This is a securities fraud case. Plaintiff Arnold Friedman, on behalf of himself
and all others similarly situated,1 is suing defendants Whitney Information Network, Inc.
(Whitney) and its individual officers claiming that defendants made a series of materially
false and misleading statements and omissions in Whitney’s public filings and releases
which artificially inflated the stock price. Plaintiff is also suing Whitney’s independent
auditor for its actions relating to the misleading statements and omissions. Plaintiff says
that when the falsity of these statements were made known, the stock price dropped
and he was damaged. As the Court understands the complaint, plaintiff puts forth three
theories of fraud–(1) improper recognition of deferred revenue, (2) failure to disclose
chargebacks, and (3) misrepresentations about Whitney’s business model–which
plaintiff says were disclosed in two press releases after which the stock dropped.
Plaintiff claims violations of Section 10(b) of the Securities Fraud and Exchange
Act of 1944, 15 U.S.C. § 78j(b) and Rule 10b-5, and violations of Section 20(a) of the
Exchange Act, 15 U.S.C. § 78t(a), as to the individual defendants.
Before the Court is Defendants’ Motion to Dismiss the Consolidated Amended
Class Action Complaint Filed on December 8, 2008 (Dkt. # 101)2 and Defendant
Ehrhardt Keefe Steiner & Hottman PC’s Motion to Dismiss (Dkt. # 103).3 Upon
1Although plaintiff requests class action status, no class has been certified.
2This motion is brought on behalf of Whitney Information Network, Inc. and its individual officers (hereinafter “the Whitney Defendants”).
3This motion is brought on behalf of Ehrhardt Keefe Steiner & Hottman PC, Whitney’s independent auditor.