by the [SEC] that the Commission was conducting an investigation to determine whether the Company has violated any securities law in connection with (i) the efficacy or trading success of the Company’s stock market education programs, and (ii) the Company’s acquisition of certain other companies. The Company intends to provide the Commission with any requested information.
See Exhibit A attached. The day before the press release, Whitney stock closed at
$8.20. On November 21, 2006, after issuance of the press release, the stock closed at
The December 15, 2006 press release reads in relevant part:
[Whitney] announced today that the United States Attorney for the Eastern District of Virginia has notified the Company that it has commenced a grand jury investigation into certain of the Company’s marketing activities. The Company received a subpoena on December 11, 2006 in connection with this investigation requesting documents and information from January 1, 2002 to the present relating to its marketing activities. The Company fully intends to cooperate with this investigation.
The Company’s Board of Directors has established a Special Committee of independent directors to conduct an internal investigation of these activities and the Company’s acquisitions of other companies. The Committee has engaged the law form of Wilmer Cutler Pickering Hall and Dorr to assist it with this investigation.
Separately, the Company also announced today that it intends to withdraw its EduTrades, Inc. Registration statement filed with the [SEC.]
See Exhibit B attached. Before issuance of the press release, Whitney stock closed at
$4.70. The day after the press release, the price closed at $3.50.
Springing from these press releases, as the Court understands the CAC, plaintiff
articulates three theories of liability. The first theory is that the Company committed
fraud because it did not properly report an unspecified level of deferred revenues (the