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followed by additional disclosures confirming that there was misconduct underlying the

investigation. Specifically, the initial press release in Bradley announced that the

company had been notified of an informal SEC inquiry regarding its revenue recognition

and capitalization of certain payments. The company then announced in subsequent

releases that it was “withdrawing its previously announced financial guidance for

unreported periods” and that Bradley would be “restating its financial results” because

its auditors had determined that the company “did not meet the criteria for revenue

recognition in [the relevant] period.” Id. at 825. The court found that loss causation had

been adequately plead, noting that “[t]he revelation of the ‘truth’ about the [accounting

issue] did not take the form of a single, unitary disclosure, but occurred through a series

of disclosing events” that culminated in the press release announcing the restatement.

Id. at 828-29.

Here, however, the announcement of the investigations in the November 21,

2006 and December 15, 2006 press releases were not “partial disclosures” that were

“later confirmed” by some revelation that the Company had made material

misstatements or omissions regarding its accounting for deferred revenue, chargeback

levels, or business model. To the contrary, the result of the Special Committee

investigation was that the Company restated its financial statements with respect to

acquisitions and certain other items unrelated to deferred revenue and chargebacks in a

way that increased the Company’s reported net income by $769,000 for the period 2002

through 2006.

Put simply, as the Court noted at the hearing, the press releases do not

sufficiently establish a connection between the specific alleged fraudulent activity (the


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