With this in mind, the Court will examine the statements of the confidential
witnesses. CW #1 is described as a “member of the Technical Support Team during
the Class Period . . . [who] had received some calls that should have been routed to
Customer Service, all of which were from customers who were unhappy with the
products.” The “most common complaint was that they were misinformed about a
contract” and had been “put under pressure” to sign a contract which was not
adequately explained. Moreover, customers complained about a monthly data charge.
CAC at ¶ 39.
These statements lack particularity. The statements from a tech-support
employee regarding “a few calls” expressing opinions on a product, intended for a
customer service representative, does not support an inference that the Company’s
entire business model is a sham. At best, it shows some people were unhappy with
Whitney’s products, but it is not indicative of a securities violation, much less an
indication of scienter.
CW #2 is described as a member of the “seminar sales team” during the Class
Period, who stated that “[i]n my estimation, about 90% of people will not make their
money back. You have to be responsible for your trades. It is really hard to make
money in the market without discipline . . . . [A]t least half of the class was a sales pitch
for more seminars and more products.” CAC at ¶ 41. Here too, this “statement” does
not support an inference that the Company violated the securities laws; rather, s/he is
offering his or her opinion on how to be successful in the stock market in general and on
the fundamental principle of a company up-selling its product. Indeed, CW #2 is not
alleging anything relating to a violation of securities laws.