CW #3 is described as “a member of the Company’s technical support team
during the Purported Class Period,” and offers an opinion that the “EduTrades proposed
IPO never occurred” because “information in the SEC registration was not ‘matching
up.’” CAC at ¶ 137. This statement lacks particularly. There are no facts alleged to
show that this member of the technical support team – who is not a part of the
Company’s executive, legal or accounting department – would have any firsthand
knowledge of the EduTrades IPO. Moreover, the allegation that numbers were not
“matching up” is the type of vague pleading rejected under the PSLRA.
CW #4 (labeled CW#5) is described as having “trained at the corporate office
and . . . worked as a sales representative from July 2006 through January 2007, [and]
learned on the road that the objective was to close the sales.” “You sit down and you
watch other sales people go through it with customers. It’s a high pressure sales
environment. CAC at ¶ 42. These allegations do not sound in fraud, as any sales
company would encourage its employees to close sales. Also, the fact that this person
was “on the road,” fails to give rise to any inference that the individual defendants, who
were executives in the corporate offices, participated in any alleged fraud.
Overall, the statements of the four confidential witnesses fail to provide the
factual narrative required to plead scienter. Their statements simply do not relate to
securities fraud and are insufficient to avoid dismissal of the CAC.
Plaintiff also points to the Paisola E-Mail and the fact that the Company did not
disclose his OSHA complaint as indicative of scienter. As discussed above, neither the
email or the OSHA complaint is evidence of scienter.
4. The Individual Defendants and Scienter