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I. Introduction

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.


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